1. What is the relationship between ZTEST and Permatech Electronics?
Permatech Electronics is a wholly owned subsidiary of ZTEST
Electronics Inc. and is an ISO 9002 certified Electronic Manufacturing Services
(EMS) provider founded in 1982. Permatech offering includes Materials
Management, Printed Circuit Board (PCB) Assembly, Testing and Design services.
Permatech operates from a 20,000 square foot facility in North York, Ontario,
Canada. The company serves customers in the Medical, Power, Computer,
Telecommunication, Wireless, Industrial and Consumer Electronics markets
requiring high quality, quick-turn, small and medium size production runs.
ZTEST purchased a 60% investment in Permatech in August 2000.
After evaluating Permatech's business for a year, ZTEST announced in September
2001 its intention to purchase the remaining 40% equity subject to regulatory
and shareholder approval. All parties agreed to the transaction and the
acquisition was completed on January 15, 2002.
2. What are the natural synergies between ZTEST and Permatech?
As a developer and manufacturer of electronic test equipment,
ZTEST had outsourced assembly projects to a number of vendors, one of them being
Permatech, whose performance had been impressive. After completing due diligence
and purchasing a 60% stake in the company, the synergies became more clear, as
both companies developed complementary expertise vital to turnkey offerings to
Permatech customers. Permatech's ISO9002-certified facility was also a valuable
asset to ZTEST, as it helps to differentiate EMS providers particularly in the
small to mid-sized run category. For Permatech, the next level of growth as an
EMS provider necessitated a transition to more turnkey business, a transition
that required additional expertise and access to capital. ZTEST's public company
status and test services background fulfilled addressed both needs.
3. What is a PCB?
A printed circuit board (PCB) is an insulating surface with
conductive material deposited in continuous paths from terminal-to-terminal.
Electronic components are then mounted on the board in the assembly process.
4. What is the difference between Printed Circuit Board (PCB) Assembly and
PCB Fabrication and where does Permatech fit?
Permatech falls into the PCB assembly provider category,
which is often confused with the manufacturers who fabricate printed circuit
boards, for example, Circuit World.
The fabricators produce the boards themselves, which are in
turn purchased by OEMs or EMS assembly providers performing procurement services
on behalf of their OEM customers. The assembly providers or OEM customers then
purchase the electronic or RF components such as chips, resistors etc. to be
mounted on the printed circuit board. Once the assembly has been completed, the
board with all attached components can be delivered back to the customer to be
placed into its enclosure, or housing.
5. What is meant by "Turnkey" versus "Consignment"
manufacturing and what effect will Permatech's transition to "Turnkey"
have on revenues?
"Turnkey" manufacturing refers to Permatech's
ability to add both Design and Materials management services to their standard
"Consignment" based assembly services. These additional services can
increase revenue substantially as the Materials Management, purchasing and
warehousing of parts, can account for as much a 90% of the total cost of the
entire manufacturing costs. Permatech recently secured a material
"Turnkey" order for materials management and assembly services. The
order, announced September 23rd 2002, is for the manufacturing of point-of-sale
terminals and is estimated to be in the $800,000 range for the first year of the
agreement, with an expected increase thereafter.
Permatech's Position within the Industry
6. What is Permatech's assembly capability?
Permatech currently offers full surface-mount and
through-hole capability. Through-hole (sometimes called
"pin-through-hole") was the prevailing manufacturing method for PCB
assembly until roughly 5 - 7 years ago, and is basically the practice of
mounting components on the board by inserting the component's leads through
holes. The limitation of Through-hole manufacturing is that the maximum density
of components is constrained by the amount of board space allocated to the holes
and secondly, the speed of placement is restricted by the component size and
mounting process. Surface mount allows for a much higher density of components
along with decreased costs and increased speed. Despite the advantages of
surface mount technology, through-hole is still the method of choice in some
applications. The company recently purchased additional assembly equipment from
Siemens and DEK Printing Machines Ltd, adding full Ball Grid Array and
Micro-Ball Grid Array placement capability.