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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 2003                 

or

For the transition period from                              to                             

Commission file number:  000-30241

DDi CORP.

(Exact name of registrant as specified in its charter)

(714) 688-7200

(Registrant’s telephone number, including area code)

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

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $0.001 per share

(Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:  Yes  x  No  ¨ .

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

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

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.  Yes  x  No  ¨ .

The aggregate market value of the voting common equity held by non-affiliates of the registrant as of June 30, 2003, based on the average closing bid and asked prices for such common equity was $3,304,548 (computed by reference (i) to the price at which the registrant’s predecessor was last sold on the over-the-counter market in the United States as posted on the OTC Bulletin Board and (ii) the number of shares of the registrant’s predecessor that were outstanding on November 30, 2003). The registrant does not have non-voting common equity.

As of March 22, 2004, DDi Corp. had 25,999,926 shares of common stock, par value $0.001 per share, outstanding.

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DDi CORP.

FORM 10-K

Index

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You should carefully consider the risk factors described below, as well as the other information included in this Annual Report on Form 10-K prior to making a decision to invest in our securities. The risks and uncertainties described below are not the only ones facing our company. Additional risks and uncertainties not presently known or that we currently believe to be less significant may also adversely affect us. Unless the context requires otherwise, references to “the Company,” “we,” “us,” “our” and “DDi Corp.” refer specifically to DDi Corp. and its subsidiaries.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

On one or more occasions, we may make statements regarding our assumptions, projections, expectations, targets, intentions or beliefs about future events. All statements other than statements of historical facts included in this Annual Report on Form 10-K relating to expectation of future financial performance, continued growth, changes in economic conditions or capital markets and changes in customer usage patterns and preferences, are forward-looking statements.

Words or phrases such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “targets,” “will likely result,” “will continue,” “may,” “could” or similar expressions identify forward-looking statements. Forward-looking statements involve risks and uncertainties which could cause actual results or outcomes to differ materially from those expressed. We caution that while we make such statements in good faith and we believe such statements are based on reasonable assumptions, including without limitation, management’s examination of historical operating trends, data contained in records and other data available from third parties, we cannot assure you that our expectations will be realized.

In addition to the factors and other matters discussed under the caption “Factors That May Affect Future Results” in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Annual Report on Form 10-K, some important factors that could cause actual results or outcomes for DDi or our subsidiaries to differ materially from those discussed in forward-looking statements include:

Any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for management to predict all such factors.

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PART I

Item 1.    Business.

Overview

We provide time-critical, technologically advanced printed circuit board engineering and manufacturing, and other value-added services. We specialize in engineering and fabricating complex multi-layer printed circuit boards on a quick-turn basis—with lead times as short as 24 hours. We have approximately 1,500 customers in the communications and networking, medical, test and industrial instruments, high-end computing, military and aerospace equipment markets. With such a broad customer base and an average of 70 new printed circuit board designs tooled per day, we have accumulated significant process and engineering expertise. Our core strength is developing innovative, high-performance solutions for customers during the engineering, test and launch phases of their new electronic product development. Our entire organization is focused on rapidly and reliably filling complex customer orders and building long-term customer relationships. Our global engineering capabilities and highly scalable manufacturing facilities in the United States, Canada and Europe enable us to respond to time-critical orders and technology challenges for our customers.

DDi Corp.’s predecessor corporation was incorporated in California in 1978. In 1991, new management, led by our current Chief Executive Officer, Bruce D. McMaster, began to focus primarily on the time-critical segment of the electronics manufacturing services industry. In April 2000, in conjunction with the closing of DDi Corp.’s initial public offering, DDi Corp. was reincorporated in Delaware. We operate through our primary operating subsidiaries, Dynamic Details, Incorporated, or Dynamic Details, and DDi Europe Limited, or DDi Europe.

Events Leading to Our Reorganization

Our corporate growth strategy in the late 1990’s involved a combination of organic revenue growth and the acquisition of several companies and facilities in the United States, Canada and Europe. This strategy served to position us to meet the strong growth in demand we experienced in 1997 through 2000 in the printed circuit board and electronics manufacturing services market segments, and enabled us to scale our business to address the increasingly global nature of our customer base. We financed our organic growth and acquisition strategy, in part, through the issuance of common stock and debt.

Beginning in 2001, the markets for printed circuit board and electronics manufacturing services, as well as many end-markets addressed by providers of these services entered into significant economic decline. As a result, demand for our services and those of our competitors decreased during 2001 and 2002, negatively impacting our consolidated revenues, operating performance, and our industry in general. From 2000 to 2002, our consolidated net sales declined from nearly $500 million to just under $250 million.

From 2001 through 2003, we implemented operational restructuring plans in order to address the changing market environment. These plans included the closure or disposition of various facilities and selected design centers throughout the United States, streamlining certain manufacturing facilities, eliminating certain sales offices, including a sales office based in Tokyo, scaling down our Anaheim, California and Sterling, Virginia facilities and reallocating production to facilities with lower cost structures in order to improve operating cash flow. We also wrote-down unutilized assets.

Despite our considerable efforts to reduce our cost structure and consolidate operations, we were unable to overcome the negative impact that the prolonged economic downturn in our market and end-markets had on our business and financial condition. As economic and capital markets conditions deteriorated, we were unable to raise additional equity capital and were not able to generate sufficient cash from operations to reduce our debt to a manageable level. As a result, as of December 31, 2002, we had approximately $313.7 million in debt, including capital leases.

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As of December 31, 2002, we defaulted on certain financial covenants of our pre-restructuring loan agreements, and as a result, were not permitted to pay interest to the holders of our convertible subordinated notes in March or April of 2003, or to the holders of our senior discount notes in May of 2003. Our failure to make these interest payments resulted in a default on obligations under our convertible subordinated notes and senior discount notes.

As a result of these events, we began negotiations with both the secured lenders under our pre-restructuring senior credit facility and committees formed by holders of our convertible notes and senior discount notes. Pursuant to these negotiations, we reached an agreement to restructure our bank debt outside of a bankruptcy proceeding and to file a bankruptcy petition and plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code. In August 2003 we filed a petition to consummate the agreed upon pre-arranged plan. At this time our total debt, including capital leases, at the time we filed for bankruptcy was approximately $335 million, including approximately $211 million in principal and accrued interest on our convertible subordinated notes and approximately $18 million in principal and accrued interest on our senior discount notes. The result of our plan of reorganization was a restructuring of our public debt that created a capital structure that could be supported by the cash flow of our operating subsidiaries. The plan reduced our total debt and accrued interest by more than $210 million and reduced our future annual cash interest expenses by approximately $16 million.

Our Recent Bankruptcy and Reorganization

On August 20, 2003, DDi Corp. and our subsidiary, DDi Capital Corp., or DDi Capital, filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. On December 2, 2003, the Bankruptcy Court approved our plan of reorganization, and on December 12, 2003, the effective date of our plan of reorganization, we reorganized and emerged from bankruptcy. DDi Corp. and our subsidiaries are now operating our businesses and properties as a group of reorganized entities pursuant to the terms of the plan of reorganization. The following is a summary of some of the transactions that were consummated on or about the effective date of our plan of reorganization:

Board and Management.    Our board of directors was reconstituted to consist of the following five independent directors in addition to Bruce D. McMaster and David Blair: Robert Amman, Robert Guezuraga, Jay B. Hunt, Andrew E. Lietz and Carl R. Vertuca Jr. No significant changes occurred in our senior management as a result of the bankruptcy.

Charter Documents.    Our certificate of incorporation and bylaws were amended and restated in the bankruptcy. We now have 80,000,000 shares of capital stock, consisting of 75,000,000 shares of Common Stock, $.001 par value per share and 5,000,000 shares of Preferred Stock, $.001 par value per share, of which 1,000,000 shares have been designated as Series A preferred stock.

Treatment of Our Pre-Bankruptcy Equity.    All of our pre-bankruptcy equity securities, including all outstanding shares of our common stock and all outstanding options to purchase common stock, were cancelled.

Treatment of Our Pre-Bankruptcy Debt.    All of our pre-bankruptcy documents evidencing or creating any indebtedness were cancelled or satisfied in full and discharged, including, without limitation, $105.5 million of our 6.25% convertible subordinated notes due 2007, $105.1 million of our 5.25% convertible subordinated notes due 2008 and $17.6 million of DDi Capital’s 12.5% senior discount notes due 2007. Our $65.9 million senior credit facility was restructured and repaid in full, and we entered into a new senior credit facility, described below.

Issuance of Common Stock.    We issued an aggregate of 23,500,000 shares of our common stock to the holders of our old convertible subordinated notes.

Issuance of Series A Preferred Stock.    We issued an aggregate of 1,000,000 shares of our Series A preferred stock to the holders of our old convertible subordinated notes.

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Issuance of Warrants.    We issued warrants to purchase an aggregate of 3,051,507 shares of our common stock to the lenders under our senior credit facility. In addition, we issued warrants to purchase an aggregate of 762,876 shares of our common stock in connection with the senior accreting notes described below. As a result of our private placement of securities in January 2004, the warrants issued to the lenders under our senior credit facility and to the holders of our old senior discount notes were adjusted pursuant to anti dilution provisions allowing such holders to purchase an aggregate of 3,228,364 shares and 807,090 shares of our common stock, respectively. These warrants are held in an escrow account until December 12, 2005 and are exercisable at an initial exercise price of $0.01 per share from December 13, 2005 through July 31, 2008. We may reduce the number of the warrants issued to the senior lenders by 50% if we permanently reduce and terminate our borrowings under the senior credit facility by 50% by December 12, 2005. Furthermore, if by December 12, 2005 we permanently reduce and terminate 100% of our borrowings under the credit facility, then none of these warrants will be exercisable. The warrants issued to the senior notes holders will be terminated if, on or before December 12, 2005, DDi Capital pays all of its indebtedness to the holders of the senior accreting notes. As noted below, as a result of paying off our senior credit facility, the warrants granted to the senior lenders were terminated.

Management and Director Stock Options and Restricted Stock.    As of March 22, 2004, we have granted options to purchase an aggregate of 2,620,434 shares of our common stock and issued 1,250,000 shares of common stock under our 2003 Management Equity Incentive Plan. We are authorized to grant options to purchase up to 2,319,686 additional shares of common stock under the plan. We are also authorized to issue up to 600,000 shares of common stock pursuant to stock options to be granted to non-employee directors under our 2003 Directors Equity Incentive Plan. The board has approved the granting of 400,000 shares of options to non-employee directors which is still subject to shareholder’s approval.

Senior Accreting Notes.    DDi Capital issued $17.7 million in senior accreting notes pursuant to an indenture. Interest is payable on the notes by issuance of additional senior accreting notes an annual rate of 16% or, at DDi Capital’s election, in cash at an annual rate of 14%. The notes mature on January 1, 2009 and are redeemable by DDi Capital. The notes have covenants customary for securities of this type.

New Senior Credit Facility.    The aggregate outstanding unpaid principal amount of senior debt, plus interest and fees, under the Dynamic Details senior credit facility was restructured, exchanged and repaid in full. The rights of the lenders under Dynamic Details $65.9 million senior credit facility were modified, exchanged and restated as provided in our new senior credit facility. Our new $72.9 million senior credit facility consists of:

The senior credit facility had $67.9 million outstanding and $0.5 million of letters of credit obligations outstanding as of March 2, 2004. No significant amortization of any loan under the senior credit facility will be due until 2005. In connection with the senior credit facility, we and DDi Capital executed and delivered two guarantee and collateral agreements, pursuant to which (i) we pledged 100% of the common stock of DDi Intermediate as collateral to secure the senior credit facility, and (ii) DDi Intermediate pledged 100% of the common stock of DDi Capital as collateral to secure the senior credit facility. Our subsidiary, DDi Europe, also has a £14.3 million ($25.3 million) credit facility and £7.0 million ($12.5 million) revolving credit facility. For further information about our debt obligations, see the discussion under the caption “Liquidity and Capital Resources” in Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations.

On March 30, 2004, we sold in a private placement 147,679 shares of Series B-1 Preferred Stock and 1,139,238 shares of Series B-2 Preferred Stock to certain institutional investors at a price of $47.40 per share (for an aggregate sales price of $61 million before placement fees and offering expenses). We paid off the Dynamic Details senior credit facility using $54.8 million of the proceeds from this placement. As a result of such pay off,

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warrants to purchase an aggregate of 3,228,364 shares of our common stock held by the senior lenders were cancelled. Immediately after the Dynamic Details senior credit facility was paid off, Dynamic Details and three of its wholly-owned subsidiaries entered into a three year asset based revolving credit facility with a commitment up to $40 million, depending upon on value of the asset base. Initially, on March 30, 2004, Dynamic Details was able borrow up to $16 million. The asset based credit facility is guaranteed by DDi Corp. and its subsidiaries, DDi Intermediate Holdings Corp., or DDi Intermediate, and DDi Capital Corp. The asset-based credit facility is secured by the assets of our domestic operating subsidiary, Dynamic Details. Under the asset based credit facility, (i) DDi Corp. pledged 100% of the common stock of DDi Intermediate as collateral to secure the senior credit facility; (ii) DDi Intermediate pledged 100% of the common stock of DDi Capital as collateral to secure the senior credit facility; and (iii) DDi Capital pledged 100% of the common stock of Dynamic Details, Incorporated as collateral to secure the asset-based credit facility. For further information about of debt obligations, see the discussion under the caption “Liquidity and Capital Resources” in Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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Set forth below is a chart diagramming our current capitalization and debt structure:

Industry Background

Printed circuit boards are a fundamental component of virtually all electronic equipment. A printed circuit board is comprised of layers of laminate and copper and contains patterns of electrical circuitry to connect electronic components. The level of printed circuit board complexity is determined by several characteristics, including size, layer count, density, materials and functionality. High-end commercial equipment manufacturers require complex printed circuit boards fabricated with higher layer counts, greater density and advanced materials and which demand highly complex and sophisticated manufacturing capabilities. By contrast, printed circuit boards used in consumer electronic products are generally less complex and have less sophisticated manufacturing capability requirements.

We see several significant trends within the printed circuit board manufacturing industry, including:

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Henderson Ventures, an independent market research firm, estimated that the global market for printed circuit boards was $31 billion in 2002, with North American manufacturers producing approximately $5.3 billion of that amount. Henderson estimated that in 2002 there were nine North American-based rigid printed circuit board manufacturers that had annual revenues in excess of $80 million, and over 400 manufacturers with annual revenues of less than $50 million. As a result of the slowdown in the electronics industry that began in early 2001 and continued through much of 2003, many printed circuit board manufacturing facilities were closed, reducing North American manufacturing capacity by an estimated 30% to 40%. We believe these plant closures have created an opportunity for increased market share and improved pricing for well-capitalized manufacturers that have advanced technological capabilities.

The DDi Customer Solution

Our customer solution combines reliable, time-critical, industry-leading engineering expertise and advanced process and manufacturing technologies. We play an integral role in our customers’ product development and manufacturing strategies. We believe our core strengths in the engineering, test and launch phases of new electronic product development provide a competitive advantage in delivering our services to customers in industries characterized by rapid product introduction cycles and demand for time-critical services.

Our customers benefit from the following:

Our Strategy

Our goal is to be the leading provider of technologically advanced, time-critical printed circuit board engineering, manufacturing and other value-added services. To achieve this goal, we intend to:

Focus on time-critical services.    We focus primarily on the quick-turn segment of the printed circuit board industry. We target the time-critical services market because the significant value of these services to our customers allows us to charge a premium and generate higher margins. We also believe that the market dynamics for time-critical services are more stable than those of the volume production market and that these services are more resistant to pricing pressure and commoditization.

Maintain our technology leadership.    We are a leader in developing and adopting new manufacturing technologies. We continually accumulate new technology and engineering expertise as we work closely with our

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broad customer base in the introduction of their new products. We believe this expertise and ability position us as an industry leader in providing technologically advanced, time-critical services.

Continue to serve our large and diverse customer base.    We believe that maintaining a broad customer base enables us to further enhance our engineering expertise while reducing end-market and customer concentration risk. We maintain a large sales and marketing staff focused on building and maintaining customer relationships. We are focused on becoming an integral part of customers’ new product initiatives and work closely with their research and development personnel.

Pursue new customers and markets with high growth potential.    We continue to pursue new customers with high growth characteristics and target additional high growth end-markets that are characterized by rapid product introduction cycles and demand for time-critical services.

Our Services

Quick-turn Printed Circuit Board Engineering and Fabrication

For the years ended December 31, 2002 and 2003, quick-turn orders, defined as orders with delivery requirements of 10 days or less, represented 60% and 50% of our net printed circuit board sales, respectively.

Value-Added Services

Manufacturing Technologies and Processes

The manufacture of printed circuit boards involves several steps: etching the circuit image on copper-clad epoxy laminate, pressing the laminates together to form a panel, drilling holes and depositing copper or other conducive material to form the inter-layer electrical connections and, lastly, cutting the panels to shape. Our advanced interconnect products require additional critical steps, including dry film imaging, photoimageable soldermask processing, computer-controlled laser drilling and routing, automated plating and process controls and achievement of controlled impedance.

Multi-layering, which involves placing multiple layers of electrical circuitry on a single printed circuit board or backpanel, expands the number of circuits and components that can be contained on the interconnect product and increases the operating speed of the system by reducing the distance that electrical signals must travel. Increasing the density of the circuitry in each layer is accomplished by reducing the width of the circuit tracks and placing them closer together on the printed circuit board or backpanel.

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Interconnect products having narrow, closely spaced circuit tracks are known as fine line products. The manufacture of complex multi-layer interconnect products often requires the use of sophisticated circuit interconnections, called blind or buried vias, between printed circuit board layers and adherence to strict electrical characteristics to maintain consistent circuit transmission speeds, referred to as controlled impedance. These technologies require very tight lamination and etching tolerances and are especially critical for printed circuit boards with ten or more layers.

We provide a number of advanced technologies which allows us to manufacture complex printed circuit boards with higher numbers of layers and increased functionality and quality, including the following:

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We are qualified under various industry standards, including Bellcore compliance for communications products and Underwriters Laboratories approval for electronics products. All of our production facilities are ISO-9002 certified. These certifications require that we meet standards related to management, production and quality control, among others. In addition, some of our production facilities are MILPRF-5510 and MILPREF-31032 certified. These certifications require that we meet certain military standards related to production and quality control.

Our Customers and Markets

We have one of the broadest customer bases in the printed circuit board industry. We measure customers as those companies that have placed at least one order with us in the preceding 6-month period. As of December 31, 2003, we had over 1,500 customers, comprised of original equipment manufacturers and electronics manufacturing services providers representing a wide range of end-user markets. These end markets consist of leading communications and networking, medical, test and industrial instruments, high-end computing, and military and aerospace equipment markets. During 2003, sales to our largest customer accounted for approximately 5% of our net sales. During 2002 and 2003, sales to our ten largest customers accounted for approximately 26% and 24% of our net sales, respectively.

We sell to original equipment manufacturers both directly and through electronic manufacturing service companies. Our top thirty customers by revenue for the year ended December 31, 2003, were:

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

The financial information for geographic areas is included in Note 2 to the Consolidated Financial Statements under the caption “Segment Reporting.”

Sales and Marketing

Our sales and marketing efforts are focused on developing long-term relationships with research and development and new product introduction personnel at current and prospective customers. Our sales personnel and engineering staff advise our customers with respect to applicable technology, manufacturing feasibility of designs and cost implications through on-line computer technical support and direct customer communication.

In order to build strong relationships with our clients through personal contacts, each customer is serviced by one individual member of the sales staff for all services across all facilities. We have developed a comprehensive database and allocation process to coordinate calling and cross-selling efforts.

We market our development and manufacturing services through an internal sales force. In addition, approximately 28% of our net sales in 2003 were generated through manufacturers’ representatives. For many of these manufacturers’ representatives, we are the largest revenue source and the exclusive supplier of quick-turn and pre-production printed circuit boards.

Research and Development

We maintain a strong commitment to research and development and focus our efforts on enhancing existing capabilities as well as developing new technologies. Our close involvement with our customers in the early stages of their product development positions us at the leading edge of technical innovation in the design and manufacture of quick-turn and complex printed circuit boards. Our experienced engineers, chemists and laboratory technicians work in conjunction with our sales staff to identify specific needs and develop innovative, high performance solutions to customer issues. Because our research and development efforts are an integral part of our production process, our research and development expenditures are not separately identifiable. Accordingly, we do not segregate these costs as a separate item, but instead include such costs in our consolidated financial statements as a part of costs of goods sold.

Patents and Other Intellectual Property

Although we seek to protect certain proprietary technology and other intangible assets through patents, we have relatively few patents and do not believe that the patents are critical to protecting our core intellectual property. We believe our business depends instead on our effective execution of fabrication techniques and our ability to improve our manufacturing processes to meet evolving industry standards. We generally enter into confidentiality and non-disclosure agreements with our employees, consultants and customers, as needed, and generally limit access to and distribution of our proprietary information and processes.

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Our Suppliers

Our raw materials inventory is small relative to sales and must be regularly and rapidly replenished. We use just-in-time procurement practices to maintain raw materials inventory at low levels. Because we provide primarily lower-volume quick-turn services, this inventory policy does not hamper our ability to complete customer orders. Although we have preferred suppliers for some raw materials, multiple sources exist for all materials. Adequate amounts of all raw materials have been available in the past, and we believe this will continue in the foreseeable future.

The primary raw materials that we use in production are core materials (copperclad layers of fiberglass of varying thickness impregnated with bonding materials) and chemical solutions (copper, gold, etc.) for plating operations, photographic film and carbide drill bits. We work closely with our suppliers to incorporate technological advances in the raw materials we purchase.

Competition

Our principal competitors include Merix Corporation, TTM Technologies, Tyco, as well as, a number of smaller private companies. The barriers to entry in the quick-turn segment of the printed circuit board industry are considerable. In order to compete effectively in this segment, companies must have a large customer base, a large staff of sales and marketing personnel, considerable engineering resources and the proper tooling and equipment to permit fast and reliable product turnaround.

We believe we compete favorably based on the following factors:

Backlog

Although we obtain firm purchase orders from our customers, our customers typically do not make firm orders for delivery of products more than 30 to 90 days in advance. We do not believe the backlog of expected product sales covered by firm purchase orders is a meaningful measure of future sales since orders may be rescheduled or canceled.

Governmental Regulation

Our operations are subject to certain federal, state and local laws and regulatory requirements relating to environmental compliance and site cleanups, waste management and health and safety matters. Among others, we are subject to regulations promulgated by:

To date the costs of compliance and environmental remediation have not been material to us. Nevertheless, additional or modified requirements may be imposed in the future. If such additional or modified requirements are imposed on us, or if conditions requiring remediation were found to exist, we may be required to incur substantial additional expenditures.

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Employees

As of December 31, 2003, we had approximately 1,800 employees, none of whom are represented by unions. Of these employees, approximately 71% were involved in manufacturing, 7% were involved in engineering, 16% were involved in administration and other capacities and approximately 6% were involved in sales. We have not experienced any labor problems resulting in a work stoppage and believe we have good relations with our employees.

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ITEM 1A.     Executive Officers Of DDi Corp.

The following table sets forth the executive officers of DDi Corp., their ages as of March 22, 2004, and the positions currently held by each person:

The President, Chief Executive Officer, Chief Financial Officer and Treasurer are elected annually by the Board of Directors at its first meeting following the annual meeting of stockholders. Other executive officers may be appointed by the Board of Directors at such meeting or at any other meeting. All executive officers serve at the pleasure of the Board of Directors.

Bruce D. McMaster has served as our President since 1991 and as a Director and our Chief Executive Officer since 1997. Before becoming our President, Mr. McMaster worked in various management capacities in our engineering and manufacturing departments. Mr. McMaster also serves as President and Chief Executive Officer of DDi Capital and Dynamic Details and serves as an executive officer of our other subsidiaries.

Joseph P. Gisch has served as Chief Financial Officer since December 2003, a position he previously held from 1995 to March 2003. From March to December 2003, Mr. Gisch served as our Executive Vice President of Business Development and Strategic Planning, focusing on our financial restructuring. Mr. Gisch also serves as Vice President, Chief Financial Officer and Treasurer of Dynamic Details. From 1986 to 1995, Mr. Gisch was a partner at the accounting firm of McGladrey & Pullen, LLP where he was responsible for the audit, accounting and information systems for a variety of manufacturing clients. Mr. Gisch was responsible for our general accounting and income tax matters. Mr. Gisch has not been responsible for any of our audit services since 1991.

David Blair has served as Chief Executive Officer of DDi Europe since January 2002, and as a director of DDi Corp. since December 2003. Prior to joining us, Mr. Blair was retired from L. Gardner PLC, where he last served as Chief Executive Officer.

Michael Moisan has served as our Chief Operating Officer since 2002 and as our Vice President, Operations—East Coast from October 2001 to 2002. Mr. Moisan oversaw our Anaheim operation from 1996 to October 2001. Prior to joining DDi, he was Director of Engineering at Circuitwise, an automotive printed circuit board supplier, from 1995 to 1996. He served as Director of Operations at AMP AKZO, a printed circuit board company, from 1990 to 1996 and as Director of Research at PCK Technology, an electronics research and development company, from 1982 to 1990.

Timothy J. Donnelly has served as our General Counsel, Vice President & Secretary since 2000. Prior to joining us, Mr. Donnelly was the Assistant General Counsel of Rockwell International Corporation from 1991 to 2000 and was an associate attorney at the law firm of Latham & Watkins LLP from 1986 through 1990.

Thomas Ingham has served as our Vice President Sales and Marketing—Eastern Region since March 2002. From September 2001 Mr. Ingham has served Dynamic Details in various positions in sales and marketing over the last five years, starting as Regional Manager. Prior to joining Dynamic Details, Mr. Ingham worked for 12 years at Insulectro, a supplier of PCB materials and laminates, in various positions, most recently as Vice President, Sales and Marketing.

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Jay Latin has served as our Vice President, Sales and Marketing—Western Region since March 2002. From 1998 to 2002, he served us as Mid-west Region manager. From 1993 to 1998, he served as a sales person for Southern California.

There are no arrangements or understandings pursuant to which any of the persons listed in the table above was selected as executive officers.

Item 2.     Properties.

As of March 22, 2004, we leased approximately 659,000 square feet of building space in locations throughout the world primarily for product assembly and manufacturing facilities for quick-turn printed circuit boards. Our lease agreements expire at various dates through the year 2011. These leases represent a commitment of $8.9 million per year through 2011.

Our significant facilities are as follows:

In addition to the facilities listed above we recently entered into a lease for approximately 13,000 square feet of building space in Longmont, Colorado to be used for assembly services.

We also lease approximately 26,800 square feet of executive office space, which is included in our Anaheim, California facility. The lease represents a commitment of $0.2 million per year through 2008.

We believe that our current facilities are sufficient for the operation of our business, and we believe that suitable additional space in various local markets is available to accommodate any needs that may arise. We are in the process of renegotiating several of our current leases.

Item 3.     Legal Proceedings.

On August 20, 2003, DDi Corp. and DDi Capital, filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code (collectively, the “Chapter 11 Cases”) with the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”), under case number 03-15261. DDi Corp.’s other direct and indirect wholly-owned subsidiaries, including Intermediate, DDi Europe and Dynamic Details were not parties to the Chapter 11 Cases. After the Chapter 11 Cases were filed, DDi Corp. and DDi Capital continued to manage their properties and operate their businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with Sections 1107(a) and 1108 of Chapter 11. On December 2, 2003, the Bankruptcy Court approved our plan of reorganization and on December 12, 2003, the effective date of our plan of reorganization, we reorganized and emerged from bankruptcy. DDi Corp., DDi

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Capital and their subsidiaries are now operating their businesses and properties as a group of reorganized entities pursuant to the terms of the plan of reorganization. Subsequent to our emergence from bankruptcy, the Bankruptcy Court retained jurisdiction over certain administrative matters. DDi Corp. and DDi Capital are in the process of filing a motion requesting closure of the Chapter 11 Cases and expect that such cases will be closed by April 2004.

In October and November 2003, several class action complaints were filed in the United States District Court for the Central District of California on behalf of purchasers of our common stock, alleging violations of the federal securities laws between December 19, 2000 and April 29, 2002. Named as defendants in these complaints are Bruce D. McMaster, our President and Chief Executive Officer, Joseph P. Gisch, our Chief Financial Officer, Charles Dimick, former Chairman of our Board of Directors, Gregory Halvorson, our former Vice President of Operations, and John Peters, our former Vice President of Sales and Marketing. Neither DDi Corp. nor any of its subsidiaries was named in this lawsuit. The complaints seek unspecified damages and allege that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by, among other things, misrepresenting and/or failing to disclose material facts about the Company’s reported and projected financial results during the class period. In December 2003, a related class action complaint was filed in the Central District of California alleging similar claims against the same parties and seeking unspecified damages, but also adding causes of action under the Securities Act of 1933 in connection with the Company’s February 2001 secondary offering. This complaint alleges that the defendants misrepresented and/or failed to disclose material facts about the Company’s reported and projected financial results in connection with the registration statement and prospectus for the secondary offering. This complaint also added former directors David Dominik, Steven Pagliuca, Steven Zide and Mark Benham as defendants, as well as Bain Capital, Inc. and the underwriters of the February 2001 offering. On December 16, 2003, a federal district court judge consolidated the Central District of California actions in to a single action, In re DDi Corp. Securities Litigation, Case No. CV 03-7063 MMM (SHx). At present, motions are pending from three lead plaintiff groups and their respective lead counsel requesting that the Court appoint lead plaintiff and lead counsel in these matters. The Court was scheduled to rule on the motions on February 23, 2004 but has rescheduled the hearing for an unspecified date. Defendants need not respond to any complaint in this action until after such ruling is made pursuant to a November 12, 2003 scheduling order. We believe the claims are without merit and that the action will be defended vigorously. However, there can be no assurance that the defendants will succeed in defending or settling this action. We cannot assure you that the action will not have a material adverse effect on our business, financial condition, cash flows and results of operations. At this time, management believes the Company will not incur significant costs associated with these matters.

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

None.

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PART II

Market for Common Stock

Our common stock formerly traded on the Nasdaq National Market until December 11, 2002, then traded on the Nasdaq SmallCap Market until April 15, 2003 and then traded on the OTC Bulletin Board until December 12, 2003 under the symbol “DDIC.” When we emerged from our Chapter 11 proceedings on December 12, 2003, all of our formerly outstanding common stock was cancelled in accordance with our plan of reorganization, and our former common stockholders received, in the aggregate, 1% of the shares of our common stock issued under the plan of reorganization. The shares of our common stock that were issued under our plan of reorganization were trading on the OTC Bulletin Board under the symbol “DDIO.” On March 5, 2004 our common stock commenced trading on the Nasdaq National Market under the symbol “DDIC.”

Because the value of one share of our post-bankruptcy common stock bears no relation to the value of one share of our old common stock, the trading prices of our post-bankruptcy common stock are set forth separately from the trading prices of our old common stock. The information regarding the old common stock illustrates trends in our market capitalization in prior periods but otherwise is not directly relevant to our current capitalization.

The following table sets forth the high and low sales prices per share of our common stock for the quarterly periods indicated, which correspond to our quarterly fiscal periods for financial reporting purposes. Prices for our old common stock are prices on the Nasdaq National Market through December 11, 2002, on the Nasdaq Small Cap Market through April 15, 2003 and sales prices on the OTC Bulletin Board through December 12, 2003. Prices for our new common stock are prices on the OTC Bulletin Board. The sales prices on the OTC Bulletin Board reflect inter-dealer prices, without mark-up, mark-down or commission and may not necessarily represent actual transactions.

The number of common stockholders of record as of March 2, 2004 was 70.

Dividend Policy

We have not declared or paid any cash dividends on our common stock since January 1996. We anticipate that substantially all of our earnings in the foreseeable future will be used to finance our business and repay our debt. We have no current intention to pay cash dividends, and we do not expect to pay dividends while our current debt

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instruments are outstanding. Our future dividend policy will depend on our earnings, capital requirements and financial condition, as well as requirements of our financing agreements and other factors that our board of directors considers relevant.

The debt instruments of our subsidiaries restrict our ability to pay dividends and restrict our subsidiaries’ ability to pay dividends to us. Dynamic Details’ ability to pay dividends is limited under its senior credit facility. DDi Capital’s ability to pay dividends is limited under an indenture dated December 12, 2003 among DDi Capital and Wilmington Trust Co. as trustee. See “Description of Indebtedness” within Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part I, Item 7 of this Annual Report on Form 10-K.

Equity Compensation Plan Information

Information concerning securities authorized for issuance under our equity compensation plans is set forth in Part III, Item 12 of this Annual Report on Form 10-K, under the caption “Equity Compensation Plan Information,” and that information is incorporated herein by reference.

Recent Sales of Unregistered Securities

Pursuant to our plan of reorganization, on December 13, 2003, we issued common stock, preferred stock and warrants to our creditors in satisfaction of such creditors’ claims against us. We issued an aggregate of 23,500,000 shares of our common stock to the holders of our old convertible subordinated notes. We issued an aggregate of 249,926 shares of common stock to the holders of our pre-bankruptcy common stock. We issued an aggregate of 1,000,000 shares of our Series A preferred stock to the holders of our old convertible subordinated notes. We issued warrants to purchase an aggregate of 3,814,383 shares of our common stock, subject to anti-dilution adjustment, to the lenders under the our new senior credit facility and to holders of our old senior discount notes. As a result of our private placement of securities in January 2004, the number of shares issuable upon exercise of the warrants increased to 4,035,454 shares. The holders of the 23,500,000 shares of our common stock issued to the holders of our old convertible subordinated notes, the Series A preferred stock and the warrants issued pursuant to our plan of reorganization, are entitled, under certain circumstances, to require us to register the resale of their common stock, Series A preferred stock, warrants and shares issuable upon exercise of the warrants under the Securities Act. However, no registration rights have been provided to holders of our pre-bankruptcy common stock with respect to the common stock issued to such holders under our plan of reorganization.

We believe that the issuances of the shares of our common stock, the Series A preferred stock, warrants and shares issuable upon exercise of the warrants pursuant to the Registrants’ plan of reorganization satisfy the requirement of Section 1145 of the Bankruptcy Code and, therefore, were exempt from registration under the Securities Act and state securities laws. Subject to volume restrictions under the Securities Act on sales by affiliates, the securities issued pursuant to our plan of reorganization may be freely transferred by most recipients, and all resales and subsequent transactions in such securities are exempt from registration under federal and state securities laws, unless the holder is an “underwriter” with respect to such securities, as such term is defined in Section 1145(b) of the Bankruptcy Code. Given the complex and subjective nature of the question of whether a particular holder may be an underwriter, we make no representation concerning the right of any person to trade in the securities issued pursuant to our plan of reorganization.

On January 21, 2004, we issued 1,000,000 shares of common stock to two institutional investors for total gross proceeds of $15,980,000. We paid our placement agent and advisor a placement fee of $758,800 out of the proceeds of the offering. We issued these securities under an exemption provided by Rule 506 of Regulation D under the Securities Act Rules. The purchasers of these securities certified that they were “accredited investors” as defined in Rule 501 of Regulation D, were acquiring the securities as an investment and not with a view to distribution, and would not resell the securities unless they became registered or another exemption from registration was available. The holders are entitled, under certain circumstances, to require us to register the

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resale of their common stock under the Securities Act. We filed a registration statement on February 12, 2004 relating to these shares of common stock.

On March 30, 2004, we sold in a private placement 147,679 shares of Series B-1 Preferred Stock and 1,139,238 shares of Series B-2 Preferred Stock (collectively, the “preferred shares”) to certain institutional investors at a price of $47.40 per share (for an aggregate sales price of $61 million before placement fees and offering expenses). We paid our placement agent and advisor a placement fee of $3,040,000 out of the proceeds of the offering. We paid off the Dynamic Details senior credit facility in full using $54.8 million of the proceeds from this placement. We issued securities under an exemption provided by Rule 506 of Regulation D under the Securities Act Rules. The purchasers of these securities certified that they were “accredited investors,” as defined in Rule 501 of Regulation D, were acquiring the securities as an investment and not with a view to distribution, and would not resell the securities unless they became registered or another exemption from registration was available. The holders are entitled, under certain circumstances, to require us to register the resale of the shares of common stock issuable upon conversion of the Series B-1 and B-2 Preferred Stock.

Each share of the preferred stock will initially be convertible into four shares of Common Stock at anytime at a conversion price of $11.85 per share, subject to certain anti-dilution and other customary adjustments. The preferred shares bear dividends at the rate of 6% per annum, payable commencing March 31, 2005, at our election, either in cash or in common stock. We have agreed to register the shares of common stock the holders will receive upon conversion and upon the payment of dividends in common stock.

The preferred shares are subject to mandatory redemption in five years. At the option of the holders, we are required to redeem the preferred shares in three equal installments in 18 months, 24 months and 30 months from issuance or earlier upon a change of control, certain events of default, or other specified occurrences. We also have the right to redeem the preferred shares if the Company’s stock trades above $20.75 for 30 consecutive trading days. The redemption price is at cost plus accrued dividends, except in the case of certain defaults where there are premiums to the redemption cost.

We have the option to make dividend and redemption payments in either cash or common stock (up to a maximum of 10,000,000 shares, unless the holders otherwise agree), except in the event of a default or certain other occurrences when the redemption payments must be made in cash. If we use our stock to pay dividends or make redemptions, then its stock is valued at a 5% discount to market in making such payments.

Until we obtain stockholder approval of the transaction, the holders are not entitled to receive common stock equal to more than 19.9% of the number of shares of our common stock which were outstanding immediately prior to the issuance of the preferred stock. In addition, the use of common stock to satisfy dividend and redemption payments also is subject to shareholder approval. We intend to seek stockholder approval of the transaction at our next stockholders meeting.

In general, the preferred shares vote together with common shares based on the number of shares into which the preferred could convert on the day of issuance. In addition, the preferred holders are entitled to elect a member of our Board of Directors in the event we fail to redeem the preferred stock when required.

The terms of the preferred stock prohibit us from taking certain actions without the consent of the majority of the holders of the preferred stock, including incurring certain levels of indebtedness, issuing preferred stock that is equal to or senior to the Series B-1 or B-2 Preferred Stock, or issuing certain securities prior the registration of the shares of common stock underlying the preferred stock.

The purchasers of the preferred shares have the right to participate in future private placements through March 2005.

Item 6.     Selected Financial Data.

The following selected consolidated financial data as of and for the dates and periods indicated have been derived from our consolidated financial statements for the years ended December 31, 1999, 2000, 2001 and 2002, for the eleven months ended November 30, 2003 and for the one month ended December 31, 2003. You should read the data

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set forth below in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I, Item 7 of this Annual Report on Form 10-K and our consolidated financial statements and the related notes thereto set forth below.

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Overview

We provide time-critical, technologically advanced printed circuit board engineering, manufacturing and other value-added services. We specialize in engineering and fabricating complex multi-layer printed circuit boards on a quick-turn basis and delivering technologically advanced solutions—with lead times as short as 24 hours. We have approximately 1,500 customers in the communications and networking, medical, test and industrial instruments, high-end computing, military and aerospace equipment markets. With such a broad customer base and an average of 70 new printed circuit board designs tooled per day, we have accumulated significant process and engineering expertise. Our core strength is developing innovative, high-performance solutions to customers during the engineering, test and launch phases of their new electronic product development. Our entire organization is focused on rapidly and reliably filling complex customer orders and building lasting client relationships. Our global engineering capabilities and highly scalable manufacturing facilities in the United States, Canada and Europe enable us to respond to time-critical orders and technology challenges for our customers.

Bankruptcy and Reorganization

From December 1997 through October 2002, we completed several acquisitions, including acquisitions in the United States, Canada and the United Kingdom. Beginning in early 2001, many of the end-markets into which we sell our products and services (including communications and networking equipment; medical, automotive, industrial and test equipment; computers and peripherals; and aerospace equipment) began to enter a significant downturn. Due to the decrease in demand for our services, combined with an increase in manufacturing capacity that resulted from our series of acquisitions, we had excess manufacturing capacity, which adversely affected our operating results. From late 2001 through mid-2003, we implemented a number of restructuring plans designed to reduce our expenses, increase operating efficiencies and focus our business on higher margin services. These restructuring plans included closing a number of facilities, including some of the facilities acquired in our acquisitions, writing-down unutilized assets, streamlining certain manufacturing facilities and eliminating certain sales offices.

Our financial performance in the fourth quarter of 2002 resulted in covenant defaults under the Dynamic Details senior credit facility. As a result of the defaults, we were not permitted to pay our interest obligations under the DDi Corp. 5.25% convertible subordinated notes or the DDi Corp. 6.25% convertible subordinated notes. We commenced discussions with the lenders under the Dynamic Details senior credit facility, convertible subordinated noteholders and other stakeholders regarding a consensual restructuring of our obligations through negotiations. As a result of the foregoing, our independent auditors expressed substantial doubt about the Company’s ability to continue as a going concern in connection with their audit of our consolidated financial statements for the year ended December 31, 2002.

In connection with our restructuring efforts, on August 20, 2003, DDi Corp. and our subsidiary, DDi Capital Corp., filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code with the United States Bankruptcy Court for the Southern District of New York. DDi Corp.’s other direct and indirect wholly-owned subsidiaries, including DDi Europe and Dynamic Details were not parties to the Chapter 11 cases. On December 2, 2003, the Bankruptcy Court entered an order confirming our Modified First Amended Plan of Reorganization dated as of August 30, 2003. On December 12, 2003, the effective date of our plan of reorganization, we reorganized and emerged from bankruptcy. DDi Corp. and our subsidiaries are now operating our businesses and properties as a group of reorganized entities pursuant to the terms of the plan of reorganization.

The following is a summary of some of the transactions that were consummated on or about the effective date of our plan of reorganization:

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Fresh-Start Accounting

In connection with the Company’s emergence from bankruptcy, we have adopted “fresh-start” accounting principles prescribed by the American Institute of Certified Public Accountants’ Statement of Position 90-7 (“SOP 90-7”), “Financial Reporting by Entities in Reorganization Under the Bankruptcy Code” effective November 30, 2003. Under fresh-start accounting, a new reporting entity, known as the “Successor Company”, is deemed to be created, and the recorded amounts of assets and liabilities are adjusted to reflect their fair value. Accordingly, the consolidated financial statements for the Successor Company for the period from December 1, 2003 to December 31, 2003, and all subsequent periods, will reflect the Company’s emergence from Chapter 11 and have been prepared utilizing the principles of fresh start reporting contained in SOP 90-7. As a result, the reported historical financial statements of the Company for periods prior to December 1, 2003, as presented in this Annual Report on Form 10-K, are not comparable to those of the Successor Company.

Key Financial Indicators

The key financial indicators used by management to measure financial performance of our business include net sales and adjusted EBITDA (earnings before interest, taxes, depreciation, amortization and significant charges).

Factors that tend to drive net sales include customers’ time-to-market and advanced technology requirements. Our management examines these factors to determine whether we have been successful in our strategy of (a) focusing on time-critical and technologically advanced services; (b) maintaining our large and diverse customer base; and (c) successfully attracting new customers and markets.

We believe that adjusted EBITDA is an important factor of our business because it reflects financial performance that is unencumbered by debt service. This financial measure is commonly used in our industry. It is also used by our lenders to determine covenant compliance. Growth in adjusted EBITDA is driven by higher gross profit and cost containment in selling, general and administration expenses.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses for each period.

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We believe our critical accounting policies, defined as those policies that we believe are: (a) the most important to the portrayal of our financial condition and results of operations, and (b) that require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain, are as follows:

Fresh-start accounting—Upon emerging from the Chapter 11 proceedings, we were required to adopt fresh-start accounting in accordance with SOP 90-7 effective November 30, 2003. For financial reporting purposes, we were required to value our assets and liabilities at their current fair value. Through fresh-start accounting, we recorded assets and liabilities at their fair values resulting in a write-up of fixed assets by approximately $4.0 million. We also recorded additional goodwill of $99.8 million and other intangibles consisting of backlog and customer relationships of approximately $24.9 million and deferred lease liabilities of $8.1 million relating to over-market leases.

We determined the fair value of assets and liabilities based on independent business valuations of our reorganization equity value, tangible assets and intangible assets which relied on significant estimates and judgments relating to future earnings, cash flow projections and industry trend data. These valuations were prepared and used only for fresh-start reporting and are not required to be updated. If different estimates and judgments were used, they would result in different valuations which would impact our balance sheet, particularly our equity, debt, intangible assets, goodwill and property, plant and equipment.

Valuation of long-lived assets—We assess the potential impairment of long-lived tangible and intangible assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Changes in our operating strategy, such as the closure of a facility, can significantly reduce the estimated useful life of such assets. If the carrying value may not be recoverable then an asset impairment may be recorded. In our 2001, 2002 and the eleven months ended November 30, 2003 Consolidated Statements of Operations, we recorded impairments of long-lived assets resulting from plant closures.

Goodwill impairment—We assess the potential impairment of goodwill at least annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If the carrying value may not be recoverable then an impairment of goodwill may be recorded. In our 2002 Consolidated Statements of Operations, we recorded impairments of goodwill resulting from the decline of our market capitalization and in the eleven months ended November 30, 2003 we recorded impairment of goodwill due to the fact we were negotiating with our convertible subordinated noteholders, senior discount noteholders and the lenders of our senior credit facility to implement a plan of reorganization and based on business valuations that indicated the book value of goodwill was in excess of its fair value.

Inventory obsolescence—We generally purchase raw materials in quantities that we anticipate will be fully used in the near term. Changes in operating strategy, however, such as the closure of a facility, can limit our ability to effectively utilize all of the raw materials purchased. If inventory is not utilized then an inventory impairment may be recorded. In our 2001, 2002 and the eleven months ended November 30, 2003 Consolidated Statements of Operations, we recorded restructuring-related inventory impairments resulting from plant closures and reduction of plant capacity and headcount. In addition to evaluations of the market value in connection with significant activities, we regularly monitor potential inventory obsolescence and, when necessary, reduce the carrying amount of our inventory to its market value.

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Allowance for doubtful accounts—We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

Income taxes—As part of the process of preparing our consolidated financial statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate. The process incorporates a determination of the proper current tax balances together with temporary differences resulting from different treatment of transactions for tax and financial statement purposes. Such differences result in deferred tax assets and liabilities, which are included within the Consolidated Balance Sheets. The recovery of deferred tax assets from future taxable income must be assessed and, to the extent that recovery is not likely, we establish a valuation allowance. Increases in valuation allowances result in the recording of additional tax expense. In our 2002 and eleven months ended November 30, 2003 Consolidated Statements of Operations, we recorded tax expense to establish valuation allowances against our federal and state deferred tax assets based upon management’s expectation that the deferred tax assets would likely not be realized. Further, if our ultimate tax liability differs from the periodic tax provision reflected in the Consolidated Statements of Operations, additional tax expense may be recorded.

Litigation and other contingencies—Management regularly evaluates our exposure to threatened or pending litigation and other business contingencies. Because of the uncertainties related to the amount of loss from litigation and other business contingencies, the recording of losses relating to such exposures requires significant judgment about the potential range of outcomes. To date, we have not been affected by any litigation or other contingencies that have had, or are currently anticipated to have, a material impact on our results of operations, cash flows or financial position. As additional information about current or future litigation or other contingencies becomes available, management will assess whether such information warrants the recording of additional expense relating to the contingencies. Such additional expense could potentially have a material impact on our results of operations, cash flows and financial position.

Stock based compensation—We record non-cash compensation costs related to stock options and restricted stock granted under our 2003 Management Equity Incentive Plan. The stock options we granted include stock options which have conditions which must be met to allow for exercise. The condition to be measured to determine the exercisability of the contingent options is based on our borrowings under the new senior credit facility on December 12, 2005. This requires our management to estimate the outcome of the contingency in order to account for the non-cash compensation costs related to these stock option grants using the variable method of accounting. Our results will differ if our assumption regarding the outcome of the contingent condition changes based on additional new information regarding the contingency.

Results of Operations and Other Financial Data

As required by fresh start accounting, the 2003 year results have been separately presented under the heading “Predecessor DDi” for the period from January 1, 2003 through November 30, 2003 and “Reorganized DDi” for the period from December 1, 2003 through December 31, 2003. The total operating results for the fiscal year ended December 31, 2003, can be derived by adding the amounts under the columns for the eleven months ended November 30, 2003 and the one month ended December 31, 2003. Management believes comparisons of the full fiscal years are the most appropriate method of analyzing and evaluating our financial results. Accordingly, the financial discussions below compare the year ended December 31, 2003, derived by adding the results of Predecessor DDi for the eleven month period ended November 30, 2003 to the results of Reorganized DDi for the one month period ended December 31, 2003, with the year ended December 31, 2002.

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The following table sets forth Consolidated Statements of Operations Data, adjusted EBITDA reconciliation and Other Financial Data for the years ended December 31, 2001 and 2002, and the eleven months ended November 30, 2003 for Predecessor DDi Corp. and the one month ended December 31, 2003 for Reorganized DDi Corp. In addition, the data for the eleven months ended November 30, 2003 and the one month ended December 31, 2003 for Predecessor DDi Corp. and Reorganized DDi Corp., respectively, has been combined in one column to present the results for the full year ended December 31, 2003 (in millions):