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UNITED STATES SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549



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FORM 10-Q



xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF
1934



For the quarterly period ended March
1, 2003



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. EmployerIdentification Number)
|                                                              
|1521 Poplar Lane, Forest Grove, Oregon                         |  | 97116                                 
|(Address of principal executive offices)                       |  | (Zip Code)                            



(503)
359-9300

(Registrants telephone number)



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 ̈



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



The number of shares of the Registrants Common Stock outstanding as of April 10, 2003 was 14,607,191 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 March 1, 2003 and May 25, 2002                                                     |  | 2   
|       
|        |  | Statements of Operations for the three months and nine months ended March 1, 2003 and February 23, 2002 |  | 3   
|       
|        |  | Statement of Shareholders Equity from May 25, 2002 through March 1, 2003                               |  | 4   
|       
|        |  | Statements of Cash Flows for the nine months ended March 1, 2003 and February 23, 2002                  |  | 5   
|       
|        |  | Notes to Financial Statements                                                                           |  | 6   
|       
|Item 2. |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                   |  | 10  
|       
|Item 3. |  | Quantitative and Qualitative Disclosure About Market Risk                                               |  | 17  
|       
|Item 4. |  | Controls and Procedures                                                                                 |  | 17  
|       
|Part II |  | Other Information                                                                                       |  |     
|       
|Item 6. |  | Exhibits and Reports on Form 8-K                                                                        |  | 18  
|       
|        |  | Signature                                                                                               |  | 19  
|       
|        |  | Certification Required Under Section 302 of the Sarbanes-Oxley Act of 2002                              |  | 20  





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PART I.     
FINANCIAL INFORMATION



MERIX CORPORATION

BALANCE SHEETS

(in thousands)



|                                                                                                                                       |  | March 1, 2003 |         |   | May 25, 2002
|-------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | - | ------------
|                                                                                                                                       |  | (unaudited)   |         |   |             
|                                                                                                                                       |  |               |         |   |             
|Assets                                                                                                                                 |  |               |         |   |             
|Cash and cash equivalents                                                                                                              |  | $             | 43,737  |   |             
|Short-term investments                                                                                                                 |  |               | 1,534   |   |             
|Accounts receivable, net of allowance of $987 and $998                                                                                 |  |               | 13,562  |   |             
|Inventories                                                                                                                            |  |               | 4,961   |   |             
|Income tax receivable                                                                                                                  |  |               | 11      |   |             
|Deferred tax asset                                                                                                                     |  |               | 1,244   |   |             
|Other current assets                                                                                                                   |  |               | 1,788   |   |             
|                                                                                                                                       |  |               |         |   |             
|Total current assets                                                                                                                   |  |               | 66,837  |   |             
|                                                                                                                                      
|Property, plant and equipment, net                                                                                                     |  |               | 79,383  |   |             
|Deferred tax asset                                                                                                                     |  |               | 12,856  |   |             
|Other assets                                                                                                                           |  |               | 1,027   |   |             
|                                                                                                                                       |  |               |         |   |             
|Total assets                                                                                                                           |  | $             | 160,103 |   |             
|                                                                                                                                       |  |               |         |   |             
|                                                                                                                                      
|Liabilities and Shareholders Equity                                                                                                   |  |               |         |   |             
|Accounts payable                                                                                                                       |  | $             | 6,477   |   |             
|Accrued compensation                                                                                                                   |  |               | 2,227   |   |             
|Accrued warranty                                                                                                                       |  |               | 892     |   |             
|Other accrued liabilities                                                                                                              |  |               | 1,062   |   |             
|                                                                                                                                       |  |               |         |   |             
|Total current liabilities                                                                                                              |  |               | 10,658  |   |             
|                                                                                                                                      
|Long-term debt                                                                                                                         |  |               | 25,000  |   |             
|                                                                                                                                       |  |               |         |   |             
|Total liabilities                                                                                                                      |  |               | 35,658  |   |             
|                                                                                                                                       |  |               |         |   |             
|                                                                                                                                      
|Commitments and contingencies (Note 9)                                                                                                 |  |               |        |   |             
|                                                                                                                                      
|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 March 1,
2003: 14,585 shares, May 25, 2002: 14,411 shares |  |               | 104,636 |   |             
|Unearned compensation                                                                                                                  |  |               | (3      | ) |             
|Retained earnings                                                                                                                      |  |               | 19,812  |   |             
|                                                                                                                                       |  |               |         |   |             
|Total shareholders equity                                                                                                             |  |               | 124,445 |   |             
|                                                                                                                                       |  |               |         |   |             
|Total liabilities and shareholders equity                                                                                             |  | $             | 160,103 |   |             
|                                                                                                                                       |  |               |         |   |             



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



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MERIX CORPORATION

STATEMENTS OF OPERATIONS

(in thousands, except per share amounts, unaudited)



|                                         |  | Three Months Ended |        |   | Nine Months Ended |  
|---------------------------------------- |  | ------------------ | ------ | - | ----------------- | -
|                                         |  | March 1, 2003      |        |   | February 23, 2002 |  
|Net sales                                |  | $                  | 22,056 |   |                   | $
|Cost of sales                            |  |                    | 23,945 |   |                   |  
|                                         |  |                    |        |   |                   |  
|Gross profit (loss)                      |  |                    | (1,889 | ) |                   |  
|                                        
|Operating expenses:                      |  |                    |        |   |                   |  
|Engineering                              |  |                    | 1,458  |   |                   |  
|Selling, general and administrative      |  |                    | 2,673  |   |                   |  
|Restructuring and related activities     |  |                    | 2,006  |   |                   |  
|                                         |  |                    |        |   |                   |  
|Total operating expenses                 |  |                    | 6,137  |   |                   |  
|                                        
|Operating loss                           |  |                    | (8,026 | ) |                   |  
|Interest and other income (expense), net |  |                    | (383   | ) |                   |  
|                                         |  |                    |        |   |                   |  
|Loss before taxes                        |  |                    | (8,409 | ) |                   |  
|                                        
|Income tax benefit                       |  |                    | (3,556 | ) |                   |  
|                                         |  |                    |        |   |                   |  
|Net loss                                 |  | $                  | (4,853 | ) |                   | $
|                                         |  |                    |        |   |                   |  
|                                        
|Net loss per share:                      |  |                    |        |   |                   |  
|Basic                                    |  | $                  | (0.33  | ) |                   | $
|                                         |  |                    |        |   |                   |  
|Diluted                                  |  | $                  | (0.33  | ) |                   | $
|                                         |  |                    |        |   |                   |  
|                                        
|Shares used in per share calculations:   |  |                    |        |   |                   |  
|Basic                                    |  |                    | 14,547 |   |                   |  
|                                         |  |                    |        |   |                   |  
|Diluted                                  |  |                    | 14,547 |   |                   |  
|                                         |  |                    |        |   |                   |  



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



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MERIX CORPORATION

STATEMENT OF SHAREHOLDERS EQUITY

(Unaudited, in thousands)



|                                                                    |  | Common Stock |  |        |         |   |                       |   |     |                   |  |  
|------------------------------------------------------------------- |  | ------------ |  | ------ | ------- | - | --------------------- | - | --- | ----------------- |  | -
|                                                                    |  | Shares       |  | Amount |         |   | Unearned Compensation |   |     | Retained Earnings |  |  
|Balance at May 25, 2002                                             |  | 14,411       |  | $      | 103,189 |   |                       |   |    |                   |  | $
|                                                                   
|Net loss                                                            |  |             |  |        |        |   |                       |   |    |                   |  |  
|Exercise of stock options                                           |  | 9            |  |        | 46      |   |                       |   |    |                   |  |  
|Stock issued under defined contribution plan                        |  | 34           |  |        | 300     |   |                       |   |    |                   |  |  
|Tax benefit related to stock-based compensation                     |  |             |  |        | 21      |   |                       |   |    |                   |  |  
|                                                                    |  |              |  |        |         |   |                       |   |     |                   |  |  
|Balance at August 25, 2002                                          |  | 14,454       |  |        | 103,556 |   |                       |   |    |                   |  |  
|                                                                   
|Net loss                                                            |  |             |  |        |        |   |                       |   |    |                   |  |  
|Exercise of stock options                                           |  | 24           |  |        | 123     |   |                       |   |    |                   |  |  
|Stock issued under defined contribution plan                        |  | 37           |  |        | 331     |   |                       |   |    |                   |  |  
|Tax benefit related to stock-based compensation                     |  |             |  |        | 37      |   |                       |   |    |                   |  |  
|Stock options granted to non-employees                              |  |             |  |        | 17      |   |                       |   | (17 | )                 |  |  
|Amortization of unearned compensation                               |  |             |  |        |        |   |                       |   | 5   |                   |  |  
|Shares surrended or canceled                                        |  |             |  |        | (2      | ) |                       |   |    |                   |  |  
|                                                                    |  |              |  |        |         |   |                       |   |     |                   |  |  
|Balance at November 23, 2002                                        |  | 14,515       |  |        | 104,062 |   |                       |   | (12 | )                 |  |  
|                                                                   
|Net loss                                                            |  |             |  |        |        |   |                       |   |    |                   |  |  
|Exercise of stock options                                           |  | 26           |  |        | 143     |   |                       |   |    |                   |  |  
|Stock issued under defined contribution plan                        |  | 44           |  |        | 327     |   |                       |   |    |                   |  |  
|Tax benefit related to stock-based compensation                     |  |             |  |        | 44      |   |                       |   |    |                   |  |  
|Stock options granted to non-employees                              |  |             |  |        | (10     | ) |                       |   | 10  |                   |  |  
|Amortization of unearned compensation                               |  |             |  |        |        |   |                       |   | (1  | )                 |  |  
|Compensation expense for modification of stock options(See Note 10) |  |             |  |        | 70      |   |                       |   |    |                   |  |  
|                                                                    |  |              |  |        |         |   |                       |   |     |                   |  |  
|Balance at March 1, 2003                                            |  | 14,585       |  | $      | 104,636 |   |                       | $ | (3  | )                 |  | $
|                                                                    |  |              |  |        |         |   |                       |   |     |                   |  |  



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



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MERIX CORPORATION

STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)





|                                                                                          |  | Nine Months Ended |        
|----------------------------------------------------------------------------------------- |  | ----------------- | -------
|                                                                                          |  | March 1, 2003     |        
|Cash flows from operating activities:                                                     |  |                   |        
|Net loss                                                                                  |  | $                 | (9,798 
|Adjustments to reconcile net loss to net cash (used in) provided by operating
activities: |  |                   |        
|Depreciation and amortization                                                             |  |                   | 8,127  
|Tax benefit related to exercise of nonqualified stock options                             |  |                   | 102    
|Deferred income taxes                                                                     |  |                   | (7,134 
|Contribution of common stock to defined contribution plan                                 |  |                   | 958    
|Loss on impairment and disposal of assets                                                 |  |                   | 958    
|Compensation expense on stock options                                                     |  |                   | 74     
|Other                                                                                     |  |                   | (22    
|                                                                                         
|Changes in assets and liabilities:                                                        |  |                   |        
|Accounts receivable                                                                       |  |                   | (2,754 
|Inventories                                                                               |  |                   | 46     
|Income tax receivable                                                                     |  |                   | 1,682  
|Other assets                                                                              |  |                   | (554   
|Accounts payable                                                                          |  |                   | 122    
|Accrued compensation                                                                      |  |                   | (201   
|Accrued warranty                                                                          |  |                   | (418   
|Other accrued liabilities                                                                 |  |                   | (1,114 
|                                                                                          |  |                   |        
|Net cash (used in) provided by operating activities                                       |  |                   | (9,926 
|                                                                                          |  |                   |        
|                                                                                         
|Cash flows from investing activities:                                                     |  |                   |        
|Short-term investments:                                                                   |  |                   |        
|Purchases                                                                                 |  |                   | (1,544 
|Maturities                                                                                |  |                   | 9,304  
|Proceeds from the sale of assets                                                          |  |                   | 6      
|Capital expenditures                                                                      |  |                   | (4,674 
|                                                                                          |  |                   |        
|Net cash provided by investing activities                                                 |  |                   | 3,092  
|                                                                                          |  |                   |        
|                                                                                         
|Cash flows from financing activities:                                                     |  |                   |        
|Long-term borrowings:                                                                     |  |                   |        
|Proceeds                                                                                  |  |                   | 25,000 
|Principal payments                                                                        |  |                   | (16,000
|Deferred financing costs                                                                  |  |                   | (1,376 
|Exercise of stock options                                                                 |  |                   | 311    
|                                                                                          |  |                   |        
|Net cash provided by (used in) financing activities                                       |  |                   | 7,935  
|                                                                                          |  |                   |        
|                                                                                         
|Increase in cash and cash equivalents                                                     |  |                   | 1,101  
|Cash and cash equivalents at beginning of period                                          |  |                   | 42,636 
|                                                                                          |  |                   |        
|Cash and cash equivalents at end of period                                                |  | $                 | 43,737 
|                                                                                          |  |                   |        
|                                                                                         
|Supplemental Disclosures:                                                                 |  |                   |        
|Cash paid for:                                                                            |  |                   |        
|Interest, net of amounts capitalized                                                      |  | $                 | 1,204  
|Taxes                                                                                     |  |                   |       



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



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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 25, 2002.



The financial information included herein reflects all normal
recurring adjustments, that are, in the opinion of management, necessary for a fair presentation of the results for interim periods. The results of operations for the nine months ended March 1, 2003 are not necessarily indicative of the results to
be expected for the full fiscal year.



The
Companys fiscal year is the 52 or 53-week period ending the last Saturday in May. Fiscal year 2003 is a 53-week year ending May 31, 2003 and fiscal year 2002 was a 52-week year ended May 25, 2002. The quarter covered by this report was a
14-week quarter, one week longer than the comparable quarter in fiscal 2002, which was a 13-week quarter.



Recent Accounting Pronouncements



In November 2002, Financial Accounting Standards Board (FASB) issued FIN 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Gurantees of Indebtedness of
Others, which elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued. It also requires that a guarantor recognize, at the inception of
a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The initial recognition and measurement provisions of this interpretation are applicable on a prospective basis to guarantees issued or modified after
December 31, 2002. In addition, the FIN 45 requires special disclosures for product warranties. The Company has adopted the disclosure requirements of FIN 45 during the third quarter of fiscal 2003. The adoption of the disclosure requirements of FIN
45 did not have a material effect on the Companys financial position or results of operations.



In December 2002, the FASB issued SFAS No. 148, Accounting for Stock for Stock-Based Compensation Transistion and Disclosure, An Amendment
of FASB Statement No. 123, (SFAS 148). SFAS 148 amends certain provisions of SFAS No. 123, Accounting for Stock-Based Compensation, (SFAS 123) and provides alternative methods of transition in voluntary adoptions of SFAS 123. The Company accounts
for its stock-based compensation in accordance with the provisions of APB Opinion No. 25, Accounting for Stock Issued to Employees. The Company will adopt the disclosure requirements of SFAS 148 during the fourth quarter of fiscal 2003. The Company
does not expect the adoption of SFAS 148 to have a material effect on the Companys financial position or results of operations.



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Note
2.    INVENTORIES





|                |  | March 1, 2003 |       |  |  | May 25, 2002
|--------------- |  | ------------- | ----- |  |  | ------------
|Raw materials   |  | $             | 917   |  |  |             
|Work in process |  |               | 2,245 |  |  |             
|Finished goods  |  |               | 1,799 |  |  |             
|                |  |               |       |  |  |             
|Total           |  | $             | 4,961 |  |  |             
|                |  |               |       |  |  |             



Note
3.    PROPERTY, PLANT AND EQUIPMENT



|                                   |  | March 1, 2003 |         |   | May 25, 2002 |  
|---------------------------------- |  | ------------- | ------- | - | ------------ | -
|Land                               |  | $             | 2,190   |   |              | $
|Buildings and grounds              |  |               | 32,502  |   |              |  
|Leasehold improvements             |  |               | 8,847   |   |              |  
|Machinery and equipment            |  |               | 85,275  |   |              |  
|Construction in progress           |  |               | 20,637  |   |              |  
|                                   |  |               |         |   |              |  
|Total                              |  |               | 149,451 |   |              |  
|Accumulated depreciation           |  |               | (70,068 | ) |              |  
|                                   |  |               |         |   |              |  
|Property, plant and equipment, net |  | $             | 79,383  |   |              | $
|                                   |  |               |         |   |              |  



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 and the convertible debenture outstanding during the period. Incremental shares of 3,897,396 and 3,234,759, related to outstanding stock options and the convertible debenture, were excluded
from the calculations of diluted net income per share for the quarter and nine months ended March 1, 2003, because including them would have been antidilutive. Incremental shares of 1,084,838 and 1,089,017, related to outstanding stock options, were
excluded in the calculations of diluted net income per share for the quarter and nine months ended February 23, 2002, because including them would have been antidilutive.



Note 5.    STOCK BASED COMPENSATION PLAN



In fiscal 2001, the Board of Directors approved the Merix
Corporation 2000 Nonqualified Stock Option Plan (the 2000 Plan). The 2000 Plan, as amended, permitted the grant of up to 2,000,000 shares of authorized common stock in the form of nonqualified stock options and stock awards to employees,
directors and to non-employee consultants, independent contractors and advisors who provide services to the Company. In August 2002, the Board of Directors authorized an additional 2,000,000 shares to be available for grant under the 2000 Plan.



In the second quarter of fiscal 2003, the
Company issued options from the 2000 Plan to a non-employee consultant for services to be provided for a term of one year. The Company has recognized $3 of the estimated charge of $7 of compensation expense in the six months ended March 1, 2003,
related to this grant. Compensation expense associated with these options is subject to quarterly revaluation throughout the one year term.



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Note
6.    DEBT



In the first
quarter of fiscal 2003, the Company privately sold a $25,000, 6.5% convertible debenture due May 2007. The debenture is unsecured, is convertible into shares of our common stock at a fixed conversion price of $19.41 per share, and is callable after
August 2004 if certain conditions are met. There is no principal amortization, and interest is payable quarterly. The debenture contains a put option that entitles the holder to require the Company to redeem the debenture at a price equal to 110% of
the principal balance upon a change in control of the Company. This put option is marked-to-market quarterly and any effect is shown in the Statement of Operations. There was no effect on the Statement of Operations for the nine months ended March
1, 2003. The Company does not anticipate that the derivative will have a significant value because no change of control is contemplated. The debenture contains a debt ratio incurrence covenant and the Company was in compliance with this covenant as
of March 1, 2003. A portion of the proceeds of this financing were used to repay in full the remaining $16,000 of senior unsecured notes outstanding at the end of fiscal 2002.



Note 7.    LEASE AGREEMENT



The Company leases manufacturing equipment under an operating lease. The lease was entered into as part of a
sales leaseback transaction and a deferred gain on the sale of equipment was recorded at the time of the transaction. The deferred gain is amortized over the life of the lease and as of March 1, 2003 the unamortized gain was $40. The lease agreement
includes certain financial covenants, including minimum net worth, debt to capitalization and debt service coverage requirements. As of March 1, 2003, the Company continued to be out of compliance with the covenant that specifies a minimum debt
service coverage ratio, however, compliance with this covenant was waived by the lessor through the first quarter of fiscal 2004.



The lease includes a buy-out provision whereby the Company has the option to purchase the equipment at the end of the fourth year. The
Company has informed the lessor of its intention to exercise the buy-out option and, accordingly, will pay $1,107 in the second quarter of fiscal 2004 and $387 in the third quarter of fiscal 2004 for the purchase of the equipment. Outstanding
minimum lease payments totaling $617 will be paid in monthly installments until the buy-out.



Note 8.    ACCRUED WARRANTY



Warranty activity for the three months and nine months ended March 1, 2003 consisted of the following:



|                                                                    |  | Three Months Ended |      |   | Nine Months Ended |  
|------------------------------------------------------------------- |  | ------------------ | ---- | - | ----------------- | -
|                                                                    |  | March 1, 2003      |      |   | March 1, 2003     |  
|Balance at the beginning of the period                              |  | $                  | 992  |   |                   | $
|Accruals for warranties issued during the period                    |  |                    | 587  |   |                   |  
|Accruals or changes in estimates related to pre-existing warranties |  |                    | (92  | ) |                   |  
|Settlements made during the period                                  |  |                    | (595 | ) |                   |  
|                                                                    |  |                    |      |   |                   |  
|Balance at the end of the period                                    |  | $                  | 892  |   |                   | $
|                                                                    |  |                    |      |   |                   |  



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Note
9.    COMMITMENTS AND CONTINGENCIES



Litigation



From time to
time, the Company is party to various legal claims, actions and complaints. The Company believes that the disposition of these matters will not have a material adverse effect on the Companys financial position, results of operations or cash
flows.



Commitments



The Company had capital commitments of approximately $8,480
as of March 1, 2003, relating to the purchase of manufacturing equipment and the operating lease buy-out. See Note 7.



In the prior fiscal year, the Company issued a standby letter of credit in the amount of $699 to secure obligations due under employee
health insurance plans. This letter of credit expired on July 1, 2002.



The Company guaranteed a note with a bank related to the financing of certain manufacturing equipment that was purchased by a subcontractor. During the second quarter of fiscal 2002, the Company was released from this
commitment.



The Company has consignment
agreements with certain suppliers for raw material inventory, some of which obligate us to purchase inventory on hand upon termination of the agreement. As of the end of the third quarter of fiscal 2003, potential commitments under these agreements
were insignificant.



Note
10.    RESTRUCTURING AND RELATED ACTIVITIES



During the third quarter of fiscal 2003, the Company executed a restructuring plan that consisted of a voluntary layoff of approximately 50 employees from both production and support groups and the relocation of certain
finishing, test, and shipping operations from a satellite production facility in Forest Grove, Oregon to the primary manufacturing plant on the main campus. In addition, the Company recorded a charge for impaired assets that resulted from the
restructuring. The plan was substantially completed during the third quarter of fiscal 2003 and a charge for restructuring and asset impairment of $2,006 was recorded in the quarter. The charge consisted of $793 related to severance costs, $364
related to production relocation and $849 related to asset impairment. Severence costs included $70 of compensation expense recorded due to the modification of stock options held by employees that participated in the voluntary layoff.



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ITEM 2.    
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS



This Quarterly Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
This Act provides a safe harbor for forward-looking statements to encourage companies to provide prospective information about themselves so long as they identify these statements as forward-looking and provide meaningful cautionary
statements identifying important factors that could cause actual results to differ from the projected results. All statements, other than statements of historical fact, including statements regarding industry prospects and future results of
operations or financial position, made in this Quarterly Report are forward looking. We use words such as anticipates, believes, expects, future and intends and similar expressions to
identify forward-looking statements. Forward-looking statements reflect managements current expectations, plans or projections and are inherently uncertain. Actual results could differ materially from managements expectations, plans or
projections. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Certain risks and uncertainties that could cause our actual results to differ significantly from
managements expectations are described in the section entitled Risk Factors Affecting Business and Results of Operations. This section, along with other sections of this Quarterly Report, describes some, but not all, of the factors
that could cause actual results to differ significantly from managements expectations. We undertake no obligation to revise these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence
of unanticipated events. Readers are urged, however, to review the factors set forth in reports that we file from time to time with the Securities and Exchange Commission.



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



Net sales were $22.1 million in the third quarter of fiscal
2003, an increase of 19% from net sales of $18.5 million in the third quarter of fiscal 2002. Net sales for the first nine months of fiscal 2003 were $72.0 million, an increase of 11% from net sales of $65.0 million in the first nine months of
fiscal 2002. The increase in net sales for the third quarter and first nine months of fiscal 2003 as compared to the same periods in the prior year resulted from an increase in unit shipments, partially offset by a decrease in average pricing. In
addition, the third quarter of fiscal 2003 was a 14-week quarter, one week longer than the comparable quarter in fiscal 2002 which was a 13-week quarter. Conversely, the first quarter of fiscal 2002 included a one-time payment by a customer to
secure a release from future commitments under a supply agreement. Based on the terms of the agreement, the payment amount was confidential.



Unit shipments were 51% and 45% higher in the third quarter and first nine months of fiscal 2003 compared to the respective periods in
fiscal 2002. The increase in unit shipments is largely due to shipments to new customers and partly due to a higher level of orders from existing customers. Beginning in January 2001, we aggressively pursued new customers to utilize excess capacity
that became available in our facility as a result of the downturn in the electronics industry. This strategy contributed to our volume increase in the first three quarters of fiscal 2003. Approximately one-third of revenues in the third quarter and
first nine months of fiscal 2003 were attributable to customers that were added since January 2001.



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Volume gains
were partially offset by a 21% and 22% decrease in average pricing in the third quarter and first nine months of fiscal 2003, respectively, as compared to the same periods in fiscal 2002. The decrease in average pricing is a result of both product
mix changes as well as competitive pressures on pricing for both quick-turn and volume orders. Product mix changes affect average pricing as pricing on circuit boards varies significantly based on board complexity, materials used and assembly
requirements. In general, average pricing is higher for boards that utilize high-speed laminate materials or thermal management solutions, which require higher cost materials. Sales of these higher priced boards as a percent of total sales have
declined slightly in the third quarter and first nine months of fiscal 2003 as compared to respective periods in the prior year due to product mix changes resulting from shifts in customer demand. Competitive pricing pressures are driven primarily
by excess industry capacity due to the extended decline in end market demand in the electronics industry. Printed circuit board manufacturers have decreased prices in efforts to increase sales volumes and cover the large fixed costs associated with
maintaining production capacity. Premium revenue, consisting of quick-turn prototype, pre-production and compressed lead-time volume orders, comprised 25% and 26% of net sales in the third quarter and first nine months of fiscal 2003, respectively,
compared to 32% and 34% for the same periods in fiscal 2002. The decrease in premium revenue as a percent of sales primarily reflects a decline in market pricing for quick-turn prototype orders and an increase in overall sales in fiscal 2003.
Premium revenue in both the first nine months of 2003 and the first nine months of 2002 consisted principally of quick-turn prototype and pre-production orders, as opposed to compressed lead-time volume orders. Until industry conditions improve and
demand significantly increases, we expect that decreased average pricing will continue to negatively affect our sales.



Sales to our five largest original equipment manufacturer (OEM) customers comprised 62% and 61% of our net sales in the third
quarter and first nine months of fiscal 2003, respectively, compared to 71% and 65% in the third quarter and first nine months of fiscal 2002. Sales to OEMs include sales made through contract manufacturers that assemble components on our products
for resale to OEMs. Approximately 55% and 61% of our net sales were made through our contract manufacturing customers in the third quarter and first nine months of fiscal 2003, respectively, compared to 64% and 46% in the same periods in fiscal
2002. Most of our shipments to contract manufacturers are directed by OEMs who negotiate product pricing and volumes directly with us. On a period to period basis, shipments to contract manufacturers will vary depending on sales mix and customer
mix. In general we are seeing a trend towards outsourcing by many of our OEM customers. In addition, we are on the approved vendor list of several contract manufacturers and continue to be awarded incremental discretionary orders directly from
certain of these contract manufacturers. We expect these discretionary orders to increase in the future.



Two OEM customers accounted for more than 10% of our net sales in the third quarter and first nine months of fiscal 2003 and the third
quarter fiscal 2002. Three OEM customers accounted for more than 10% of our net sales in the first nine months of fiscal 2002. We expect to continue to depend upon a small number of customers for a significant portion of our net sales in the
foreseeable future. The loss of or decrease in orders from one or more major customers could materially reduce our sales.



Our 90-day backlog was approximately $7.8 million at March 1, 2003 and $9.5 million at May 25, 2002. A substantial portion of our backlog
is typically scheduled for delivery within 60 days. The level and timing of orders placed by our customers vary due to a number of factors, including variations in demand for customer products, customer inventory management and changes in customer
manufacturing strategies. Because we do not generally obtain long-term purchase orders or commitments from our customers, we must anticipate the future volume of orders based on discussions with our customers. We rely on our estimates of anticipated
future volumes when making commitments regarding the level of business that we will seek and accept, the mix of products that we intend to manufacture, the timing of production schedules and the levels and utilization of personnel and other
resources. A customer may cancel, reduce or delay orders that were previously made or reduce estimates of future orders. A significant portion of our backlog may be subject to cancellation or postponement without penalty and we may not be able to
timely replace canceled, delayed or reduced orders. Accordingly, our backlog is not necessarily indicative of future financial results.



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Future demand
and product pricing depend on many factors including product mix, competitive pressure in the printed circuit board industry, capacity utilization, levels of advanced technology, and economic conditions affecting the markets we serve and the
electronics industry in general. The current uncertainty regarding the level and timing of an economic recovery in our product markets and volatility in our customer forecasts continue to make our forecasting difficult. However, at this time we
expect sales in the fourth quarter of fiscal 2003 to be approximately equal to sales in the third quarter of fiscal 2003.



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



|                             |  | Three Months Ended |  | Nine Months Ended
|---------------------------- |  | ------------------ |  | -----------------
|                             |  | Mar. 1, 2003       |  | Feb. 23, 2002    
|End Markets                  |  |                    |  |                  
|Communications               |  | 73%                |  | $                
|High-end Computing & Storage |  | 15%                |  |                  
|Test and Measurement         |  | 8%                 |  |                  
|Other                        |  | 4%                 |  |                  
|                             |  |                    |  |                  
|Total                        |  | 100%               |  | $                
|                             |  |                    |  |                  



Although there is some
variability on a quarter to quarter basis, the percentage of our net sales to principal end markets we serve remains relatively consistent from year to year. The communications market is our primary focus and we continue to add new customers. Some
of these new customers are relatively small companies and our future business with them may be significantly affected by their ability to obtain ongoing financing.



Gross Profit (Loss)



Gross profit (loss) as a percentage of sales or gross margin was negative 9% in the third quarter of fiscal 2003 compared to negative 12%
in the third quarter of fiscal 2002. This improvement in gross margin in the third quarter of 2003 reflects an increase in manufacturing capacity utilization, a lower cost structure and increased productivity, partially offset by a decrease in
average pricing. Manufacturing capacity utilization improved due to increased product demand from new and existing customers. Higher capacity utilization enhances gross margin because fixed costs are spread over a higher number of units produced
which decreases the cost per unit. The lower cost structure primarily resulted from reduced headcount through lay-offs and attrition, reductions in vendor pricing for materials and other cost reduction actions taken over the past year. In addition,
restructuring and related activities were implemented during the third quarter of fiscal 2003 and a portion of the cost savings associated with this plan were realized during the quarter. Productivity gains were achieved through process
re-engineering that resulted in an increase in unit output with reduced headcount.



Gross margin was negative 1% for the first nine months of fiscal 2003 compared to positive 1% for the first nine months of fiscal 2002. The one-time customer payment discussed in Net Sales
above directly benefited the gross margin in fiscal 2002. Excluding this one-time payment, margins increased for the first nine months of fiscal 2003 compared to the first nine months of fiscal 2002 as the effect of the decline in average pricing
was more than offset by the impact of increased production, increased productivity and decreases in cost structure.



Until industry conditions improve and demand increases, we expect that gross margin will continue to be negatively affected by low
capacity utilization and competitive product pricing. Our gross profit may also be affected by other factors, including changes in product mix, production yields, and changes in our cost structure.



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Engineering



Engineering expenses were $1.5 million in
the third quarter of fiscal 2003 and $1.4 million in the third quarter of fiscal 2002, representing 7% of net sales in those periods. Engineering expenses were $4.7 million and $4.1 million in the first nine months of fiscal 2003 and 2002,
respectively, representing 6% of net sales in those periods. The increase in engineering expense in the third quarter and the first nine months of fiscal 2003 reflects the capitalization of qualified internal expenses related to the construction of
the Wood Village, Oregon facility in fiscal 2002 that were not repeated in fiscal 2003 and a level of mandated time off in fiscal 2002 that was not repeated in fiscal 2003. These increases, plus the effect of the extra week in the quarter, were
partially offset by a decrease in engineering headcount in fiscal 2003 compared to fiscal 2002.



Selling, General and Administrative



Selling, general and administrative expenses were $2.7 million in the third quarter of fiscal 2003 and 2002, representing 12% and 15% of net sales in those periods, respectively. Labor savings due to
reductions in headcount as compared to the third quarter of fiscal 2002 were offset by less mandated time off and the additional week included in the third quarter of fiscal 2003.



Selling, general and administrative expenses were $8.7 million, or 12% of net sales, for the first nine
months of fiscal 2003 and $8.3 million, or 13% of net sales, for the first nine months of fiscal 2002. The increase in selling, general and administrative expense resulted largely from additional labor costs in fiscal 2003 as compared to fiscal 2002
due to mandated time off in fiscal 2002 that was not repeated in fiscal 2003. Labor costs have increased due to the increased days worked in fiscal 2003 as compared to the prior year and increased sales force salaries and bonuses. Direct sales force
salaries increased due to strategic hires to strengthen the organization and facilitate expansion of our sales group into Europe. Sales commissions and bonuses have increased due to higher sales volumes and an increase in the number of manufacturing
representation firms used by the Company. These increases were partially offset by lower overall headcount, a reduction in discretionary spending on travel and general business expenses, and a decline in out-of-warranty costs in the first nine
months of fiscal 2003.



Restructuring and Related Activities



During the third quarter of fiscal 2003,
the Company executed a restructuring plan that consisted of a voluntary layoff of approximately 50 employees from both production and support groups and the relocation of certain finishing, test and shipping operations from a satellite production
facility in Forest Grove to the primary manufacturing plant on our main campus. This relocation is expected to have a positive impact on our cost structure, cycle time, and productivity. In addition, the Company recorded a related charge for
impaired assets that resulted from the restructuring. The plan was substantially completed during the third quarter of fiscal 2003 and a charge of $2.0 million was recorded for restructuring and related activities. The charge consisted of $793
thousand related to severance costs, $364 thousand related to production relocation and $849 thousand related to asset impairment. We expect an additional charge of approximately $140 thousand to complete restructuring and related activities in the
fourth quarter of fiscal 2003. Approximately $1.1 million of the total charge will be a cash charge. As a result of these actions, we expect to realize quarterly cost savings of approximately $600 thousand. Approximately two-thirds of the quarterly
savings were realized in the third quarter of fiscal 2003.



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Interest and Other Income
(Expense), net



Interest and other
income (expense), net was a net expense of $383 thousand in the third quarter of fiscal 2003 and net income of $79 thousand in the third quarter of fiscal 2002. Interest and other income (expense), net was a net expense of $1.0 million in the first
nine months of fiscal 2003 and net income of $1.1 million in the first nine months of fiscal 2002. The net change is the result of decreased interest income, increased interest expense and an increase in other expenses. Interest income decreased in
the third quarter and first nine months of fiscal 2003 due to reduced interest yields on lower levels of cash and cash equivalents and short-term investments. Interest expense increased in the third quarter and first nine months of fiscal 2003
primarily because the capitalization of interest related to our capacity expansion projects ended in the third quarter of fiscal 2002.



Income Taxes



The effective tax rate was a benefit of 42% in the third quarter of fiscal 2003 and a cumulative benefit of 43% in the first nine months
of fiscal 2003, compared to a tax benefit of 40% in the third quarter of fiscal 2002 and a cumulative benefit of 45% in the first nine months fiscal 2002. The tax benefits recorded during the second quarters of fiscal 2003 and 2002 included research
and development tax credits realized from prior years of $398 thousand and $585 thousand, respectively. A foreign sales exclusion was reflected as a benefit for the second quarter of fiscal 2002. Tax benefits recorded during the third quarter of
fiscal 2003 included research and development tax credits realized from prior years of $92 thousand. Research and development tax credits related to the reported periods were also recognized in their respective periods.



The effective tax rate for the remainder of fiscal 2003 is
expected to be a benefit of approximately 43%. We expect to realize the deferred tax assets, which are being carried forward, prior to their expiration. Expiration of deferred tax assets begin in fiscal 2018.



Liquidity and Capital Resources



At the end of the first nine months of fiscal 2003, we had
$43.7 million in cash and cash equivalents and $1.5 million in short-term investments.



Cash used in operating activities for the first nine months of fiscal 2003 was $9.9 million and was the result of a net loss of $9.8 million, adjusted for depreciation and amortization, deferred income
taxes and a net increase in working capital. The increase in working capital is primarily the result of an increase in accounts receivable, and a decrease in other accrued liabilities, partially offset by a decrease in income tax receivable. Cash
used in conjunction with restructuring and related activities in the third quarter of fiscal 2003 was $818 thousand.



Cash provided by investing activities in the first nine months of fiscal 2003 was $3.1 million, primarily from the maturity of
investments, offset by capital expenditures primarily for manufacturing equipment.



Cash provided by financing activities in the first nine months of fiscal 2003 was $7.9 million. During the first quarter of fiscal 2003, we privately sold a $25.0 million, 6.5% convertible debenture
due May 2007. The debenture is convertible into shares of our common stock at a fixed conversion price of $19.41 per share and is callable after August 2004 if certain conditions are met. Interest is payable quarterly. We paid $1.4 million in
financing costs associated with the transaction and a portion of the proceeds were used to pay off $16 million in outstanding senior notes.





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We lease
manufacturing equipment under an operating lease. The lease agreement includes certain financial covenants including minimum net worth, debt to capitalization and debt service coverage requirements. As of March 1, 2003, we continue to be out of
compliance with the covenant that specifies a minimum debt service coverage ratio. This covenant has been waived by the lessor through the first quarter of fiscal 2004. The lease includes a buy-out provision whereby we may purchase the equipment at
the end of the fourth year. We have informed the lessor of our intention to exercise the buy-out option and, accordingly, will pay $1.1 million in the second quarter of fiscal 2004 and $387 thousand in the third quarter of fiscal 2004. Outstanding
minimum lease payments totaling $617 thousand will be paid in monthly installments until the time of the buy-out.



We lease a 90,000 square foot manufacturing facility located in Wood Village, Oregon under an operating lease. Monthly lease payments
escalate at specific points over the minimum ten-year term of the lease. Outstanding minimum lease payments at the end of the third quarter of fiscal 2003 totaled $4.7 million. Payments on the initial term of the lease extend through July 2011 and
we have the option to extend the initial term of the lease for three consecutive periods of five years each.



We had capital commitments of approximately $8.5 million as of March 1, 2003, relating to the purchase of manufacturing equipment and the
operating lease buy-out.



We commenced capacity
expansion programs at our Wood Village, Oregon and Forest Grove, Oregon locations in the first quarter of fiscal 2001. Due to current industry conditions, the completion of this program has been put on hold.



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



Risk Factors Affecting Business and Results of Operations



Certain statements in this report contain forward-looking information (as defined in Section 27A of the
Securities Act of 1933, as amended) that involves risks and uncertainties. Words such as anticipates, believes, expects, future and intends and similar expressions identify forward-looking
statements. These statements relate to future events or our future financial performance. These statements constitute forward-looking statements and are only predictions. Actual events or results may differ materially. The differences could be
caused by a number of factors or combination of factors, including the factors listed below and the risks detailed in the Companys Securities and Exchange Commission filings, including our Annual Report on Form 10-K for the fiscal year ended
May 25, 2002.



Forward-looking statements
contained in this report relate to the Companys plans and expectations as to future sales, our customer base, gross profit, cost of, and savings from our restructuring and related activities, and the need for and availability of capital
resources and cash.



The following factors, among
others, could cause actual results to differ from those indicated in the forward-looking statements: a continued downturn in the economy in general or in the electronics and printed circuit board industries; a further decrease in demand for
electronic products or continued weak demand for these products; our ability to effectively utilize our assets; pricing and other competitive pressures in the industry from domestic and global competitors; the impact of armed conflict; the loss of
any of our major customers; our ability to attract new customers; our ability to reduce costs, including those associated with our restructuring plan; the ability of our suppliers to maintain service levels and the ability of some of our new
customers to obtain financing. These factors or additional risks and uncertainties not known to us or that we currently deem immaterial may impair business operations and 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.



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Recent Accounting
Pronouncements



In November 2002, Financial
Accounting Standards Board (FASB) issued FIN 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Gurantees of Indebtedness of Others, which elaborates on the disclosures to be made by a guarantor in its
interim and annual financial statements about its obligations under certain guarantees that it has issued. It also requires that a guarantor recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in
issuing the guarantee. The initial recognition and measurement provisions of this interpretation are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. In addition, the FIN 45 requires special disclosures for
product warranties. We have adopted the disclosure requirements of FIN 45 during the third quarter of fiscal 2003. The adoption of the disclosure requirements of FIN 45 did not have a material effect on our financial position or results of
operations.



In December 2002, the FASB issued
SFAS No. 148, Accounting for Stock for Stock-Based Compensation Transistion and Disclosure, An Amendment of FASB Statement No. 123, (SFAS 148). SFAS 148 amends certain provisions of SFAS No. 123, Accounting for Stock-Based Compensation, (SFAS 123)
and provides alternative methods of transition in voluntary adoptions of SFAS 123. The Company accounts for its stock-based compensation in accordance with the provisions of APB Opinion No. 25, Accounting for Stock Issued to Employees. We will adopt
the disclosure requirements of SFAS 148 during the fourth quarter of fiscal 2003. We do not expect the adoption of SFAS 148 to have a material effect on our financial position or results of operations.



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ITEM 3.
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



Our exposure to market risk for changes in interest rates relates primarily to the increase or decrease in the amount of interest income
we can earn on our funds available for investment. We ensure the safety and preservation of our invested principal funds by limiting default risk, market risk and reinvestment risk. We mitigate default risk by investing in high-credit quality
securities. We do not believe that changes in interest rates will have a material effect on our liquidity, financial condition or results of operations.



We do not have interest rate risk in our long-term debt and we do not enter into interest rate swap agreements. A change in interest rates
would not effect interest expense on the $25.0 million, 6.5% convertible debenture because that instrument bears a fixed rate of interest.



ITEM 4.
    CONTROLS AND PROCEDURES



An evaluation was performed under the supervision and with the participation of the Companys management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the
effectiveness of the design and operation of the Companys disclosure controls and procedures within 90 days before the filing date of this quarterly report. Based on that evaluation, the Companys management, including the CEO and CFO,
concluded that the Companys disclosure controls and procedures were effective to ensure that material information required to be included in the Companys Exchange Act reports would be made known to management by others within the
Company. There have been no significant changes in the Companys internal controls or in other factors that could significantly affect internal controls subsequent to their evaluation, nor were there any significant deficiencies or material
weaknesses in such internal controls. As a result, no corrective actions were required or taken.



Our CEO and CFO do not expect that our disclosure controls or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations
include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more
people, or by management override of the control. The design of any system of controls also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its
stated goals under all potential future conditions.



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PART II.
    OTHER INFORMATION



ITEM 6.
    EXHIBITS AND REPORTS ON FORM 8-K



|(a) |  | See the Exhibit Index for the exhibits filed as part of this report.
|--- |  | --------------------------------------------------------------------



|(b) |  | Reports on Form 8-K
|--- |  | -------------------



A Current Report on Form 8-K was filed on December 18, 2002 to report under Item 5 the Companys results for the second quarter of fiscal 2003. A
Current Report on Form 8-K was filed on January 30, 2003, to report under Item 5 the Companys update of guidance on the results for the third quarter of fiscal 2003. No other reports on Form 8-K were filed during the quarter ended March 1,
2003.



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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 14thday of April, 2003.



MERIX CORPORATION   By: /S/   JANIE S.
BROWN Janie S. Brown Sr. Vice President, Chief Financial Officer, Treasurer and Secretary (Principal Financial Officer)






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CERTIFICATION REQUIRED UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002



I, Janie S. Brown, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Merix Corporation;
|-- |  | ------------------------------------------------------------------------



|2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. |  | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report
(the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | The registrants other certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee
of registrants board of directors (or persons performing the equivalent function):
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize
and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



|6. |  | The registrants other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Date: April 14, 2003



|                                      
|--------------------------------------
|/S/  JANIE S.
BROWN                   
|Janie S. Brown Chief Financial Officer





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I, Mark R. Hollinger, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Merix Corporation;
|-- |  | ------------------------------------------------------------------------



|2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. |  | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report
(the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | The registrants other certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee
of registrants board of directors (or persons performing the equivalent function):
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize
and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



|6. |  | The registrants other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Date: April 14, 2003



|                                         
|-----------------------------------------
|/S/   MARK R.
HOLLINGER                  
|Mark R. Hollinger Chief Executive Officer





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EXHIBIT
INDEX



|Exhibit Number |  | Document Description                                                                                                                                                                    
|-------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|              
|3.1            |  | Articles of Incorporation of the Company, as amended, incorporated by reference to the Companys Annual Report on
Form 10-K for the fiscal year ended May 26, 2001.                     
|              
|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.                                          
|              
|99.1           |  | Merix Corporation Certification of Mark R. Hollinger, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|              
|99.2           |  | Merix Corporation Certification of Janie S. Brown, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.