The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated condensed financial statements and the related notes and the other financial information included in this Quarterly Report on Form 10-Q. This discussion and analysis contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of specified factors, including those set forth in Item 1A "Risk Factors" of Part II below and elsewhere in this Quarterly Report on Form 10-Q.

This discussion and analysis should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" set forth in our annual report on Form 10-K for the year ended December 31, 2007, filed with the Securities and Exchange Commission.

Overview

We are a one-stop provider of time-critical and technologically complex printed circuit boards (PCBs) and backplane assemblies, which serve as the foundation of sophisticated electronic products. We serve high-end commercial and aerospace/defense markets - including the networking/communications infrastructure, high-end computing, defense, and industrial/medical markets - which are characterized by high levels of complexity and moderate production volumes. Our customers include original equipment manufacturers (OEMs), electronic manufacturing services (EMS) providers, and aerospace/defense companies. Our time-to-market and high technology focused manufacturing services enable our customers to reduce the time required to develop new products and bring them to market.

We measure customers as those companies that have placed at least two orders in the preceding 12-month period. We had approximately 900 customers as of September 29, 2008 and October 1, 2007. Sales to our 10 largest customers accounted for 51% of our net sales in the third quarter ended September 29, 2008, and 45% of our net sales in the third quarter ended October 1, 2007. Sales to our 10 largest customers for the three quarters ended September 29, 2008 and October 1, 2007 were 50% and 44% of net sales, respectively. We sell to OEMs both directly and indirectly through EMS companies. Sales attributable to our five largest OEM customers accounted for approximately 30% and 25% of our net sales in the quarter ended September 29, 2008 and October 1, 2007, respectively.

The following table shows the percentage of our net sales attributable to each of the principal end markets we served for the periods indicated.

                                                               Quarter Ended                        Three Quarters Ended
                                                     September 29,          October 1,        September 29,         October 1,
End Markets(1)                                            2008                 2007               2008                 2007

Networking/Communications                                         39 %               40 %                 41 %               42 %
Aerospace/Defense                                                 39                 32                   36                 30
Computing/Storage/Peripherals                                     11                 13                   11                 13
Medical/Industrial/Instrumentation/Other                          11                 15                   12                 15

Total                                                            100 %              100 %                100 %              100 %

(1) Sales to EMS companies are classified by the end markets of their OEM customers.

For PCBs we measure the time sensitivity of our products by tracking the quick-turn percentage of our work. We define quick-turn orders as those with delivery times of 10 days or less, which typically captures research and development, prototype, and new product introduction work, in addition to unexpected short-term demand among our customers. Generally, we quote prices after we receive the design specifications and the time and volume requirements from our customers. Our quick-turn services command a premium price as compared to standard lead time products. Quick-turn orders decreased from approximately 13% of net PCB sales for the quarter ended October 1, 2007 to 11% of net PCB sales for the quarter ended September 29, 2008, partially due to the increasingly complex nature of our quick-turn work, which requires more time to manufacture, thereby extending some of these orders beyond the 10 day delivery window. We also deliver a large percentage of compressed lead-time work with

lead times of 11 to 20 days. We receive a premium price for this work as well. Purchase orders may be cancelled prior to shipment. We charge customers a fee, based on percentage completed, if an order is cancelled once it has entered production.

We derive revenues primarily from the sale of printed circuit boards and backplane assemblies using customer-supplied engineering and design plans. We recognize revenues when persuasive evidence of a sales arrangement exists, the sales terms are fixed and determinable, title and risk of loss have transferred, and collectibility is reasonably assured - generally when products are shipped to the customer. Net sales consist of gross sales less an allowance for returns, which typically has been approximately 2% of gross sales. We provide our customers a limited right of return for defective printed circuit boards and backplane assemblies. We record an estimated amount for sales returns and allowances at the time of sale based on historical information.

Cost of goods sold consists of materials, labor, outside services, and overhead expenses incurred in the manufacture and testing of our products as well as stock-based compensation expense. Many factors affect our gross margin, including capacity utilization, product mix, production volume, and yield. We do not participate in any significant long-term contracts with suppliers, and, generally, we believe there are a number of potential suppliers for the raw materials and components we use.

Selling and marketing expenses consist primarily of salaries and commissions paid to our internal sales force and independent sales representatives, salaries paid to our sales support staff, stock-based compensation expense as well as costs associated with marketing materials and trade shows. We generally pay higher commissions to our independent sales representatives for quick-turn work, which generally has a higher gross profit component than standard lead-time work.

General and administrative costs primarily include the salaries for executive, finance, accounting, information technology, facilities and human resources personnel, as well as insurance expenses, expenses for accounting and legal assistance, incentive compensation expense, stock-based compensation expense, and bad debt expense.

Critical Accounting Policies and Estimates

Our consolidated condensed financial statements included in this report have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, net sales and expenses, and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management has discussed the development, selection, and disclosure of these estimates with the audit committee of our board of directors. Actual results may differ from these estimates under different assumptions or conditions.

Accounting policies for which significant judgments and estimates are made include asset valuation related to bad debts and inventory obsolescence; sales returns and allowances; impairment of long-lived assets, including goodwill and intangible assets; realizability of deferred tax assets; determining stock-based compensation expense, self-insured medical reserves, asset retirement obligations, and environmental liabilities.

Allowance for Doubtful Accounts

We provide customary credit terms to our customers and generally do not require collateral. We perform ongoing credit evaluations of the financial condition of our customers and maintain an allowance for doubtful accounts based upon historical collections experience and expected collectibility of accounts. Our actual bad debts may differ from our estimates.

Inventories

In assessing the realization of inventories, we are required to make judgments as to future demand requirements and compare these with current and committed inventory levels. Provision is made to reduce excess and obsolete inventories to their estimated net realizable value. Our inventory requirements may change based on our

projected customer demand, changes due to market conditions, technological and product life cycle changes, longer or shorter than expected usage periods, and other factors that could affect the valuation of our inventories. We maintain certain finished goods inventories near certain key customer locations in accordance with agreements. Although this inventory is typically supported by valid purchase orders, should these customers ultimately not purchase these inventories, our results of operations and financial condition would be adversely affected.

Revenue Recognition

We derive revenues primarily from the sale of printed circuit boards and backplane assemblies using customer-supplied engineering and design plans and recognize revenues when persuasive evidence of a sales arrangement exists, the sales terms are fixed and determinable, title and risk of loss have transferred, and collectibility is reasonably assured - generally when products are shipped to the customer. We provide our customers a limited right of return for defective printed circuit boards and backplane assemblies. We accrue an estimated amount for sales returns and allowances at the time of sale based on historical information. To the extent actual experience varies from our historical experience, revisions to these allowances may be required.

Long-lived Assets

We have significant long-lived tangible and intangible assets consisting of property, plant and equipment, definite-lived intangibles, and goodwill. We review these assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. In addition, we perform an impairment test related to goodwill at least annually. Our goodwill and intangibles are largely attributable to our acquisitions of other businesses. During the fourth quarter 2007, we performed an impairment assessment of our goodwill, which requires the use of a fair-value based analysis and determined that no impairment existed. At September 29, 2008, there were no indications that the carrying amount of long-lived tangible assets, definite-lived intangible assets and goodwill may not be recoverable. If future market conditions continue to deteriorate, such events and circumstances may necessitate our review of the recoverability of long-lived assets.

We use an estimate of the future undiscounted net cash flows in measuring whether our long-lived tangible assets and definite-lived intangible assets are recoverable. If forecasts and assumptions used to support the realizability of our long-lived assets change in the future, significant impairment charges could result that would adversely affect our results of operations and financial condition.

Income Taxes

Deferred income tax assets are reviewed for recoverability, and valuation allowances are provided, when necessary, to reduce deferred tax assets to the amounts expected to be realized. At September 29, 2008 and December 31, 2007, we had net deferred income tax assets of $12.2 million and $4.4 million, respectively. In addition, we record income tax provision or benefit during interim periods at a rate that is based on expected results for the full year. If future changes in market conditions cause actual results for the year to be more or less favorable than those expected, adjustments to the effective income tax rate could be required.

Stock-Based Awards

We adopted the fair value recognition provisions of SFAS No. 123R, Share-Based Payments, (SFAS 123R) using the modified prospective transition method. Under this method we recognize compensation expense net of an estimated forfeiture rate and only recognize compensation cost for those shares expected to vest over the requisite service period of the award using a straight-line method.

We estimate the value of stock-based restricted stock unit awards on the date of grant using the closing share price. We estimate the value of stock-based option awards on the date of grant using the Black-Scholes option pricing model. Calculating the fair value of stock-based option payment awards requires the input of highly subjective assumptions, including the expected term of the share-based payment awards and expected stock price volatility. The expected term represents the average time that options that vest are expected to be outstanding. The expected volatility rates are estimated based on a weighted average of the historical volatilities of our common stock. The assumptions used in calculating the fair value of share-based payment awards represent our best

estimates, but these estimates involve inherent uncertainties and the application of our judgment. As a result, if factors change and we use different assumptions, our stock-based compensation expense could be materially different in the future. In addition, we are required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. We have currently estimated our forfeiture rate to be 8 percent. If our actual forfeiture rate is materially different from our estimate, the stock-based compensation expense could be significantly different from what we have recorded in the current period. For the quarters ended September 29, 2008 and October 1, 2007, stock-based compensation expense was $1.0 million and $0.6 million, respectively, net of tax. For the three quarters ended September 29, 2008 and October 1, 2007, stock-based compensation expense was $2.5 million and $1.8 million, respectively, net of tax. At September 29, 2008, total unrecognized estimated compensation expense related to non-vested stock options was $2.8 million, which is expected to be recognized over a weighted-average period of 0.9 year. At September 29, 2008, $6.1 million of total unrecognized compensation cost related to restricted stock units is expected to be recognized over a weighted-average period of 1 year.

Self Insurance

We are self-insured for group health insurance benefits provided to our employees, and we purchase insurance to protect against claims at the individual and aggregate level. The insurance carrier adjudicates and processes employee claims and is paid a fee for these services. We reimburse our insurance carrier for paid claims subject to variable monthly limitations. We estimate our exposure for claims incurred but not paid at the end of each reporting period and use historical information supplied by our insurance carrier and broker on an annual basis to estimate our liability for these claims. This liability is subject to an aggregate stop-loss that varies based on employee enrollment and factors that are established at each annual contract renewal. Our actual claims experience may differ from our estimates.

Asset Retirement Obligation and Environmental Liabilities

We establish liabilities for the costs of asset retirement obligations when a legal or contractual obligation exists to dispose of or restore an asset upon its retirement and the timing and cost of such work is reasonably estimable. We record such liabilities only when such timing and costs are reasonably determinable. In addition, we accrue an estimate of the costs of environmental remediation for work at identified sites where an assessment has indicated it is probable that cleanup costs are or will be required and may be reasonably estimated. In making these estimates, we consider information that is currently available, existing technology, enacted laws and regulations, and our estimates of the timing of the required remedial actions, and we discount these estimates at 8 percent. We also are required to estimate the amount of any probable recoveries, including insurance recoveries.

Results of Operations

Quarter and Three Quarters Ended September 29, 2008 Compared to Quarter and Three Quarters Ended October 1, 2007

There were 91 days in both of the quarters ended September 29, 2008 and October 1, 2007 and 273 and 274 days in the three quarters ended September 29, 2008 and October 1, 2007, respectively.

The following table sets forth statement of operations data expressed as a percentage of net sales for the periods indicated:

                                             Quarter Ended                       Three Quarters Ended
                                    September 29,        October 1,        September 29,         October 1,
                                        2008                2007               2008                 2007

Net sales                                    100.0 %           100.0 %              100.0 %            100.0 %
Cost of goods sold                            81.0              80.8                 79.4               81.0

Gross profit                                  19.0              19.2                 20.6               19.0

Operating (income) expenses:
Selling and marketing                          4.5               4.4                  4.5                4.4
General and administrative                     4.8               4.9                  4.9                4.8
Amortization of definite-lived
intangibles                                    0.5               0.6                  0.5                0.6
Metal reclamation                                -                 -                 (0.7 )                -

Total operating expenses                       9.8               9.9                  9.2                9.8

Operating income                               9.2               9.3                 11.4                9.2
Other income (expense):
Interest expense                              (0.9 )            (1.6 )               (1.3 )             (2.2 )
Interest income                                0.4               0.1                  0.2                0.3
Other, net                                    (0.2 )             0.1                 (0.2 )                -

Total other expense, net                      (0.7 )            (1.4 )               (1.3 )             (1.9 )

Income before income taxes                     8.5               7.9                 10.1                7.3
Income tax provision                          (2.9 )            (2.9 )               (3.7 )             (2.7 )

Net income                                     5.6 %             5.0 %                6.4 %              4.6 %

The Company has two reportable segments: PCB Manufacturing and Backplane Assembly. These reportable segments are managed separately because they distribute and manufacture distinct products with different production processes. PCB Manufacturing fabricates printed circuit boards. Backplane Assembly is a contract manufacturing business that specializes in assembling backplanes into sub-assemblies and other complete electronic devices. PCB Manufacturing customers are either EMS or OEM companies, while Backplane Assembly customers are usually OEMs. Our Backplane Assembly segment includes our Hayward, California and Shanghai, China plants and our Ireland sales and distribution infrastructure. Our PCB Manufacturing segment is composed of eight domestic PCB fabrication plants, and a facility which provides follow on value-added services primarily for one of the PCB Manufacturing plants. The following table compares net sales by reportable segment for the quarters and three quarters ended September 29, 2008, and October 1, 2007:

                                Quarter Ended                     Three Quarters Ended
                        September 29,       October 1,       September 29,       October 1,
                            2008               2007              2008               2007
                                                    (In thousands)

 Net sales:
 PCB Manufacturing     $       148,003     $    140,514     $       446,304     $    431,316
 Backplane Assembly             29,254           30,679              92,984           96,500

 Total sales                   177,257          171,193             539,288          527,816
 Inter-company sales            (8,238 )         (8,114 )           (23,223 )        (25,824 )

 Total net sales       $       169,019     $    163,079     $       516,065     $    501,992

Net Sales

Net sales increased $5.9 million, or 3.6%, from $163.1 million for the quarter ended October 1, 2007 to $169.0 million for the quarter ended September 29, 2008 due to increased demand from aerospace/defense customers. PCB sales volume decreased approximately 9%, however, prices rose approximately 11% due to a shift in production mix toward more high technology production. Our quick-turn production, which we measure as orders placed and shipped within 10 days, decreased from 13% of net PCB sales for the quarter ended October 1, 2007 to 11% of net PCB sales for the quarter ended September 29, 2008. The increasingly complex nature of our quick-turn work requires more time to manufacture, thereby extending some of these orders beyond the 10-day delivery window.

Net sales increased $14.1 million, or 2.8%, from $502.0 million for the three quarters ended October 1, 2007 to $516.1 million for the three quarters ended September 29, 2008 due to increased demand from aerospace/defense customers, partially offset by the closure of our Dallas, Oregon facility in April 2007. The Dallas, Oregon facility contributed approximately $11.8 million of revenue to the PCB Manufacturing segment during the three quarters ended 2007. Excluding revenue derived from our Dallas, Oregon facility, the $25.9 million revenue improvement reflects increased net sales at our other PCB Manufacturing facilities, partially offset by lower net sales in our Backplane Assembly operations. PCB sales volume declined approximately 9% for the three quarters ended September 29, 2008 as compared to the three quarters ended October 1, 2007. Prices rose approximately 13% due to a shift in production mix toward more high technology production. Our quick-turn production, which we measure as orders placed and shipped within 10 days, decreased from 15% of net PCB sales for the three quarters ended October 1, 2007 to 12% of net PCB sales for the three quarters ended September 29, 2008. The increasingly complex nature of our quick-turn work requires more time to manufacture, thereby extending some of these orders beyond the 10-day delivery window.

Cost of Goods Sold

Cost of goods sold increased $5.1 million, or 3.9%, from $131.8 million for the quarter ended October 1, 2007 to $136.9 million for the quarter ended September 29, 2008. Cost of goods sold increased mainly due to increased sales. As a percentage of net sales, cost of goods sold increased from 80.8% for the quarter ended October 1, 2007 to 81.0% for the quarter ended September 29, 2008, primarily due to higher repair and maintenance expenses.

Cost of goods sold increased $3.2 million, or 0.8%, from $406.5 million for the three quarters ended October 1, 2007 to $409.7 million for the three quarters ended September 29, 2008. Cost of goods sold increased for the three quarters ended September 29, 2008 mainly due to increased sales. For the three quarters ended September 29, 2008 cost of goods sold, as a percentage of sales, decreased to 79.4% from 81.0% for the three quarters ended October 1, 2007, primarily due to higher pricing.

Gross Profit

As a result of the foregoing, gross profit increased $0.9 million, or 2.9%, from $31.2 million for the quarter ended October 1, 2007 to $32.1 million for the quarter ended September 29, 2008 with gross margin decreasing from 19.2% for the quarter ended October 1, 2007 to 19.0% for the quarter ended September 29, 2008. Gross margin decreased slightly as a result of higher repair and maintenance expenses in the quarter ended September 29, 2008.

Additionally, gross profit increased $10.8 million, or 11.3%, from $95.5 million for the three quarters ended October 1, 2007 to $106.3 million for the three quarters ended September 29, 2008 with gross margin increasing from 19.0% for the three quarters ended October 1, 2007 to 20.6% for the three quarters ended September 29, 2008. The change in our gross margin for the three quarters ended September 29, 2008 was primarily due to a shift in production mix toward more high technology production and higher pricing.

Printed circuit board manufacturing is a multi-step process that requires a certain level of equipment and staffing for even minimal production volumes. As production increases, our employees are able to work more efficiently and produce more printed circuit boards without incurring proportionally more costs. However, at higher capacity utilization rates, additional employees and capital may be required.

Selling and Marketing Expenses

Selling and marketing expenses increased $0.5 million, or 7.0%, from $7.1 million for the quarter ended October 1, 2007 to $7.6 million for the quarter ended September 29, 2008. Additionally, selling and marketing expenses increased $0.8 million, or 3.6%, from $22.2 million for the three quarters ended October 1, 2007 to $23.0 million for the three quarters ended September 29, 2008. The increase for the quarter and three quarters ended September 29, 2008 is primarily due to increased labor expenses and higher commission expense for increased sales. As a percentage of net sales, selling and marketing expenses remained consistent at 4.5% for the quarter and three quarters ended September 29, 2008 compared to 4.4% for the quarter and three quarters ended October 1, 2007.

General and Administrative Expense

General and administrative expenses increased $0.1 million from $8.0 million, or 4.9% of net sales, for the quarter ended October 1, 2007 to $8.1 million, or 4.8% of net sales, for the quarter ended September 29, 2008. The increase in expenses resulted primarily from higher incentive bonus expense and stock-based compensation expense for restricted stock and stock option awards, offset by lower accounting costs.

General and administrative expenses increased $1.0 million from $24.2 million, or 4.8% of net sales, for the three quarters ended October 1, 2007 to $25.2 million, or 4.9% of net sales, for the three quarters ended September 29, . . .