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

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

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

For the quarterly period ended June 30, 2003

OR

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

For the ~~quarterly~~transition period ~~ended~~from________ ~~June 30, 2002~~ to_________

	Commission File Numbers:
	DDi Corp.	000-30241
	DDi Capital Corp.	333-41187

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

DDi CORP.
DDi CAPITAL CORP.

(Exact name of registrants as specified in their charters)

Delaware		06-1576013
California		33-0780382

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1220 Simon Circle
Anaheim, California 92806

(Address of principal executive offices) (Zip code)

(714) 688-7200

(Registrants’ telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

~~For~~ Indicate by check mark whether DDi Corp. and DDi Capital Corp.: (1) have filed all reports required to be filed by Section 13 or 15(d) of the ~~transition period from~~ Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days:

~~Commission~~x ~~File~~Yes ~~Numbers:~~o No

~~DDi Corp. 000~~ Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-~~30241~~2 of the Exchange Act).

~~DDi~~o ~~Capital~~Yes ~~Corp. 333-41187~~ x No

As of August 5, 2003, DDi ~~CORP~~Corp. had 49,526,136 shares of common stock, par value $0.01 per share, outstanding and DDi Capital Corp. had 1,000 shares of common stock, par value $0.01 per share, outstanding. As of August 5, 2003, all of the voting stock of DDi Capital Corp. was held by DDi Intermediate Holdings Corp., and all of the voting stock of DDi Intermediate Holdings Corp. was held by DDi Corp.

DDi CAPITAL CORP.

(Exact name of registrants as specified in their charters)

Delaware		06-1576013
California		33-0780382
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1220 Simon Circle

Anaheim, California 92806

(Address of principal executive offices) (Zip code)

(714) 688-7200

(Registrants’ telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether DDi Corp. and DDi Capital Corp.: (1) have 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 registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days: x Yes ¨ No.

As of August 7, 2002, all of the voting stock of DDi Capital Corp. was held by DDi Intermediate Holdings Corp., and all of the voting stock of DDi Intermediate Holdings Corp. was held by DDi Corp.

As of August 7, 2002, DDi Corp. had 48,373,719 shares of common stock, par value $0.01 per share, outstanding and DDi Capital Corp. had 1,000 shares of common stock, par value $0.01 per share, outstanding.

This Quarterly Report on Form 10-Q is a combined quarterly report being filed separately by two registrants: DDi Corp. (“DDi Corp.” f/k/a DDi Holdings Corp.) and DDi Capital Corp. (“DDi Capital”). Except where the context clearly indicates otherwise, any references in this report to “DDi Corp.” includes all subsidiaries of DDi Corp. including DDi Capital. DDi Capital makes no representation as to the information contained in this report in relation to DDi Corp. and its subsidiaries other than DDi Capital.

DDi Capital meets the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q, and is filing this form with the reduced disclosure format pursuant to General Instruction H(2).

DDi CORP. DDi CAPITAL CORP. FORM 10-Q

DDi CAPITAL CORP.

FORM 10-Q

TABLE OF CONTENTS

		Page No.	~~Page No.~~
PART I	FINANCIAL INFORMATION	~~FINANCIAL INFORMATION~~
Item 1		Financial Statements
Item 1.	Financial Statements	4
		Condensed Consolidated Balance Sheets as of June 30, 2002 and December 31, 2001	3
	Condensed Consolidated Balance Sheets as of June 30, 2003 and December 31, 2002	4
		Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2002 and 2001	4
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2003 and 2002	5
		Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2002 and 2001	6
	Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2003 and 2002	7
		Condensed Consolidated Statements of Cash Flows for the six months ended ended June 30, 2002 and 2001	8
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2003 and 2002	9
	Notes to Condensed Consolidated Financial Statements	~~Notes to Condensed Consolidated Financial Statements~~11	9
Item 2		Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3		Quantitative and Qualitative Disclosures about Market Risk	28
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	31
PART II		OTHER INFORMATION
Item 4.	Controls and Procedures	31
Item 2		Changes in Securities and Use of Proceeds	29
PART II	OTHER INFORMATION
Item 4		Submission of Matters to a Vote of Security Holders	29
Item 3.	Default Upon Senior Securities	32
Item 6		Exhibits and Reports on Form 8-K	29
Item 6.	Exhibits and Reports on Form 8-K	32
Signatures		34	31

~~Item~~ ~~1. Financial~~FORWARD-LOOKING ~~Statements~~ STATEMENTS

~~DDi~~ ~~CAPITAL~~A ~~CORP~~number of the matters and subject areas discussed in this Form 10-Q are forward-looking in nature. The ~~AND~~discussion ~~DDi~~of ~~CORP~~such matters and subject areas is qualified by the inherent risks and uncertainties surrounding future expectations generally, and also may differ materially from our actual future experience involving any one or more of such matters and subject areas. The Company cautions readers that all statements other than statements of historical facts included in this quarterly report on Form 10-Q regarding our financial position and business strategy may constitute forward-looking statements. All of these forward-looking statements are based upon estimates and assumptions made by our management, which although believed to be reasonable, are inherently uncertain. Therefore, undue reliance should not be placed on such estimates and statements. No assurance can be given that any of such estimates or statements will be realized and it is likely that actual results will differ materially from those contemplated by such forward-looking statements. Factors that may cause such differences include: risks associated with confirmation of our proposed plan of reorganization and the implementation of the consensual restructuring contemplated therein; risks associated with third parties seeking to propose and confirm one or more plans of reorganization with respect to the proposed Chapter 11 cases; risks associated with the termination of the support agreements with our senior lenders and convertible subordinated note holders; our ability to continue as a going concern; our ability to obtain court approval with respect to motions in the proposed Chapter 11 proceedings prosecuted by it from time to time; our ability to maintain contracts that are critical to our operations; the potential adverse impact of the proposed Chapter 11 cases on our liquidity or results of operations; changes in general economic conditions in the markets in which we may compete and fluctuations in demand in the electronics industry; our ability to sustain historical margins as the industry develops; increased competition; increased costs; our ability to retain key members of management; adverse state, federal or foreign legislation or regulation or adverse determinations by regulators; and other factors identified from time to time in our filings with the SEC. We have attempted to identify, in context, certain of the factors that we currently believe may cause actual future experiences to differ from our current expectations regarding the relevant matter or subject area. In addition to the items specifically discussed above, our business and results of operations are subject to the risks and uncertainties described herein in Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations under the heading “Factors That May Affect Future Results;” however, the operations and results of our business also may be subject to the effect of other risks and uncertainties. Such risks and uncertainties not currently known to us include, but are not limited to, items described from time-to-time in our registration statements and periodic reports filed with the Securities and Exchange Commission. The Company assumes no obligation to update forward-looking information disclosed in this report or elsewhere to reflect actual results or changes in the factors affecting such forward-looking information.

Condensed Consolidated Balance Sheets

(In thousands)

	DDi Capital						DDi Corp.
	June 30, 2002			December 31, 2001			June 30, 2002			December 31, 2001
Assets	(Unaudited)						(Unaudited)
Current assets:
Cash and cash equivalents	$	2,352		$	17,569		$	20,737		$	23,629
Marketable securities—available for sale		10,027			21,886			28,826			21,886
Cash, cash equivalents and marketable securities—restricted		6,250			—			6,250			—
Accounts receivable, net		29,098			30,385			39,621			42,548
Inventories		15,848			15,196			26,298			24,030
Prepaid expenses and other		4,993			1,766			7,013			3,178
Income tax receivable		9,214			5,291			9,214			5,290
Deferred income taxes		6,649			12,241			8,517			12,241
Total current assets		84,431			104,334			146,476			132,802
Property, plant and equipment, net		69,492			79,134			98,424			106,869
Debt issuance costs, net		3,298			6,280			10,549			9,778
Goodwill and other intangibles, net		83,471			144,577			145,923			218,984
Deferred income taxes		5,429			—			5,023			—
Cash, cash equivalents and marketable securities—restricted		6,250			—			6,250			—
Other		1,491			1,824			2,158			2,384
Total assets	$	253,862		$	336,149		$	414,803		$	470,817
Liabilities and Stockholders’ Equity
Current liabilities:
Current maturities of long-term debt and capital lease obligations	$	11,638		$	17,184		$	14,458		$	17,845
Revolving credit facility					—			—			—
Revolving credit facilities		—			—			—			2,975
Accounts payable		16,985			14,470			28,224			26,767
Accrued expenses and other		19,848			18,234			32,439			28,119
Income taxes payable		83			188			1,597			2,369
Total current liabilities		48,554			50,076			76,718			78,075
Long-term debt and capital lease obligations		82,003			138,982			303,146			260,977
Notes payable and other		4,273			7,665			4,273			7,665
Deferred income taxes		—			784			—			1,628
Total liabilities		134,830			197,507			384,137			348,345
Commitments and contingencies
Stockholders’ equity:
Common stock, additional paid-in-capital and other		603,292			546,711			541,513			540,983
Accumulated other comprehensive income (loss)		(4,164	)		565			(5,086	)		(4,311	)
Accumulated deficit		(480,096	)		(408,634	)		(505,761	)		(414,200	)
Total stockholders’ equity		119,032			138,642			30,666			122,472
Total liabilities and stockholders’ equity	$	253,862		$	336,149		$	414,803		$	470,817

The accompanying notes are an integral part of these condensed consolidated financial statements.

~~DDi~~ ~~CAPITAL~~PART ~~CORP.~~I – FINANCIAL INFORMATION

~~Condensed~~ ~~Consolidated~~Item ~~Statements~~1. Financial ~~of Operations~~ Statements

DDi CAPITAL CORP. AND DDi CORP. Condensed Consolidated Balance Sheets (In thousands) (Unaudited)

(Unaudited)

	DDi Capital						DDi Corp.

	June 30, 2003			December 31, 2002			June 30, 2003			December 31, 2002

Assets
Current assets:
Cash and cash equivalents	$	14,480		$	28,145		$	14,523		$	28,934
Marketable securities - available for sale		174			115			174			115
Cash, cash equivalents and marketable securities - restricted		9,392			6,250			9,392			6,250
Accounts receivable, net		21,075			28,013			36,082			41,986
Inventories		13,709			16,988			24,819			28,240
Prepaid expenses and other		3,106			2,674			5,123			3,963

Total current assets		61,936			82,185			90,113			109,488
Property, plant and equipment, net		49,603			54,301			77,092			83,139
Debt issuance costs, net		2,662			3,524			8,565			10,141
Goodwill		—			—			14,184			13,982
Cash, cash equivalents and marketable securities - restricted		—			3,142			—			3,142
Other		860			1,242			940			1,300

Total assets	$	115,061		$	144,394		$	190,894		$	221,192

Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Current maturities of long-term debt and capital lease obligations	$	83,049		$	70,054		$	288,275		$	275,137
Revolving credit facilities		—			—			10,077			4,246
Accounts payable		9,942			14,062			24,206			27,457
Accrued expenses and other		22,063			15,553			39,156			28,093
Income taxes payable		456			235			45			68

Total current liabilities		115,510			99,904			361,759			335,001
Long-term debt and capital lease obligations		1,765			18,846			20,570			38,509
Deferred income tax liability		263			226			1,091			2,464
Notes payable and other		5,412			9,078			5,412			9,078

Total liabilities		122,950			128,054			388,832			385,052

Commitments and contingencies
Stockholders’ equity (deficit):
Common stock, additional paid-in-capital and other		628,454			628,951			542,289			542,266
Accumulated other comprehensive income (loss)		519			(5,739	)		2,657			(3,215	)
Stockholder receivables		—			—			(626	)		(618	)
Accumulated deficit		(636,862	)		(606,872	)		(742,258	)		(702,293	)

Total stockholders’ equity (deficit)		(7,889	)		16,340			(197,938	)		(163,860	)

Total liabilities and stockholders’ equity (deficit)	$	115,061		$	144,394		$	190,894		$	221,192

	Three Months Ended June 30,						Six Months Ended June 30,
	2002			2001			2002			2001
Net sales	$	47,373		$	65,165		$	94,354		$	183,847
Cost of sales		42,316			44,849			84,497			119,657
Restructuring-related inventory impairment		3,397			—			3,397			—
Gross profit		1,660			20,316			6,460			64,190
Operating expenses:
Sales and marketing		5,608			5,176			11,368			13,989
General and administrative		2,981			3,037			5,962			8,291
Amortization of intangibles		—			4,512			—			8,994
Goodwill impairment		45,000			—			45,000			—
Restructuring and other related charges		13,809			—			13,809			—
Operating income (loss)		(65,738	)		7,591			(69,679	)		32,916
Interest expense (net) and other expense (net)		644			11,508			4,116			29,132
Income (loss) before income taxes		(66,382	)		(3,917	)		(73,795	)		3,784
Income tax benefit (expense)		(522	)		1,331			2,333			(3,010	)
Net income (loss)	$	(66,904	)	$	(2,586	)	$	(71,462	)	$	774

The accompanying notes are an integral part of these condensed consolidated financial statements.

DDi CAPITAL CORP. Condensed Consolidated Statements of Operations (In thousands) (Unaudited)

Condensed Consolidated Statements of Operations

	Three Months Ended June 30,						Six Months Ended June 30,

	2003			2002			2003			2002

Net sales	$	35,834		$	47,373		$	76,973		$	94,354
Cost of sales		33,568			42,316			71,568			84,497
Restructuring-related inventory impairment		1,736			3,397			1,736			3,397

Gross profit		530			1,660			3,669			6,460
Operating expenses:
Sales and marketing		3,769			5,608			7,655			11,368
General and administration		2,354			2,981			4,599			5,962
Goodwill impairment		2,000			45,000			2,000			45,000
Restructuring and other related charges		3,010			13,809			3,429			13,809
Reorganization expenses		2,440			—			5,139			—

Operating loss		(13,043	)		(65,738	)		(19,153	)		(69,679	)
Loss on interest rate swap termination		5,621			—			5,621			—
Interest expense (net) and other expense (net)		2,255			644			4,819			4,116

Loss before income taxes		(20,919	)		(66,382	)		(29,593	)		(73,795	)
Income tax benefit (expense)		(153	)		(522	)		(397	)		2,333

Net loss	$	(21,072	)	$	(66,904	)	$	(29,990	)	$	(71,462	)

(In thousands, except share and per share amounts)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2002			2001			2002			2001
Net sales	$	62,112		$	85,839		$	124,600		$	226,548
Cost of sales		55,923			59,317			112,082			147,467
Restructuring-related inventory impairment		3,465			—			3,465			—
Gross profit		2,724			26,522			9,053			79,081
Operating expenses:
Sales and marketing		6,185			5,851			12,409			15,295
General and administrative		4,611			4,654			8,951			11,791
Goodwill impairment		60,000			—			60,000			—
Restructuring and other related charges		14,434			—			14,434			—
Amortization of intangibles		—			5,809			—			11,517
Operating income (loss)		(82,506	)		10,208			(86,741	)		40,478
Interest expense (net) and other expense (net)		4,351			13,625			9,750			32,394
Income (loss) before income taxes		(86,857	)		(3,417	)		(96,491	)		8,084
Income tax benefit (expense)		1,222			955			4,930			(4,863	)
Net income (loss)	$	(85,635	)	$	(2,462	)	$	(91,561	)	$	3,221
Net income (loss) per share—basic	$	(1.78	)	$	(0.05	)	$	(1.91	)	$	0.07
Net income (loss) per share—diluted	$	(1.78	)	$	(0.05	)	$	(1.91	)	$	0.07
Weighted average shares used to compute income (loss) per share:
Basic		48,000,178			47,736,731			48,013,294			46,872,304
Diluted		48,000,178			47,736,731			48,013,294			48,461,204

The accompanying notes are an integral part of these condensed consolidated financial statements.

DDi ~~CAPITAL~~ CORP.Condensed Consolidated Statements of Operations (In thousands, except share and per share data) (Unaudited)

Consolidated Statements of Comprehensive Loss

	Three Months Ended June 30,						Six Months Ended June 30,

	2003			2002			2003			2002

Net sales	$	56,223		$	62,112		$	117,884		$	124,600
Cost of sales		52,526			55,923			109,724			112,082
Restructuring-related inventory impairment		1,736			3,465			1,736			3,465

Gross profit		1,961			2,724			6,424			9,053
Operating expenses:
Sales and marketing		4,846			6,185			9,401			12,409
General and administration		4,250			4,611			8,359			8,951
Goodwill impairment		2,000			60,000			2,000			60,000
Restructuring and other related charges		3,298			14,434			3,795			14,434
Reorganization expenses		2,698			—			6,028			—

Operating loss		(15,131	)		(82,506	)		(23,159	)		(86,741	)
Loss on interest rate swap termination		5,621			—			5,621			—
Interest expense (net) and other expense (net)		5,994			4,351			12,261			9,750

Loss before income taxes		(26,746	)		(86,857	)		(41,041	)		(96,491	)
Income tax benefit		609			1,222			1,076			4,930

Net loss	$	(26,137	)	$	(85,635	)	$	(39,965	)	$	(91,561	)

Net loss per share - basic and diluted	$	(0.53	)	$	(1.78	)	$	(0.81	)	$	(1.91	)

Weighted average shares used to compute loss per share:
Basic and diluted		49,215,889			48,000,178			49,214,213			48,013,294

(In thousands)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2002			2001			2002			2001
Net income (loss)	$	(66,904	)	$	(2,586	)	$	(71,462	)	$	774
Other comprehensive income (loss):
Foreign currency translation adjustments		335			201			313			201
Cumulative effect of adoption of SFAS No. 133		—			—			—			(627	)
Unrealized gain (loss) on interest rate swaps, net of income tax effect		(3,872	)		1,357			(5,013	)		(1,273	)
Unrealized benefit of loss on interest rate swap agreements		—			—			—			—
Unrealized holding gain (loss) on marketable securities—available for sale		3			9			(29	)		43
Comprehensive loss	$	(70,438	)	$	(1,019	)	$	(76,191	)	$	(882	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

DDi CAPITAL CORP. Consolidated Statements of Comprehensive Loss (In thousands) (Unaudited)

Consolidated Statements of Comprehensive Loss

	Three Months Ended June 30,						Six Months Ended June 30,

	2003			2002			2003			2002

Net loss	$	(21,072	)	$	(66,904	)	$	(29,990	)	$	(71,462	)
Other comprehensive income (loss):
Foreign currency translation adjustments		510			335			798			313
Unrealized net loss for the period on interest rate swaps, net of income tax effect		(456	)		(3,872	)		(165	)		(5,013	)
Reclassification adjustment for loss on interest rate swap included in net loss		5,621			—			5,621			—
Unrealized holding gain (loss) on marketable securities - available for sale		9			3			4			(29	)

Comprehensive loss	$	(15,388	)	$	(70,438	)	$	(23,732	)	$	(76,191	)

(In thousands)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2002			2001			2002			2001
Net income (loss)	$	(85,635	)	$	(2,462	)	$	(91,561	)	$	3,221
Other comprehensive income (loss):
Foreign currency translation adjustments		5,609			230			4,057			(3,386	)
Cumulative effect of adoption of SFAS No. 133					—			—			(1,150	)
Unrealized net gain (loss) on interest rate swaps, net of income tax effect		(3,693	)		1,694			(4,830	)		(979	)
Unrealized net tax benefit on loss on interest rate swap agreements		—			—			—			—
Unrealized holding gain (loss) on marketable securities—available for sale		31			9			(2	)		43
Comprehensive loss	$	(83,688	)	$	(529	)	$	(92,336	)	$	(2,251	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

DDi ~~CAPITAL~~ CORP.Consolidated ~~AND~~Statements ~~DDi~~of ~~CORP.~~Comprehensive Loss (In thousands) (Unaudited)

Condensed Consolidated Statements of Cash Flows

	Three Months Ended June 30,						Six Months Ended June 30,

	2003			2002			2003			2002

Net loss	$	(26,137	)	$	(85,635	)	$	(39,965	)	$	(91,561	)
Other comprehensive income (loss):
Foreign currency translation adjustments		1,124			5,609			412			4,057
Unrealized net loss for the period on interest rate swaps, net of income tax effect		(456	)		(3,693	)		(165	)		(4,830	)
Reclassification adjustment for loss on interest rate swap included in net loss		5,621			—			5,621			—
Unrealized holding gain (loss) on marketable securities - available for sale		9			31			4			(2	)

Comprehensive loss	$	(19,839	)	$	(83,688	)	$	(34,093	)	$	(92,336	)

(In thousands)

(Unaudited)

	DDi Capital						DDi Corp.
	Six Months Ended June 30,						Six Months Ended June 30,
	2002			2001			2002			2001
Cash flows from operating activities:
Net cash provided by (used in) operating activities	$	391		$	52,161		$	(2,452	)	$	61,421
Cash flows from investing activities:
Purchases of property, plant and equipment		(5,257	)		(14,197	)		(6,471	)		(20,952	)
Purchases of marketable securities		—			(32,126	)		(18,731	)		(32,126	)
Proceeds from sales of marketable securities		11,830			9,701			11,788			9,701
Investment in restricted assets		(12,500	)		—			(12,500	)		—
Acquisition of Thomas Walter		—			—			—			(24,500	)
Acquisition of Nelco		—			(2,960	)		—			(2,960	)
Acquisition of Olympic		—			(12,937	)		—			(12,937	)
Acquisition of Altatron		—			(4,736	)		—			(4,736	)
Acquisition of Stellar Technology					—						—
Acquisition related cash receipts (expenditures), net		236			(530	)		21			(596	)
Net cash used in investing activities		(5,691	)		(57,785	)		(25,893	)		(89,106	)
Cash flows from financing activities:
Net principal payments on long-term debt		(62,572	)		(143,573	)		(62,572	)		(144,997	)
Net borrowings (payments) on revolving credit facilities		—			439			(3,030	)		1,842
Proceeds from issuance of convertible subordinated notes		—			—			100,000			100,000
Payments on other notes payable		(88	)		(47	)		(88	)		(47	)
Principal payments on capital lease obligations		(856	)		(988	)		(1,320	)		(1,406	)
Payment of debt issuance costs		—			(2,820	)		(4,250	)		(6,800	)
Capital contribution from Parent, net		57,483			160,512			—			—
Repayment of stockholders receivable		—			—			110			—
Escrow payable distribution		—			(1,602	)		—			(1,602	)
Proceeds from interest rate swaps					—
Net proceeds from issuance of common stock
through follow-on public offering		—			—			—			66,975
Payment of pro-rata portion of deferred swap liability		(3,761	)		—			(3,761	)		—
Costs incurred in connection with the issuance of
common stock through follow-on public offering		—			—			—			(844	)
Issuance of common stock through Employee Stock
Purchase Plan		—			—			5			733
Proceeds from exercise of stock options		—			—			336			2,928
Net cash provided by (used in) financing activities		(9,794	)		11,921			25,430			16,782
Effect of exchange rate changes on cash		(123	)		(10	)		23			(561	)
Net increase (decrease) in cash and cash equivalents		(15,217	)		6,287			(2,892	)		(11,464	)
Cash and cash equivalents, beginning of year		17,569			39,629			23,629			66,874
Cash and cash equivalents, end of period	$	2,352		$	45,916		$	20,737		$	55,410

Supplemental disclosure of cash flow information:

Non-cash operating activities:

During the six months ended June 30, 2002 depreciation expense was approximately $8.4 million for DDi Capital and approximately $10.7 million for DDi Corp, goodwill impairment was $45.0 million for DDi Capital and $60.0 million for DDi Corp., and non-cash restructuring charges were $11.6 million for DDi Capital and $11.8 million for DDi Corp.

During the six months ended June 30, 2001 depreciation and amortization expense was approximately $18 million for DDi Capital and approximately $22 million for DDi Corp.

The accompanying notes are an integral part of these condensed consolidated financial statements.

DDi CAPITAL CORP. AND DDi CORP. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	DDi Capital						DDi Corp.

	Six Months Ended June 30,						Six Months Ended June 30,

	2003			2002			2003			2002

Cash flows from operating activities:
Net cash provided by (used in) operating activities	$	(6,676	)	$	391		$	(11,056	)	$	(2,452	)

Cash flows from investing activities:
Purchases of property, plant and equipment		(2,830	)		(5,257	)		(3,330	)		(6,471	)
Proceeds from sale of fixed assets		68			—			79			—
Purchases of marketable securities		(57	)		—			(57	)		(18,731	)
Proceeds from sales of marketable securities		—			11,830			—			11,788
Investment in restricted assets		—			(12,500	)		—			(12,500	)
Acquisition related cash receipts, net		—			236			—			21

Net cash used in investing activities		(2,819	)		(5,691	)		(3,308	)		(25,893	)

Cash flows from financing activities:
Principal payments on long-term debt		(2,620	)		(62,572	)		(3,808	)		(62,572	)
Net payments on revolving credit facilities		—			—			—			(3,030	)
Proceeds from issuance of convertible subordinated notes		—			—			—			100,000
Net borrowings on DDi Europe Facilities Agreement		—			—			5,577			—
Payments on other notes payable		—			(88	)		—			(88	)
Principal payments on capital lease obligations		(1,466	)		(856	)		(1,642	)		(1,320	)
Payment of debt issuance costs		—			—			—			(4,250	)
Capital contribution from Parent, net		84			57,483			—			—
Repayment of stockholder receivable		—			—			—			110
Payment of pro-rata portion of deferred swap liability		—			(3,761	)		—			(3,761	)
Issuance of common stock through Employee Stock Purchase Plan		—			—			23			5
Proceeds from exercise of stock options		—			—			—			336

Net cash provided by (used in) financing activities		(4,002	)		(9,794	)		150			25,430

Effect of exchange rate changes on cash		(168	)		(123	)		(197	)		23

Net decrease in cash and cash equivalents		(13,665	)		(15,217	)		(14,411	)		(2,892	)
Cash and cash equivalents, beginning of year		28,145			17,569			28,934			23,629

Cash and cash equivalents, end of period	$	14,480		$	2,352		$	14,523		$	20,737

The accompanying notes are an integral part of these condensed consolidated financial statements.

DDi CAPITAL CORP. AND DDi CORP.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

Supplemental disclosure of cash flow information:

	Non-cash operating activities:
		During the six months ended June 30, 2003, depreciation expense was approximately $6.8 million for DDi Capital and approximately $9.4 million for DDi Corp., goodwill impairment was $2.0 million for DDi Capital and DDi Corp., and non-cash restructuring and reorganization charges were approximately $6.2 million for DDi Capital and $6.3 million for DDi Corp.

		During the six months ended June 30, 2002, depreciation expense was approximately $8.4 million for DDi Capital and approximately $10.7 million for DDi Corp., goodwill impairment was $45.0 million for DDi Capital and $60.0 million for DDi Corp., and non-cash restructuring charges were $11.6 million for DDi Capital and $11.8 million for DDi Corp.

The accompanying notes are an integral part of these condensed consolidated financial statements.

NOTE 1. BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS

~~BASIS~~ OFBasis ~~PRESENTATION~~of Presentation

The unaudited condensed consolidated financial statements for DDi Corp. (“DDi Corp.”) include the accounts of its wholly-owned subsidiaries, DDi Intermediate Holdings Corp. (“Intermediate”) and ~~its subsidiaries and~~ DDi Europe Limited (“DDi Europe” f/k/a MCM Electronics Limited (“MCM”)). and the direct and indirect subsidiaries of Intermediate. The unaudited condensed consolidated financial statements for DDi Capital Corp. (“DDi Capital”), a wholly-owned subsidiary of Intermediate, include the accounts of its wholly-owned subsidiary Dynamic Details, Incorporated and its subsidiaries (“Dynamic Details”). Collectively, DDi Corp. and its subsidiaries are referred to as the “Company.”

The unaudited condensed consolidated financial statements of DDi Corp. include the results of ~~Thomas~~ ~~Walter~~Kamtronics Limited (“~~Thomas Walter~~Kamtronics”) commencing onOctober ~~March 5~~24, ~~2001~~2002, the date of ~~acquisition of Thomas Walter (see Note 8), Nelco Technology, Inc. (“Nelco”) commencing on April 27, 2001,~~ the ~~date of~~ acquisition ~~of Nelco’s~~ ~~assets (see Note 9), Olympic Circuits Canada (“Olympic”) commencing on May 9, 2001, the date~~ of ~~acquisition~~Kamtronics ~~of Olympic (see Note 10) and Altatron Technology Inc. (“Altatron”) commencing on June 4, 2001, the date of acquisition of Altatron’s~~ assets (see Note 118). All intercompany transactions have been eliminated in consolidation.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary (consisting only of normal recurring adjustments) to present fairly the financial position of DDi Capital and DDi Corp. as of June 30, ~~2002~~2003, ~~and~~ the results of operations for the three and six months ended June 30, 2003 and 2002 and cash flows for the ~~three and~~ six months ended June 30, ~~2002~~2003 and ~~2001~~2002. The results of operations for such interim periods are not necessarily indicative of results of operations to be expected for the full year.

These financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such regulations, although the Company believes the disclosures provided are adequate to prevent the information presented from being misleading.

This report on Form 10-Q for the quarter ended June 30, ~~2002~~2003 should be read in conjunction with the audited financial statements presented in ~~the~~ DDi Capital ~~Corp.~~’s and DDi Corp.’s Annual Report on Form 10-K for the year ended December 31, ~~2001~~2002.

~~Certain~~Continued ~~prior year amounts have been reclassified to conform with the 2002 presentation.~~ Existence

~~Description~~ The accompanying financial statements have been prepared assuming the Company will continue as a going-concern. The Company has incurred losses of ~~Business~~approximately $40.0 million for the six months ended June 30, 2003, and at June 30, 2003 has negative working capital of approximately $271.6 million, primarily attributable to the classification of approximately $282.0 million of debt, currently in default, as current liabilities, and has a stockholders’ deficit of approximately $197.9 million. The Company is in default under the Dynamic Details senior credit facility (the “Senior Credit Facility,” or “Senior Indebtedness”), the DDi Corp. 5.25% and 6.25% convertible subordinated notes (collectively, the “Convertible Subordinated Notes”) and the DDi Capital 12.5% senior discount notes (the “Senior Discount Notes”) (see Note 3). The accompanying unaudited consolidated financial statements do not include adjustments that might result should the Company be unable to continue as a going concern.

~~The~~ As previously disclosed in the Company's ~~provides~~public ~~technologically~~filings, ~~advanced~~on May 13, ~~time-critical~~ ~~electronics~~2003, ~~design~~DDi Corp. and its indirect subsidiaries, ~~development~~DDi Capital and ~~manufacturing~~Dynamic ~~services~~Details, toannounced ~~original~~that ~~equipment~~they ~~manufacturers~~had reached an agreement in principle on a restructuring plan with a steering committee of the senior lender group of the Dynamic Details senior credit facility and ~~other~~with ~~providers~~the steering committe of ~~electronics~~the ~~manufacturing~~ad ~~services~~hoc committee of certain holders of DDi Corp.’s ~~The~~5.25% ~~Company~~and ~~serves~~6.25% ~~over~~convertible ~~2,000~~subordinated ~~customers~~notes. inSince ~~the~~that ~~communications~~time, ~~networking~~DDi Corp. and its senior lenders, the convertible subordinated noteholders and the holders of DDi Capital’s ~~computer~~12.5% senior discount notes have been negotiating the significant terms of the restructuring. DDi Corp. and DDi Capital (collectively, ~~medical~~the “Debtors”) currently intend to implement the restructuring by filing voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code (collectively, ~~automotive~~the ~~industrial~~“Chapter ~~and~~11 ~~aerospace~~Cases”) ~~industries~~with the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) on or before August 21, 2003. Dynamic Details anticipates restructuring its senior credit facility outside the Chapter 11 bankruptcy proceedings (see Note 14).

9 Following the filing of the Chapter 11 Cases, there is no assurance that the carrying amounts of assets will be realized or that liabilities will be settled for amounts recorded. Based on negotiations with various parties in interest, DDi Corp. and DDi Capital will file a pre-arranged plan of reorganization with the Bankruptcy Court to reorganize DDi Corp.’s and DDi Capital’s businesses and to restructure their obligations. It is anticipated that this plan of reorganization will change the amounts reported in the financial statements and cause a material change in the carrying amount of assets and liabilities. Future financial statements will be prepared in accordance with the AICPA’s Statement of Position 90-7 (“SOP 90-7”) “Financial Reporting by Entities in Reorganization Under the Bankruptcy Code.” SOP 90-7 requires, under certain circumstances, that entities adopt fresh-start reporting upon emergence from Chapter 11. Fresh-start reporting involves allocating the reorganization value of the entity (which generally approximates fair value) to the entity’s assets and liabilities. SOP 90-7 also requires the debtor to segregate pre-petition liabilities that are subject to compromise and identify all transactions and events that are directly associated with the reorganization of the debtor. A portion of the liabilities recorded at June 30, 2003 are expected to be subject to compromise. Also in accordance with SOP 90-7, after the filing date, interest will no longer be accrued on any unsecured debt.

~~DDi~~ ~~CAPITAL~~Included ~~CORP.~~in ~~AND~~the ~~DDi~~Condensed ~~CORP.~~Consolidated Financial Statements are the financial position and results of operations of subsidiaries of the Company that will not be party to the Chapter 11 Cases (see Note 14).

~~NOTES~~ TONature ~~CONDENSED~~of ~~CONSOLIDATED FINANCIAL STATEMENTS~~ Business

The Company provides technologically advanced, time-critical electronics design, development and manufacturing services to original equipment manufacturers and other providers of electronics manufacturing services. The Company serves approximately 1,700 customers in the communications, networking, computer, medical, automotive industrial and aerospace industries.

NOTE 2. INVENTORIES

Inventories are stated at the lower of cost (determined on a first-in, first-out basis) or market and consist of the following (in thousands):

DDi Capital

~~DDi Corp.~~

DDi Corp.

June 30, 2002

December 31, 2001

June 30, 2002

December 31, 2001

June 30, 2003

December 31, 2002

June 30, 2003

December 31, 2002

Raw materials

86,~~514~~689

98,~~868~~964

~~14,294~~

$11,544

~~14,325~~

15,376

Work-in-process

5,~~700~~010

35,~~493~~759

~~9,916~~

9,015

~~6,840~~

8,536

Finished goods

12,~~634~~010

12,~~835~~265

~~2,088~~

4,260

~~2,865~~

4,328

Total

1513,~~848~~709

1516,~~196~~988

~~26,298~~

$24,819

~~24,030~~

28,240

NOTE 3. LONG-TERM DEBT AND CAPITAL LEASES

As discussed in Note 1 above, DDi Corp. and DDi Capital intend to file petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the Southern District of New York on or before August 21, 2003. The stay protection that will be afforded by the bankruptcy filings will prevent any action from being taken against the Company’s assets without further order of the Court. The Company cannot predict the impact of the proposed Chapter 11 bankruptcy filings on the debt obligations listed below.

Long-term debt and capital lease obligations consist of the following (in thousands):

	DDi Capital							DDi Corp.
	June 30, 2002				December 31, 2001			June 30, 2002				December 31, 2001
	June 30, 2003			December 31, 2002				June 30, 2003			December 31, 2002
Senior Term Facility (a)	$	7365,~~248~~925		$	$68,545	~~135,819~~		$	7365,~~248~~925		$	$68,545	~~135,819~~
5.25% Convertible Subordinated Notes		—			—	—			100,000			100,000	~~100,000~~
6.25% Convertible Subordinated Notes		—			—	—			100,000			100,000	—
12.5% Capital Senior Discount Notes (b)		15,382				14,478			15,382				14,478
12.5% Senior Discount Notes		16,090			16,090				16,090			16,090
DDi Europe Facilities Agreement (c)		—				—			22,981				21,840
DDi Europe Facilities Agreement (b)		—			—				23,595			24,146
Capital lease obligations		52,~~011~~799			4,265	~~5,869~~			53,~~993~~235			4,865	~~6,685~~
Sub-total		9384,~~641~~814			88,900	~~156,166~~			~~317~~308,~~604~~845			313,646	~~278,822~~
Less current maturities		(1183,~~638~~049	)		(70,054	~~(17,184~~)	)		(14288,~~458~~275	)		(275,137	~~(17,845~~)	)
Total	$	821,~~003~~765		$	$18,846	~~138,982~~		$	~~303~~20,~~146~~570		$	$38,509	~~260,977~~

(a) The Senior Term Facility, together with the Revolving Credit Facility, comprise the Senior Credit Facility. Interest rates are LIBOR-based. The effective interest rate, after giving effect to the interest rate swap agreement,as of June 30, 2002, was 9.91%.

(a)	The Senior Term Facility, together with the Revolving Credit Facility, comprise the Senior Credit Facility.
	Interest rates are LIBOR-based. The effective interest rate as of June 30, 2003, was 5.06%.
(b)	Interest rates are LIBOR-based. The effective interest rate as of June 30, 2003, was 5.14%.

(b) Face amount of $16,090 at June 30, 2002 and December 31, 2001, net of unamortized discount of $708 and $1,612 at June 30, 2002 and December 31, 2001, respectively.

(c) Interest rates are LIBOR-based. The effective interest rate, after giving effect to the interest rate swap agreement, as of June 30, 2002, was 8.67%.

During the second quarter of 2002, Dynamic Details reached an agreement to amend its Senior Credit Facility, effective June 28, 2002. The amendment, which covers $73.3 million in outstanding term loans and a $50.0 million Revolving Credit Facility, either waives or resets the financial covenants through December 31, 2003 and established two new covenants, one related to liquidity and the other related to minimum revenues. The amendment did not change the interest rate spread nor the repayment schedule for the outstanding term loans, which mature between July 24, 2004 and April 2005, but did reduce the Revolving Credit Facility to $50 million from $75 million. Access to the full amount of the Revolving Credit Facility is subject to conditions set forth in the credit facility agreement. Under the amendment, the maximum Dynamic Details can borrow under the revolving credit facility is limited to $25 million until December 31, 2003.

DDi CAPITAL CORP. AND DDi CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4. DERIVATIVES

On January 1, 2001, the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 133 “Accounting for Derivative Instruments and Hedging Activities.” In accordance with the transition provisions of SFAS No. 133, DDi Capital and DDi Corp. recorded a cumulative-effect-type adjustment to accumulated other comprehensive income (loss) for the initial difference between the book value and fair value of interest rate swap agreements as of January 1, 2001. The initial difference amounted to approximately $0.6 million for DDi Capital and approximately $1.2 million for DDi Corp. The fair value of interest rate swaps at June 30, 2002 is included in current and long-term liabilities in the condensed consolidated balance sheets.

In April 2002, in connection with the $47.9 million repayment of the Senior Term Facility, Dynamic Details elected to amend its swap agreement by reducing the notional balance of the swap to reflect the impact of the debt repayment on the outstanding principal. In connection with the amendment of the swap agreement, Dynamic Details paid approximately $3.1 million to the counterparty, representing the pro-rata portion of the deferred swap liability.

NOTE 5. EARNINGS PER SHARE

Basic and diluted earnings per share — DDi Corp. has adopted the provisions of SFAS No. 128 “Earnings Per Share.” SFAS No. 128 requires DDi Corp. to report both basic net income (loss) per share, which is based on the weighted average number of common shares outstanding and diluted net income (loss) per share, which is based on the weighted average number of common shares outstanding and dilutive potential common shares outstanding.

	DDi Corp.
(in thousands, except share amounts)	Three Months Ended June 30, 2002						Three Months ended June 30, 2001
Numerator:	Basic			Diluted			Basic			Diluted
Net loss allocable to common stock	$	(85,635	)	$	(85,635	)	$	(2,462	)	$	(2,462	)
Denominator:
Weighted average shares of common stock outstanding (basic)		48,000,178			48,000,178			47,736,731			47,736,731
Dilutive potential common shares:
Stock options and warrants		—			—			—			—
Shares used in computing diluted income (loss) per share		48,000,178			48,000,178			47,736,731			47,736,731
	DDi Corp.
(in thousands, except share amounts)	Six Months Ended June 30, 2002						Six Months Ended June 30, 2001
Numerator:	Basic			Diluted			Basic			Diluted
Net income (loss) allocable to common stock	$	(91,561	)	$	(91,561	)	$	3,221		$	3,221
Denominator:
Weighted average shares of common stock outstanding (basic)		48,013,294			48,013,294			46,872,304			46,872,304
Dilutive potential common shares:
Stock options and warrants		—			—			—			1,588,900
Shares used in computing diluted income (loss) per share		48,013,294			48,013,294			46,872,304			48,461,204

DDi CAPITAL CORP. AND DDi CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6. PUBLIC OFFERING

On February 14, 2001, DDi Corp. and some of its shareholders completed a follow-on public offering of 6,000,000 shares of its common stock, with 3,000,000 shares issued by DDi Corp. and the remainder sold by selling shareholders. The shares were sold at $23.50 per share, generating proceeds of $67.0 million, net of underwriting discounts, commissions and expenses. Concurrently, DDi Corp. issued 5.25% Convertible Subordinated Notes due March 1, 2008 with an aggregate principal of $100.0 million. These notes are convertible at any time prior to maturity into shares of common stock at a conversion price of $30.00 per share, subject to certain adjustments. These notes generated proceeds of $97.0 million, net of underwriting discounts, commissions and expenses. The net proceeds of both transactions were used to repurchase a portion of the Capital Senior Discount Notes and all of the Senior Subordinated Notes (see Note 16).

NOTE 7. PRIVATE OFFERING

On April 2, 2002, DDi Corp. completed its private offering of $100.0 million aggregate principal amount of 6.25% Convertible Subordinated Notes due April 1, 2007. These notes are convertible at any time prior to maturity into shares of common stock at a conversion price of $11.04 per share, subject to certain adjustments. These notes generated proceeds of $95.8 million, net of underwriting discounts. Approximately $47.9 million of the net proceeds from the sale were used to repay a portion of the Dynamic Details Senior Term Facility, $12.5 million was placed in an interest reserve account to cover two years of interest payments on the notes and the remainder will be used for working capital and general corporate purposes. In connection with the $47.9 million repayment of the Senior Term Facility, Dynamic Details elected to amend its swap agreement by reducing the notional balance of the swap to reflect the impact of the debt repayment on the outstanding principal. In connection with the amendment of the swap agreement, Dynamic Details paid approximately $3.1 million to the counterparty, representing the pro-rata portion of the deferred swap liability. In addition, the Company recorded a write-off of debt issuance costs of approximately $2.0 million, offset by a net credit of $3.4 million as a result of the swap amendment, which collectively are included in net interest expense.

NOTE 8. ACQUISITION OF THOMAS WALTER

On March 5, 2001, DDi Europe completed the acquisition of Thomas Walter, a leading circuit board manufacturer based in Marlow, England for approximately $24.5 million, plus expenses of $0.3 million. Thomas Walter is a well-established provider of complex, quick-turn rigid and rigid-flex printed circuit boards for the European electronics industry.

The purchase price has been allocated to the underlying assets and liabilities based upon their estimated respective fair values at the date of acquisition. The excess of the purchase price was allocated to goodwill and identifiable intangible assets.

Goodwill generated in the acquisition of Thomas Walter has an assigned value of approximately $17.0 million. The identifiable intangibles consist of developed technologies and assembled workforce. The fair value of the developed technology assets at the date of acquisition was approximately $0.5 million and represents the aggregate fair value of individually identified technologies that were fully developed at the time of acquisition. The assembled workforce asset was assigned a fair value of approximately $0.8 million at the date of acquisition.

NOTE 9. ACQUISITION OF NELCO TECHNOLOGY

On April 27, 2001, Dynamic Details completed the acquisition of certain of the assets of Nelco, a wholly owned subsidiary of Park Electrochemical Corp., for total cash consideration of approximately $3.0 million. Nelco is an Arizona-based manufacturer of semi-finished printed wiring boards, commonly known as mass lamination.

The total purchase price has been allocated to the underlying assets and liabilities based upon their estimated respective fair values at the date of the transaction.

~~DDi~~ ~~CAPITAL~~Senior ~~CORP.~~Credit ~~AND DDi CORP.~~ Facility

~~NOTES~~ TODynamic ~~CONDENSED~~Details ~~CONSOLIDATED~~and ~~FINANCIAL~~Dynamic ~~STATEMENTS~~Details Incorporated, Silicon Valley entered into the Senior Credit Facility with a syndicate of banks, including JPMorgan Chase Bank, as Collateral, Co-Syndication and Administrative Agent (formerly Chase Manhattan Bank, N.A.) and Bankers Trust Company, as Documentation and Co-Syndication Agent. Borrowings under the Senior Credit Facility consist of a senior term facility (the “Senior Term Facility”) and a revolving credit facility. The Senior Credit Facility is jointly and severally guaranteed by Intermediate and DDi Capital and substantially all of the indirect subsidiaries of DDi Capital , and is collateralized by a pledge of all of the capital stock of Dynamic Details and of substantially all of its subsidiaries and liens upon substantially all of the assets of Dynamic Details and of substantially all of its subsidiaries. The Senior Credit Facility expires in April 2005. Under the terms of this agreement, Dynamic Details must comply with certain restrictive covenants, which include the requirement that Dynamic Details meet certain financial tests. The Company is in default of certain covenants under the Senior Credit Facility. As there are no long-term forbearance arrangements in place, the Company has classified approximately $65.9 million and $68.5 million, respectively, of indebtedness relating to the Senior Credit Facility as current liabilities at June 30, 2003 and December 31, 2002. Dynamic Details is restricted from making certain payments, including dividend payments to its corporate parents, which in turn has the effect of prohibiting the payment of dividends to DDi Corp.’s stockholders. In the event the Company is unable to enter into satisfactory arrangements with the Senior Credit Facility lenders, the lenders could elect to declare all amounts outstanding together with accrued interest, to be immediately due and payable.

~~NOTE~~During the second quarter of 2003, Dynamic 10Details amended its Senior Credit Facility, effective June 27, 2003. ~~ACQUISITION~~ The OFamendment ~~OLYMPIC~~modified ~~CIRCUITS~~the ~~CANADA~~payment date for the principal payment due on June 30, 2003 to August 1, 2003.

On ~~May~~August 91, ~~2001~~ 2003, Dynamic Details ~~completed~~further ~~the~~amended ~~acquisition~~its ~~of Olympic,~~Senior aCredit ~~Canada-based,~~Facility. The ~~time-critical~~amendment ~~electronics~~defers ~~manufacturing~~all ~~service~~remaining ~~provider~~principal ~~specializing~~amortization payments in ~~quick-turn~~2003, ~~prototype~~including ~~printed~~the ~~circuit~~one ~~boards~~due ~~for~~on aAugust ~~total~~1, ~~cash~~2003, ~~consideration~~to ofJanuary ~~approximately~~30, ~~$12.8 million plus contingent consideration~~2004, ofsubject up to ~~$4.5~~earlier acceleration ~~million~~upon ~~based on earnings in each of~~ the ~~three~~happening ~~years following the date~~ of ~~acquisition,~~specified ~~plus expenses of $0~~events.1 Interest ~~million. No contingent consideration has been earned or recorded as of June 30, 2002. If contingent consideration is earned~~ and ~~paid,~~fees ~~it will~~remain bepayable ~~capitalized as additional purchase price~~currently.

~~The~~ ~~purchase~~5.25% ~~price has been allocated to the underlying assets~~ and ~~liabilities based upon their estimated respective fair values at the date of acquisition~~6.25% ~~The~~Convertible ~~excess~~Subordinated ~~of the purchase price was allocated to goodwill.~~ Notes

~~NOTE~~ 11As a result of the default on the Senior Credit Facility, the Company was not permitted to pay the interest obligations under the 5. ~~ACQUISITION~~25% OFconvertible ~~ALTATRON~~subordinated ~~TECHNOLOGY~~notes on March 1, 2003 and the 6.25% convertible subordinated notes on April 1, 2003. Since the Company failed to make such interest payments within 30 days of their due date the Company is currently in default under the Convertible Subordinated Notes. Accordingly, the holders of the Convertible Subordinated Notes could declare all principal and accrued interest under the Convertible Subordinated Notes due and payable. The Company’s current expectation is that the Convertible Subordinated Notes will not be repaid in accordance with their stated terms. As a result, the Company classified this debt as current liabilities at June 30, 2003 and December 31, 2002.

On ~~June~~DDi 4,Capital ~~2001,~~Senior ~~Dynamic~~Discount Details completed the acquisition of the assets of Altatron, a Southern California-based provider of value-add assembly services to electronics original equipment manufacturers for a total cash consideration of approximately $4.8 million, plus contingent consideration based on earnings in each of the two years following the date of acquisition. No contingent consideration has been earned or recorded as of June 30, 2002. If contingent consideration is earned and paid, it will be capitalized as additional purchase price. Notes

~~The~~ As ~~purchase~~a ~~price~~result ~~has~~of ~~been~~the ~~allocated~~ongoing todebt restructuring efforts, the ~~underlying~~Company ~~assets~~did ~~and~~not ~~liabilities~~pay ~~based~~the ~~upon~~interest ~~their~~obligations ~~estimated~~due ~~respective~~on ~~fair~~May ~~values at~~15, 2003 under the ~~date~~Senior Discount Notes. Since the Company failed to make such interest payments within 30 days of their due date, the ~~transaction~~Company is currently in default under the Senior Discount Notes. Accordingly, ~~The~~the ~~excess~~holders of the ~~purchase~~Senior ~~price~~Discount ~~was~~Notes ~~allocated~~could todeclare ~~goodwill~~all principal and accrued interest under the Senior Discount Notes due and payable. The Company’s current expectation is that the Senior Discount Notes will not be repaid in accordance with their stated terms. As a result, the Company has classified this debt as current at June 30, 2003.

NOTE 124. ~~UNAUDITED PRO~~ ~~FORMA INFORMATION~~ DERIVATIVES

The ~~accompanying~~Company’s ~~condensed~~interest ~~consolidated~~rate ~~statements~~swap ofagreement ~~operations~~represented ~~include~~an ~~the~~effective ~~accounts~~cash flow hedge of ~~Thomas~~the ~~Walter,~~variable ~~Nelco,~~rate ~~Olympic~~of ~~and~~interest ~~Altatron~~(1-month ~~for~~LIBOR) paid under the ~~period~~Senior ~~January~~Term 1Facility, ~~2002~~mitigating ~~through~~exposure ~~June~~to 30increases in interest rates related to this debt. On April 25, ~~2002~~2003, ~~and~~pursuant ~~includes~~to notification by the ~~accounts~~counter-party of ~~Thomas~~their ~~Walter~~intent ~~for~~to ~~the~~exercise ~~period~~their ~~March~~right to 5,terminate ~~2001~~the ~~through~~interest ~~June~~rate ~~30,~~swap ~~2001~~agreement, the ~~accounts~~agreement ofwas ~~Nelco~~terminated ~~for~~at ~~the~~a ~~period~~cost ~~April~~of 27$5.8 million, ~~2001~~the ~~through~~fair ~~June~~market ~~30,~~value ~~2001,~~of the ~~accounts~~ liability at termination. In accordance with Statement of ~~Olympic~~Financial Accounting Standards (“SFAS”) No. 133, “Accounting for ~~the~~Derivative ~~period~~Instruments ~~May~~and 9Hedging Activities”, ~~2001~~since ~~through~~it ~~June~~is 30probable, ~~2001~~as ~~and~~determined ~~the~~by ~~accounts~~EITF of02-04, ~~Altatron~~“Determining ~~for~~Whether ~~the~~a ~~period~~Debtor’s ~~June~~Modification 4,or ~~2001~~Exchange ~~through~~of ~~June~~Debt ~~30,~~Instruments ~~2001~~is within the Scope of FASB Statement No. ~~The~~15,” ~~following~~and ~~pro~~EITF ~~forma~~96-19, ~~information~~“Debtor’s Accounting for ~~the~~a ~~six~~Modification ~~months~~or ~~ended~~Exchange ~~June~~of 30Debt Instruments,” ~~2001~~that ~~presents~~terms ~~net~~of ~~sales~~the Senior Term Facility will be modified and ~~net~~ ~~income~~will ~~for~~not ~~each~~be repaid in accordance with its currently stated terms, the amount of ~~these~~net ~~periods~~unrealized aslosses ifon the ~~Thomas~~interest ~~Walter,~~rate ~~Nelco,~~swap ~~Olympic~~reported ~~and~~in ~~Altatron~~accumulated ~~transactions~~other ~~were~~comprehensive ~~consummated~~income onhas ~~January~~been 1,realized ~~2001.~~and thus has been reclassified

		Pro Forma Six months ended June 30, 2001
		(in millions, except per share data)
Net Sales:
DDi Capital		$192.6
DDi Corp.		$238.8
Net Income:
DDi Capital		$ 0.1
DDi Corp.		$ 2.7
DDi Corp. net income per share of common stock—basic		$ 0.06
DDi Corp. net income per share of common stock—diluted		$ 0.06

~~DDi~~ ~~CAPITAL~~into ~~CORP~~the Company’s net loss. ~~AND~~The ~~DDi~~net ~~CORP~~realized loss of $5.6 million related to the termination of the interest rate swap agreement has been reclassified into loss on interest rate swap termination, a component of non-operating expenses, during the quarter ended June 30, 2003.

~~NOTES~~ TONOTE ~~CONDENSED~~5. ~~CONSOLIDATED~~EARNINGS ~~FINANCIAL~~PER ~~STATEMENTS~~ SHARE

~~NOTE 13~~ Basic and diluted earnings per share –SFAS No. ~~SEGMENT~~ ~~REPORTING~~128 “Earnings Per Share” requires DDi Corp. to report both basic net income (loss) per share, which is based on the weighted average number of common shares outstanding and diluted net income (loss) per share, which is based on the weighted average number of common shares outstanding and dilutive potential common shares outstanding.

~~The Company has adopted~~ For the ~~provisions~~three ofand ~~SFAS~~six ~~No.~~months ~~131~~ended ~~“Disclosures~~June ~~about~~30, ~~Segments of~~2003 ~~an Enterprise~~ and ~~Related~~2002, ~~Information.”~~potentially ~~SFAS~~dilutive ~~No.~~shares ~~131~~from ~~established~~the ~~standards~~exercise ~~for~~of ~~reporting~~stock ~~information~~options ~~about~~and ~~operating~~warrants ~~segments~~and inthe ~~annual~~conversion ~~financial~~of ~~statements~~the ~~and~~convertible ~~requires~~subordinated ~~selected~~debt ~~information~~were ~~about~~not ~~operating~~included ~~segments~~ in ~~interim~~diluted ~~financial reports~~earnings ~~issued~~per toshare ~~stockholders.~~because Itto ~~also~~do so ~~established~~would ~~standards~~be ~~for related disclosures about products and services, geographic areas and major customers~~anti-dilutive. The ~~Operating~~number ~~segments are defined as components~~ of anpotentially ~~enterprise~~dilutive ~~that~~shares ~~engage~~for inthe ~~business~~three ~~activities from~~months ~~which~~ended itJune ~~may~~30, ~~earn~~2003 ~~revenues~~ and ~~incur~~2002, ~~expenses~~were ~~whose~~12,626,486 ~~separate~~and ~~financial~~12,824,961, ~~information~~respectively, ~~is available~~ and isfor ~~evaluated regularly by~~ the ~~Company’s~~six ~~chief~~months ~~operating~~ended ~~decision~~June ~~makers~~30, or2003 ~~decision~~and ~~making group~~2002, towere ~~perform~~12,628,162 ~~resource allocations~~ and ~~performance~~12,811,845, ~~assessments~~respectively.

~~The~~ ~~Company’s~~NOTE ~~chief operating decision maker is the Chief Executive Officer~~6. ~~Based~~STOCK on the evaluation of the Company’s financial information, management believes that the Company operates in one reportable segment which designs, develops, manufactures, assembles and tests complex printed circuit boards, back panels and related electronic products. The Company operates in two geographical areas, domestic (U.S.A.) and international. Revenues are attributed to the country to which the product is sold. Revenues by product and service are not reported as it is impracticable to do so. During the three and six months ended June 30, 2002 there were no material assets in or revenues realized from any individual foreign country. OPTIONS

~~The~~ In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based ~~following~~Compensation—Transition ~~summarizes~~and ~~financial~~Disclosure—an ~~information~~Amendment to SFAS No. 123.” SFAS No. 148 provides alternative methods of transition for ~~DDi~~a ~~Corp~~voluntary change to the fair value based method on accounting for stock-based employee compensation. The byCompany ~~geographic~~has ~~area:~~not currently adopted SFAS No. 123 and accordingly the implementation of SFAS No. 148 has not had a material effect on the Company’s consolidated financial position or results of operations.

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2002		2001		2002		2001
Net sales:
Domestic	$	44,229	$	61,026	$	88,968	$	167,005
Europe		14,820		21,998		30,800		47,848
Other		3,063		2,815		4,832		11,695
Total	$	62,112	$	85,839	$	124,600	$	226,548

There is no compensation expense for stock based employee compensation in the condensed consolidated financial statements for the three and six months ended June 30, 2003 or 2002. The Company uses the intrinsic value method prescribed by Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” to account for employee stock options and other stock-based compensation. Under this method, because the exercise price of the Company’s employee stock options equals the market price of the underlying stock on the date of the grant, no compensation expense is recognized.

~~Net~~ ~~sales~~The byCompany ~~geographic~~determined ~~area~~its ~~for~~pro ~~DDi~~forma ~~Capital~~results below ~~for~~using the ~~three~~alternate ~~and~~fair ~~six~~value ~~months~~method ~~ended~~of ~~June~~accounting ~~30, 2002~~for ~~and~~stock-based ~~2001~~compensation ~~were~~prescribed ~~the~~by ~~same~~SFAS asNo. ~~DDi Corp~~123. The ~~except~~fair value of each option grant is estimated at the ~~sales~~date toof ~~Europe~~grant ~~were~~using ~~$0.1~~the ~~million~~Black-Sholes option pricing model and $1recognized over the vesting period, generally four years.3 ~~million~~Pricing ~~for~~model ~~the~~assumptions ~~three~~included ~~months~~an ~~ended~~expected ~~June~~term ~~30,~~of ~~2002~~four years; and ~~2001~~a risk-free interest rate, ~~respectively~~dividend yield, and ~~$0.6~~volatility ~~million~~assumptions consistent with the expected term and $5particular grant date.1 Had ~~million~~compensation cost for ~~the~~all ~~six~~stock-based ~~months~~compensation ~~ended~~plans ~~June~~been 30determined consistent with SFAS No. 123, ~~2002~~DDi Corp.’s net loss and ~~2001~~ net loss per share would have been the following (amounts in millions, ~~respectively.~~except per share data):

	June 30,			December 31,
	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2002			2001
	2003			2002			2003			2002
Long-lived assets:
Net loss:
Domestic	$	172,834		$	222,101
As Reported	$	(26.1	)	$	(85.6	)	$	(40.0	)	$	(91.6	)
International		95,493			115,914
Pro Forma	$	(30.2	)	$	(90.9	)	$	(44.1	)	$	(96.9	)
Total	$	268,327		$	338,015
Net loss per share - basic and diluted:
As Reported	$	(0.53	)	$	(1.78	)	$	(0.81	)	$	(1.91	)
Pro Forma	$	(0.61	)	$	(1.89	)	$	(0.90	)	$	(2.02	)

~~Long-lived~~ ~~assets~~NOTE ~~for DDi Capital as of June 30, 2002 and December 31, 2001 consist of $169~~7.4 PRIVATE ~~million and $218.6 million, respectively, in domestic long-lived assets and $3.4 million and $13.2 million, respectively, in international long-lived assets.~~ OFFERING

~~DDi~~ ~~CAPITAL~~repay ~~CORP~~a portion of the Senior Term Facility, $12.5 ~~AND~~million ~~DDi~~was ~~CORP~~placed in a restricted account and the remainder has been and is being used for working capital and general corporate purposes.

~~NOTES~~NOTE TO8. ~~CONDENSED~~ACQUISITION ~~CONSOLIDATED~~OF ~~FINANCIAL~~KAMTRONICS ~~STATEMENTS~~ LIMITED

~~NOTE~~On October 24, 2002, DDi Europe completed the acquisition of Kamtronics 14Limited (“Kamtronics”), a market leader in sourcing printed circuit boards for European customers, based in Calne, England, for approximately $4. ~~GOODWILL~~2 ~~AND~~million ~~INTANGIBLES~~plus contingent consideration based on earnings in each of the two years following the date of acquisition. No contingent consideration has been earned or recorded as of June 30, 2003. If contingent consideration is earned and paid, it will be capitalized as additional purchase price. The total purchase price has been allocated to underlying assets acquired and liabilities assumed based upon their respective fair market value at the date of acquisition.

On ~~January~~As ~~1, 2002,~~ the ~~Company~~historical ~~adopted~~financial ~~SFAS~~statements ~~Nos. 141 and 142. SFAS No. 141 “Business Combinations” requires that the purchase method~~ of ~~accounting be used for all business combinations, establishes specific criteria for recognizing intangible assets separately from goodwill and requires certain disclosures~~Kamtronics ~~regarding~~are ~~reasons for a business combination and the allocation of the purchase price paid. SFAS No. 142 “Goodwill and Other Intangible Assets” establishes that goodwill and certain intangible assets will~~ not bematerial ~~amortized~~to ~~and~~ the ~~amortization~~ ~~period~~Company’s ofconsolidated ~~certain~~financial ~~intangible assets will no longer be limited to forty years. In addition~~statements, ~~SFAS~~pro ~~No.~~forma ~~142~~financial ~~requires~~information ~~that~~has ~~goodwill and intangible assets that are~~ not ~~amortized~~been ~~be tested for impairment at least annually~~presented.

In ~~adopting~~NOTE ~~these pronouncements, the Company evaluated its identifiable intangible assets for recognition apart from goodwill~~9. AtSEGMENT the date of adoption, identifiable intangible assets consisted of developed technologies, assembled workforce and customer relationships. Such assets were not deemed to be separable from goodwill. Accordingly, the balances of these intangible assets at January 1, 2002, with an aggregate net carrying amount of $45.6 million (consisting of a gross cost of $90.8 million and associated accumulated amortization of $45.2 million), were reclassified to goodwill. In addition, the Company also reclassified approximately $16.6 million of deferred tax liabilities associated with these intangible assets to goodwill. In accordance with SFAS No. 142, as of the date of adoption, the Company prospectively ceased amortization of goodwill and instead conducts periodic tests of impairment. REPORTING

~~The~~ ~~Company~~SFAS ~~operates in one reportable segment (see Note 13)~~No. ~~The~~131 ~~Company~~“Disclosures ~~separately~~about ~~monitors~~Segments ~~the financial performance~~ of ~~its~~an ~~North~~Enterprise ~~American~~ and ~~European~~Related ~~operations.~~Information” ~~Further,~~established ~~each~~standards offor ~~these~~reporting ~~operations~~information ~~generally~~about ~~serves~~operating asegments ~~distinct~~in ~~customer~~annual ~~base.~~financial ~~Based~~statements ~~upon these facts, the Company considers the North American~~ and ~~European~~requires ~~operations its reporting~~selected ~~units~~information ~~for~~about ~~the~~operating ~~assignment~~segments ofin ~~goodwill.~~interim ~~The~~financial ~~Company’s~~reports ~~European~~issued ~~operations~~to ~~consist~~stockholders. It ofalso ~~entities~~established ~~acquired~~standards infor ~~conjunction~~related ~~with~~disclosures ~~the~~about ~~MCM~~products ~~purchase~~and ~~transaction~~services, ingeographic ~~2000~~areas and ~~the~~major ~~Thomas~~customers. Operating ~~Walter~~segments ~~purchase~~are defined ~~transaction~~as incomponents ~~2001. The amount~~ of ~~goodwill attributable~~an toenterprise ~~the~~that ~~European~~engage ~~operations~~in ~~was~~business ~~the~~activities ~~amount~~from ~~generated~~which init ~~the~~may ~~purchase~~earn ~~transactions,~~revenues ~~net~~and ofincur ~~related~~expenses ~~amortization~~whose ~~through~~separate ~~December~~financial ~~31,~~information ~~2001~~is available and ~~the~~is ~~associated~~evaluated ~~reclassifications~~regularly ofby ~~deferred~~the ~~tax~~Company’s ~~liabilities~~chief tooperating ~~goodwill.~~decision makers, ~~All~~or ~~other~~decision ~~goodwill~~making ~~is related~~group, to ~~the~~perform ~~Company’s~~resource ~~North~~allocations ~~American~~and ~~operations.~~performance assessments.

~~Based~~ onThe ~~the~~ Company’s ~~initial~~chief ~~transition~~operating ~~impairment~~decision ~~testing~~maker ~~during~~is the Chief Executive Officer. Based ~~first~~on ~~quarter~~the evaluation of ~~2002,~~the noCompany’s ~~impairment~~financial ~~was~~information, ~~recognized.~~management ~~However,~~believes ~~due~~that tothe ~~continued~~Company ~~stock~~operates ~~price~~in ~~decline~~one ~~during~~reportable ~~the~~segment ~~second~~which ~~quarter~~designs, ofdevelops, ~~2002~~manufactures, aassembles ~~test~~and oftests ~~impairment~~complex ~~was~~printed ~~again~~circuit ~~performed.~~boards, back panels and related electronic products. The ~~analysis~~Company ~~indicated~~operates ~~that~~in ~~the~~two ~~book~~geographical ~~value~~areas, ofdomestic ~~goodwill~~(U.S.A.) ~~was~~and ininternational. Revenues ~~excess~~are ~~of its~~attributed ~~fair~~to ~~value,~~the ~~determined~~country byto which the ~~Company’s~~product ~~market~~is ~~capitalization~~sold. Revenues ~~After~~by ~~assessing~~product ~~the~~and ~~goodwill~~service ~~impairment~~are atnot areported ~~reporting~~as ~~unit~~it is ~~level,~~impracticable ~~the~~to ~~Company~~do ~~calculated~~so. During ~~and~~the ~~recorded~~three aand ~~goodwill~~six ~~impairment~~months ~~charge~~ended ofJune ~~$45~~30, ~~million~~2003 ~~for~~and ~~DDi~~2002, ~~Capital~~respectively, ~~and~~there ~~$60 million~~were ~~for~~no ~~DDi~~material ~~Corp.~~assets in ~~the~~or ~~quarter~~revenues ~~ended~~realized ~~June~~from ~~30,~~any ~~2002.~~individual foreign country.

~~Goodwill,~~The ~~net~~following ofsummarizes ~~accumulated~~net ~~amortization,~~sales for ~~each~~DDi ~~reporting~~Corp. ~~unit~~by isgeographic ~~as follows~~area (in thousands):

	June 30, 2002
	Three Months Ended June 30,				Six Months Ended June 30,
North America	$	83.5
	2003		2002		2003		2002
Europe		62.4
Net sales:
Total	$	145.9
Domestic	$	33,349	$	44,229	$	71,090	$	88,968
Europe		20,760		14,820		41,453		30,800
Other		2,114		3,063		5,341		4,832
Total	$	56,223	$	62,112	$	117,884	$	124,600

~~Goodwill~~ Net sales by geographic area for DDi Capital asfor ofthe three and six months ended June 30, 2003 and 2002 were ~~consists~~the ~~entirely~~same ofas DDi Corp. except the ~~North~~sales ~~American goodwill~~to Europe were $0.4 million and $0.1 million for the three months ended June 30, 2003 and 2002, respectively, and $0.5 million and $0.6 million for the six months ended June 30, 2003 and 2002.

The following summarizes long-lived assets for DDi Corp. by geographic area (in thousands):

	June 30, 2003		December 31, 2002

Long-lived assets:
Domestic	$	54,758	$	65,173
International		46,023		46,531

Total	$	100,781	$	111,704

~~DDi~~ ~~CAPITAL~~Long-lived ~~CORP.~~assets ~~AND~~for DDi ~~CORP.~~Capital as of June 30, 2003 and December 31, 2002 consist of $48,855 and $58,556, respectively, in domestic long-lived assets and $4,270 and $3,653, respectively, in international long-lived assets.

~~NOTES~~ TONOTE ~~CONDENSED~~10. ~~CONSOLIDATED~~GOODWILL ~~FINANCIAL~~AND ~~STATEMENTS~~ INTANGIBLES

~~The~~ ~~following~~On ~~table~~January ~~shows~~1, on2002, athe ~~pro-forma~~Company ~~basis~~adopted SFAS Nos. 141 and 142. SFAS No. 141 “Business Combinations” requires that the purchase method of accounting be used for all business combinations, ~~what~~establishes ~~net~~specific ~~income~~criteria ~~(loss)~~for ~~and~~recognizing ~~earnings~~intangible ~~per~~assets ~~share~~separately ~~would~~from ~~have~~goodwill ~~been~~and requires certain disclosures regarding reasons for a business combination and the ~~three~~allocation of the purchase price paid. SFAS No. 142 “Goodwill and ~~six~~Other ~~months~~Intangible ~~ended~~Assets” ~~June~~establishes ~~30,~~that ~~2001~~goodwill ifand certain intangible assets will not be amortized and the ~~new~~amortization ~~accounting~~period ~~standards~~of ~~had~~certain ~~been~~intangible ~~applied~~assets ~~beginning~~will ~~January~~no 1longer be limited to forty years. In addition, SFAS No. 142 requires that goodwill and intangible assets that are not amortized be tested for impairment at least ~~2001~~annually. The (Company will complete its annual impairment test in ~~thousands):~~the fourth quarter of its fiscal year. The Company also performs quarterly impairment tests if circumstances related to the Company’s business deem it necessary.

	DDi Capital
	Three Months EndedJune 30,2001			Six Months Ended June 30,2001
Net income (loss), as reported	$	(2,586	)	$	774
Add back: goodwill and intangibles amortization, net of tax effect		3,527			7,025
Pro forma net income	$	941		$	7,799
	DDi Capital

In adopting these pronouncements, the Company evaluated its identifiable intangible assets for recognition apart from goodwill. At the date of adoption, identifiable intangible assets consisted of developed technologies, assembled workforce and customer relationships. Such assets were not deemed to be separable from goodwill. Accordingly, the balances of these intangible assets at January 1, 2002, with an aggregate net carrying amount of $45.6 million (consisting of a gross cost of $90.8 million and associated accumulated amortization of $45.2 million), were reclassified to goodwill. In addition, the Company also reclassified approximately $16.6 million of deferred tax liabilities associated with these intangible assets to goodwill. In accordance with SFAS No. 142, as of the date of adoption, the Company prospectively ceased amortization of goodwill and instead conducts periodic tests of impairment.

	Three Months Ended June 30,2001			Six Months Ended June 30,2001
Net income (loss), as reported	$	(2,462	)	$	3,221
Add back: goodwill and intangibles amortization, net of tax effect		4,763			9,356
Pro forma net income	$	2,301		$	12,577
Basic earnings (loss) per share, as reported	$	(0.05	)	$	0.07
Add back: goodwill and intangibles amortization, net of tax effect		0.10			0.20
Pro forma basic earnings per share	$	0.05		$	0.27
Diluted earnings (loss) per share, as reported	$	(0.05	)	$	0.07
Add back: goodwill and intangible amortization, net of tax effect		0.10			0.19
Proforma diluted earnings per share	$	0.05		$	0.26

The Company operates in one reportable segment (see Note 9). The Company separately monitors the financial performance of its North American and European operations. Further, each of these operations generally serves a distinct customer base. Based upon these facts, the Company considers the North American and European operations its reporting units for the assignment of goodwill. The Company’s European operations consist of entities acquired in conjunction with the MCM Electronics purchase transaction in 2000; the Thomas Walter purchase transaction in 2001 and the Kamtronics purchase transaction in 2002. The amount of goodwill attributable to the European operations was the amount generated in the purchase transactions, net of related amortization through December 31, 2001 and the associated reclassifications of deferred tax liabilities to goodwill. All other goodwill was related to the Company’s North American operations.

~~NOTE~~ 15Based on the Company’s initial transition impairment testing during the first quarter of 2002, no impairment was recognized. ~~RESTRUCTURING~~ However, ~~AND~~due ~~OTHER~~to ~~RELATED~~a ~~CHARGES~~continued stock price decline during both the second and third quarters of 2002, tests of impairment were performed in each of these quarters. The analyses indicated that the book value of goodwill during each quarter was in excess of its fair value, as determined by the Company’s market capitalization. After assessing the goodwill impairment at a reporting unit level, the Company calculated and recorded goodwill impairment charges of $45.0 million and $7.0 million, respectively, for DDi Capital and $60.0 million and $12.0 million, respectively, for DDi Corp. in the quarters ended June 30 and September 30, 2002, respectively. In addition, due to evolving financial factors affecting the Company’s business, primarily the Company’s recent discussions with its senior lenders, convertible subordinated noteholders and other stakeholders, and based on business valuations that indicated the book value of goodwill was in excess of its fair value at December 31, 2002, the Company calculated and recorded goodwill impairment charges during the fourth quarter of 2002 of $76.7 million and $127.0 million for DDi Capital and DDi Corp., respectively.

In ~~October 2001, management and~~ the ~~Company’s~~second ~~Board~~quarter of ~~Directors approved a plan to close its Garland~~2003, ~~Texas~~the ~~and~~Company ~~Marlborough, Massachusetts~~amended ~~facilities. In conjunction with~~ the ~~closure~~contingent ofconsideration ~~the~~relating ~~Garland~~to ~~and~~a ~~Marlborough~~prior ~~facilities,~~purchase ~~DDi~~transaction ~~Corp.~~ and ~~DDi~~replaced ~~Capital~~it ~~recorded~~with ~~charges~~a insettlement ~~the fourth quarter~~ of ~~2001 totaling~~ $792.80 million ~~and~~to ~~$79.4~~be ~~million, respectively. Of these amounts,~~paid ~~$3.7~~over ~~million~~the ~~represent~~next ~~restructuring~~three ~~related inventory impairments and were therefore reflected as a component of gross profit~~years. This ~~The~~amount ~~remaining~~was ~~$76.1~~originally ~~million~~capitalized ~~of charges were classified~~ as ~~“Restructuring~~additional ~~and~~purchase ~~other~~price ~~related charges” and consist of $51.4 million relating~~ to ~~impairments of intangibles assets~~goodwill. However, ~~$15.5~~due ~~million relating~~ to ~~impairments~~evolving offinancial ~~net~~factors ~~property,~~affecting ~~plant~~the ~~and~~Company’s ~~equipment~~business, ~~and~~primarily ~~$9.2~~the ~~million~~Company’s ~~for~~recent ~~DDi Corp. and $8.8 million for DDi Capital in accrued restructuring expenses. Such~~discussions ~~accrued~~with ~~restructuring~~its ~~expenses~~senior ~~represented~~lenders, ~~$4.4~~convertible ~~million~~subordinated innoteholders ~~estimated~~and ~~facilities~~other ~~closure costs~~stakeholders, ~~$3.5 million for DDi Corp.~~ and ~~$3.1~~based ~~million~~on ~~for~~business ~~DDi~~valuations ~~Capital~~that inindicated ~~severance and related expenses associated with~~ the ~~involuntary~~book ~~termination~~value of ~~the~~goodwill ~~208~~was ~~staff and management employees from the plant closures and changes~~ in ~~senior~~excess ~~management undertaken in the fourth quarter~~ of ~~2001,~~its ~~and~~fair ~~$1.3 million in other exit costs. Total accrued restructuring expenses at December 31~~value, ~~2001 were $6.4 million for DDi Corp. and $6.1 million for DDi Capital. During~~ the ~~six~~Company ~~months~~recorded ~~ended~~goodwill ~~June~~impairment ~~30,~~charges ~~2002, approximately~~ of $32.0 million for DDi ~~Corp. and $2.8 for DDi~~ Capital ~~was expended in cash, leaving accrued restructuring costs at June 30, 2002 of $3.4 million~~ and ~~$3.3 million for~~ DDi Corp.during ~~and DDi Capital, respectively. The closure of~~ the ~~facilities~~quarter isended ~~estimated~~June ~~to be effectively complete by September~~ 30, ~~2002~~2003.

In ~~April~~SFAS ~~2002,~~No. ~~management~~142 ~~and~~requires ~~the~~a ~~Company’s~~second ~~Board~~step ofanalysis ~~Directors~~whenever ~~approved~~ a ~~plan~~reporting tounit’s ~~close~~book ~~its~~value ~~Texas~~exceeds ~~and~~its estimated ~~Moorpark~~fair ~~facilities,~~value. This ~~selected~~analysis ~~design~~requires ~~centers and~~ the ~~restructuring~~Company ofto ~~various~~estimate ~~UK operations. In conjunction with this plan, DDi Corp. and DDi Capital recorded charges in~~ the ~~second~~fair ~~quarter~~value of ~~2002~~the ~~totaling~~reporting ~~$17.9~~unit’s ~~million~~individual assets and ~~$17.2~~liabilities ~~million,~~to ~~respectively.~~complete Ofthis ~~these~~analysis ~~amounts,~~to ~~$3.5~~determine ~~million~~if ~~for~~any ~~DDi~~adjustments ~~Corp.~~to ~~and~~the ~~$3.4~~estimated ~~million~~goodwill ~~for DDi Capital represent restructuring related inventory~~impairment ~~impairments~~charges ~~and~~recorded ~~were~~are ~~therefore reflected as a component of gross profit~~necessary. The ~~remaining~~Company ~~$14.4~~expects ~~million~~to ofcomplete ~~charges~~this ~~for~~analysis ~~DDi~~in ~~Corp.~~the ~~and~~quarter ~~$13.8~~ending ~~million~~December ~~for~~31, ~~DDi Capital were classified as “Restructuring and other related charges~~2003.~~” Such charges consist~~

Goodwill for DDi ~~CAPITAL~~Corp. ~~CORP~~is $14.2 ~~AND~~million and $14.0 million as of June 30, 2003 and December 31, 2002, respectively, which represents the goodwill of DDi ~~CORP~~Europe. Goodwill for DDi Capital consists entirely of North American goodwill which had no value as of June 30, 2003 and December 31, 2002.

~~NOTES~~ TONOTE ~~CONDENSED~~11. ~~CONSOLIDATED~~RESTRUCTURING ~~FINANCIAL~~AND ~~STATEMENTS~~OTHER RELATED CHARGES

of In ~~$8.3~~2001, ~~million~~management ~~for~~and ~~DDi~~the ~~Corp.~~Company’s ~~and $8.2~~Board ~~million~~of ~~for~~Directors ~~DDi~~approved ~~Capital~~a ~~relating~~plan to ~~impairments~~close ofits ~~net property~~Garland, ~~plant~~Texas and ~~equipment~~Marlborough, ~~and~~Massachusetts $6facilities.1 In ~~million~~2002, ~~for~~management ~~DDi Corp.~~ and ~~$5.6~~the ~~million~~Company’s ~~for~~Board ~~DDi~~of Directors ~~Capital~~approved ina ~~accrued~~plan ~~restructuring~~to ~~expenses.~~close ~~The~~its ~~accrued~~Dallas, ~~restructuring~~Texas ~~expenses represented $2.5 million for DDi Corp.~~ and ~~$2.4~~Moorpark, ~~for~~California ~~DDi Capital in estimated~~ facilities ~~closure~~and ~~costs,~~selected ~~$3.0~~design ~~million~~centers ~~for DDi Corp.~~ and ~~$2.6~~to ~~million~~restructure ~~for~~various ~~DDi~~European ~~Capital~~operations. The inclosure ~~severance~~of ~~and~~all ~~related~~of ~~expenses~~these ~~associated~~facilities ~~with~~was ~~the~~effectively ~~involuntary~~complete ~~termination~~by ofDecember 31, ~~the~~2002. In ~~135~~addition ~~staff~~to ~~and management employees from~~ the ~~plant~~facility closures ~~undertaken~~during ~~in the second quarter of~~ 2002, management and ~~$0.6~~the ~~million~~Company’s inBoard ~~other~~of ~~exit~~Directors ~~costs.~~also ~~Total~~approved ~~accrued~~a ~~restructuring~~plan ~~expenses~~to atwrite-down ~~June~~unutilized 30assets, ~~2002~~streamline ~~were~~certain ~~$3.9~~manufacturing ~~million~~facilities, ~~for~~eliminate ~~DDi~~certain ~~Corp.~~sales offices, ~~and~~including ~~$3.8~~the ~~million~~office ~~for~~based ~~DDi~~in ~~Capital.~~Tokyo, ~~The~~and ~~closure of the facilities is estimated~~ to bescale ~~effectively~~down ~~complete~~its ~~by December 31~~Anaheim, ~~2002.~~California facility.

~~NOTE~~In 16the first quarter of 2003, DDi Capital and DDi Corp. ~~COMPREHENSIVE~~ ~~INCOME~~recorded charges totaling $0.4 ~~(LOSS)~~million and $0.5 million, respectively, which were classified as “Restructuring and other related charges.” Such charges primarily represent revision of estimates from previously recorded restructuring charges and consisted of $0.2 million in accrued restructuring expenses and $0.2 million and $0.3 million in severance and other exit costs for DDi Capital and DDi Corp., respectively. The accrued restructuring expenses of $0.2 million relate to other exit costs for both DDi Capital and DDi Corp.

~~SFAS~~ ~~No.~~In ~~130~~the ~~“Reporting~~second ~~Comprehensive~~quarter ~~Income”~~of ~~establishes~~2003, ~~requirements~~the ~~for~~Company ~~reporting~~sold ~~and~~certain ~~disclosure~~assets of ~~comprehensive~~ ~~income~~its ~~(loss)~~Dallas-based ~~and~~electronic ~~its~~enclosure ~~components~~operations. In ~~Comprehensive~~conjunction ~~income~~with ~~(loss)~~this ~~includes~~sale, ~~unrealized~~the ~~holding~~Company received ~~gains~~$0.5 ~~and~~million ~~losses~~in cash and ~~other~~subsequently ~~items~~paid-off ~~that~~all ~~have~~of ~~previously~~the ~~been~~outstanding ~~excluded~~lease ~~from~~obligations ~~net~~of ~~income and reflected instead in stockholders’ equity~~$0. ~~Comprehensive~~8 ~~income (loss) for DDi Capital and DDi Corp~~million. In ~~consists~~addition, ofduring ~~net income (loss) plus~~ the ~~effect~~second quarter of ~~foreign currency translation adjustments~~2003, ~~unrealized~~management ~~holding~~and ~~gains~~the ~~(losses)~~Company’s onBoard ~~marketable~~of ~~securities~~Directors ~~classified~~approved asa ~~available-for-sale~~plan ~~and~~down-sizing ~~unrealized~~its ~~net~~Virginia ~~gains (losses) on interest rate swaps~~ and ~~related~~Anaheim, ~~unrealized~~California ~~net tax impact~~workforces.

~~The~~ ~~Company~~“Restructuring ~~adopted~~and ~~SFAS~~other Norelated charges” recorded in the second quarter of 2003 totaled $4.7 ~~133 “Accounting~~million ~~for~~and ~~Derivative~~$5.0 ~~Instruments~~million for DDi Capital and ~~Hedging~~DDi ~~Activities”~~Corp., onrespectively. Such ~~January~~charges consist of $1,.7 ~~2001~~million ~~(see~~relating ~~Note~~to 4)impairment of inventory which are reflected as a component of cost of goods sold, $1.0 Inrelating ~~accordance~~to ~~with~~impairment of net property, plant and equipment primarily related to the ~~transition~~Dallas-based ~~provisions~~electronics ofenclosure ~~SFAS~~operations Nothe Company sold, $0.3 ~~133~~million in estimated facilities closure costs, $0.1 million in other exit costs and $1.3 million in accrued restructuring expenses for both DDi Capital and DDi Corp. The charges recorded ain ~~cumulative-effect-type~~the ~~adjustment~~current ~~to accumulated~~quarter ~~other~~also ~~comprehensive~~consist ~~loss~~of severance expenses of $0.3 million and $0.6 million for ~~the~~DDi ~~initial~~Capital ~~difference~~and ~~between~~DDi ~~the~~Corp., ~~book~~respectively. The ~~value~~accrued restructuring expenses primarily relate to severance and ~~fair~~related ~~value~~expenses associated with involuntary termination of ~~interest~~248 ~~rate~~and ~~swap~~250 ~~agreements~~staff asand ofmanagement ~~January~~employees 1,for ~~2001~~DDi Capital and DDi Corp., respectively.

~~NOTE~~ 17Total accrued restructuring expenses at June 30, 2003 were $4. ~~RECENT~~4 ~~ACCOUNTING~~million ~~PRONOUNCEMENTS~~for DDi Capital and $4.6 million for DDi Corp. These accrued restructuring expenses represented $2.7 million for DDi Capital and $2.9 million for DDi Corp. in estimated facilities closure costs, $1.5 million for in severance and related expenses and $0.2 million in other exit costs for both DDi Capital and DDi Corp.

InNOTE ~~April 2002, the Financial Accounting Standards Board (FASB) issued SFAS No~~12. ~~145~~REORGANIZATION “Rescission of FASB Statements No. 4, 44 and 64, Amendment of SFAS No. 13, and Technical Corrections.” Among other matters, SFAS No. 145 rescinds SFAS No. 4, “Reporting Gains and Losses from Extinguishment of Debt” thereby eliminating the requirement that gains and losses from the extinguishment of debt be aggregated and, if material, classified as an extraordinary item, net of the related income tax effect. As a result, the criteria in APB Opinion No. 30, “Reporting Results of Operations – Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions” will be used to classify those gains and losses. EXPENSES

~~The~~ ~~Company~~During ~~adopted SFAS No. 145 in~~ the fourth ~~second~~ quarter of 2002., Asthe aCompany ~~result~~initiated ofplans ~~the~~to ~~adoption~~restructure ofdebt ~~this pronouncement,~~and ~~the~~retain ~~Company~~employees. ~~accounts~~These ~~for~~efforts ~~the~~resulted ~~impact~~in reorganization charges of ~~the~~$2.7 ~~early~~million ~~extinguishment~~and of$3.3 ~~debt~~million asin aDDi ~~component~~Capital ofand ~~net~~DDi ~~interest~~Corp., ~~expense~~respectively, infor the ~~accompanying~~first ~~condensed~~quarter ~~consolidated statements~~ of ~~operations~~ 2003. Of Inthese ~~accordance~~amounts, ~~with~~$2.0 ~~SFAS~~million ~~No.~~is ~~145,~~related ~~the~~to ~~Company~~professional ~~has reclassified~~fees ~~certain~~and ~~costs~~$0.7 ~~incurred~~million inand ~~prior~~$1.3 ~~periods~~million ~~that~~for ~~were~~DDi ~~previously~~Capital ~~classified~~and asDDi ~~extraordinary~~Corp., ~~items~~respectively, ~~net~~is of related ~~income~~to ~~taxes.~~personnel ~~Such~~retention ~~reclassifications~~costs ~~had~~under nothe ~~effect~~Dynamic ~~upon~~Details ~~net~~Key ~~income~~Employee Retention Program (~~loss~~“KERP”), ~~but resulted in increases~~ of which $8.0.7 million and $190.68 million tofor ~~reported~~DDi ~~interest~~Capital ~~expense~~and ~~for~~DDi ~~the~~Corp., ~~second~~respectively, ~~quarter~~are ~~and~~included ~~six~~in ~~months~~accrued ~~ended~~expenses at June 30, ~~2001, respectively~~2003.

In ~~June~~the ~~2002,~~second ~~the~~quarter of 2003, ~~FASB~~the ~~issued~~Company ~~SFAS~~recorded Noreorganization charges of $2.4 ~~146~~million “and ~~Accounting~~$2.7 ~~for~~million ~~Costs~~in ~~Associated~~DDi ~~with~~Capital ~~Exit~~and orDDi ~~Disposal~~Corp., ~~Activities~~respectively.” Of ~~This~~these ~~statement~~amounts, ~~addresses~~$1.7 ~~financial~~million ~~accounting~~ and ~~reporting~~$1.9 million for ~~costs~~DDi ~~associated~~Capital ~~with~~and ~~exit~~DDi orCorp., ~~disposal~~respectively, ~~activities~~is ~~and~~related ~~nullifies~~to ~~Emerging Issues~~professional ~~Task~~fees ~~Force~~and ~~(EITF) Issue No~~$0.7 ~~94-3,~~million ~~“Liability~~and ~~Recognition~~$0.8 million for ~~Certain~~DDi ~~Employee~~Capital ~~Termination~~and ~~Benefits~~DDi ~~and~~Corp., ~~Other~~respectively, ~~Costs~~is related to ~~Exit~~personnel ~~and~~retention ~~Activity~~costs ~~(including~~under ~~Certain~~the ~~Costs~~Dynamic ~~Incurred~~Details inKERP aof ~~Restructuring)~~which $0.”7 ~~SFAS~~million Noand $0.8 ~~146~~million isfor ~~effective~~DDi ~~for~~Capital ~~exit~~and orDDi ~~disposal~~Corp., respectively, is ~~activities~~included ~~initiated~~in ~~after~~accrued ~~December~~expenses 31at June 30, ~~2002~~2003. The ~~provisions~~maximum remaining commitment as of ~~EITF~~June ~~94-3~~30, ~~shall~~2003, ~~continue~~dependent toon ~~apply~~future ~~for~~service ~~exit~~and ~~activities~~therefore ~~initiated~~not ~~under~~accrued anin ~~exit~~the ~~plan~~consolidated ~~that~~financial ~~met~~statements, ~~criteria~~related to each of ~~EITF~~the ~~94-3~~remaining ~~prior~~installment payments tounder the ~~initial~~KERP ~~application~~are ofestimated ~~SFAS~~to Nobe $1.3 ~~146~~million and $1.5 million for DDi Capital and DDi Corp., respectively.

NOTE 18. SUBSEQUENT EVENT

In July 2002, DDi Corp. made a capital contribution of $30.0 million to Dynamic Details, Inc., pursuant to the terms of the amended senior credit facility (see Note 3).

~~Item~~ 2Total accrued reorganization expenses at June 30, 2003 were $1. ~~Management’s~~4 ~~Discussion~~million for DDi Capital and ~~Analysis~~$1.6 for DDi Corp. All of ~~Financial~~these ~~Condition~~accrued ~~and~~reorganization ~~Results~~expenses ofrepresent the ~~Operations.~~personnel retention costs under the Dynamic Details KERP.

~~Overview~~ NOTE 13. COMPREHENSIVE LOSS

~~DDi~~ ~~Corp~~SFAS No., ~~formerly~~130 ~~known~~“Reporting Comprehensive asIncome” ~~DDi~~establishes ~~Holdings~~requirements ~~Corp.~~for reporting and disclosure of comprehensive income (~~“DDi~~loss) ~~Corp~~and its components.~~”),~~ Comprehensive ~~provides~~loss ~~technologically~~includes ~~advanced,~~unrealized ~~time-critical electronics~~holding ~~design,~~gains ~~development~~and losses and ~~manufacturing~~other ~~services~~items tothat ~~original~~have ~~equipment~~previously ~~manufacturers~~been excluded from net loss and ~~other~~reflected ~~electronics~~instead ~~manufacturing~~in ~~service~~stockholders’ ~~providers~~equity. Comprehensive ~~Operating~~loss ~~through~~for ~~our~~DDi ~~primary~~Capital ~~operating~~and ~~subsidiaries,~~ DDi ~~Europe~~Corp. ~~Limited~~consists ~~(“DDi~~of ~~Europe”) and~~net ~~Dynamic~~loss ~~Details,~~plus ~~Incorporated~~the ~~(“Dynamic~~effect ~~Details”),~~of weforeign ~~target~~currency ~~customers~~translation ~~that~~adjustments, ~~are~~unrealized ~~characterized~~holding bygains ~~new~~(losses) ~~product~~on marketable ~~development~~securities ~~programs~~classified ~~demanding~~as ~~the~~available-for-sale ~~rapid~~and ~~application~~unrealized ofnet ~~advanced~~gains ~~technology~~on interest rate swaps and ~~design~~related unrealized net tax impact.

As ~~used~~a ~~herein,~~result of the “termination of the Company,”’s interest ~~“we,”~~rate ~~“us~~swap agreement (see Note 4),” orthe ~~“our”~~Company ~~means~~reclassified ~~DDi~~the ~~Corp.~~amount ~~and~~of ~~its~~net ~~wholly-owned~~unrealized ~~subsidiaries,~~losses ~~including~~on ~~DDi Capital~~interest ~~Corp.~~rate ~~(“DDi~~swaps ~~Capital”),~~reported ~~DDi~~in ~~Europe~~accumulated ~~and~~other ~~Dynamic~~comprehensive ~~Details~~income into operations during the quarter ended June 30, 2003.

~~This discussion and analysis should be read in conjunction with~~ ~~Management’s~~NOTE ~~Discussion and Analysis of Financial Condition and Results of Operations set forth in DDi Capital Corp~~14.’s SUBSEQUENT ~~and DDi Corp.’s Annual Report on Form 10-K for the year ended December 31, 2001.~~ EVENTS

~~Results~~ Proposed Restructuring and Proposed Proceedings under Chapter 11 of ~~Operations~~the Bankruptcy Code

~~Three~~ ~~Months~~On May 13, 2003, the Company announced that it had reached an agreement in principle on a restructuring plan with a steering committee of the senior lender group of the Senior Credit Facility, and with a steering ~~Ended~~committee ~~June~~of 30the ad hoc committee of the holders of the Convertible Subordinated Notes. The restructuring proposal contemplated, ~~2002~~among ~~Compared~~other tothings, the ~~Three~~restructuring ~~Months~~of ~~Ended~~the ~~June~~pre-restructuring 30Senior Credit Facility, ~~2001~~the cancellation of the pre-restructuring Convertible Subordinated Notes and the related issuance of shares of new common stock of DDi Corp. and new preferred stock of DDi Europe to the holders of the Convertible Subordinated Notes. The agreement in principle also anticipated that the claims of the holders of the Senior Discount Notes would also be restructured.

~~Net~~On ~~Sales~~August 1, 2003, the Debtors entered into a Restructuring Support Agreement with 100% of the holders of the Senior Indebtedness with respect to the terms of the Debtors’ proposed plan of reorganization and the out-of-court restructuring of the Senior Indebtedness. On August 8, 2003, the Debtors and convertible subordinated note holders holding approximately 63% of the outstanding principal amount of the Convertible Subordinated Notes (the “Convertible Subordinated Note Holders”) entered into a Plan Support Agreement with respect to the terms of the Debtors’ proposed plan of reorganization. Pursuant to the Restructuring Support Agreement and the Plan Support Agreement, the holders of the Senior Indebtedness and the Convertible Subordinated Note Holders, respectively, agreed to support the plan as long as the respective Restructuring Support Agreement and Plan Support Agreement remain in effect. As is commonly the case in this type of restructuring, the holders of the Senior Indebtedness and the Convertible Subordinated Note Holders will not be required to continue to support the plan of reorganization and the out-of-court restructuring of the Senior Indebtedness if certain events occur. Such events include (but are not limited to) the modification of the plan in a manner not agreed to by the holders of the Senior Indebtedness and the Convertible Subordinated Note Holders, the appointment of a bankruptcy trustee or other receiver, the plan not being confirmed by the Bankruptcy Court by December 15, 2003, and the plan not being effective by January 8, 2004. In addition, the Debtors and the holders of approximately 43% of the outstanding principal amount of the Senior Discount Notes (the “Senior Discount Note Holders”) also reached an agreement in principle with respect to the terms of the Debtors’ proposed plan of reorganization.

~~DDi~~The ~~Capital~~Restructuring ~~net~~Support ~~sales~~Agreement ~~decreased~~and ~~$17.8~~Plan ~~million~~Support ~~(27%)~~Agreement toeach ~~$47.4~~required ~~million~~that the Debtors file voluntary petitions for reorganization under Chapter 11 of the ~~three~~U.S. ~~months~~Bankruptcy ~~ended~~Code ~~June~~by ~~30,~~August ~~2002~~15, ~~from $65~~2003.2 ~~million~~The ~~for~~Debtors ~~the~~had ~~same~~prepared ~~period~~such petitions but were unable to make such filings due to power outages in ~~2001.~~New York and the resulting closure of the United ~~DDi~~States ~~Corp.~~Bankruptcy ~~net~~Court ~~sales~~for ~~decreased~~the ~~$23~~Southern District of New York on that date.7 ~~million~~The ~~(28%)~~interested parties to ~~$62.1~~the ~~million~~Restructuring ~~for~~Support Agreement and Plan Support Agreement have informally indicated to the ~~three~~Debtors ~~months~~that ~~ended~~due ~~June~~to 30such circumstances, ~~2002~~they will not consider the failure to have filed the petitions on August 15, ~~from~~2003 ~~$85~~to be a material breach of the agreements.8 ~~million~~The ~~for~~Debtors are currently negotiating written waivers of the ~~same~~applicable ~~period~~provisions inof ~~2001.~~the ~~Such~~Restructuring ~~decreases~~Support inAgreement ~~net~~and ~~sales~~an amendment ~~are~~of ~~attributable~~the Plan Support Agreement which will formally waive any technical breaches due to ~~reductions~~failure into ~~panels~~file ~~produced~~the voluntary petitions by August 15, 2003 and which will extend the ~~average~~ ~~price~~date ~~per~~upon ~~panel~~which the voluntary petitions must be filed until August 21, ~~reflecting~~2003 ~~softened~~as ~~economic~~well ~~conditions~~as inthe ~~both~~date ~~North~~upon ~~America~~which ~~and~~the ~~Europe~~plan of reorganization must be filed until August 30, 2003. The Debtors anticipate that they will receive the required Restructuring Support Agreement waivers as well as the amendment to the Plan Support Agreement by August 21, 2003.

~~Gross~~In ~~Profit~~addition, the Debtors are currently negotiating a Senior Discount Noteholders Plan Support Agreement with holders of approximately 70% of the outstanding principal amount of Senior Discount Notes, in which such holders are being asked to agree to support the Debtors’ proposed plan of reorganization for as long as the agreement remains in effect. The proposed Senior Discount Noteholders Plan Support Agreement would also require that the voluntary petitions be filed by August 21, 2003 and that the plan of reorganization be filed by August 30, 2003. Similar to the Restructuring Support Agreement and Plan Support Agreement, the holders of Senior Discount Notes would not be required to continue to support the plan of reorganization and the out-of-court restructuring of the Senior Discount Notes if certain events occur. Those events are similar to the termination events in the Restructuring Support Agreement and Plan Support Agreement described above.

~~DDi~~The ~~Capital~~Debtors ~~gross~~intend ~~profit decreased $18.6 million (92%)~~ to ~~$1.7~~file ~~million~~voluntary petitions for ~~the~~reorganization ~~three~~under ~~months~~Chapter ~~ended~~11 ~~June~~of ~~30,~~the ~~2002,~~Bankruptcy ~~from~~Code ~~$20.3~~with ~~million for~~ the ~~same~~United States ~~period~~Bankruptcy inCourt ~~2001. DDi Corp. gross profit decreased $23.8 million (90%) to $2.7 million~~ for the ~~three~~Southern ~~months~~District ~~ended~~of ~~June~~New ~~30,~~York ~~2002,~~on ~~from~~or ~~$26.5~~before ~~million~~August ~~for~~21, ~~the same period in 2001~~2003. The ~~gross~~Debtors ~~profit~~also ~~for~~intend ~~DDi~~to ~~Capital~~file ~~and~~a ~~DDi Corp. includes incremental charges ($3.4 million for DDi Capital and $3.5 million for DDi Corp.) for inventory write~~pre-~~downs~~arranged inplan ~~connection with our second quarter 2002 restructuring initiatives (see the discussion~~ of ~~Restructuring~~reorganization and ~~Other~~related ~~Related~~disclosure ~~Charges~~statement ~~for~~with ~~further information). Excluding~~ the ~~incremental~~Bankruptcy ~~charge,~~Court ~~DDi~~on ~~Capital gross profit was $5.1 million,~~ or ~~11%~~before ofAugust ~~net sales for the three months ended June~~ 30, ~~2002, down from 31% of net sales for the same period in 2001~~2003. ~~On the same basis, DDi Corp. gross~~The ~~profit~~Company ~~was~~currently ~~$6.2~~estimates ~~million,~~that ~~or 10% of net sales for~~ the ~~three~~Debtors ~~months~~will ~~ended~~emerge ~~June 30, 2002, down~~ from ~~31%~~bankruptcy ~~for~~within ~~the~~90 ~~same~~to ~~period~~120 indays ~~2001.~~after ~~The decreases in~~ the ~~Company’s~~filing ~~gross profit resulted from lower average pricing in 2002 and reduced absorption~~ of ~~fixed~~ ~~manufacturing overhead. The impact of~~ the ~~decreases~~voluntary ~~in sales was mitigated by various cost control initiatives relating to materials, production personnel and overhead expenses~~petitions.

~~Sales~~ The consensual restructuring of the Convertible Subordinated Notes, the Senior Discount Notes and ~~Marketing~~the ~~Expenses~~existing shares of DDi Corp. common stock will be accomplished by the filing of the pre-arranged plan of reorganization. The

DDi Capital sales and marketing expenses increased $0.4 million (8%) to $5.6 million for the three months ended June 30, 2002, from $5.2 million for the same period in 2001. DDi Corp. sales and marketing expenses increased $0.3 million (5%) to $6.2 million for the three months ended June 30, 2002, from $5.9 million for the same period in 2001. Such increases in sales and marketing expenses reflect additional costs associated with the Company’s Tokyo-based sales office and a shift in the overall production mix resulting in increased commissions and other variable expenses.

General and Administration Expenses

DDi Capital general and administration expenses remained at approximately $3.0 million for the three months ended June 30, 2002, from the same period in 2001. DDi Corp. general and administration expenses decreased $0.1 million (2%) to $4.6 million for the three months ended June 30, 2002, from $4.7 million for the same period in 2001. General and administrative expenses increased as a percentage of sales for the Company, however, reflecting the relatively fixed nature of many of these costs.

Restructuring and Other Related Charges

Restructuring and related charges were $13.8 million for DDi Capital and $14.4 million for DDi Corp. for the three months ended June 30, 2002. Such charges represent incremental costs incurred in connection with management’s decision to close

~~various~~ ~~facilities,~~consensual ~~eliminate~~restructuring ~~additional~~of ~~overhead,~~the ~~and~~Senior ~~remove~~Indebtedness ~~underutilized~~is ~~assets~~being ~~from~~effected ~~productive~~outside ~~service.~~the ~~See~~plan ~~Note~~of 15reorganization pursuant to the ~~Condensed Consolidated~~Restructuring ~~Financial~~Support ~~Statements~~Agreement.

~~Amortization~~The principal effects of ~~Intangibles~~the restructuring and the plan of reorganization that the Debtors expect to file will be as follows:

~~Amortization~~ ofSenior ~~intangibles~~Credit ~~for~~Facility. The ~~the~~full ~~three~~principal ~~months~~amount ~~ended~~of ~~June~~the ~~30,~~Senior ~~2001~~Credit ~~was~~Facility (which consists of $41.52 million ~~for~~in ~~DDi~~letters ~~Capital~~of credit and $571.87 million ~~for~~senior ~~DDi~~term ~~Corp.~~loans ~~Effective~~comprising ~~January 1, 2002,~~ the ~~Company~~outstanding ~~adopted~~balance of ~~Statement~~the ~~of Financial~~senior ~~Accounting~~term ~~Standards~~loans Noof $65.9 ~~142~~million ~~(see~~at ~~Note~~June 1430, to2003 and the ~~Condensed~~outstanding ~~Consolidated~~liability ~~Financial~~resulting ~~Statements).~~from Asthe ainterest ~~result~~rate ofswap ~~the~~termination ~~adoption~~(see Note 4) of ~~this~~$5.8 ~~standard~~million), ~~the~~plus ~~Company~~all ~~recorded~~accrued nointerest ~~amortization~~and offees ~~intangibles~~will ~~for~~be ~~the~~restructured, ~~three~~pursuant ~~months~~to ~~ended~~an ~~June~~out-of-court ~~30,~~agreement ~~2002.~~ as follows:

Goodwill Impairment

	•	The Tranche A Revolving and Term Loan Facility shall be in an aggregate amount of $15 million which shall be available as a revolving loan until June 30, 2005 at which time any outstanding amounts under such facility shall be converted to a Tranche A Term Loan with a maturity date of April 15, 2008. The Tranche B Term Loan shall consist of $57.9 million plus any accrued and unpaid interest under the pre-restructuring senior secured credit facility. The Tranche B Term Loan will mature on April 15, 2008. No significant amortization under either Tranche will be due until 2005.

	•	The holders of the Company’s restructured senior secured credit facility will receive warrants representing 10% of the Company’s common stock, on a fully diluted basis. The warrants will be held in escrow and will be exercisable after the twenty-four month anniversary of the effective date of the restructuring, but will be subject to cancellation in whole or in part if the Company meets certain conditions involving the permanent prepayment of the restructured senior credit facility on or before such anniversary date.

~~DDi~~5.25% ~~Capital~~Convertible ~~and~~Subordinated ~~DDi Corp~~Notes. Each ~~recorded~~holder aof ~~goodwill~~the ~~impairment~~5.25% convertible subordinated notes, of which $45100 million ~~and~~in ~~$60~~principal ~~million,~~amount ~~respectively~~is currently outstanding, ~~during~~will receive a pro rata share of (a) 43.2% of the ~~three~~new ~~months~~outstanding ~~ended~~common ~~June~~stock 30of the Company, ~~2002.~~subject ~~See~~to ~~Note~~dilution 14for issuance of new common stock in connection with the exercise of the new stock options to be issued under the ~~Condensed~~Company’s ~~Consolidated~~new ~~Financial~~management ~~Statements~~equity incentive plan, which is described below, and the new senior lender warrants, and (b) shares of a new class of preferred stock of DDi Europe, the Company’s European operating company, with an annual dividend of 15% and an aggregate liquidation preference of $7.5 million. The existing 5.25% convertible subordinated notes will be cancelled pursuant to the plan.

~~Net~~ ~~Interest~~6.25% ~~Expense~~Convertible Subordinated Notes. Each holder of the Company’s of 6.25% convertible subordinated notes, of which $100 million in principal amount is currently outstanding, will receive a pro rata share of (a) 50.8% of the new outstanding common stock of the Company, subject to dilution for issuance of new common stock in connection with the exercise of the new stock options to be issued under the Company’s new management equity incentive plan, which is described below, and the new senior lender warrants, and (b) shares of a new class of preferred stock of DDi Europe, with an annual dividend of 15% and an aggregate liquidation preference of $7.5 million. The existing 6.25% convertible subordinated notes will be cancelled pursuant to the plan.

DDi Capital ~~net~~Senior ~~interest~~Discount ~~expense decreased $10~~Notes.9 Each ~~million~~holder ~~(95%)~~of ~~to $0.6 million for~~ the ~~three~~Senior ~~months ended June 30~~Discount Notes, ~~2002,~~of ~~from~~which $1116.509 million ~~for~~in ~~the~~principal ~~same~~amount ~~period~~is incurrently ~~2001.~~outstanding, ~~Such~~will ~~decrease~~receive inrestructured ~~net~~senior ~~interest~~discount ~~expense~~notes iswith ~~due~~a ~~primarily~~maturity todate ~~the retirement~~ of ~~debt~~January ~~in each~~1, ~~period~~2009. Payment-in-kind ~~For~~interest ~~the~~on ~~three~~such ~~months~~restructured ~~ended~~senior ~~June~~discount ~~30,~~notes ~~2002,~~would accrue ~~the~~at ~~Company~~16%, ~~recorded~~with ~~approximately~~a ~~$1.4~~mechanism ~~million~~to intransition ~~net~~to ~~non-~~cash ~~credits~~pay ~~resulting~~at ~~from~~14%, asubject ~~write-off~~to ofcertain ~~debt~~terms ~~issuance~~and ~~costs~~conditions. The inholders ~~connection with the prepayment~~ of ~~a portion of~~ the ~~Dynamic Details~~ Senior ~~Term~~Discount ~~Facility~~Notes ~~and~~will ~~the~~also ~~modification~~receive ofwarrants ~~the~~representing ~~related interest rate swap agreement~~2.5% ~~For~~of the ~~three~~Company’s ~~months~~common ~~ended June 30~~stock, ~~2001,~~subject ~~the~~to dilution ~~Company~~for ~~recorded~~issuance ~~net interest charges~~ of ~~approximately~~new ~~$8.0~~common ~~million~~stock in connection with the ~~redemption~~exercise of ~~a portion of~~ the ~~DDi~~new ~~Capital~~stock ~~Senior~~options ~~Discount Notes. See Note 17~~ to ~~the~~be ~~Condensed~~issued ~~Consolidated~~under ~~Financial~~DDi ~~Statements~~Corp.’s ~~The~~new ~~decrease~~management inequity ~~net~~incentive ~~interest~~plan, ~~expense~~which ~~also~~is ~~reflects~~described ~~the~~below, ~~reduced~~and ~~indebtedness resulting from~~ the ~~aforementioned~~new ~~transactions,~~senior ~~the~~lender ~~redemption of~~warrants. The ~~the~~warrants ~~Dynamic~~will ~~Details~~be ~~Senior~~held ~~Subordinated Notes~~ in ~~February~~escrow ~~2001,~~ and ~~the~~will ~~scheduled~~be ~~principal~~exercisable ~~repayments~~after of the ~~Dynamic~~twenty-four ~~Details~~month ~~Senior~~anniversary ~~Credit~~of ~~Facility.~~the ~~DDi~~effective ~~Corp.~~date ~~net~~of ~~interest~~the ~~expense~~restructuring, ~~decreased~~but ~~$9.2~~will ~~million~~be ~~(68%)~~subject to ~~$4.4~~forfeiture ~~million~~if ~~for~~ the ~~three~~Company ~~months ended~~meets ~~June~~certain ~~30,~~conditions ~~2002,~~involving ~~from $13.6 million for~~ the ~~same~~permanent ~~period~~prepayment of ~~in 2001. Such decrease in net interest expense reflects~~ the ~~decrease~~restructured inSenior ~~net~~Discount ~~interest~~Notes ~~expense incurred by DDi Capital, partially offset by interest expense incurred~~ on ~~the~~or ~~DDi~~before ~~Corp.~~such ~~6.25% Convertible~~anniversary ~~Subordinated Notes issued in April 2002~~date.

~~Income~~Management ~~Taxes~~Equity Incentive Plan. The Company will establish a new management equity incentive plan. Under the new management equity incentive plan, (a) the Company will issue shares of restricted stock equaling five percent (5%) of the reorganized Company’s common stock to the Company’s management, and (b) the Company may issue options for up to an additional ten percent (10%) of the Company’s common stock for members of the Company’s management.

~~The~~ ~~DDi~~Current ~~Capital~~Equity. On the effective ~~tax~~date ~~rate decreased to an expense rate~~ of ~~approximately 1% for~~ the ~~three~~plan ~~months ended June 30~~of reorganization, ~~2002, from a benefit rate of 34% for~~ the ~~same~~current ~~period~~common inequity ~~2001.~~holders ~~The~~will ~~DDi Corp.~~receive ~~effective income tax rate decreased to a benefit rate of approximately~~ 1% ~~for~~of the ~~three~~equity ~~months~~in ~~ended~~the ~~June~~restructured 30Company, ~~2002,~~subject ~~as compared~~ to adilution ~~benefit~~for ~~rate~~issuance of ~~28%~~equity ~~for the same period~~ in ~~2001.~~connection ~~For~~with the ~~three~~exercise ~~months~~of ~~ended June 30, 2002,~~ the Company’s ~~effective~~ ~~tax~~new ~~rates~~options ~~reflect~~and ~~the~~new ~~impact~~senior oflender ~~substantial~~warrants following ~~non-deductible items, primarily~~ the ~~goodwill impairment (see Goodwill Impairment above), and valuation allowances relating to certain state deferred tax assets, including certain state tax credits~~restructuring.

~~Six~~ ~~Months~~Because ~~Ended~~the ~~June~~terms ~~30,~~of ~~2002~~the ~~Compared~~proposed toplan of reorganization and the ~~Six~~out-of-court ~~Months~~restructuring ~~Ended~~of ~~June~~the ~~30,~~Senior ~~2001~~Indebtedness have been agreed upon by holders holding approximately 63% of the outstanding principal amount of the Convertible

Net Sales

DDi Capital net sales decreased $89.4 million (49%) to $94.4 million for the six months ended June 30, 2002, from $183.8 million for the same period in 2001. DDi Corp. net sales decreased $101.9 million (45%) to $124.6 million for the six months ended June 30, 2002, from $226.5 million for the same period in 2001. Such decreases in net sales are attributable to a reduction in panels produced and the average price per panel, reflecting softened economic conditions in both North America and Europe.

Gross Profit

DDi Capital gross profit decreased $57.7 million (90%) to $6.5 million for the six months ended June 30, 2002, from $64.2 million for the same period in 2001. DDi Corp. gross profit decreased $70 million (88%) to $9.1 million for the three months ended June 30, 2002, from $79.1 million for the same period in 2001. The gross profit for DDi Capital and DDi Corp. includes incremental charges ($3.4 million for DDi Capital and $3.5 million for DDi Corp.) for inventory write-downs in connection with our second quarter 2002 restructuring initiatives (see the discussion of Restructuring and Other Related Charges for further information). Excluding the incremental charge, DDi Capital gross profit was $9.9 million, or 10% of net sales for the six months ended June 30, 2002, down from 35% of net sales for the same period in 2001. On the same basis, DDi Corp. gross profit was $12.5 million, or 10% of net sales for the six months ended June 30, 2002, down from 35% for the same period in 2001. The decreases in the Company’s gross profit resulted from the lower level of net sales generated in 2002. The impact of the decreases in sales was mitigated by various cost control initiatives relating to materials, production personnel and overhead expenses.

Sales and Marketing Expenses

DDi Capital sales and marketing expenses decreased $2.6 million (19%) to $11.4 million for the six months ended June 30, 2002, from $14 million for the same period in 2001. DDi Corp. sales and marketing expenses decreased $2.9 million (19%) to $12.4 million for the six months ended June 30, 2002, from $15.3 million for the same period in 2001. Such decreases

in ~~sales~~Subordinated ~~and~~Notes, ~~marketing~~are ~~expenses~~supported ~~reflect~~by the ~~lower~~holders ~~level~~of 100% of ~~net~~the ~~sales~~Senior Indebtedness, ~~partially~~and ~~offset~~are bythe ~~additional~~subject ~~costs~~of ~~associated~~an ~~with~~agreement in principle between the ~~Company’s~~Debtors and the holders of ~~Tokyo-based~~approximately ~~sales~~43% ~~office~~of ~~and~~the aoutstanding ~~shift~~principal inamount of the ~~overall~~Senior ~~production~~Discount ~~mix~~Notes, ~~resulting~~the inCompany ~~increased~~believes ~~commissions~~there ~~and~~is ~~other~~a ~~variable~~strong ~~expenses.~~likelihood that the proposed restructuring will be confirmed.

~~General~~ The Debtors will continue to conduct their business through their non-debtor operating subsidiaries, Dynamic Details and ~~Administration~~DDi ~~Expenses~~Europe. The Debtors will manage their properties as debtors-in-possession during the pendency of the proposed Chapter 11 Cases. The proposed Chapter 11 Cases are expected to only minimally affect the operating businesses of the Debtors’ non-debtor affiliates.

DDi Capital general and administration expenses decreased $2.3 million (28%) to $6 million for the six months ended June 30, 2002, from $8.3 million for the same period in 2001. DDi Corp. general and administration expenses decreased $2.8 million (24%) to $9 million for the six months ended June 30, 2002, from $11.8 million for the same period in 2001. The decreases in general and administrative expenses reflect the impact of various cost control initiatives. Such expenses increased as a percentage of net sales, however, reflecting the relatively fixed nature of many of these costs.

Restructuring and Other Related Charges

Restructuring and related charges were $13.8 million for DDi Capital and $14.4 million for DDi Corp. for the six months ended June 30, 2002. Such charges represent incremental costs incurred in connection with management’s decision to close various facilities, eliminate additional overhead, and remove underutilized assets from productive service. See Note 15 to the Condensed Consolidated Financial Statements.

Amortization of Intangibles

Amortization of intangibles for the six months ended June 30, 2001 was $9 million for DDi Capital and $11.5 million for DDi Corp. Effective January 1, 2002, the Company adopted of Statement of Financial Accounting Standards No. 142 (see Note 14 to the Condensed Consolidated Financial Statements). As a result of the adoption of this standard, the Company recorded no amortization of intangibles for the six months ended June 30, 2002.

Goodwill Impairment

DDi Capital and DDi Corp. recorded a goodwill impairment of $45 million and $60 million, respectively, during the six months ended June 30, 2002. See Note 14 to the Condensed Consolidated Financial Statements.

Net Interest Expense

DDi Capital net interest expense decreased $25 million (86%) to $4.1 million for the six months ended June 30, 2002, from $29.1 million for the same period in 2001. Such decrease in net interest expense is due primarily to the retirement of debt in each period. For the six months ended June 30, 2002, the Company recorded approximately $1.4 million in net non-cash credits resulting from a write-off of debt issuance costs in connection with the prepayment of a portion of the Dynamic Details Senior Term Facility and the modification of the related interest rate swap agreement. For the six months ended June 30, 2001, the Company recorded net interest charges of approximately $19.6 million in connection with the redemption of the Dynamic Details Senior Subordinated Notes in February 2001 and a portion of the DDi Capital Senior Discount Notes in the second quarter of 2001. See Note 17 to the Condensed Consolidated Financial Statements. The decrease in net interest expense also reflects the reduced indebtedness resulting from the aforementioned transactions and the scheduled principal repayments of the Dynamic details Senior Credit Facility. DDi Corp. net interest expense decreased $22.6 million (70%) to $9.8 million for the six months ended June 30, 2002, from $32.4 million for the same period in 2001. Such decrease in net interest expense reflects the decrease in net interest expense incurred by DDi Capital, partially offset by interest expense incurred on the DDi Corp. 5.25% Convertible Subordinated Notes issued in February 2001 and the DDi Corp. 6.25% Convertible Subordinated Notes issued in April 2002.

Income Taxes

The DDi Capital effective tax rate decreased to a benefit rate of approximately 3% for the six months ended June 30, 2002, from an expense rate of 80% for the same period in 2001. The DDi Corp. effective income tax rate decreased to a benefit rate of approximately 5% for the six months ended June 30, 2002, as compared to a benefit rate of 60% for the same period in 2001. For the six months ended June 30, 2002, the Company’s effective tax rates reflect the impact of substantial non-deductible items, primarily the goodwill impairment (see Goodwill Impairment above), and valuation allowances relating to certain state deferred tax assets, including certain state tax credits.

Liquidity and Capital Resources

As of June 30, 2002, cash, cash equivalents and marketable securities were $12.4 million for DDi Capital and $49.6 million for DDi Corp., compared to $39.5 million for DDi Capital and $45.5 million for DDi Corp. as of December 31, 2001. Additionally, the Company had $12.5 million in restricted cash and investments at June 30, 2002 (see Note 7 to the condensed consolidated financial statements). Our principal sources of liquidity to fund ongoing operations are cash provided by operations, existing cash, cash equivalents and marketable securities available for sale.

~~Net~~ ~~cash~~Item ~~provided by (used in) operating activities for the six months ended June 30, 2002 was $0~~2.4 ~~million~~Management’s ~~for~~Discussion ~~DDi Capital~~ and ~~$(2.5)~~Analysis ~~million~~of ~~for~~Financial ~~DDi~~Condition ~~Corp., compared to $52.2 million for DDi Capital~~ and ~~$61.4~~Results ~~million for DDi Corp. for the six months ended June 30, 2001. The decline in operating cash flow is due primarily to lower levels~~ of ~~earnings~~ ~~in the current period~~Operations.

~~Capital~~Overview expenditures for the six months ended June 30, 2002 were $5.3 million for DDi Capital and $6.5 million for DDi Corp., compared to $14.2 million for DDi Capital and $21.0 million for DDi Corp. for the six months ended June 30, 2001.

As ~~of June 30, 2002,~~ DDi ~~Capital and DDi~~ Corp. ~~had~~provides ~~long-term~~technologically ~~borrowings of $82.0 million and $303.1 million~~advanced, ~~respectively.~~time-critical ~~Dynamic~~electronics ~~Details has a $50.0 million revolving credit facility for revolving credit loans~~design, ~~letters~~development ~~of credit~~ and ~~swing~~manufacturing ~~line~~services ~~loans. Access~~ to ~~the~~original ~~full~~equipment ~~amount~~manufacturers ofand ~~the~~other ~~revolving~~electronics ~~credit~~manufacturing ~~facility~~service isproviders. Operating ~~subject~~through toour ~~conditions~~primary operating ~~set~~subsidiaries, ~~forth~~DDi inEurope ~~the~~Limited ~~credit~~(“DDi ~~facility~~Europe”) ~~agreement.~~and ~~Under an amendment to the~~ Dynamic Details ~~senior credit facility in June 2002~~, ~~the~~Incorporated ~~maximum we can borrow under the revolving credit facility is limited to $25 million until December 31, 2003. At June 30, 2002,~~ (“Dynamic Details”), ~~had~~we notarget ~~amounts~~customers ~~outstanding~~that ~~under~~are ~~this~~characterized ~~revolving~~by ~~credit~~new ~~facility~~product ~~and~~development ~~had~~programs ~~$1.2~~demanding ~~million reserved against~~ the ~~facility~~rapid ~~for letters~~application of advanced ~~credit~~technology and ~~had $23~~design.8 million available for borrowing under the facility. Our European operating subsidiary, DDi Europe, has $15.3 million available for borrowing under its revolving credit facility. At June 30, 2002, no amounts were drawn on this revolving credit facility.

~~The~~ ~~following~~As ~~table~~used ~~shows~~herein, the “Company,” “we,” “us,” or “our” ~~contractual~~means ~~cash~~DDi ~~obligations~~Corp. and ~~commercial~~its ~~commitments~~wholly-owned assubsidiaries, ofincluding ~~June~~DDi Capital 30Corp. (“DDi Capital”), ~~2002:~~ DDi Europe and Dynamic Details.

~~Payments~~ ~~Due~~This bydiscussion ~~Period~~and analysis should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations set forth in DDi Capital’s and DDi Corp.’s Annual Report on Form 10-K for the year ended December 31, 2002.

~~(in~~ ~~millions)~~Results of Operations

	DDi Capital
	For the Six Months Ending December 31,		Year Ending December 31,
Commitments	2002		2003		2004		2005		2006		Thereafter		Total
Long-Term Debt	$	4.7	$	11.0	$	24.7	$	32.8	$	—	$	16.1	$	89.3
Capital Lease Obligations		0.8		1.5		1.4		1.3		—		—		5.0
Operating Leases		3.2		5.8		5.0		5.0		3.7		12.3		35.0
Total Commitments	$	8.7	$	18.3	$	31.1	$	39.1	$	3.7	$	28.4	$	129.3

Three Months Ended June 30, 2003 Compared to the Three Months Ended June 30, 2002

	DDi Corp.
	For the Six Months Ending December 31,		Year Ending December 31,
Commitments	2002		2003		2004		2005		2006		Thereafter		Total
Long-Term Debt	$	4.7	$	15.6	$	29.3	$	37.4	$	4.6	$	220.6	$	312.2
Capital Lease Obligations		1.3		1.8		1.6		1.4		—		—		6.1
Operating Leases		4.3		7.8		6.9		6.8		5.6		30.5		61.9
Total Commitments	$	10.3	$	25.2	$	37.8	$	45.6	$	10.2	$	251.1	$	380.2

Net Sales
DDi Capital net sales decreased $11.6 million (24%) to $35.8 million for the three months ended June 30, 2003, from $47.4 million for the same period in 2002. Such decrease in net sales reflects the disposition of certain non-core facilities during the latter part of 2002 and in April 2003 and a reduction in the average price per panel reflecting softened economic conditions in North America. DDi Corp. net sales decreased $5.9 million (10%) to $56.2 million for the three months ended June 30, 2003, from $62.1 million for the same period in 2002. The decrease in DDi Corp. net sales is due to the net decrease in DDi Capital net sales discussed above, as well as a reduction in the average price per panel reflecting softened economic conditions in Europe, partially offset by the acquisition of Kamtronics in October 2002 and growth in U.K. assembly operations.

OnGross ~~February~~ProfitDDi ~~14,~~Capital ~~2001,~~gross ~~DDi Corp.~~profit ~~and~~decreased ~~some of its shareholders completed a follow-on public offering of 6,000,000 shares of its common stock, with 3,000,000 shares issued by DDi Corp~~$1.2 ~~and~~million ~~the~~(71%) ~~remainder sold by selling shareholders~~to $0.5 ~~The~~million ~~shares~~for ~~were~~the ~~sold~~three atmonths ~~$23.50~~ended ~~per~~June ~~share~~30, ~~generating~~ ~~proceeds~~2003, offrom $671.07 million, ~~net~~for ofthe ~~underwriting~~same ~~discounts,~~period ~~commissions~~in ~~and expenses~~2002. ~~Concurrently,~~ DDi Corp. ~~issued~~gross ~~5.25%~~profit ~~Convertible~~decreased ~~Subordinated~~$0.7 ~~Notes~~million ~~due~~(26%) ~~March~~to ~~1, 2008 with an aggregate principal of~~ $~~100~~2.0 million. ~~These~~for ~~notes~~the ~~are convertible~~three atmonths ~~any~~ended ~~time~~June ~~prior to maturity into shares of common stock at a conversion price of $~~30~~.00~~, ~~per share~~2003, ~~subject~~from ~~to certain adjustments. These notes generated proceeds of~~ $972.07 million, ~~net~~for ofthe ~~underwriting~~same period ~~discounts,~~in ~~commissions and expenses~~2002. The ~~net~~decreases ~~proceeds~~in ofthe ~~both~~Company’s ~~transactions~~gross ~~were~~profit ~~used~~resulted tofrom ~~repurchase a portion of~~ the ~~DDi~~lower ~~Capital~~level ~~senior discount notes and all~~ of ~~the~~net ~~Dynamic~~sales ~~Details~~generated ~~senior~~in ~~subordinated notes (see Note 6 to the condensed consolidated financial statements)~~2003.

On ~~April~~Sales 2and Marketing Expenses DDi Capital sales and marketing expenses decreased $1.8 million (32%) to $3.8 million for the three months ended June 30, ~~2002~~2003, from $5.6 million for the same period in 2002. DDi Corp. ~~completed~~sales ~~its~~and ~~private~~marketing ~~offering~~expenses ofdecreased $~~100~~1.04 million ~~aggregate~~(23%) ~~principal~~to ~~amount~~$4.8 ofmillion ~~6.25%~~for the ~~Convertible~~three ~~Subordinated~~months ~~Notes~~ended ~~due~~June ~~April~~30, 12003, ~~2007~~from $6.2 ~~These~~million ~~notes~~for ~~are~~the ~~convertible~~same atperiod ~~any~~in ~~time~~2002. Such ~~prior~~decreases toin ~~maturity~~sales ~~into~~and ~~shares~~marketing expenses resulted from the lower level of net sales generated in 2003 and from various cost control initiatives implemented throughout 2002 and 2003.

General and Administration Expenses
DDi Capital general and administration expenses decreased $0.6 million (21%) to $2.3 million for the three months ended June 30, 2003, from $2.9 million for the same period in 2002. DDi Corp. general and administration expenses decreased $0.4 million (9%) to $4.2 million for the three months ended June 30, 2003, from $4.6 million for the same period in 2002. Such decreases in general and administration expenses resulted from various cost control initiatives implemented throughout 2002 and 2003.

Goodwill Impairment
Goodwill impairment for both DDi Capital and DDi Corp. was $2.0 million for the three months ended June 30, 2003, compared to $45.0 million for DDi Capital and $60.0 million for DDi Corp. for the three months ended June 30, 2002. The impairment charge for 2003 relates to the additional purchase price for a prior acquisition initially capitalized in the second quarter of 2003 (see Note 10 to the condensed consolidated financial statements). The impairment charge for 2002 was

~~common~~incurred ~~stock~~because ~~at a conversion price of $11.04 per share, subject to certain adjustments. These notes generated proceeds of $95.8 million, net of underwriting discounts. Approximately $47.9 million of~~ the ~~net~~book ~~proceeds~~value ~~from the sale were used to repay a portion~~ of ~~the~~goodwill ~~Dynamic Details Senior Term Facility, $12.5 million~~ was ~~placed~~ in anexcess ~~interest reserve account to cover two years~~ of ~~interest payments~~its onfair ~~the notes and the remainder will be used for working capital and general corporate purposes. In connection with the $47.9 million repayment of the Senior Term Facility~~value, ~~Dynamic~~as ~~Details~~determined ~~elected to amend its swap agreement~~ by ~~reducing~~ the ~~notional~~ ~~balance~~Company’s ofmarket ~~the swap to reflect the impact of the debt repayment on the outstanding principal~~capitalization. In connection with the amendment of the swap agreement, Dynamic Details paid approximately $3.1 million to the counterparty, representing the pro-rata portion of the deferred swap liability (see Note 7 to the condensed consolidated financial statements).

~~Based~~ ~~upon~~Restructuring ~~the~~and ~~current~~Other ~~level~~Related ofChargesRestructuring ~~operations,~~and werelated ~~believe~~charges ~~that~~were ~~cash~~$3.0 ~~generated~~million ~~from~~for ~~operations,~~DDi ~~available~~Capital ~~cash~~ and ~~amounts~~$3.3 ~~available~~million ~~under~~for ~~our~~DDi ~~senior~~Corp. ~~credit~~for ~~facility~~the ~~will~~three bemonths ~~adequate~~ended toJune ~~meet~~30, ~~our~~2003, ~~debt~~compared ~~service~~to ~~requirements,~~$13.8 ~~capital~~million for DDi ~~expenditures~~Capital and ~~working~~$14.4 ~~capital~~million ~~needs~~for DDi Corp. for the ~~foreseeable~~three ~~future,~~months ~~although~~ended noJune ~~assurance~~30, ~~can~~2002. Such becharges ~~given~~ in ~~this~~the ~~regard.~~current ~~Accordingly,~~quarter ~~there~~represent ~~can~~the becosts noassociated ~~assurance~~with ~~that~~the ~~our~~sale ~~business~~of ~~will~~certain ~~generate~~assets ~~sufficient~~of ~~cash~~the ~~flow~~Company’s ~~from~~Dallas-based electronic enclosure operations orand ~~that~~the ~~future borrowings~~down-sizing ~~will~~of beits ~~available~~Virginia toand ~~enable~~Anaheim, usCalifornia toworkforces ~~service~~(see ~~our~~Note ~~indebtedness.~~11 Weto ~~remain~~the ~~leveraged~~condensed ~~and~~consolidated ~~our~~financial ~~future~~statements). Charges ~~operating~~for ~~performance~~the ~~and~~three ~~ability~~months toended ~~service~~June or30, ~~refinance~~2002, ~~our~~represent ~~indebtedness~~incremental ~~will~~costs beincurred ~~subject~~in connection towith ~~future~~management’s ~~economic~~decision ~~conditions~~to ~~and~~close tovarious ~~financial~~facilities, ~~business~~ ~~and~~eliminate ~~other~~additional ~~factors~~overhead, ~~certain~~and ofremove ~~which~~underutilized ~~are~~assets ~~beyond~~from ~~our~~productive ~~control~~service.

~~FORWARD-LOOKING~~ ~~STATEMENTS~~Reorganization ExpensesReorganization expenses were $2.4 million for DDi Capital and $2.7 million for DDi Corp., respectively, for the three months ended June 30, 2003 and $0 for both DDi Capital and DDi Corp. for the three months ended June 30, 2002. Such charges represent $1.7 million for DDi Capital and $1.9 million for DDi Corp. of costs relating to professional fees incurred in connection with our efforts to effect a plan of reorganization to deleverage our capital structure and $0.7 million for DDi Capital and $0.8 million of costs relating to our Key Employee Retention Plan (see Note 12 to the condensed consolidated financial statements).

A ~~number~~Loss of the matters and subject areas discussed in this Form 10-Q are forward-looking in nature. The discussion of such matters and subject areas is qualified by the inherent risks and uncertainties surrounding future expectations generally, and also may differ materially from our actual future experience involving any one or more of such matters and subject areas. We wish to caution readers that all statements other than statements of historical facts included in this quarterly report on ~~Form~~Interest ~~10-Q~~Rate ~~regarding our financial position and business strategy may constitute forward-looking statements. All of these forward-looking statements~~Swap ~~are~~TerminationDDi ~~based~~Capital ~~upon estimates~~ and ~~assumptions~~DDi ~~made by our management, which although believed to be reasonable, are inherently uncertain~~Corp. ~~Therefore,~~recorded ~~undue~~a ~~reliance~~loss ~~should not be placed~~ on ~~such~~interest ~~estimates~~rate ~~and~~swap ~~statements.~~termination ~~No assurance can be given that any~~ of ~~such estimates or statements will be realized and it is likely that actual results will differ materially from those contemplated by such forward-looking statements~~$5.6 ~~Factors~~million ~~that~~for ~~may cause such differences include: (1) changes in general economic conditions in~~ the ~~markets~~three inmonths ~~which~~ended weJune may compete and fluctuations in demand in the electronics industry; (2) success of our restructuring efforts; (3) the ability to sustain historical margins as the industry develops; (4) increased competition; (5) increased costs; (6) loss or retirement of key members of management; (7) increases in our cost of borrowings or unavailability of additional debt or equity capital on terms considered reasonable by management; (8) adverse state30, ~~federal or foreign legislation or regulation or adverse determinations by regulators; and (9) inability to consummate acquisitions on attractive terms~~2003. The Weloss ~~have~~relates ~~attempted~~ to ~~identify, in context, certain of~~ the ~~factors~~termination that we currently believe may cause actual future experiences to differ from our current expectations regarding the relevant matter or subject area. In addition to the items specifically discussed in the foregoing, our business and results of ~~operations are subject to~~ the ~~risks~~interest ~~and uncertainties~~rate ~~described~~swap ~~herein~~agreement ~~under~~related ~~the heading “Factors That May Affect Future Results” contained herein, however, the operations and results of our business also may be subject~~ to the ~~effect of other risks and uncertainties. Such risks~~ ~~and~~senior ~~uncertainties~~term ~~include,~~facility ~~but~~(see ~~are~~Note ~~not~~4 ~~limited~~ to, ~~items described from time-to-time in our registration statements and periodic reports filed with~~ the ~~Securities~~condensed ~~and~~consolidated ~~Exchange~~financial ~~Commission~~statements).

Net Interest Expense
DDi Capital net interest expense increased $1.7 million to $2.3 million for the three months ended June 30, 2003, from $0.6 million for the same period in 2002. The increase in net interest expense for DDi Capital is due to the net non-cash credits resulting from a write-off of debt issuance costs in connection with the prepayment of a portion of the Dynamic Details senior term facility and the modification of the related interest rate swap agreement recorded in 2002. DDi Corp. net interest expense increased $1.6 million to $6.0 million for the three months ended June 30, 2003, from $4.4 million for the same period in 2002. The increase in net interest expense reflects the increase in net interest expense incurred by DDi Capital, and also by interest expense incurred on the DDi Corp. 6.25% convertible subordinated notes issued in April 2002.

Income Taxes
The DDi Capital effective tax rate was approximately 1.0% for the three months ended June 30, 2003 and for the same period in 2002. The DDi Corp. effective income tax rate increased to a benefit rate of approximately 2.0% for the three months ended June 30, 2003, as compared to a benefit rate of 1.4% for the same period in 2002. During the three months ended June 30, 2003, the Company’s effective tax rates reflect the impact of valuation allowances on US federal and state deferred tax assets generated in the current period. During the three months ended June 30, 2002, the Company’s effective tax rates reflect the impact of substantial non-deductible items, primarily the goodwill impairment and valuation allowances relating to certain state deferred tax assets, including state tax credits.

Six Months Ended June 30, 2003 Compared to the Six Months Ended June 30, 2002

Net Sales
DDi Capital net sales decreased $17.4 million (18%) to $77.0 million for the six months ended June 30, 2003, from $94.4 million for the same period in 2002. Such decrease in net sales reflects the disposition of certain non-core facilities during the latter part of 2002 and April 2003 and a reduction in the average price per panel reflecting softened economic conditions in North America, partially offset by growth in U.S. assembly operations. DDi Corp. net sales decreased $6.7 million (5%) to $117.9 million for the six months ended June 30, 2003, from $124.6 million for the same period in 2002. The decrease in DDi Corp. net sales is due to the net decrease in DDi Capital net sales discussed above, as well as a reduction in the average price per panel reflecting softened economic conditions in Europe, partially offset by the acquisition of Kamtronics in October 2002 and growth in U.K. assembly operations.

Gross Profit
DDi Capital gross profit decreased $2.8 million (43%) to $3.7 million for the six months ended June 30, 2003, from $6.5 million for the same period in 2002. DDi Corp. gross profit decreased $2.7 million (30%) to $6.4 million for the six months ended June 30, 2003, from $9.1 million for the same period in 2002. The decreases in the Company’s gross profit

~~FACTORS~~ ~~THAT~~resulted ~~MAY~~from ~~AFFECT~~both ~~FUTURE~~the ~~RESULTS~~lower level of net sales generated in 2003 and the restructuring related inventory impairment (see Note 11 to the condensed consolidated financial statements).

~~Substantial~~ ~~Indebtedness~~Sales and Marketing ExpensesDDi Capital sales and marketing expenses decreased $3.7 million (33%) to $7.7 million for the six months ended June 30, 2003, from $11.4 million for the same period in 2002. DDi Corp. sales and marketing expenses decreased $3.0 million (24%) to $9.4 million for the six months ended June 30, 2003, from $12.4 million for the same period in 2002. Such decreases in sales and marketing expenses resulted from the lower level of net sales generated in 2003 and from various cost control initiatives implemented throughout 2002 and 2003.

We ~~have~~General aand ~~substantial amount of indebtedness.~~Administration AsExpensesDDi ofCapital ~~June~~general ~~30,~~and ~~2002,~~administration ~~our~~expenses ~~total~~decreased ~~debt was approximately~~ $931.63 million ~~for~~(22%) ~~DDi~~to ~~Capital and~~ $~~317~~4.6 million for ~~DDi~~the ~~Corp.~~six Asmonths ofended June 30, ~~2002~~2003, wefrom ~~had~~ $235.89 million ~~available~~for ~~under~~ the ~~Dynamic~~same ~~Details~~period ~~senior~~in ~~credit facility and $14~~2002.6 ~~million available under the~~ DDi ~~Europe~~Corp. ~~credit facility for future borrowings for~~ general ~~corporate purposes~~ and ~~working~~administration ~~capital~~expenses decreased ~~needs~~$0.6 Inmillion ~~addition,~~(7%) ~~subject~~ to ~~the~~$8.3 ~~restrictions~~million infor the ~~DDi~~six ~~Corp.~~months ~~convertible~~ended ~~subordinated~~June ~~notes~~30, ~~DDi~~2003, ~~Capital~~from ~~senior~~$8.9 ~~discount~~million ~~notes~~for ~~and Dynamic~~the ~~Details~~same ~~senior~~period ~~credit~~in ~~facility,~~2002. Such wedecreases ~~may~~in ~~incur~~general ~~additional~~and ~~indebtedness~~administration inexpenses anresulted ~~unrestricted amount~~ from ~~time~~various tocost ~~time~~control toinitiatives implemented ~~finance~~throughout ~~acquisitions~~2002 orand ~~capital expenditures or for other purposes~~2003.

As Goodwill ImpairmentGoodwill impairment for both DDi Capital and DDi Corp. was $2.0 million for the six months ended June 30, 2003, compared to $45.0 million for DDi Capital and $60.0 million for DDi Corp. for the six months ended June 30, 2002. The impairment charge for 2003 relates to the additional purchase price for a ~~result~~prior ofacquisition ~~our~~initially ~~level~~capitalized in the second quarter of ~~debt~~2003 ~~and~~(see Note 10 to the ~~terms~~condensed consolidated financial statements). The impairment charge for 2002 was incurred because the book value of ~~our~~goodwill ~~debt~~was ~~instruments:~~in excess of its fair value, as determined by the Company’s market capitalization.

• ~~our~~Restructuring ~~vulnerability~~and Other Related ChargesRestructuring and related charges were $3.4 million for DDi Capital and $3.8 million for DDi Corp. for the six months ended June 30, 2003, compared to ~~adverse~~$13.8 ~~general~~million ~~economic~~for ~~conditions~~DDi isCapital ~~heightened;~~and $14.4 million for DDi Corp. for the six months ended June 30, 2002. Such charges in the current year represent the costs associated with the sale of certain assets of the Company’s Dallas-based electronic enclosure operations and the down-sizing of its Virginia and Anaheim, California workforces (see Note 11 to the condensed consolidated financial statements). Charges for the six months ended June 30, 2002, represent incremental costs incurred in connection with management’s decision to close various facilities, eliminate additional overhead, and remove underutilized assets from productive service.

•Reorganization weExpensesReorganization ~~will~~expenses bewere ~~required~~$5.1 tomillion ~~dedicate~~for aDDi ~~substantial~~Capital ~~portion~~and $6.0 million for DDi Corp., respectively. Such charges represent $3.7 million for DDi Capital and $3.9 million for DDi Corp. of ~~our~~costs ~~cash~~relating ~~flow~~to ~~from~~professional ~~operations~~fees incurred in connection with our efforts to ~~repayment~~effect a plan of ~~debt,~~reorganization ~~limiting~~to ~~the~~deleverage ~~availability~~our ofcapital ~~cash~~structure and $1.4 million for ~~other~~DDi ~~purposes;~~Capital and $2.1 million of costs relating to our Key Employee Retention Plan (see Note 12 to the condensed consolidated financial statements).

• weLoss ~~are~~on Interest Rate Swap TerminationDDi Capital and ~~will~~DDi ~~continue~~Corp. torecorded bea ~~limited~~loss byon ~~financial~~interest ~~and~~rate ~~other~~swap ~~restrictive~~termination of ~~covenants~~$5.6 inmillion ~~our~~for ~~ability~~the tosix ~~borrow~~months ~~additional~~ended ~~funds~~June 30, ~~consummate~~2003. The ~~asset~~loss ~~sales,~~relates ~~enter~~to ~~into~~the ~~transactions~~termination ~~with~~of ~~affiliates~~the orinterest ~~conduct~~rate ~~mergers~~swap ~~and~~agreement ~~acquisitions;~~related to the senior term facility (see Note 4 to the condensed consolidated financial statements).

• Net ~~our~~Interest ~~flexibility~~ExpenseDDi inCapital ~~planning~~net interest expense increased $0.7 million to $4.8 million for the six months ended June 30, or2003, ~~reacting~~from $4.1 million for the same period in 2002. The increase in net interest expense for DDi Capital is due to the net non-cash credits resulting from a write-off of debt issuance costs in connection with the prepayment of a portion of the Dynamic Details senior term facility and the modification of the related interest rate swap agreement recorded in 2002. DDi Corp. net interest expense increased $2.5 million to $12.3 million for the six months ended June 30, ~~changes~~2003, from $9.8 million for the same period in ~~our~~2002. The ~~business~~increase in net interest expense reflects the increase in net interest expense incurred by DDi Capital, and ~~industry~~also ~~will~~by beinterest ~~limited;~~expense incurred on the DDi Corp. 6.25% convertible subordinated notes issued in April 2002.

• weIncome ~~are~~TaxesThe ~~sensitive~~DDi Capital effective tax rate decreased to ~~fluctuations~~a tax rate of approximately 1.3% for the six months ended June 30, 2003, from a benefit rate of 3.3% for the same period in ~~interest~~2002. The ~~rates~~DDi ~~because~~Corp. effective ~~some~~income tax rate decreased to a benefit rate of ~~our~~approximately ~~debt~~2.7% ~~obligations~~for ~~are~~the ~~subject~~six months ended June 30, 2003, as compared to ~~variable~~a ~~interest~~benefit rate of 5.4% for the same period in 2002. During the six months ended June 30, 2003, the Company’s effective tax rates; ~~and~~reflect the impact of

• our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate purposes or other purposes may be impaired.

Our ability to pay principal and interest on our indebtedness and to satisfy our other debt obligations will depend upon our future operating performance, which will be affected by prevailing economic conditions and financial, business and other factors, some of which are beyond our control, as well as the availability of revolving credit borrowings under the Dynamic Details senior credit facility and the DDi Europe facilities agreement or successor facilities. We anticipate that our existing cash and marketable securities, operating cash flow, amounts available under our existing credit facilities will be sufficient to meet our operating expenses and to service our debt requirements as they become due. If we are unable to service our indebtedness, we will be forced to take actions such as reducing or delaying capital expenditures, selling assets, restructuring or refinancing our indebtedness, or seeking additional equity capital. There is no assurance that we can effect any of these remedies on satisfactory terms, or at all.

Business Cycles of the End Markets We Serve

The end markets into which we sell printed circuit boards and electronic manufacturing services (including communications and networking equipment; computers and peripherals; medical, automotive, industrial and test equipment; and aerospace equipment) have their own business cycles. Some of these cycles show predictability from year to year. However, other cycles are unpredictable in commencement, depth and duration. The communications industry entered into a significant downturn in late 2000, which continues as of this date. This has had a negative impact on our revenues and operating performance for the six months ended June 30, 2002 and has continued to have a negative impact on our revenues and operating performance during the third quarter of 2002. The failure of such industries to recover, a worsening of the downturn, or any other event leading to additional excess capacity will negatively impact our revenues, gross margins and operating margins.

Potential Adverse Effects Relating to Our Indebtedness

Dynamic Details and DDi Europe are required to maintain specified financial ratios and satisfy certain financial condition tests contained in their respective credit facilities. If Dynamic Details and DDi Europe are not able to meet the financial ratios and satisfy the financial condition tests contained in their respective credit facilities, we may be required to commence discussions with our lenders regarding forbearance agreements, additional amendments or waivers under, or a potential restructuring of, our indebtedness. There can be no assurance that any such agreement could be obtained.

~~Any~~ ~~increase~~valuation inallowances ~~our~~on ~~debt~~US ~~service~~federal ~~requirements~~and orstate ~~any~~deferred ~~reduction~~tax inassets ~~amounts~~generated ~~available~~in ~~for borrowing under~~ the ~~Dynamic~~current ~~Details~~period. During ~~senior~~the ~~credit~~six ~~facility~~months orended ~~our~~June ~~other~~30, ~~indebtedness~~2002, ~~could~~the ~~significantly~~Company’s ~~affect~~effective tax ~~our~~rates ~~ability~~reflect tothe ~~meet~~impact ~~debt~~of ~~service~~substantial ~~requirements,~~non-deductible ~~to fund capital expenditures~~items, ~~acquisitions,~~primarily ~~and working capital. There can be no assurance that~~ the ~~Dynamic~~ ~~Details~~goodwill ~~senior~~impairment ~~credit~~and ~~facility~~valuation orallowances ~~our~~relating ~~other~~to ~~indebtedness~~certain ~~would~~state bedeferred ~~renegotiated~~tax onassets, ~~terms~~including ~~acceptable~~state totax uscredits.

If weLiquidity ~~are not able to comply with the current financial covenant levels, we will not be able to borrow under the Dynamic Details senior credit facility,~~ and ~~the~~Capital lenders under this facility will have the right to declare the outstanding borrowings under the facility to be immediately due and payable and the exercise of all or any of their other rights and remedies, including foreclosing on the collateral pledged to secure the facility, which consists of substantially all of the assets of Dynamic Details and its subsidiaries. Resources

~~Restrictions~~ ~~Imposed~~Proposed ~~by Terms of Indebtedness~~ Restructuring

~~The~~ ~~terms~~On ofMay ~~our~~13, ~~indebtedness restrict~~2003, ~~among~~the ~~other~~Company ~~things,~~announced ~~our~~that it ~~ability~~had toreached ~~incur~~an ~~additional~~agreement ~~indebtedness,~~in ~~pay~~principle ~~dividends~~on ora ~~make~~restructuring ~~certain~~plan ~~other~~with ~~restricted~~a ~~payments,~~steering ~~consummate~~committee ~~certain~~of ~~asset~~the ~~sales,~~senior ~~enter into~~lender ~~certain~~group ~~transactions~~of ~~with~~the ~~affiliates,~~Dynamic ~~merge~~Details orsenior ~~consolidate~~credit ~~with~~facility ~~any~~(the ~~other~~“Senior ~~person~~Credit ~~or sell~~Facility,” ~~assign,~~or ~~transfer,~~“Senior ~~lease~~Indebtedness”), ~~convey~~and with ora ~~otherwise~~steering ~~dispose~~committee of ~~all~~the orad ~~substantially~~hoc ~~all~~committee of ~~our~~the ~~assets.~~holders ~~DDi~~of ~~Europe,~~the ~~DDi~~5.25% ~~Capital~~ and ~~Dynamic~~6.25% ~~Details~~convertible ~~are~~subordinated ~~also required~~notes toof ~~maintain~~the ~~specified~~Company ~~financial~~(the ~~ratios~~“Convertible ~~and~~Subordinated ~~satisfy certain financial condition tests~~Notes”). The ~~Our~~restructuring ~~subsidiaries’~~proposal ~~ability~~contemplated, toamong ~~meet~~other things, ~~those~~the ~~financial~~restructuring ~~ratios~~of ~~and~~the ~~tests~~pre-restructuring ~~can~~Senior beCredit ~~affected by events beyond our subsidiaries’ control~~Facility, ~~and~~the ~~there~~cancellation ~~can~~of ~~be no~~the ~~assurance~~pre-restructuring ~~that~~Convertible ~~they~~Subordinated ~~will~~Notes ~~meet~~and ~~those tests. Depending on~~ the ~~specific~~related ~~circumstance,~~issuance ~~breach~~ of ~~any~~shares of ~~these~~new ~~covenants~~common ~~could~~stock ~~result in a default under some or all~~ of ~~our~~DDi ~~indebtedness agreements~~Corp. ~~Upon~~and ~~the~~new ~~occurrence~~preferred ofstock ~~an event~~ of ~~default, lenders~~DDi ~~under~~Europe ~~such indebtedness could elect~~ to ~~declare~~the ~~all~~holders ~~amounts~~of ~~outstanding~~the ~~together~~Convertible ~~with~~Subordinated ~~accrued interest, to be immediately due and payable~~Notes. The Ifagreement wein ~~were~~principle ~~unable~~also toanticipated ~~repay~~that ~~such amounts,~~ the ~~lenders~~claims ~~could~~of ~~proceed against~~ the ~~collateral~~holders ~~granted to them to secure that indebtedness. Substantially all the assets~~ of ~~Dynamic Details and its subsidiaries are pledged as security under~~ the ~~Dynamic~~DDi ~~Details~~Capital ~~senior credit facility~~12.5% ~~Substantially~~senior ~~all~~discount notes (the ~~assets~~“Senior ofDiscount ~~DDi~~Notes”) ~~Europe~~would ~~are~~also ~~pledged as security under the DDi~~be ~~Europe facilities agreement~~restructured.

~~Restrictions~~On onAugust 1, 2003, DDi Corp. and DDi Capital (the “Debtors”) entered into a Restructuring Support Agreement with 100% of the holders of the Senior Indebtedness with respect to the terms of the Debtors’s ~~Ability~~proposed plan of reorganization and the out-of-court restructuring of the Senior Indebtedness. On August 8, 2003, the Debtors and convertible subordinated note holders holding approximately 63% of the outstanding principal amount of the Convertible Subordinated Notes (the “Convertible Subordinated Note Holders”) entered into a Plan Support Agreement with respect to ~~Use~~the ~~Funds~~terms ~~from~~of ~~Its~~the ~~Operating~~Debtors’ ~~Subsidiaries~~proposed plan of reorganization. Pursuant to the Restructuring Support Agreement and the Plan Support Agreement, the holders of the Senior Indebtedness, and the Convertible Subordinated Note Holders, respectively, agreed to support the plan as long as the respective Restructuring Support Agreement and Plan Support Agreement remain in effect. As is commonly the case in this type of restructuring, the holders of the Senior Indebtedness and the Convertible Subordinated Note Holders will not be required to continue to support the plan of reorganization and the out-of-court restructuring of the Senior Indebtedness if certain events occur. Such events include (but are not limited to) the modification of the plan in a manner not agreed to by the holders of the Senior Indebtedness and the Convertible Subordinated Note Holders, the appointment of a bankruptcy trustee or other receiver, the plan not being confirmed by the Bankruptcy Court by December 15, 2003, and the plan not being effective by January 8, 2004. In addition, the Debtors and the holders of approximately 43% of the outstanding principal amount of the Senior Discount Notes (the “Senior Discount Note Holders”) also reached an agreement in principle with respect to the terms of the Debtors’ proposed plan of reorganization.

~~DDi~~The ~~Corp.~~Restructuring isSupport aAgreement ~~holding~~and ~~company,~~Plan ~~and~~Support aAgreement ~~significant~~each ~~portion~~required that the Debtors file voluntary petitions for reorganization under Chapter 11 of ~~its~~the ~~operations~~U.S. ~~are~~Bankruptcy ~~conducted~~Code by ~~its~~(collectively ~~subsidiaries.~~the ~~DDi~~“Chapter ~~Corp~~11 cases”)August 15, 2003.’s ~~cash~~The ~~flow~~Debtors ~~and~~had ~~its ability~~prepared tosuch ~~service~~petitions ~~indebtedness~~but ~~are~~were ~~dependent~~unable to amake ~~large~~such ~~extent~~filings ~~upon~~due ~~cash~~to ~~dividends~~power outages in New York and ~~distributions~~the resulting orclosure ~~other~~of ~~transfers~~the ~~from~~United ~~its~~States ~~subsidiaries.~~Bankruptcy InCourt ~~addition,~~for ~~any~~the ~~payment~~Southern District of ~~dividends,~~New ~~distributions,~~York ~~loans~~(the or“Bankruptcy ~~advances~~Court”)on bythat ~~DDi Corp~~date.’s ~~subsidiaries~~The interested parties to the Restructuring Support Agreement and Plan Support Agreement have informally indicated to ~~DDi~~the ~~Corp.~~Debtors ~~could~~that bedue ~~subject~~to such circumstances, they will not consider the failure to ~~restrictions~~have filed the petitions on ~~dividends~~August ~~imposed~~15, by2003 to be a material breach of the ~~current~~agreements. ~~and~~The ~~future~~Debtors ~~debt~~are ~~instruments~~currently negotiating written waivers of ~~its~~the applicable ~~subsidiaries~~provisions of the Restructuring Support Agreement and ~~applicable~~an ~~laws.~~amendment ~~Such~~of ~~payments~~the Plan Support Agreement which will formally waive any technical breaches due to ~~DDi~~failure ~~Corp.~~to file the voluntary petitions by ~~its~~August ~~subsidiaries~~15, ~~are~~2003 ~~contingent~~and ~~upon~~which ~~the~~will ~~subsidiaries’~~extend the ~~earnings.~~date ~~Any~~upon ~~right~~which ~~that~~the ~~DDi~~voluntary ~~Corp.~~petitions ~~has~~must tobe ~~receive~~filed ~~any~~until ~~assets~~August of21, ~~any~~2003 ofas ~~its~~well ~~subsidiaries~~as the date upon which the ~~liquidation~~plan orof reorganization ofmust ~~any~~be ~~such~~filed ~~subsidiary~~until ~~will~~August be30, ~~effectively~~2003. ~~subordinated~~The toDebtors ~~the~~anticipate ~~claims~~that ofthey ~~subsidiary~~will ~~creditors,~~receive ~~including~~the ~~trade~~required ~~creditors~~Restructuring ~~and~~Support ~~holders~~Agreement ofwaivers ~~debt~~as ~~issued~~well byas the ~~subsidiary~~amendment to the Plan Support Agreement by August 21, 2003.

~~The~~In ~~Dynamic~~addition, ~~Details~~the ~~senior~~Debtors ~~credit~~are ~~facility~~currently ~~and~~negotiating ~~the~~a ~~DDi~~Senior ~~Europe~~Discount ~~facilities~~Noteholders ~~agreement~~Plan Support ~~restrict~~Agreement ~~the~~with ~~ability~~holders of ~~Dynamic~~approximately ~~Details~~70% ~~and~~of ~~DDi~~the ~~Europe~~outstanding toprincipal ~~pay~~amount ~~dividends~~of orSenior ~~make~~Discount ~~loans~~Notes, toin ~~DDi~~which ~~Corp.~~such Ifholders ~~DDi~~are ~~Corp.~~being ~~does~~asked ~~not~~to ~~have~~agree ~~funds~~to ~~available~~support ~~from~~the ~~other~~Debtors’ ~~sources~~proposed toplan ~~repay~~of ~~its~~reorganization ~~indebtedness~~for ~~when~~as ~~due,~~long ~~DDi~~as ~~Corp.~~the ~~could~~agreement remains ~~attempt~~in toeffect. ~~refinance~~The ~~all~~proposed orSenior ~~a portion~~Discount ofNoteholders ~~its~~Plan ~~indebtedness~~Support orAgreement ~~seek~~would ~~the~~also ~~consent~~require ofthat ~~its~~the ~~lenders~~voluntary topetitions ~~make~~be ~~the~~filed ~~payments~~by ~~due~~August 21, ~~but~~2003 ~~there~~and ~~can~~that bethe noplan ~~assurance~~of ~~that~~reorganization ~~DDi~~be ~~Corp.~~filed ~~can~~by ~~obtain~~August ~~such~~30, ~~consent~~2003. IfSimilar ~~DDi~~to ~~Corp.~~the Restructuring ~~does~~Support ~~not~~Agreement ~~have~~and ~~funds~~Plan ~~available~~Support ~~from~~Agreement, ~~other~~the ~~sources~~holders ~~and~~of isSenior ~~not~~Discount ~~able~~Notes towould ~~obtain~~not ~~a consent~~be ofrequired ~~its~~to ~~lenders,~~continue ~~DDi~~to ~~Corp.~~support ~~could not make~~ the ~~payments~~plan ~~due~~of ~~under~~reorganization ~~its~~and ~~indebtedness.~~the ~~DDi~~out-of-court ~~Corp.’s~~restructuring ~~failure~~of tothe ~~make~~Senior ~~any~~Discount ~~payments~~Notes ~~due~~if ~~under~~certain events ~~its~~occur. ~~indebtedness~~Those ~~would~~events ~~constitute~~are ansimilar ~~event~~to ofthe ~~default~~termination ~~under~~events ~~such~~in ~~indebtedness,~~the ~~which~~Restructuring ~~may~~Support ~~constitute~~Agreement ~~a default~~and ~~under~~Plan ~~the~~Support ~~terms~~Agreement ofdescribed ~~our other indebtedness~~above.

~~Technological~~The ~~Change~~Debtors intend to file voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code with the United States Bankruptcy Court for the Southern District of New York on or before August 21, 2003. The Debtors also intend to file a pre-arranged plan of reorganization and ~~Process~~related disclosure ~~Development~~statement with the Bankruptcy Court on or before August 30, 2003. The Company currently estimates that the Debtors will emerge from bankruptcy within 90 to 120 days after the filing of the voluntary petitions.

~~The~~ ~~market for our products and services is characterized by rapidly changing technology and continuing process development.~~ The ~~future~~consensual ~~success~~restructuring of ~~our~~the ~~business will~~Convertible ~~depend~~Subordinated ~~in large part upon our ability to maintain and enhance our technological capabilities~~Notes, tothe ~~develop~~Senior ~~and~~Discount ~~market~~Notes ~~products~~ and ~~services~~the ~~that~~existing ~~meet~~shares ~~changing~~of ~~customer~~DDi ~~needs,~~Corp. ~~and~~common tostock ~~successfully~~will ~~anticipate~~be oraccomplished ~~respond~~by tothe ~~technological~~filing ~~changes~~of onthe ~~a cost~~pre-~~effective~~arranged ~~and~~plan ~~timely basis~~of reorganization. The ~~Research~~consensual ~~and~~restructuring ~~development~~of ~~expenses~~the ~~are~~Senior ~~expected~~Indebtedness tois ~~increase~~being aseffected ~~manufacturers~~outside ~~make~~the ~~demands~~plan ~~for products and services requiring more advanced technology on a quicker turnaround basis. We are more leveraged than some~~ of ~~our~~ ~~principal~~reorganization ~~competitors,~~pursuant ~~and therefore may not be able~~ to ~~respond~~the toRestructuring ~~technological~~Support ~~changes as quickly as these competitors~~Agreement.

~~In addition,~~ ~~the~~The ~~electronics~~purpose ~~manufacturing services industry could in~~ of the ~~future~~plan ~~encounter~~of ~~competition~~reorganization ~~from~~is ~~new~~to orrestructure ~~revised~~the ~~technologies~~Debtors’ ~~that~~public ~~render~~debt ~~existing~~to ~~technology~~provide ~~less competitive or obsolete or that reduce~~ the ~~demand~~Debtors ~~for~~with ~~our~~a ~~services.~~capital Westructure ~~cannot assure you~~ that wecan ~~will~~be ~~effectively~~supported ~~respond~~by to the ~~technological~~cash ~~requirements~~flows of ~~the~~their ~~changing~~operating ~~market~~subsidiaries. To ~~the extent we determine~~ that ~~new~~end, ~~technologies~~the ~~and~~plan ~~equipment~~of ~~are~~reorganization ~~required~~is expected to ~~remain~~reduce ~~competitive,~~ the ~~development,~~Debtors’ ~~acquisition~~debt ~~and~~by ~~implementation of~~more ~~such~~than ~~technologies~~$194 million and ~~equipment~~its ~~may~~future ~~require~~annual uscash tointerest ~~make~~expense ~~significant~~by ~~capital~~approximately ~~investments.~~$11 ~~There can be~~ million.

Because the terms of the proposed plan of reorganization and the out-of-court restructuring of the Senior Indebtedness have been agreed upon by holders holding approximately 63% of the outstanding principal amount of the Convertible Subordinated Notes, are supported by the holders of 100% of the Senior Indebtedness, and are the subject of an agreement in principle between the Debtors and the holders of approximately 43% of the outstanding principal amount of the Senior Discount Notes, the Company believes there is a

no ~~assurance~~strong likelihood that wethe proposed restructuring will be ~~able~~confirmed (see Note 14 to ~~obtain~~the ~~capital~~condensed ~~for~~consolidated ~~these~~financial ~~purposes~~statements inregarding the ~~future~~proposed orrestructuring and ~~that~~the ~~any~~proposed ~~investments~~proceedings inunder ~~new~~Chapter ~~technologies~~11 ~~will~~of ~~result~~the ~~in commercially~~Bankruptcy ~~viable technological processes~~Code).

Following the filing of the Chapter 11 Cases, there is no assurance that the carrying amounts of assets will be realized or that liabilities will be settled for amounts recorded. Based on negotiations with various parties in interest, DDi Corp. and DDi Capital will file a pre-arranged plan of reorganization with the Bankruptcy Court to reorganize DDi Corp.’s and DDi Capital’s businesses and to restructure their obligations. It is anticipated that this plan of reorganization will change the amounts reported in the financial statements and cause a material change in the carrying amount of assets and liabilities. Future financial statements will be prepared in accordance with the AICPA’s Statement of Position 90-7 (“SOP 90-7”) “Financial Reporting by Entities in Reorganization Under the Bankruptcy Code.” SOP 90-7 requires, under certain circumstances, that entities adopt fresh-start reporting upon emergence from Chapter 11. Fresh-start reporting involves allocating the reorganization value of the entity (which generally approximates fair value) to the entity’s assets and liabilities. SOP 90-7 also requires the debtor to segregate pre-petition liabilities that are subject to compromise and identify all transactions and events that are directly associated with the reorganization of the debtor. A portion of the liabilities recorded at June 30, 2003 are expected to be subject to compromise. Also in accordance with SOP 90-7, after the filing date, interest will no longer be accrued on any unsecured debt.

Outstanding Debt and Other Financing Arrangements

We are currently in default under the Senior Credit Facility, the Convertible Subordinated Notes and the Senior Discount Notes. As a result of the defaults, we have classified all indebtedness relating to the Senior Credit Facility of approximately $68.5 million, the aggregate $200 million of indebtedness relating to the Convertible Subordinated Notes, and the approximately $16.1 million of indebtedness relating to the Senior Discount Notes as current liabilities. On April 25, 2003, pursuant to notification by the counter-party of their intent to exercise their right to terminate the interest rate swap agreement, the agreement was terminated at a cost of $5.8 million, the fair market value of the liability at termination (see Note 3 to the condensed consolidated financial statements regarding the proposed restructuring and the proposed proceedings under Chapter 11 of the Bankruptcy Code).

On August 1, 2003, Dynamic Details amended its Senior Credit Facility. The amendment defers all remaining principal amortization payments in 2003, including the one due on August 1, 2003, to January 30, 2004, subject to earlier acceleration upon the happening of specified events. Interest and fees remain payable currently.

The Convertible Subordinated Notes are obligations of DDi Corp., which is a holding company. As a result, the Convertible Subordinated Notes are structurally subordinated to the liabilities of DDi Corp.’s subsidiaries, including DDi Capital and Dynamic Details. Accordingly, the Convertible Subordinated Notes effectively rank junior to the Senior Credit Facility and the Senior Discount Notes. Similarly, the Senior Discount Notes are structurally subordinated to the liabilities of Dynamic Details, including the Senior Credit Facility. The Senior Credit Facility, which is jointly and severally guaranteed by DDi Capital and its subsidiaries and collateralized by the assets of all of DDi Corp.’s domestic subsidiaries and pledges of the stock thereof, effectively ranks senior to the Convertible Subordinated Notes and the Senior Discount Notes.

DDi Europe has an outstanding credit facility with the Bank of Scotland (the “DDi Europe Facilities Agreement”). The DDi Europe Facilities Agreement expires on September 30, 2007 and requires DDi Europe to meet financial ratios and to comply with other restrictive covenants. All the assets of DDi Europe are pledged as collateral under the DDi Europe Facilities Agreement. Borrowings under the facilities bear interest at varying rates. The overall effective interest rate for the DDi Europe term loan facilities, as of June 30, 2003, was 5.14%. The DDi Europe Facilities Agreement also contains a revolving credit facility which is available until November 2003 and bears interest at varying rates, comprising three-month U.K. LIBOR at the dates of commencement of the relevant quarterly interest period plus a margin of 1.50%.

As described above, DDi Corp. and DDi Capital intend to file voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code on or before August 21, 2003, in order to implement the Company’s pre-arranged plan of reorganization and the financial restructuring contemplated therein. Upon filing of the proposed Chapter 11 Cases, all actions and proceedings against the Debtors will be stayed under the Bankruptcy Code and the Debtors will continue to conduct their business through their non-debtor operating subsidiaries, Dynamic Details and DDi Europe. The Debtors anticipate that they will manage their properties as debtors-in-possession during the pendency of the proposed Chapter 11 Cases. The Chapter 11 Cases are expected to only minimally affect the operating businesses of the Debtors’ non-debtor affiliates.

Current Financial Condition and Cashflows

Net cash provided by (used in) operating activities for the six months ended June 30, 2003 was $(6.7) million for DDi Capital and $(11.1) million for DDi Corp., compared to $0.4 million for DDi Capital and $(2.5) million for DDi Corp. for the six months ended June 30, 2002. The decline in operating cash flows is due primarily to lower levels of earnings and restructuring and reorganization expenses.

Net cash provided by (used in) financing activities for the six months ended June 30, 2003 was $(4.0) million for DDi Capital and $0.2 million for DDi Corp., compared to $(9.8) million for DDi Capital and $25.4 million for DDi Corp. for the six months ended June 30, 2002. The increase in cash used in financing activities for DDi Capital is due primarily to a paydown of long-term debt partially offset by a contribution from DDi Corp. during the six months ended June 30, 2002. The decline in cash provided by financing activities for DDi Corp. is due primarily to the cash proceeds from the issuance of the 6.25% convertible subordinated notes partially offset by the paydown of long-term debt during the six months ended June 30, 2002.

Net cash used in investing activities for the six months ended June 30, 2003 was $2.8 million for DDi Capital and $3.3 million for DDi Corp., compared to $5.7 million for DDi Capital and $25.9 million for DDi Corp. for the six months ended June 30, 2002. The decrease in cash used in investing activities for DDi Capital is due primarily to a decrease in capital

expenditures during the six months ended June 30, 2003. The decrease in cash used in investing activities for DDi Corp. is due primarily to the decrease in the DDi Capital cash used in investing activities as well as a decrease in the purchase of marketable securities during the six months ended June 30, 2003.

Capital expenditures for the six months ended June 30, 2003 were $2.8 million for DDi Capital and $3.3 million for DDi Corp., compared to $5.3 million for DDi Capital and $6.5 million for DDi Corp. for the six months ended June 30, 2002. The decrease is due to continued cost containment efforts.

As of June 30, 2003, cash, cash equivalents and marketable securities were $24.1 million for DDi Capital and for DDi Corp., which included $9.4 million in restricted cash, cash equivalents and marketable securities, compared to $28.3 million for DDi Capital and $29.0 million for DDi Corp. at December 31, 2002. As a result of the Company’s current defaults under the Senior Credit Facility and its other indebtedness, the Company is currently unable to borrow any additional funds under the Senior Credit Facility. As of June 30, 2003, DDi Europe had $10.1 million outstanding under its revolving credit facility and had $1.5 million available for borrowing under its revolving credit facility.

Our principal sources of liquidity to fund ongoing operations are unrestricted cash, cash equivalents and marketable securities available for sale and with respect to DDi Europe, borrowings available under the DDi Europe facilities agreement. On August 1, 2003, the holders of our Senior Indebtedness, as a condition to their consenting to the restructuring, entered into control agreements with us to monitor and control the use of the Company’s cash and cash equivalents held in the Company’s three principal bank accounts, described below, during the restructuring period prior to Bankruptcy Court approval of the plan of reorganization. Substantially all of our domestic cash, cash equivalents and marketable securities available for sale has been and during the restructuring period will be, deposited into these accounts. The Company’s general operating account is maintained at JPMorgan Chase Bank and is under the sole control of JPMorgan Chase Bank, as collateral agent under the senior credit facility. The Company has no right to issue instructions or any other right or ability to access or withdraw or transfer funds from the operating account without the consent of JPMorgan Chase Bank. The senior lenders also required the Company to establish a reserve account and maintain a minimum of $7.5 million in such account at all times. Under certain circumstances, the Company has access only to the interest earned on the funds in the reserve account. The Debtors also established a restructuring account for use in administering the costs and expenses associated with the restructuring, which will be funded by Dynamic Details pursuant to an agreement with the senior lenders unless specified events occur. Under certain circumstances, the holders of our Senior Indebtedness can take control of all of the above-referenced accounts.

We believe that the deferral of principal payments due under the Senior Credit Facility, along with our current cash position, should provide us with sufficient liquidity to meet our liquidity needs through the completion of the reorganization. Assuming the reorganization is confirmed as currently contemplated, we believe, based upon the current level of operations, that cash generated from operations, available cash, cash equivalents and marketable securities and amounts available under our the restructured Senior Credit Facility and the DDi Europe Facility Agreement will be adequate to meet our debt service requirements, capital expenditures and working capital needs for the foreseeable future, although no assurance can be given in this regard. Accordingly, there can be no assurance that our business will generate sufficient cash flow from operations or that future borrowings will be available to enable us to service our indebtedness. We remain leveraged and our future operating performance and ability to service or refinance our indebtedness will be subject to future economic conditions and to financial, business and other factors, certain of which are beyond our control.

Contractual Cash Obligations and Commercial Commitments

The following table shows our contractual cash obligations and commercial commitments as of June 30, 2003:

Payments Due by Period
(in millions)

	DDi Capital

	For the Six Months Ending December 31,		Year Ending December 31,

Commitments	2003		2004		2005		2006		2007		Thereafter		Total

Long-Term Debt	$	82.0	$	—	$	—	$	—	$	—	$	—	$	82.0
Capital Lease Obligations		0.5		1.1		1.2		—		—		—		2.8
Operating Leases		3.3		5.9		6.0		4.9		3.3		8.5		31.9

Total Commitments	$	85.8	$	7.0	$	7.2	$	4.9	$	3.3	$	8.5	$	116.7

	DDi Corp.

	For the Six Months Ending December 31,		Year Ending December 31,

Commitments	2003		2004		2005		2006		2007		Thereafter		Total

Long-Term Debt	$	286.2	$	4.8	$	4.8	$	4.8	$	4.9	$	—	$	305.5
Capital Lease Obligations		0.7		1.4		1.3		—		—		—		3.4
Operating Leases		4.7		8.5		8.2		6.9		5.3		26.7		60.3

Total Commitments	$	291.6	$	14.7	$	14.3	$	11.7	$	10.2	$	26.7	$	369.2

Factors That May Affect Future Results

There are significant uncertainties relating to our proposed bankruptcy proceedings

Our future results are dependent upon the successful confirmation and implementation of a plan or plans of reorganization and out of court restructuring. Although we intend to file voluntary petitions for reorganziation and to submit a proposed plan of reorganization to the Bankruptcy Court for approval, we cannot make any assurances that we will be able to obtain any such approval in a timely manner. In addition, due to the nature of the reorganization process, actions may be taken by creditors or other parties in interest that may have the effect of preventing or unduly delaying confirmation of a plan or plans of reorganization in connection with the proposed Chapter 11 proceeding. Our ability to obtain financing to fund our operations and our relations with our customers and suppliers may be harmed by protracted bankruptcy proceedings. Further, we cannot predict the ultimate amount of our liabilities that will be subject to a plan of reorganization.

Other negative consequences that could arise as a result of the proposed bankruptcy proceedings include:

	•	limiting our flexibility in planning for, or reacting to, changes in our business and our industry;

	•	the incurrence of significant costs associated with our reorganization;

	•	potential impacts on our relationship with suppliers and customers;

	•	limiting our ability to borrow additional funds; and

	•	negatively impacting our ability to attract, retain and compensate key employees.

Once a plan of reorganization is finalized, approved and implemented, our operating results may be adversely affected by the possible reluctance of prospective lenders, customers and suppliers to do business with a company that recently emerged from bankruptcy proceedings.

We face uncertainty with respect to treatment of our liabilities

Upon the filing of the Chapter 11 proceeding, in general, all pending litigation against us will be stayed and no party may take any action to realize on their pre-petition claims except pursuant to further order of the Bankruptcy Court. In addition, we may reject pre-petition executory contracts and unexpired lease obligations, and parties affected by these rejections may file claims with the Bankruptcy Court. While we anticipate substantially all liabilities as of the petition date will be dealt with in accordance with our proposed plan of reorganization, there can be no assurance that all the liabilities will be handled in this manner.

We have substantial debt and are highly leveraged

We have a substantial amount of debt outstanding which could adversely affect our financial health. As of June 30, 2003, DDi Corp. and DDi Capital had approximately $308.8 million and $84.8 million of debt outstanding, respectively. We are currently in default under our existing Senior Credit Facility, the Convertible Subordinated Notes and the Senior Discount Notes. In addition, a filing for reorganization under Chapter 11 will represent an event of default under each of the respective financing arrangements. After a Chapter 11 filing, DDi Corp. and DDi Capital will not be permitted to make scheduled principal and interest payments with respect to pre-petition debt unless specifically ordered by the Bankruptcy Court. This leveraged position could have adverse consequences, including:

	•	limiting our ability to obtain additional financing, if needed, for working capital, capital expenditures, debt service requirements or other purposes;

	•	increasing our vulnerability to adverse economic and industry conditions;

	•	requiring us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for operations, future business opportunities or other purposes;

	•	limiting our flexibility in planning for, or reacting to, changes in our business and our industry; and

	•	placing us at a competitive disadvantage compared to our competitors that have less leverage.

We have and, following our proposed bankruptcy proceedings, expect to have liens on all of our assets, which will limit our ability to raise additional incremental senior secured financing in the future.

We believe our equity holders will receive little value for their interests under a plan or plans of reorganization

Under the proposed plan of reorganization that we intend to file, if approved and implemented, our equity holders will receive little value for their interests. The value of our capital stock is highly speculative and any investment in such capital stock would pose a high degree of risk. Our common stock was delisted from Nasdaq in April 2003 and later began trading on the OTCBB. As a result, a liquid public market for our common stock does not exist, which may make it difficult for you to sell our common stock. In addition, there may be very limited demand for our common stock.

Our reorganization will require substantial effort by management.

Our senior management have been and may continue to be required to expend a substantial amount of time and effort structuring a plan or plans of reorganization, which could have a disruptive impact on management’s ability to focus on the operation of our business.

Our independent accountants’ report that accompanies our audited financial statements for the year ended December 31, 2002 expresses substantial doubt about our ability to continue as a going concern.

Our independent accountants have expressed a substantial doubt about our ability to continue as a going concern. Following the proposed Chapter 11 filings, the Company’s ability to realize assets and liquidate liabilities is subject to uncertainty.

Restrictions Imposed by Proposed Bankruptcy Proceeding

Following the Chapter 11 filings, we anticipate that DDi Corp. will continue to manage its business as a debtor-in-possession. As a debtor-in-possession, management is authorized to operate the business, but may not engage in transactions outside the ordinary course of business without Court approval. Under bankruptcy law, actions by creditors to collect pre-petition indebtedness owed by DDi Corp. and DDi Capital at the filing date are stayed and other pre-petition contractual obligations may not be enforced against DDi Corp. or DDi Capital without further order of the Bankruptcy Court. Due to material uncertainties inherent in the proposed Chapter 11 filings, it is not possible to predict the length of time DDi Corp. and DDi Capital will operate under Chapter 11 protection, the outcome of the proceedings in general, whether DDi Corp. and DDi Capital will continue to operate under its current organizational structure, the effect of the proceedings on the DDi Corp.’s and DDi Capital’s businesses or the recovery by creditors and equity holders of DDi Corp. and DDi Capital.

Business Cycles of the End Markets We Serve

The end markets into which we sell printed circuit boards and electronic manufacturing services (including communications and networking equipment; computers and peripherals; medical, automotive, industrial and test equipment; and aerospace equipment) have their own business cycles. Some of these cycles show predictability from year to year. However, other cycles are unpredictable in commencement, depth and duration. The communications industry entered into a significant downturn in late 2000, which continues as of this date. This has had a negative impact on our revenues and operating performance for the three and six months ended June 30, 2003 and has continued to have a negative impact on our revenues and operating performance during the third quarter of 2003. If certain industries take a downturn, or if events leading to additional excess capacity occur, we will experience a negative impact on our revenues, gross margins and operating margins.

Technological Change and Process Development

The market for our products and services is characterized by rapidly changing technology and continuing process development. The future success of our business will depend in large part upon our ability to maintain and enhance our technological capabilities, to develop and market products and services that meet changing customer needs, and to successfully anticipate or respond to technological changes on a cost-effective and timely basis. Research and development expenses are expected to increase as manufacturers make demands for products and services requiring more advanced technology on a quicker turnaround basis. We are more leveraged than some of our principal competitors, and therefore may not be able to respond to technological changes as quickly as these competitors.

In addition, the electronics manufacturing services industry could in the future encounter competition from new or revised technologies that render existing technology less competitive or obsolete or that reduce the demand for our services. We cannot assure you that we will effectively respond to the technological requirements of the changing market. To the extent that we determine that new technologies and equipment are required to remain competitive, the development, acquisition and implementation of such technologies and equipment may require us to make significant capital investments. There can be no assurance that we will be able to obtain capital for these purposes in the future or that any investments in new technologies will result in commercially viable technological processes, particularly in light of the proposed bankruptcy proceeding.

Dependence on a Core Group of Significant Customers

Although we have a large number of customers, nonet ~~one~~sales to our largest customer accounted for ~~more~~approximately ~~than 10~~5.6% of net sales for the ~~second~~ quarter ended June 30, ~~2002~~2003. Net sales to our ten largest customers accounted for approximately 2226.~~3% for DDi Capital and 25.~~4% ~~for DDi Corp~~ of net sales during the same period. We may depend upon a core group of customers for a material percentage of ~~their~~our respective net sales in the future. Substantially all of our sales are made on the basis of purchase orders rather than long-term agreements. We cannot assure you that significant customers will order services from us in the future or that they will not reduce or delay the amount of services ordered. Any reduction or delay in orders could negatively impact revenues. In addition, we generate significant accounts receivable in connection with providing services to customers. If one or more significant customers were to become insolvent or otherwise were unable to pay us for the services provided, results of operations would be adversely affected.

Variability of Orders

Our operating results fluctuate because we sell on a purchase-order basis rather than pursuant to long-term contracts and we expect these fluctuations to continue in the future. We are, therefore, sensitive to variability in demand by our customers. Because we time our expenditures in anticipation of future sales, our operating results may be less than we estimate if the timing and volume of customer orders do not match expectations. Furthermore, we may not be able to capture all potential revenue in a given period if our customers’ demand for quick-turnaround services exceeds our capacity during that period. Because of these factors, you should not rely on quarter-to-quarter comparisons of our results of operations as an indication of future performance. Because a significant portion of our operating expenses are fixed, even a small revenue shortfall can have a disproportionate effect on operating results. It is possible that, in future periods, results may be below the expectations of public market analysts and investors. This could cause the market price of DDi Corp.’s common stock to decline.

~~Competition~~ 29

The printed circuit board industry is highly fragmented and characterized by intense competition. We principally compete with independent and captive manufacturers of complex quick-turn and longer-lead printed circuit boards. Our principal competitors include independent small private companies and integrated subsidiaries of more broadly based volume producers that also manufacture multilayer printed circuit boards and other electronic assemblies. Some of our principal competitors are less highly-leveraged than us and may have greater financial and operating flexibility.

Competition in the complex quick-turn and longer-lead printed circuit board industry has increased due to the consolidation trend in the industry, which results in potentially better capitalized and more effective competitors. Our basic technology is generally not subject to significant proprietary protection, and companies with significant resources or international operations may enter the market. Increased competition could result in price reductions, reduced margins or loss of market share, any of which could materially adversely affect our business, financial condition and results of operations.

Dependence on Acquisition Strategy

As part of our business strategy, we expect that we will continue to grow by pursuing acquisitions of other companies, assets or product lines that complement or expand our existing business. Competition for attractive companies in our industry is substantial. We cannot assure you that we will be able to identify suitable acquisition candidates or to finance and complete transactions that we select. In addition, existing credit facilities restrict our ability to acquire the assets or business of other companies. The attention of our management may be diverted, and operations may be otherwise disrupted. If we fail to effectively execute this acquisition strategy, the growth of our revenues may suffer and the price of DDi Corp.’s common stock may decline.

Risks Relating to the Closure or Restructuring of Our Manufacturing Facilities

During the fourth quarter of 2001, we closed two of our manufacturing facilities which required us to transfer associated orders to other facilities. This transfer had a negative impact on our expected margins for these orders in the first quarter of 2002 and has negatively impacted our financial performance. In addition, we have recently decided to close two more manufacturing facilities, which we expect to complete during the fourth quarter of 2002. These closures could have a

~~similar~~ ~~negative~~revenue ~~impact~~in ona given period if our ~~margins~~customers’ ~~and~~demand for quick-turnaround services exceeds our ~~financial~~capacity ~~performance~~during that period. WeBecause a significant portion of our operating expenses are fixed, even a small revenue shortfall can ~~provide~~have noa ~~assurance~~disproportionate ~~that~~effect ~~the~~on ~~contemplated~~operating ~~closures~~results. orIt ~~any additional~~is ~~restructuring~~possible wethat, in future periods, results may ~~pursue~~be inbelow the ~~future~~expectations ~~will~~of ~~not~~public ~~have~~market aanalysts ~~negative~~and ~~impact~~investors. This oncould ~~our~~cause the ~~margins~~market orprice ~~financial~~of ~~performance~~DDi Corp.’s common stock to decline.

~~Costs of~~ ~~International Expansion~~ Competition

We ~~have~~The ~~expanded~~printed ~~into~~circuit ~~new~~board ~~foreign~~industry ~~markets~~is highly fragmented and ~~intend~~characterized toby ~~continue~~intense ~~our international expansion~~competition. We ~~completed~~ ~~our~~principally ~~acquisition~~compete ofwith ~~MCM~~independent ~~Electronics~~ and ~~Thomas~~captive ~~Walter~~manufacturers ~~Limited,~~of ~~both~~complex ~~United~~quick-turn ~~Kingdom companies, on April 14, 2000~~ and ~~March~~longer-lead 5,printed ~~2001,~~circuit ~~respectively~~boards. Our Weprincipal ~~also~~competitors ~~acquired~~include ~~Olympic~~independent ~~Circuits~~small ~~Canada, a Canadian company, on May 9, 2001. In addition, in~~private ~~April 2001~~companies, wetwo ~~established~~small ~~Dynamic~~public ~~Details~~companies ~~Japan~~and asintegrated asubsidiaries ~~sales~~of ~~office~~more inbroadly ~~Tokyo,~~based ~~Japan.~~volume ~~Entry~~producers ~~into~~that ~~foreign~~also ~~markets~~manufacture ~~may~~multilayer ~~require~~printed ~~considerable~~circuit ~~management~~boards ~~time~~and asother ~~well~~electronic ~~as,~~assemblies. Some ~~in the case~~ of ~~new~~our ~~operations,~~principal ~~start-up~~competitors ~~expenses for market development, hiring and establishing office facilities before any significant revenues~~ are ~~generated. As a result, operations in new foreign markets may achieve low margins or may be unprofitable. We may not be able to utilize net operating losses incurred by foreign~~less ~~operations~~highly-leveraged tothan ~~reduce~~us ~~our~~and ~~U.S. income taxes. Therefore, as we continue to expand internationally, we~~ may ~~not~~have ~~generate~~greater ~~operating~~financial ~~results consistent with historical performance,~~ and ~~the~~operating ~~market price of DDi Corp~~flexibility.’s ~~common stock may decline.~~

~~Inaccuracies~~ The barriers to entry in ~~Forecasting~~our ~~Our~~niche ~~Supply~~are ~~Needs~~considerable. In ~~Could~~order ~~Negatively~~to ~~Impact~~survive ~~Our~~in ~~Results~~the quick-turn sector, a competitor must have a very large customer base, a large staff of ~~Operations~~sales and marketing personnel, considerable engineering resources, and proper tooling and equipment to permit fast turnaround of small lots on a daily basis.

A substantial portion of our net sales are derived from quick-turn services for which we provide both the materials and the manufacturing services. As a result, we often bear the risk of fluctuations in the cost of materials, and the risk of generating scrap and excess inventory, which can affect gross profit margins. We forecast future inventory needs based upon the anticipated demands of our customers. Inaccuracies in making these forecasts or estimates could result in a shortage or an excess of materials, either of which could negatively affect production schedules and margins.

Intellectual Property

Our success depends in part on proprietary technology and manufacturing techniques. Currently, we do not ~~rely~~place significant reliance on patent protection to safeguard these proprietary techniques but rely primarily on trade secret protection. Litigation may be necessary to protect our technology and determine the validity and scope of the proprietary rights of competitors. Intellectual property litigation could result in substantial costs and diversion of our management and other resources. If any infringement claim is asserted against us, we may seek to obtain a license of the other party’s intellectual property rights. We cannot assure you that a license would be available on reasonable terms or at all.

Environmental Matters

Our operations are regulated under a number of federal, state and foreign environmental and safety laws and regulations that govern, among other things, the discharge of hazardous materials into the air and water, as well as the handling, storage and disposal of such materials. These laws and regulations include the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, and the Comprehensive Environmental Response, Compensation and Liability Act, as well as analogous state and foreign laws. Compliance with these environmental laws is a major consideration for us because we use in our manufacturing process materials classified as hazardous such as ammoniacal etching solutions, copper and nickel. In addition, because we are a generator of hazardous wastes, we may be subject to potential financial liability for costs associated with an investigation and any remediation of sites at which we have arranged for the disposal of hazardous wastes if such sites become contaminated. Even if we fully comply with applicable environmental laws and are not directly at fault for the contamination, we may still be liable. The wastes we generate include spent ammoniacal etching solutions, solder stripping solutions and hydrochloric acid solution containing palladium; waste water which contains heavy metals, acids, cleaners and conditioners; and filter cake from equipment used for on-site waste treatment. Violations of environmental laws could subject us to revocation of our effluent discharge permits. Any such revocations could require us to cease or limit production at one or more of our facilities, thereby negatively impacting revenues and potentially causing the market price of DDi Corp.’s common stock to decline.

Dependence on Key Management

We depend on the services of our senior executives, including Bruce D. McMaster, President and Chief Executive Officer. We cannot assure you that we will be able to retain him and other executive officers and key personnel or attract additional qualified management in the future. Mr. McMaster is not a party to an employment agreement with us. Our business also depends on our ability to continue to recruit, train and retain skilled employees, particularly engineering and sales personnel, due to our focus on the technologically advanced and time-critical segment of the electronics manufacturing services industry. In addition, our ability to successfully integrate acquired companies depends in part on our ability to retain key management and existing employees at the time of the acquisition. Effective December 19, 2002, the Company adopted a plan to retain employees under the Key Employee Retention Program (“KERP”). The KERP is a discretionary retention bonus program which is scheduled to pay a stay bonus in three installments, on December 31, 2002, July 1, 2003, and January 1, 2004. Each of our senior executives, including Mr. McMaster, have received retention bonuses under the KERP. There can be no assurance that the KERP will be successful in retaining key personnel.

26 30

personnel, due to our focus on the technologically advanced and time-critical segment of the electronics manufacturing services industry. In addition, our ability to successfully integrate acquired companies depends in part on our ability to retain key management and existing employees at the time of the acquisition.

Possible Effects of Changes in Our Debt Ratings

Certain of our outstanding debt instruments are publicly rated by independent rating agencies, which ratings are now below investment grade. These public debt ratings affect our ability to raise debt, our access to the commercial paper market (which is currently closed to us), and our ability to engage in asset-based financing. These public debt ratings also may negatively affect the cost to us and terms and conditions of debt and asset-based financings. Additionally, any negative developments regarding our cash flow, public debt ratings and/or our incurring significant levels of debt, or our failure to meet certain covenants under our credit agreements, could cause us to lose access to, and/or cause a default under certain of our credit facilities and adversely affect further the cost and terms and conditions of our debt and asset-based financings.

Charter Documents and State Law Provisions

Provisions in our charter and bylaws may have the effect of delaying or preventing a change of control or changes in our management that stockholders consider favorable or beneficial. If a change of control or change in management is delayed or prevented, the market price of our common stock could suffer.

Controlling Stockholders

Investment funds affiliated with Bain Capital, Inc. beneficially own approximately 6% of the outstanding common stock of DDi Corp. In addition, of the nine directors who serve on our board, three are current representatives of Bain Capital, Inc. and two are former representatives of Bain Capital, Inc. By virtue of such stock ownership and board representation, these entities will continue to have a significant influence over all matters submitted to our stockholders, including the election of our directors, and to exercise significant control over our business, policies and affairs. Such concentration of voting power could have the effect of delaying, deterring or preventing a change of control or other business combination that might otherwise be beneficial to our stockholders.

A further decline in our stock price could result in a charge for impairment of goodwill

On January 1, 2002, we adopted Statement of Financial Accounting Standards No. 142 “Goodwill and Other Intangible Assets” (“SFAS 142”). SFAS 142 requires that goodwill and certain other intangible assets be tested for impairment at least annually or whenever evidence of potential impairment exists. Under SFAS 142, we are required to recognize an impairment charge for the write-down of our goodwill if the fair values of our net assets are less than their current recorded book values. As a result of the recent significant decline in the market price of DDi Corp.’s common stock, we were required to test our goodwill and certain other intangible assets for impairment. As a result of this impairment analysis, DDi Corp. recorded a $60 million goodwill impairment charge during the second quarter of 2002. A further decline in the market price of DDi Corp.’s common stock could require us to further test our goodwill and certain other intangible assets for impairment and require us to recognize an additional impairment charge for the write-down of our goodwill if the fair values of our net assets are less than their current recorded book values.

DDi Corp.’s Common Stock May Be Delisted From The Nasdaq National Market.

DDi Corp. has received a notice from Nasdaq that its common stock has failed to maintain the required minimum bid price of $1.00 over a period of 30 consecutive trading days. As a result, Nasdaq has provided DDi Corp. with 90 calendar days, or until November 4, 2002, to regain compliance with this requirement or be delisted from trading on the Nasdaq National Market. While our Board of Directors intends to review the options available to us for regaining compliance with the listing requirements of the Nasdaq National Market, we may also consider transferring our securities to The Nasdaq SmallCap Market (“SmallCap Market”), which would increase the initial grace period from 90 days to 180 days. In addition, if we transfer to the SmallCap Market, we could be eligible for an additional 180-calendar day grace period provided that we meet the initial listing criteria for the SmallCap Market under Marketplace Rule 4301(c)(2)(A). Furthermore, we may be eligible to transfer back to The Nasdaq National Market, without paying the initial listing fees the end of all applicable grace periods, DDi Corp.’s bid price maintains the $1.00 per share requirement for 30 consecutive trading days and we have maintained compliance with all other continued listing requirements on that market. Our failure to comply or promptly to cure a noncompliance could result in our stock being delisted. If our stock is delisted, trading, if any, in the stock would thereafter be conducted in the over-the-counter market in the “pink sheets” or the National Association of Securities Dealers’ “Electronic Bulletin Board” and the liquidity of our stock could be materially impaired.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Interest Rate Risk

The DDi Europe ~~facilities~~Facilities Agreement ~~agreement~~ and the ~~Dynamic~~Senior ~~Details~~Credit ~~senior~~Facility ~~credit facility~~ bear interest at a floating rate; the ~~DDi~~Senior ~~Capital~~Discount ~~senior~~Notes ~~discount notes~~ and ~~DDi~~ ~~Corp.~~Convertible ~~convertible~~Subordinated ~~subordinated~~Notes ~~notes~~ bear interest at fixed rates. ~~We reduce our exposure to interest rate risks through swap agreements.~~

The Dynamic Details revolving credit facility bears interest at (a) 3.75% per annum plus the applicable LIBOR or (b) 2.00% per annum plus the federal reserve reported overnight funds rate plus 0.5% per annum. As of June 30, ~~2002~~2003, we had no ~~amount~~amounts outstanding under ~~our~~ the revolving credit facility. ~~Based~~and ~~upon our anticipated utilization of~~ the ~~Dynamic Details~~ revolving credit facility ~~through~~is ~~the~~not ~~year~~currently ~~ending December 31~~available. Therefore, ~~2002,~~ a 10% change in interest rates isduring ~~not~~the ~~expected~~twelve ~~to materially~~months ending June 30, 2004 will not affect the interest expense to be incurred on this facility during such period.

Under the terms of the current swap agreement, we pay a maximum annual rate of interest applied to a notional amount equal to the principal balance of the term facility portion of the Dynamic Details senior credit facility. From January 1, 2002 through December 31, 2002 we pay a fixed annual rate of 5.99%, from January 1, 2003 through December 31, 2003, we pay a fixed annual rate of 6.49% and from January 1, 2004 through the scheduled maturity of the Tranche B term facility under the Dynamic Details senior credit facility in 2005 we pay a fixed annual rate of 6.99%. The term loan facility portion of the ~~Dynamic~~Senior ~~Details~~Credit ~~senior~~Facility ~~credit facility~~ bears interest based on one-month LIBOR. As of June 30, ~~2002~~2003, one-month LIBOR was 1.8412%. If one-month LIBOR increased by 10% to 21.0223%, interest expense related to the term loan facility portion would ~~not~~ increase ~~over~~by ~~the~~approximately ~~twelve months ending June 30, 2003 due to the fixed rates under the swap agreements~~$0.1 million. The overall effective interest rate for the term loans, ~~after giving effect to the interest rate swap agreement,~~ as of June 30, ~~2002~~2003, was 9 5.9106%.

~~Under~~ ~~the~~The ~~terms of the current swap agreement,~~ DDi Europe ~~pays~~Facilities ~~a fixed~~Agreement ~~annual~~bears ~~rate of~~ interest ~~equal~~based toon 6three-month U.~~92%~~K. ~~applied~~LIBOR toplus ~~fixed~~a ~~amounts~~margin of ~~debt per the agreement, through September 2002~~1. ~~As of June 30, 2002, the swap covers approximately 100~~50% ~~of the outstanding debt under the facilities agreement~~. Based upon our anticipated utilization of the DDi Europe revolving credit facility through the ~~year~~period ending ~~December~~June 3130, ~~2002~~2004, a 10% change in interest rates is not expected to materially affect the interest expense to be incurred on this facility during such period. ~~The DDi Europe facilities agreement bears interest based on three-month LIBOR.~~ As of June 30, ~~2002~~2003, three-month U.K. LIBOR was 1 3.8664%. If three-month U.K. LIBOR increased by 10% to 24.0500%, interest expense related to the term loan facility would ~~not~~ increase ~~due~~approximately ~~to the fixed rate of 6~~$0.~~92%~~1 ~~under the swap agreement~~million. The overall effective interest rate for the term ~~loans,~~loan ~~after giving effect to the interest rate swap agreement~~facilities, as of June 30, ~~2002~~ 2003, was 85.6714%.

A change in interest rates would not have an effect on our interest expense on the ~~DDi~~Senior ~~Capital~~Discount ~~senior~~Notes ~~discount notes~~ or ~~DDi~~Convertible ~~Corp.~~Subordinated ~~convertible~~Notes ~~subordinated notes~~ because these instruments bear a fixed rate of interest.

Foreign Currency Exchange Risk

The sales and expenses and financial results of DDi Europe and of our Canadian operations are denominated in British pounds and Canadian dollars, respectively. We have foreign currency translation risk equal to our net investment in those operations. However, since nearly all of our sales are denominated in local currency or in U.S. dollars, we have relatively little exposure to foreign currency transaction risk with respect to sales made. Based on our forecasts, the effect of an immediate 10% change in exchange rates would ~~not~~ have an impact on our operating results over the 12 month period ending June 30, ~~2003~~2004, of approximately $0.1 million. We do not use forward exchange contracts to hedge exposures to foreign currency denominated transactions and do not utilize any other derivative financial instruments for trading or speculative purposes.

28Item 4. Controls and Procedures.

Based on an evaluation of the effectiveness of DDi Corp.’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Act of 1934, as amended), DDi Corp.’s Chief (principal) Executive Officer and Chief (principal) Financial Officer have concluded that such controls and procedures were effective as of the end of the period covered by this report. In connection with such evaluation, no change in DDi Corp.’s internal control over financial reporting occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, DDi Corp.’s internal control over financial reporting.

Based on an evaluation of the effectiveness of DDi Capital’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Act of 1934, as amended), DDi Capital’s Chief (principal) Executive Officer and Chief (principal) Financial Officer have concluded that such controls and procedures were effective as of the end of the period covered by this report. In connection with such evaluation, no change in DDi Capital’s internal control over financial reporting occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, DDi Capital’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 23. ~~Changes~~Defaults inUpon ~~Securities~~Senior ~~and Use of Proceeds~~Securities.

On ~~April~~We 2,have ~~2002,~~been ~~DDi Corp. sold $100.0 million aggregate principal amount of 6.25%Convertible Subordinated Notes due April 1, 2007~~ in adefault ~~private offering to J.P. Morgan Securities Inc. and Robertson Stephens, Inc., the initial purchasers~~ of ~~the~~certain ~~notes.~~financial ~~This~~covenants ~~transaction was exempt from registration~~ under ~~Section 4(2) of~~ the Securities Act of 1933 (the “Act”). The notes were subsequently sold to qualified institutional buyers pursuant to the exemption provided by Rule 144A of the Act. These notes are convertible at any time prior to maturity into shares of common stock at a conversion price of $11.04 per share, subject to certain adjustments. We issued the notes to the initial purchasers at a 3% discount. These notes generated proceeds of $95.8 million, net of underwriting discounts. Approximately $47.9 million of the net proceeds from the sale were used to repay a portion of the Dynamic Details Senior ~~Term~~Credit Facility, ~~$12.5~~since million was placed in an interest reserve account to cover two years of interest payments on the notes and the remainder will be used for working capital and general corporate purposes. In connection with the $47.9 million repayment of the Senior Term Facility, Dynamic Details elected to amend its swap agreement by reducing the notional balance of the swap to reflect the impact of the debt repayment on the outstanding principal. In connection with the amendment of the swap agreement, Dynamic Details paid approximately $3.1 million to the counterparty, representing the pro-rata portion of the deferred swap liability. The notes are redeemable by DDi Corp. any time on or after December 2131, ~~2004 at specified prices~~2002. In connection with the sale of the notes, DDi Corp. entered into a registration rights agreement, pursuant to which DDi Corp. has filed a registration statement for the resale of the notes and the shares of common stock issuable upon conversion of the notes.

~~Item~~ As a result of the defaults under the Senior Credit Facility, we were not permitted to pay our interest obligations under the DDi Corp. 5.25% convertible subordinated notes on March 1, 2003 and the DDi Corp. 6.25% 4convertible subordinated notes on April 1, 2003. Since the interest payments on the Convertible Subordinated Notes were not made within the 30 day grace period provided under the respective agreements, the Convertible Subordinated Notes are in ~~Submission~~default and the holders of ~~Matters~~those instruments are able to aexercise ~~Vote~~all of ~~Security~~their ~~Holders~~respective rights and remedies under the terms of the respective agreements. The total amount of interest on the DDi Corp. 5.25% convertible subordinated notes and the DDi Corp. 6.25% convertible subordinated notes, in arrears on the date of this report is approximately $4.9 million and $5.3 million, respectively.

~~The~~We ~~Annual~~did ~~Meeting~~not ofpay ~~Stockholders of~~our ~~DDi~~interest ~~Corp.~~obligations ~~was held~~ due on May 1415, ~~2002~~2003 ~~for~~under the ~~purpose~~Senior ofDiscount ~~(a)~~Notes. Failure ~~electing~~to ~~four~~make ~~Class~~such IIinterest ~~Directors~~payments towithin ~~the~~30 ~~Board~~days of ~~Directors~~their ~~and~~due ~~(b)~~date ~~voting~~has onresulted in a ~~proposal~~default. The ~~to ratify the appointment of PricewaterhouseCoopers LLP as the~~ Company’s ~~independent~~current ~~auditors. Robert~~expectation ~~Guezuraga,~~is ~~Murray~~that ~~Kenney,~~the ~~Bruce~~Senior D.Discount ~~McMaster~~Notes ~~and~~will ~~Stephen~~not ~~Zide~~be repaid ~~were~~in ~~elected~~accordance towith ~~serve~~their asstated ~~Class~~terms. As IIa ~~Directors~~result, of the Company ~~for~~has ~~three-year~~classified ~~terms~~all ~~expiring~~indebtedness atrelating to the ~~2005~~Senior ~~Annual~~Discount ~~Meeting~~Notes, ~~of Stockholders~~$16.1 ~~Prescott~~million ~~Ashe~~in ~~and~~the ~~David~~aggregate, ~~Dominik~~as ~~continued~~current ~~in office~~liabilities asat ~~Class~~June I30, ~~Directors~~2003. The ~~and~~total ~~Edward~~amount W.of interest ~~Conard,~~on ~~Stephen~~the G.Senior ~~Pagliuca~~Discount ~~and~~Notes ~~Mark~~in R.arrears ~~Benham~~on ~~continued~~the indate ~~office~~of asthis ~~Class~~report ~~III~~is ~~Directors~~approximately $1.5 million.

The tabulation of the votes cast for the election of Messrs. Guezuraga, Kenney, McMaster and Zide was as follows:

	Votes For	Votes Withheld
Robert Guezuraga	36,204,545	334,002
Murray Kenney	36,042,545	496,002
Bruce D. McMaster	25,019,988	11,518,559
Stephen Zide	35,934,546	604,001

The proposal to ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent auditors was approved. The tabulation of votes was as follows:

Votes For		Votes Against		Abstensions		Broker Non-Votes
35,483,499		1,049,455		5,593		0

Item 6. Exhibits and Reports on Form 8-K.

(a) Exhibits.

The exhibits listed below are hereby filed with the U.S. Securities and Exchange Commission as part of this Quarterly Report on Form 10-Q.

~~Exhibit~~	Exhibit	~~Description~~	Description
~~10.1~~	10.1	Purchase Agreement dated as of March 26, 2002 among DDi Corp., as issuer, and J.P. Morgan Securities Inc. and Robertson Stephens, Inc, as the Initial Purchasers of DDi Corp.’s 6.25% Convertible Subordinated Notes due 2007. (Previously filed with the Commission on May 15, 2002 as Exhibit 10.1 to DDi Corp.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, which is incorporated herein by reference.)	Seventh Amendment, dated as of June 27, 2003, to the Credit Agreement, dated as of July 23, 1998, among (i) DDi Capital Corp., formerly known as Details, Capital Corp.; (ii) Dynamic Details, Incorporated, formerly known as Details, Inc.; (iii) Dynamic Details Incorporated, Silicon Valley, formerly known as Dynamic Circuits, Inc.; (iv) the several banks and other financial institutions from time to time parties thereto; (v) Bankers Trust Company; and (vi) The Chase Manhattan Bank.
	10.2		Eighth Amendment, dated as of August 1, 2003, to the Credit Agreement, dated as of July 23, 1998, among (i) DDi Capital Corp., formerly known as Details, Capital Corp.; (ii) Dynamic Details, Incorporated, formerly known as Details, Inc.; (iii) Dynamic Details Incorporated, Silicon Valley, formerly known as Dynamic Circuits, Inc.; (iv) the several banks and other financial institutions from time to time parties thereto; (v) Bankers Trust Company; and (vi) The Chase Manhattan Bank.
	31.1		Certification of Chief Executive Officer of DDi Corp., Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	31.2		Certification of Chief Financial Officer of DDi Corp., Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.3		Certification of Chief Executive Officer of DDi Capital Corp., Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.4		Certification of Chief Financial Officer of DDi Capital Corp., Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32.1		Certification of Chief Executive Officer of DDi Corp., Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

29 32

10.2		Registration Rights Agreement dated as of April 2, 2002 among DDi Corp. and J.P. Morgan Securities Inc. and Robertson Stephens, Inc. (Previously filed with the Commission on May 15, 2002 as Exhibit 10.2 to DDi Corp.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, which is incorporated herein by reference.)
	Exhibit		Description
10.3		Indenture dated April 2, 2002 between DDi Corp., as Issuer, and State Street Bank and Trust Company, as Trustee, relating to DDi Corp.’s 6.25% Convertible Subordinated Notes due 2007. (Previously filed with the Commission on May 15, 2002 as Exhibit 10.3 to DDi Corp.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, which is incorporated herein by reference.)
	32.2		Certification of Chief Financial Officer of DDi Corp., Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
10.4		Sixth Amendment, dated as of June 28, 2002, to the Credit Agreement, dated as of July 23, 1998, among (i) DDi Capital Corp., formerly known as Details, Capital Corp.; (ii) Dynamic Details, Incorporated, formerly known as Details, Inc.; (iii) Dynamic Details Incorporated, Silicon Valley, formerly known as Dynamic Circuits, Inc.; (iv) the several banks and other financial institutions from time to time parties thereto; (v) Bankers Trust Company; and (vi) The Chase Manhattan Bank. (Previously filed with the Commission on July 1, 2002 as Exhibit 99.1 to DDi Capital and DDi Corp.’s Current Report on Form 8-K.)
	32.3		Certification of Chief Executive Officer of DDi Capital Corp., Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1		Certification of Chief Executive Officer of DDi Corp., Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	32.4		Certification of Chief Financial Officer of DDi Capital Corp., Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.2		Certification of Chief Executive Officer of DDi Capital Corp., Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.3		Certification of Chief Financial Officer of DDi Corp., Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.4		Certification of Chief Financial Officer of DDi Capital Corp., Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K.

The following Current Reports on Form 8-K were filed in the quarterly period ended June 30, ~~2002~~2003:

(i). On April 21, 2003, DDi Corp. filed a report on Form 8-K dated April 1, 2003 disclosing an update on negotiations with DDi Corp.’s senior lenders and convertible subordinated noteholders, announcing changes to its previously announced fourth quarter and year end results for 2002 and announcing certain reclassifications of indebtedness recorded in fiscal 2002. (ii). On April 14, 2003, DDi Corp. filed a ~~Current~~report ~~Report~~on Form 8-K dated April 14, 2003 announcing that its shares of common stock would be delisted from trading on The Nasdaq SmallCap Market effective April 15, 2003. (iii). On May 15, 2003, DDi Corp. filed a report on Form 8-K ~~reporting~~dated May 14, 2003 announcing its operating results for the ~~closing~~first quarter of ~~its~~the ~~private~~fiscal ~~offering~~year ending December 31, 2003. (iv). On May 15, 2003, DDi Corp. filed a report on Form 8-K dated May 13, 2003 announcing that the Company and a steering committee of ~~convertible~~the ~~subordinated~~senior ~~notes~~lender ~~due~~group ~~2007~~of the Dynamic Details senior credit facility, have reached an agreement in principle on a proposal to restructure the Dynamic Details senior credit facility which, as previously disclosed, is currently in default.

30 33

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, DDi Corp. has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized~~, in the city of Anaheim, state of California, on the 14th day of August 2002~~ .

DDi CORP. By: /S/ JOSEPH P. GISCH Joseph P. Gisch Chief Financial Officer, Secretary and Treasurer (Principal Financial Officer)

Date: August 19, 2003	DDi CORP.

	By:	/s/ JOHN K. STUMPF

		John K. Stumpf Chief Financial Officer and Treasurer (Authorized Signatory and Principal Financial Officer)

31 34

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, DDi Capital Corp. has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized~~, in the city of Anaheim, state of California, on the 14th day of August 2002~~ .

DDi CAPITAL CORP. By: /S/ JOSEPH P. GISCH Joseph P. Gisch Vice President, Chief Financial Officer, and Treasurer (Principal Financial Officer)

Date: August 19, 2003	DDi CAPITAL CORP.

	By:	/s/ JOHN K. STUMPF

		John K. Stumpf Chief Financial Officer and Treasurer (Authorized Signatory and Principal Financial Officer)

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Filing Compare · DDI CAPITAL CORP/DYNAMIC DETAILS INC