UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K

[X]              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                     For the fiscal year ended May 31, 1997

                                       OR

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

                         Commission file number 0-23818

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

                OREGON                                    93-1135197
    (State or other Jurisdiction of                    (I.R.S. Employer
     Incorporation or Organization)                 Identification Number)

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

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

           Securities registered pursuant to Section 12(b) of the Act:
                                      None

           Securities registered pursuant to Section 12(g) of the Act:
                           Common Stock, no par value

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

The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of July 1, 1997 was $64.1 million based upon the composite closing
price of the Registrant's Common Stock on the Nasdaq National Market System on
that date.

The number of shares of the Registrant's Common Stock outstanding as of July 1,
1997 was 6,184,327 shares.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's proxy statement in connection with its 1997 Annual
Meeting of Shareholders are incorporated by reference into Part III.
<PAGE>
                                MERIX CORPORATION
                                    FORM 10-K

                                TABLE OF CONTENTS

Part I                                                                      Page

      Item 1.   Business                                                       2

      Item 2.   Properties                                                     8

      Item 3.   Legal Proceedings                                              8

      Item 4.   Submission of Matters to a Vote of Security Holders            8

Part II

      Item 5.   Market for the Registrant's Common Stock and
                Related Stockholder Matters                                    9

      Item 6.   Selected Financial Data                                        9

      Item 7.   Management's Discussion and Analysis of Financial
                Condition and Results of Operations                           10

      Item 8.   Financial Statements and Supplementary Data                   16

      Item 9.   Changes In and Disagreements With Accountants on 
                Accounting and Financial Disclosure                           31

Part III

      Item 10.  Directors and Executive Officers of the Registrant            31

      Item 11.  Executive Compensation                                        31

      Item 12.  Security Ownership of Certain Beneficial
                Owners and Management                                         31

      Item 13.  Certain Relationships and Related Transactions                31

Part IV

      Item 14.  Exhibits, Financial Statement Schedules,
                and Reports on Form 8-K                                       31

                Signatures                                                    34

                                       1
<PAGE>
                                     PART I

ITEM 1. BUSINESS.

Merix Corporation (Merix or the Company) is a leading manufacturer of
technologically advanced electronic interconnect products, custom engineered to
meet customers' specific needs. The Company's principal products are high
density, multilayer, rigid printed circuits used to connect the microprocessors,
integrated circuits (ICs) and other components essential to the functioning of
electronic equipment. The Company has also produced a small amount of flexible
circuits, but has recently decided to exit the flexible circuit market. The
Company recently entered the market for laminate-based chip carriers that are
used to connect ICs to printed circuits. The Company's customers include a
diversified base of manufacturers in the industrial instrumentation, computer,
and communications segments of the electronics industry.

Merix, an Oregon corporation, was formed in March 1994 to succeed to the
business conducted by the Circuit Board Division (the Division) of Tektronix,
Inc. (Tektronix), which had been in the electronic interconnect manufacturing
business for over 30 years. On June 1, 1994, Merix acquired the assets and
assumed certain liabilities (the Acquisition) of the Division in connection with
the initial public offering of its common stock, and began to operate as an
independent corporation. The term "Company" is used in this document to refer to
both Merix and its predecessor, the Division. The Company has manufacturing
operations in Forest Grove, Oregon, Loveland, Colorado and San Diego, California
(Soladyne division). The Company's corporate offices are located at 1521 Poplar
Lane, Forest Grove, Oregon 97116 and the telephone number is (503) 359-9300.


Electronic Interconnect Industry Overview

Printed circuits, including rigid and flexible printed circuits, are the basic
platforms used to connect the microprocessors, ICs and other components
essential to the functioning of electronic equipment. These products consist of
a pattern of electrical circuitry etched from copper that is laminated to a
board made of insulating material. The manufacture of these and other complex
interconnect products requires increasingly sophisticated engineering and
manufacturing expertise and substantial capital investment. This has contributed
to increasing reliance by original equipment manufacturers (OEMs) on independent
manufacturers for such products.

According to industry reports, the U.S. domestic market for all interconnect
products was approximately $7.8 billion in 1996, including both "captive" and
"independent" producers. Captive producers are typically divisions of larger
OEMs that manufacture interconnect products for use in their own product lines.
Independent producers, such as the Company, manufacture interconnect products
for multiple OEMs, and represented approximately 85% of the U.S. domestic market
revenues in 1996. The market share of independent producers has increased in
recent years as OEMs have found that independent producers can often provide
greater flexibility, higher levels of responsiveness and faster delivery at a
lower overall cost than their own captive operations.

Historically, the industry has been highly fragmented. Increasing technology
demands and resulting demands for capital investment are expected to continue to
contribute to a growing trend toward consolidation of independent producers.


Customers, Marketing and Sales

The Company's customers include a diversified base of leading OEMs in the
industrial instrumentation, computer, and communications segments of the
electronics industry. These customers often use leading-edge technologies and
their product requirements generally drive the advancement of electronic
interconnect manufacturing technology.

                                       2
<PAGE>
The Company also manufactures and sells products to electronic manufacturing
service industry (EMSI) customers such as Benchmark Electronics, Inc., Pro-Log
Corporation, Solectron Corporation, and SCI Systems, Inc. which assemble
components on the products for resale to OEMs. The Company seeks to expand
existing relationships and establish relationships with other EMSI customers to
gain access to more OEM customers.

The Company seeks to develop strategic relationships with its customers and
markets its products and services through a direct sales force and
manufacturers' representatives. The Company's sales strategy includes providing
advice to customers with respect to applicable technology, manufacturability of
designs and cost implications.

The Company believes continuous improvement in product technology is essential
to satisfy customer needs. To gain knowledge of future technology needs, the
Company holds technology planning and review meetings with its major customers,
attends technical conferences and trade shows, and hosts an annual conference
with its customers and suppliers. These activities also enhance the Company's
visibility in the marketplace.

In fiscal year 1997, the following five customers represented approximately 74%
of net sales: Hewlett-Packard Company (HP), Tektronix, Motorola, Inc., Teradyne,
Inc. and Storage Technology Corporation represented approximately 25.4%, 18.4%,
13.0% 8.9% and 7.9% of net sales, respectively. See Management's Discussion and
Analysis of Financial Condition and Results of Operations in Item 7 of this
Report.

Supply Agreements

In December 1996, the Company entered into a four year supply agreement with
Amkor Electronics, Inc. (Amkor) under which the Company will manufacture
laminate-based substrates for chip carrier products. In connection with this
agreement, the Company purchased certain assets, including manufacturing
equipment, and licensed process know-how from Amkor. The Company anticipates
that volume shipments under the supply agreement with Amkor will commence in
fiscal year 1998.

In connection with the Company's acquisition of the Loveland operation (See Note
3 of the Notes to Financial Statements in Item 8 of this Report) from HP in
fiscal year 1996, the Company entered into a two-year supply agreement, which
expires on October 31, 1997, under which HP agreed to purchase, at market
prices, at least $35 million of products in the first year and at least $25
million in the second year.

Immediately prior to consummation of the Acquisition, Tektronix, through
participating divisions and subsidiaries, entered into seven separate three-year
supply agreements with the Company under which they agreed to purchase annually
from the Company at least the lesser of 90% of their aggregate requirements for
printed circuit boards, flexible circuits and related tooling and test fixtures
or $28.5 million worth of the Company's products. These supply agreements with
Tektronix expired on May 31, 1997 and have not been renewed. The Company is
continuing to manufacture products for Tektronix, but there can be no assurance
that Tektronix will continue to purchase products from the Company at historic
levels.


Manufacturing and Engineering

Product Profiles

The Company's principal products are high density, multilayer printed circuits
manufactured with materials ranging from standard fiberglass to high performance
materials. The Company has also produced a small amount of flexible circuits,
but has recently decided to exit the flexible circuit market. The Company
recently entered the market for laminate-based chip carriers that are used to
connect ICs to printed circuits. The Company's products and their applications
are described below.

                                       3
<PAGE>
Rigid Epoxy Substrate Circuits. This product group consists of epoxy/glass
laminate circuit boards used in virtually all segments of the electronics
industry and is manufactured at the Forest Grove and Loveland facilities. The
Company also manufactures rigid-flex circuits which are a hybrid of the rigid
and flexible circuits. Such boards combine performance characteristics of rigid
circuits with the spatial advantages of flexible circuits. For fiscal years 1997
and 1996, rigid circuits represented approximately 75% and 73%, respectively, of
the Company's net sales.

High Performance Circuits. High performance circuits are used in electronic
products requiring high speed and high frequency interconnect solutions, such as
cellular phone base stations and other communications, computing and
instrumentation products and are manufactured at the Forest Grove and Soladyne
facilities. High performance circuits are manufactured using specialty materials
with properties that address the need for faster speeds, higher operating
temperatures and higher frequencies. The Company has developed the expertise and
specialized engineering processes required to manufacture high performance
circuits using a broad range of materials, including Teflon(R), Duroid(R),
Cyanate Ester and GETEK(R). For fiscal years 1997 and 1996, high performance
circuits represented approximately 23% and 24%, respectively, of the Company's
net sales.

Chip Carrier Products. Chip carriers are very small circuits (typically less
than two square inches) that are used to attach ICs to printed circuits. For
certain end product applications, laminate-based chip carriers are a preferred
alternative to conventional ceramic carriers. In December 1996, the Company
entered into a four year supply agreement to manufacture chip carriers for
Amkor. Under the agreement, the Company will be Amkor's primary North American
supplier of substrates for laminate-based enhanced ball grid array (BGA) chip
carriers, provided the Company meets the rigorous qualification and other
requirements of Amkor and Amkor's customers. Although the Company believes it is
well positioned to capitalize on the emerging chip carrier market, there is no
assurance that the Company will be successful in entering and competing in this
new market.

Flexible Circuits. Flexible circuits are thin, lightweight circuits used to
interconnect other circuit boards and electronic devices within electronic
equipment, and are used in high speed computers and other electronic equipment
as replacements to cables, wiring and other interconnect devices to improve
product reliability and performance. Flexible circuits, which represented
approximately 2% and 3% of the Company's net sales in fiscal years 1997 and
1996, respectively, are manufactured at the Company's Forest Grove facility. The
Company intends to exit the flexible and rigid-flex circuit markets in order to
focus its resources on rigid and high performance printed circuits and chip
carrier products. Sales of flexible circuit products are expected to be phased
out during the first quarter of fiscal year 1998.

Manufacturing Processes

The manufacture of complex multilayer printed circuits involves the use of a
variety of sophisticated production processes and equipment. In general, the
Company receives circuit designs directly from its customers in the form of
computer aided design files that it reviews to ensure manufacturability. Using
these computer files, the Company generates images of the circuit patterns that
it develops on individual layers using advanced photographic processes. Through
a variety of plating and etching processes, the Company adds and removes
conductive and insulating materials. Separate layers are combined, or laminated
together, using intense heat and pressure under vacuum. Connections between
layers are achieved by plating through small holes called vias. Vias are made by
highly specialized equipment capable of achieving extremely fine tolerances with
high accuracy.

The formation of very small holes (microvias) permits the Company's customers to
increase circuit densities and reduce overall circuit board size to meet their
design requirements. Because mechanical drill bits below a certain size break
during the drilling process, microvia formation requires new manufacturing
processes. In December 1995, the Company entered into a sub-license agreement
with HP's Printed Circuit Organization under which the Company obtained the
rights to use the DYCOstrate(R) interconnect substrate technology (DYCOstrate).
DYCOstrate is a trademark of Dyconex Patente AG, a Swiss company. The Company is
currently using both DYCOstrate and Plasma Etched Redistribution Layer (PERL)
technologies to manufacture microvias as small as .004 inches. These
technologies utilize plasma

                                       4
<PAGE>
(excited gases) to etch microvias. As an alternative to plasma etching, the
Company is currently evaluating the use of laser drilling equipment for the
formation of microvias.

The Company specializes in products with extremely fine geometries and
tolerances. Because of the tolerances involved, the Company uses clean rooms in
certain manufacturing processes where tiny particles can create defects on the
circuit patterns, and uses automated optical inspection (AOI) to ensure
consistent quality.

The manufacturing of chip carriers shares some of the same equipment and
processes as printed circuits, but also requires the use of certain other
specialized equipment used only in the manufacture of chip carriers. For
example, after the Company manufactures a panel with dozens of chip carriers, it
uses specialized singulation equipment and processes to cut the panel into
individual or strips of carriers.

The Company embraces Total Quality Management to meet the highest industry
standards for product quality. The Company has remained ISO 9001 certified since
1992, when it was the first independent circuit board operation in the United
States to be certified to this level of international quality standards. In May
1996, the Company's Forest Grove facility received the Shingo Prize for
Manufacturing Excellence. The Shingo Prize is awarded annually by the National
Association of Manufacturers to recognize North American domestic manufacturing
companies that demonstrate excellence in manufacturing leading to quality
enhancement, productivity improvement, and customer satisfaction.

The Company operates on a twenty-four hour, five or six day manufacturing work
week schedule, with non-scheduled days reserved for maintenance.


Supplier Relationships

Historically, the majority of raw materials used in the manufacture of the
Company's products have been readily available. However, as product changes
increase the industry's use of new laminate materials, the potential for
shortages in the supply of these materials increases. To date, material
shortages or price fluctuations have not had a materially adverse effect on the
Company.

In order to reduce lead times and inventory carrying costs, to enhance the
quality and reliability of the supply of raw materials and to reduce
transportation and other logistics costs, the Company has entered into strategic
relationships with certain of its suppliers of laminates, raw materials and
services. Matsushita Electronics Materials, a key laminate supplier, operates an
82,000 square foot factory adjacent to the Company's Forest Grove facility to
produce laminates previously imported by the Company from Japan. Insulectro, a
supplier of raw materials and services, operates a warehouse distribution center
adjacent to the Company's Forest Grove facility. In addition, Probe Test
Fixtures, Inc. provides on-site electrical test services to Company's Forest
Grove facility.

The Company strives to develop and maintain good working relationships with its
key suppliers to enhance operation of the business. Supplier management programs
drive improvements and working relationships between the parties. These programs
include, but are not limited to, quarterly review meetings, joint product and
process development, and participation in an annual technology needs assessment
meeting with the Company's key and strategic customers.


Environmental Controls

Electronic interconnect product manufacturing requires the use of a variety of
materials, including metals and chemicals. As a result, the Company is subject
to environmental laws relating to the storage, use and disposal of chemicals,
solid waste, and other hazardous materials, as well as air quality regulations.
Water used in the manufacturing process must be treated to remove metal
particles and other contaminates before it can be discharged into the municipal
sanitary sewer system. The Company operates and maintains effluent water
treatment systems and utilizes approved laboratory testing procedures at each of

                                       5
<PAGE>
its manufacturing facilities under effluent discharge permits issued by a number
of governmental authorities. These permits must be renewed periodically and are
subject to revocation in the event of violations of environmental laws. The
Company believes that its waste treatment complies with all current
environmental protection requirements in all material respects. However, there
can be no assurance that violations will not occur in the future. Further, to
the extent that environmental laws change, environmental expenditures could
increase.

Certain waste products generated by the Company's manufacturing facilities
require further treatment or controlled disposal. In connection with the
Acquisition, the Company entered into an agreement with Tektronix to provide
tanker and containerized waste handling, storage, treatment and disposal
arrangement services for the Forest Grove facility in accordance with applicable
environmental regulations for the three year period ended May 31, 1997. The
Company and Tektronix extended the agreement with certain revisions which
eliminate disposal arrangement services and reduce waste treatment services. The
Forest Grove facility's waste materials not treated by Tektronix, and those from
the Loveland and Soladyne facilities, are sent to approved third parties for
recycling, reclaim, treatment or disposal.

The Company is a recognized leader in the professional management of industrial
chemicals, waste treatment and recycling. The Company's commitment to
responsible management of hazardous chemicals has resulted in eliminating from
use in manufacturing many hazardous chemicals common to the Company's industry
such as ozone depleting substances, chromium, trichloroethylene and
perchloroethylene.


Backlog

The Company's 90 day backlog was approximately $26.4 million at the end of
fiscal year 1997 and $19.9 million at the end of fiscal year 1996. Backlog at
the end of fiscal year 1997 included $6.8 million of orders with delivery dates
beyond lead time which have not been previously included in the Company's
backlog calculation. Backlog at the end of fiscal year 1996 has not been
restated to include these orders. A substantial portion of the Company's backlog
is typically scheduled for delivery within 60 days. A certain portion of the
Company's backlog is subject to cancellation or postponement without significant
penalty. Accordingly, the Company's backlog is not necessarily indicative of
future sales or earnings. Cancellation and postponement charges generally vary
depending upon the time of cancellation or postponement.


Competition

Competitive factors in the market for printed circuits include product quality,
technological capability, responsiveness to customers in delivery and service,
and price. The Company believes that competition in the printed circuit market
segments served by the Company is based more on product quality, technical
capability and delivery than on price. The Company believes its primary
competitive strengths are its ability to provide a wide array of interconnect
products at a high quality within a shorter lead time, engineering and
manufacturing expertise, and customer service and support.

The printed circuit industry in the United States is highly fragmented. An
industry source estimates the number of companies producing circuit boards in
the United States is between 750 and 800 companies. According to an industry
source, the top 10 merchant suppliers accounted for approximately 23% of total
circuit board sales by independent suppliers in 1996. Increasing technology
demands and resulting demands for capital investment are expected to continue to
contribute to a growing trend toward consolidation of independent producers. The
Company also faces potential competition from captive printed circuit
manufacturers, many of which have substantial resources and production
capabilities, who may seek orders in the open market to fill excess capacity,
thereby increasing competition.

                                       6
<PAGE>
Patents and Other Intellectual Property

The Company's success depends in part on proprietary technology and
manufacturing expertise. While the Company attempts to protect its proprietary
technology through patents, copyrights and trade secrets, it believes that its
success will depend more upon further innovation and technological advances.
Companies in the electronics industry from time to time receive letters from
third parties alleging infringement of patent rights. The Company has received
no such letters; however, Tektronix, prior to the Acquisition, received a notice
of infringement from Jerome H. Lemelson, alleging infringement of several of Mr.
Lemelson's "barcode reader," "machine vision," "video imaging," "beam
processing" and certain other patent claims. Mr. Lemelson contends that any
modern manufacturing facility such as that operated by the Company must
necessarily infringe on at least some of the asserted patent claims at some time
during the course of product design, fabrication, or testing. In connection with
the Acquisition, Tektronix agreed to assume any liabilities, in excess of any
manufacturer's indemnity, relating to the claim made by Mr. Lemelson for
products of the Company shipped to customers prior to the consummation of the
Acquisition. Tektronix and Mr. Lemelson have announced that Tektronix has
entered into an agreement with Mr. Lemelson to license certain of Mr. Lemelson's
patents. Should Mr. Lemelson assert a claim against the Company and be able to
identify processes or products of the Company for which a license is legally
required, although there can be no assurance, the Company expects Mr. Lemelson
to license the patented technology to the Company under terms that would not
have a material financial impact.

Executive Officers

The following table sets forth certain information with respect to the executive
officers of the Company.

<TABLE>
<CAPTION>
Name                        Age                          Position
----                        ---                          --------
<S>                         <C>     <C>
Deborah A. Coleman          44      Chair, Chief Executive Officer and President
Joseph H. Howell            45      Senior Vice President and Chief Financial
                                    Officer
Joseph Reichbach            52      Senior Vice President - Sales and Marketing
Terri L. Timberman          39      Vice President - Human Resources and Quality
Samuel R. DeSimone, Jr.     37      Vice President -  Corporate Development and
                                    Secretary
Mark H. Hynes               39      Vice President - Site Operations
Charles William Payne       59      Vice President - Engineering and Chief
                                    Technology Officer
</TABLE>

Deborah A. Coleman serves as Chair of the Board of Directors, Chief Executive
Officer and President of the Company. From November 1992 to the inception of the
Company, Ms. Coleman served as Vice President, Materials Operations of
Tektronix, where she led worldwide procurement, distribution, component
engineering and component manufacturing operations. Prior to joining Tektronix,
Ms. Coleman held various positions at Apple Computer, Inc. for 11 years,
including Chief Financial Officer, Vice President Information Systems &
Technology, and Vice President of Operations. Ms Coleman serves on the Board of
Directors of Applied Materials, Inc., Octel Communications Corporation and
Synopsys, Inc.

Joseph H. Howell serves as Senior Vice President and Chief Financial Officer of
the Company. From 1988 until joining the Company in January 1995, Mr. Howell
served as Controller of Borland International, Inc., where he was appointed Vice
President in 1991 and acting Chief Financial Officer in 1994.

Joseph Reichbach serves as Senior Vice President - Sales and Marketing of the
Company. From 1989 until joining the Company in February 1997, Mr. Reichbach
served as Vice President of Sales for North America for Analog Devices, Inc.

Terri L. Timberman serves as Vice President - Human Resources and Quality of the
Company. Ms. Timberman joined the Circuit Board Division in February 1994. From
1992 until joining the Company, Ms. Timberman served in various human resource
management positions for Tektronix. Prior to 1992, Ms. Timberman served as
Director of Human Resources for TriQuint Semiconductor, Inc.

                                       7
<PAGE>
Samuel R. DeSimone, Jr. serves as Vice President - Corporate Development and
Secretary. From 1990 until joining the Company in September 1995, Mr. DeSimone
was a partner at the law firm of Lane Powell Spears Lubersky in Portland,
Oregon. Prior to 1990, Mr. DeSimone worked for the law firm of Testa, Hurwitz &
Thibeault in Boston, Massachusetts.

Mark H. Hynes serves as Vice President - Site Operations. From 1990 until
joining the Company in November 1995, Mr. Hynes served as the Operations Manager
of the Loveland Circuit Board Facility of Hewlett-Packard Company. Prior to
1990, Mr. Hynes served as Engineering Manager of that facility.

Charles William Payne serves as Vice President - Engineering and Chief
Technology Officer of the Company. Mr. Payne joined the Company in 1991 and
served as an engineering manager and then Director of Engineering until May 1995
when he became Vice President - Engineering and Chief Technology Officer. Prior
to 1991, Mr. Payne served as Executive Manager of the Printed Circuit Facility
of Intergraph Corporation.


Employees

As of May 31, 1997 the Company had a total of 1,572 employees, of which 1,348
were regular employees and 224 were temporary agency employees. None of the
Company's employees are represented by a labor union. The Company has never
experienced an employee-related work stoppage. The average length of service for
the Company's regular employees is approximately 10 years. The Company believes
its relationship with its employees is good. The Company also believes that the
continued hiring and retention of engineers and management personnel is integral
to the success of the Company.


ITEM 2. PROPERTIES.

The Company owns a 73-acre industrial land site located in Forest Grove, Oregon
on which a 174,000-square-foot manufacturing facility, a 6,300-square-foot waste
treatment facility and a new 62,500-square- foot administration and training
facility are located. Pursuant to a trust deed granted by the Company to
Tektronix, such site is subject to a mortgage securing the Company's obligation
to repay $10 million pursuant to a note payable to Tektronix in connection with
the Acquisition. See Note 1 of Notes to Financial Statements in Item 8.
Additionally, during the fourth quarter of fiscal year 1995, the Company
acquired a vacant 37,500-square-foot building approximately one mile from the
Forest Grove manufacturing facility. This building was retrofitted to provide
interim office space pending the completion of the new administration and
training facility. During the third quarter of fiscal year 1997, approximately
15,000 square feet of this building was converted to provide additional
manufacturing capacity.

In connection with the acquisition of the Loveland operation in October 1995,
the Company entered into a five year lease with HP for 120,000 square feet of
manufacturing space housing the acquired operations. In connection with the
acquisition of the Soladyne operation from Rogers Corporation in December 1995,
the Company assumed a lease for the 37,000-square-foot manufacturing facility
housing the acquired operations. The lease has four years remaining. See Note 14
of the Notes to Financial Statements in Item 8.

ITEM 3. LEGAL PROCEEDINGS.

There are no material pending legal proceedings.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

No matters were submitted to a vote of the security holders during the fourth
quarter of the fiscal year covered by this Report.

                                       8
<PAGE>
                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
        STOCKHOLDER MATTERS.

The Company's Common Stock is traded on the Nasdaq National Market System under
the symbol MERX. The range of the high and low prices for the Company's Common
Stock as reported on the Nasdaq National Market System for the eight most recent
fiscal quarters was as follows:

                                           High        Low
            Fiscal year 1997:
                Quarter 4               $ 18.88    $ 13.00
                Quarter 3                 20.13      15.25
                Quarter 2                 22.38      13.75
                Quarter 1                 31.50      16.25

            Fiscal year 1996:
                Quarter 4               $ 39.13    $ 30.25
                Quarter 3                 38.00      27.00
                Quarter 2                 38.75      29.00
                Quarter 1                 34.75      23.50

As of July 11, 1997 there were 146 shareholders of record and approximately
4,700 beneficial shareholders.

The Company has never declared any cash dividends. The Company currently intends
to retain all future earnings, if any, for use in the Company's business and,
accordingly, does not anticipate paying any cash dividends on its Common Stock
in the foreseeable future.


ITEM 6. SELECTED FINANCIAL DATA.

Financial information for fiscal years 1994 and 1993 relates to the Circuit
Board Division of Tektronix, and is not necessarily indicative of the results
that would have occurred had the Division operated as a separate entity for the
fiscal years presented.

<TABLE>
<CAPTION>
                                                  1997        1996        1995     1994(2)     1993(2)
                                                  ----        ----        ----     -------     -------
                                                       (In thousands, except per share data)
        <S>                                   <C>         <C>         <C>          <C>         <C>    
        Statement of Income Data:
        Net sales                             $156,184    $155,634    $101,448     $78,442     $70,340
        Net income                                 321      12,793      10,564       6,791       5,146
        Primary earnings per share (1)           $0.05       $1.98       $1.67       $1.12       $ .85

        Balance Sheet Data:
        Working capital                        $45,586     $34,841     $34,201     $28,215    $  4,213
        Total assets                           130,449     111,170      69,597      52,254      24,487
        Long-term debt                          42,390      26,670       6,427       8,073         240
        Shareholders' equity                   $67,416     $66,353     $52,319     $38,093     $16,271


     (1) Primary earnings per share for fiscal years 1994 and 1993 are pro forma
     based on the initial 6,055 shares outstanding following the Acquisition.

     (2) See Note 1 of the Notes to Financial Statements in Item 8 of this
     Report.
</TABLE>

                                        9
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS.

Acquisitions (In thousands)

On October 31, 1995, the Company acquired certain assets of Hewlett-Packard
Company's (HP) Loveland, Colorado printed circuit board manufacturing facility
for a total purchase price of approximately $26,868. See Note 3 of the Notes to
Financial Statements in Item 8 of this Report. Of the purchase price paid in
cash, $20 million was borrowed on the Company's unsecured bank line of credit,
which was subsequently repaid from the proceeds of the Company's $40 million
private placement of senior unsecured notes in September 1996. See Note 7 of the
Notes to Financial Statements in Item 8 of this Report. The Company's primary
purpose in acquiring this operation was to add manufacturing capacity and create
a second manufacturing operation for products produced for its current
customers. In connection with this transaction, the Company and HP entered into
a two year supply agreement under which HP agreed to purchase, at market prices,
at least $35 million of product in the first year and at least $25 million in
the second year.

On December 31, 1995, the Company acquired certain assets, consisting
principally of inventory and manufacturing equipment, of the Soladyne printed
circuit fabrication operation from Rogers Corporation. Soladyne is located in
San Diego, California, and Rogers is one of the Company's suppliers of high
performance material. The purchase price was not material to the financial
position of the Company.

The acquisitions were accounted for as purchase transactions and, accordingly,
the results of the Loveland and Soladyne operations are included in the
financial statements since the effective dates of the transactions.

In December 1996, the Company entered into a four year supply agreement with
Amkor Electronics, Inc. (Amkor) under which the Company will manufacture
laminate-based substrates for chip carrier products. In connection with this
agreement, the Company purchased certain assets, including manufacturing
equipment, and licensed process know-how from Amkor. The Company anticipates
that volume shipments under the supply agreement with Amkor will commence in
fiscal year 1998.

                                       10
<PAGE>
Results of Operations (In thousands)

Results of operations information in dollars and as a percentage of net sales
are as follows:

<TABLE>
<CAPTION>
                                                                              Percentage of Net Sales
                                                                          -------------------------------
                                      1997        1996        1995        1997          1996         1995
                                      ----        ----        ----        ----          ----         ----
<S>                               <C>         <C>         <C>            <C>           <C>          <C>   
Net sales                         $156,184    $155,634    $101,448       100.0%        100.0%       100.0%
Cost of sales                      134,328     118,234      72,380        86.0%         76.0%        71.3%
                                  --------    --------    --------       ------        ------       ------
Gross profit                        21,856      37,400      29,068        14.0%         24.0%        28.7%
Operating expenses:
  Engineering                        6,013       5,019       3,523         3.9%          3.2%         3.5%
  Selling, general and
    administrative                  13,822      11,399       8,726         8.8%          7.3%         8.6%
                                  --------    --------    --------       ------        ------       ------
  Total operating expenses          19,835      16,418      12,249        12.7%        10.5%         12.1%
                                  --------    --------    --------       ------        ------       ------
Operating income                     2,021      20,982      16,819         1.3%         13.4%        16.6%
Interest income                      1,380         950       1,005         0.9%          0.6%         1.0%
Interest expense                     3,247       1,333         721         2.1%          0.8%         0.7%
Other income (expense), net            137        (260)        (65)        0.1%         (0.2)%       (0.1)%
                                  --------    --------    --------       ------        ------       ------
Income before taxes                    291      20,339      17,038         0.2%         13.0%        16.8%
Income tax (expense) benefit            30      (7,546)     (6,474)          -          (4.8)%       (6.4)%
                                  --------    --------    --------       ------        ------       ------
Net income                        $    321    $ 12,793    $ 10,564         0.2%          8.2%        10.4%
                                  ========    ========    ========       ======        ======       ======
</TABLE>


Sales by product lines, market segments and largest customers in dollars and as
a percent of net sales are as follows:

<TABLE>
<CAPTION>
                                                                              Percentage of Net Sales
                                                                          -------------------------------
                                      1997        1996        1995        1997          1996         1995
                                      ----        ----        ----        ----          ----         ----
<S>                               <C>         <C>         <C>            <C>           <C>          <C>   
Product Lines
   Rigid                          $117,395    $114,530    $ 73,144        75.2%        73.6%         72.1%
   High Performance                 36,407      36,750      25,571        23.3%        23.6%         25.2%
   Flexible                       --------    --------    --------       ------        ------       ------
                                     2,382       4,354       2,733         1.5%         2.8%          2.7%
                                  --------    --------    --------       ------        ------       ------
     Total                        $156,184    $155,634    $101,448       100.0%        100.0%       100.0%
                                  ========    ========    ========       ======        ======       ======
Market Segments
   Computers                      $ 42,998    $ 33,206    $ 19,261        27.5%         21.3%        19.0%
   Communications                   32,406      43,798      40,058        20.7%         28.2%        39.5%
   Test and Instruments             54,263      55,828      35,103        34.8%         35.9%        34.6%
   Contract Manufacturing           23,134      20,606       6,793        14.8%         13.2%         6.7%
   Other                          --------    --------    --------       ------        ------       ------
                                     3,383       2,196         233         2.2%          1.4%         0.2%
                                  --------    --------    --------       ------        ------       ------
     Total                        $156,184    $155,634    $101,448       100.0%        100.0%       100.0%
                                  ========    ========    ========       ======        ======       ======
Largest Customers
   Hewlett-Packard Company        $ 39,693    $ 29,100    $      -        25.4%         18.7%            -
   Tektronix, Inc.                  28,766      32,010      31,577        18.4%         20.6%        31.1%
   Motorola, Inc.                   20,321      30,427      23,170        13.0%         19.5%        22.8%
   Teradyne, Inc.                   13,885      16,389      11,497         8.9%         10.5%        11.4%
   Storage Technology Corp.         12,341       9,491       9,899         7.9%          6.1%         9.8%
   Other                            41,178      38,217      25,305        26.4%         24.6%        24.9%
                                  --------    --------    --------       ------        ------       ------
     Total                        $156,184    $155,634    $101,448       100.0%        100.0%       100.0%
                                  ========    ========    ========       ======        ======       ======
</TABLE>

                                       11
<PAGE>
The Company's five largest customers comprised 73.6%, 75.4% and 75.1% of net
sales for fiscal years 1997, 1996 and 1995, respectively. One of the Company's
principal short-term objectives is to diversify its customer base in order to
grow sales and reduce the risks associated with a concentration of sales to a
relatively small number of customers. The Company is taking actions to increase
sales by broadening its customer base, and expects that a small number of
customers will continue to account for a substantial majority of its sales until
efforts to broaden its customer base are successful. There can be no assurance
that the Company's principal customers will continue to purchase products and
services from the Company at current levels, that the mix or volume of products
purchased will be in the same ratio or that actions to broaden its customer base
and increase sales to new and existing customers will be successful. The loss of
one or more principal customers, or a change in the mix of product sales, could
have a material adverse effect on the Company's business, financial condition
and results of operations.

Comparison of Fiscal Years 1997 and 1996  (In thousands)

Fiscal Year. The Company's fiscal year is the 52 or 53-week period ending the
last Saturday in May. Fiscal year 1997 was a 53-week year and fiscal years 1996
and 1995 were 52-week years.

Net Sales. The Company is engaged in the single business segment of producing
custom, complex, technologically advanced electronic interconnect products to
customer specifications. The Company classifies its printed circuits,
principally based on the type of production materials used, as rigid, high
performance and flexible printed circuit boards. There were no production sales
of chip carrier products during fiscal year 1997.

Net sales for fiscal year 1997 of $156,184 were relatively flat with net sales
of $155,634 in fiscal 1996, due principally to a decrease in sales to certain of
the Company's significant customers, largely offset by an increase in sales to
HP resulting from a full year of operations at the Loveland site (see above
table). Sales to Motorola, Inc. (Motorola) decreased due to a transition to a
new generation of its cellular base station products. Motorola is consuming its
existing inventory of these older products, which have been a significant part
of the Company's sales to Motorola. The Company has begun production of the next
generation of Motorola's products, but expects that future sales of these
products will have lower margins. Sales to Teradyne, Inc. (Teradyne) decreased
in fiscal 1997 due to a decline in Teradyne's sales to its customers as a result
of a softening in the semiconductor industry earlier in the year.

In addition, the Company experienced overall changes in product mix, which
caused average selling prices to decline from the prior year.

Gross Margins. The Company's gross margin was 14.0% in fiscal year 1997,
compared with 24.0% in fiscal year 1996. The Company's gross margin can be
affected by various factors, including sales volumes, product mix, production
yields, price changes and changes in the Company's cost structure. High
performance products are generally more complex and carry higher margins than
the Company's rigid products. Gross margins in fiscal year 1997 declined
principally due to flat sales combined with a higher level of fixed costs. A
significant portion of the Company's manufacturing costs are relatively fixed,
and these costs were higher in fiscal year 1997 principally as a result of the
acquisitions of the Loveland and Soladyne sites in the middle of fiscal year
1996.

The level and mix of sales were the major factors in determining the Company's
1997 gross margin. The product mix in fiscal year 1997 included a greater
proportion of lower priced, lower margin products than in fiscal year 1996. The
Company is working to increase the level of sales and to enhance its product mix
by targeting higher complexity products which have higher gross margins in order
to improve profitability. However, there can be no assurance that these efforts
will be successful or result in an increase in gross margins.

Engineering. Engineering expenses were $6,013 and $5,019 in fiscal years 1997
and 1996, respectively, and were 3.9% and 3.2% of net sales, respectively, each
year. Engineering expenses have increased due to additional engineering staff as
a result of the acquisitions of the Loveland and Soladyne operations in fiscal
year 1996.

                                       12
<PAGE>
Selling, General and Administrative. Selling, general and administrative
expenses were $13,822 and $11,399 in fiscal years 1997 and 1996, respectively,
and were 8.8% and 7.3% of net sales, respectively. The increase over the prior
year was due principally to costs associated with increased selling efforts. The
Company is continuing to invest in expanded selling activity, including the
restructuring and relocation of its sales force. However, there can be no
assurance these efforts will result in increased sales or profits.

Interest Income. The increase in interest income from the prior year is due
principally to higher balances of cash and investments for a majority of the
year, primarily as a result of the proceeds from $40,000 of senior notes issued
in September 1996.

Interest Expense. Interest expense was $3,247 and $1,333 in fiscal years 1997
and 1996, respectively. The increase from the prior year is due to the issuance
of $40,000 in senior notes in September 1996.

Income Taxes. The Company's effective tax rate of (10)% in fiscal year 1997 is
lower than the effective tax rate of 37% in 1996, due to lower pretax income in
fiscal year 1997 and higher tax exempt interest income in relation to pretax
income. The Company expects its effective tax rate to be approximately 38% in
fiscal year 1998.

Comparison of Fiscal Years 1996 and 1995  (In thousands)

Net Sales. Net sales for fiscal year 1996 were $155,634 representing a 53.4%
increase over prior year net sales of $101,448. The overall increase in net
sales resulted principally from the acquisition of the Loveland and Soladyne
operations, from increased sales of high performance products which increased by
$11,179, or 44% as compared to sales of high performance products in 1995, and
from capacity and productivity increases to meet customer demand at the Forest
Grove facility.

Gross Margins. The Company's gross margin was 24.0% in fiscal year 1996,
compared with 28.7% in the prior year. The Company's product mix in fiscal year
1996 included a higher percentage of rigid product due to the acquisition of the
Loveland operation which produces exclusively rigid product. Gross margins
decreased in fiscal year 1996 principally as a result of product mix, including
the effect of the Loveland operation, and an increase in sales of products that
include component subassembly.

Engineering. Engineering expenses were $5,019 and $3,523 in fiscal years 1996
and 1995, respectively, and were 3.2% and 3.5% of net sales, respectively, each
year. Engineering expenses have increased due to additional engineering staff as
a result of the acquisitions of the Loveland and Soladyne operations.

Selling, General and Administrative. Selling, general and administrative
expenses were $11,399 and $8,726 in fiscal years 1996 and 1995, respectively,
and were 7.3% and 8.6% of net sales, respectively. Selling, general and
administrative expenses as a percent of sales decreased due to the relatively
fixed nature of certain general and administrative expenses. These expenses
increased primarily to support growth and a multi-site environment.

Interest Expense. Interest expense increased in fiscal year 1996 from the prior
year due to the interest resulting from the $20 million bank borrowing used to
fund the acquisition of the Loveland operation.

Income Taxes. The Company's effective tax rate of 37% in fiscal year 1996 is
lower than the effective tax rate of 38% in 1995, principally due to the State
of Oregon reducing the current year corporate income tax rate as a method of
refunding excess income taxes collected in prior years. The effect of the
reduction was to increase net income for the fiscal year by $204.

                                       13
<PAGE>
Liquidity and Capital Resources (In thousands)

Cash and short-term investments at May 31, 1997 were $25,097, compared to
$19,358 at May 25, 1996. Working capital was $45,586 at May 31, 1997 compared to
$34,841 at May 25, 1996.

In fiscal year 1997, the Company generated cash from operations of $7,371 and
cash from financing activities of $15,715, and used cash of $18,740 in investing
activities. During fiscal year 1997, $13,717 of the Company's investments
matured and $15,110 of short-term investments, consisting of taxable and
municipal debt securities, were purchased. The Company's policy is to hold such
short-term investments to maturity.

During fiscal year 1997, the Company had capital expenditures of $17,769,
including $1,502 for the expansion of manufacturing facilities and completion of
the Company's new administration and training building in Forest Grove, and
$16,267 for purchases of machinery and equipment. The Company had capital
commitments of approximately $6.4 million at May 31, 1997, related to expansion
of manufacturing capacity.

On September 10, 1996, the Company completed a $40 million private placement of
senior unsecured notes with two insurance companies. The notes bear interest at
7.92%, payable on a semi-annual basis, with payment of principal in five equal
annual installments commencing on September 15, 1999. Proceeds from the notes
were used to pay off $20 million outstanding under the Company's bank line of
credit and will be used to fund capital equipment purchases, capacity expansion
and possible acquisitions.

The Company has an unsecured $30 million bank line of credit against which it
had no borrowings at May 31, 1997. Borrowings under this line of credit would
bear interest at the agent's prime or alternative LIBOR based rates available at
the time of borrowing rate (7.65% at May 31, 1997). The instrument matures on
September 30, 1998.

The senior unsecured notes and the line of credit include certain financial
covenants (such as minimum net worth, debt ratio, quick ratio and interest
coverage requirements) and cross-default provisions. As of May 31, 1997, the
Company was in compliance with all covenants.

The Company's future needs for financial resources include amounts to support
investments for expansion of manufacturing capacity. The Company believes that
its existing capital resources, including the proceeds from the $40 million
private placement of debt and bank line of credit, and cash generated from
operations will be sufficient to meet its working capital and capital
expenditure requirements through fiscal year 1998.

                                       14
<PAGE>
Forward-Looking Information

Information contained in this Form 10-K regarding fiscal year 1998 and in the
1997 Annual Report to Shareholders regarding goals and expectations of the
Company, including: anticipated customer demand, product shipments, sales and
profitability; gross margins; estimated effective tax rate for fiscal year 1998;
and Company goals with respect to revenue growth, customer diversification,
changes in product mix, technology leadership, technology licenses, human
resources and supply chain integration constitute forward-looking statements.
Information contained in forward-looking statements is based on current
expectations and is subject to change and may differ materially from actual
results. From time to time, information provided by the Company or statements
made by its employees may contain other forward-looking information that
involves a number of risks and uncertainties. Factors that could cause actual
results to differ materially from the forward-looking information include, but
are not limited to, the matters discussed in this Form 10-K as well as the
following: customer demand, ability to attract new customers, business
conditions and growth in the general economy and the interconnect industry;
production delays; product mix; the highly competitive interconnect environment;
cancellation or reduction of orders; effective utilization of existing and new
manufacturing resources; customer acceptance of new technologies; environmental
issues; pricing pressures by key customers; costs and yield issues associated
with production; capacity constraints; availability of parts and supplies from
third parties on a timely basis and at reasonable prices; ability to execute
financing strategies; and other risks listed from time to time in the Company's
Securities and Exchange Commission reports or otherwise disclosed by the
Company. Any forward-looking statements should be considered in light of these
factors.

                                       15
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.


                                MERIX CORPORATION

                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Shareholders of
Merix Corporation:

We have audited the accompanying balance sheets of Merix Corporation as of May
31, 1997 and May 25, 1996 and the related statements of income, shareholders'
equity, and cash flows for the years ended May 31, 1997, May 25, 1996, and May
27, 1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Merix Corporation as of May 31, 1997 and May
25, 1996, and the results of its operations and its cash flows for the years
ended May 31, 1997, May 25, 1996, and May 27, 1995 in conformity with generally
accepted accounting principles.



DELOITTE & TOUCHE LLP

Portland, Oregon
June 20, 1997

                                       16
<PAGE>
<TABLE>
<CAPTION>
                                MERIX CORPORATION
                                 BALANCE SHEETS
                                 (In thousands)
                                                                                      May 31
                                                                              1997               1996
                                                                          --------------    --------------
<S>                                                                          <C>               <C>      
ASSETS
Current assets:
    Cash and cash equivalents (Note 2)                                       $  16,537         $  12,191
    Short-term investments (Notes 2 and 4)                                       8,560             7,167
    Accounts receivable, net of allowance of  $322                              21,066            21,401
         and $78, respectively (Note 4)
    Accounts receivable - affiliates (Note 13)                                   3,091             3,138
    Inventories (Notes 2 and 5)                                                  8,642             6,435
    Income tax refund receivable (Note 10)                                       2,308                 -
    Deferred tax asset (Note 10)                                                 1,410               794
    Other current assets                                                         1,817               589
                                                                          --------------    --------------
    Total current assets                                                        63,431            51,715

Property, plant and equipment, net (Notes 2 and 6)                              63,398            55,576

Deferred tax asset (Note 10)                                                         -             1,489
Goodwill, net of accumulated amortization of $265 and $96
   (Notes 2 and 3)                                                               2,292             2,390
Other assets                                                                     1,328                 -
                                                                          --------------    --------------
Total assets                                                                 $ 130,449         $ 111,170
                                                                          ==============    ==============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
    Accounts payable                                                         $  10,011          $  7,456
    Accrued compensation                                                         3,084             4,502
    Current portion of long-term debt (Note 7)                                   2,260             1,931
    Income taxes payable (Note  10)                                                  -                67
    Other accrued liabilities                                                    2,490             2,918
                                                                          --------------    --------------
    Total current liabilities                                                   17,845            16,874

Long-term debt  (Note 7)                                                        42,390            26,670
Deferred tax liability (Note 10)                                                 1,525                 -
Other liabilities                                                                1,273             1,273
                                                                          --------------    --------------
    Total liabilities                                                           63,033            44,817
                                                                          --------------    --------------

Commitments and contingencies (Note 14)                                              -                 -
Shareholders' equity (Notes 8 and 9):

    Preferred stock, no par value; authorized 10,000 shares;
          none issued                                                                -                 -

    Common stock, no par value; authorized 50,000 shares; issued
          and outstanding 1997: 6,167 shares, 1996: 6,133                       44,360            43,733
    shares

    Unearned compensation                                                         (622)             (737)
    Retained earnings                                                           23,678            23,357
                                                                          --------------    --------------
    Total shareholders' equity                                                  67,416            66,353
                                                                          ==============    ==============
Total liabilities and shareholders' equity                                   $ 130,449        $  111,170
                                                                          ==============    ==============

               See the accompanying Notes to Financial Statements.
</TABLE>

                                       17
<PAGE>
<TABLE>
<CAPTION>
                                MERIX CORPORATION
                              STATEMENTS OF INCOME
                      (In thousands, except per share data)


                                                                          Years ended May 31
                                                                  1997            1996           1995
                                                              -------------   -------------  -------------
<S>                                                             <C>             <C>            <C>      
Net sales (Notes 2, 12 and 13)                                  $ 156,184       $ 155,634      $ 101,448
Cost of sales                                                     134,328         118,234         72,380
                                                              -------------   -------------  -------------

Gross profit                                                       21,856          37,400         29,068
                                                              -------------   -------------  -------------

Operating expenses:
  Engineering                                                       6,013           5,019          3,523
  Selling, general and administrative                              13,822          11,399          8,726
                                                              -------------   -------------  -------------

  Total operating expenses                                         19,835          16,418         12,249
                                                              -------------   -------------  -------------

Operating income                                                    2,021          20,982         16,819
Interest income                                                     1,380             950          1,005
Interest expense                                                    3,247           1,333            721
Other income (expense), net                                           137            (260)           (65)
                                                              -------------  --------------  -------------

Income before taxes                                                   291          20,339         17,038
Income tax (expense) benefit (Note 10)                                 30          (7,546)        (6,474)
                                                              -------------   -------------  -------------

Net income                                                    $       321      $   12,793     $   10,564
                                                              =============   =============  =============



Earnings per share                                                  $0.05          $ 1.98        $  1.67
                                                              =============   =============  =============

Weighted average shares of common stock and common
stock equivalents outstanding                                       6,260           6,449          6,340
                                                              =============   =============  =============


               See the accompanying Notes to Financial Statements.
</TABLE>

                                       18
<PAGE>
<TABLE>
<CAPTION>
                                MERIX CORPORATION
                       STATEMENTS OF SHAREHOLDERS' EQUITY
                                 (In thousands)


                                            Common Stock           Unearned         Retained
                                        Shares        Amount     Compensation       Earnings        Total
                                       ---------    ----------  ---------------  --------------  ------------
<S>                                      <C>         <C>           <C>               <C>           <C>    
Balance at June 1, 1994 after the
   reorganization of entities under
   common control (Note 1)               6,055       $38,588       $   (495)                       $38,093
Net income                                                                           $10,564        10,564
Purchase price adjustment (Note 10)                    3,279                                         3,279
Exercise of stock options                   10            90                                            90
Tax benefit related to stock-based
   compensation                                           72                                            72
Restricted stock awards                     10           233           (233)                             -
Amortization of unearned
   compensation                                                         221                            221
                                       ---------    ----------  ---------------  --------------  ------------
Balance at May 31, 1995                  6,075        42,262           (507)          10,564        52,319
Net income                                                                            12,793        12,793
Exercise of stock options                   40           429                                           429
Tax benefit related to stock-based
   compensation                                          445                                           445
Restricted stock awards                     18           597           (597)                             -
Amortization of unearned
   compensation                                                         367                            367
                                       ---------    ----------  ---------------  --------------  ------------
Balance at May 31, 1996                  6,133        43,733           (737)          23,357        66,353
Net income                                                                               321           321
Exercise of stock options                   35           316                                           316
Tax benefit related to stock-based
   compensation                                          261                                           261
Restricted stock awards                     19           364           (364)                             -
Amortization of unearned
   compensation                                                         434                            434
Shares surrendered/canceled                (20)         (314)            45                           (269)
                                       ---------    ----------  ---------------  --------------  ------------
Balance at May 31, 1997                   6,167       $44,360         $  (622)         $23,678       $67,416
                                       =========    ==========  ===============  ==============  ============


               See the accompanying Notes to Financial Statements.
</TABLE>

                                       19
<PAGE>
<TABLE>
<CAPTION>
                                MERIX CORPORATION
                            STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                                                           Years ended May 31
                                                                    1997         1996          1995
                                                                    ----         ----          ----
<S>                                                              <C>         <C>           <C>     
Cash flows from operating activities:
    Net income                                                   $   321     $ 12,793      $ 10,564
    Adjustments to reconcile net income to net cash
      provided by operating activities:
        Depreciation and amortization                              8,762        5,643         2,930
        Deferred income taxes                                      2,398        2,397           570
        Amortization of unearned compensation                        434          367           221
        Other                                                        (85)           3             -
        Changes in assets and liabilities (exclusive of
           effects of purchase of Loveland and
           Soladyne assets):
          Accounts receivable                                        382      (11,765)       (1,028)
          Inventories                                             (2,207)         303           582
          Income tax refund receivable                            (2,048)           -             -
          Other current assets                                    (1,228)         692          (913)
          Accounts payable                                         2,555        3,183         1,207
          Accrued compensation                                    (1,418)       1,331         3,171
          Income taxes payable                                       (67)         353           231
          Other accrued  liabilities                                (428)       1,583           480
                                                                 -------     --------      --------
    Net cash provided by operating activities                      7,371       16,883        18,015
                                                                 -------     --------      --------

Cash flows from investing activities:
    Purchase of Loveland and Soladyne assets                           -      (28,720)            -
    Capital expenditures                                         (17,769)     (16,111)       (6,875)
    Short-term investments:
         Purchases                                               (15,110)     (14,000)      (21,900)
         Maturities                                               13,717       19,417         9,316
    Proceeds from sale of assets                                     422           91            60
                                                                 -------     --------      --------

    Net cash used in investing activities                        (18,740)     (39,323)      (19,399)
                                                                 -------     --------      --------
Cash flows from financing activities:
 Long-term borrowings:
           Proceeds                                               40,000       20,000             -
           Principal payments                                    (23,951)        (105)       (1,900)
Exercise of stock options                                             91          429            90
Deferred financing costs                                            (382)           -             -
Reacquired common stock                                              (43)           -             -
                                                                 -------     --------      --------
    Net cash provided by (used in) financing activities           15,715       20,324        (1,810)
                                                                 -------     --------      --------

Increase (decrease) in cash and cash equivalents                   4,346       (2,116)       (3,194)

 Cash and cash equivalents at beginning of year                   12,191       14,307        17,501
                                                                 -------     --------      --------

    Cash and cash equivalents at end of year                     $16,537     $ 12,191      $ 14,307
                                                                 =======     ========      ========
Supplemental Disclosures:
    Cash paid for:
        Interest                                                 $ 3,205     $    697      $    721
        Taxes                                                          -        4,799         5,670
    Noncash transactions:
        Assets acquired by recognition of lease
          renovation liability                                         -        1,273             -
        Software license acquired through financing agreement          -          367             -
        Tax benefit related to stock-based compensation              261          445            72
        Purchase price adjustment (Note 10)                            -            -         3,279
     Surrender of unvested shares of restricted stock                 45            -             -
     Receipt of common stock for exercise of stock options           225            -             -


               See the accompanying Notes to Financial Statements.
</TABLE>

                                       20
<PAGE>
                                MERIX CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                (Dollars in thousands, except per share amounts)


Note 1.  ORGANIZATION AND ACQUISITION

Merix Corporation, an Oregon corporation, was formed in March 1994 to succeed to
the business conducted by the Circuit Board Division (the Division) of
Tektronix, Inc. (Tektronix), which had been in the electronic interconnect
manufacturing business for over 30 years. On June 1, 1994, Merix acquired the
assets and assumed certain liabilities (the Acquisition) of the Division in
connection with the initial public offering of its common stock, and began to
operate as an independent corporation.


Note 2.  ACCOUNTING POLICIES

Fiscal Year

The Company's fiscal year is the 52 or 53-week period ending the last Saturday
in May. Fiscal year 1997 was a 53-week year ended May 31, and fiscal years 1996
and 1995 were 52-week years ended May 25 and May 27, respectively. For
convenience, these periods have been presented in these financial statements as
ended May 31.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of sales and expenses during the reporting period. Actual
results could differ from those estimates.

Balance Sheet Financial Instruments: Fair Values

The carrying amounts reported in the balance sheet for investments, accounts
receivable and accounts payable approximate fair value because of the immediate
or short-term maturity of these financial instruments. The carrying amount for
long-term debt approximates its fair value because the related interest rates
are comparable to rates currently available to the Company for debt with similar
terms and maturities.

Cash and Cash Equivalents

Cash and cash equivalents are comprised of cash in banks and highly liquid
investments with maturities of three months or less when purchased.

Investments

The Company classifies securities at acquisition into one of three categories:
held to maturity, available for sale, or trading. At May 31, 1997 and 1996, all
of the Company's investments, consisting of taxable and municipal debt
securities, with original maturities of more than 90 days are classified as held
to maturity and are valued at amortized cost.

                                       21
<PAGE>
Inventories

Inventories are valued at the lower of cost or market and include materials,
labor and manufacturing overhead. Cost is determined on the first-in, first-out
(FIFO) basis.

Property and Depreciation

Property, plant and equipment is carried at cost less accumulated depreciation.
Depreciation is calculated based on the estimated useful lives of depreciable
assets as follows: 40 years for buildings, 10 to 20 years for grounds, 3 to 7
years for machinery and equipment, and is provided using the straight line
method.

Goodwill

The cost of goodwill is amortized on a straight-line basis over the estimated
period benefited of 15 years. Goodwill amortization for fiscal years 1997, 1996
and 1995 was $169, $96 and zero, respectively.

Revenue Recognition

Revenue from product sales is recognized at the time of shipment. Service
revenue is recognized as services are provided.

Engineering Expense

Expenditures for engineering of products and manufacturing processes are
expensed as incurred.

Warranty

The Company generally warrants its products for a period of up to four months
from shipment. Accordingly, a provision for the estimated cost of the warranty
is recorded upon shipment.

Earnings per Share

Earnings per share are computed using the weighted average number of shares of
common stock and common stock equivalents outstanding during the period. Common
stock equivalent shares are computed using common stock options and the treasury
stock method.

Recent Accounting Pronouncements

In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 128, "Earnings per Share" (SFAS
128). SFAS 128 changes the standards for computing and presenting earnings per
share (EPS) and supersedes Accounting Principles Board Opinion No. 15, "Earnings
per Share." SFAS 128 simplifies the standards for computing earnings per share
and makes them comparable to international EPS standards. It replaces the
presentation of primary EPS with a presentation of basic EPS. It also requires
dual presentation of basic and diluted EPS on the face of the income statement
for all entities with complex capital structures and requires a reconciliation
of the numerator and denominator of the basic EPS computation to the numerator
and denominator of the diluted EPS computation. SFAS 128 is effective for
financial statements issued for periods ending after December 15, 1997,
including interim periods; earlier application is not permitted. This Statement
requires restatement of all prior-period EPS data presented.

                                       22
<PAGE>
Following is the pro forma effect of adoption of SFAS 128 on the Company's
earnings per share for the years ended May 31, 1997, 1996 and 1995:

<TABLE>
<CAPTION>
                                                 Years Ended May 31
                                            1997           1996           1995
                                     -----------    -----------     ----------
<S>                                       <C>            <C>           <C>    
Primary EPS as reported                   $ 0.05         $ 1.98        $  1.67
Effect of SFAS 128                          0.00           0.09           0.07
                                     ===========    ===========     ==========
Basic EPS as restated                     $ 0.05         $ 2.07         $ 1.74
                                     ===========    ===========     ==========

Fully diluted EPS                         $ 0.05         $ 1.98         $ 1.64
Effect of SFAS 128                          0.00           0.00           0.03
                                     ===========    ===========     ==========
Diluted EPS as restated                   $ 0.05         $ 1.98        $  1.67
                                     ===========    ===========     ==========
</TABLE>

In June 1997, the FASB issued Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income" (SFAS 130), which establishes requirements
for disclosure of comprehensive income and is effective for the Company's fiscal
year ending May 1999. Reclassification of earlier financial statements for
comparative purposes is required.

Reclassifications

Reclassifications of certain prior period balances have been made to conform
with the current method of presentation.


Note 3.  ACQUISITIONS

On October 31, 1995, the Company acquired certain assets of Hewlett-Packard
Company's (HP) Loveland, Colorado printed circuit fabrication operation for a
total purchase price of approximately $26,868. Of this amount, $23,600 was paid
to HP for the purchase of fixed assets and inventory, $427 was assumed as a
liability for the purchase of manufacturing equipment, $1,813 was paid to others
for costs related to the transaction, and $1,028 was accrued as a long-term
liability for the estimated cost of the Company's contractual obligation to
renovate leased manufacturing facilities in Loveland at the conclusion of the
lease term. The fair value of assets acquired consisted of $1,955 for inventory
and supplies, $22,427 for fixed assets, principally manufacturing equipment, and
$2,486 for goodwill. Of the purchase price paid in cash, $20 million was
borrowed on the Company's unsecured bank line of credit, which was subsequently
repaid from the proceeds of the Company's $40 million private placement of
senior unsecured notes in September 1996. See Note 7.

In connection with the acquisition, the Company entered into a five-year lease
agreement with HP to lease the HP owned printed circuit fabrication facility in
Loveland. Monthly payments under the lease are $171. See Note 14. Also in
connection with this transaction, the Company and HP entered into a two year
supply agreement under which HP agreed to purchase, at market prices, at least
$35 million of product in the first year and at least $25 million in the second
year.

On December 31, 1995, the Company acquired certain assets of the Soladyne
printed circuit fabrication operation, consisting principally of inventory and
manufacturing equipment, from Rogers Corporation, one of the Company's suppliers
of high performance material. Soladyne is located in San Diego, California. The
purchase price was not material to the financial position of the Company. In
connection with the acquisition, the Company assumed the existing lease for the
Soladyne facility with four years remaining. Monthly payments under the lease
are $24, with an annual rate increase of 3-5% each year over the life of the
lease. See Note 14.

The acquisitions were accounted for as purchase transactions and, accordingly,
the results of the Loveland and Soladyne operations are included in the
financial statements since the effective dates of the transactions.

                                       23
<PAGE>
Note 4.  CONCENTRATIONS OF CREDIT RISK

Financial instruments that potentially subject the Company to concentrations of
credit risk consist principally of trade accounts receivable and investments.
Five customers represented 22%, 14%, 13%, 12% and 9%, respectively, of the
accounts receivable balance at May 31, 1997. The risk in trade accounts
receivable is limited due to the creditworthiness of companies comprising the
Company's customer base and their dispersion across many different sectors of
the electronics industry and geographies. The Company has not had significant
losses related to its accounts receivable in the past. The risk in investments
is limited due to the creditworthiness of investees comprising the portfolio,
the diversity of the portfolio and relative low risk of municipal securities. At
May 31, 1997, the Company does not believe it had any significant credit risks.

<TABLE>
<CAPTION>
Note 5.  INVENTORIES

                                                                             May 31
                                                                      1997          1996
                                                                    ----------   -----------
<S>                                                                   <C>           <C>    
Raw materials                                                         $ 2,506       $ 2,254
Work in process                                                         4,790         3,104
Finished goods                                                          1,346         1,077
                                                                    ----------   -----------

    Total                                                             $ 8,642       $ 6,435
                                                                    ==========   ===========
</TABLE>


<TABLE>
<CAPTION>
Note 6.   PROPERTY, PLANT AND EQUIPMENT

                                                                              May 31
                                                                       1997           1996
                                                                    ------------   ------------
<S>                                                                   <C>            <C>      
Land                                                                  $   2,190      $   2,190
Buildings and grounds                                                    23,618         16,345
Machinery and equipment                                                  90,219         77,196
Construction in progress                                                     -           6,000
                                                                    ------------   ------------

    Total                                                               116,027        101,731
Accumulated depreciation                                                (52,629)       (46,155)
                                                                    ------------   ------------
      Property, plant and equipment, net                               $ 63,398       $ 55,576
                                                                    ============   ============
</TABLE>


<TABLE>
<CAPTION>
Note 7.   LONG-TERM DEBT

                                                                                May 31
                                                                         1997          1996
                                                                      -----------   ------------
<S>                                                                    <C>            <C>      
Senior unsecured notes, principal payable in five
  equal annual installments commencing
  September 15, 1999, with interest at 7.92%
  payable on a semi-annual basis                                       $ 40,000
Note payable to Tektronix, payable in five annual
  installments including interest at 7.5%,
  secured by a Trust Deed                                                 4,437       $   8,267
Bank line of credit, interest only payable monthly                            -          20,000
Other                                                                       213             334
                                                                      -----------   ------------
    Total                                                                44,650          28,601
    Less current portion                                                 (2,260)         (1,931)
                                                                      -----------   ------------

    Long-term debt                                                     $ 42,390       $  26,670
                                                                      ===========   ============
</TABLE>

                                       24
<PAGE>
The Company has an unsecured $30 million bank line of credit against which it
had no borrowings at May 31, 1997. Borrowings under this line of credit would
bear interest at prime or other LIBOR based rates available at the time of
borrowing (7.65% at May 31, 1997). The instrument matures on September 30, 1998.
The senior unsecured notes and the line of credit include certain financial
covenants (such as minimum net worth, debt ratio, quick ratio and interest
coverage requirements) and cross-default provisions. As of May 31, 1997, the
Company was in compliance with all covenants.

Future principal payments for long-term debt are as follows: 1998, $2,260; 1999,
$2,390; 2000, $8,000; 2001, $8,000 and 2002, $8,000.


Note 8.   STOCK-BASED COMPENSATION  PLAN

In March 1994, the Company adopted the 1994 Stock Incentive Plan (the 1994 Plan)
for employees, consultants and directors of the Company. The 1994 Plan, as
amended, covers 1,500,000 shares of common stock and permits the grant of
incentive stock options, non-qualified stock options, stock appreciation rights,
stock and cash bonus rights, restricted stock awards and performance based
awards to employees, independent contractors and consultants. A committee of the
Board of Directors has the authority to determine non-qualified stock option
prices. To date, all options have been granted at the fair market value of the
stock at the date of grant. The options vest ratably over a four-year period
beginning on the first anniversary of their issuance with a maximum term of 10
years. The 1994 Plan provides for automatic option grants to directors not
affiliated with Merix or Tektronix of 20,000 shares at the time first elected to
the board and 5,000 shares annually thereafter. The options generally become
exercisable ratably over a four-year period beginning one year after the date of
grant and expire ten years after the date of grant.

A summary of non-qualified stock option activity is as follows:

<TABLE>
<CAPTION>
                                                                        Weighted
                                                         Number          Average
                                                           of             Price
                                                         Shares         Per Share
                                                     ------------      ------------
           <S>                                         <C>              <C>   
           Outstanding at May 31, 1994                   200,000         $ 9.00
              Granted                                    488,300          11.71
              Canceled                                   (34,450)          9.32
              Exercised                                  (10,000)          9.00
                                                     ------------      ------------
           Outstanding at May 31, 1995                   643,850          11.04
              Granted                                    310,700          32.41
              Canceled                                    (7,336)         17.52
              Exercised                                  (39,808)         10.79
                                                     ------------      ------------
           Outstanding at May 31, 1996                   907,406          18.33
              Granted                                    457,506          19.73
              Canceled                                  (284,041)         28.76
              Exercised                                  (34,939)          9.04
                                                     ------------      ------------
           Outstanding at May 31, 1997                 1,045,932         $16.42
                                                     ============      ============

           Options exercisable at May 31, 1997           339,276         $12.55
                                                     ============      ============
</TABLE>

                                       25
<PAGE>
Restricted stock awards are subject to vesting and other terms as specified at
the time of issuance by a committee of the Board of Directors. Generally,
restricted stock awards vest ratably over a three-year period beginning on the
first anniversary of their issuance. Unearned compensation expense is recognized
ratably over the vesting period. The weighted average per share fair value of
restricted stock awards issued was $18.79, $33.70 and $11.19 in fiscal years
1997, 1996 and 1995, respectively. A summary of restricted stock award activity
is as follows:

<TABLE>
<CAPTION>
                                                     Number
                                                       of               Value
                                                     Shares           Per Share
                                                 -------------    -----------------
           <S>                                         <C>          <C>
           Unvested balance at May 31, 1994                 -            -
              Awarded                                  65,000       $9.00-$23.25
              Vested                                   (5,000)          9.00
                                                 -------------    -----------------
           Unvested balance at May 31, 1995            60,000         9.00-23.25
              Awarded                                  17,700        23.62-37.75
              Vested                                  (19,998)        9.00-23.25
                                                 -------------    -----------------
           Unvested balance at May 31, 1996            57,702         9.00-37.75
              Awarded                                  19,400       16.50-21.25
              Vested                                  (27,167)        9.00-37.75
              Canceled                                 (5,000)          9.00
                                                 =============    =================
           Unvested balance at May 31, 1997            44,935       $9.00-$37.75
                                                 =============    =================
</TABLE>


During 1995, the FASB issued Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation" (SFAS 123) which defines a fair
value based method of accounting for employee stock options and similar equity
instruments and encourages all entities to adopt that method of accounting for
all of their employee stock compensation plans. However, it also allows an
entity to continue to measure compensation cost for those plans using the method
of accounting prescribed by Accounting Principles Board Opinion No. 25 (APB 25).
Entities electing to remain with the accounting in APB 25 must make pro forma
disclosures of net income and, if presented, earnings per share, as if the fair
value based method of accounting defined in SFAS 123 had been adopted.

The Company has elected to account for its stock-based compensation plans under
APB 25; however, the Company has computed, for pro forma disclosure purposes,
the value of all stock options granted during 1997 and 1996 using the
Black-Scholes option pricing model as prescribed by SFAS 123 using the following
weighted average assumptions:

                                               Years ended May 31
                                          1997                    1996
                                     ----------------      -----------------

Risk-free interest rate                6.48-5.77%             5.23-6.40%
Expected dividend yield                    0%                     0%
Expected lives                        1.6-4.6 years         1.6-4.6 years
Expected volatility                        59%                   59%

Using the Black-Scholes methodology, the total value of stock options granted
during 1997 and 1996 was $3,330 and $4,402, respectively, which would be
amortized on a pro forma basis over the vesting period of the options (typically
four years). The weighted average fair value of options granted during 1997 and
1996 was $7.30 per share and $14.12 per share, respectively.

                                       26
<PAGE>
If the Company had accounted for its 1994 Plan in accordance with SFAS 123, the
Company's net income and earnings per share would approximate the pro forma
disclosures below:

<TABLE>
<CAPTION>
                                                          Years ended May 31
                                                1997                             1996
                                     ---------------------------     -----------------------------
                                      As Reported      Pro Forma      As Reported        Pro Forma
                                     ------------    -----------     ------------     ------------
<S>                                  <C>             <C>             <C>              <C>         
Net income (loss)                    $        321    $     (866)     $     12,793     $     12,004
Earnings (loss) per share            $       0.05    $    (0.14)     $       1.98     $       1.86
</TABLE>

The effects of applying SFAS 123 in this pro forma disclosure are not indicative
of future amounts. SFAS 123 does not apply to awards prior to June 1, 1995, and
additional awards are anticipated in future years.

The following table summarizes information about stock options outstanding at
May 31, 1997:

<TABLE>
<CAPTION>
                           Options Outstanding                                      Options Exercisable
---------------------------------------------------------------------------    -------------------------------
                                            Weighted
                                             Average            Weighted                            Weighted
    Range of                                Remaining            Average         Number of          Average
    Exercise              Number           Contractual          Exercise           Shares           Exercise
     Prices            Outstanding         Life (years)           Price          Exercisable          Price
----------------    -----------------    ----------------     -------------    --------------     ------------
   <S>                 <C>                    <C>                <C>             <C>                <C>    
   $       9.00          423,945              6.92              $   9.00         263,445            $  9.00
     9.25-19.00          242,111              9.23                 18.31          11,292              14.70
    19.25-23.25          273,982              6.35                 20.72          33,676              23.25
    23.63-35.27          105,269              8.37                 30.62          30,613              30.36
          37.75              625              8.42                 37.75             250              37.75
----------------    -----------------    ----------------     -------------    --------------     ------------
   $ 9.00-37.75        1,045,932              7.45               $ 16.42         339,276            $ 12.55
================    =================    ================     =============    ==============     ============
</TABLE>


Note 9.  SHAREHOLDER RIGHTS PLAN

On March 25, 1997, the Board of Directors adopted a Shareholder Rights Plan (the
Plan) designed to preserve and enhance shareholder value and the Company's
ability to carry out its long-term business strategy. In connection with the
adoption of the Plan, the Board of Directors declared a dividend distribution of
one Right per share of common stock, payable to the shareholders of record on
April 25, 1997. A Right enables the holder, under certain circumstances, to
purchase either Series A Preferred or Common Stock of the Company. The Company
may redeem the Rights for $0.001 per Right under certain circumstances. The
Rights will expire in 2007. On March 25, 1997, the Board also reserved 500,000
shares of Series A Preferred Stock for purposes of the Plan.


Note 10.   INCOME TAXES

Income tax expense consists of federal and state income taxes. Deferred income
taxes are determined based on differences between the financial reporting and
tax bases of assets and liabilities, using currently enacted tax rates.

                                       27
<PAGE>
The provision for (benefit from) income taxes consisted of the following:

<TABLE>
<CAPTION>
                                                              Years ended May 31
                                                        1997         1996         1995
                                                        ----         ----         ----
     <S>                                             <C>          <C>          <C>    
     Current:
       Federal                                       $(2,428)     $ 4,443      $ 4,859
       State                                               -          706        1,045
                                                     -------      -------      -------
         Total current                                (2,428)       5,149        5,904
                                                     -------      -------      -------
     Deferred:
       Federal                                         2,357        1,939          518
       State                                              41          458           52
                                                     -------      -------      -------
         Total deferred                                2,398        2,397          570
                                                     -------      -------      -------
     Income taxes                                    $   (30)     $ 7,546      $ 6,474
                                                     =======      =======      =======
</TABLE>

The principal differences between taxes on income computed at the federal
statutory rate of 35% in fiscal years 1997, 1996 and 1995 and recorded income
tax expense (benefit) were as follows:

<TABLE>
<CAPTION>
                                                                  Years ended May 31
                                                             1997         1996         1995
                                                             ----         ----         ----
     <S>                                                  <C>          <C>          <C>    
     Tax computed at statutory rate                       $   102      $ 7,118      $ 5,963
     State income taxes, net of federal benefit                 -          757          731
     Tax exempt interest                                     (182)        (280)        (273)
     Other, net                                                50          (49)          53
                                                          -------      -------      -------
     Income taxes                                         $   (30)     $ 7,546      $ 6,474
                                                          =======      =======      =======
</TABLE>

Significant components of the Company's deferred tax asset and liability were as
follows:

<TABLE>
<CAPTION>
                                                             May 31
                                                        1997         1996
                                                        ----         ----
     <S>                                            <C>           <C>
     Deferred tax assets:
         Current:
             Inventories                            $    553      $   499
             Vacation accrual                            427          275
             State loss carryforward                     370            -
             Other                                        60           20
                                                    --------      -------
                 Deferred tax asset                 $  1,410      $   794
                                                    ========      =======

         Long-term:
             Intangible basis difference            $      -      $   469
             Fixed asset basis difference                  -        1,020
                                                    --------      -------
                 Deferred tax asset                 $      -      $ 1,489
                                                    ========      =======
     Deferred tax asset (liability):
         Intangible basis difference                $   381       $     -
         Fixed asset basis difference                (2,050)            -
         Unearned compensation                          144             -
                                                    --------      -------
                 Deferred tax liability             $(1,525)      $     -
                                                    ========      =======
</TABLE>

The Company finalized its tax basis purchase price allocation for the
Acquisition at the end of fiscal year 1995, resulting in an increase in deferred
tax assets and common stock of $3,279.

                                       28
<PAGE>
For financial reporting purposes the Acquisition was accounted for similar to a
pooling of interests to reflect the reorganization of entities under common
control. A deferred tax asset was recorded for the basis difference in fixed
assets as a result of recording their bases at fair market value for tax
purposes and at carrying value for financial reporting purposes. Since the date
of the Acquisition, the basis difference has decreased and deferred tax
liabilities have been recorded to reflect the use of accelerated depreciation
for tax purposes. During fiscal year 1997, aggregate deferred tax liabilities
for fixed assets exceeded the remaining balance of the original deferred tax
asset.


Note 11.  BENEFIT PLAN

Effective June 1, 1994, the Company adopted a defined contribution plan, which
meets the requirements of Section 401(k) of the Internal Revenue Code, for all
regular employees. Under this plan, the Company contributes 50 cents for each
dollar contributed by an employee up to 6% of the employee's base pay. During
fiscal years 1997, 1996 and 1995, the Company's contribution expense was $1,094,
$884 and $578, respectively.


Note 12.  SIGNIFICANT CUSTOMERS

Customers who individually represent 10% or more of net sales for the respective
year are as follows:

<TABLE>
<CAPTION>
                                                        Years ended May 31
                                                  1997       1996        1995
                                                  ----       ----        ----
         <S>                                     <C>        <C>        <C>
         Hewlett-Packard Company                 25.4%      18.7%         *
         Tektronix, Inc.                         18.4       20.6       31.1%
         Motorola, Inc.                          13.0       19.5       22.8
         Teradyne, Inc.                             *       10.5       11.4
                                                                                      

         *  Revenues were less than 10%.
</TABLE>


Note 13.  RELATED PARTY TRANSACTIONS

Immediately prior to consummation of the Acquisition, Tektronix, through certain
participating divisions and subsidiaries, entered into seven separate Supply
Agreements with the Company. During the three-year term of the Supply
Agreements, the participating divisions and subsidiaries agreed to purchase from
the Company annually at least the lesser of 90% of their aggregate requirements
for printed circuit boards, flexible circuits and related tooling and test
fixtures or $28,500. The three year supply agreements with Tektronix expired on
May 31, 1997. The Company and Tektronix have not entered into new supply
agreements, although the Company is continuing to manufacture products for
Tektronix.

Included in net sales for fiscal years 1997, 1996 and 1995 are product sales to
Tektronix of $28,766, $32,010 and $31,577, respectively. Accounts
receivable-affiliates at May 31, 1997 and 1996 consists of amounts receivable
from Tektronix of $3,091 and $3,138, respectively.

In addition, the Company and Tektronix entered into Waste Management and Master
Services Agreements covering certain environmental matters for a three-year
term, which ended May 31, 1997. The Company and Tektronix extended the
agreements with certain revisions which eliminate disposal arrangement services
and reduce waste treatment services. The fiscal year 1997, 1996 and 1995 expense
pursuant to the agreements was $291, $426 and $336, respectively.

                                       29
<PAGE>
Note 14.  COMMITMENTS AND CONTINGENCIES

Litigation

In the normal course of business, the Company is party to various legal claims,
actions and complaints, including actions involving patent infringement and
other intellectual property claims. The Company believes that the disposition of
these matters will not have a material adverse effect on the Company's financial
position and results of operations.

Operating Leases

The Company leases facilities for its printed circuit fabrication operations
under operating leases at its Loveland and Soladyne operations. See Note 3.

Minimum rental payments under operating leases that have non-cancelable lease
terms in excess of 12 months are as follows:

<TABLE>
<CAPTION>
                                                 Minimum rental payments
           Years ended May 31                    under operating leases
           ------------------                    ----------------------
           <S>                                            <C>    
           1998                                           $ 2,386
           1999                                             2,380
           2000                                             2,380
           2001                                             1,110
                                                          =======
           Total minimum lease payments                   $ 8,256
                                                          =======
</TABLE>

Rental expense under operating leases was $2,376, $1,333 and $12 in fiscal years
1997, 1996 and 1995, respectively.


Note 15.  QUARTERLY FINANCIAL DATA  (Unaudited)

Summary quarterly financial data is as follows:

<TABLE>
<CAPTION>
                                                                    1997
                                                                    ----
                                                  1st Qtr     2nd Qtr    3rd Qtr     4th Qtr
                                                 --------    --------   --------    --------
      <S>                                        <C>         <C>        <C>         <C>     
      Net sales                                  $ 41,116    $ 35,841   $ 35,942    $ 43,285
      Gross profit                                  7,352       5,086      3,690       5,728
      Operating income (loss)                       2,270         223     (1,211)        739
      Net income (loss)                             1,256        (143)    (1,086)        294
      Earnings (loss) per share                      0.20       (0.02)     (0.18)       0.05

                                                                    1997
                                                                    ----
                                                  1st Qtr     2nd Qtr    3rd Qtr     4th Qtr
                                                 --------    --------   --------    --------
      Net sales                                  $ 27,713    $ 33,564   $ 46,896    $ 47,461
      Gross profit                                  7,392       8,277     10,810      10,921
      Operating income                              4,180       4,738      5,856       6,208
      Net income                                    2,708       2,911      3,518       3,655
      Earnings per share                             0.42        0.45       0.55        0.57
</TABLE>

                                       30
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

No information is required to be reported under this item.


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The information required by this item regarding directors is included under
"Election of Directors" in the Company's Proxy Statement for its 1997 annual
meeting of shareholders. The information required by this item regarding
executive officers is contained under "Executive Officers" in Item 1 of Part I
hereof. Information regarding compliance with Section 16(a) of the Securities
Exchange Act of 1934 is included under the caption "Section 16(a) Beneficial
Ownership Reporting Compliance" in the Company's Proxy Statement for its 1997
annual meeting of shareholders.

ITEM 11. EXECUTIVE COMPENSATION.

The information required by this item is included under "Executive Compensation"
and "Report of the Compensation Committee on Executive Compensation" in the
Company's Proxy Statement for its 1997 annual meeting of shareholders.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
         MANAGEMENT.

The information required by this item is included under "Voting Securities and
Principal Shareholders" and "Election of Directors" in the Company's Proxy
Statement for its 1997 annual meeting of shareholders.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information required by this item is included under "Certain Relationships
and Related Transactions" in the Company's Proxy Statement for its 1997 annual
meeting of shareholders.

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)1. Index to Financial Statements.

      Merix Corporation                                           Page Reference
      -----------------                                           --------------
          Independent Auditors' Report                                  16
          Balance Sheets as of May 31, 1997 and May 25, 1996            17
          Statements of Income for fiscal years ended May 31, 1997,
             May 25, 1996 and May 27, 1995                              18
          Statements of Shareholders' Equity for fiscal years ended
             May 31, 1997, May 25, 1996 and May 27, 1995                19
          Statements of Cash Flows for fiscal years ended
             May 31, 1997, May 25, 1996 and May 27, 1995                20
          Notes to Financial Statements                                 21

                                       31
<PAGE>
(a)2. Financial Statement Schedules

All schedules have been omitted since they are either not required or the
information is included in the financial statements included herewith.

(b) Reports on Form 8-K

A Current Report on Form 8-K, dated March 25, 1997, was filed reporting the
adoption of a Shareholder Rights Agreement under Item 5.

(a)3. Index to Exhibits

      The following exhibits are filed with, or incorporated by reference into,
this Annual Report on Form 10-K:

      3.1(1)    Articles of Incorporation of the Registrant (Exhibit 3.1)
      3.2       Bylaws of the Registrant, as amended
      4.1(1)    Article II of the Registrant's Articles of Incorporation
                (Exhibit 3.1)
      4.2(9)    Shareholder Rights Agreement dated March 25, 1997
     10.1(2)    Asset Transfer Agreement between Tektronix and Merix
                (including Note and Trust Deed and Assignment of Rents
                and Leases) (Exhibit 10.1)
     10.2(2)    Registration Rights Agreement between Merix and Tektronix
                (Exhibit 10.2)
     10.3(2)    Waste Management Agreement between Merix and Tektronix
                (Exhibit 10.3)
     10.4(2)    Services Agreement between Merix and Tektronix (Exhibit 10.4)
    +10.5(4)    Stock Incentive Plan of the Registrant, as amended
    +10.6(2)    Indemnity Agreement between Merix and Deborah A. Coleman as
                of April 4, 1994 (Exhibit 10.6)
    +10.7(2)    Indemnity Agreement between Merix and John P. Karalis as of
                April 4, 1994 (Exhibit 10.9)
    +10.8(2)    Indemnity Agreement between Merix and Carl W. Neun as of
                April 4, 1994 (Exhibit 10.10)
    +10.9(2)    Indemnity Agreement between Merix and Carlene M. Ellis as of
                May 24, 1994 (Exhibit 10.11)
    +10.10(2)   Indemnity Agreement between Merix and Charles M. Boesenberg
                as of May 24, 1994 (Exhibit 10.12)
    +10.11(2)   Indemnity Agreement between Merix and Dr. Koichi Nishimura
                as of May 24, 1994 (Exhibit 10.13)
    +10.12(3)   Indemnity Agreement between Merix and Terri L. Timberman
                as of May 25, 1994 (Exhibit 10.14)
    +10.13(3)   Indemnity Agreement between Merix and Joseph H. Howell as of
                January 30, 1995 (Exhibit 10.15)
    +10.14(6)   Indemnity Agreement between Merix and Samuel R. DeSimone, Jr.
                as of September 11, 1995 (Exhibit 10.15)
     10.15(1)   Form of Supply Agreement (Exhibit 10.7)
    +10.16      Amended Executive Severance Agreement between Merix and
                Deborah A. Coleman
    +10.17      Amended Executive Severance Agreement between Merix and
                Terri L. Timberman
    +10.18      Amended Executive Severance Agreement between Merix and
                Joseph H. Howell
    +10.19      Amended Executive Severance Agreement between Merix and
                Samuel R. DeSimone, Jr.
    +10.20      Executive Severance Agreement between Merix and Joseph Reichbach
    +10.21      Executive Severance Agreement between Merix and Charles W. Payne
    +10.22      Executive Severance Agreement between Merix and Mark H. Hynes
    10.23(8)    Loan Agreement with Bank of America dated October 31, 1996
                (Exhibit 10)
   t10.24(5)    Master Asset Purchase Agreement between Merix and
                Hewlett-Packard Company dated  October 10, 1995 (Exhibit 2)
    10.25(7)    Note Purchase Agreement dated September 10, 1996 (Exhibit 10.1)
    10.26       Amendment to Note Purchase Agreement dated May 28, 1997

                                       32
<PAGE>

    10.27       Notice of Assignment and Amendment No. 1 to Loan Agreement with
                Bank of America dated December 13, 1996
    10.28       Second Amendment to Loan Agreement with Bank of America dated
                February 27, 1997
    11.1        Computation of Earnings Per Share
    23.1        Independent Auditors' Consent
    27.1        Financial Data Schedule


                (1)   Incorporated by reference to the Registrant's Registration
                      Statement on Form S-1, Registration No. 33-77348.
                (2)   Incorporated by reference to the Company's Form 10-K for
                      the fiscal year ended May 28, 1994 (File No. 0-23818).
                (3)   Incorporated by reference to the Company's Form 10-K for
                      the fiscal year ended May 27, 1995 (File No. 0-23818).
                (4)   Incorporated by reference to Appendix A of the Company's
                      Proxy Statement for the 1995 Annual Meeting of
                      Shareholders (File No. 0-23818).
                (5)   Incorporated by reference to the Company's Current Report
                      on Form 8-K dated October 31, 1995 (File No. 0-23818).
                (6)   Incorporated by reference to the Company's Form 10-K for
                      the fiscal year ended May 25, 1996. (File No. 0-23818).
                (7)   Incorporated by reference to the Company's Form 10-Q for
                      the quarterly period ended August 31, 1996 (File No.
                      0-23818).
                (8)   Incorporated by reference to the Company's Form 10-Q for
                      the quarterly period ended November 30, 1996 (File No.
                      0-23818).
                (9)   Incorporated by reference to the Company's Current Report
                      on Form 8-K dated March 25, 1997. (File No. 0-23818).


                +     This Exhibit constitutes a management contract or
                      compensatory plan or arrangement.

                t     Confidential treatment requested for portions of this
                      Exhibit.

                                       33
<PAGE>
                                   SIGNATURES

Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized this 4th day of
August, 1997

                                       MERIX CORPORATION

                                       By: JOSEPH H. HOWELL
                                           -------------------------------------
                                           Joseph H. Howell,
                                           Senior Vice President and Chief
                                           Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below on August 4, 1997 by the following persons on behalf of
the Registrant and in the capacities indicated.

           Signature                                  Title
           ---------                                  -----

       DEBORAH A. COLEMAN              Chair, Chief Executive Officer and
----------------------------------     President
       Deborah A. Coleman              (Principal Executive Officer)

        JOSEPH H. HOWELL               Senior Vice President  and Chief
----------------------------------     Financial Officer
        Joseph H. Howell               (Principal Accounting and Financial
                                        Officer)

         JOHN P. KARALIS               Director
----------------------------------
         John P. Karalis

          CARL W. NEUN                 Director
----------------------------------
          Carl W. Neun

        CARLENE M. ELLIS               Director
----------------------------------
        Carlene M. Ellis

      CHARLES M. BOESENBERG            Director
----------------------------------
      Charles M. Boesenberg

      DR. KOICHI NISHIMURA             Director
----------------------------------
      Dr. Koichi Nishimura

                                       34


                                       8
<PAGE>
                                 EXHIBIT INDEX

Exhibit No.    Description
-----------    -----------

   3.1(1)      Articles of Incorporation of the Registrant (Exhibit 3.1)
   3.2         Bylaws of the Registrant, as amended
   4.1(1)      Article II of the Registrant's Articles of Incorporation (Exhibit
               3.1)
   4.2(9)      Shareholder Rights Agreement dated March 25, 1997
   10.1(2)     Asset Transfer Agreement between Tektronix and Merix (including
               Note and Trust Deed and Assignment of Rents and Leases) (Exhibit
               10.1)
   10.2(2)     Registration Rights Agreement between Merix and Tektronix
               (Exhibit 10.2)
   10.3(2)     Waste Management Agreement between Merix and Tektronix (Exhibit
               10.3)
   10.4(2)     Services Agreement between Merix and Tektronix (Exhibit 10.4)
  +10.5(4)     Stock Incentive Plan of the Registrant, as amended
  +10.6(2)     Indemnity Agreement between Merix and Deborah A. Coleman as of
               April 4, 1994 (Exhibit 10.6)
  +10.7(2)     Indemnity Agreement between Merix and John P. Karalis as of April
               4, 1994 (Exhibit 10.9)
  +10.8(2)     Indemnity Agreement between Merix and Carl W. Neun as of April 4,
               1994 (Exhibit 10.10)
  +10.9(2)     Indemnity Agreement between Merix and Carlene M. Ellis as of May
               24, 1994 (Exhibit 10.11)
  +10.10(2)    Indemnity Agreement between Merix and Charles M. Boesenberg as of
               May 24, 1994 (Exhibit 10.12)
  +10.11(2)    Indemnity Agreement between Merix and Dr. Koichi Nishimura as of
               May 24, 1994 (Exhibit 10.13)
  +10.12(3)    Indemnity Agreement between Merix and Terri L. Timberman as of
               May 25, 1994 (Exhibit 10.14)
  +10.13(3)    Indemnity Agreement between Merix and Joseph H. Howell as of
               January 30, 1995 (Exhibit 10.15)
  +10.14(6)    Indemnity Agreement between Merix and Samuel R. DeSimone, Jr. as
               of September 11, 1995 (Exhibit 10.15)
   10.15(1)    Form of Supply Agreement (Exhibit 10.7)
  +10.16       Amended Executive Severance Agreement between Merix and Deborah
               A. Coleman
  +10.17       Amended Executive Severance Agreement between Merix and Terri L.
               Timberman
  +10.18       Amended Executive Severance Agreement between Merix and Joseph H.
               Howell
  +10.19       Amended Executive Severance Agreement between Merix and Samuel R.
               DeSimone, Jr.
  +10.20       Executive Severance Agreement between Merix and Joseph Reichbach
  +10.21       Executive Severance Agreement between Merix and Charles W. Payne
  +10.22       Executive Severance Agreement between Merix and Mark H. Hynes
   10.23(8)    Loan Agreement with Bank of America dated October 31, 1996
               (Exhibit 10)
  t10.24(5)    Master Asset Purchase Agreement between Merix and Hewlett-Packard
               Company dated October 10, 1995 (Exhibit 2)
   10.25(7)    Note Purchase Agreement dated September 10, 1996 (Exhibit 10.1)
   10.26       Amendment to Note Purchase Agreement dated May 28, 1997
   10.27       Notice of Assignment and Amendment No. 1 to Loan Agreement with
               Bank of America dated December 13, 1996
   10.28       Second Amendment to Loan Agreement with Bank of America dated
               February 27, 1997
<PAGE>
   11.1        Computation of Earnings Per Share
   23.1        Independent Auditors' Consent
   27.1        Financial Data Schedule


     (1)  Incorporated by reference to the Registrant's Registration Statement
          on Form S-1, Registration No. 33-77348.

     (2)  Incorporated by reference to the Company's Form 10-K for the fiscal
          year ended May 28, 1994 (File No. 0-23818).

     (3)  Incorporated by reference to the Company's Form 10-K for the fiscal
          year ended May 27, 1995 (File No. 0-23818).

     (4)  Incorporated by reference to Appendix A of the Company's Proxy
          Statement for the 1995 Annual Meeting of Shareholders (File No.
          0-23818).

     (5)  Incorporated by reference to the Company's Current Report on Form 8-K
          dated October 31, 1995 (File No. 0-23818).

     (6)  Incorporated by reference to the Company's Form 10-K for the fiscal
          year ended May 25, 1996. (File No. 0-23818).

     (7)  Incorporated by reference to the Company's Form 10-Q for the quarterly
          period ended August 31, 1996 (File No. 0-23818).

     (8)  Incorporated by reference to the Company's Form 10-Q for the quarterly
          period ended November 30, 1996 (File No. 0-23818).

     (9)  Incorporated by reference to the Company's Current Report on Form 8-K
          dated March 25, 1997. (File No. 0-23818).

     +    This Exhibit constitutes a management contract or compensatory plan or
          arrangement.

     t    Confidential treatment requested for portions of this Exhibit.