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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 24, 2001

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(State or other Jurisdiction of
Incorporation or Organization)

93-1135197(I.R.S. Employer
Identification Number)1521 Poplar Lane, Forest Grove, Oregon(Address of principal executive offices)

97116(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 6, 2001 was 13,613,284 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 24, 2001 and May 27, 2000                                                         |                                                                                       | 2   
|        |         | Statements of Operations for the three months and nine months ended
    February 24, 2001 and February 26, 2000 |                                                                                       | 3   
|        |         | Statements of Cash Flows for the nine months ended February 24, 2001
    and February 26, 2000                  |                                                                                       | 4   
|        |         | Notes to Financial Statements                                                                                   |                                                                                       | 5   
|        | Item 2. |                                                                                                                 | Management's Discussion and Analysis of Financial Condition and Results of Operations |     
|        | Item 3. |                                                                                                                 | Quantitative and Qualitative Disclosure About Market Risk                             |     
|Part II |         | Other Information                                                                                               |                                                                                       |     
|        | Item 6. |                                                                                                                 | Exhibits and Reports on Form 8-K                                                      |     
|        |         | Signature                                                                                                       |                                                                                       | 13  

1

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PART I. FINANCIAL INFORMATION    MERIX CORPORATION  BALANCE SHEETS  (in thousands)

|                                                         |                                                                                                                                        | February 24,
2001                          |         | May 27,
2000
|-------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ------------
|
|Assets                                                   |                                                                                                                                        |                                            |         |             
|Cash, cash equivalents and short-term investments        |                                                                                                                                        | $                                          | 78,216  |             
|Accounts receivable, net of allowance of $1,071 and $337 |                                                                                                                                        |                                            | 20,712  |             
|Inventories                                              |                                                                                                                                        |                                            | 11,414  |             
|Prepaid income taxes                                     |                                                                                                                                        |                                            | 656     |             
|Deferred tax asset                                       |                                                                                                                                        |                                            | 4,005   |             
|Other current assets                                     |                                                                                                                                        |                                            | 2,043   |             
|                                                         |                                                                                                                                        |                                            |         |             
|                                                         | Total current assets                                                                                                                   |                                            |         | 117,046     
|Property, plant and equipment, net                       |                                                                                                                                        |                                            | 68,263  |             
|Other assets                                             |                                                                                                                                        |                                            | 204     |             
|                                                         |                                                                                                                                        |                                            |         |             
|Total assets                                             |                                                                                                                                        | $                                          | 185,513 |             
|                                                         |                                                                                                                                        |                                            |         |             
|Liabilities and Shareholders' Equity                     |                                                                                                                                        |                                            |         |             
|Accounts payable                                         |                                                                                                                                        | $                                          | 14,212  |             
|Accrued compensation                                     |                                                                                                                                        |                                            | 3,880   |             
|Current portion of long-term debt                        |                                                                                                                                        |                                            | 9,149   |             
|Income taxes payable                                     |                                                                                                                                        |                                            |        |             
|Other accrued liabilities                                |                                                                                                                                        |                                            | 2,379   |             
|                                                         |                                                                                                                                        |                                            |         |             
|                                                         | Total current liabilities                                                                                                              |                                            |         | 29,620      
|Long-term debt                                           |                                                                                                                                        |                                            | 20,000  |             
|Deferred tax liability                                   |                                                                                                                                        |                                            | 4,780   |             
|                                                         |                                                                                                                                        |                                            |         |             
|                                                         | Total liabilities                                                                                                                      |                                            |         | 54,400      
|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 Feb. 24, 2001: 13,600 shares, May 27, 2000: 13,312 shares |                                            |         | 94,079      
|                                                         | Retained earnings                                                                                                                      |                                            |         | 37,034      
|                                                         |                                                                                                                                        |                                            |         |             
|                                                         | Total shareholders' equity                                                                                                             |                                            |         | 131,113     
|                                                         |                                                                                                                                        |                                            |         |             
|                                                         |                                                                                                                                        | Total liabilities and shareholders' equity |         | $           
|                                                         |                                                                                                                                        |                                            |         |             

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

2

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MERIX CORPORATION    STATEMENTS OF OPERATIONS  (Unaudited, in thousands, except per share amounts)

|                                         |                                     | Three Months Ended |        | Nine Months Ended |  
|---------------------------------------- | ----------------------------------- | ------------------ | ------ | ----------------- | -
|
|Net sales                                |                                     | $                  | 44,446 |                   | $
|Cost of sales                            |                                     |                    | 30,012 |                   |  
|                                         |                                     |                    |        |                   |  
|Gross profit                             |                                     |                    | 14,434 |                   |  
|Operating expenses:                      |                                     |                    |        |                   |  
|                                         | Engineering                         |                    |        | 1,330             |  
|                                         | Selling, general and administrative |                    |        | 3,351             |  
|                                         |                                     |                    |        |                   |  
|Total operating expenses                 |                                     |                    | 4,681  |                   |  
|Operating income                         |                                     |                    | 9,753  |                   |  
|Interest and other income (expense), net |                                     |                    | 669    |                   |  
|                                         |                                     |                    |        |                   |  
|Income before income taxes               |                                     |                    | 10,422 |                   |  
|Income tax expense                       |                                     |                    | (4,065 | )                 |  
|                                         |                                     |                    |        |                   |  
|Net income                               |                                     | $                  | 6,357  |                   | $
|                                         |                                     |                    |        |                   |  
|Net income per share:                    |                                     |                    |        |                   |  
|                                         | Basic                               |                    | $      | 0.47              |  
|                                         |                                     |                    |        |                   |  
|                                         | Diluted                             |                    | $      | 0.44              |  
|                                         |                                     |                    |        |                   |  
|Shares used in per share calculations:   |                                     |                    |        |                   |  
|                                         | Basic                               |                    |        | 13,574            |  
|                                         |                                     |                    |        |                   |  
|                                         | Diluted                             |                    |        | 14,308            |  
|                                         |                                     |                    |        |                   |  

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

3

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MERIX CORPORATION  STATEMENTS OF CASH FLOWS  (Unaudited, in thousands)

|                                                                   |                                                                                   | Nine Months Ended                                             |        
|------------------------------------------------------------------ | --------------------------------------------------------------------------------- | ------------------------------------------------------------- | -------
|
|Cash flows from operating activities:                              |                                                                                   |                                                               |        
|                                                                   | Net income                                                                        |                                                               | $      
|                                                                   | Adjustments to reconcile net income to net cash provided by operating activities: |                                                               |        
|                                                                   |                                                                                   | Depreciation and amortization                                 |        
|                                                                   |                                                                                   | Tax benefit related to exercise of nonqualified stock options |        
|                                                                   |                                                                                   | Deferred income taxes                                         |        
|                                                                   |                                                                                   | Contribution of common stock to defined contribution plan     |        
|                                                                   |                                                                                   | Other                                                         |        
|                                                                   | Changes in assets and liabilities:                                                |                                                               |        
|                                                                   |                                                                                   | Accounts receivable                                           |        
|                                                                   |                                                                                   | Inventories                                                   |        
|                                                                   |                                                                                   | Other current assets                                          |        
|                                                                   |                                                                                   | Accounts payable                                              |        
|                                                                   |                                                                                   | Accrued compensation                                          |        
|                                                                   |                                                                                   | Income taxes payable                                          |        
|                                                                   |                                                                                   | Other accrued liabilities                                     |        
|                                                                   |                                                                                   |                                                               |        
|Net cash provided by operating activities                          |                                                                                   |                                                               | 39,685 
|                                                                   |                                                                                   |                                                               |        
|Cash flows from investing activities:                              |                                                                                   |                                                               |        
|                                                                   | Short-term investments:                                                           |                                                               |        
|                                                                   |                                                                                   | Purchases                                                     |        
|                                                                   |                                                                                   | Maturities                                                    |        
|                                                                   | Capital expenditures                                                              |                                                               |        
|                                                                   | Net proceeds from sale-leaseback of equipment                                     |                                                               |        
|                                                                   | Proceeds from sale of assets                                                      |                                                               |        
|                                                                   |                                                                                   |                                                               |        
|Net cash (used in) provided by investing activities                |                                                                                   |                                                               | (69,084
|                                                                   |                                                                                   |                                                               |        
|Cash flows from financing activities:                              |                                                                                   |                                                               |        
|                                                                   | Principal payments on long-term debt                                              |                                                               |        
|                                                                   | Proceeds from exercise of stock options                                           |                                                               |        
|                                                                   |                                                                                   |                                                               |        
|Net cash used in financing activities                              |                                                                                   |                                                               | (3,575 
|                                                                   |                                                                                   |                                                               |        
|(Decrease) increase in cash and cash equivalents                   |                                                                                   |                                                               | (32,974
|Cash and cash equivalents at beginning of period                   |                                                                                   |                                                               | 61,615 
|                                                                   |                                                                                   |                                                               |        
|Cash and cash equivalents at end of period                         |                                                                                   |                                                               | 28,641 
|Short-term investments                                             |                                                                                   |                                                               | 49,575 
|                                                                   |                                                                                   |                                                               |        
|Cash, cash equivalents and short-term investments at end of period |                                                                                   | $                                                             | 78,216 
|                                                                   |                                                                                   |                                                               |        
|Supplemental Disclosures:                                          |                                                                                   |                                                               |        
|Cash paid for:                                                     |                                                                                   |                                                               |        
|                                                                   | Interest                                                                          |                                                               | $      
|                                                                   | Taxes                                                                             |                                                               |        

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

4

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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 27, 2000.

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 24, 2001 are not necessarily indicative of the results to be expected for
the full year.

Certain
reclassifications have been made to prior years' data to conform to the current year's presentation. These reclassifications had no impact on previously reported results of
operations or shareholders' equity. Share information of the prior periods has been restated to reflect the 3 for 2 stock split that occurred in the first quarter of fiscal 2001.

The
Company's fiscal year is the 52 or 53-week period ending the last Saturday in May. Fiscal year 2001 is a 52-week year ending May 26, 2001 and fiscal
year 2000 was a 52-week year ended May 27, 2000.

Note 2. INVENTORIES

|                |       | Feb. 24,
2001 |       | May 27,
2000
|--------------- | ----- | ------------- | ----- | ------------
|Raw materials   |       | $             | 888   |             
|Work in process |       |               | 2,779 |             
|Finished goods  |       |               | 7,747 |             
|                |       |               |       |             
|                | Total |               | $     | 11,414      
|                |       |               |       |             

Note 3. PROPERTY, PLANT AND EQUIPMENT

|                                   |  | Feb. 24,
2001 |         | May 27,
2000 |  
|---------------------------------- |  | ------------- | ------- | ------------ | -
|Land                               |  | $             | 2,190   |              | $
|Buildings and grounds              |  |               | 27,996  |              |  
|Machinery and equipment            |  |               | 95,517  |              |  
|Construction in progress           |  |               | 3,331   |              |  
|                                   |  |               |         |              |  
|                                   |  |               | 129,034 |              |  
|Less accumulated depreciation      |  |               | (60,771 | )            |  
|                                   |  |               |         |              |  
|Property, plant and equipment, net |  | $             | 68,263  |              | $
|                                   |  |               |         |              |  

5

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Note 4. NET INCOME PER SHARE

Basic net income 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 stock options outstanding during the period. Incremental shares of 733,665 and
985,933 related to outstanding stock options, were included in the calculations of diluted net income per share for the third quarter and first nine months of fiscal year 2001, respectively.

Note 5. EVENTS SUBSEQUENT TO MAY 27, 2000

On December 20, 2000, the Board of Directors approved the Merix Corporation 2000 Nonqualified Stock Option Plan (the 2000 Plan). The 2000 Plan covers
2,000,000 shares of common stock and permits the grant of nonqualified stock options to employees and directors. Options granted to officers and directors in any given year cannot exceed 25% of the
total options granted in that year. A committee of the Board of Directors has the authority to determine non-qualified stock option prices.

On
February 26, 2001, the Company renewed an unsecured line of credit from US Bank, increasing it from $8.0 million to $15.0 million. This renewal will expire in
February 2002. Borrowings under this line of credit would bear interest at the bank's prime rate or alternative LIBOR based rates available at the time of borrowing.

On
March 29, 2001, the Board of Directors authorized a stock repurchase program that allows the Company, at management's discretion, to purchase up to 650,000 shares of Merix
common stock, through May 2002. No purchases have been made to date.

6

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

We are a leading manufacturer of technologically advanced electronic interconnect solutions for use in sophisticated electronic equipment. Our principal
products are complex multilayer printed circuit boards, which are the platforms used to interconnect microprocessors, integrated circuits and other components that are essential to the operation of
electronic products and systems.

Results of Operations

Net Sales

Our net sales for the third quarter of fiscal 2001 were $44.4 million, which represented an increase of 12.0% from net sales of $39.7 million in
the third quarter of fiscal 2000. The increase in net sales for the quarter was the result of a favorable sales mix which offset lower unit shipments. The favorable sales mix resulted from higher
levels of advanced technology printed circuit boards and higher levels of premium revenue, both of which have higher average selling prices. Premium revenue, consisting of both prototype and
compressed lead-time volume orders, comprised 31.8% of net sales in the third quarter of fiscal 2001 compared to 20.5% in the third quarter fiscal 2000 net sales. Lower unit shipments were
in response to decreased customer demand.

Net
sales for the first nine months of fiscal 2001 were $153.8 million, which represented an increase of 40.2% from net sales of $109.7 million in the first nine months
of fiscal 2000. The increase in year-to-date sales was due to higher levels of premium revenues and higher levels of advanced technology printed circuit boards, both yielding
higher average selling prices. Premium revenue, consisting of both prototype and compressed lead-time volume orders, comprised 36.8% and 21.8% of net sales in the first nine months of 2001
and 2000, respectively. Sales in the communications market segment was the primary driver behind increased sales during the first nine months of fiscal 2001.

Beginning
December 2000, we experienced a slowdown in demand from our customers, including a reduction in demand for compressed lead-time volume orders as well as
the postponement or cancellation of orders previously placed. We also recently received notice of termination of a key customer supply agreement. Future demand and product pricing are dependent upon a
variety of factors including, product mix, levels of advanced technology and premium revenues, competitive pressure in the circuit board industry, and economic conditions affecting the electronics
industry in general and the markets we serve. The current uncertainty regarding the level and timing of an economic recovery in our product markets and volatility in our customer forecasts makes our
forecasting inherently less reliable than in prior periods. However, we expect sales in the fourth quarter to be significantly less than that in each of the first three quarters of fiscal 2001.

Our
90-day backlog was approximately $25.4 million at February 24, 2001, compared to approximately $40.5 million at November 25, 2000 and
$35.4 million at May 27, 2000. 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 financial results.

Our
five largest original equipment manufacturer, or OEM, customers represented 63.3% of net sales in the third quarter of fiscal 2001 and 67.2% of net sales in the third quarter of
fiscal 2000. Our five
largest OEM customers represented 64.2% of net sales in the first nine months of fiscal 2001 and 68.1% of net sales in the first nine months of fiscal 2000. Our sales to OEMs include sales made
through contract manufacturers. Our sales to contract manufacturers were 54.1% of net sales in the third quarter of fiscal 2001 and 58.7% of net sales in the third quarter of fiscal 2000. Our sales to
contract manufacturers were 56.9% of net sales in the first nine months of fiscal 2001 and 53.2% of net

7

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sales in the first nine months of fiscal 2000. We expect to continue to depend upon a small number of customers for a significant portion of our net sales for the foreseeable future. The loss of or
decrease in orders from one or more major customers could materially reduce our sales.

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

|                     |       | Three Months Ended |     | Nine Months Ended
|-------------------- | ----- | ------------------ | --- | -----------------
|
|Market Segments      |       |                    |     |                  
|Communications       |       | 58                 | %   | $                
|Computers            |       | 24                 |     |                  
|Test and Instruments |       | 16                 |     |                  
|Other                |       | 2                  |     |                  
|                     |       |                    |     |                  
|                     | Total |                    | 100 | %                
|                     |       |                    |     |                  

Gross Profit

Our gross margin was 32.5% in the third quarter of fiscal 2001 compared to 19.0% in the third quarter of fiscal 2000 and was 34.5% in the first nine months of
fiscal 2001 compared to 18.0% in the first nine months of fiscal 2000. Gross profit increased in both the third quarter and first nine months of fiscal 2001 due to a favorable product mix and cost
reductions. Our product mix was favorable because we produced a greater proportion of advanced technology printed circuit boards and premium orders, which provide significantly higher gross margins.
Our cost reductions included higher production yields, manufacturing process improvements and lower raw material and supply costs.

We
expect product shipments in the last quarter of fiscal 2001 to be significantly less than each of the first three quarters of fiscal 2001 and also expect a significant amount of
fourth quarter shipments to come from our finished goods inventory build-up from the end of the third quarter. Accordingly, we expect our gross profit in the fourth quarter of fiscal 2001
to decrease significantly compared to the first nine months of fiscal 2001 since reduced manufacturing volumes will adversely affect manufacturing capacity utilization resulting in lower absorption of
overhead costs. Shipments are expected to decrease due to reduced customer demand. Our gross profit may also be affected by various other factors including product mix, production yields, price
changes and changes in our cost structure.

Engineering

Our engineering expenses were $1.3 million in the third quarter of fiscal 2001 and $1.2 million in the third quarter of fiscal 2000, representing
3.0% and 2.9% of our net sales, respectively. Our engineering expenses were $4.1 million in the first nine months of fiscal 2001 and $3.3 million in the first nine months of fiscal 2000,
representing 2.7% and 3.0% of our net sales, respectively. Engineering expenses increased in the third quarter and first nine months of fiscal 2001 due to increased headcount required to support
higher production levels and capacity expansion activities.

8

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Selling, General and Administrative

Our selling, general and administrative expenses were $3.4 million in the third quarter of fiscal 2001 and $3.0 million in the third quarter of
fiscal 2000, representing 7.5% of our net sales for both periods. The increase in selling, general and administrative expenses in the third quarter of fiscal 2001 was due to an increase in bad debts
provision and increased sales and administrative headcount required to support our growth, offset by a reduction in selling expenses and incentive compensation.

Selling,
general and administrative expenses in the first nine months of fiscal 2001 were $10.5 million and $7.9 million in the first nine months of fiscal 2000,
representing 6.8% and 7.2% of our net sales, respectively. The increase in selling, general and administrative expenses during year-to-date fiscal 2001 was due to increases in
sales and administrative headcount supporting our growth, bad debt provision, incentive compensation and selling expense.

Interest and Other Income (Expense), net

Our interest and other income (expense), net was $0.7 million in the third quarter of fiscal 2001 and $(0.7) million in the third quarter of fiscal
2000. Interest and other income (expense), net was $1.5 million in the first nine months of fiscal 2001 and $(2.3) million in the first nine months of fiscal 2000. The change principally
resulted from changes in interest income and interest expense. Interest income increased in the third quarter of fiscal 2001 and in the nine months of fiscal 2001 due to higher levels of cash and
short-term investments, primarily due to $41.3 million net proceeds from the May 2000 offering of our common stock and increased cash flow from operations. Interest expense
decreased in the third quarter of fiscal 2001 and during the nine months of fiscal 2001 due to scheduled principal payments on long-term debt.

Income Taxes

Our effective tax rate was approximately 39% in the first nine months of fiscal 2001 and during fiscal 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. These tax and interest payments could range from $1.5 million to $2.0 million and are not expected to affect income tax expense.

Liquidity and Capital Resources

Cash provided by operating activities in the first nine months of fiscal 2001 was $39.7 million, consisting primarily of net income for the period
adjusted for depreciation and amortization, deferred income taxes, and the tax benefit of stock option exercises, offset by a $2.9 million increase in working capital. Working capital increased
largely due to a build-up of finished goods inventory caused by customer requests for the push-out of existing sales orders and an increase in accrued interest on
short-term investments.

Cash
used in investing activities in the first nine months of fiscal 2001 was $69.1 million, used primarily for the purchase of short-term investments and
expenditures for manufacturing buildings and equipment supporting the capacity expansion program, offset by maturities of short-term investments. Capital commitments at February 24,
2001 were approximately $24.8 million, primarily for manufacturing equipment.

9

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Cash used in financing activities in the first nine months of fiscal 2001 was $3.6 million, which primarily consisted of principal payments on our senior unsecured notes
partially offset by proceeds from the exercise of stock options.

We
have $28.0 million outstanding under 7.9% senior unsecured notes held by two insurance companies, with interest payable semi-annually. Semi-annual
principal payments of $4.0 million are due in September and March, with a final principal payment of $8.0 million due in September 2003. The notes contain certain financial
covenants, including minimum net worth, debt ratio and interest coverage and a make-whole provision covering potential prepayment penalties. As of February 24, 2001, we were in
compliance with all covenants.

On
February 26, 2001, we renewed an unsecured line of credit from a bank, increasing it from $8.0 million to $15.0 million. This credit facility expires in
February 2002. Borrowings under this line of credit would bear interest at the bank's prime rate or alternative LIBOR based rates available at the time of borrowing. To date, we have not made
any borrowings under this credit facility.

On
March 29, 2001, the Board of Directors authorized a stock repurchase program that allows the Company, at management's discretion, to purchase up to 650,000 shares of Merix
common stock, through May 2002. No purchases have been made to date.

Capacity Expansion

We continue to execute on our expansion plans, although at a slower pace than originally planned. Our expansion projects, announced in March and July of 2000,
are expected to increase production capacity by approximately 100% and will cost approximately $90.0 million. Pursuant to these expansion projects, we entered into a lease agreement for a
90,000 square foot facility in Wood Village, Oregon. Consistent with the current reduction in demand for our product, we have delayed the completion of the initial phase of this new facility until the
spring of 2002. Full capacity is now expected to be available in 2004. Upon the completion of these expansion projects, we expect that our manufacturing facilities will support a revenue run rate of
approximately $400.0 million annually. We expect to fund our expansion projects with existing capital resources, internally generated funds and lease financing.

Our
planned capacity expansions involve significant risks. For example, we may encounter construction delays, equipment delays, labor shortages or disputes and production
start-up problems that could prevent us from meeting our customers' delivery schedules. We also expect to incur new fixed operating expenses associated with our expansion efforts,
including increases in depreciation expenses and lease expenses. If our revenues do not increase sufficiently to offset these expenses, our operating results may be harmed. In addition, the
electronics industry has historically been cyclical and is currently experiencing a significant economic downturn characterized by diminished product demand and over-capacity. The current
unfavorable economic conditions affecting the electronics industry in general may affect our ability to successfully utilize our additional manufacturing capacity in an effective manner, which could
adversely affect our operating results.

We
believe that our existing capital resources and cash generated from operations should be sufficient to meet our working capital and capital expenditure requirements through at
least the next 12 months.

Risk Factors Affecting Business and Results of Operations

This report contains forward-looking statements that involve risks and uncertainties. These statements relate to future events or our future financial
performance. In some cases, you can identify forward-looking statements by terminology including "could," "may," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict,"
"potential" or "continue," the negative of these terms or other comparable terminology. Statements discussing gross margin, customer demand and increases in

10

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manufacturing capacity constitute forward-looking statements and are only predictions. Actual events or results may differ materially. In evaluating these statements, you should specifically consider
various factors, including those listed in "Management's Discussion and Analysis of Financial Condition and Results of OperationsRisk Factors Affecting Business and Results of Operations"
contained in our Annual Report on Form 10-K for the fiscal year ended May 27, 2000, as filed with the Securities and Exchange Commission and other risk factors otherwise
disclosed by us. These factors may cause our actual results to differ materially from any forward-looking statement. Although we believe the expectations reflected in the forward-looking statements
are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We are under no duty to update any of the forward-looking statements after the date of this report,
to conform them to actual results or to make changes in our expectations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We do not currently use derivative financial instruments for speculative purposes that expose us to market risk. We are exposed to fair value risk due to
changes in interest rates with respect to our outstanding debt and short-term investments in marketable securities. Information required by this item is included in "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

11

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PART II. OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

No
reports on Form 8-K were filed during the quarter ended February 24, 2001.

12

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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, 2001.

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

13

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EXHIBIT INDEX

|Exhibit Number |  | Document Description                                                                                                                                               
|-------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1            |  | Articles of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-1, Registration No. 33-77348).
|3.2            |  | Bylaws of the Company, as amended (incorporated by reference to Exhibit 3.2 to the Company's Form 10-K for the fiscal year ended May 31, 1997).                    
|4.1            |  | Instruments defining the rights of security holders (included in the Articles of Incorporation and Bylaws filed as Exhibits 3.1 and 3.2 respectively).             
|10.34          |  | Promissory Note dated February 26, 2001 between the Company and U.S. Bank National Association (filed herewith).                                                   

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