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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





Form 10-K





(Mark One)

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

For the fiscal year ended December 31, 2009

or



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

For the transition period from  to

Commission file number: 000-30241





DDi CORP.

(Exact name of registrant as specified
in its charter)







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

1220 N. Simon Circle,

Anaheim, California 92806

(Address and zip code of principal executive offices)

(714) 688-7200

(Registrants telephone number, including area code)





Securities registered pursuant to Section 12(b) of the Act:



|                               |  |                                          
|------------------------------ |  | -----------------------------------------
|Title of each class            |  | Name of each exchange on which
registered
|Common Stock, $0.001 par value |  | The NASDAQ Global Market                 

Securities registered pursuant to Section 12(g) of the Act:

None





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.    Yes   ̈    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the
Act.    Yes   ̈    No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days.    Yes  x    No   ̈

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will
not be contained, to the best of the registrants knowledge, in the definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   ̈

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



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

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

The aggregate market value of the Common Stock held by non-affiliates of the registrant as of June 30, 2009 was approximately $63.0
million (computed using the closing price of $4.53 per share of Common Stock on June 30, 2009, as reported by the NASDAQ Stock Market).

As of March 12, 2010, DDi Corp. had 19,855,634 shares of common stock, par value $0.001 per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrants
definitive proxy statement prepared in connection with the Annual Meeting of Stockholders to be held in 2010 are incorporated by reference in Part III of this Form 10-K.









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DDi CORP.

FORM 10-K

Index



|         |  |                                                                                                              |  |     
|-------- |  | ------------------------------------------------------------------------------------------------------------ |  | ----
|         |  |                                                                                                              |  | Page
|PART I  
|         |  |                                                                                                             
|Item 1.  |  | Business                                                                                                     |  | 3   
|Item 1A. |  | Risk Factors                                                                                                 |  | 12  
|Item 1B. |  | Unresolved Staff Comments                                                                                    |  | 20  
|Item 2.  |  | Properties                                                                                                   |  | 21  
|Item 3.  |  | Legal Proceedings                                                                                            |  | 21  
|Item 4.  |  | Reserved                                                                                                     |  | 21  
|        
|PART II 
|         |  |                                                                                                             
|Item 5.  |  | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 22  
|Item 6.  |  | Selected Financial Data                                                                                      |  | 24  
|Item 7.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                        |  | 25  
|Item 7A. |  | Quantitative and Qualitative Disclosures About Market Risk                                                   |  | 35  
|Item 8.  |  | Financial Statements and Supplementary Data                                                                  |  | 36  
|Item 9.  |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                         |  | 65  
|Item 9A. |  | Controls and Procedures                                                                                      |  | 65  
|Item 9B. |  | Other Information                                                                                            |  | 65  
|        
|PART III
|         |  |                                                                                                             
|Item 10. |  | Directors, Executive Officers and Corporate Governance                                                       |  | 66  
|Item 11. |  | Executive Compensation                                                                                       |  | 66  
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               |  | 66  
|Item 13. |  | Certain Relationships and Related Transactions, and Director Independence                                    |  | 66  
|Item 14. |  | Principal Accountant Fees and Services                                                                       |  | 66  
|        
|PART IV 
|         |  |                                                                                                             
|Item 15. |  | Exhibits and Financial Statement Schedules                                                                   |  | 67  
|         |  | Signatures                                                                                                   |  | 69  



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Unless the context requires otherwise, references to the Company, we,
us, our, DDi, and DDi Corp. refer specifically to DDi Corp. and its consolidated subsidiaries. You should carefully consider the risk factors described below, as well as the other information included
in this Annual Report on Form 10-K prior to making a decision to invest in our securities. The risks and uncertainties described below are not the only ones facing our company. Additional risks and uncertainties not presently known or that we
currently believe to be less significant may also adversely affect us.

SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS

This document contains forward-looking statements  that is, statements related to future,
not past, events. In this context, forward-looking statements often address our assumptions, projections, targets, intentions or beliefs about expected future business and financial performance and financial condition. All statements other than
statements of historical facts included in this Annual Report on Form 10-K 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.

For us, particular uncertainties that could cause our actual
results to be materially different than those expressed in our forward-looking statements include: the severity and duration of current economic and financial conditions, including volatility in interest and exchange rates, commodity and equity
prices; the impact of U.S. and foreign government programs to restore liquidity and stimulate national and global economies; the impact of conditions in the financial and credit markets on the availability and cost of credit for DDi and its
customers; the level of demand and financial performance of the major industries we serve, including, without limitation, communications, computing, military/aerospace, industrial electronics, instrumentation and medical; increased competition;
increased costs; the impact of state, federal or foreign legislation or regulation; investigative and legal proceedings and legal compliance risks; strategic actions, including acquisitions and dispositions and our success in integrating acquired
businesses; and numerous other matters of national, regional and global scale, including those of a political, economic, business and competitive nature. These uncertainties are described in more detail in Part 1, Item 1A, Risk
Factors of this Annual Report on Form 10-K.

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



|Item 1. | Business.
|------- | ---------

Overview

We are a leading provider of time-critical, technologically-advanced printed circuit board
(PCB) engineering and manufacturing services. We specialize in engineering and fabricating complex multi-layer PCBs on a quick-turn basis, with lead times as short as 24 hours, and in manufacturing products with high levels of
complexity and reliability with low-to-moderate production volumes. We have approximately 1,100 PCB customers in various market segments including communications, computing, military/aerospace, industrial electronics, instrumentation, medical and
high-durability commercial markets. Our customers include both original equipment manufacturers (OEMs), electronic manufacturing services (EMS) providers, and military/aerospace companies. With such a broad customer base and
approximately 80 new PCB designs tooled per day, we have accumulated significant process and engineering expertise. Our core strength is developing innovative, high-performance solutions for customers during the engineering, test and launch phases
of their new electronic product development. Our entire organization is focused on rapidly and reliably filling complex customer orders and building long-term customer relationships. Our engineering capabilities and manufacturing facilities located
in the United States and Canada, together with our suppliers in Asia, enable us to respond to time-critical orders and technology challenges for our customers.

On December 31, 2009, we completed the acquisition of Coretec Inc. (Coretec), a publicly-held PCB manufacturer headquartered in Toronto, Canada. This acquisition will allow us to increase
our overall North American production capacity, extend our presence in the military/aerospace and medical markets and strengthen our flex and rigid-flex product capabilities. See Note 3 of the Notes to Consolidated Financial Statements
-Acquisition of Coretec Inc.

We operate in one reportable business segment through our primary operating subsidiary, DDi
Global Corp. Our consolidated revenues in 2009, 2008 and 2007 were $158.0 million, $190.8 million, and $181.1 million, respectively. Revenues are attributable to the country in which the customer buying the product is located. For additional
information about our geographical operations, see Note 2 of the Notes to Consolidated Financial Statements - Significant Accounting Policies.

Industry Overview

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

We see several significant trends within the PCB manufacturing industry, including:



| |  |  | Short product life cycles for electronics.Rapid advances in technology are significantly shortening product life-cycles and placing
increased pressure on OEMs to develop new products in shorter periods of time. In response to these pressures, OEMs look to PCB manufacturers to offer design and engineering support and quick-turn manufacturing services to reduce time to market.
Many OEMs, in an effort to increase electronic supply chain efficiency, work with a small number of technically qualified suppliers that have sophisticated manufacturing expertise and are able to offer a broad range of PCB products.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Increasing complexity of electronic equipment.OEMs are continually designing more complex and higher performance electronic equipment,
which requires sophisticated PCBs that accommodate higher signal speeds and frequencies and increased component densities and operating temperatures. Further, the semiconductor industry continues to design and manufacture integrated circuits with
higher speeds or smaller sizes and require PCBs to meet the densities of the semiconductor industry. In turn, OEMs rely on PCB manufacturers that can provide advanced engineering and manufacturing services early in the new product development cycle.
OEMs are also requiring more lead-free materials and other green products which add to the complexity of the materials utilized in the manufacturing of PCBs.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Military and aerospace products.The military/aerospace market is characterized by time-consuming and complex certification processes, long
product life cycles, and a unique combination of demand for leading-edge technology with extremely high reliability and durability. An increased focus on
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | incorporating technology in products for reconnaissance and intelligence combined with continued spending on military communications, aerospace, and weapons systems applications are anticipated
to drive steady end-market growth. Success in the military/aerospace market is generally achieved only after manufacturers demonstrate the long-term ability to pass extensive OEM and government certification processes, numerous product inspections,
audits for quality and performance, and extensive administrative requirements associated with participation in government programs. Export controls represent a barrier to entry for international competition as they restrict the overseas export of
defense-related materials, services, and sensitive technologies that are associated with government programs. In addition, the complexity of the end products serves as a barrier to entry to potential new suppliers.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Increased demand volatility in commercial end-markets.As a result of the continued downturn in the global economy, demand for PCBs from the
commercial sector, including the communications, computing, industrial electronics, and instrumentation markets, continues to be volatile. Companies operating in these industries, including existing or potential DDi customers, are experiencing
deterioration in their businesses, which in turn may cause them to delay or cancel orders from PCB manufacturers.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Shifting of high volume production to Asia.Asian-based PCB manufacturers have been able to capitalize on lower labor costs to increase
their market share of production of PCBs used in higher-volume consumer electronics applications, such as personal computers and cell phones. However, Asian-based manufacturers have generally been unable to meet the lead time requirements for the
production of complex PCBs on a quick-turn basis.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Estimates by two leading independent market research
firms indicate that the 2009 global market for PCBs (the most recent data available to us) was between $40.3 and $44.3 billion, with the Americas PCB market representing approximately $3.3 billion of that total.

Our Customer Solution

Our
customer solution combines reliable, time-critical, industry-leading engineering expertise and advanced process and manufacturing technologies. We play an integral role in our customers product development and manufacturing strategies. We
believe our core strengths in the engineering, test and launch phases of new electronic product development provide a competitive advantage in delivering our services to customers in industries characterized by significant research and development,
high-quality complex end product requirements, rapid product introduction cycles and demand for time-critical services.

Our
customers benefit from the following:



| |  |  | Customized engineering solutions.We are actively involved in the early stages of our customers product development cycles. This
positions us at the leading-edge of technical innovation in the engineering of complex PCBs. Our engineering and sales teams collaborate to identify the specific needs of our customers and work with them to develop innovative, high performance
solutions. This method of product development provides us with an in-depth understanding of our customers businesses and enables us to better anticipate and serve their needs.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Strong process and technology expertise.We deliver time-critical and highly complex manufacturing services through our advanced manufacturing
processes and material and technology expertise. We regularly manufacture PCBs with fine line circuitry and complex via structures. Vias are drilled holes which provide electrical connectivity between layers of circuitry in a PCB. All of our
production facilities are ISO-9001:2000 certified. These certifications require that we meet standards related to management, production and quality control, among others.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Military/aerospace capabilities.We provide a comprehensive product offering in the military/aerospace market and provide customers with
comprehensive PCB fabrication capabilities, exotic material expertise and technological experience. In addition, some of our production facilities are MIL-PRF-55110, AS9100, MIL-PRF-31032 and MIL-P-50884 certified, which require us to meet certain
military standards related to production and quality control.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Advanced manufacturing technologies.We are committed to manufacturing process improvements and focus on enhancing existing capabilities,
providing reliable products to our customers and developing new technologies. We are consistently among the first to adopt advances in PCB manufacturing technology. For example, we believe that we were the first PCB manufacturer in North America to
manufacture PCBs utilizing
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | stacked microvia, or SMVTMtechnology, and we continue to evolve the SMVTMtechnology with new and enhanced capabilities. Further, during 2007 we introduced the DDi FLAT-WRAP technology which addresses critical design and manufacturing issues for IPC Class 2 and
Class 3 copper wrap plating requirements. We believe we are the domestic leader in this technology.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Time-critical services.In addition to customized engineering solutions and advanced manufacturing technologies, we specialize in providing
time-critical, or quick-turn, PCB engineering and manufacturing services. Our engineering, fabrication and customer service systems enable us to respond to customers needs with quick-turn services. Our personnel are trained and experienced in
providing our services with speed and precision. For example, we are able to issue price quotes to our customers in hours, rather than days. Approximately 35% of our PCB sales in 2009 were generated from orders with manufacturing delivery of
10 days or less, and we fill some of our customers orders in as little as 24 hours. As we continue to increase our penetration into the military/aerospace market and see the complexity of our products increase, we expect the percentage of
our total sales with lead times of 10 days or less to continue to decline.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our Strategy

Our goal is to be the leading provider of technologically-advanced, time-critical PCB engineering and manufacturing services in North
America. To achieve this goal, through some combination of organic growth and corporate development activities, we:



| |  |  | Focus on engineering services and support for high-technology and complex PCBs.We focus on leading-edge engineering, high-technology,
high-reliability, high mix, low volume and complex PCBs because we believe it provides us a competitive advantage in the North American marketplace. This also enables us to better anticipate and serve our customers needs. We are able to work
with our customers to provide innovative and high performance solutions.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Maintain our technology leadership.We continually accumulate new technology and engineering expertise as we work closely with our broad
customer base in the introduction of their new products. We believe this expertise and ability positions us as an industry leader in providing technologically-advanced, time-critical services.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Continue to expand our presence in the military/aerospace market.We have targeted the military/aerospace market as a growth opportunity for DDi
as we believe this type of work is less likely to move offshore. Although historically DDi has been more focused on commercial markets, we believe this shift in focus may result in improved revenue growth in the future. In 2009, our sales in the
military/aerospace market increased approximately 21%. We intend to continue to pursue internal initiatives aimed at increasing our presence in the military/aerospace market and better serving existing customers within this market.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Focus on time-critical services.We focus on the quick-turn segment of the PCB industry. We target the time-critical services market
because the significant value of these services to our customers allows us to charge a premium and generate higher margins. We also believe that the market dynamics in recent years for time-critical services have been more stable than those of the
volume production market and that these services are more resistant to pricing pressure and commoditization, and are less likely to move offshore.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Continue to serve our large and diverse customer base.We believe that maintaining a broad customer base enables us to further enhance our
engineering expertise while reducing end-market and customer concentration risk. We maintain a sales and technical marketing staff focused solely on building and maintaining customer relationships. We are focused on becoming an integral part of
customers new product initiatives and work closely with their research and development personnel.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Pursue new customers and markets with high growth potential.We continue to pursue new customers with high growth characteristics and
target additional high growth end-markets that are characterized by rapid product introduction cycles and demand for time-critical services.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our Services

PCB Prototype, Design, Engineering and
Manufacturing.We engineer and manufacture highly complex, technologically-advanced multi-layer PCB prototypes on a quick-turn basis. Our advanced development and manufacturing technologies facilitate production with delivery times ranging
from 24 hours to 10 days.

Pre-Production and Production Fabrication Services.We provide quick-turn and
longer lead time pre-production fabrication services to our customers when they introduce products to the market and require PCBs in a short period of



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time. We also provide our customers low volume production fabrication services. Our pre-production and production fabrication services typically have delivery dates ranging from 2 days to
20 days, or longer in some cases. We do not specifically target the high-volume commercial markets which are more likely to have their PCB demands met from off-shore suppliers.

In addition to the engineering and manufacturing services we offer our customers from our eight facilities located in North America, we
also support customer requirements for a transition to higher volume needs by sourcing from facilities located in Asia. This transition support is a small part of our offering and approximates 2% of our net sales.

Manufacturing Technologies and Processes

The manufacture of PCBs involves multiple steps: etching the circuit image on copper-clad epoxy laminate, pressing the laminates together to form a panel, drilling holes and depositing copper or other
conductive material to form the inter-layer electrical connections and, lastly, cutting the panels to shape. Our advanced interconnect products require additional critical steps, including accurate dry film imaging, via filling, planarization,
photoimageable soldermask processing, computer numeric controlled mechanical drilling and routing, precision laser drilling, automated plating and process controls and achievement of controlled impedance.

Multi-layering, which involves placing multiple layers of electrical circuitry on a single PCB or backpanel, expands the number of circuits
and components that can be contained on the interconnect product and increases the operating speed of the system by reducing the distance that electrical signals must travel. Increasing the density of the circuitry in each layer is accomplished by
reducing the width of the circuit tracks and placing them closer together on the PCB or backpanel.

Interconnect products
having narrow, closely-spaced circuit tracks are known as fine line products. The manufacture of complex multi-layer interconnect products often requires the use of sophisticated circuit interconnections, called blind or buried vias, between PCB
layers and adherence to strict electrical characteristics to maintain consistent circuit transmission speeds, referred to as controlled impedance. These technologies require very tight lamination, drilling, plating and etching tolerances and are
especially critical for todays high-technology PCBs.

We use a number of advanced technologies which allow us to
manufacture complex PCBs with increased functionality and quality, including the following:



| |  |  | Laser direct imaging (LDI).LDI is a process that allows us to process high-density products by direct writing onto photoresist
with a high-precision laser technology. LDI is a high-resolution tool that is capable of imaging sub 0.002 inches/0.002 inches line/space and also gives us the ability to image solder mask especially where tolerances are tightly defined.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Blind or buried vias.Vias are drilled holes which, when plated with a conductive material, provide electrical connectivity between layers
of circuitry in a PCB. Blind vias connect the surface layer of the PCB to any inner layer. Buried vias are holes that do not reach either surface of the PCB but allow inner layers to be interconnected. Products with blind and buried vias can be made
thinner, smaller, lighter and with higher component density and more functionality than products with traditional vias, and may require fewer layers.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Laser drilling microvias.We have a variety of laser technologies capable of laser drilling any customer driven application including UV,
UV/CO2 and CO2. Microvias are small vias with diameters generally between 0.003 and 0.008 inches after laser drilling. The fabrication of PCBs with microvias requires specialized equipment and highly skilled process knowledge. These tools are also
capable of solder mask ablation and precision milling. Applications such as handheld wireless devices employ microvias to obtain a higher degree of functionality from a smaller given surface area. These products can be delivered in as little as
3 days.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Stacked microvias (SMV technology).Stacked microvias are microvias plated with solid copper that can be stacked, connecting as many
as six layers sequentially on each side of a center buried via core. This technology provides improved current carrying capability and thermal characteristics, planar surface for ball-grid array assembly and increased routing density for fine pitch
ball-grid arrays and flipchip devices. SMV technology provides solutions for next generation technologies that include high input/output count, 0.65mm, 0.50mm, 0.40mm and 0.25mm ball-grid array and flipchip devices. This is done by allowing
extra routing channels directly under the bonding pads, as compared to a conventional microvia that is limited to 1 or 2 layer deep routing. We believe we remain one of the leading PCB manufacturers in North America that currently offers fabrication
of PCBs utilizing SMV technology.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Buried passives.Buried passive technology involves embedding the capacitor and resistor elements inside the PCB, which allows for removal
of passive components from the surface of the PCB, leaving more surface area for active components. We have offered buried resistor products since the early 1990s. This technology is used
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | in the high speed interconnect space as well as single-chip or multi-chip modules, memory and high-speed switches. This process is used to eliminate surface mount resistors and allows for
termination to occur directly under other surface mounted components such as ball-grid arrays and quad-flat packs. We have offered embedded capacitance layers since the mid-1990s. The buried capacitance layers are currently used mostly as a signal
noise reduction method.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Fine line traces and spaces.Traces are the connecting copper lines between the different components of the PCB and spaces are the
distances between traces. The smaller the traces and tighter the spaces, the higher the density on the PCB and the greater the expertise required to achieve a desired final yield on a customer required order. We are able to provide 0.002 inch traces
and spaces.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | DDi FLAT-WRAP technology.Industry specifications for PCBs with certain designs require wrap-around copper plating for filled holes
on blind, buried and through via technology. Current industry practices produce excess plated copper on the surface of the required layer and limit the capability for manufacturing high-density surface features (line width and space dimensions).
DDis new FLAT-WRAP technology eliminates this excess surface plated copper and is compliant with the IPC specification for wrap plating and facilitates improved design capabilities. FLAT-WRAP technology is suited for
design applications with multiple wrap plating requirements and fine pitch line and space on plated layers, typically sequential lamination product or standard through hole via-in-pad technology requiring conductive or non-conductive via fill. This
technology is particularly beneficial for products in the high reliability and military/aerospace markets.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | High aspect ratios.The aspect ratio is the ratio between the thickness of the PCB and the diameter of a drilled hole. The higher the
ratio, the greater the difficulty to reliably form, electroplate and finish all the holes on a PCB. We are able to provide aspect ratios of up to 30:1. We are currently developing a solution to provide a 50:1 and greater aspect ratio.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | NextGen SMV technology. This newly developed technology will allow us to fabricate multi-layer PCBs by electrically connecting different
via configurations to accommodate customer designs with blind, buried and stacked microvias. The manufacturing process involves a parallel processing methodology that makes use of laser generated microvias and conductive pastes. NextGen SMV
will enable us to offer reduced lead times on complex, sequentially-laminated PCBs and is of value to customers with high aspect ratio requirements.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Thin core processing.A core is the basic inner-layer building block material from which PCBs are constructed. A core consists of a flat
sheet of material comprised of glass-reinforced resin with copper foil on either side. The thickness of inner-layer cores is determined by the overall thickness of the PCB and the number of layers required. The demand for thinner cores derives from
requirements of thinner PCBs, higher layer counts and various electrical parameters. Core thickness in our PCBs ranges from as little as 0.001 inches up to 0.062 inches.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Flexible and rigid-flex PCBs.The use of flexible and rigid-flex PCB technology offers certain advantages over traditional rigid PCBs.
Flexible printed circuits consist of copper conductive patterns that have been etched or printed while affixed to flexible substrate materials such as polyimide or polyester. The circuits are manufactured by subjecting the base materials to multiple
processes, such as drilling, screening, photo imaging, etching, plating and finishing. We manufacture flexible PCBs using a static or flex-to-install application which enables interconnection to be made between two or more
mechanical units in areas that have mechanical constraints or non-standard packaging that cannot accommodate conventional interconnects. This application is useful in the military/aerospace market.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

A rigid-flex PCB is a hybrid construction of rigid and flexible circuitry that is stacked and then laminated. Rigid-flex PCBs can accommodate
special mechanical and packing requirements while at the same time offer a high number of interconnections between two or more rigid boards. For this reason the rigid-flex PCB is often used in back plane or mother board
applications to interface multiple systems. The rigid-flex PCB offers superior reliability of interconnects in environments that are subject to vibration, shock and thermal extremes. The rigid flex application is frequently found in the
military/aerospace market and would include cockpit instrumentation, electronic warfare systems, missiles, rockets, satellites and radar.



| |  |  | Materials.We offer a full range of materials for microwave, radio frequency and high speed applications. These materials can be used in
hybrid stack-ups to allow for maximum performance in a cost-reduced package. We currently use approximately 50 different materials and have added environmentally friendly green materials such as halogen-free and materials suitable for
lead free assembly. The use of these materials requires advanced capabilities in the areas of drilling, hole cleaning, plating and registration.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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We are qualified under various industry standards, including Bellcore compliance for
communications products and Underwriters Laboratories approval for electronics products. All of our production facilities are ISO-9001:2000 certified. These certifications require that we meet standards related to management, production and quality
control, among others. In addition, some of our production facilities are MIL-PRF-55110, AS9100, MIL-PRF-31032 and MIL-P-50884 certified, which require us to meet certain military and aerospace standards related to production and quality control.

Our Customers and Markets

As of December 31, 2009, we had approximately 1,100 PCB customers in various market sectors including communications, computing, military/aerospace, industrial electronics, instrumentation, medical,
and high-durability commercial markets. We sell to OEMs both directly and through electronic manufacturing service companies. We measure customers as those companies that have placed at least one order with us in the preceding six-month period.
During 2009, 2008 and 2007, sales to our largest customer accounted for approximately 6%, 8%, and 8%, respectively, of our net sales. During 2009, 2008 and 2007, sales to our ten largest customers accounted for approximately 30%, 30% and 33%,
respectively, of our net sales.

The following table shows the percentage of our net sales attributable to each of the
principal end markets we served during the years ended December 31, 2009 and 2008. During 2008, we began tracking our end market sales data by the industry market segments defined by the IPC. This change was made to become more compliant with
industry reporting. As such, our 2009 and 2008 data are presented in slightly different categories than our 2007 end market data:



|                            |  |                         |   |  |      |  
|--------------------------- |  | ----------------------- | - |  | ---- | -
|                            |  | Year Ended December 31, |  
|                            |  | 2009                    |   |  | 2008 |  
|End Market (1)              |  |                         |   |  |      |  
|Communications              |  | 21                      | % |  | 24   | %
|Computer                    |  | 14                      |   |  | 22   |  
|Military/Aerospace          |  | 30                      |   |  | 21   |  
|Industrial Electronics      |  | 16                      |   |  | 17   |  
|Instrumentation and Medical |  | 11                      |   |  | 11   |  
|Consumer Electronics        |  | 7                       |   |  | 3    |  
|Automotive                  |  |                        |   |  | 1    |  
|Business Retail             |  | 1                       |   |  | 1    |  
|                            |  |                         |   |  |      |  
|Total                       |  | 100                     | % |  | 100  | %
|                            |  |                         |   |  |      |  



|(1) | Sales to EMS providers are classified by the end markets of their customers, if known to us, or to the primary market served by that EMS provider if not known.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

The following table shows the percentage of our net sales attributable to each of the principal end markets we
served for the year ended December 31, 2007 using our previously reported industry markets:



|                          |  |                            |  
|------------------------- |  | -------------------------- | -
|End Market (1)            |  | Year EndedDecember 31,2007 |  
|Communications/Networking |  | 34                         | %
|Medical/Test/Industrial   |  | 22                         |  
|High-end Computing        |  | 26                         |  
|Military/Aerospace        |  | 11                         |  
|Other                     |  | 7                          |  
|                          |  |                            |  
|Total                     |  | 100                        | %
|                          |  |                            |  



|(1) | Sales to EMS providers are classified by the end markets of their customers, if known to us, or to the primary market served by that EMS provider if not known.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

Sales and Marketing

Our sales and marketing efforts are focused on developing long-term relationships with research and development and new product introduction personnel at current and prospective customers. Our sales
personnel and engineering staff



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advise our customers with respect to applicable technology, manufacturing feasibility of designs and cost implications through on-line computer technical support and direct customer
communication. Our customers are serviced by a support team consisting of sales, engineering, manufacturing and customer service employees.

We market our development and manufacturing services through both an internal sales force and manufacturers representatives. Approximately 75% of our net sales are typically generated through our
internal sales force with the balance generated through manufacturers representatives. For many of these manufacturers representatives, we are their largest revenue source and their exclusive supplier of quick-turn and pre-production
PCBs.

Research and Development

We maintain a strong commitment to research and development and focus our efforts on enhancing existing capabilities as well as developing new technologies and integrating them across all of our
facilities. Our close involvement with our customers in the early stages of their product development cycle positions us at the leading-edge of technical innovation in the design and manufacture of quick-turn and complex PCBs. Our experienced
engineers, chemists and laboratory technicians work in conjunction with our sales staff to identify specific needs and develop innovative, high performance solutions to customer issues and to align our technology roadmap with that of our customers.
Because our research and development efforts are an integral part of our production process, our research and development expenditures are not separately identifiable. Accordingly, we do not segregate these costs as a separate item, but instead
include such costs in our consolidated financial statements as part of cost of goods sold.

Proprietary Processes

We believe our business depends on our effective execution of fabrication techniques and our ability to improve our manufacturing processes
to meet evolving industry standards. Depending on our technology strategy, we may periodically enter into joint technology development agreements with certain of our suppliers to develop new processes. We generally enter into confidentiality and
non-disclosure agreements with our employees, consultants, vendors and customers, as needed, and generally limit access to and distribution of our proprietary information and processes. We have also recently filed patent applications with respect to
certain manufacturing processes of which one has been issued.

Our Suppliers

Our raw materials inventory must be regularly and rapidly replenished. We use just-in-time procurement practices to maintain raw materials
inventory at low levels and we utilize preferred suppliers for some of these materials. We evaluate all of our suppliers and create strategic relationships where appropriate. Adequate amounts of all raw materials have been available in the past, and
we believe this will continue in the foreseeable future. As part of our strategy to migrate the risk of a long-term supply shortage, we have expanded our evaluation of suppliers and begun to include those domiciled in Asia.

The primary raw materials that we use in production are core materials (copperclad layers of fiberglass of varying thickness impregnated
with bonding materials), chemical solutions (copper, gold, etc.) for plating operations, photographic film and carbide drill bits. We work closely with our suppliers to incorporate technology advances in the raw materials we purchase.

Competition

Our principal
competitors include Viasystems Group, Inc., TTM Technologies, Endicott Interconnect Technologies, FTG, Multek Corporation (a division of Flextronics International Ltd.), Sanmina-SCI, and a number of smaller companies. The barriers to entry in the
quick-turn segment of the PCB industry are many. In order to compete effectively in this industry, companies must have a sufficient customer base, a staff of qualified sales and marketing personnel, considerable engineering resources and the proper
tooling and equipment to permit fast and reliable product turnaround.

We believe we compete favorably based on the following
factors:



| |  |  | ability to offer quick time-to-market capabilities (North American market leader);
| | - |  | ----------------------------------------------------------------------------------



| |  |  | capability and flexibility to produce technologically complex products;
| | - |  | -----------------------------------------------------------------------



| |  |  | engineering and design services to complement the manufacturing process;
| | - |  | ------------------------------------------------------------------------



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| |  |  | additional available manufacturing capacity without significant additional capital expenditures;
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | consistent high-quality products; and
| | - |  | -------------------------------------



| |  |  | outstanding customer service.
| | - |  | -----------------------------

Backlog

Although we obtain firm purchase orders from our customers, our customers typically do not make firm
orders for delivery of products more than 30 to 90 days in advance. We do not believe the backlog of expected product sales covered by firm purchase orders is a meaningful measure of future sales since orders may be rescheduled or canceled and
a significant portion of our sales result from orders with manufacturing delivery of less than 10 days.

Environmental Matters

PCB manufacturing requires the use of a variety of materials, including metals and chemicals. As a result, our operations are
subject to certain federal, state and local laws and regulatory requirements relating to environmental compliance and site cleanups, waste management and health and safety matters. Among others, we are subject to regulations promulgated by:



| |  |  | the Occupational Safety and Health Administration pertaining to health and safety in the workplace;
| | - |  | ---------------------------------------------------------------------------------------------------



| |  |  | the Environmental Protection Agency pertaining to the use, storage, discharge and disposal of hazardous chemicals used in the manufacturing processes.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------

We are required to comply with various regulations relating to the storage, use, labeling, disposal and
human exposure to chemicals, solid waste and other hazardous materials, as well as air quality regulations. Many of our activities are also subject to permits issued by authorized governmental agencies. These permits must be renewed periodically and
are subject to revocation in the event of violations of environmental laws. Certain waste materials and byproducts generated by our manufacturing processes are either processed by us or sent to third parties for recycling, reclamation, treatment or
disposal. Water used in our manufacturing process must be properly treated prior to discharge.

We incur expenses relating to
compliance with these laws and regulations. To date, the costs of compliance and environmental remediation have not been material to us. Nevertheless, additional or modified requirements may be imposed in the future. If such additional or modified
requirements are imposed on us, or if conditions requiring remediation were found to exist, we may be required to incur substantial additional expenditures.

Employees

As of December 31, 2009, we had approximately 1,604
employees, none of whom were represented by unions. Of these employees, approximately 80% were involved in manufacturing, 7% were involved in engineering, 7% were involved in sales and marketing and 6% were involved in administration and other
capacities. We have not experienced any labor problems resulting in a work stoppage and believe we have good relations with our employees.

Executive Officers of the Registrant

The following table sets forth the executive officers of DDi Corp., their
ages as of March 12, 2010, and the positions currently held by each person:



|                   |  |     |  |                                                  
|------------------ |  | --- |  | -------------------------------------------------
|Name               |  | Age |  | Position                                         
|Mikel H. Williams  |  | 53  |  | President, Chief Executive Officer and Director  
|J. Michael Dodson  |  | 49  |  | Senior Vice President and Chief Financial Officer
|Michael R. Mathews |  | 49  |  | Senior Vice President  Manufacturing Operations 
|Gerald P. Barnes   |  | 51  |  | Senior Vice President  Sales                    

Executive officers are elected by, and serve at the discretion of, the Board of Directors. There are no arrangements or understandings pursuant to which any of the persons listed below were selected as an executive officer.

Mikel H. Williamshas served as President and Chief Executive Officer since November 2005. From November 2004 to October 2005,
Mr. Williams served as Senior Vice President and Chief Financial Officer of the Company. Before joining the Company, Mr. Williams served as the sole member of Constellation Management Group, LLC providing strategic, operational and
financial/capital advisory consulting services to companies in the telecom, software and high-tech



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industries from May to November 2004; and as Chief Operating Officer of LNG Holdings, a European telecommunications company where he oversaw the restructuring and sale of the business from June
2002 to December 2003. Prior to that, from November 1996 to June 2001, Mr. Williams held the following executive positions with Global TeleSystems, Inc. and its subsidiaries, a leading telecommunications company providing data and internet
services in Europe: Senior Vice President, Ebone Sales from December 2000 through June 2001; President, GTS Broadband Services from August 2000 through November 2000; President, GTS Wholesale Services from January 2000 through July 2000; and prior
thereto, Vice President, Finance of Global TeleSystems, Inc. Mr. Williams began his career as a certified public accountant in the State of Maryland working as an auditor for Price Waterhouse. Mr. Williams holds a bachelor of science
degree in Accounting from the University of Maryland and a Masters of Business Administration from Georgetown University.

J. Michael Dodsonhas served as Senior Vice President and Chief Financial Officer of the Company since January 2010. Before joining the Company, Mr. Dodson served as a partner at Tatum, LLC, a provider of executive services on
an interim or special project basis, from October 2009 to January 2010. From December 2005 to January 2009, Mr. Dodson served as Chief Financial Officer of eTelecare Global Solutions, Inc., a provider of business process outsourcing services.
From May 2003 to December 2005, Mr. Dodson served as Senior Vice-President of Administration and Chief Financial Officer of Electro Scientific Industries, Inc., a supplier of production laser systems for microengineering applications. From July
1999 to December 2002, Mr. Dodson served as Chief Financial Officer of SpeedFam-IPEC, Inc., a developer of semiconductor equipment. Mr. Dodson also previously served as Corporate Controller and Chief Accounting Officer for Novellus
Systems, an S&P 500 high technology manufacturer of semiconductor equipment. Mr. Dodson holds a B.B.A. with majors in Accounting and Information Systems Analysis and Design from the University of Wisconsin-Madison.

Michael R. Mathewshas served as the Companys Senior Vice President  Manufacturing Operations since September 2006.
From February to September 2006, he served as the Companys Vice President of Quality and Process Engineering. Prior to joining the Company, Mr. Mathews served in various management roles with Sanmina-SCI, an electronics manufacturing
services company, from July 1995 to February 2006, most recently as Vice President Operations & Quality, PWB and Enclosures. While at Sanmina-SCI, Mr. Mathews also served as Operations Manager, Vice President American Eastern Region
Enclosure Division and Vice President and General Manager PCB Division. Mr. Matthews joined Raytheon Company in August of 1983 in the Missile Systems Division, where he rose to Manufacturing Operations Manager prior to his departure in July
1995. Mr. Mathews began his career at Lockheed Missiles and Space where he worked from July 1982 to August 1983. Mr. Mathews holds a Bachelor of Science degree in Chemical Engineering and a Master of Science degree in Plastics Engineering
both from the University of Massachusetts Lowell.

Gerald P. Barneshas served as Senior Vice President 
Sales of the Company since January 2007. Before joining the Company, Mr. Barnes served as Vice President of Sales for TTM Technologies, a PCB manufacturer, from September 2005 to January 2007. From 2004 to 2005, he served as Vice President of
Sales and Marketing for Cosmotronic, a PCB manufacturer. Mr. Barnes served as President and Chief Executive Officer of Winonic, Inc., a privately held PCB design and manufacturing company, from 2003 to 2004. From 1990 to 2003, he served in
numerous capacities for the Advanced Interconnect Division of Toppan Electronics, a division of Toppan Printing Co. Ltd., including President and Chief Operating Officer from 1999 to 2003, Vice President of Sales and Marketing from 1995 to 1999, and
Director of Sales and Marketing from 1993 to 1995. Mr. Barnes holds a Bachelor of Science in Business Administration from Delaware State University.

Available Information

Our Internet address is www.ddiglobal.com. There we
make available, free of charge, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports, as soon as reasonably practicable after we electronically file such
material with or furnish it to the Securities and Exchange Commission (SEC). Our SEC reports can be accessed through the investor relations section of our website. Reports filed with the SEC may be viewed at www.sec.gov or
obtained at the SEC Public Reference Room in Washington, D.C. Information regarding the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. References to our website addressed in this Annual Report on Form
10-K are provided as a convenience and do not constitute, or should be viewed as, an incorporation by reference of the information contained on, or available through, the website. Therefore, such information should not be considered part of this
Annual Report on Form 10-K.



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

Current conditions
in the global economy and the major industry sectors that we serve may materially and adversely affect our business and results of operations.

Our business and operating results will continue to be affected by worldwide economic conditions and, in particular, conditions in the communications, computing, military/aerospace, industrial
electronics, instrumentation, medical, high-durability commercial markets, and other significant industries we serve. As a result of slowing global economic growth, the credit market crisis, declining consumer and business confidence, increased
unemployment, reduced levels of capital expenditures, fluctuating commodity prices, bankruptcies and other challenges currently affecting the global economy, our customers may experience deterioration of their businesses, cash flow shortages, and
difficulty obtaining financing. As a result, existing or potential customers may delay or cancel plans to purchase products produced by our customers which would have a material adverse effect on us. Further, our vendors may be experiencing similar
conditions, which may impact their ability to fulfill their obligations to us. Although the Obama Administration in the United States has enacted various, and may enact additional, economic stimulus programs, there can be no assurance as to the
effectiveness of these programs, and with respect to future programs, the timing and effectiveness, of these programs. If the global economic slowdown continues for a significant period or there is significant further deterioration in the global
economy, our results of operations, financial position and cash flows could be materially adversely affected.

There are risks in owning
our common stock.

The market price and volume of our common stock have been, and may continue to be, subject to
significant fluctuations. These may arise from general stock market conditions, the impact of the risk factors described above on our financial condition and results of operations, a change in sentiment in the market regarding us or our business
prospects or from other factors, many of which are beyond our control. These factors include, among other things, actual or anticipated variations in our operating results and cash flows, 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 industry, the amount and frequency of share repurchases, governmental legislation or
regulation, currency and exchange rate fluctuations, as well as general economic and market conditions. Our common stock is listed on the NASDAQ Global Market. 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 on the NASDAQ Global Market.

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 a number of purposes, including:



| |  |  | to fund our operations beyond 2010;
| | - |  | -----------------------------------



| |  |  | 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. Further, if we attempt to obtain future additional financing, the issues facing the credit market could negatively impact our ability to obtain such financing.



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We may issue additional shares of common stock that may dilute the value of our common stock and
adversely affect the market price of our common stock.

In addition to the approximately 19.8 million shares of
our common stock outstanding at December 31, 2009, we may issue additional shares of common stock in the following scenarios:



| |  |  | up to approximately 3.2 million shares of our common stock may be required to be issued pursuant to outstanding and/or future equity compensation
awards;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a significant number of additional shares of our common stock may be issued if we seek to raise capital through offerings of our common stock,
securities convertible into our common stock, or rights to acquire such securities or our common stock.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

A
large issuance of shares of our common stock, in any or all of the above scenarios, will decrease the ownership percentage of current outstanding stockholders and will likely result in a decrease in the market price of our common stock. Any large
issuance may also result in a change in control of DDi.

The terms of any future credit facility may restrict our financial and
operational flexibility.

We are currently negotiating an asset-backed credit facility with a new lender. If we enter
into such a credit facility it will likely 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 other persons, or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of our assets. Further, we may be required to maintain specified financial ratios and satisfy certain
financial conditions. Our ability to meet those financial ratios and tests can be affected by events beyond our control, and there can be no assurance that we would meet those tests.

We are dependent upon the electronics industry, which is highly cyclical and suffers significant downturns in demand resulting in excess manufacturing capacity and increased price competition.

The electronics industry, on which a substantial portion of our business depends, is cyclical and subject to
significant downturns characterized by diminished product demand, rapid declines in average selling prices and over-capacity. This industry has experienced periods characterized by relatively low demand and price depression and is likely to
experience recessionary periods in the future. Economic conditions affecting the electronics industry in general, or specific customers in particular, have adversely affected our operating results in the past and may do so in the future.

The electronics industry is characterized by intense competition, rapid technological change, relatively short product life cycles and
pricing and profitability pressures. These factors adversely affect our customers and we suffer similar effects. Our customers are primarily high-technology equipment manufacturers in the communications and computing, military and aerospace,
industrial electronics, instrument, medical, and high-durability commercial markets of the electronics industry. Due to the uncertainty in the markets served by most of our customers, we cannot accurately predict our future financial results or
accurately anticipate future orders. At any time, our customers can discontinue or modify products containing components manufactured by us, adjust the timing of orders and shipments or affect our mix of consolidated net sales generated from
quick-turn and premium services revenues versus standard lead time production, any of which could have a material adverse effect on our results of operations.

Our customers are subject to economic cycles and fluctuations in product demand. A significant downturn in demand for our customers products would similarly affect demand for our products and
as such, our sales, gross margin and operating performance would be adversely affected.

Our customers that purchase
PCB 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 sales, gross margin and operating performance.



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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 performance and cash flows may not be indicative of our future operating performance 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 sales 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.

In addition, the PCB
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. It is possible that
we will not 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. It is possible that we will not be able to obtain capital for these purposes in the future or that any investments in new technologies will not result in commercially
viable technological processes.

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 primarily 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 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 revenue, and a reduction in demand from, or an inability to pay by, this core group could adversely affect our
revenue.

Although we have a large number of customers, net sales to our ten largest customers accounted for
approximately 30%, 30% and 33% of our net sales in 2009, 2008 and 2007, respectively. We may continue to depend upon a core group of customers for a material percentage of our net sales in the future. 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 and cash flows 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 quick-turn orders.
However, if these orders are not received, we could experience losses due to excess capacity. Whenever we experience excess capacity, our revenue may be insufficient to fully cover our fixed overhead expenses and our gross margins would 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 PCB industry is highly fragmented and characterized by intense competition. We principally compete with independent and captive
manufacturers of complex quick-turn and longer-lead PCBs. 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 PCBs. We also expect that competition will increase as a result of industry consolidation.



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Some of our competitors and potential competitors may have a number of advantages over us,
including:



| |  |  | significantly greater financial, technical, marketing and manufacturing resources;
| | - |  | ----------------------------------------------------------------------------------



| |  |  | preferred vendor status with some of our existing and potential customers;
| | - |  | --------------------------------------------------------------------------



| |  |  | more focused production facilities that may allow them to produce and sell products at lower price points;
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | more capital; and
| | - |  | -----------------



| |  |  | larger customer bases.
| | - |  | ----------------------

In addition, these competitors may have the ability to respond more quickly to new or emerging technologies, be more successful in entering or adapting to existing or new end markets, adapt more quickly
to changes in customer requirements and devote greater resources to the development, promotion and sale of their products than we can. Consolidation in the PCB industry, which we expect to continue, could result in an increasing number of larger PCB
companies with greater market power and resources. Such consolidation could in turn increase price competition and result in other competitive pressures for us.

For us to be competitive in the quick-turn sector, we must maintain a large customer base, a large staff of qualified 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 PCB manufacturers based in Asia and other locations with lower production costs may play an increasing role in the PCB markets in which we compete. While PCB manufacturers in these locations have historically competed
primarily in markets for less technologically-advanced products with high volumes, they are expanding their manufacturing capabilities to produce higher layer count and higher technology PCBs. In the future, competitors in Asia may be able to
effectively compete in our higher technology markets, which may result in decreased net sales or force us to lower our prices, reducing our gross margins.

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.

We manufacture highly complex products to our customers specifications. These products may contain manufacturing errors or failures
despite our quality control and quality assurance efforts. Defects in the products we manufacture, whether caused by a design, manufacturing or materials failure or error, may result in delayed shipments, increased warranty costs, 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. Since our products are used in products that are integral to our
customers businesses, errors, defects or other performance problems could result in financial or other damages to our customers beyond the cost of the PCB, for which we may be liable in some cases. Although we generally attempt to sell our
products on terms designed to limit our exposure to warranty, product liability and related claims, in certain cases, the terms of our agreements allocate to us substantial exposure for product defects. In addition, even if we can contractually
limit our exposure, existing or future laws or unfavorable judicial decisions could negate these limitation of liability provisions. Product liability litigation against us, even if it were 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
in defense of allegations that we infringe others intellectual property rights. These claims and any resulting litigation could subject us to significant



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liability for damages and invalidate our property rights. In addition, these lawsuits, regardless of their merits, could be time consuming and expensive to resolve and could 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 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 solutions 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.

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 Mikel H. Williams, our President and Chief Executive Officer. 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, potential future facility shutdowns and workforce reductions could 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.



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We rely on suppliers for the timely delivery of materials used in manufacturing our PCBs, and an
increase in industry demand or a shortage of raw materials may increase the price of the raw materials we use and may limit our ability to manufacture certain products and adversely impact our gross margins.

To manufacture our PCBs, we use materials such as laminated layers of fiberglass, copper foil and chemical solutions which we order from our
suppliers. Suppliers of laminates and other raw materials that we use may from time to time extend lead times, limit supplies or increase prices due to capacity constraints or other factors, which could adversely affect our gross margins and our
ability to deliver our products on a timely basis. In previous years we experienced, and may experience again, increases in the cost of materials, including laminate, copper products, gold, and oil-based or oil-derivative raw materials, which could
adversely impact our gross margins. Some of our products use types of laminates that are only available from a single supplier that holds a patent on the material. Although other manufacturers of advanced PCBs also must use the single supplier and
our OEM customers generally determine the type of laminates used, a failure to obtain the material from the single supplier for any reason may cause a disruption, and possible cancellation, of orders for PCBs using that type of laminate, which in
turn would cause a decrease in our sales.

Our recent acquisition of Coretec Inc. or future acquisitions may be costly and difficult to
integrate, may divert management resources and may dilute shareholder value.

As part of our business strategy, we
have made and may continue to make acquisitions of, or investments in, companies, products or technologies that complement our current products, augment our market coverage, enhance our technical capabilities or production capacity or that may
otherwise offer growth opportunities. In connection with our Coretec acquisition or any future acquisitions or investments, we could experience:



| |  |  | problems integrating the purchased operations, technologies or products;
| | - |  | ------------------------------------------------------------------------



| |  |  | failure to achieve potential sales, materials costs and other synergies:
| | - |  | ------------------------------------------------------------------------



| |  |  | unanticipated expenses and working capital requirements, including those associated with assumed actual or contingent liabilities;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------



| |  |  | difficulty achieving sufficient sales to offset increased expenses associated with acquisitions;
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | diversion of managements attention;
| | - |  | ------------------------------------



| |  |  | adverse effects on business relationships with our or the acquired companys suppliers and customers;
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | difficulty in entering markets in which we have limited or no prior experience;
| | - |  | -------------------------------------------------------------------------------



| |  |  | losses of key employees, particularly those of the acquired organization; and
| | - |  | -----------------------------------------------------------------------------



| |  |  | problems implementing adequate internal controls and procedures.
| | - |  | ----------------------------------------------------------------

In addition, in connection with any future acquisitions or investments, we could:



| |  |  | issue stock that would dilute our current stockholders percentage ownership;
| | - |  | -----------------------------------------------------------------------------



| |  |  | incur debt and assume liabilities that could impair our liquidity;
| | - |  | ------------------------------------------------------------------



| |  |  | incur amortization expenses related to intangible assets; or
| | - |  | ------------------------------------------------------------



| |  |  | incur large and immediate write-offs that would negatively impact our results of operations.
| | - |  | --------------------------------------------------------------------------------------------

Any of these factors could prevent us from realizing anticipated benefits of an acquisition or investment, including operational synergies,
economies of scale and increased profit margins and revenue. Acquisitions are inherently risky, and any acquisition may not be successful. Failure to manage and successfully integrate acquisitions could harm our business and operating results in a
material way.



17



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##### Table of Contents

We may be unable to realize anticipated synergies or may incur additional costs in connection with the
Coretec acquisition.

We have identified annual cost synergies in connection with the Coretec acquisition, consisting
of the elimination of redundant corporate costs, selling, general and administrative expense reductions, materials savings and other rationalizations, in addition to the potential for revenue synergies. While management believes that these synergies
are achievable, we may be unable to realize all of these synergies within the timeframe expected, or at all. In addition, we may incur additional and/or unexpected costs in order to realize these synergies.

Damage to our manufacturing facilities due to fire, natural disaster, or other event could harm our financial results.

We have manufacturing facilities in California, Colorado, Ohio, Virginia, and Ontario, Canada. The destruction or closure of any of our
facilities for a significant period of time as a result of fire; explosion; blizzard; act of war or terrorism; or flood, tornado, earthquake, lightning, or other natural disaster could harm us financially, increasing our costs of doing business and
limiting our ability to deliver our manufacturing services on a timely basis.

Pending or future litigation could have a material
adverse effect on our operating results and financial condition.

We are involved, from time to time, in litigation
incidental to our business. This litigation could result in substantial costs and could divert managements attention and resources which could harm our business. Risks associated with legal liability are often difficult to assess or quantify,
and their existence and magnitude can remain unknown for significant periods of time. In cases where we record a liability, the amount of our estimates could be wrong. In addition to the direct costs of litigation, pending or future litigation could
divert managements attention and resources from the operation of our business. While we maintain director and officer insurance, the amount of insurance coverage may not be sufficient to cover a claim and the continued availability of this
insurance cannot be assured. As a result, there can be no assurance that the actual outcome of pending or future litigation will not have a material adverse effect on our results of operations or financial condition.

A trend toward consolidation among our customers could adversely affect our business.

Recently, some of our large customers have consolidated and further consolidation of customers may occur. Depending on which organization
becomes the controller of the supply chain function following the consolidation, we may not be retained as a preferred or approved supplier. In addition, product duplication could result in the termination of a product line that we currently
support. While there is potential for increasing our position with the combined company, the potential exists for decreased revenue if we are not retained as a continuing supplier. We also face the risk of increased pricing pressure from the
combined customer because of its increased market share.

We are exposed to the credit risk of some of our customers and to credit
exposures in weakened markets.

Most of our sales are on an open credit basis, with standard industry
payment terms. We monitor individual customer payment capability in granting such open credit arrangements, seek to limit such open credit to amounts we believe the customers can pay, and maintain reserves we believe are adequate to cover exposure
for doubtful accounts. During periods of economic downturn in the electronics industry and the global economy, our exposure to credit risks from our customers increases. Although we have programs in place to monitor and mitigate the associated
risks, such programs may not be effective in reducing our credit risks.

Our 10 largest customers accounted for approximately
30% of our net sales in 2009. Additionally, our OEM customers often direct a significant portion of their purchases through a relatively limited number of EMS companies. Our contractual relationship is often with the EMS companies, who are obligated
to pay us for our products. Because we expect our OEM customers to continue to direct our sales to EMS companies, we expect to continue to be subject to the credit risk with a limited number of EMS customers. If one or more of our significant
customers were to become insolvent or were otherwise unable to pay us, our results of operations would be harmed.

Some of our
customers are EMS companies located abroad. Our exposure has increased as these foreign customers continue to expand. Our foreign sales are denominated in U.S. dollars and are typically on the same open credit basis and terms described
above. Our foreign receivables were approximately 18% of our net accounts receivable as of December 31, 2009 and are expected to continue to grow as a percentage of our total receivables. We do not utilize credit insurance as a risk management
tool.



18



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##### Table of Contents

The increasing prominence of EMS providers in the PCB industry could reduce our gross margins,
potential sales, and customers.

Sales to EMS providers represented approximately 34% of our net sales in 2009. Sales
to EMS providers include sales directed by OEMs as well as orders placed with us at the EMS providers discretion. EMS providers source on a global basis to a greater extent than OEMs. The growth of EMS providers increases the purchasing power
of such providers and could result in increased price competition or the loss of existing OEM customers. In addition, some EMS providers, including some of our customers, have the ability to directly manufacture PCBs. If a significant number of our
other EMS customers were to acquire these abilities, our customer base might shrink, and our sales might decline substantially. Moreover, if any of our OEM customers outsource the production of PCBs to these EMS providers, our business, results of
operations, and financial condition may be harmed.

Increasingly, our larger customers are requesting that we enter into supply
agreements with them that have increasingly restrictive terms and conditions. These agreements typically include provisions that increase our financial exposure, which could result in significant costs to us.

Increasingly, our larger customers are requesting that we enter into supply agreements with them. These agreements typically include
provisions that generally serve to increase our exposure for product liability and warranty claims  as compared to our standard terms and conditions  which could result in higher costs to us as a result of such claims. In addition, these
agreements typically contain provisions that seek to limit our operational and pricing flexibility and extend payment terms, which can adversely impact our cash flow and results of operations.

We export military and commercial products from the United States to other countries. If we fail to comply with export laws, we could be subject to
fines and other punitive actions.

Exports from the United States are regulated by the U.S. Department of State and
U.S. Department of Commerce. Failure to comply with these regulations can result in significant fines and penalties. Additionally, violations of these laws can result in punitive penalties, which would restrict or prohibit us from exporting certain
products, resulting in significant harm to our business.

We may not be able to fully recover our costs for providing design services to
our customers, which could harm our financial results.

Although we enter into design service activities with purchase
order commitments, the cost of labor and equipment to provide these services may in fact exceed what we are able to fully recover through purchase order coverage. We also may be subject to agreements with customers in which the cost of these
services is recovered over a period of time or through a certain number of units shipped as part of the ongoing product price. While we may make contractual provisions to recover these costs in the event that the product does not go into production,
the actual recovery can be difficult and may not happen in full. In other instances, the business relationship may involve investing in these services for a customer as an ongoing service not directly recoverable through purchase orders. In any of
these cases, the possibility exists that some or all of these activities are considered costs of doing business, are not directly recoverable, and may adversely impact our operating results.

We may have exposure to income tax rate fluctuations as well as to additional tax liabilities, which would impact our financial position.

We are subject to taxes in the United States and Canada. Our effective tax rate is subject to fluctuation as the income tax
rates for each year are a function of the following factors, among others:



| |  |  | the effects of a mix of profits or losses earned by us and our subsidiaries in numerous tax jurisdictions with a broad range of income tax rates;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to utilize net operating losses;
| | - |  | --------------------------------------------



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##### Table of Contents

| |  |  | changes in contingencies related to taxes, interest or penalties resulting from tax audits; and
| | - |  | -----------------------------------------------------------------------------------------------



| |  |  | changes in tax laws or the interpretation of such laws.
| | - |  | -------------------------------------------------------

Changes in the mix of these items and other items may cause our effective tax rate to fluctuate between periods, which could have a material
adverse effect on our financial position.

In addition, changes in the ownership of our common stock could further limit our
ability to utilize our net operating losses, which could have a material adverse effect on our financial position.

We are
also subject to non-income taxes, such as payroll, sales, use, value-added, net worth, property and goods and services taxes, in both the United States and Canada.

Significant judgment is required in determining our provision for income taxes and other tax liabilities. Our tax determinations are regularly subject to audit by tax authorities, and developments in
those audits could adversely affect our income tax provision. Although we believe that our tax estimates are reasonable, the final determination of tax audits or tax disputes may be different from what is reflected in our historical income tax
provisions, which could affect our operating results.

We are subject to risks associated with currency fluctuations, which could have a
material effect on our results of operations and/or financial condition.

A portion of our cash and other current
assets is held in the Canadian dollar. Changes in the exchange rates of the Canadian dollar and the U.S. dollar will affect the value of these assets as translated to U.S. dollars on our balance sheet. To the extent that we ultimately decide to
repatriate some portion of these funds to the United States, the actual value transferred could be impacted by movements in exchange rates. Any such type of movement could negatively impact the amount of cash available to fund operations or to repay
debt.

In addition, a portion of our business operations are transacted in Canadian dollars, and as a result, similar changes
in exchange rates of the Canadian dollar and the U. S. dollar could result in exchange losses, which could impact our results of operations.

The impact of future exchange rate fluctuations on our results of operations and/or financial condition cannot be predicted.



|Item 1B. | Unresolved Staff Comments.
|-------- | --------------------------

None.



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##### Table of Contents

|Item 2. | Properties.
|------- | -----------

We lease approximately 367,000 square feet of building space in locations throughout North America for the manufacture of quick-turn PCBs and administrative purposes. Our lease agreements expire at various dates through 2014 and
represent an average annual commitment of approximately $2.2 million.

We also own four buildings with remaining mortgages
totaling approximately $4.6 million at December 31, 2009 and that consist of approximately 256,000 square feet of manufacturing and office space. Associated with these buildings are land parcels totaling approximately 18.5 acres.

Our significant facilities are as follows:



|                     |  |                                          |  |                     
|-------------------- |  | ---------------------------------------- |  | --------------------
|Location             |  | Primary Function                         |  | Square Feet(Approx.)
|Sterling, Virginia   |  | Manufacturing                            |  | 101,000             
|Anaheim, California  |  | Manufacturing and corporate headquarters |  | 90,000              
|Milpitas, California |  | Manufacturing                            |  | 72,000              
|Toronto, Canada(1)   |  | Manufacturing                            |  | 211,000             
|North Jackson, Ohio  |  | Manufacturing                            |  | 77,000              
|Cuyahoga Falls, Ohio |  | Manufacturing                            |  | 40,000              
|Littleton, Colorado  |  | Manufacturing                            |  | 24,000              
|Richardson, Texas    |  | Data Center                              |  | 8,000               
|                     |  |                                          |  |                     
|Total                |  |                                          |  | 623,000             
|                     |  |                                          |  |                     



|(1) | Represents three Toronto facilities: Sheppard, McNicoll and Ellesmere. We are in the process of consolidating all Toronto manufacturing locations into
the 125,000 square foot Sheppard facility.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We believe that our current facilities are sufficient for the
operation of our business and we believe that suitable additional space in various local markets is available to accommodate any needs that may arise.



|Item 3. | Legal Proceedings.
|------- | ------------------

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



|Item 4. | Reserved.
|------- | ---------



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##### Table of Contents

PART II



|Item 5. | Market for the Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
|------- | -----------------------------------------------------------------------------------------------------------------

Market for Common Stock

Our common stock is traded on the NASDAQ Global Market under the symbol DDIC.

The following table sets forth the high and low sales prices per share of our common stock for the quarterly periods indicated, which correspond to our quarterly fiscal periods for financial reporting purposes.



|                                     |  |                       |      |     |   |     
|------------------------------------ |  | --------------------- | ---- | --- | - | ----
|                                     |  | DDi Corp.Common
Stock
|                                     |  | High                  |      | Low
|Fiscal Year Ended December 31, 2009: |  |                       |      |     |   |     
|Fourth Quarter                       |  | $                     | 5.10 |     | $ | 3.78
|Third Quarter                        |  | $                     | 5.16 |     | $ | 3.88
|Second Quarter                       |  | $                     | 5.07 |     | $ | 3.07
|First Quarter                        |  | $                     | 3.75 |     | $ | 2.76
|Fiscal Year Ended December 31, 2008: |  |                       |      |     |   |     
|Fourth Quarter                       |  | $                     | 5.09 |     | $ | 2.55
|Third Quarter                        |  | $                     | 6.45 |     | $ | 4.90
|Second Quarter                       |  | $                     | 6.43 |     | $ | 4.45
|First Quarter                        |  | $                     | 5.70 |     | $ | 4.07

As of March 12,
2010, the number of common stockholders of record was 57.

Dividend Policy

We have not declared nor paid any cash dividends on our common stock since January 1996. We have no current intention to pay cash dividends
on our common stock, and we anticipate that substantially all of our earnings in the foreseeable future will be used to finance our business. Our future dividend policy will depend on our earnings, capital requirements and financial condition, as
well as requirements of any future financing agreements and other factors that our Board of Directors considers relevant.

Share
Repurchases

Our Board of Directors (the Board) previously authorized a common stock repurchase program of up
to 3,000,000 shares of our common stock in the open market at prevailing market prices or in privately-negotiated transactions. In February 2009, the Board amended the stock repurchase program to increase the amount of shares of common stock
authorized to be repurchased by up to an additional $10 million worth of shares. The stock repurchase program is subject to applicable legal and regulatory requirements, may be modified or discontinued at any time, and the stock repurchase
authorization does not have an expiration date. We will continue to review the value in repurchasing shares after considering our cash levels and operating needs as well as other uses for our cash that could create greater shareholder value.

No shares were repurchased during the quarter or year ended December 31, 2009. As of December 31, 2009, we had
repurchased a total of 2,946,986 shares since the inception of the program.



22



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##### Table of Contents

Performance Graph

The following Performance Graph and related information shall not be deemed soliciting material or to be filed with the SEC, nor shall such information be incorporated by reference
into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that we specifically incorporate it by reference into such filing.

The following graph compares the cumulative total stockholder return on our common stock since December 31, 2004 with the cumulative
total return of (a) the NASDAQ Composite Index and (b) an index of two peer companies selected by us. The peer group is comprised of Merix Corp. and TTM Technologies Inc. This peer group index will be subject to occasional change as we or
our competitors change their focus, merge or are acquired, undergo significant changes, or as new competitors emerge. The comparison assumes $100 was invested on December 31, 2004 in DDi Corp. common stock and in each of the indices shown and
assumes that all dividends were reinvested.

The comparisons in this table are required by the SEC and, therefore, are not
intended to forecast or be indicative of possible future performance of our common stock.

LOGO



23



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##### Table of Contents

|Item 6. | Selected Financial Data.
|------- | ------------------------

The following selected consolidated financial data as of and for the dates and periods indicated have been derived from our consolidated financial statements for the years ended December 31, 2009,
2008, 2007, 2006 and 2005. On February 3, 2006, the Company effected a one-for-seven reverse stock split. All share and per share information have been retroactively adjusted to reflect the reverse stock split. You should read the data set
forth below in conjunction with Managements Discussion and Analysis of Financial Condition and Results of Operationsin Part II, Item 7 of this Annual Report on Form 10-K and our audited consolidated
financial statements and the related notes thereto set forth in Part II, Item 8 of this Annual Report on Form 10-K.



|                                                                                                             |  |                                                      |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |        |  
|------------------------------------------------------------------------------------------------------------ |  | ---------------------------------------------------- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | - |  | ---- | ----- | - |  | - | ------ | -
|                                                                                                             |  | Year Ended December 31,                              |      
|                                                                                                             |  | 2009                                                 |       |   | 2008 |   |       | 2007 |  |   | 2006  |   |  | 2005 |      
|                                                                                                             |  | (In millions, except percentages and per share data) |      
|Consolidated Statements of Operations Data:                                                                  |  |                                                      |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |        |  
|Net sales                                                                                                    |  | $                                                    | 158.0 |   |      | $ | 190.8 |      |  | $ | 181.1 |   |  | $    | 198.1 |   |  | $ | 184.6  |  
|Cost of goods sold                                                                                           |  |                                                      | 128.8 |   |      |   | 152.0 |      |  |   | 146.2 |   |  |      | 160.2 |   |  |   | 157.9  |  
|                                                                                                             |  |                                                      |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |        |  
|Gross profit                                                                                                 |  |                                                      | 29.2  |   |      |   | 38.8  |      |  |   | 34.9  |   |  |      | 37.9  |   |  |   | 26.7   |  
|Gross profit percentage                                                                                      |  |                                                      | 18.5  | % |      |   | 20.3  | %    |  |   | 19.3  | % |  |      | 19.1  | % |  |   | 14.4   | %
|Operating expenses:                                                                                          |  |                                                      |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |        |  
|Sales and marketing                                                                                          |  |                                                      | 11.7  |   |      |   | 12.5  |      |  |   | 12.2  |   |  |      | 15.2  |   |  |   | 15.0   |  
|General and administrative                                                                                   |  |                                                      | 13.3  |   |      |   | 14.0  |      |  |   | 14.5  |   |  |      | 14.6  |   |  |   | 15.7   |  
|Amortization of intangible assets                                                                            |  |                                                      | 0.8   |   |      |   | 5.0   |      |  |   | 5.4   |   |  |      | 4.7   |   |  |   | 4.6    |  
|Loss on sale of assembly business                                                                            |  |                                                      |      |   |      |   |      |      |  |   |      |   |  |      | 4.6   |   |  |   |       |  
|Litigation reserve                                                                                           |  |                                                      |      |   |      |   |      |      |  |   |      |   |  |      | 1.7   |   |  |   |       |  
|Restructuring and other related charges                                                                      |  |                                                      |      |   |      |   | 0.3   |      |  |   | 0.6   |   |  |      | 1.1   |   |  |   | 4.7    |  
|Goodwill impairment                                                                                          |  |                                                      |      |   |      |   | 38.9  |      |  |   |      |   |  |      |      |   |  |   | 54.7   |  
|                                                                                                             |  |                                                      |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |        |  
|Operating income (loss)                                                                                      |  |                                                      | 3.4   |   |      |   | (31.9 | )    |  |   | 2.2   |   |  |      | (4.0  | ) |  |   | (68.0  | )
|Interest and other (income) expense, net                                                                     |  |                                                      | 0.9   |   |      |   | (0.2  | )    |  |   | 0.5   |   |  |      | 1.4   |   |  |   | 4.8    |  
|Income (loss) from continuing operations before income taxes                                                 |  |                                                      | 2.5   |   |      |   | (31.7 | )    |  |   | 1.7   |   |  |      | (5.4  | ) |  |   | (72.8  | )
|Income tax expense                                                                                           |  |                                                      | 0.7   |   |      |   | 1.7   |      |  |   | 1.0   |   |  |      | 1.8   |   |  |   | 1.4    |  
|                                                                                                             |  |                                                      |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |        |  
|Income (loss) from continuing operations                                                                     |  |                                                      | 1.8   |   |      |   | (33.4 | )    |  |   | 0.7   |   |  |      | (7.2  | ) |  |   | (74.2  | )
|(Income) loss from discontinued operations, net of tax                                                       |  |                                                      |      |   |      |   |      |      |  |   |      |   |  |      |      |   |  |   | (10.2  | )
|                                                                                                             |  |                                                      |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |        |  
|Net income (loss)                                                                                            |  | $                                                    | 1.8   |   |      | $ | (33.4 | )    |  | $ | 0.7   |   |  | $    | (7.2  | ) |  | $ | (64.0  | )
|                                                                                                             |  |                                                      |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |        |  
|Less: Series B Preferred Stock dividends, accretion and redemption charge                                    |  |                                                      |      |   |      |   |      |      |  |   |      |   |  |      | 16.4  |   |  |   | 6.4    |  
|                                                                                                             |  |                                                      |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |        |  
|Net income (loss) applicable to common stockholders                                                          |  | $                                                    | 1.8   |   |      | $ | (33.4 | )    |  | $ | 0.7   |   |  | $    | (23.6 | ) |  | $ | (70.4  | )
|                                                                                                             |  |                                                      |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |        |  
|Other Financial Data:                                                                                        |  |                                                      |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |        |  
|Net income (loss) per share from continuing operations applicable to common stockholders  basic and diluted |  | $                                                    | 0.09  |   |      | $ | (1.60 | )    |  | $ | 0.03  |   |  | $    | (1.21 | ) |  | $ | (10.04 | )
|Net income (loss) per share applicable to common stockholders  basic and diluted Basic                      |  | $                                                    | 0.09  |   |      | $ | (1.60 | )    |  | $ | 0.03  |   |  | $    | (1.21 | ) |  | $ | (8.76  | )
|Weighted-average shares used in per share computations  Basic                                               |  |                                                      | 19.7  |   |      |   | 21.0  |      |  |   | 22.6  |   |  |      | 19.6  |   |  |   | 8.0    |  
|Weighted-average shares used in per share computations  Diluted                                             |  |                                                      | 19.8  |   |      |   | 21.0  |      |  |   | 22.6  |   |  |      | 19.6  |   |  |   | 8.0    |  
|                                                                                                             | 
|                                                                                                             |  | As of December 31,                                   |      
|                                                                                                             |  | 2009                                                 |       |   | 2008 |   |       | 2007 |  |   | 2006  |   |  | 2005 |      
|                                                                                                             |  | (In millions)                                        |      
|Consolidated Balance Sheet Data:                                                                             |  |                                                      |       |  
|Cash and cash equivalents (excluding restricted cash)                                                        |  | $                                                    | 19.4  |   |      | $ | 20.1  |      |  | $ | 20.4  |   |  | $    | 15.9  |   |  | $ | 26.0   |  
|Working capital                                                                                              |  |                                                      | 36.2  |   |      |   | 37.7  |      |  |   | 40.0  |   |  |      | 31.2  |   |  |   | 26.2   |  
|Total assets                                                                                                 |  |                                                      | 120.5 |   |      |   | 90.8  |      |  |   | 136.8 |   |  |      | 139.6 |   |  |   | 164.3  |  
|Total debt, including current maturities                                                                     |  |                                                      | 17.2  |   |      |   | 1.5   |      |  |   | 1.8   |   |  |      | 2.0   |   |  |   | 19.9   |  
|Stockholders equity                                                                                         |  |                                                      | 69.3  |   |      |   | 65.1  |      |  |   | 111.2 |   |  |      | 109.6 |   |  |   | 108.0  |  



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|Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations.
|------- | --------------------------------------------------------------------------------------

Overview

We are a leading
provider of time-critical, technologically-advanced PCB engineering and manufacturing services. We specialize in engineering and fabricating complex multi-layer PCBs on a quick-turn basis, with lead times as short as 24 hours. We have approximately
1,100 PCB customers in various market segments including communications and computing, military and aerospace, industrial electronics, instrumentation, medical, and high-durability commercial markets.

On December 31, 2009, we completed the acquisition of Coretec, a Canadian-based PCB manufacturer whose shares previously were publicly
traded on the Toronto Stock Exchange. This acquisition will allow us to increase our overall North American production capacity, extend our presence in the military/aerospace and medical markets and strengthen our flex and rigid-flex product
capabilities. As the acquisition closed on December 31, 2009, none of Coretecs results of operations from 2009 were included in our 2009 Consolidated Statement of Operations.

On October 23, 2006, we completed the acquisition of Sovereign Circuits, Inc. (Sovereign), a privately-held PCB
manufacturer based in North Jackson, Ohio.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our audited consolidated financial
statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported
amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses for each period.

We believe our critical accounting policies, defined as those policies that we believe are: (i) the most important to the portrayal of
our financial condition and results of operations; and (ii) that require managements most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently
uncertain, are as follows:

Revenue recognition  Our revenue consists primarily of the sale of PCBs using
customer supplied engineering and design plans. Revenue from the sale of products is recognized when title and risk of loss has passed to the customer, typically at the time of shipment, persuasive evidence of an arrangement exists, including a
fixed price, and collectability is reasonably assured. We do not have customer acceptance provisions, but we do provide our customers a limited right of return for defective PCBs. We record warranty expense at the time revenue is recognized and we
maintain a warranty accrual for the estimated future warranty obligation based upon the relationship between historical sales volumes and anticipated costs. Factors that affect our warranty liability include the number of units sold, historical and
anticipated rates of warranty claims and the estimated cost of repair. We assess the adequacy of the warranty accrual each quarter.To date, actual warranty claims and costs have been in line with our estimates.

Receivables and allowance for doubtful accounts  Trade accounts receivable are recorded at the invoiced amount and do not
bear interest. The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in our existing accounts receivable. We determine the allowance based on historical write-off experience and specific account review. We
review our allowance for doubtful accounts at least quarterly. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. All other balances are reviewed on a pooled basis by age of receivable.
Account balances are charged off against the allowance when we feel it is probable the receivable will not be recovered. We do not have any off-balance-sheet credit exposure related to our customers.

Goodwill and other long-lived assets  Goodwill and other intangible assets with indefinite lives are not subject to
amortization but are tested for impairment annually or whenever events or changes in circumstances indicate that the asset might be impaired. We operate in one operating segment and have one reporting unit; therefore, we test goodwill for impairment
at the consolidated level against the fair value of the Company. The fair value of a reporting unit refers to the amount at which the unit as a whole could be bought or sold in a current transaction between willing parties. Quoted market prices in
active markets are the best evidence of fair value and are used as the basis on the last day of the year for the measurement, if available. We assess potential impairment on an annual basis on the last day of the year and compare our



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market capitalization to the book value of the Company including goodwill. A significant decrease in our stock price could indicate a material impairment of goodwill which, after further
analysis, could result in a material charge to operations. If goodwill is considered impaired, the impairment loss to be recognized is measured by the amount by which the carrying amount of the goodwill exceeds the implied fair value of that
goodwill. Inherent in our fair value determinations are certain judgments and estimates, including projections of future cash flows, the discount rate reflecting the risk inherent in future cash flows, the interpretation of current economic
indicators and market valuations, and strategic plans with regard to operations. A change in these underlying assumptions would cause a change in the results of the tests, which could cause the fair value of the reporting unit to be less than its
respective carrying amount.

In connection with our annual impairment test as of December 31, 2008, we recorded a
non-cash charge of $38.9 million to write-off the entire carrying value of our goodwill existing as of that date. The charge was driven by a decrease in our stock price and market capitalization as a result of the weakened economy and adverse
capital market conditions. The impairment charge did not affect our normal business operations, liquidity position or availability under our previous credit facility, and we believe does not reflect the actual performance of the business. On
December 31, 2009, in connection with our acquisition of Coretec, we recorded additional goodwill of approximately $3.0 million on our balance sheet. Our first annual impairment test of this goodwill will be December 31, 2010, unless
indications of impairment become evident prior to that time.

Applicable accounting guidelines require impairment losses for
long-lived assets, including intangible assets subject to amortization, to be recorded when indicators of impairment, such as changes in our operations strategy, reductions in demand for our products or significant economic slowdowns in the PCB
industry, are present. Reviews are performed to determine whether the carrying value of an asset is impaired, based on comparisons to undiscounted expected future cash flows. If this comparison indicates that there is impairment, the impaired asset
is written down to fair value, which is typically calculated using discounted expected future cash flows.

Inventory
obsolescence  We purchase raw materials in quantities that we anticipate will be fully used in the near term. However, changes in operating strategy, such as the closure of a facility or changes in technology can limit our ability to
effectively utilize all of the raw materials purchased. If inventory is not utilized, then an inventory impairment may be recorded.

Income taxes  As part of the process of preparing our consolidated financial statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate. The process incorporates a
determination of the proper current tax balances together with temporary differences resulting from different treatment of transactions for tax and financial statement purposes. Such differences result in deferred tax assets and liabilities, which
are included within the Consolidated Balance Sheets. The recovery of deferred tax assets from future taxable income must be assessed and, to the extent that recovery is not likely, we establish a valuation allowance. If our ultimate tax liability
differs from the periodic tax provision reflected in the Consolidated Statements of Operations, additional tax expense will be recorded. In 2009, we completed a tax audit with Canada for years 2005 through 2008. The settlement of this audit and
other tax matters increased our effective tax rate by approximately 35%.

Effective January 1, 2009, as prescribed by the
authoritative guidance, any reduction of the U.S. valuation allowance that was related to net deferred tax assets that were in existence as of applying fresh-start accounting and any adjustments to uncertain tax positions for years prior to our
emergence from bankruptcy in 2003 or related to the Coretec acquisition will now be recognized as a U.S. tax benefit as opposed to a reduction of goodwill and additional-paid-in-capital as was done in the past.

Effective January 1, 2007, as prescribed by the authoritative guidance, we utilize a two-step approach to recognizing and measuring
uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of
related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely to be realized upon ultimate settlement. We consider many factors when evaluating and estimating
our tax positions and tax benefits, which may require periodic adjustments and which may not accurately anticipate actual outcomes.

Litigation and other contingencies  Management regularly evaluates our exposure to threatened or pending litigation and other business contingencies. Because of the uncertainties related to the amount of loss from
litigation and other business contingencies, the recording of losses relating to such exposures requires significant judgment about the



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potential range of outcomes. As additional information about current or future litigation or other contingencies becomes available, management will assess whether such information warrants the
recording of expense relating to the contingencies. Such additional expense could potentially have a material impact on our results of operations, cash flows and financial position.

Stock-based compensation  Stock-based compensation cost is measured at the grant date based on the fair value of the award
and is recognized as expense over the requisite service period, which is the vesting period. We use the Black-Scholes option-pricing model to estimate the fair values of stock options. The Black Scholes option-pricing model requires the input of
certain assumptions that require our judgment including the expected term, the expected stock price volatility of the underlying stock options and expected forfeiture rate. The assumptions used in calculating the fair value of stock-based
compensation represent managements best estimates, but these estimates involve inherent uncertainties and the application of judgment. As a result, if factors change and we use different assumptions, our stock-based compensation expense could
be materially different in the future. In addition, if our actual forfeiture rate is materially different from our estimate, the stock-based compensation expense could be significantly different from what we have recorded in the current period.

Results of Operations and Other Financial Data

The following table sets forth select data from our Consolidated Statements of Operations (in thousands):



|                                        |  |                         |         |   |      |   |         |      |  |   |         |  
|--------------------------------------- |  | ----------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                        |  | Year Ended December 31, |        
|                                        |  | 2009                    |         |   | 2008 |   |         | 2007 | 
|Net sales                               |  | $                       | 157,991 |   |      | $ | 190,842 |      |  | $ | 181,054 |  
|Cost of goods sold                      |  |                         | 128,778 |   |      |   | 152,058 |      |  |   | 146,195 |  
|                                        |  |                         |         |   |      |   |         |      |  |   |         |  
|Gross profit                            |  |                         | 29,213  |   |      |   | 38,784  |      |  |   | 34,859  |  
|                                        |  |                         | 18.5    | % |      |   | 20.3    | %    |  |   | 19.3    | %
|Operating expenses:                     |  |                         |         |   |      |   |         |      |  |   |         |  
|Sales and marketing                     |  |                         | 11,710  |   |      |   | 12,540  |      |  |   | 12,207  |  
|General and administrative              |  |                         | 13,329  |   |      |   | 14,004  |      |  |   | 14,468  |  
|Amortization of intangible assets       |  |                         | 760     |   |      |   | 4,975   |      |  |   | 5,358   |  
|Restructuring and other related charges |  |                         |        |   |      |   | 295     |      |  |   | 646     |  
|Goodwill impairment                     |  |                         |        |   |      |   | 38,898  |      |  |   |        |  
|                                        |  |                         |         |   |      |   |         |      |  |   |         |  
|Operating income (loss)                 |  |                         | 3,414   |   |      |   | (31,928 | )    |  |   | 2,180   |  
|Interest expense, net                   |  |                         | 624     |   |      |   | 371     |      |  |   | 461     |  
|Other expense (income), net             |  |                         | 318     |   |      |   | (562    | )    |  |   | 46      |  
|                                        |  |                         |         |   |      |   |         |      |  |   |         |  
|Income (loss) before income taxes       |  |                         | 2,472   |   |      |   | (31,737 | )    |  |   | 1,673   |  
|Income tax expense                      |  |                         | 688     |   |      |   | 1,702   |      |  |   | 985     |  
|                                        |  |                         |         |   |      |   |         |      |  |   |         |  
|Net income (loss)                       |  |                         | 1,784   |   |      |   | (33,439 | )    |  |   | 688     |  
|                                        |  |                         |         |   |      |   |         |      |  |   |         |  

Year Ended December 31, 2009 Compared to the Year Ended December 31, 2008

During 2009, the overall economy, both globally and in the U.S., continued to face significant challenges, and the PCB industry as a whole
experienced reduced demand. We experienced a 17.2% decrease in sales in 2009 versus the prior year with a decrease in gross margins of 1.8 points, to 18.5% in 2009 during the same period. Beginning in the third quarter of 2008, we
experienced four consecutive quarters of declining revenues. However, we did experience the beginning of an increase in demand during the back half of 2009 as sales increased sequentially over the last two quarters of 2009. The sequential
growth was driven primarily by the improving demand in the commercial markets, led by the communications, industrial, instrumentation, medical, and consumer electronics segments. Exiting 2009 with this increase in underlying demand, the Company
recorded gross margins of 20.5% in the fourth quarter which was the highest rate in the last five quarters. In addition, if the order intake during the first two months of the first quarter of 2010 continues throughout the year, we expect net
sales in 2010 to grow at least 10% over the combined DDi and Coretec pro forma prior year net sales of $220 million.

Net Sales

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

Net sales decreased by $32.8 million, or 17.2%, to $158.0 million in 2009 from $190.8 million in 2008. The
decrease in net sales was primarily due to a decline in customer demand related to general economic conditions.



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Gross Profit

Gross profit for 2009 was $29.2 million, or 18.5% of net sales, compared to $38.8 million, or 20.3% of net sales, in 2008. The decrease in gross profit as a percentage of net sales was primarily
due to less efficient absorption of fixed costs on lower sales, partially offset by reductions in variable operating expenses along with decreases in depreciation expense and management incentives.

Non-Cash Compensation

The
following table sets forth select data related to non-cash compensation expense (in thousands):



|                                    |  |                         |       |      |   |      
|----------------------------------- |  | ----------------------- | ----- | ---- | - | -----
|                                    |  | Year Ended December 31,
|                                    |  | 2009                    |       | 2008
|Non-cash compensation:              |  |                         |       |      |   |      
|Cost of goods sold                  |  | $                       | 532   |      | $ | 528  
|Sales and marketing expenses        |  |                         | 362   |      |   | 298  
|General and administrative expenses |  |                         | 1,013 |      |   | 1,825
|                                    |  |                         |       |      |   |      
|Total non-cash compensation         |  | $                       | 1,907 |      | $ | 2,651
|                                    |  |                         |       |      |   |      

Non-cash compensation expense was recorded based on
estimated fair value as prescribed by the authoritative guidance. The decrease in non-cash compensation expense was related to a significant number of higher-valued stock-based awards which became fully amortized in 2008 and early 2009. We expect
non-cash compensation expense to be approximately $918,000 in 2010 based on unvested stock-based awards outstanding as of December 31, 2009.

Sales and Marketing Expenses

Sales and marketing expenses decreased by $830,000, or 6.6%, to $11.7 million, or
7.4% of net sales, from $12.5 million, or 6.6% of net sales, in 2008. The decrease was primarily due to lower commissions on reduced sales levels and lower management incentives. We expect sales and marketing expenses, in terms of absolute
dollars, to increase somewhat in 2010 as a result of expected higher sales levels attributed to our acquisition of Coretec, but to decrease as a percentage of sales if these higher sales levels are achieved.

General and Administrative Expenses

General and administrative expenses decreased by $675,000, or 4.8%, to $13.3 million, or 8.4% of net sales in 2009, compared to $14.0 million, or 7.3% of net sales in 2008. The decrease was primarily due to reductions in non-cash
compensation expense, travel, management incentives and Sarbanes Oxley consulting fees, offset by transaction costs related to our acquisition of Coretec as well as higher professional fees. We expect general and administrative expenses in terms of
absolute dollars to increase somewhat in 2010 as a result of our acquisition of Coretec, but to decrease as a percentage of sales if higher sales levels are achieved.

Amortization of Intangibles

Amortization of intangible assets relates to
customer relationships identified during the allocation of the reorganized value of the Company subsequent to our emergence from bankruptcy in December 2003 and to customer relationships identified in connection with the purchase of Sovereign in the
fourth quarter of 2006. These intangible assets are being amortized using the straight-line method over an estimated useful life of five years resulting in $1.3 million of amortization expense per quarter through November 2008, when the
customer relationships identified in the bankruptcy became fully amortized, and thereafter $190,000 per quarter for the remaining Sovereign customer relationships through October 2011. Amortization expense for 2010 is expected to be
approximately $760,000 based on customer relationships that are recorded as of December 31, 2009.

Restructuring

In May 2005, our Board approved plans to close our Arizona-based mass lamination operation. We completed remediation of the Arizona facility
(encompassing three separate buildings) and exited the last building in the third quarter of 2006. During 2008, we incurred approximately $295,000 in ongoing fees and expenses related to litigation with the



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landlord of one of the buildings. A ruling was issued in July 2008 in the plaintiffs favor awarding them $52,000. This award was accrued for in the second quarter of 2008 and paid to the
plaintiff in January 2009, following which the case was dismissed with prejudice. As of December 31, 2009, we had incurred a total of $6.7 million in charges relating to the closure and do not anticipate any additional charges.

We had no accrued restructuring costs as of December 31, 2009, 2008 or 2007.

Goodwill Impairment

In
connection with our annual impairment test of goodwill at December 31, 2008, we recorded a non-cash charge of $38.9 million to write-off the entire carrying value of this goodwill. The charge was driven by a decrease in our stock price and
market capitalization as a result of the weakened economy and adverse capital market conditions during 2008. Substantially all of the goodwill written-off was established in fresh-start accounting when we exited from the 2003 restructuring and was
not related to any acquisition or transaction for which we paid cash.

The impairment charge did not affect our normal
business operations, liquidity position or availability under our previous credit facility, and we believe does not reflect the actual performance of the business. On December 31, 2009, in connection with our acquisition of Coretec, we recorded
additional goodwill of approximately $3.0 million on our balance sheet. Our first annual impairment test of this goodwill will be December 31, 2010, unless indications of impairment become evident prior to that time.

Interest Expense, Net

Net
interest expense consists of amortization of debt issuance costs, interest and fees related to our previous asset-based credit facility with GE Capital, interest on our note payable on our North Jackson, Ohio facility and expense associated with
long-term leases, net of interest income. Net interest expense increased to $624,000 for the year ended December 31, 2009 from $371,000 for 2008. The increase was primarily the result of the amortization of previously capitalized debt issuance
costs as a result of the termination in December 2009 of our line of credit with GE Capital and increased interest expense related to deferred lease liabilities, offset somewhat by an increase in interest income earned on higher average cash
balances.

Other Expense (Income), Net

Net other expense (income) consists of foreign exchange transaction gains or losses related to our operations in Canada and other miscellaneous non-operating items. For the year ended December 31,
2009, net other expense was $318,000 compared to net other income of $562,000 for the year ended December 31, 2008 and was primarily due to the change in currency exchange rates between the U.S. and Canadian dollar.

Income Tax Expense

Income
tax expense decreased by $1.0 million to $688,000 for the year ended December 31, 2009 compared to $1.7 million for the year ended December 31, 2008. Our income tax expense consists of both U.S. and Canadian jurisdictional taxes. U.S. and
Canadian tax expense was lower in 2009 due to decreases in U.S. income which lowered our federal and state income taxes by approximately $870,000. In 2009, we completed a tax audit with Canada for years 2005 through 2008. The settlement of this
audit and other tax matters increased our effective tax rate by approximately 35%.

Year Ended December 31, 2008 Compared to the Year
Ended December 31, 2007

Net Sales

Net sales increased by $9.7 million, or 5.4%, to $190.8 million in 2008 from $181.1 million in 2007. The increase in net sales was primarily a result of strengthening and extending our
sales team and geographic coverage, particularly in the military/aerospace market where we have doubled our business each year. In the fourth quarter of 2008, sales to the military/aerospace market represented approximately 27% of total sales, as
well as higher average pricing related to the mix of products shipped.



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Gross Profit

Gross profit for 2008 was $38.8 million, or 20.3% of net sales, compared to $34.9 million, or 19.3% of net sales, in 2007. The increase in gross profit as a percentage of net sales was primarily
a function of better absorption of overhead on higher sales, improved operational performance related to yields and overage, and to a lesser extent, to slightly higher unit pricing relative to the product mix shift towards higher technology
products. These improvements were partially offset by an increase in depreciation expense related to capital equipment upgrades to increase our technological capabilities as well as expanded capacity in certain manufacturing process areas and to an
increase in non-cash compensation and factory and management compensation expenses.

Non-Cash Compensation

The following table sets forth select data related to non-cash compensation expense (in thousands):



|                                    |  |                         |       |      |   |      
|----------------------------------- |  | ----------------------- | ----- | ---- | - | -----
|                                    |  | Year Ended December 31,
|                                    |  | 2008                    |       | 2007
|Non-cash compensation:              |  |                         |       |      |   |      
|Cost of goods sold                  |  | $                       | 528   |      | $ | 374  
|Sales and marketing expenses        |  |                         | 298   |      |   | 120  
|General and administrative expenses |  |                         | 1,825 |      |   | 1,808
|                                    |  |                         |       |      |   |      
|Total non-cash compensation         |  | $                       | 2,651 |      | $ | 2,302
|                                    |  |                         |       |      |   |      

The increase in non-cash compensation expense in 2008
compared to 2007 was related to additional stock option and restricted stock grants to management, directors, and other key employees in 2008.

Sales and Marketing Expenses

Sales and marketing expenses in 2008 increased on an absolute dollar basis by
$333,000, or 2.7%, to $12.5 million, or 6.6% of net sales, from $12.2 million, or 6.7% of net sales, in 2007. The dollar increase was primarily due to higher non-cash compensation and management incentive compensation expenses as a result of
strengthening our sales team.

General and Administrative Expenses

General and administrative expenses decreased by $464,000, or 3.2%, to $14.0 million, or 7.3% of net sales in 2008, compared to $14.5
million, or 8.0% of net sales in 2007. The decrease was primarily due to reductions in Sarbanes-Oxley and other consulting fees, communications expense and insurance costs, partially offset by higher management incentive compensation expense and
depreciation.

Amortization of Intangibles

Amortization of intangible assets relates to customer relationships identified during the allocation of the reorganized value of the Company subsequent to our emergence from bankruptcy in December 2003
and to customer relationships identified in connection with the purchase of Sovereign in the fourth quarter of 2006. These intangible assets are being amortized using the straight-line method over an estimated useful life of five years resulting in
$1.3 million of amortization expense per quarter through November 2008, when the customer relationships identified in the bankruptcy became fully amortized, and thereafter $190,000 per quarter for the remaining Sovereign customer
relationships through October 2011.

Restructuring

In May 2005, our Board approved plans to close our Arizona-based mass lamination operation. We completed remediation of the Arizona facility (encompassing three separate buildings) and exited the last
building in the third quarter of 2006. During 2008, we incurred approximately $295,000 in ongoing fees and expenses related to litigation with the landlord of one of the buildings. A ruling was issued in July 2008 in the plaintiffs favor
awarding them $52,000. This award was accrued for in the second quarter of 2008 and paid to the plaintiff in January 2009, following which the case was dismissed with prejudice. As of December 31, 2008, we had incurred a total of $6.7 million
in charges relating to the closure and do not anticipate any additional charges.



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Goodwill Impairment

In connection with our annual impairment test of goodwill at December 31, 2008, we recorded a non-cash charge of $38.9 million to write-off the entire carrying value of this goodwill. The charge was
driven by a decrease in our stock price and market capitalization as a result of the weakened economy and adverse capital market conditions during 2008. Substantially all of the goodwill written-off was established in fresh-start accounting when we
exited from the 2003 restructuring and was not related to any acquisition or transaction for which we paid cash.

The
impairment charge did not affect our normal business operations, liquidity position or availability under our previous credit facility, and we believe does not reflect the actual performance of the business.

Interest Expense, Net

Net
interest expense consists of amortization of debt issuance costs, interest and fees related to our previous asset-based credit facility, which was terminated on December 31, 2009, interest on our note payable on our Ohio facility, and expense
associated with long-term leases, net of interest income. Net interest expense decreased to $371,000 for the year ended December 31, 2008 from $461,000 for 2007. The decrease was primarily the result of a reduction in interest expense when one
of the leases on our Milpitas, California facility expired in 2007 and a reduction in interest on our note payable as a result of a declining principal balance and declining interest rates, partially offset by a reduction in interest income due
to lower interest rates in 2008 compared to 2007.

Other Expense (Income), Net

Net other expense (income) consists of foreign exchange transaction gains or losses related to our operations in Canada and other
miscellaneous non-operating items. For the year ended December 31, 2008, net other income was $562,000 compared to net other expense of $46,000 for the year ended December 31, 2007 and was primarily due to the change in currency exchange
rates between the U.S. and Canadian dollar.

Income Tax Expense

Income tax expense increased by $717,000 to $1.7 million for the year ended December 31, 2008 compared to $985,000 for the year ended
December 31, 2007. Our income tax expense consists of both U.S. and Canadian jurisdictional taxes. U.S. and Canadian taxable income was higher in 2008, resulting in higher U.S. and Canadian income tax expense.



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Quarterly Financial Information

The following table presents selected quarterly financial information for 2009 and 2008. This information is unaudited but, in our opinion,
reflects all adjustments consisting only of normal recurring adjustments that we consider necessary for a fair statement of this information in accordance with generally accepted accounting principles. These quarterly results are not necessarily
indicative of future results.



|                                                |  |                    |      |             |   |             |  |             |      |             |   |      |             |   |             |   |             |   |      |  |   |      |  |   |     
|----------------------------------------------- |  | ------------------ | ---- | ----------- | - | ----------- |  | ----------- | ---- | ----------- | - | ---- | ----------- | - | ----------- | - | ----------- | - | ---- |  | - | ---- |  | - | ----
|                                                |  | Three Months Ended
|                                                |  | Dec 31,2009        |      | Sep 30,2009 |   | Jun 30,2009 |  | Mar 31,2009 |      | Dec 31,2008 |   |      | Sep 30,2008 |   | Jun 30,2008 |   | Mar 31,2008
|                                                |  | (In millions)     
|Net sales                                       |  | $                  | 42.2 |             | $ | 39.3        |  | $           | 37.2 |             | $ | 39.3 |             | $ | 43.0        |   |             | $ | 49.3 |  | $ | 51.2 |  | $ | 47.4
|Gross profit                                    |  |                    | 8.7  |             |   | 6.6         |  |             | 6.7  |             |   | 7.3  |             |   | 8.4         |   |             |   | 10.2 |  |   | 10.4 |  |   | 9.7 
|Net income (loss)                               |  |                    | 0.6  |             |   | 0.2         |  |             | 0.4  |             |   | 0.5  |             |   | (37.3       | ) |             |   | 1.6  |  |   | 1.5  |  |   | 0.7 
|Net income (loss) per share  basic and diluted |  | $                  | 0.03 |             | $ | 0.01        |  | $           | 0.02 |             | $ | 0.03 |             | $ | (1.89       | ) |             | $ | 0.08 |  | $ | 0.07 |  | $ | 0.03

Liquidity and Capital Resources



|                                                      |  |                        |         |      |   |        
|----------------------------------------------------- |  | ---------------------- | ------- | ---- | - | -------
|                                                      |  | As of December 31,    
|                                                      |  | 2009                   |         | 2008
|                                                      |  | (Dollars in thousands)
|Working capital                                       |  | $                      | 36,170  |      | $ | 37,682 
|Current ratio (current assets to current liabilities) |  |                        | 1.9:1.0 |      |   | 2.7:1.0
|Cash and cash equivalents                             |  | $                      | 19,392  |      | $ | 20,081 
|Long-term debt, including current portion             |  | $                      | 17,200  |      | $ | 1,516  

We manage our
liquidity to help ensure access to sufficient funding at acceptable costs to meet our business needs and financial obligations throughout business cycles. We rely on cash generated from our operating activities as well as unsecured and secured
funding sources, including bank deposits and bank borrowings.

As of December 31, 2009, we had total cash and cash
equivalents of $19.4 million. Management defines cash and cash equivalents as highly liquid deposits with original maturities of 90 days or less when purchased. We maintain cash and cash equivalents balances at certain financial institutions in
excess of amounts insured by federal agencies. Management does not believe this concentration subjects the Company to any unusual financial risk beyond the normal risk associated with commercial banking relationships. We frequently monitor the
third-party depository institutions that hold our cash and cash equivalents. Our emphasis is primarily on safety of principal and secondarily on maximizing yield on those funds.

The decrease in our cash and cash equivalents, current ratio, and working capital at December 31, 2009 compared to December 31,
2008 was primarily due to less net cash provided by operations in 2009 than in 2008 and the use of approximately $5.8 million, net of cash acquired, to purchase Coretec, offset by the fact that no treasury shares were repurchased by the Company in
2009 compared to $14.4 million in share repurchases during 2008. The decrease in our current ratio was primarily due to the impact of consolidating Coretecs current assets and liabilities at year-end 2009 in connection with the acquisition.

Our principal sources of liquidity to fund ongoing operations have been existing cash on hand and cash generated from
operations. We believe that our current cash balance, in combination with net cash expected to be generated from operations will fund ongoing operations for at least the next twelve months. During the first quarter of 2010, in connection with our
acquisition of Coretec, we have spent $4.3 million to pay off the line of credit with Wells Fargo Canada and expect to spend up to $3.1 million related to payments to certain Coretec employees and directors for severance and stock-based
compensation. Further, in the first half of 2010, we expect to spend up to approximately $1.3 million to complete the remediation of Coretecs Ellesmere facility located in Toronto, Ontario as well as additional payments as we continue our
integration work related to our Sheppard and McNicoll facilities, both also in Toronto, Ontario.

We are currently negotiating
a new $25 million asset-backed revolving credit facility with JPMorgan Chase, which would provide additional liquidity, if needed. There can be no assurance that the new credit facility will be completed, however.



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In the event that we require additional funding beyond this during the next twelve months,
we will attempt to raise capital through either debt or equity arrangements. We cannot provide assurance that the required capital would be available on acceptable terms, if at all, or that any financing activity would not be dilutive to our current
stockholders.

Concentration of Credit Risk

Financial instruments which potentially expose us to concentration of credit risk consist principally of trade accounts receivable. To minimize this risk, we perform ongoing credit evaluations of
customers financial condition and maintain relationships with their customers which allow us to monitor current changes in business operations so we can respond as needed. We do not, generally, require collateral. In 2009, 2008 and 2007, no
individual customer accounted for 10% or more of our net sales. At December 31, 2009 and 2008, one customer accounted for 6.9% and 12.1% of our total accounts receivable, respectively.

Receivables and Allowance for Doubtful Accounts

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in the existing
accounts receivable. We determine the allowance based on historical write-off experience and specific account review. We also review our allowance for doubtful accounts at least quarterly. Past due balances over 90 days and over a specified
amount are reviewed individually for collectability. All other balances are reviewed on a pooled basis by age of receivable. Account balances are charged off against the allowance when it is probable the receivable will not be recovered. We do not
have any off-balance-sheet credit exposure related to its customers.

Consolidated Cash Flows

The following table summarizes our statements of cash flows for the years ended December 31, 2009, 2008 and 2007 (in thousands):



|                                        |  |                         |        |   |      |   |         |      |  |   |        |  
|--------------------------------------- |  | ----------------------- | ------ | - | ---- | - | ------- | ---- |  | - | ------ | -
|                                        |  | Year Ended December 31, |       
|                                        |  | 2009                    |        |   | 2008 |   |         | 2007 | 
|Net cash provided by (used in):         |  |                         |        |   |      |   |         |      |  |   |        |  
|Operating activities                    |  | $                       | 9,329  |   |      | $ | 25,125  |      |  | $ | 14,561 |  
|Investing activities                    |  |                         | (9,449 | ) |      |   | (11,495 | )    |  |   | (6,993 | )
|Financing activities                    |  |                         | (294   | ) |      |   | (14,692 | )    |  |   | (2,187 | )
|Effect of exchange rates on cash        |  |                         | (275   | ) |      |   | 698     |      |  |   | (856   | )
|                                        |  |                         |        |   |      |   |         |      |  |   |        |  
|Net change in cash and cash equivalents |  | $                       | (689   | ) |      | $ | (364    | )    |  | $ | 4,525  |  
|                                        |  |                         |        |   |      |   |         |      |  |   |        |  

Year Ended December 31, 2009 Compared to the Year Ended December 31, 2008

Net cash provided by operating activities represents net income adjusted for non-cash charges and working capital changes. The $15.8 million
decrease in net cash provided by operating activities for the year ended December 31, 2009 compared to the year ended December 31, 2008 was primarily due to a decrease in operating income after the non-cash goodwill impairment charge is
excluded from operating income for the year ended December 31, 2008 and a decrease in accounts payable as a result of the timing of payments made, offset by decreases in depreciation expense, intangible asset amortization and income taxes
payable and a decrease in accrued expenses.

The $2.0 million decrease in net cash used in investing activities for the year
ended December 31, 2009 compared to the year ended December 31, 2008 was due to a decrease in capital equipment investments in 2009, offset by our acquisition of Coretec.

The $14.4 million decrease in net cash used in financing activities for the year ended December 31, 2009 compared to the year ended
December 31, 2008 was due to repurchases of our common stock totaling $14.4 million during 2008 compared with no repurchases during 2009.



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Year Ended December 31, 2008 Compared to the Year Ended December 31, 2007

Net cash provided by operating activities represents net income, adjusted for non-cash charges and working capital changes. The
$10.6 million increase in net cash provided by operating activities for the year ended December 31, 2008 compared to the year ended December 31, 2007 was primarily due to an increase in operating income excluding the non-cash goodwill
impairment and accounts payable as a result of the timing of scheduled payments.

The $4.5 million increase in net cash
used in investing activities for the year ended December 31, 2008 compared to the year ended December 31, 2007 was due to an increase in capital equipment investments to increase our technological capabilities as well as expand capacity in
certain manufacturing process areas.

The $12.5 million increase in net cash used in financing activities for the year ended
December 31, 2008 compared to the year ended December 31, 2007 was due to repurchases of our common stock totaling $14.4 million during the year compared with only $1.9 million of repurchases in 2007.

Contractual Obligations

The following table shows our material contractual obligations and commitments as of December 31, 2009 (in thousands):



|                      |  |                        |        |                   |   |                   |  |                    |       |                     |   |       |  |   |      
|--------------------- |  | ---------------------- | ------ | ----------------- | - | ----------------- |  | ------------------ | ----- | ------------------- | - | ----- |  | - | -----
|                      |  | Payments Due by Period
|Commitments           |  | Total                  |        | Less ThanOne Year |   | One toThree Years |  | Three toFive Years |       | More ThanFive Years
|Long-term debt (a)    |  | $                      | 17,778 |                   | $ | 2,296             |  | $                  | 3,796 |                     | $ | 3,019 |  | $ | 8,667
|Operating leases      |  |                        | 11,762 |                   |   | 4,517             |  |                    | 5,232 |                     |   | 2,013 |  |   |     
|                      |  |                        |        |                   |   |                   |  |                    |       |                     |   |       |  |   |      
|Total commitments (b) |  | $                      | 29,540 |                   | $ | 6,813             |  | $                  | 9,028 |                     | $ | 5,032 |  | $ | 8,667
|                      |  |                        |        |                   |   |                   |  |                    |       |                     |   |       |  |   |      



|(a) | Long-term debt consists of mortgage obligations and term notes acquired in connection with the purchase of Sovereign in 2006 and Coretec in 2009. In calculating future
payments due by period, we used the interest rates in effect for the mortgages and term notes at December 31, 2009.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) | As of December 31, 2009, we have recorded tax reserves for tax contingencies of approximately $446,000. We are unable to make a reasonable estimate regarding the
settlement of these tax contingencies, and as such, these contingencies have been excluded from the table. See Note 11 of the Notes to Consolidated Financial StatementsIncome Tax Matters for a discussion of tax contingencies.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Revolving Credit Facility

On December 21, 2009, we terminated the Amended and Restated Credit Agreement, dated as of March 30, 2007, among the Company, certain of its subsidiaries, and General Electric Capital Credit and
the related Canadian credit facility with GE Canada Finance Holding Company (the Credit Agreements). The terminations became effective on December 31, 2009 under the terms of the Credit Agreements. The Credit Agreements provided for
a revolving unsecured credit facility of up to $25 million with a term of three years from the effective date of March 31, 2007. No borrowings were outstanding under the Credit Agreements at the time of termination, and no penalties resulted
from the early terminations.

In connection with the acquisition of Coretec on December 31, 2009, we assumed the
liability for the outstanding balance on Coretecs revolving credit line with Wells Fargo Canada. The three year, CAD $10 million asset-based lending facility was entered into by Coretec on March 24, 2009 and was to be used for day-to-day
working capital and other expenditures. At December 31, 2009, the total outstanding principal and interest owed under the credit line was approximately USD $4.2 million. We terminated this credit line effective February 26, 2010 and
paid the balance owed of approximately USD $3.1 million on that date in full as well as an additional fee of approximately USD $101,000 for early termination and legal fees.

Recent Accounting Pronouncements

In January 2010, the Financial Accounting
Standards Board (FASB) issued amended standards related to Accounting Standards Codification (ASC) Topic 820, Fair Value Measurements and Disclosures, that require additional fair value disclosures. These amended
standards require disclosures about inputs and valuation techniques used to measure fair value as well as disclosures about significant transfers, beginning in the first quarter of 2010. Additionally, these amended standards require presentation of
disaggregated activity within the reconciliation for fair value measurements using significant unobservable inputs (Level 3), beginning in the first quarter of 2011. We do not expect these new standards to materially impact its consolidated
financial statements.



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In December 2007, the FASB issued ASC Topic 805, Business Combinations (ASC
805), which established principles and requirements for the acquirer of a business to recognize and measure in its financial statements the identifiable assets (including in-process research and development and defensive assets) acquired, the
liabilities assumed, and any noncontrolling interest in the acquiree. ASC 805 is effective for financial statements issued for fiscal years beginning after December 15, 2008. Prior to the adoption of ASC 805, in-process research and development
costs were immediately expensed and acquisition costs were capitalized. Under ASC 805 all acquisition costs are expensed as incurred. The standard also provides guidance for recognizing and measuring the goodwill acquired in the business combination
and determines what information to disclose to enable users of financial statements to evaluate the nature and financial effects of the business combination. In April 2009, the FASB updated ASC 805 to amend the provisions for the initial recognition
and measurement, subsequent measurement and accounting, and disclosures for assets and liabilities arising from contingencies in business combinations. This update also eliminates the distinction between contractual and non-contractual
contingencies. The effect of ASC 805 is reflected in our 2009 consolidated financial statements, as the provisions of ASC 805 were applied in connection with our acquisition of Coretec. See Note 3 of the Notes to Consolidated Financial Statements Acquisition of Coretec Inc.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our
financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.



|Item 7A. | Quantitative and Qualitative Disclosures About Market Risk.
|-------- | -----------------------------------------------------------

Interest Rate Risk

Variable Rate Debt

In connection with our acquisitions of Sovereign and Coretec, we assumed variable-rate debt including notes payable and mortgages previously
used to finance the purchase of certain real estate holdings, infrastructure or plant and equipment. The interest rates on our variable rate debt are tied to various floating base rates as defined or to LIBOR. These debt obligations, therefore,
expose us to variability in interest payments due to changes in these rates. If interest rates increase, interest expense increases. Conversely, if interest rates decrease, interest expense decreases.

Our variable-rate notes payable and variable rate mortgages subject us to market risk exposure. At December 31, 2009, we had $11.6
million outstanding under such agreements at interest rates ranging from 1.74% to 6.92% per annum. A 10% increase in interest rates would increase annual interest expense by approximately $51,000 based on amounts outstanding at
December 31, 2009.

Fixed Rate Debt

The fair market value of our one long-term fixed interest rate mortgage assumed in connection with our acquisition of Coretec is subject to interest rate risk. Generally, the fair market value of fixed
interest rate debt will increase as interest rates fall because we could refinance for a lower rate. Conversely, the fair value of fixed interest rate debt will decrease as interest rates rise. The interest rate changes affect the fair market value
but do not impact earnings or cash flows.

Foreign Currency Exchange Risk

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



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|Item 8. | Financial Statements and Supplementary Data.
|------- | --------------------------------------------

Index to Financial Statements



|                                                                                                             |  |     
|------------------------------------------------------------------------------------------------------------ |  | ----
|                                                                                                             |  | Page
|Reports of Independent Registered Public Accounting Firms                                                    |  | 37  
|Consolidated Balance Sheets as of December 31, 2009 and 2008                                                 |  | 40  
|Consolidated Statements of Operations for the Years Ended December 31, 2009, 2008 and
2007                   |  | 41  
|Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 
31, 2009, 2008 and 2007 |  | 42  
|Consolidated Statements of Stockholders Equity for the Years Ended December 
31, 2009, 2008 and 2007        |  | 43  
|Consolidated Statements of Cash Flows for the Years Ended December 31, 2009, 2008 and
2007                   |  | 44  
|Notes to Consolidated Financial Statements                                                                   |  | 45  
|Financial Statement Schedule:                                                                                |  |     
|Schedule II  Valuation and Qualifying Accounts                                                              |  | 64  



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##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of DDi Corp. and Subsidiaries

We have audited the accompanying consolidated balance sheet of DDi Corp. and subsidiaries
(the Company) as of December 31, 2009 and the related consolidated statements of operations, comprehensive income, stockholders equity, and cash flows for the year ended December 31, 2009. Our audit of the basic financial statements
included the financial statement Schedule II listed in the index appearing under Item 15(a)2. These consolidated financial statements and financial statement schedule are the responsibility of the Companys management. Our responsibility
is to express an opinion on these consolidated financial statements and financial statement schedule based on our audit.

We conducted our
audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of DDi Corp. and subsidiaries as of December 31, 2009, and the results of their operations and
their cash flows for the year ended December 31, 2009 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the related financial statement Schedule II, when considered in relation to
the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), DDi Corp. and subsidiaries internal control over financial reporting as of December 31, 2009, based on
criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 12, 2010 expressed an unqualified opinion on the effectiveness
of internal control over financial reporting.



|                      
|----------------------
|/s/ Grant Thornton LLP
|Irvine, California    
|March 12, 2010        



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of DDi
Corp. and Subsidiaries

We have audited DDi Corp. and subsidiaries internal control over financial reporting as of December 31,
2009, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). DDi Corp. and subsidiaries management is responsible for
maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Managements Report on Internal Control Over Financial
Reporting. Our responsibility is to express an opinion on DDi Corp. and subsidiaries internal control over financial reporting based on our audit. Our audit of, and opinion on, DDi Corp. and subsidiaries internal control over financial
reporting does not include internal control over financial reporting of Coretec Inc., a wholly-owned subsidiary, whose financial statements reflect total assets constituting 32 percent of the related consolidated financial statement amounts as of
December 31, 2009. As indicated in Managements Report on Internal Control Over Financial Reporting, Coretec Inc. was acquired on December 31, 2009 and therefore, managements assertion on the effectiveness of DDi Corp. and
subsidiaries internal control over financial reporting excluded internal control over financial reporting of Coretec Inc.

We conducted
our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over
financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors
of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, DDi Corp. and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31,
2009, based on criteria established in Internal ControlIntegrated Framework issued by COSO.

We also have audited, in accordance
with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of DDi Corp. and subsidiaries as of December 31, 2009, and the related consolidated statements of operations, comprehensive
income, stockholders equity, and cash flows for the year ended December 31, 2009 and our report dated March 12, 2010 expressed an unqualified opinion on those consolidated financial statements.



|                      
|----------------------
|/s/ Grant Thornton LLP
|Irvine, California    
|March 12, 2010        



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##### Table of Contents

Report of Independent Registered Public Accounting Firm

To the Board of Directors and

Stockholders of DDi
Corp.:

In our opinion, the consolidated balance sheet as of December 31, 2008 and the related consolidated statements of operations, of
comprehensive income (loss), of stockholders equity and of cash flows for each of two years in the period ended December 31, 2008 present fairly, in all material respects, the financial position of DDi Corp. and its subsidiaries at
December 31, 2008, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2008, in conformity with accounting principles generally accepted in the United States of America. In
addition, in our opinion, the financial statement schedule for each of the two years in the period ended December 31, 2008 listed in the index appearing under Item 15(a)(2) presents fairly, in all material respects, the information set
forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Companys management. Our responsibility is to express an
opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for
our opinion.

/s/ PricewaterhouseCoopers LLP

Orange County, California

March 6, 2009



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##### Table of Contents

DDi CORP.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)



|                                                                                                                                                                                                                                        |  |                    |          |   |      |   |          |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | -------- | - | ---- | - | -------- | -
|                                                                                                                                                                                                                                        |  | As of December 31, |         
|                                                                                                                                                                                                                                        |  | 2009               |          |   | 2008 |  
|ASSETS                                                                                                                                                                                                                                  |  |                    |          |   |      |   |          |  
|Current assets:                                                                                                                                                                                                                         |  |                    |          |   |      |   |          |  
|Cash and cash equivalents                                                                                                                                                                                                               |  | $                  | 19,392   |   |      | $ | 20,081   |  
|Accounts receivable, net                                                                                                                                                                                                                |  |                    | 35,280   |   |      |   | 25,504   |  
|Inventories                                                                                                                                                                                                                             |  |                    | 19,342   |   |      |   | 13,768   |  
|Prepaid expenses and other current assets                                                                                                                                                                                               |  |                    | 1,265    |   |      |   | 620      |  
|                                                                                                                                                                                                                                        |  |                    |          |   |      |   |          |  
|Total current assets                                                                                                                                                                                                                    |  |                    | 75,279   |   |      |   | 59,973   |  
|Property, plant and equipment, net                                                                                                                                                                                                      |  |                    | 40,175   |   |      |   | 27,848   |  
|Intangible assets, net                                                                                                                                                                                                                  |  |                    | 1,374    |   |      |   | 2,134    |  
|Goodwill                                                                                                                                                                                                                                |  |                    | 2,986    |   |      |   |         |  
|Other assets                                                                                                                                                                                                                            |  |                    | 659      |   |      |   | 825      |  
|                                                                                                                                                                                                                                        |  |                    |          |   |      |   |          |  
|Total assets                                                                                                                                                                                                                            |  | $                  | 120,473  |   |      | $ | 90,780   |  
|                                                                                                                                                                                                                                        |  |                    |          |   |      |   |          |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                                                    |  |                    |          |   |      |   |          |  
|Current liabilities:                                                                                                                                                                                                                    |  |                    |          |   |      |   |          |  
|Revolving credit facility                                                                                                                                                                                                               |  | $                  | 4,227    |   |      |   |         |  
|Current maturities of long-term debt                                                                                                                                                                                                    |  |                    | 1,727    |   |      | $ | 244      |  
|Accounts payable                                                                                                                                                                                                                        |  |                    | 13,939   |   |      |   | 11,635   |  
|Accrued expenses and other current liabilities                                                                                                                                                                                          |  |                    | 17,242   |   |      |   | 8,776    |  
|Income taxes payable                                                                                                                                                                                                                    |  |                    | 1,974    |   |      |   | 1,636    |  
|                                                                                                                                                                                                                                        |  |                    |          |   |      |   |          |  
|Total current liabilities                                                                                                                                                                                                               |  |                    | 39,109   |   |      |   | 22,291   |  
|Long-term debt                                                                                                                                                                                                                          |  |                    | 11,246   |   |      |   | 1,272    |  
|Other long-term liabilities                                                                                                                                                                                                             |  |                    | 810      |   |      |   | 2,113    |  
|                                                                                                                                                                                                                                        |  |                    |          |   |      |   |          |  
|Total liabilities                                                                                                                                                                                                                       |  |                    | 51,165   |   |      |   | 25,676   |  
|                                                                                                                                                                                                                                        |  |                    |          |   |      |   |          |  
|Commitments and contingencies (Note 14)                                                                                                                                                                                                 |  |                    |          |   |      |   |          |  
|Stockholders equity:                                                                                                                                                                                                                   |  |                    |          |   |      |   |          |  
|Common stock  $0.001 par value, 190,000 shares authorized, 22,803 and 19,856 shares issued and outstanding,
respectively, at December 31, 2009 and 22,738 and 19,791 shares issued and outstanding, respectively, at December 31, 2008 |  |                    | 23       |   |      |   | 23       |  
|Additional paid-in-capital                                                                                                                                                                                                              |  |                    | 247,245  |   |      |   | 245,589  |  
|Treasury stock, at cost  2,947 shares held in treasury at December 31, 2009 and 2008                                                                                                                                                   |  |                    | (16,323  | ) |      |   | (16,323  | )
|Accumulated other comprehensive income (loss)                                                                                                                                                                                           |  |                    | 410      |   |      |   | (354     | )
|Accumulated deficit                                                                                                                                                                                                                     |  |                    | (162,047 | ) |      |   | (163,831 | )
|                                                                                                                                                                                                                                        |  |                    |          |   |      |   |          |  
|Total stockholders equity                                                                                                                                                                                                              |  |                    | 69,308   |   |      |   | 65,104   |  
|                                                                                                                                                                                                                                        |  |                    |          |   |      |   |          |  
|Total liabilities and stockholders equity                                                                                                                                                                                              |  | $                  | 120,473  |   |      | $ | 90,780   |  
|                                                                                                                                                                                                                                        |  |                    |          |   |      |   |          |  

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



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##### Table of Contents

DDi CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)



|                                                        |  |                         |         |   |      |   |         |      |  |   |         |  
|------------------------------------------------------- |  | ----------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                        |  | Year Ended December 31, |        
|                                                        |  | 2009                    |         |   | 2008 |   |         | 2007 | 
|Net sales                                               |  | $                       | 157,991 |   |      | $ | 190,842 |      |  | $ | 181,054 |  
|Cost of goods sold                                      |  |                         | 128,778 |   |      |   | 152,058 |      |  |   | 146,195 |  
|                                                        |  |                         |         |   |      |   |         |      |  |   |         |  
|Gross profit                                            |  |                         | 29,213  |   |      |   | 38,784  |      |  |   | 34,859  |  
|Operating expenses:                                     |  |                         |         |   |      |   |         |      |  |   |         |  
|Sales and marketing                                     |  |                         | 11,710  |   |      |   | 12,540  |      |  |   | 12,207  |  
|General and administrative                              |  |                         | 13,329  |   |      |   | 14,004  |      |  |   | 14,468  |  
|Amortization of intangible assets                       |  |                         | 760     |   |      |   | 4,975   |      |  |   | 5,358   |  
|Restructuring and other related charges                 |  |                         |        |   |      |   | 295     |      |  |   | 646     |  
|Goodwill impairment                                     |  |                         |        |   |      |   | 38,898  |      |  |   |        |  
|                                                        |  |                         |         |   |      |   |         |      |  |   |         |  
|Operating income (loss)                                 |  |                         | 3,414   |   |      |   | (31,928 | )    |  |   | 2,180   |  
|Non-operating (income) expense:                         |  |                         |         |   |      |   |         |      |  |   |         |  
|Interest expense                                        |  |                         | 813     |   |      |   | 502     |      |  |   | 1,091   |  
|Interest income                                         |  |                         | (189    | ) |      |   | (131    | )    |  |   | (630    | )
|Other expense (income), net                             |  |                         | 318     |   |      |   | (562    | )    |  |   | 46      |  
|                                                        |  |                         |         |   |      |   |         |      |  |   |         |  
|Income (loss) before income tax expense                 |  |                         | 2,472   |   |      |   | (31,737 | )    |  |   | 1,673   |  
|Income tax expense                                      |  |                         | 688     |   |      |   | 1,702   |      |  |   | 985     |  
|                                                        |  |                         |         |   |      |   |         |      |  |   |         |  
|Net income (loss)                                       |  |                         | 1,784   |   |      |   | (33,439 | )    |  |   | 688     |  
|                                                        |  |                         |         |   |      |   |         |      |  |   |         |  
|Net income (loss) per share:                            |  |                         |         |   |      |   |         |      |  |   |         |  
|Basic                                                   |  | $                       | 0.09    |   |      | $ | (1.60   | )    |  | $ | 0.03    |  
|Diluted                                                 |  | $                       | 0.09    |   |      | $ | (1.60   | )    |  | $ | 0.03    |  
|Weighted-average shares used in per share computations: |  |                         |         |   |      |   |         |      |  |   |         |  
|Basic                                                   |  |                         | 19,732  |   |      |   | 20,961  |      |  |   | 22,551  |  
|Diluted                                                 |  |                         | 19,838  |   |      |   | 20,961  |      |  |   | 22,594  |  

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



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DDi CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)



|                                         |  |                         |       |      |   |         |      |  |   |    
|---------------------------------------- |  | ----------------------- | ----- | ---- | - | ------- | ---- |  | - | ---
|                                         |  | Year Ended December 31,
|                                         |  | 2009                    |       | 2008 |   |         | 2007
|Net income (loss)                        |  | $                       | 1,784 |      | $ | (33,439 | )    |  | $ | 688
|Other comprehensive income (loss):       |  |                         |       |      |   |         |      |  |   |    
|Foreign currency translation adjustments |  |                         | 764   |      |   | (825    | )    |  |   | 203
|                                         |  |                         |       |      |   |         |      |  |   |    
|Comprehensive income (loss)              |  | $                       | 2,548 |      | $ | (34,264 | )    |  | $ | 891
|                                         |  |                         |       |      |   |         |      |  |   |    

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



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DDi CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

(In thousands)



|                                                        |  |                         |   |                          |        |    |                     |   |         |                                            |  |   |                    |   |  |       |      |   |  |   |          |   |  |   |         |  
|------------------------------------------------------- |  | ----------------------- | - | ------------------------ | ------ | -- | ------------------- | - | ------- | ------------------------------------------ |  | - | ------------------ | - |  | ----- | ---- | - |  | - | -------- | - |  | - | ------- | -
|                                                        |  | Common StockOutstanding |   | AdditionalPaid-InCapital |        |    | TreasuryStockAmount |   |         | AccumulatedOtherComprehensiveIncome (Loss) |  |   | AccumulatedDeficit |   |  | Total |     
|                                                        |  | Shares                  |   |                          | Amount |    |                     |   |         |                                           
|Balance, December 31, 2006                              |  | 22,569                  |   |                          |        | 23 |                     |   | 240,356 |                                            |  |   |                   |   |  |       | 268  |   |  |   | (131,080 | ) |  |   | 109,567 |  
|Stock based compensation expense                        |  |                        |   |                          |        |   |                     |   | 2,302   |                                            |  |   |                   |   |  |       |     |   |  |   |         |   |  |   | 2,302   |  
|Issuance of common stock upon exercise of stock options |  | 54                      |   |                          |        |   |                     |   | 280     |                                            |  |   |                   |   |  |       |     |   |  |   |         |   |  |   | 280     |  
|Issuance of restricted stock                            |  | 123                     |   |                          |        |   |                     |   |        |                                            |  |   |                   |   |  |       |     |   |  |   |         |   |  |   |        |  
|Repurchases of common stock                             |  | (304                    | ) |                          |        |   |                     |   |        |                                            |  |   | (1,875             | ) |  |       |     |   |  |   |         |   |  |   | (1,875  | )
|Foreign currency translation adjustment                 |  |                        |   |                          |        |   |                     |   |        |                                            |  |   |                   |   |  |       | 203  |   |  |   |         |   |  |   | 203     |  
|Net income                                              |  |                        |   |                          |        |   |                     |   |        |                                            |  |   |                   |   |  |       |     |   |  |   | 688      |   |  |   | 688     |  
|                                                        |  |                         |   |                          |        |    |                     |   |         |                                            |  |   |                    |   |  |       |      |   |  |   |          |   |  |   |         |  
|Balance, December 31, 2007                              |  | 22,442                  |   |                          |        | 23 |                     |   | 242,938 |                                            |  |   | (1,875             | ) |  |       | 471  |   |  |   | (130,392 | ) |  |   | 111,165 |  
|Stock-based compensation expense                        |  |                        |   |                          |        |   |                     |   | 2,651   |                                            |  |   |                   |   |  |       |     |   |  |   |         |   |  |   | 2,651   |  
|Unvested restricted stock cancellations                 |  | (8                      | ) |                          |        |   |                     |   |        |                                            |  |   |                   |   |  |       |     |   |  |   |         |   |  |   |        |  
|Repurchases of common stock                             |  | (2,643                  | ) |                          |        |   |                     |   |        |                                            |  |   | (14,448            | ) |  |       |     |   |  |   |         |   |  |   | (14,448 | )
|Foreign currency translation adjustment                 |  |                        |   |                          |        |   |                     |   |        |                                            |  |   |                   |   |  |       | (825 | ) |  |   |         |   |  |   | (825    | )
|Net loss                                                |  |                        |   |                          |        |   |                     |   |        |                                            |  |   |                   |   |  |       |     |   |  |   | (33,439  | ) |  |   | (33,439 | )
|                                                        |  |                         |   |                          |        |    |                     |   |         |                                            |  |   |                    |   |  |       |      |   |  |   |          |   |  |   |         |  
|Balance, December 31, 2008                              |  | 19,791                  |   |                          | $      | 23 |                     | $ | 245,589 |                                            |  | $ | (16,323            | ) |  | $     | (354 | ) |  | $ | (163,831 | ) |  | $ | 65,104  |  
|Stock-based compensation expense                        |  |                        |   |                          |        |   |                     |   | 1,907   |                                            |  |   |                   |   |  |       |     |   |  |   |         |   |  |   | 1,907   |  
|Unvested restricted stock cancellations                 |  | (6                      | ) |                          |        |   |                     |   |        |                                            |  |   |                   |   |  |       |     |   |  |   |         |   |  |   |        |  
|Tax shares equivalent for restricted stock release      |  | (14                     | ) |                          |        |   |                     |   | (251    | )                                          |  |   |                   |   |  |       |     |   |  |   |         |   |  |   | (251    | )
|Issuance of restricted stock                            |  | 85                      |   |                          |        |   |                     |   |        |                                            |  |   |                   |   |  |       |     |   |  |   |         |   |  |   |        |  
|Foreign currency translation adjustment                 |  |                        |   |                          |        |   |                     |   |        |                                            |  |   |                   |   |  |       | 764  |   |  |   |         |   |  |   | 764     |  
|Net income                                              |  |                        |   |                          |        |   |                     |   |        |                                            |  |   |                   |   |  |       |     |   |  |   | 1,784    |   |  |   | 1,784   |  
|                                                        |  |                         |   |                          |        |    |                     |   |         |                                            |  |   |                    |   |  |       |      |   |  |   |          |   |  |   |         |  
|Balance, December 31, 2009                              |  | 19,856                  |   |                          | $      | 23 |                     | $ | 247,245 |                                            |  | $ | (16,323            | ) |  | $     | 410  |   |  | $ | (162,047 | ) |  | $ | 69,308  |  
|                                                        |  |                         |   |                          |        |    |                     |   |         |                                            |  |   |                    |   |  |       |      |   |  |   |          |   |  |   |         |  

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



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DDi CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)



|                                                                                     |  |                         |        |   |      |   |         |      |  |   |        |  
|------------------------------------------------------------------------------------ |  | ----------------------- | ------ | - | ---- | - | ------- | ---- |  | - | ------ | -
|                                                                                     |  | Year Ended December 31, |       
|                                                                                     |  | 2009                    |        |   | 2008 |   |         | 2007 | 
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                |  |                         |        |   |      |   |         |      |  |   |        |  
|Net income (loss)                                                                    |  | $                       | 1,784  |   |      | $ | (33,439 | )    |  | $ | 688    |  
|Adjustments to reconcile net income (loss) to cash provided by operating activities: |  |                         |        |   |      |   |         |      |  |   |        |  
|Depreciation                                                                         |  |                         | 8,237  |   |      |   | 11,119  |      |  |   | 10,012 |  
|Amortization of intangible assets                                                    |  |                         | 760    |   |      |   | 4,975   |      |  |   | 5,358  |  
|Amortization of debt issuance costs and discount                                     |  |                         | 130    |   |      |   | 103     |      |  |   | 254    |  
|Amortization of deferred lease liability                                             |  |                         | 469    |   |      |   | 535     |      |  |   | 714    |  
|Goodwill impairment                                                                  |  |                         |       |   |      |   | 38,898  |      |  |   |       |  
|Non-cash stock-based compensation                                                    |  |                         | 1,907  |   |      |   | 2,651   |      |  |   | 2,302  |  
|Other                                                                                |  |                         | (148   | ) |      |   | 460     |      |  |   | 137    |  
|Change in operating assets and liabilities, (net of acquisitions and disposals):     |  |                         |        |   |      |   |         |      |  |   |        |  
|Accounts receivable                                                                  |  |                         | 621    |   |      |   | (273    | )    |  |   | (966   | )
|Inventories                                                                          |  |                         | (316   | ) |      |   | (582    | )    |  |   | 1,215  |  
|Prepaid expenses and other assets                                                    |  |                         | 69     |   |      |   | (31     | )    |  |   | 226    |  
|Accounts payable                                                                     |  |                         | (805   | ) |      |   | 1,255   |      |  |   | (2,214 | )
|Accrued expenses and other liabilities                                               |  |                         | (2,293 | ) |      |   | (970    | )    |  |   | (2,474 | )
|Income taxes payable                                                                 |  |                         | (1,086 | ) |      |   | 424     |      |  |   | (691   | )
|                                                                                     |  |                         |        |   |      |   |         |      |  |   |        |  
|Net cash provided by operating activities                                            |  |                         | 9,329  |   |      |   | 25,125  |      |  |   | 14,561 |  
|                                                                                     |  |                         |        |   |      |   |         |      |  |   |        |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                |  |                         |        |   |      |   |         |      |  |   |        |  
|Purchases of property and equipment                                                  |  |                         | (3,649 | ) |      |   | (11,495 | )    |  |   | (6,993 | )
|Acquisition of Coretec Inc., net of cash acquired of $880                            |  |                         | (5,800 | ) |      |   |        |      |  |   |       |  
|                                                                                     |  |                         |        |   |      |   |         |      |  |   |        |  
|Net cash used in investing activities                                                |  |                         | (9,449 | ) |      |   | (11,495 | )    |  |   | (6,993 | )
|                                                                                     |  |                         |        |   |      |   |         |      |  |   |        |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                |  |                         |        |   |      |   |         |      |  |   |        |  
|Payments on long-term debt                                                           |  |                         | (244   | ) |      |   | (244    | )    |  |   | (284   | )
|Payments of debt issuance costs                                                      |  |                         | (50    | ) |      |   |        |      |  |   | (308   | )
|Repurchases of common stock including commissions                                    |  |                         |       |   |      |   | (14,448 | )    |  |   | (1,875 | )
|Proceeds from exercise of stock options                                              |  |                         |       |   |      |   |        |      |  |   | 280    |  
|                                                                                     |  |                         |        |   |      |   |         |      |  |   |        |  
|Net cash used in financing activities                                                |  |                         | (294   | ) |      |   | (14,692 | )    |  |   | (2,187 | )
|                                                                                     |  |                         |        |   |      |   |         |      |  |   |        |  
|Effect of exchange rate changes on cash and cash equivalents                         |  |                         | (275   | ) |      |   | 698     |      |  |   | (856   | )
|                                                                                     |  |                         |        |   |      |   |         |      |  |   |        |  
|Net (decrease) increase in cash and cash equivalents                                 |  |                         | (689   | ) |      |   | (364    | )    |  |   | 4,525  |  
|Cash and cash equivalents, beginning of period                                       |  |                         | 20,081 |   |      |   | 20,445  |      |  |   | 15,920 |  
|                                                                                     |  |                         |        |   |      |   |         |      |  |   |        |  
|Cash and cash equivalents, end of period                                             |  | $                       | 19,392 |   |      | $ | 20,081  |      |  | $ | 20,445 |  
|                                                                                     |  |                         |        |   |      |   |         |      |  |   |        |  

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



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DDi CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1. DESCRIPTION OF BUSINESS

The consolidated financial statements include the accounts of DDi Corp. and its wholly-owned subsidiaries. Collectively, DDi Corp. and its subsidiaries are referred to as the Company or DDi. DDi is a leading provider
of time-critical, technologically-advanced printed circuit board (PCB) engineering and manufacturing services. The Company specializes in engineering and fabricating complex multi-layer PCBs on a quick-turn basis, with lead times as
short as 24 hours. DDi has approximately 1,100 PCB customers in various market segments including communications and computing, military and aerospace, industrial electronics, instrumentation, medical and high-durability commercial markets. The
Companys engineering capabilities and manufacturing facilities located in the United States and Canada, together with its suppliers in Asia, enable it to respond to time-critical orders and technology challenges for its customers. DDi operates
primarily in one geographical area, North America.

On December 31, 2009, the Company completed the acquisition of
Coretec Inc. (Coretec), a publicly-held PCB manufacturer headquartered in Toronto, Ontario, which was previously a publicly-traded company listed on the Toronto Stock Exchange. See Note 3  Acquisition of Coretec Inc.

On October 23, 2006, the Company completed the acquisition of Sovereign Circuits, Inc. (Sovereign) a
privately-held PCB manufacturer in North Jackson, Ohio. See Note 5  Goodwill and Intangible Assets.

2. SIGNIFICANT
ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All inter-company accounts and
transactions have been eliminated in consolidation.

Management Estimates

The preparation of the Companys consolidated financial statements, in accordance with accounting principles generally accepted in the
United States of America, requires the Company to make estimates and judgments that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amount of revenues and expenses for each period. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Fair Value of Financial Instruments

The fair value of financial instruments including cash, cash equivalents, accounts receivable, accounts payable, accrued liabilities and fixed and variable rate debt approximate book value as of
December 31, 2009 and 2008.

Cash and Cash Equivalents

Management defines cash and cash equivalents as highly liquid deposits with original maturities of 90 days or less when purchased. The
Company maintains cash and cash equivalents balances at certain financial institutions in excess of amounts insured by federal agencies. Management does not believe this concentration subjects it to any unusual financial risk beyond the normal risk
associated with commercial banking relationships.

Revenue Recognition

The Companys revenue consists primarily of the sale of PCBs using customer supplied engineering and design plans. Revenue from the sale
of products is recognized when title and risk of loss has passed to the customer, typically at the time of shipment, persuasive evidence of an arrangement exists, including a fixed price, and collectability is reasonably assured. The Company does
not have customer acceptance provisions, but it does provide customers a limited right of return for defective PCBs.



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DDi CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



The Company accrues an estimated amount for sales returns and allowances, which is
recorded as a reduction to net sales based on historical information. The reserve for sales returns and allowances is included in the allowance for doubtful accounts as a reduction to accounts receivable. Shipping and handling fees billed to
customers are included in net sales. The related freight costs and supplies are included as a component of cost of goods sold.

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

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



|                                    |  |                         |        |   |      |   |        |      |  |   |        |  
|----------------------------------- |  | ----------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                    |  | Year Ended December 31, |       
|                                    |  | 2009                    |        |   | 2008 |   |        | 2007 | 
|Beginning balance                   |  | $                       | 805    |   |      | $ | 750    |      |  | $ | 592    |  
|Warranties issued during the period |  |                         | 4,474  |   |      |   | 4,274  |      |  |   | 3,518  |  
|Warranty liabilities assumed (1)    |  |                         | 285    |   |      |   |       |      |  |   |       |  
|Warranty expenditures               |  |                         | (4,464 | ) |      |   | (4,219 | )    |  |   | (3,360 | )
|                                    |  |                         |        |   |      |   |        |      |  |   |        |  
|Ending Balance                      |  | $                       | 1,100  |   |      | $ | 805    |      |  | $ | 750    |  
|                                    |  |                         |        |   |      |   |        |      |  |   |        |  



|(1) | Assumed in connection with the Companys acquisition of Coretec.
|--- | ----------------------------------------------------------------

Concentration of Credit Risk

Financial instruments which
potentially expose the Company to concentration of credit risk consist principally of trade accounts receivable. To minimize this risk, the Company performs ongoing credit evaluations of customers financial condition and maintains
relationships with its customers which allow the Company to monitor current changes in business operations so it can respond as needed; the Company, however, generally does not require collateral. In 2009, 2008 and 2007, no individual customer
accounted for 10% or more of the Companys net sales. At December 31, 2009, one customer accounted for 6.9% of the Companys total accounts receivable. At December 31, 2008, one customer accounted for 12.1% of the Companys
total accounts receivable.

Receivables and Allowance for Doubtful Accounts

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the
Companys best estimate of the amount of probable credit losses in the existing accounts receivable. The Company determines the allowance based on historical write-off experience and specific account review. The Company reviews its allowance
for doubtful accounts at least quarterly. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. All other balances are reviewed on a pooled basis by age of receivable. Account balances are
charged off against the allowance when it is probable the receivable will not be recovered. The Company does not have any off-balance-sheet credit exposure related to its customers.

Inventories

Inventories are stated at the lower of cost (using
either a standard cost method which approximates first-in, first-out (FIFO) or an average cost method) or market. Provisions are made to reduce excess and obsolete inventories to their estimated net realizable value based on such factors as age,
utilization levels compared to quantities on hand, and actual or foreseeable technological changes.

Property, Plant and Equipment

Property, plant and equipment are capitalized at historical cost and are presented net of accumulated depreciation.
Assets purchased in conjunction with acquired subsidiaries are recorded at fair value and depreciated over their remaining useful lives. Depreciation is provided over the estimated useful lives of the assets using the straight-line method for
financial reporting purposes. For leasehold improvements, amortization is provided over the shorter of the estimated useful lives of the assets or the remaining lease term and is included in depreciation expense. The depreciable life assigned to the
Companys buildings is 28 years. Machinery, office furniture, equipment and vehicles are each depreciated over three to seven years.



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DDi CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Debt Issuance Costs and Debt Discounts

The Company defers certain debt issuance costs relating to the establishment of its various debt facilities and the issuance of its debt
instruments (see Note 6  Revolving Credit Facilities and Long-Term Debt). These costs are capitalized and amortized over the term of the related indebtedness using the effective interest method or, if not materially different, the
straight-line method.

Goodwill and Other Long-Lived Assets

Goodwill and other intangible assets with indefinite lives are not subject to amortization, but are tested for impairment annually or
whenever events or changes in circumstances indicate that the asset might be impaired. The Company operates in one operating segment and has one reporting unit; therefore, goodwill is tested for impairment at the consolidated level against the fair
value of the Company. The fair value of a reporting unit refers to the amount at which the unit as a whole could be bought or sold in a current transaction between willing parties. Quoted market prices in active markets are the best evidence of fair
value and are used as the basis on the last day of the year for the measurement, if available. The Company assesses potential impairment on an annual basis on the last day of the year and compares its market capitalization to its carrying amount,
including goodwill. A significant decrease in its stock price could indicate a material impairment of goodwill which, after further analysis, could result in a material charge to operations. If goodwill is considered impaired, the impairment loss to
be recognized is measured by the amount by which the carrying amount of the goodwill exceeds the implied fair value of that goodwill. Inherent in the Companys fair value determinations are certain judgments and estimates, including projections
of future cash flows, the discount rate reflecting the risk inherent in future cash flows, the interpretation of current economic indicators and market valuations, and strategic plans with regard to operations. A change in these underlying
assumptions would cause a change in the results of the tests, which could cause the fair value of the reporting unit to be less than its respective carrying amount.

The Company accounts for long-lived assets, including intangible assets subject to amortization, in accordance with the prescribed authoritative guidance, which requires impairment losses to be recorded
on long-lived assets used in operations when indicators of impairment, such as reductions in demand or significant economic slowdowns in the PCB industry, are present. Reviews are performed to determine whether carrying value of an asset is
impaired, based on comparisons to undiscounted expected future cash flows. If this comparison indicates that there is impairment, the impaired asset is written down to fair value, which is typically calculated using discounted expected future cash
flows utilizing an appropriate discount rate. Impairment is based on the excess of the carrying amount over the fair value of those assets.

Income Taxes

The Company records on its balance sheet deferred tax assets and liabilities for expected
future tax consequences of events that have been recognized in different periods for financial statement purposes versus tax return purposes. Management provides a valuation allowance for net deferred tax assets when it is more likely than not that
a portion of such net deferred tax assets will not be recovered through future operations.

Comprehensive Income (Loss)

The Comprehensive Income Topic of Financial Accounting Standard board (FASB) Accounting Standards
Codification (ASC) establishes requirements for reporting and disclosure of comprehensive income (loss) and its components. Comprehensive income (loss) for the Company consists of net income (loss) plus the effect of foreign currency
translation adjustments.

Foreign Currency

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



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Stock-Based Compensation

Effective January 1, 2006, the Company adopted the fair value recognition provisions of the Stock Compensation Topic of FASB ASC
(ASC 718), using the modified prospective application transition method. Under this transition method, stock-based compensation cost recognized in the years ended December 31, 2008 and 2007 included: (i) compensation cost for
all unvested stock-based awards granted prior to January 1, 2006 based on the grant-date fair value estimated in accordance with the original provisions of SFAS No. 123, Accounting for Stock-Based Compensation , and
(ii) compensation cost for all stock-based awards granted or modified subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of ASC 718.

Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the
requisite service period, which is the vesting period. The Company uses the Black-Scholes option-pricing model to estimate the fair values of stock options. The Black Scholes option-pricing model requires the input of certain assumptions that
require our judgment including the expected term and the expected stock price volatility of the underlying stock options. The assumptions used in calculating the fair value of stock-based compensation represent managements best estimates, but
these estimates involve inherent uncertainties and the application of judgment. As a result, if factors change resulting in the use of different assumptions, stock-based compensation expense could be materially different in the future. In addition,
the Company is required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. If the actual forfeiture rate is materially different from managements estimates, the stock-based compensation
expense could be significantly different from what the Company has recorded in the current period.

Basic and Diluted Earnings Per Share

The Company reports 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.

Advertising Costs

Advertising costs are expensed as incurred. These
costs are included in sales and marketing expense in the accompanying consolidated statements of operations. Advertising expense for the years ended December 31, 2009, 2008 and 2007 were $77,000, $70,000 and $73,000, respectively.

Taxes Collected from Customers and Remitted to Governmental Authorities

Pursuant to authoritative guidance, the Companys policy is to present taxes collected from customers and remitted to
governmental authorities on a net basis.

Segment Reporting

The Segment Reporting Topic of FASB ASC 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 a component of an enterprise that engages 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 develops and
manufactures multi-layer PCBs. The Company operates in one geographical area, North America. Revenues are attributed to the country in which the customer buying the product is located.



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DDi CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



The following summarizes revenues by customer location (in thousands):



|                  |  |                         |         |      |   |         |  |   |        
|----------------- |  | ----------------------- | ------- | ---- | - | ------- |  | - | -------
|                  |  | Year Ended December 31,
|                  |  | 2009                    |         | 2008 |   | 2007   
|Net sales:        |  |                         |         |      |   |         |  |   |        
|North America (1) |  | $                       | 144,921 |      | $ | 174,776 |  | $ | 165,732
|Asia              |  |                         | 10,583  |      |   | 13,822  |  |   | 13,563 
|Other             |  |                         | 2,487   |      |   | 2,244   |  |   | 1,759  
|                  |  |                         |         |      |   |         |  |   |        
|Total             |  | $                       | 157,991 |      | $ | 190,842 |  | $ | 181,054
|                  |  |                         |         |      |   |         |  |   |        



|(1) | Sales to the United States of America represent the majority of sales to North America.
|--- | ---------------------------------------------------------------------------------------

The following summarizes long-lived assets by location (in thousands):



|                         |  |                    |        |      |   |       
|------------------------ |  | ------------------ | ------ | ---- | - | ------
|                         |  | As of December 31,
|                         |  | 2009               |        | 2008
|Long-lived assets:       |  |                    |        |      |   |       
|United States of America |  | $                  | 26,341 |      | $ | 26,057
|Canada                   |  |                    | 13,834 |      |   | 1,791 
|                         |  |                    |        |      |   |       
|Total                    |  | $                  | 40,175 |      | $ | 27,848
|                         |  |                    |        |      |   |       

Recent Accounting Pronouncements

In January 2010, the FASB issued amended standards related to ASC Topic 820, Fair Value Measurements and Disclosures,that require additional fair value disclosures. These amended standards require disclosures about inputs and valuation techniques used to measure fair value as well as disclosures about significant transfers, beginning in the first
quarter of 2010. Additionally, these amended standards require presentation of disaggregated activity within the reconciliation for fair value measurements using significant unobservable inputs (Level 3), beginning in the first quarter of 2011. The
Company does not expect these new standards to materially impact its consolidated financial statements.

In
December 2007, the FASB issued ASC Topic 805, Business Combinations (ASC 805), which established principles and requirements for the acquirer of a business to recognize and measure in its financial statements the identifiable
assets (including in-process research and development and defensive assets) acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. ASC 805 is effective for financial statements issued for fiscal years beginning after
December 15, 2008. Prior to the adoption of ASC 805, in-process research and development costs were immediately expensed and acquisition costs were capitalized. Under ASC 805 all acquisition costs are expensed as incurred. The standard also
provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of financial statements to evaluate the nature and financial effects of the business
combination. In April 2009, the FASB updated ASC 805 to amend the provisions for the initial recognition and measurement, subsequent measurement and accounting, and disclosures for assets and liabilities arising from contingencies in business
combinations. This update also eliminates the distinction between contractual and non-contractual contingencies. The effect of ASC 805 is reflected in the Companys 2009 consolidated financial statements, as the provisions of ASC 805 were
applied in connection with the Companys acquisition of Coretec. See Note 3  Acquisition of Coretec Inc.

3. ACQUISITION
OF CORETEC INC.

On December 31, 2009, the Company completed the acquisition of all of the issued and outstanding
shares of capital stock of Coretec by way of a plan of arrangement under the Business Corporations Act (Ontario) (the Arrangement). As a result of the Arrangement, Coretec and its subsidiaries became wholly-owned subsidiaries of the
Company. Under the Arrangement, (i) Coretecs shareholders received CAD $0.38 (USD $0.36) per Coretec common share; and (ii) holders of outstanding Coretec stock options having an exercise price less than CAD $0.38 (USD $0.36) per
share received an amount per Coretec stock option equal to the difference between the CAD $0.38 (USD $0.36) and the exercise price in respect of such Coretec stock options. The aggregate cash purchase price paid by the Company under the Arrangement
was CAD $7.0 million (USD $6.7 million). In addition, as a result of the Arrangement, DDi effectively assumed approximately CAD $16.7 million (USD $15.9 million) of Coretec debt.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Immediately prior to the acquisition date, the Company owned 515,000 shares of Coretec
with an acquisition date fair value of approximately USD $187,000. A gain in the amount of approximately USD $134,000 was recognized by the Company as a result of remeasuring the fair value of this equity interest in Coretec on the acquisition date,
and this gain was included in net other expense (income).

The acquisition of Coretec was recorded using the acquisition
method of accounting in accordance with the revised authoritative guidance for business combinations. The components of the purchase price are as follows (in thousands):



|                       |  |   |       
|---------------------- |  | - | ------
|Purchase price:        |  |   |       
|Cash                   |  | $ | 6,680 
|Assumption of debt (1) |  |   | 15,928
|                       |  |   |       
|Total                  |  | $ | 22,608
|                       |  |   |       

| | (1) | See Note 6  Revolving Credit Facilities and Long-Term Debt
| | --- | -----------------------------------------------------------

The Companys primary reasons for this acquisition were to increase its overall production capacity, extend its presence in the military/aerospace and medical markets and strengthen its flex and
rigid-flex product capabilities. The significant factors that resulted in goodwill were: (a) the purchase price was based on cash flow and return on capital projections assuming integration with our core business and (b) the calculation of
the fair value of tangible assets acquired. The Company did not identify any intangible assets in connection with the acquisition of Coretec.

The purchase price of Coretec was allocated to the assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the purchase price over net tangible
and identifiable intangible assets (for which there were none in this transaction) was recorded as goodwill. As a result of this acquisition, the Company recorded approximately $3.0 million of goodwill, representing the Companys entire balance
of goodwill as of December 31, 2009. The purchase price allocation used in the preparation of these consolidated financial statements is preliminary due to the continuing analyses relating to the determination of the estimated fair values of
the assets acquired and liabilities assumed. Any changes to the valuation of net assets acquired, based on information as of the acquisition date, will result in an adjustment to the estimated fair value of the assets acquired and liabilities
assumed and a corresponding adjustment to goodwill. Management does not expect the finalization of these matters to have a material effect on the allocation. Goodwill recorded in connection with the acquisition is not deductible for tax purposes. As
the acquisition closed on December 31, 2009, none of Coretecs results of operations from 2009 were included in the Companys 2009 consolidated results of operations.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of the acquisition (in
thousands):



|                                               |  |   |        |  
|---------------------------------------------- |  | - | ------ | -
|Allocation of purchase price:                  |  |   |        |  
|Cash                                           |  | $ | 880    |  
|Accounts receivable, net                       |  |   | 9,558  |  
|Inventories                                    |  |   | 4,871  |  
|Prepaid expenses and other current assets      |  |   | 571    |  
|Property, plant and equipment                  |  |   | 16,704 |  
|Goodwill                                       |  |   | 2,986  |  
|Accounts payable                               |  |   | (4,317 | )
|Accrued expenses and other current liabilities |  |   | (8,645 | )
|                                               |  |   |        |  
|Total                                          |  | $ | 22,608 |  
|                                               |  |   |        |  

For the year ended December 31, 2009, the Companys consolidated results of operations include
acquisition-related expenses of approximately $515,000 which are included in general and administrative expenses.

In
connection with the acquisition, the Company assumed a liability with an estimated fair value in the amount of approximately $1.3 million representing an accrual of expected future remediation costs to exit a leased Coretec facility in Toronto,
Ontario. This effort was initiated by Coretec in mid-2009 and will be completed by the end of the facility lease term in April 2010.



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DDi CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



The following unaudited pro forma financial information for the Company summarizes the
results of operations for the periods indicated as if the Coretec acquisition had been completed as of the beginning of the periods presented. This pro forma financial information gives effect to actual operating results prior to the acquisition,
but is presented for informational purposes only and does not purport to be indicative of the results of future operations or of the results that would have occurred had the acquisition taken place at the beginning of 2008.



|                                                    |  |                                   |         |   |      |   |         |  
|--------------------------------------------------- |  | --------------------------------- | ------- | - | ---- | - | ------- | -
|                                                    |  | 2009                              |         |   | 2008 |  
|                                                    |  | (in thousands, except share data) |        
|Net sales                                           |  | $                                 | 220,096 |   |      | $ | 267,352 |  
|Net loss                                            |  |                                   | (5,208  | ) |      |   | (32,934 | )
|Pro forma net loss per sharebasic and diluted      |  | $                                 | (0.26   | ) |      | $ | (1.57   | )
|Pro forma weighted-average sharesbasic and diluted |  |                                   | 19,732  |   |      |   | 20,961  |  

4. DETAIL OF CERTAIN ASSET
ACCOUNTS

Accounts receivable, net consist of the following (in thousands):



|                                      |  |                    |        |   |      |   |        |  
|------------------------------------- |  | ------------------ | ------ | - | ---- | - | ------ | -
|                                      |  | As of December 31, |       
|                                      |  | 2009               |        |   | 2008 |  
|Accounts receivable                   |  | $                  | 36,926 |   |      | $ | 27,082 |  
|Less: Allowance for doubtful accounts |  |                    | (1,646 | ) |      |   | (1,578 | )
|                                      |  |                    |        |   |      |   |        |  
|                                      |  | $                  | 35,280 |   |      | $ | 25,504 |  
|                                      |  |                    |        |   |      |   |        |  

Inventories consist of the following (in thousands):



|                |  |                    |        |      |   |       
|--------------- |  | ------------------ | ------ | ---- | - | ------
|                |  | As of December 31,
|                |  | 2009               |        | 2008
|Raw materials   |  | $                  | 8,173  |      | $ | 6,144 
|Work-in-process |  |                    | 6,264  |      |   | 4,513 
|Finished goods  |  |                    | 4,905  |      |   | 3,111 
|                |  |                    |        |      |   |       
|                |  | $                  | 19,342 |      |   | 13,768
|                |  |                    |        |      |   |       

Property, plant and equipment consist of the following
(in thousands):



|                                     |  |                    |         |   |      |   |         |  
|------------------------------------ |  | ------------------ | ------- | - | ---- | - | ------- | -
|                                     |  | As of December 31, |        
|                                     |  | 2009               |         |   | 2008 |  
|Land                                 |  | $                  | 6,346   |   |      | $ | 68      |  
|Buildings and leasehold improvements |  |                    | 19,800  |   |      |   | 14,954  |  
|Machinery and equipment              |  |                    | 54,083  |   |      |   | 45,292  |  
|Office furniture and equipment       |  |                    | 8,106   |   |      |   | 7,921   |  
|Vehicles                             |  |                    | 113     |   |      |   | 85      |  
|Deposits on equipment                |  |                    | 2,172   |   |      |   | 3,021   |  
|                                     |  |                    |         |   |      |   |         |  
|                                     |  |                    | 90,620  |   |      |   | 71,341  |  
|Less: Accumulated depreciation       |  |                    | (50,445 | ) |      |   | (43,493 | )
|                                     |  |                    |         |   |      |   |         |  
|                                     |  | $                  | 40,175  |   |      | $ | 27,848  |  
|                                     |  |                    |         |   |      |   |         |  

5. GOODWILL AND INTANGIBLE ASSETS

Goodwill

As part of fresh-start accounting, an allocation of the
reorganization value in connection with our emergence from bankruptcy in 2003 resulted in goodwill of $99.8 million. Under the fresh-start accounting rules prescribed by the authoritative guidance in effect at that time, the reductions of U.S.
tax valuation allowances related to net deferred tax assets that were in existence as of applying fresh-start accounting had been recognized as a credit to goodwill and not as a U.S. tax benefit for book purposes.



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The changes in the carrying amount of goodwill are as follows (in thousands):



|                                                                                             |  |                             |       |      |   |         |      |  |   |        |  
|-------------------------------------------------------------------------------------------- |  | --------------------------- | ----- | ---- | - | ------- | ---- |  | - | ------ | -
|                                                                                             |  | For Year Ended December 31, |      
|                                                                                             |  | 2009                        |       | 2008 |   |         | 2007 | 
|Beginning balance                                                                            |  | $                           |      |      | $ | 39,006  |      |  | $ | 39,229 |  
|Goodwill resulting from Coretec acquisition                                                  |  |                             | 2,986 |      |   |        |      |  |   |       |  
|Adjustments related to pre-fresh-start accounting tax contingencies and valuation allowances |  |                             |      |      |   | (108    | )    |  |   | (223   | )
|Impairment charges                                                                           |  |                             |      |      |   | (38,898 | )    |  |   |       |  
|                                                                                             |  |                             |       |      |   |         |      |  |   |        |  
|Ending balance                                                                               |  | $                           | 2,986 |      | $ |        |      |  | $ | 39,006 |  
|                                                                                             |  |                             |       |      |   |         |      |  |   |        |  

Annual Goodwill Impairment Test

The Company assesses potential impairment on an annual basis on the last day of the year using a two step method. The Company operates in one operating segment and has one reporting unit, and therefore,
it tests goodwill for impairment at the consolidated level against the fair value of the Company.

The goodwill recorded by
the Company as of December 31, 2009 resulted from its acquisition of Coretec on that date and its first annual impairment test of this goodwill will be December 31, 2010, unless indications of impairment become evident prior to that time.

As of December 31, 2008, the Company performed the first step of its impairment test by comparing its market
capitalization to its carrying value, including goodwill. Due to a decline in the Companys stock price and market capitalization during the fourth quarter of 2008 caused by adverse equity market conditions and the general economic environment,
the analysis indicated that the Companys book value was in excess of its fair value. As a result, the Company then performed the second step of the goodwill impairment analysis which involves calculating the implied fair value of its goodwill
by allocating the fair value of the Company to all of its assets and liabilities other than goodwill (including both recognized and unrecognized intangible assets) and comparing the residual amount to the carrying value of goodwill. The Company
determined that its goodwill was fully impaired and recorded a non-cash goodwill impairment charge to write off the entire carrying value of its goodwill of $38.9 million. The impairment charge had no impact on the Companys tangible net book
value, liquidity or availability under its previous asset-based credit facility.

As of December 31, 2007, the Company
performed its annual impairment test on goodwill and determined that because the fair value of the Company, using its market capitalization as the basis, exceeded its carrying value, no goodwill impairment was indicated at that time.

Intangible Assets

As part of fresh-start accounting, an allocation of the reorganization value in 2003 resulted in identified intangible assets of $23.0 million related to customer relationships. The intangible assets were amortized over their estimated
useful life of five years and were fully amortized as of November 2008. The Company further acquired $3.8 million of customer relationships intangible assets in connection with the acquisition of Sovereign which are also being amortized over their
estimated useful life of five years. Amortization related to customer relationships for the years ended December 31, 2009, 2008, and 2007 was $760,000, $5.0 million, and $5.4 million, respectively.

Identifiable intangible assets consist of the following (in thousands):



|                       |  |                         |        |                         |   |         |           |  |             |       |                         |   |        |           |   |         |   |  |   |      
|---------------------- |  | ----------------------- | ------ | ----------------------- | - | ------- | --------- |  | ----------- | ----- | ----------------------- | - | ------ | --------- | - | ------- | - |  | - | -----
|                       |  | As of December 31, 2009 |        | As of December 31, 2008
|                       |  | GrossAmount             |        | AccumulatedAmortization |   |         | NetAmount |  | GrossAmount |       | AccumulatedAmortization |   |        | NetAmount
|Customer relationships |  | $                       | 26,790 |                         | $ | (25,416 | )         |  | $           | 1,374 |                         | $ | 26,790 |           | $ | (24,656 | ) |  | $ | 2,134
|                       |  |                         |        |                         |   |         |           |  |             |       |                         |   |        |           |   |         |   |  |   |      



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Estimated amortization expense for the remaining amortizable lives of the assets is as
follows (in thousands):



|                         |  |   |      
|------------------------ |  | - | -----
|Year Ending December 31, |  |  
|2010                     |  | $ | 760  
|2011                     |  |   | 614  
|                         |  |   |      
|Total                    |  | $ | 1,374
|                         |  |   |      

6. REVOLVING CREDIT FACILITIES AND LONG-TERM DEBT

Revolving credit facility and long-term debt obligations consisted of the following (in thousands):



|                                          |  |                    |        |   |      |   |       |  
|----------------------------------------- |  | ------------------ | ------ | - | ---- | - | ----- | -
|                                          |  | As of December 31, |       
|                                          |  | 2009               |        |   | 2008 |  
|Revolving credit facility                 |  | $                  | 4,227  |   |      | $ |      |  
|Notes payable                             |  |                    | 12,973 |   |      |   | 1,516 |  
|                                          |  |                    |        |   |      |   |       |  
|Sub-total                                 |  |                    | 17,200 |   |      |   | 1,516 |  
|Less: current maturities of notes payable |  |                    | (1,727 | ) |      |   | (244  | )
|Less: revolving credit facility           |  |                    | (4,227 | ) |      |   |      |  
|                                          |  |                    |        |   |      |   |       |  
|Total long-term debt                      |  | $                  | 11,246 |   |      | $ | 1,272 |  
|                                          |  |                    |        |   |      |   |       |  

Revolving Credit Facility with General Electric Capital Credit

On December 21, 2009, the Company terminated its Amended and Restated Credit Agreement, dated as of March 30, 2007, between the
Company, certain of its subsidiaries, and General Electric Capital Credit and the related Canadian credit facility with GE Canada Finance Holding Company (the Credit Agreements). The terminations became effective on December 31,
2009 under the terms of the Credit Agreements. The Credit Agreements provided for a revolving unsecured credit facility of up to $25 million with a term of three years from the effective date of March 31, 2007. No borrowings were outstanding
under the Credit Agreements at the time of termination, and no penalties resulted from the early terminations.

Coretec Credit Facility

In connection with the acquisition of Coretec on December 31, 2009, the Company assumed the liability for the
outstanding balance on Coretecs revolving credit line with Wells Fargo Canada. The three year, CAD $10 million asset-based lending facility was entered into by Coretec on March 24, 2009 and was to be used for day-to-day working capital
and other expenditures. At December 31, 2009, the total outstanding principal and interest owed under the credit line was approximately USD $4.2 million. The Company terminated this credit line effective February 26, 2010 and paid the
balance owed of approximately USD $3.1 million on that date in full as well as an additional fee of approximately USD $101,000 for early termination and legal fees.

Long-Term Debt

Sovereign Long-Term Debt

In April 2007, the Company consolidated two outstanding term loans assumed in the Sovereign acquisition with an aggregate outstanding
balance totaling $1.9 million into one term loan collateralized by Sovereigns real property. The note matures in April 2015, bears interest at LIBOR plus 1.5%, and has monthly payments of approximately $20,000 plus accrued interest.
In connection with this transaction, the lender released its liens on all assets of Sovereign other than the real property. At December 31, 2009, the effective interest rate of the term loan was 1.74% and the principal balance was $1.3 million.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Coretec Long-Term Debt

On December 31, 2009, the Company assumed all of the long-term debt of Coretec in connection with the acquisition. Coretec had six
asset-backed term loans as of December 31, 2009, as follows:

Business Development Bank of Canada

Coretec had four existing loans with Business Development Bank of Canada (BDC)  a term loan, an infrastructure loan, an
equipment loan and a building loan. The BDC loans are secured by the land and building of the Companys Sheppard Avenue facility, located in Toronto, Ontario, and include the requirement for the guarantee of 25% of the loan balance by the
Company. The BDC loans contain customary covenants including financial covenants regarding the Companys (a) debt-to-equity ratio, which must remain at or below .75:1, and (b) working capital ratio, which must remain at or above
1.2:1. As of December 31, 2009, the Company was in compliance with all required covenants.

The outstanding term loan had
a principal balance of approximately USD $1.1 million as of December 31, 2009. The loan requires monthly principal payments of approximately $44,000 over the loan term and bears interest, payable monthly, at BDCs floating base rate less
1.5% (2.75% at December 31, 2009). The term loan matures in December 2011.

The infrastructure loan was provided to
finance the completion of the Companys Sheppard Avenue facility, located in Toronto, Ontario, for expanding infrastructure. The infrastructure loan had a principal balance of approximately USD $4.8 million as of December 31, 2009, accrues
interest at BDCs floating base rate (4.25% at December 31, 2009), has a 20 year term and requires monthly payments of approximately $21,000.

The equipment loan had a principal balance of approximately USD $2.5 million as of December 31, 2009. The equipment loan accrues interest at the 1-month USD $ floating base rate plus 0.6%, (4.35% at
December 31, 2009), has a 7 year term and requires monthly payments of approximately $36,000.

The building loan had a
principal balance of approximately USD $431,000 as of December 31, 2009. The building loan accrues interest at BDCs floating base rate plus 0.25%, (4.5% at December 31, 2009), matures in March 2012 and requires monthly payments of
approximately $16,000.

Zions Bank Mortgage

The Company had an existing mortgage with Zions Bank with a principal balance of approximately USD $1.5 million as of December 31, 2009,
secured by the land and building of the Companys Cuyahoga Falls, Ohio facility. The mortgage accrues interest at the Federal Home Loan Bank rate plus 2% (6.92% at December 31, 2009), has a term through November 2032, and requires monthly
principal and interest payments of approximately $12,000.

GE Real Estate Mortgage

The Company had an existing mortgage with GE Real Estate, with a principal balance of approximately USD $1.4 million as of December 31,
2009, secured by the land and building of the Companys Littleton, Colorado facility. The mortgage accrues interest at a fixed rate of 7.55% per annum, has a term through June 2032, and requires monthly interest and principal payments of
approximately $11,000.

Maturities of long-term debt for the next five years and thereafter are as follows (in thousands):



|                         |  |   |       
|------------------------ |  | - | ------
|Year Ending December 31,
|2010                     |  | $ | 1,727 
|2011                     |  |   | 1,759 
|2012                     |  |   | 1,106 
|2013                     |  |   | 1,109 
|2014                     |  |   | 1,150 
|Thereafter               |  |   | 6,122 
|                         |  |   |       
|Total                    |  | $ | 12,973
|                         |  |   |       



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



7. DETAIL OF CERTAIN LIABILITY ACCOUNTS

Accrued expenses and other current liabilities consist of the following (in thousands):



|                                                            |  |                    |        |      |   |      
|----------------------------------------------------------- |  | ------------------ | ------ | ---- | - | -----
|                                                            |  | As of December 31,
|                                                            |  | 2009               |        | 2008
|Accrued salaries and related benefits                       |  | $                  | 6,213  |      | $ | 5,568
|Facility remediation accrual (1)                            |  |                    | 1,334  |      |   |     
|Accrued employee severance and stock-based compensation (1) |  |                    | 2,601  |      |   |     
|Current portion of deferred lease liability                 |  |                    | 497    |      |   | 640  
|Accrued warranty expense                                    |  |                    | 1,100  |      |   | 805  
|Other accrued expenses                                      |  |                    | 5,497  |      |   | 1,763
|                                                            |  |                    |        |      |   |      
|                                                            |  | $                  | 17,242 |      | $ | 8,776
|                                                            |  |                    |        |      |   |      



|(1) | Related to Coretec acquisition
|--- | ------------------------------

Other long-term liabilities consist of the following (in thousands):



|                                              |  |                    |     |      |   |      
|--------------------------------------------- |  | ------------------ | --- | ---- | - | -----
|                                              |  | As of December 31,
|                                              |  | 2009               |     | 2008
|Long-term portion of deferred lease liability |  | $                  | 312 |      | $ | 767  
|Income tax-related liabilities                |  |                    | 498 |      |   | 1,046
|Other long-term liabilities                   |  |                    |    |      |   | 300  
|                                              |  |                    |     |      |   |      
|                                              |  | $                  | 810 |      | $ | 2,113
|                                              |  |                    |     |      |   |      

Deferred Lease Liability

This represents the excess of actual lease payments due under operating leases over market value of such leases (at net present value) which
will be amortized through (a) a reduction of rent expense and (b) a charge to interest expense over the remaining term of the leases. The Company recognized a deferred lease liability of $8.1 million through fresh-start accounting, of
which $692,000 and $1.2 million of the deferred liability remained to be amortized at December 31, 2009 and 2008, respectively. In addition, approximately $117,000 and $207,000 of deferred lease liability associated with normal operating
leases remained to be amortized at December 31, 2009 and 2008, respectively. Amortization for the years ended December 31, 2009, 2008 and 2007 was $469,000, $535,000 and $714,000, respectively. The non-cash interest expense associated with
the deferred lease liability originating from fresh-start accounting was $561,000, $495,000 and $602,000 for the years ended December 31, 2009, 2008 and 2007, respectively.

8. STOCKHOLDERS EQUITY

Repurchase Program

The Companys Board of Directors (the Board) previously authorized a common stock repurchase program of up to 3,000,000
shares of the Companys common stock in the open market at prevailing market prices or in privately-negotiated transactions. In February 2009, the Board amended the stock repurchase program to increase the amount of shares of common stock
authorized to be repurchased by up to an additional $10 million worth of shares. The stock repurchase program is subject to applicable legal and regulatory requirements, may be modified or discontinued at any time, and the stock repurchase program
may be modified or discontinued at any time. The Company will continue to review the value in repurchasing shares after considering its cash levels and operating needs as well as other uses for its cash that could create greater shareholder value.

No shares were repurchased during the quarter or year ended December 31, 2009. As of December 31, 2009, the Company
had repurchased a total of 2,946,986 shares since the inception of the program. Shares repurchased are recorded as treasury stock (accounted for under the cost method) and are available for reissuance under our 2005 Stock Incentive Plan or as
otherwise determined by the Board.



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DDi CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



9. STOCK-BASED COMPENSATION

Stock Options

In 2005, the Company adopted the DDi Corp. 2005 Stock
Incentive Plan (the 2005 Plan). Awards under the 2005 Plan may be made to key employees and directors of DDi whose participation in the 2005 Plan is determined to be in the best interests of the Company by the Compensation Committee of
the Board of Directors (the Compensation Committee). The 2005 Plan permits the granting of options (both incentive and nonqualified stock options), share appreciation rights, restricted common stock, deferred share units and performance
awards. The Company has reserved an aggregate of 3,142,857 shares of its common stock for issuance under the 2005 Plan. Of these shares, 1,071,429 may be made in a form other than stock options and stock appreciation rights. Options granted to
employees under the 2005 Plan vest annually over three years from the date of grant in equal installments and have a contractual term of 10 years.

In 2003, the Company adopted the DDi Corp. 2003 Management Equity Incentive Plan (the 2003 Plan). Stock options granted under the 2003 Plan vest in equal installments, with one-third vesting
immediately upon grant, one-third after 18 months and one-third after 36 months. The Company no longer grants options under the 2003 Plan.

In 2003, the Company also adopted the DDi Corp. 2003 Directors Equity Incentive plan (the 2003 Directors Plan) for non-employee directors of the Company. Stock options granted under the 2003
Directors Plan vest 40% immediately upon approval of grant by stockholders and 20% each year thereafter on December 19 from 2004 through 2006. The Company no longer grants options under the 2003 Directors Plan.

The following table summarizes the Companys stock option activity under all the plans for the year ended December 31, 2009:



|                                            |  |                                  |   |  |                                         |      |                                                   |     |                                        |   |    
|------------------------------------------- |  | -------------------------------- | - |  | --------------------------------------- | ---- | ------------------------------------------------- | --- | -------------------------------------- | - | ---
|                                            |  | OptionsOutstanding(in thousands) |   |  | WeightedAverage ExercisePriceper Option |      | Weighted AverageRemainingContractual Lifein Years |     | AggregateIntrinsic Value(in thousands)
|Balance as of December 31, 2008             |  | 2,161                            |   |  | $                                       | 8.52 |                                                   | 7.4 |                                        | $ | 10 
|Granted                                     |  | 140                              |   |  |                                         | 3.61 |                                                   |     |                                        |   |    
|Exercised                                   |  |                                 |   |  |                                         |     |                                                   |     |                                        |   |    
|Forfeited                                   |  | (73                              | ) |  |                                         | 9.55 |                                                   |     |                                        |   |    
|                                            |  |                                  |   |  |                                         |      |                                                   |     |                                        |   |    
|Balance as of December 31, 2009             |  | 2,228                            |   |  |                                         | 8.18 |                                                   | 6.4 |                                        |   | 227
|                                            |  |                                  |   |  |                                         |      |                                                   |     |                                        |   |    
|Options exercisable as of December 31, 2009 |  | 1,893                            |   |  |                                         | 8.73 |                                                   | 6.1 |                                        |   | 30 
|                                            |  |                                  |   |  |                                         |      |                                                   |     |                                        |   |    

The aggregate intrinsic value represents the difference between the exercise price of the
underlying awards and the quoted price of DDis common stock for those awards that have an exercise price below the quoted price at December 31, 2009. The Company had outstanding at December 31, 2009 options to purchase an aggregate
of 172,486 shares with an exercise price below the quoted price of the Companys stock resulting in an aggregate intrinsic value of approximately $30,000. During the years ended December 31, 2008 and 2007, the aggregate intrinsic value of
options exercised under the Companys stock option plans was approximately $10,000 and $109,000, respectively, determined as of the date of exercise. No options were exercised during the year ended December 31, 2009.

The Company made an estimate of expected forfeitures and recognized compensation costs in 2009 for those equity awards expected to vest. At
December 31, 2009, the total compensation cost related to non-vested stock options not yet recognized was $318,000, net of estimated forfeitures. This cost will be amortized on a straight-line basis over a weighted-average period of
approximately 0.9 years and will be adjusted for subsequent changes in estimated forfeitures.

During 2007, the Company
recorded $93,000 of incremental cost resulting from the modification of pre-existing awards belonging to a member of the Board of Directors that retired from service to the Company in May 2007.



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DDi CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Determining Stock Option Fair Value

Valuation and Amortization Method The Company estimates the fair value of stock options granted using the Black-Scholes
option-pricing model and a single option award approach. The Black-Scholes option-pricing model requires the input of certain assumptions that require managements judgment including the expected term and the expected stock price volatility of
the underlying stock option. The fair value of stock options is amortized on a straight-line basis over the requisite service periods of the awards, which is the vesting period.

Expected Term The Companys expected term represents the period that the Companys stock-based awards are
expected to be outstanding and is determined based on historical option exercise patterns of similar awards, the contractual terms and vesting schedules of the stock-based awards and expectations of future employee stock option exercise behavior.

Expected Stock Price Volatility  Beginning January 1, 2006, and until December 31, 2007, the
Company determined that the most appropriate indicators of its expected future stock volatility were its own historical volatility, combined with the historical volatility of its two most closely related competitors during the period immediately
preceding the Companys emergence from Chapter 11 bankruptcy in 2003. Beginning January 1, 2008, the Company determined that its own historical volatility alone was the most appropriate indicator of its expected future stock volatility, as
four full years of stock trading data was then available.

Expected Dividend Yield The Company does not pay
dividends on its common stock, and management does not have any plan in the foreseeable future to do so.

Risk-Free
Interest Rate The Company uses the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent remaining term, approximating the expected term of the option, as a risk-free interest rate.

Fair Value The fair value of the Companys stock options granted to employees for the years ended December 31,
2009, 2008 and 2007 were estimated using the following weighted average assumptions:



|                                      |  |                             |      |   |      |   |      |      |  |   |      |  
|------------------------------------- |  | --------------------------- | ---- | - | ---- | - | ---- | ---- |  | - | ---- | -
|                                      |  | For Year Ended December 31, |     
|                                      |  | 2009                        |      |   | 2008 |   |      | 2007 | 
|Expected term (years)                 |  |                             | 4    |   |      |   | 4    |      |  |   | 4    |  
|Expected stock price volatility       |  |                             | 47.2 | % |      |   | 47.7 | %    |  |   | 53.9 | %
|Expected dividend yield               |  |                             | 0    | % |      |   | 0    | %    |  |   | 0    | %
|Risk-free interest rate               |  |                             | 1.7  | % |      |   | 2.5  | %    |  |   | 4.1  | %
|Weighted-average fair value per share |  | $                           | 1.39 |   |      | $ | 1.81 |      |  | $ | 2.95 |  

Restricted Stock

In October 2008 and December 2007, the Company granted 395,000 and 122,500 restricted stock awards, respectively,
under the 2005 Plan which vest annually over three years from the date of grant in equal annual installments. The Company calculated compensation expense on these shares using the fair market value of its common stock of $3.84 and $5.80,
respectively, on the grant date. No restricted stock awards were granted in 2009. At December 31, 2009, the total compensation cost related to non-vested restricted stock awards not yet recognized was $966,000 net of estimated forfeitures. This
cost will be amortized on a straight-line basis over a weighted-average period of approximately 1.7 years and will be adjusted for subsequent changes in estimated forfeitures.

A summary of the status of the Companys non-vested restricted shares as of December 31, 2009, and changes during the year ended
December 31, 2009 is presented below:



|                                |  |                                            |   |  |                                      |     
|------------------------------- |  | ------------------------------------------ | - |  | ------------------------------------ | ----
|                                |  | Non-vested SharesOutstanding(in
thousands) |   |  | Weighted AverageGrant-DateFair
Value
|Non-vested at January 1, 2009   |  | 472                                        |   |  | $                                    | 4.16
|Granted                         |  |                                           |   |  |                                      |    
|Vested                          |  | (170                                       | ) |  |                                      | 4.28
|Forfeited                       |  | (39                                        | ) |  |                                      | 4.17
|                                |  |                                            |   |  |                                      |     
|Non-vested at December 31, 2009 |  | 263                                        |   |  | $                                    | 4.08
|                                |  |                                            |   |  |                                      |     



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DDi CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Stock Compensation Expense

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



|                                    |  |                             |       |      |   |       |  |   |      
|----------------------------------- |  | --------------------------- | ----- | ---- | - | ----- |  | - | -----
|                                    |  | For Year Ended December 31,
|                                    |  | 2009                        |       | 2008 |   | 2007 
|Non-cash compensation expense:      |  |                             |       |      |   |       |  |   |      
|Cost of goods sold                  |  | $                           | 532   |      | $ | 528   |  | $ | 374  
|Sales and marketing expenses        |  |                             | 362   |      |   | 298   |  |   | 120  
|General and administrative expenses |  |                             | 1,013 |      |   | 1,825 |  |   | 1,808
|                                    |  |                             |       |      |   |       |  |   |      
|Total non-cash compensation expense |  | $                           | 1,907 |      | $ | 2,651 |  | $ | 2,302
|                                    |  |                             |       |      |   |       |  |   |      

10. RESTRUCTURING AND OTHER RELATED CHARGES

In May 2005, the Board of Directors of the Company approved plans to close the Companys Arizona facility in order to increase
operational efficiency. The Arizona facility, encompassing three buildings, produced mass lamination cores for four of the Companys North American PCB plants. The Company announced the exit plan to the affected workforce in May 2005, with all
production activity completed by the end of that same month. The Company completed remediation of the Arizona facility (encompassing three separate buildings) and exited the last building in the third quarter of 2006. The Company incurred the
following types of restructuring costs in connection with the closure of the facility: termination benefits; facility exit costs; fixed asset and inventory write-offs; taxes; and other miscellaneous charges. As of December 31, 2008, the Company
had incurred a total of $6.7 million in charges relating to the closure. During 2008, the Company incurred approximately $295,000 in ongoing fees and expenses related to litigation with the landlord of one of the buildings, but does not
anticipate any additional charges as this litigation was ruled upon in July 2008 and an award of $52,000 paid to the plaintiff in January 2009.

In connection with the acquisition of Coretec, the Company assumed a liability with an estimated fair value in the amount of approximately $1.3 million representing an accrual of expected future
remediation costs to exit a leased Coretec facility in Toronto, Ontario. This effort was initiated by Coretec in mid-2009 and will be completed by the end of the facility lease term in April 2010.

11. INCOME TAX MATTERS

The components of income (loss) before income taxes were as follows (in thousands):



|         |  |                         |       |   |      |   |         |      |  |   |       |  
|-------- |  | ----------------------- | ----- | - | ---- | - | ------- | ---- |  | - | ----- | -
|         |  | Year Ended December 31, |      
|         |  | 2009                    |       |   | 2008 |   |         | 2007 | 
|Domestic |  | $                       | (620  | ) |      | $ | (36,353 | )    |  | $ | (572  | )
|Foreign  |  |                         | 3,092 |   |      |   | 4,616   |      |  |   | 2,245 |  
|         |  |                         |       |   |      |   |         |      |  |   |       |  
|         |  | $                       | 2,472 |   |      | $ | (31,737 | )    |  | $ | 1,673 |  
|         |  |                         |       |   |      |   |         |      |  |   |       |  

The provision (benefit) for income taxes from continuing operations consisted of the following (in
thousands):



|                                                      |  |                         |       |   |      |   |       |      |  |   |       |  
|----------------------------------------------------- |  | ----------------------- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | -
|                                                      |  | Year Ended December 31, |      
|                                                      |  | 2009                    |       |   | 2008 |   |       | 2007 | 
|Current:                                              |  |                         |       |   |      |   |       |      |  |   |       |  
|Federal                                               |  | $                       | (113  | ) |      | $ | 172   |      |  | $ | 156   |  
|State                                                 |  |                         | (604  | ) |      |   | 545   |      |  |   | 243   |  
|Foreign                                               |  |                         | 1,379 |   |      |   | 1,010 |      |  |   | 702   |  
|                                                      |  |                         |       |   |      |   |       |      |  |   |       |  
|                                                      |  |                         | 662   |   |      |   | 1,727 |      |  |   | 1,101 |  
|Deferred:                                             |  |                         |       |   |      |   |       |      |  |   |       |  
|Foreign                                               |  |                         | 26    |   |      |   | (25   | )    |  |   | (116  | )
|                                                      |  |                         |       |   |      |   |       |      |  |   |       |  
|Provision for income taxes from continuing operations |  | $                       | 688   |   |      | $ | 1,702 |      |  | $ | 985   |  
|                                                      |  |                         |       |   |      |   |       |      |  |   |       |  



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DDi CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Deferred income tax assets and liabilities from continuing operations consist of the
following (in thousands):



|                                                   |  |                    |         |   |      |   |         |  
|-------------------------------------------------- |  | ------------------ | ------- | - | ---- | - | ------- | -
|                                                   |  | As of December 31, |        
|                                                   |  | 2009               |         |   | 2008 |  
|Deferred tax assets:                               |  |                    |         |   |      |   |         |  
|Net operating loss carryforwards                   |  | $                  | 41,220  |   |      | $ | 45,545  |  
|Tax credits                                        |  |                    | 11,421  |   |      |   | 6,061   |  
|Accrued liabilities                                |  |                    | 1,298   |   |      |   | 1,264   |  
|Capitalized research and development costs         |  |                    | 3,142   |   |      |   | 5,962   |  
|Property, plant and equipment                      |  |                    | 3,276   |   |      |   | 3,660   |  
|Other                                              |  |                    | 4,222   |   |      |   | 3,470   |  
|                                                   |  |                    |         |   |      |   |         |  
|                                                   |  |                    | 64,579  |   |      |   | 65,962  |  
|                                                   |  |                    |         |   |      |   |         |  
|Deferred tax liabilities:                          |  |                    |         |   |      |   |         |  
|Intangible assets                                  |  |                    | (92     | ) |      |   | (280    | )
|                                                   |  |                    |         |   |      |   |         |  
|Valuation allowance                                |  |                    | (64,267 | ) |      |   | (65,436 | )
|                                                   |  |                    |         |   |      |   |         |  
|Net deferred tax assets from continuing operations |  | $                  | 220     |   |      | $ | 246     |  
|                                                   |  |                    |         |   |      |   |         |  

Deferred tax assets and liabilities are based on managements best estimate of the ultimate realization
of the tax benefits. Management will continually evaluate these matters.

Based upon the substantial net operating loss
carryovers and current economic conditions that could impact future operating results, management concluded that it is more likely than not that substantially all of the deferred tax assets at December 31, 2009 may not be realized.
Consequently, the Company established a valuation allowance for the majority of its deferred tax assets, with the exception of deferred tax assets related to Canada (excluding deferred tax assets recorded in connection with the Companys
acquisition of Coretec), where the Company has operating income. In addition, the Company expects to provide a full valuation allowance on future tax benefits realized in the United States until it can sustain a level of taxable income that
demonstrates its ability to utilize the assets and the economy stabilizes. The change in the valuation allowance from the prior year is primarily due to the impact of purchase accounting deferred tax assets recorded in connection with the
Companys acquisition of Coretec and to the 382 and 383 limitations on net operating losses and credits.

The income tax
provision from continuing operations differs from the amount of income tax determined by applying the U.S. federal statutory income tax rate of 35% to the income (loss) from continuing operations before income taxes as below (in thousands):



|                                                                     |  |                         |         |   |      |   |         |      |  |   |      |  
|-------------------------------------------------------------------- |  | ----------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ---- | -
|                                                                     |  | Year Ended December 31, |        
|                                                                     |  | 2009                    |         |   | 2008 |   |         | 2007 | 
|Computed expected tax expense (benefit) from continuing operations |  | $                       | 865     |   |      | $ | (11,108 | )    |  | $ | 586  |  
|Increase (decrease) in income taxes resulting from:                  |  |                         |         |   |      |   |         |      |  |   |      |  
|State tax                                                            |  |                         | (604    | ) |      |   | 545     |      |  |   | 243  |  
|Goodwill                                                             |  |                         |        |   |      |   | 13,047  |      |  |   |     |  
|Resolution of tax controversies                                      |  |                         | 1,007   |   |      |   |        |      |  |   |     |  
|Foreign tax differential                                             |  |                         | (124    | ) |      |   | 13      |      |  |   | 382  |  
|Research and development credits                                     |  |                         | (411    | ) |      |   | (1,203  | )    |  |   | (915 | )
|Change in effective tax rate                                         |  |                         | 100     |   |      |   |        |      |  |   |     |  
|Net operating loss and credit limitation                             |  |                         | 16,298  |   |      |   |        |      |  |   |     |  
|Increase (decrease) in valuation allowance                           |  |                         | (16,298 | ) |      |   | 501     |      |  |   | 683  |  
|Other                                                                |  |                         | (145    | ) |      |   | (93     | )    |  |   | 6    |  
|                                                                     |  |                         |         |   |      |   |         |      |  |   |      |  
|Provision for income taxes from continuing operations                |  | $                       | 688     |   |      | $ | 1,702   |      |  | $ | 985  |  
|                                                                     |  |                         |         |   |      |   |         |      |  |   |      |  



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DDi CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



At December 31, 2009, the Company had U.S. federal and state net operating
loss (NOL) carryforwards of approximately $88.6 million and $25 million, respectively. The federal and state NOLs begin expiring in 2021 and 2015, respectively.

At December 31, 2009, the Company had U.S. federal and state research and experimentation (R&E) credits of
approximately $2.2 million and $4.8 million, respectively. The federal R&E credits begin to expire in 2027 and the state R&E credits carryover indefinitely. In addition, the Company has an AMT tax credit of approximately $205,000, which
carries forward indefinitely.

At December 31, 2009, Coretec Inc. had Canadian NOL carryforwards of approximately $28.7
million and research credit carryforwards of approximately $4.9 million. The net operating losses will expire in 2029 and the research credits will begin to expire in 2020.

Pursuant to section 382 and 383 of the Internal Revenue Code, the utilization of NOLs and other tax attribute carryovers may be subject to
limitations if certain ownership changes occur. The Company experienced ownership changes under Section 382 and 383 in 2003, 2005 and 2008. The NOLs and certain tax credits (deferred tax assets) and related valuation allowance has been written
down to the amounts utilizable before their respective expirations. The deferred tax assets were reduced by $16.3 million. The annual limitations will be used to calculate NOL and other tax attributes available for utilization in each future year.

A cash dividend was declared in 2005 to repatriate to the U.S. previously undistributed earnings of our Canadian
subsidiary. DDi management does not currently have plans to repatriate additional Canadian earnings. U.S. income taxes have not been provided on approximately $10.1 million of undistributed earnings of foreign subsidiaries since management
considers these earnings to be invested indefinitely or substantially offset by foreign tax credits. It is not practicable to estimate the amount of unrecognized deferred U.S. taxes on these undistributed earnings.

The Company is periodically under examination by various taxing authorities. The Company believes the results of these audits will not have
a material impact on the Companys financial position, cash flows or results of operations.

Unrecognized Tax Benefits

The Company is subject to income taxes in the United States and Canada. Significant judgment is required in evaluating the
Companys tax positions and determining its provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. The Company establishes reserves
for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These reserves are established when the Company believes that certain positions might be challenged despite a belief that its tax
return positions are fully supportable. The Company adjusts these reserves in light of changing facts and circumstances, such as the outcome of income tax audits. The provision for income taxes includes the impact of reserve provisions and changes
to reserves that are considered appropriate. Accruals for unrecognized tax benefits are provided for in accordance with the requirements of the prescribed authoritative guidance.

The reconciliation of the Companys unrecognized tax benefits is as follows (in thousands):



|                                                                           |  |      |      |   |      |   |       |  
|-------------------------------------------------------------------------- |  | ---- | ---- | - | ---- | - | ----- | -
|                                                                           |  | 2009 |      |   | 2008 |  
|Balance at beginning of year                                               |  | $    | 921  |   |      | $ | 1,398 |  
|Settlements                                                                |  |      | (313 | ) |      |   | (121  | )
|Increases in balances related to tax positions taken in prior periods      |  |      | 116  |   |      |   |      |  
|Decreases in balances related to tax positions taken during prior periods  |  |      | (434 | ) |      |   | (259  | )
|Increases in balances related to tax positions taken during current period |  |      | 156  |   |      |   |      |  
|Currency fluctuations                                                      |  |      |     |   |      |   | (97   | )
|                                                                           |  |      |      |   |      |   |       |  
|Balance at end of year                                                     |  | $    | 446  |   |      | $ | 921   |  
|                                                                           |  |      |      |   |      |   |       |  

As of December 31, 2009, the Companys total unrecognized tax benefit was $446,000, which amount
has been included in other long-term liabilities on the accompanying consolidated balance sheets. If recognized in future periods, there would be a favorable effect of $331,000 to the effective tax rate. Management anticipates a decrease in the tax
contingency reserve in the next twelve months due to statute expirations of approximately $108,000.



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DDi CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Interest and penalties related to income tax matters are included in current income tax
expense. Accrued interest and penalties at December 31, 2009 and 2008 were $104,000 and $418,000, respectively. The amount of interest and penalties accrued in 2009 was $310,000.

The Company files income tax returns in the U.S. federal jurisdiction, various states and Canada. The Company has substantially concluded
all U.S. federal income tax matters for years through 2004. Canadian income tax matters have been examined through 2008 with the final results of the examination included in preparation of the 2009 consolidated financial statements. State
jurisdictions that remain subject to examination range from 2003 to 2009.

12. NET INCOME (LOSS) PER SHARE

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

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



|                                                                                           |  |                         |        |      |   |         |      |  |   |       
|------------------------------------------------------------------------------------------ |  | ----------------------- | ------ | ---- | - | ------- | ---- |  | - | ------
|                                                                                           |  | Year Ended December 31,
|                                                                                           |  | 2009                    |        | 2008 |   |         | 2007
|Weighted-average shares of common stock outstanding  basic                                |  |                         | 19,732 |      |   | 20,961  |      |  |   | 22,551
|Weighted common stock equivalents                                                          |  |                         | 106    |      |   |        |      |  |   | 43    
|                                                                                           |  |                         |        |      |   |         |      |  |   |       
|Weighted-average shares of common stock and common stock equivalents outstanding  diluted |  |                         | 19,838 |      |   | 20,961  |      |  |   | 22,594
|                                                                                           |  |                         |        |      |   |         |      |  |   |       
|Net income (loss)                                                                          |  | $                       | 1,784  |      | $ | (33,439 | )    |  | $ | 688   
|Net income (loss) per share  basic and diluted                                            |  | $                       | 0.09   |      | $ | (1.60   | )    |  | $ | 0.03  
|                                                                                           |  |                         |        |      |   |         |      |  |   |       

For the year ended December 31, 2009, common
shares issuable upon exercise of outstanding stock options and restricted stock of 2,385,591 were excluded from the diluted net income per common share calculation as their impact would have been anti-dilutive.

As a result of the net loss incurred during the year ended December 31, 2008, common shares issuable upon exercise of outstanding stock
options and restricted stock of 2,632,373 were excluded from the diluted net loss per common share calculation as their impact would have been anti-dilutive.

For the year ended December 31, 2007, common shares issuable upon exercise of outstanding stock options and restricted stock of 2,325,311 were excluded from the diluted net income per common share
calculation as their impact would have been anti-dilutive.

13. FAIR VALUE MEASUREMENTS

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



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



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DDi CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



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

Cash equivalents consist of the Companys excess cash invested in highly liquid money market accounts. These amounts are reflected
within cash and cash equivalents on the consolidated balance sheet at a net value of 1:1 for each dollar invested. The cost and fair value of the Companys cash equivalents was $19.4 million as of December 31, 2009 and was based on quoted
market prices in active markets for identical assets, a Level 1 input.

To calculate the estimated fair value of the
Companys variable and fixed rate notes payable and mortgage debt as of December 31, 2009, the Company estimated that in the current market the Companys cost of borrowing on similar debt would, on average, be approximately 5.75%
based on its current debt rating and an analysis of current market rates. Using this estimated interest rate and a discount rate of 8.0% (Level 2 and 3 inputs), the Company estimated the fair value of its debt to be approximately $285,000 higher
than its carrying value of $12.9 million.

As of December 31, 2009, the carrying amount of the Companys revolving
line of credit debt assumed in connection with the Coretec acquisition was representative of its fair value due to the fact that the line had just been entered into in March 2009, less than one year earlier, and because of its classification as
short-term debt as it was paid off in full by the Company in February 2010.

14. COMMITMENTS, CONTINGENCIES AND GUARANTEES

Environmental matters

The Companys operations are regulated under a number of federal, state and local environmental laws and regulations, which 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. Compliance with these environmental laws are major considerations for all PCB manufacturers because metals and other hazardous materials are used in the manufacturing
process. In addition, because the Company is a generator of hazardous wastes, the Company, along with any other person who arranges for the disposal of such wastes, may be subject to potential financial exposure for costs associated with an
investigation and remediation of sites at which it has arranged for the disposal of hazardous wastes, if such sites become contaminated. This is true even if the Company fully complies with applicable environmental laws. In addition, it is possible
that in the future new or more stringent requirements could be imposed. Management believes it has complied with all applicable environmental laws and regulations. There have been no claims asserted nor is management aware of any unasserted claims
for environmental matters.

Operating leases

The Company has entered into various operating leases principally for manufacturing facilities, office space, and equipment that expire at various dates through 2014, some of which contain escalating rent
provisions. The Company recognizes rent expense using a straight-line method based on total lease payments. Future annual minimum lease payments under all non-cancelable operating leases with initial terms of one year or more, consist of the
following at December 31, 2009 (in thousands):



|                         |  |   |       
|------------------------ |  | - | ------
|Year Ending December 31, |  |  
|2010                     |  | $ | 4,517 
|2011                     |  |   | 3,523 
|2012                     |  |   | 1,709 
|2013                     |  |   | 1,041 
|2014                     |  |   | 972   
|                         |  |   |       
|Total                    |  | $ | 11,762
|                         |  |   |       

Rent expense for the years ended December 31,
2009, 2008 and 2007 was approximately $3.5 million, $3.4 million, and $3.6 million, respectively.



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DDi CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Litigation

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

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 the 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 which are reasonably incurred in connection with such action, suit or proceeding.

15. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION



|                                                |  |                         |         |   |      |   |       |  |   |      
|----------------------------------------------- |  | ----------------------- | ------- | - | ---- | - | ----- |  | - | -----
|                                                |  | Year Ended December 31,
|                                                |  | 2009                    |         |   | 2008 |   | 2007 
|                                                |  | (in thousands)         
|Cash payments for:                              |  |                         |         |   |      |   |       |  |   |      
|Income taxes                                    |  | $                       | 1,127   |   |      | $ | 1,210 |  | $ | 1,856
|                                                |  |                         |         |   |      |   |       |  |   |      
|Interest                                        |  | $                       | 98      |   |      | $ | 134   |  | $ | 207  
|                                                |  |                         |         |   |      |   |       |  |   |      
|Acquisition of Coretec Inc.:                    |  |                         |         |   |      |   |       |  |   |      
|Cash consideration                              |  | $                       | 6,680   |   |      | $ |      |  | $ |     
|Fair value of non-cash tangible assets acquired |  |                         | (31,704 | ) |      |   |      |  |   |     
|Goodwill                                        |  |                         | (2,986  | ) |      |   |      |  |   |     
|Liabilities assumed and incurred                |  |                         | 28,890  |   |      |   |      |  |   |     
|                                                |  |                         |         |   |      |   |       |  |   |      
|Cash acquired                                   |  | $                       | 880     |   |      | $ |      |  | $ |     
|                                                |  |                         |         |   |      |   |       |  |   |      



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DDi CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



FINANCIAL STATEMENT SCHEDULE

The financial statement Schedule II  VALUATION AND QUALIFYING ACCOUNTS is filed as part of this Form 10-K.

SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS



|                                  |  |                              |        |                                             |   |          |                                  |  |            |        |  |                        |      |   |  |   |       
|--------------------------------- |  | ---------------------------- | ------ | ------------------------------------------- | - | -------- | -------------------------------- |  | ---------- | ------ |  | ---------------------- | ---- | - |  | - | ------
|Column A                          |  | Column B                     |        | Column C                                    |   | Column D |                                  |  | Column E  
|                                  |  | Balance atBeginning ofPeriod |        | AdditionsCharged toCosts andExpenses(1) (2) |   |          | AdditionsCharged toOtherAccounts |  | Deductions |        |  | Balance atEnd ofPeriod
|Description                       |  | (in thousands)              
|Allowance for Doubtful Accounts:  |  |                              |        |                                             |   |          |                                  |  |            |        |  |                        |      |   |  |   |       
|Year ended December 31, 2009      |  | $                            | 1,578  |                                             | $ | 262      |                                  |  | $          |       |  | $                      | (194 | ) |  | $ | 1,646 
|Year ended December 31, 2008      |  | $                            | 1,687  |                                             | $ | 301      |                                  |  | $          |       |  | $                      | (410 | ) |  | $ | 1,578 
|Year ended December 31, 2007      |  | $                            | 1,933  |                                             | $ | 632      |                                  |  | $          |       |  | $                      | (878 | ) |  | $ | 1,687 
|Deferred Tax Valuation Allowance: |  |                              |        |                                             |   |          |                                  |  |            |        |  |                        |      |   |  |   |       
|Year ended December 31, 2009      |  | $                            | 65,436 |                                             | $ | (16,298  | )                                |  | $          | 15,129 |  | $                      |     |   |  | $ | 64,267
|Year ended December 31, 2008      |  | $                            | 63,290 |                                             | $ | 1,409    |                                  |  | $          | 737    |  | $                      |     |   |  | $ | 65,436
|Year ended December 31, 2007      |  | $                            | 61,771 |                                             | $ | 1,068    |                                  |  | $          | 451    |  | $                      |     |   |  | $ | 63,290



|(1) | For the Allowance for Doubtful Accounts account specifically, data includes both amounts charged to general and administrative expense (for bad debts) and
as a reduction to revenue (for sales returns and discounts).
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Also includes any applicable opening reserve balances recorded in connection with the acquisition of Coretec on December 31, 2009.
|--- | ----------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

|Item 9. | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
|------- | -------------------------------------------------------------------------------------

None.



|Item 9A. | Controls and Procedures.
|-------- | ------------------------

Disclosure Controls and Procedures

Our President and Chief Executive Officer and our Chief Financial Officer
have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Annual Report on
Form 10-K and, based on this evaluation, have concluded that the disclosure controls and procedures are effective.

Report of
Management on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining
adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable
detail accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that the transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and our directors; and (iii) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Our
management evaluated the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control  Integrated
Framework.Our evaluation of the effectiveness of internal control excluded consideration of internal control over the financial reporting of Coretec Inc. and its subsidiaries, which were acquired by us on December 31, 2009. Based on this
evaluation, our management concluded that our internal control over financial reporting was effective as of the end of the period covered by this Annual Report on Form 10-K. Our independent registered public accounting firm, Grant Thornton LLP,
issued a report on the effectiveness of our internal control over financial reporting as of December 31, 2009, which appears on page 38 herein.

Inherent Limitations of Effectiveness of Controls

Our management, including our President and Chief Executive
Officer and our Chief Financial Officer, do not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated,
can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns
can occur because of simple errors or mistakes. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the control. The design of any system of controls is
also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in
a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of
changes in conditions or deterioration in the degree of compliance with policies or procedures.

Changes in Internal Control Over Financial
Reporting

There have been no changes in our internal control over financial reporting that occurred during our fourth
quarter ended December 31, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



|Item 9B. | Other Information.
|-------- | ------------------

On December 8, 2009, the Board of Directors of the Company adopted the Senior Management Bonus Program for the fiscal year ending December 31, 2010 (the 2010 Bonus Program). Selected
employees, including all of the Companys executive officers, are eligible to participate in the 2010 Bonus Program. Each participant in the 2010 Bonus Program has been assigned a target annual cash bonus. Participants may earn bonuses based on
(a) the achievement by the Company of certain financial goals set forth in the Companys annual budget related to the Companys EBITDA from the Companys consolidated operations less the total amount of bonus payments awarded under
the 2010 Bonus Program and certain other adjustments (Net EBITDA); and (b) meeting annual personal objectives established for each participating employee.

Under the 2010 Bonus Program, (i) the target bonus for Mikel Williams, the President and Chief Executive Officer of the Company, is 100% of his base salary, with the opportunity to earn up to 135% of this
amount based on the level of personal performance and the achievement of the Companys financial goals; (ii) the target bonus for Mike Mathews, the Senior Vice President - Manufacturing Operations of the Company, is 50% of his base salary, with
the opportunity to earn up to 125% of this amount based on the level of personal performance and the achievement of the Companys financial goals; (iii) the target bonus for Jerry Barnes, the Senior Vice President - Sales of the Company, is 60%
of his base salary, with the opportunity to earn up to 117% of this amount based on the level of personal performance and the achievement of the Companys financial goals; and (iv) the target bonus for Michael Dodson, the Chief Financial
Officer of the Company, is 50% of his base salary, with the opportunity to earn up to 125% of this amount based on the level of personal performance and the achievement of the Companys financial goals. Bonus payouts are subject to pro-ration
in the event participants are on leave. The 2010 Bonus Program also provides the Compensation Committee with discretion to grant additional discretionary bonuses to participants, including the Companys named executive officers.



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PART III



|Item 10. | Directors, Executive Officers and Corporate Governance.
|-------- | -------------------------------------------------------

Information regarding our executive officers is set forth in Part I of this report under Item 1. Business 
Executive Officers of the Registrant. In addition, the information set forth under the captions Election of Directors, Information About the Board of Directors and Committees of the Board and Transactions with
Management and Others  Section 16(a) Beneficial Ownership Reporting Compliance in our definitive proxy statement for our Annual Meeting of Stockholders to be held in 2010 (the Proxy Statement), which will be filed
with the SEC within 120 days of the end of our fiscal year ended December 31, 2009, is incorporated herein by reference.



|Item 11. | Executive Compensation.
|-------- | -----------------------

Except as specifically provided, the information set forth under the captions Compensation of Executive Officers and Information About the Board of Directors and Committees of the
Board  Compensation of Directors in the Proxy Statement is incorporated herein by reference.



|Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|-------- | -----------------------------------------------------------------------------------------------

The disclosure contained in Part II, Item 5 under Equity Compensation Plan Information is incorporated herein by reference.
Information regarding security ownership of certain beneficial owners and management is incorporated by reference to the information set forth under the caption Security Ownership of Certain Beneficial Owners and Management in the Proxy
Statement.



|Item 13. | Certain Relationships and Related Transactions, and Director Independence.
|-------- | --------------------------------------------------------------------------

The information set forth under the captions Transactions with Management and Others and Information About the Board of
Directors and Committees of the Board in the Proxy Statement is incorporated herein by reference.



|Item 14. | Principal Accountant Fees and Services.
|-------- | ---------------------------------------

Information regarding principal accountant fees and services is incorporated by reference to the information set forth under the caption Ratification of the Selection of Independent Registered
Public Accounting Firm - Relationship of the Company with Independent Registered Public Accounting Firm in the Proxy Statement.



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PART IV



|Item 15. | Exhibits and Financial Statement Schedules.
|-------- | -------------------------------------------

(a)1. Financial Statements

Included in Part II of this Annual Report on Form
10-K:

Reports of Independent Registered Public Accounting Firms

Consolidated Balance Sheets as of December 31, 2009 and 2008

Consolidated Statements of Operations for the Years Ended December 31, 2009, 2008 and 2007

Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2009, 2008 and 2007

Consolidated Statements of Stockholders Equity for the Years Ended December 31, 2009, 2008 and 2007

Consolidated Statements of Cash Flows for the Years Ended December 31, 2009, 2008 and 2007

Notes to Consolidated Financial Statements

(a)2. Financial Statement Schedules

Included in Part II of this Annual Report on
Form 10-K

Schedule II - Valuation and Qualifying Accounts. Schedules I, III, IV and V are not included because they are not
required.

(a)3 and (b). Exhibits

The exhibits listed below are hereby filed with the SEC as part of this Annual Report on Form 10-K. Certain of the following exhibits have been previously filed with the SEC pursuant to the
requirements of the Securities Act or the Exchange Act. Such exhibits are identified in the chart to the right of the Exhibit and are incorporated herein by reference. We will furnish a copy of any exhibit upon request, but a reasonable fee will be
charged to cover our expense in furnishing such exhibit.



|        |  |                                                                                                |  |               |  |      |  |                           |  |         |  |           
|------- |  | ---------------------------------------------------------------------------------------------- |  | ------------- |  | ---- |  | ------------------------- |  | ------- |  | ----------
|        |  |                                                                                                |  |               |  |      |  | Incorporated by Reference
|Exhibit |  | Description                                                                                    |  | FiledHerewith |  | Form |  | PeriodEnding              |  | Exhibit |  | FilingDate
|2.1     |  | Arrangement Agreement dated November 23, 2009 between DDi Corp. and Coretec Inc.               |  |               |  | 8-K  |  |                           |  | 2.1     |  | 11/30/2009
|        |  |                                                                                                |  |               |  |     
|3.1     |  | Amended and Restated Certificate of Incorporation of DDi Corp.                                 |  |               |  | 8-K  |  |                           |  | 3.1     |  | 12/13/2003
|        |  |                                                                                                |  |               |  |     
|3.4     |  | Certificate of Amendment to the Amended and Restated Certificate of Incorporation of DDi Corp. |  |               |  | 8-K  |  |                           |  | 3.1     |  | 8/10/2005 
|        |  |                                                                                                |  |               |  |     
|3.5     |  | Amended and Restated Bylaws of DDi Corp.                                                       |  |               |  | 8-K  |  |                           |  | 3.1     |  | 12/11/2007
|        |  |                                                                                                |  |               |  |     
|10.1*   |  | Dynamic Details Incorporated 2009 Senior Management Bonus Program                              |  |               |  | 10-K |  | 12/31/2008                |  | 10.2    |  | 3/6/2009  
|        |  |                                                                                                |  |               |  |     
|10.2*   |  | Dynamic Details Incorporated 2010 Senior Management Bonus Program                              |  | X             |  |      |  |                           |  |         |  |           
|        |  |                                                                                                |  |               |  |     
|10.3*   |  | Independent Director Compensation Policy                                                       |  |               |  | 10-K |  | 12/31/2006                |  | 10.3    |  | 3/12/2007 
|        |  |                                                                                                |  |               |  |     
|10.4*   |  | 2003 Directors Equity Incentive Plan                                                           |  |               |  | S-8  |  |                           |  | 4.3     |  | 6/14/2004 
|        |  |                                                                                                |  |               |  |     
|10.5*   |  | Form of Stock Option Agreement (2003 Directors Equity Incentive Plan)                          |  |               |  | S-8  |  |                           |  | 4.4     |  | 6/14/2004 
|        |  |                                                                                                |  |               |  |     
|10.6*   |  | DDi Corp. 2003 Management Incentive Plan                                                       |  |               |  | S-1  |  |                           |  | 10.41   |  | 2/12/2004 
|        |  |                                                                                                |  |               |  |     
|10.7*   |  | DDi Corp. 2005 Stock Incentive Plan, as Amended                                                |  |               |  | S-8  |  |                           |  | 4.4     |  | 11/7/2008 
|        |  |                                                                                                |  |               |  |     
|10.8*   |  | Form of Stock Option Agreement under the DDi Corp 2005 Stock Incentive Plan                    |  |               |  | 8-K  |  |                           |  | 10      |  | 12/27/2005



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|        |  |                                                                                                                  |  |               |  |      |  |                           |  |         |  |           
|------- |  | ---------------------------------------------------------------------------------------------------------------- |  | ------------- |  | ---- |  | ------------------------- |  | ------- |  | ----------
|        |  |                                                                                                                  |  |               |  |      |  | Incorporated by Reference
|Exhibit |  | Description                                                                                                      |  | FiledHerewith |  | Form |  | PeriodEnding              |  | Exhibit |  | FilingDate
|        |  |                                                                                                                  |  |               |  |     
|10.9*   |  | Form of Restricted Share Award Agreement under the DDi Corp 2005 Stock Incentive Plan                            |  |               |  | 8-K  |  |                           |  | 99.2    |  | 12/11/2007
|        |  |                                                                                                                  |  |               |  |     
|10.10*  |  | Employment Agreement dated April 7, 2008 between DDi Corp. and Mikel H. Williams                                 |  |               |  | 8-K  |  |                           |  | 99.1    |  | 4/11/2008 
|        |  |                                                                                                                  |  |               |  |     
|10.11*  |  | Employment Agreement dated April 7, 2008 between DDi Corp. and Michael R. Mathews                                |  |               |  | 8-K  |  |                           |  | 99.2    |  | 4/11/2008 
|        |  |                                                                                                                  |  |               |  |     
|10.12*  |  | Separation Agreement and General Release between DDi Corp. and Sally Edwards dated October 16, 2009.             |  |               |  | 8-K  |  |                           |  | 99.1    |  | 10/20/2009
|        |  |                                                                                                                  |  |               |  |     
|10.13*  |  | Employment Agreement dated April 7, 2008 between DDi Corp. and Gerald Barnes                                     |  |               |  | 8-K  |  |                           |  | 99.3    |  | 4/11/2008 
|        |  |                                                                                                                  |  |               |  |     
|21.1    |  | Subsidiaries of DDi Corp.                                                                                        |  | X             |  |      |  |                           |  |         |  |           
|        |  |                                                                                                                  |  |               |  |     
|23.1    |  | Consent of Grant Thornton LLP                                                                                    |  | X             |  |      |  |                           |  |         |  |           
|        |  |                                                                                                                  |  |               |  |     
|23.2    |  | Consent of PricewaterhouseCoopers LLP                                                                            |  | X             |  |      |  |                           |  |         |  |           
|        |  |                                                                                                                  |  |               |  |     
|31.1    |  | Certification of Chief Executive Officer of DDi Corp., Pursuant to Rule 13a-14 of the Securities Exchange Act    |  | X             |  |      |  |                           |  |         |  |           
|        |  |                                                                                                                  |  |               |  |     
|31.2    |  | Certification of Chief Financial Officer of DDi Corp., Pursuant to Rule 13a-14 of the Securities Exchange Act    |  | X             |  |      |  |                           |  |         |  |           
|        |  |                                                                                                                  |  |               |  |     
|32.1    |  | Certification of Chief Executive Officer of DDi Corp., Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |  | X             |  |      |  |                           |  |         |  |           
|        |  |                                                                                                                  |  |               |  |     
|32.2    |  | Certification of Chief Financial Officer of DDi Corp., Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |  | X             |  |      |  |                           |  |         |  |           



|* | Indicates a management contract or compensatory plan or arrangement
|- | -------------------------------------------------------------------



|(c) | Financial Statement Schedules.
|--- | ------------------------------

The required financial statement schedule, Schedule II  Valuation and Qualifying Accounts, is set forth under Part II, Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K,
and is hereby incorporated by reference in this Item 15 (c).



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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, in the city of Anaheim, state of California, on the 12thday of March, 2010.



DDi CORP.By:

/s/ MIKEL H. WILLIAMSMikel H. WilliamsPresident and Chief Executive Officer/s/ J. MICHAEL DODSONJ. Michael DodsonChief Financial Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of DDi Corp. and in the capacities and on the dates indicated.



|                         |  |  |  |                                                 |  |               
|------------------------ |  |  |  | ----------------------------------------------- |  | --------------
|Signature                |  |  |  | Title                                           |  | Date          
|                         |  |  | 
|/s/ MIKEL H. WILLIAMS    |  |  |  | President, Chief Executive Officer and Director |  | March 12, 2010
|Mikel H. Williams        |  |  |  | (Principal Executive Officer)                   |  |               
|                         |  |  | 
|/s/ J. MICHAEL DODSON    |  |  |  | Chief Financial Officer                         |  | March 12, 2010
|J. Michael Dodson        |  |  |  | (Principal Financial and Accounting Officer)    |  |               
|                         |  |  | 
|/s/ ROBERT J. AMMAN      |  |  |  | Director                                        |  | March 12, 2010
|Robert J. Amman          |  |  |  |                                                 |  |               
|                         |  |  | 
|/s/ JAY B. HUNT          |  |  |  | Director                                        |  | March 12, 2010
|Jay B. Hunt              |  |  |  |                                                 |  |               
|                         |  |  | 
|/s/ ANDREW E. LIETZ      |  |  |  | Director                                        |  | March 12, 2010
|Andrew E. Lietz          |  |  |  |                                                 |  |               
|                         |  |  | 
|/s/ BRYANT RILEY         |  |  |  | Director                                        |  | March 12, 2010
|Bryant Riley             |  |  |  |                                                 |  |               
|                         |  |  | 
|/s/ STEVEN C. SCHLEPP    |  |  |  | Director                                        |  | March 12, 2010
|Steven C. Schlepp        |  |  |  |                                                 |  |               
|                         |  |  | 
|/s/ CARL R. VERTUCA, JR. |  |  |  | Director                                        |  | March 12, 2010
|Carl R. Vertuca, Jr.     |  |  |  |                                                 |  |               



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