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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

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

For the quarterly period ended February 26, 2000

OR

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

Commission file number 0-23818

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MERIX CORPORATION(Exact name of registrant as specified in its charter)

|OREGON                                                         |  | 93-1135197                             
|-------------------------------------------------------------- |  | ---------------------------------------
|(State or other Jurisdiction of
Incorporation or Organization) |  | (I.R.S. Employer
Identification Number)
|1521 Poplar Lane, Forest Grove, Oregon                         |  | 97116                                  
|(Address of principal executive offices)                       |  | (Zip Code)                             

(503) 359-9300(Registrant's telephone number)

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

The
number of shares of the Registrant's Common Stock outstanding as of April 3, 2000 was 6,544,319 shares.

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## 

MERIX CORPORATION FORM 10-Q TABLE OF CONTENTS

|        |  |                                                                                                             |  | Page
|------- |  | ----------------------------------------------------------------------------------------------------------- |  | ----
|Part I  |  | Financial Information                                                                                       |  |     
|Item 1. |  | Financial Statements:                                                                                       |  |     
|        |  | Balance Sheets as of February 26, 2000 and May 29, 1999                                                     |  | 2   
|        |  | Statements of Operations for the three months and nine months ended February 26, 2000 and February 27, 1999 |  | 3   
|        |  | Statements of Cash Flows for the nine months ended February 26, 2000 and February 27, 1999                  |  | 4   
|        |  | Notes to Financial Statements                                                                               |  | 5   
|Item 2. |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                       |  | 7   
|Item 3. |  | Quantitative and Qualitative Disclosure About Market Risk                                                   |  | 11  
|Part II |  | Other Information                                                                                           |  |     
|Item 6. |  | Exhibits and Reports on Form 8-K                                                                            |  | 11  
|        |  | Signature                                                                                                   |  | 12  

1



## 

PART I. FINANCIAL INFORMATION

MERIX CORPORATION

BALANCE SHEETS

(unaudited, in thousands)

|                                                                                                                    |  | Feb. 26, 2000 |         | May 29, 1999 |  
|------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | ------------ | -
|Assets                                                                                                              |  |               |         |              |  
|Cash and short-term investments                                                                                     |  | $             | 16,538  |              | $
|Accounts receivable, net of allowance of $237                                                                       |  |               | 22,014  |              |  
|Inventories                                                                                                         |  |               | 9,206   |              |  
|Deferred tax asset                                                                                                  |  |               | 713     |              |  
|Other current assets                                                                                                |  |               | 749     |              |  
|                                                                                                                    |  |               |         |              |  
|Total current assets                                                                                                |  |               | 49,220  |              |  
|Property, plant and equipment, net                                                                                  |  |               | 56,854  |              |  
|Deferred tax asset                                                                                                  |  |               | 6,608   |              |  
|Other assets                                                                                                        |  |               | 613     |              |  
|                                                                                                                    |  |               |         |              |  
|Total assets                                                                                                        |  | $             | 113,295 |              | $
|                                                                                                                    |  |               |         |              |  
|Liabilities and Shareholders' Equity                                                                                |  |               |         |              |  
|Accounts payable                                                                                                    |  | $             | 13,325  |              | $
|Accrued compensation                                                                                                |  |               | 3,718   |              |  
|Current portion of long-term debt                                                                                   |  |               | 9,149   |              |  
|Other accrued liabilities                                                                                           |  |               | 2,242   |              |  
|                                                                                                                    |  |               |         |              |  
|Total current liabilities                                                                                           |  |               | 28,434  |              |  
|Long-term debt                                                                                                      |  |               | 29,150  |              |  
|                                                                                                                    |  |               |         |              |  
|Total liabilities                                                                                                   |  |               | 57,584  |              |  
|Shareholders' equity:                                                                                               |  |               |         |              |  
|Preferred stock, no par value; authorized 10,000 shares; none issued                                                |  |               |        |              |  
|Common stock, no par value; authorized 50,000 shares; issued and outstanding 2000: 6,510 shares, 1999: 6,370 shares |  |               | 46,689  |              |  
|Unearned compensation                                                                                               |  |               |        |              |  
|Retained earnings                                                                                                   |  |               | 9,022   |              |  
|                                                                                                                    |  |               |         |              |  
|Total shareholders' equity                                                                                          |  |               | 55,711  |              |  
|                                                                                                                    |  |               |         |              |  
|Total liabilities and shareholders' equity                                                                          |  | $             | 113,295 |              | $
|                                                                                                                    |  |               |         |              |  

The
accompanying notes are an integral part of the financial statements.

2



MERIX CORPORATION

STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share amounts)

|                                      |  | Three Months Ended |        | Nine Months Ended |  
|------------------------------------- |  | ------------------ | ------ | ----------------- | -
|
|Net sales                             |  | $                  | 39,674 |                   | $
|Cost of sales                         |  |                    | 32,144 |                   |  
|                                      |  |                    |        |                   |  
|Gross profit (loss)                   |  |                    | 7,530  |                   |  
|                                      |  |                    |        |                   |  
|Operating expenses:                   |  |                    |        |                   |  
|Engineering                           |  |                    | 1,158  |                   |  
|Selling, general and administrative   |  |                    | 2,983  |                   |  
|Restructuring expense (benefit)       |  |                    |       |                   |  
|                                      |  |                    |        |                   |  
|Total operating expense (benefit)     |  |                    | 4,141  |                   |  
|Operating income (loss)               |  |                    | 3,389  |                   |  
|Interest and other expense, net       |  |                    | (673   | )                 |  
|                                      |  |                    |        |                   |  
|Income (loss) before income taxes     |  |                    | 2,716  |                   |  
|Income tax (expense) benefit          |  |                    | (1,059 | )                 |  
|                                      |  |                    |        |                   |  
|Net income (loss)                     |  | $                  | 1,657  |                   | $
|                                      |  |                    |        |                   |  
|Net income (loss) per share           |  |                    |        |                   |  
|Basic                                 |  | $                  | 0.26   |                   | $
|                                      |  |                    |        |                   |  
|Diluted                               |  | $                  | 0.24   |                   | $
|                                      |  |                    |        |                   |  
|Shares used in per share calculations |  |                    |        |                   |  
|Basic                                 |  |                    | 6,467  |                   |  
|                                      |  |                    |        |                   |  
|Diluted                               |  |                    | 6,820  |                   |  
|                                      |  |                    |        |                   |  

The
accompanying notes are an integral part of the financial statements.

3



MERIX CORPORATION

STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

|                                                                                         |  | Nine Months Ended |       
|---------------------------------------------------------------------------------------- |  | ----------------- | ------
|
|Cash flows from operating activities:                                                    |  |                   |       
|Net income (loss)                                                                        |  | $                 | 3,887 
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |                   |       
|Depreciation and amortization                                                            |  |                   | 6,129 
|Deferred income taxes                                                                    |  |                   | 2,485 
|Amortization of unearned compensation                                                    |  |                   | 3     
|Restructuring charge                                                                     |  |                   |      
|Contribution of common stock to 401(k) plan                                              |  |                   | 894   
|Other                                                                                    |  |                   | 266   
|Changes in assets and liabilities:                                                       |  |                   |       
|Accounts receivable                                                                      |  |                   | (4,506
|Inventories                                                                              |  |                   | (2,669
|Other current assets                                                                     |  |                   | 192   
|Accounts payable                                                                         |  |                   | 1,221 
|Accrued compensation                                                                     |  |                   | 1,206 
|Other accrued liabilities                                                                |  |                   | 271   
|                                                                                         |  |                   |       
|Net cash provided by operating activities                                                |  |                   | 9,379 
|                                                                                         |  |                   |       
|Cash flows from investing activities:                                                    |  |                   |       
|Capital expenditures                                                                     |  |                   | (7,315
|Short-term investments: purchases                                                        |  |                   |      
|maturities                                                                               |  |                   | 7,507 
|Net proceeds from sale-leaseback of equipment                                            |  |                   | 4,492 
|Proceeds from sale of assets                                                             |  |                   | 171   
|                                                                                         |  |                   |       
|Net cash provided by (used in) investing activities                                      |  |                   | 4,855 
|                                                                                         |  |                   |       
|Cash flows from financing activities:                                                    |  |                   |       
|Principal payments on long-term debt                                                     |  |                   | (4,000
|Proceeds from exercise of stock options                                                  |  |                   | 432   
|Reacquired common stock                                                                  |  |                   | (2    
|                                                                                         |  |                   |       
|Net cash used in financing activities                                                    |  |                   | (3,570
|                                                                                         |  |                   |       
|Increase (decrease) in cash and cash equivalents                                         |  |                   | 10,664
|Cash and cash equivalents at beginning of period                                         |  |                   | 5,874 
|                                                                                         |  |                   |       
|Cash and cash equivalents at end of period                                               |  |                   | 16,538
|Short-term investments                                                                   |  |                   |      
|                                                                                         |  |                   |       
|Cash and short-term investments at end of period                                         |  | $                 | 16,538
|                                                                                         |  |                   |       
|Supplemental disclosures:                                                                |  |                   |       
|Cash paid for interest, net of amount capitalized                                        |  | $                 | 1,756 
|Noncash transactions:                                                                    |  |                   |       
|Tax benefit related to stock-based compensation                                          |  | $                 | 171   
|Surrender of unvested shares of restricted stock                                         |  |                   |      

The
accompanying notes are an integral part of the financial statements.

4



MERIX CORPORATION

NOTES TO FINANCIAL STATEMENTS

(Dollars in thousands)

Note 1. BASIS OF PRESENTATION

The accompanying unaudited financial statements of Merix Corporation (the Company) have been prepared pursuant to Securities and Exchange Commission rules and
regulations. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's annual report
on Form 10-K for the fiscal year ended May 29, 1999.

The
financial information included herein reflects all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary for a fair
presentation of the results for interim periods. The results of operations for the three and nine months ended February 26, 2000 are not necessarily indicative of the results to be expected for
the full year.

The
Company's fiscal year is the 52 or 53-week period ending the last Saturday in May. Fiscal year 2000 is a 52-week year ending May 27, 2000 and fiscal year 1999 was a 52-week
year ended May 29, 1999.

Note 2. INVENTORIES

|                |  | Feb. 26, 2000 |       | May 29, 1999
|--------------- |  | ------------- | ----- | ------------
|Raw materials   |  | $             | 1,594 |             
|Work in process |  |               | 4,281 |             
|Finished goods  |  |               | 3,331 |             
|                |  |               |       |             
|Total           |  | $             | 9,206 |             
|                |  |               |       |             

Note 3. PROPERTY, PLANT AND EQUIPMENT

|                                   |  | Feb. 26, 2000 |         | May 29, 1999 |  
|---------------------------------- |  | ------------- | ------- | ------------ | -
|Land                               |  | $             | 2,190   |              | $
|Buildings and grounds              |  |               | 24,685  |              |  
|Machinery and equipment            |  |               | 85,102  |              |  
|Construction in progress           |  |               | 1,466   |              |  
|                                   |  |               |         |              |  
|                                   |  |               | 113,443 |              |  
|Less accumulated depreciation      |  |               | (56,589 | )            |  
|                                   |  |               |         |              |  
|Property, plant and equipment, net |  | $             | 56,854  |              | $
|                                   |  |               |         |              |  

Note 4. NET INCOME (LOSS) PER SHARE

Basic net income (loss) per share is computed using the weighted average number of shares of common stock outstanding for the period. Diluted net income per
share is computed using the weighted average number of shares of common stock and dilutive common equivalent shares related to

5



stock
options outstanding during the period. Incremental shares of 352,669 and 59,072 related to outstanding stock options, were included in the calculations of diluted net income per share for the
for the three months ended February 26, 2000 and February 27, 1999, respectively. Incremental shares of 239,557 related to outstanding stock options, were included in the calculation of
diluted net income per share for the nine months ended February 26, 2000.

Diluted
net loss per share is computed using the weighted average number of shares of common stock outstanding for the period. Stock options to purchase 1,199,445 shares were not
included in the net loss per share calculation for the nine months ended February 27, 1999, because to do so would have been
antidilutive.

6



## 

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands)

This discussion and analysis should be read in conjunction with our Management's Discussion and Analysis of Financial Condition and Results of Operations set
forth in our Report on Form 10-K for the fiscal year ended May 29, 1999.

Results of Operations

Fiscal year

Our fiscal year is the 52 or 53-week period ending the last Saturday in May. Fiscal year 2000 is a 52-week year ending May 27, 2000 and fiscal year 1999
was a 52-week year ended May 29, 1999.

Net Sales

Our net sales for the third quarter of fiscal year 2000 were $39,674, which represented an increase of 30.1% from net sales of $30,503 in the third quarter of
fiscal year 1999. Net sales for the first nine months of fiscal year 2000 were $109,654, an increase of 35.3% from net sales of $81,050 in the first nine months of fiscal year 1999. Net sales in the
first nine months of fiscal year 1999 included five months of sales from our Loveland manufacturing facility, which we closed in October 1998, and nine months of sales from our Soladyne
manufacturing facility, which we sold in February 1999. See "Restructuring" below. Net sales increased in the third quarter and first nine months of fiscal year 2000 primarily as a result of
higher levels of demand from new and existing customers as the electronic equipment industry recovered from the downturn of 1998. Sales to the communications market segment increased in the third
quarter and first nine months of fiscal year 2000, compared to the same periods in fiscal year 1999, as a result of rapidly increasing demand for data communications, primarily associated with the
growth of the Internet, and in the use of wireless communications.

Pricing
of our products, which had been affected by the electronics industry slowdown beginning late in fiscal year 1998, began to stabilize during the last half of fiscal year 1999
and has remained relatively stable during the first nine months of fiscal year 2000. In recent months we have seen increased customer demand and an increased customer focus on the availability of
capacity rather than product price. Continued price stability of our products is dependent on a variety of factors including continued strength of customer orders, capacity utilization in the printed
circuit board industry, competition from domestic printed circuit board companies and potential future competition from Asian printed circuit board companies.

Our
five largest original equipment manufacturer (OEM) customers represented 67.2% of net sales in the third quarter of fiscal year 2000 and 68.2% of net sales in the third quarter of
fiscal year 1999. Our five largest OEM customers represented 68.1% of net sales in the first nine months of fiscal year 2000 and 66.7% of net sales in the first nine months of fiscal year 1999. Our
sales to OEMs include sales made through contract manufacturers. Our sales to contract manufacturers were 58.7% of net sales in the third quarter of fiscal year 2000, 32.0% of net sales in the third
quarter of fiscal year 1999, 53.2% of net sales in the first nine months of fiscal year 2000 and 27.4% of net sales in the first nine months of fiscal year 1999. The loss of one or more of our
principal customers or a change in the mix of our product sales could have a material adverse effect on our business, financial condition and results of
operations.

7



The
following table shows for the periods indicated, the percentage of our net sales to the principal end-user markets we serve:

|                     |  |     |   |   |        |  |     |   |   | Nine Months Ended
|-------------------- |  | --- | - | - | ------ |  | --- | - | - | -----------------
|
|
|
|Market Segments      |  |     |   |   |        |  |     |   |   |                  
|Communications       |  | 52  | % | $ | 20,560 |  | 46  | % | $ | 13,977           
|Computers            |  | 22  |   |   | 8,964  |  | 35  |   |   | 10,530           
|Test and Measurement |  | 23  |   |   | 9,115  |  | 14  |   |   | 4,371            
|Other                |  | 3   |   |   | 1,035  |  | 5   |   |   | 1,625            
|                     |  |     |   |   |        |  |     |   |   |                  
|Total                |  | 100 | % | $ | 39,674 |  | 100 | % | $ | 30,503           
|                     |  |     |   |   |        |  |     |   |   |                  

Our
90-day backlog was approximately $28,600 at February 26, 2000, compared to approximately $18,000 at the end of fiscal year 1999. The level and timing of orders placed by
our customers vary due to many factors, including customer attempts to manage inventory, changes in customers' manufacturing strategies and variation in demand for customer products. Accordingly, our
backlog is not necessarily indicative of future quarterly or annual financial results.

Gross Margin

Our gross margin was 19.0% in the third quarter of fiscal year 2000 and 17.1% in the third quarter of fiscal year 1999. Our gross margin was 18.0% in the first
nine months of fiscal year 2000 and (1.8)% in the first nine months of fiscal year 1999. Gross margin in the first nine months of fiscal 1999 was negatively affected by a $1.1 million write-off of
inventory related to the restructuring discussed below. In addition, because of the downturn in the electronic equipment industry in 1998, our capacity utilization in the first nine months of fiscal
1999 was significantly below our historical capacity utilization levels.

Gross
profit increased in the third quarter and first nine months of fiscal year 2000 primarily as a result of higher capacity utilization, a favorable product mix and cost
reductions. Our product mix was favorable because we produced a greater number of advanced technology printed circuit board and quick-turn circuit boards, which provide significantly higher gross
margins. Our cost reductions consisted of higher production yields, manufacturing process improvements and lower raw material costs. Our gross margins may be affected by various factors including
product mix, capacity utilization, production yields, price changes and changes in our cost structure.

Engineering

Our engineering expenses were $1,158 (2.9% of net sales) in the third quarter of fiscal year 2000 and $1,010 (3.3% of net sales) in the third quarter of fiscal
year 1999. Our engineering expenses were $3,269 (3.0% of net sales) in the first nine months of fiscal year 2000 and $3,058 (3.8%) of net sales in the first nine months of fiscal year 1999.
Engineering expenses were reduced by approximately $650 in the first nine months of fiscal year 1999, as a result of our capitalization of engineering labor related to the Forest Grove expansion
project. Excluding the effect of capitalization of engineering labor, engineering expenses decreased in first nine months of fiscal year 2000 due to reduced headcount resulting from the restructuring
discussed below.

Selling, General and Administrative

Selling, general and administrative expenses were $2,983 (7.5% of net sales) in the third quarter of fiscal year 2000 and $2,121 (7.0% of net sales) in the
third quarter of fiscal year 1999. Selling, general and administrative expenses were $7,874 and (7.2% of net sales) in the first nine months of fiscal year

8



2000
and $7,032 (8.7% of net sales) in the first nine months of fiscal year 1999. The increase in selling expenses in the fiscal year 2000 periods, resulting from a larger sales force and higher
commissions on greater net sales, was offset by a decrease in general and administrative costs primarily due to reduced headcount resulting from the restructuring discussed below.

Restructuring

In the first quarter of fiscal year 1999, we announced a restructuring plan to improve our capacity utilization and to lower our cost structure. We closed our
Loveland, Colorado facility, reduced approximately 35 employees from administrative, engineering and support functions at our Forest
Grove, Oregon location and sold our Soladyne facility in San Diego, California. We sold the Soladyne facility in February 1999. We completed the closure of the Loveland facility in
October 1998 and laid off approximately 340 manufacturing and support employees in Loveland. We transferred a portion of the Loveland production and manufacturing equipment to our Forest Grove
site, and completed installation of this equipment at the end of December 1999.

In
the third quarter of fiscal year 1999, we reversed $7,109 of the restructuring charge taken in the first quarter of the year. The reversal was the result of a favorable termination
of the Loveland facility lease, higher than estimated proceeds from the sale of excess equipment and the sale of the Soladyne facility.

Interest and Other Expense, net

Interest and other expense, net was $673 in the third quarter of fiscal year 2000 and $329 in the third quarter of fiscal year 1999. Interest and other
expense, net was $2,254 in the first nine months of fiscal year 2000 and $1,252 in the first nine months of fiscal years 1999. We capitalized interest related to the Forest Grove capacity expansion of
$185 in the third quarter of fiscal year 1999 and $584 in the first nine months of fiscal year 1999. No interest was capitalized in the fiscal year 2000 periods. Additionally, in the first nine months
of fiscal year 2000, we incurred finance charges in connection with the restructuring of our senior unsecured notes and retired manufacturing equipment.

Income Taxes

Our effective tax rate was approximately 39% in the first nine months of fiscal year 2000 compared to 38% in 1999. We expect our effective tax rate will be
approximately 39% for fiscal year 2000. Based on our net operating losses available for carryforward, we expect to make no cash payments for income taxes for fiscal year 2000.

The
Internal Revenue Service has examined our federal income tax returns for fiscal years 1995, 1996 and 1997. Their proposed adjustments are principally related to the timing of
deductions. We are currently appealing some of their proposed adjustments. We expect the resolution of these issues to result in the payment of previously deferred federal and state income taxes and
interest on these taxes becoming currently payable. The tax and interest payments could range from $1.5 million to $2.5 million, but will not impact income tax expense.

Liquidity and Capital Resources

As of February 26, 2000, we had $16,538 in cash and cash equivalents and $29,150 of long-term debt.

Cash
provided by operating activities in the first nine months of fiscal year 2000 was $9,379. Cash provided by operating activities consisted primarily of net income for the period
and adjustments for depreciation and amortization, primarily offset by increases in accounts receivable and inventories. Our

9



accounts
receivable and inventories increased as a result of a higher level of sales and production in the first nine months of fiscal year 2000.

Cash
provided by investing activities in the first nine months of fiscal year 2000 was $4,855. Cash provided by investing activities included maturities of short-term investments and
net proceeds from the sale-leaseback of equipment offset by capital expenditures for manufacturing equipment. We have capital commitments of approximately $5,200 primarily for manufacturing equipment.
See "Subsequent Events" below.

Cash
used in financing activities in the first nine months of fiscal year 2000 was $3,570, which primarily consisted of a principal payment on our senior unsecured notes.

We
have a secured note payable to Tektronix, Inc. with $2,299 outstanding at February 26, 2000. The note bears interest at 7.5% and is payable in annual installments of
$1,149 in June 2000 and $1,150 in June 2001.

We
have $36,000 outstanding under a private placement of senior unsecured notes with two insurance companies, with interest payable semi-annually at 7.92%. The notes provide for
semi-annual principal payments of $4,000 in September and March, with a final principal payment of $8,000 payable in September 2003.

We
have a lease agreement, which allows us to sell and leaseback up to $5,000 of manufacturing equipment. As of February 26, 2000, we had sold $4,997 of equipment under this
agreement. The lease is classified as an operating lease in accordance with SFAS No. 13, "Accounting for Leases."

We
believe our existing capital resources and cash generated from operations, together with the proceeds from the offering referred to below, should be sufficient to meet our working
capital and capital expenditure requirements through at least the next 12 months.

Subsequent Events

In March 2000, we obtained an $8.0 million unsecured line of credit from a bank. We have not made any borrowings under this line of credit to date.

On
March 16, 2000, we filed a registration statement for the sale of approximately 3,000,000 shares of common stock. We are offering 2,000,000 shares and a selling shareholder
is offering an additional 1,000,000 shares. We intend to use the net proceeds of this offering to purchase new equipment and expand our production capacity and for working capital and other general
corporate purposes. We may also use some of the proceeds to acquire other companies, technologies or assets that complement our business, although we have no agreements or understandings relating to
any of these transactions.

In
March 2000, we announced that over the next two fiscal years, we intend to increase our plant capacity through the addition of new equipment and square footage to our Forest
Grove facility, at a cost of approximately $25.0 million. We expect to fund this expansion with a combination of the proceeds from offering referred to above, internally generated funds and lease
financing.

Forward-looking Statements

Information included in our Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. Our
actual results may differ significantly from those projected in the forward-looking statements. Factors and other risks that might cause our results to differ significantly from those projected in the
forward-looking statements are listed from time to time in our Securities and Exchange Commission reports, including the registration statement we filed on March 16, 2000, or otherwise
disclosed by us.

10



We
undertake no obligation to publicly release the results of any revision to our forward-looking statements which may be made to reflect subsequent events or circumstances or the
occurrence of unanticipated events.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

To date, we have not used derivative financial instruments for speculative purposes which expose us to market risk. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations" in this Report.

PART II. OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

|Exhibit No. |  |                                                                                                                                                                                                                                  
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.28       |  | Executive Severance Agreement between the Company and Anaya K. Vardya, dated as of January 18, 2000, incorporated by reference to Exhibit 10.25 to the Company's Registration Statement on Form S-3, (Registration
No. 333-32616)
|10.29       |  | Indemnity Agreement between the Company and Anaya K. Vardya as of December 20, 1999, incorporated by reference to Exhibit 10.26 to the Company's Registration Statement on Form S-3, (Registration No.
 333-32616)               
|10.30       |  | Promissory Note dated January 27, 2000 between the Company and U.S. Bank National Association                                                                                                                                    
|27          |  | Financial Data Schedule                                                                                                                                                                                                          

No
reports on Form 8-K were filed during the quarter ended February 26, 2000.

11



## 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized this 10th day of April 2000.

| |  | MERIX CORPORATION
| |  | -----------------
| |  | By:              

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