DDi Corp. Announces Third Quarter 2008 Results

Q3 Highlights:

-- Net sales increased 14 percent over prior year to $49.3 million

-- Record PCB bookings of $51.1 million since the 2003 restructuring

-- Gross margin improved over prior year and sequentially to 20.8 percent

-- Net income improved to $1.6 million, or $0.08 per diluted share

-- Repurchased 1.6 million shares, leaving 19.8 million shares outstanding

Third Quarter Results

The Company reported third quarter 2008 net sales of $49.3 million, gross margin of 20.8 percent, adjusted EBITDA of $7.1 million, and net income of $1.6 million, or $0.08 per diluted share.

Mikel Williams, President and CEO of DDi, stated, "I am pleased with another quarter of solid results as we demonstrate focused execution on our strategy and operating plan despite a challenging general economic environment."

The Company's third quarter 2008 net sales of $49.3 million represented a 14 percent increase from the prior year's third quarter net sales of $43.3 million, and a 4 percent sequential decrease from second quarter 2008 net sales of $51.2 million, consistent with the typically slower summer months. In addition, third quarter 2008 booked orders were $51.1 million, the best quarterly PCB bookings performance since the 2003 restructuring due to strong sales efforts and improved operational performance. On a year-to-date basis, net sales increased 9 percent to $147.8 million for the first nine months of 2008 compared to $135.9 million for the same period of 2007. The increase in net sales was primarily driven by the growth in the military/aerospace market segment.

The Company's adjusted EBITDA for the third quarter of 2008 of $7.1 million, or 14.3 percent of net sales, was an improvement over $4.3 million, or 10 percent of net sales for the prior year's third quarter. Adjusted EBITDA was down slightly on a sequential basis compared to $7.4 million, or 14.4 percent of net sales for the second quarter of 2008. On a year-to-date basis, adjusted EBITDA increased 33 percent to $20.5 million, or 13.9 percent of net sales in the first nine months of 2008, compared to $15.4 million, or 11.3 percent of net sales for the same period of 2007. The improvement in adjusted EBITDA was primarily driven by the top line sales growth and improved margin performance while maintaining control over operating expenses. (Reconciliations of this non-GAAP measure are provided after the GAAP condensed consolidated financial statements below.)

The Company reported net income of $1.6 million, or $0.08 per diluted share for the third quarter of 2008, a significant improvement compared to breakeven, or $0.00 per diluted share for the prior year's third quarter. On a sequential basis, net income was slightly higher compared to net income of $1.5 million or $0.07 per diluted share in the second quarter. On a year-to-date basis, net income improved 292 percent to $3.8 million, or $0.18 per diluted share in the first nine months of 2008, compared to $1.0 million, or $0.04 per diluted share in the same period of 2007.

As of September 30, 2008, the Company had total cash and cash equivalents of $17.1 million and no borrowings were outstanding under its revolving credit facility, which had a borrowing capacity of approximately $20.2 million.

The Company repurchased 1.6 million shares of its common stock during the third quarter, bringing total shares repurchased to 2.9 million, or just over 13 percent of the outstanding shares since the inception of the repurchase program in August 2007. Common shares outstanding were 19.8 million as of September 30, 2008.

Conference Call and Webcast

A conference call with simultaneous webcast to discuss third quarter 2008 financial results will be held today at 5:00 p.m. Eastern / 2:00 p.m. Pacific. The call is being webcast and can be accessed at the Company's web site: www.ddiglobal.com/investor. Participants should access the website at least 15 minutes early to register and download any necessary audio software. A telephone replay of the conference call will be available through November 5, 2008 by dialing 888-286-8010 (domestic) or 617-801-6888 (international) and entering the conference ID 94884341. An online replay of the webcast will be available for 12 months at www.ddiglobal.com/investor under "Financial Calendar." For more information, visit www.ddiglobal.com.

About DDi

DDi is a leading provider of time-critical, technologically-advanced electronics manufacturing services. Headquartered in Anaheim, California, DDi and its subsidiaries offer PCB engineering, fabrication and manufacturing services to leading electronics OEMs and contract manufacturers worldwide from its facilities across North America and with manufacturing partners in Asia.

Non-GAAP Financial Measures

This release includes 'adjusted EBITDA', a non-GAAP financial measure as defined in Regulation G of the Securities Exchange Act of 1934. Management believes that the disclosure of non-GAAP financial measures, when presented in conjunction with the corresponding GAAP measures, provide useful information to the Company, investors and other users of the financial statements and other financial information in identifying and understanding operating performance for a given level of net sales and business trends. Management believes that adjusted EBITDA is an important factor of the Company's business because it reflects financial performance that is unencumbered by debt service and other non-cash, non-recurring or unusual items. This financial measure is commonly used in the Company's industry. It is also used by the Company's lenders to determine components of covenant compliance. However, adjusted EBITDA should not be considered as an alternative to cash flow from operating activities, as a measure of liquidity or as an alternative to net income as a measure of operating results in accordance with generally accepted accounting principles. The Company's definition of adjusted EBITDA may differ from definitions of such financial measure used by other companies. The Company has provided a reconciliation of adjusted EBITDA to GAAP financial information in the attached Schedule of Non-GAAP reconciliations.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995

Except for historical information contained in this release, statements in this release may constitute forward-looking statements regarding the Company's assumptions, projections, expectations, targets, intentions or beliefs about future events. Words or phrases such as "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "projects," "targets," "will likely result," "will continue," "may," "could" or similar expressions identify forward-looking statements. Forward-looking statements involve risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed. The Company cautions that while it makes such statements in good faith and it believes such statements are based on reasonable assumptions, including without limitation, management's examination of historical operating trends, data contained in records, and other data available from third parties, it cannot assure you that the Company's projections will be achieved. In addition to other factors and matters discussed from time to time in the Company's filings with the U.S. Securities and Exchange Commission, or the SEC, some important factors that could cause actual results or outcomes for DDi or its subsidiaries to differ materially from those discussed in forward-looking statements include changes in general economic conditions in the markets in which it may compete and fluctuations in demand in the electronics industry; the Company's ability to sustain historical margins; increased competition; increased costs; loss or retirement of key members of management; increases in the Company's cost of borrowings or unavailability of additional debt or equity capital on terms considered reasonable by management; and adverse state, federal or foreign legislation or regulation or adverse determinations by regulators. Any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by law, the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for management to predict all such factors.

DDi Corp. Condensed Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited) Qtr. Ended Qtr. Ended Qtr. Ended Sep. 30, 2008 Sep. 30, 2007 Jun. 30, 2008 Net sales $ 49,285 $ 43,290 $ 51,188 Cost of goods sold 39,058 35,562 40,815 Gross profit 10,227 7,728 10,373 20.8 % 17.9 % 20.3 % Operating expenses: Sales and marketing 3,230 2,976 3,192 General and administrative 3,508 3,471 3,332 Amortization of intangible assets 1,339 1,339 1,340 Restructuring and other related charges 8 124 82 Operating income (loss) 2,142 (182 ) 2,427 Interest and other expense, net 42 80 89 Income (loss) before income taxes 2,100 (262 ) 2,338 Income tax expense (benefit) 513 (268 ) 831 Net income $ 1,587 $ 6 $ 1,507 Net income per share -- basic $ 0.08 $ 0.00 $ 0.07 Net income per share -- diluted $ 0.08 $ 0.00 $ 0.07 Weighted-average shares used in per share computations -- 20,893 22,571 21,303 basic Weighted-average shares used in per share computations -- 20,932 22,624 21,326 diluted

DDi Corp. Condensed Consolidated Statements of Operations (In thousands, except for per share amounts) (Unaudited) 9 Months Ended 9 Months Ended Sep. 30, 2008 Sep. 30, 2007 Net sales $ 147,825 $ 135,870 Cost of goods sold 117,482 108,886 Gross profit 30,343 26,984 20.5 % 19.9 % Operating expenses: Sales and marketing 9,698 9,428 General and administrative 10,678 11,174 Amortization of intangible assets 4,018 4,018 Restructuring and other related charges 275 333 Operating income 5,674 2,031 Interest and other expense, net 83 646 Income before income taxes 5,591 1,385 Income tax expense 1,779 412 Net income $ 3,812 $ 973 Net income per share -- basic $ 0.18 $ 0.04 Net income per share -- diluted $ 0.18 $ 0.04 Weighted-average shares used in per share computations -- 21,393 22,593 basic Weighted-average shares used in per share computations -- 21,415 22,641 diluted

DDi Corp Condensed Consolidated Balance Sheets (In thousands) (Unaudited) September 30, December 31, 2008 2007 Assets Current assets: Cash and cash equivalents $ 17,061 $ 20,445 Accounts receivable, net 29,723 26,411 Inventories 14,201 13,696 Prepaid expenses and other current assets 1,028 657 Total current assets 62,013 61,209 Property, plant and equipment, net 28,323 28,503 Goodwill and intangible assets, net 41,549 46,115 Other assets 803 950 Total assets $ 132,688 $ 136,777 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 14,229 $ 11,024 Accrued expenses and other current liabilities 12,209 10,139 Total current liabilities 26,438 21,163 Other long-term liabilities 3,891 4,449 Total liabilities 30,329 25,612 Stockholders' equity: Common stock, additional paid-in-capital and treasury stock 228,592 241,086 Accumulated other comprehensive income 347 471 Accumulated deficit (126,580 ) (130,392 ) Total stockholders' equity 102,359 111,165 Total liabilities and stockholders' equity $ 132,688 $ 136,777

DDi Corp. Schedule of Non-GAAP Reconciliations (In thousands) (Unaudited) Qtr. Ended Qtr. Ended Qtr. Ended Sep. 30, Sep. 30, Jun. 30, 2008 2007 2008 Adjusted EBITDA: GAAP net income $ 1,587 $ 6 $ 1,507 Add back: Interest and other expense, net 42 80 89 Income tax expense (benefit) 513 (268 ) 831 Depreciation 2,925 2,498 2,893 Amortization of intangible assets 1,339 1,339 1,340 Non-cash compensation 653 548 651 Restructuring and other related charges 8 124 82 Adjusted EBITDA(a) $ 7,067 $ 4,327 $ 7,393 (a) Earnings before interest and other, income taxes, depreciation, amortization, non-cash compensation, and restructuring and other related charges 9 Months Ended 9 Months Ended Sep. 30, Sep. 30, 2008 2007 Adjusted EBITDA: GAAP net income $ 3,812 $ 973 Add back: Interest and other expense, net 83 646 Income tax expense 1,779 412 Depreciation 8,554 7,275 Amortization of intangible assets 4,018 4,018 Non-cash compensation 1,954 1,698 Restructuring and other related charges 275 333 Adjusted EBITDA(a) $ 20,475 $ 15,355 (a) Earnings before interest and other, income taxes, depreciation, amortization, non-cash compensation, and restructuring and other related charges

SOURCE: DDi Corp.

DDi Corp. Mikel H. Williams Chief Executive Officer 714-688-7200 Sally L. Edwards Chief Financial Officer 714-688-7200