<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 14 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
------------------------------------------------
OR
[ ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 14 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________________ to ______________________
333-29727
(Commission File Number)
VIASYSTEMS, INC.
(Exact name of Registrant as specified in charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
43-1777252
(I.R.S. Employer Identification No.)
101 SOUTH HANLEY ROAD
ST. LOUIS, MO 63105
(314) 727-2087
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
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 [ ] NO [X]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
<TABLE>
<CAPTION>
Outstanding at
Class November 21, 1997
----- -----------------
<S> <C>
Viasystems, Inc.
Common Stock 1,000 shares
</TABLE>
<PAGE> 2
VIASYSTEMS, INC. & SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PART I - FINANCIAL INFORMATION
Viasystems, Inc. & Subsidiaries
Condensed Consolidated Balance Sheets as of September 30, 1997 and December 31, 1996 ............ 2
Condensed Consolidated Statements of Operations for the three and nine
months ended September 30, 1997 .............................................................. 3
Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 1997...... 4
Notes to Condensed Consolidated Financial Statements ............................................ 5
Circo Craft Co. Inc.
Condensed Consolidated Statements of Earnings for the three and nine months ended
September 30, 1996 ........................................................................... 11
Condensed Consolidated Statement of Changes in Financial Position for the nine
months ended September 30, 1996 .............................................................. 12
Notes to Condensed Consolidated Financial Statements ............................................ 13
Viasystems Technologies Corp. (formerly Microelectronics Group, Interconnection
Technologies Unit of Lucent Technologies Inc.)
Condensed Statements of Operations for the three and nine months ended September 30, 1996 ....... 14
Notes to Condensed Statements of Operations ..................................................... 15
Forward Group PLC
Condensed Consolidated Profit and Loss Accounts for the three and nine months ended
September 30, 1996 and the three months ended March 31, 1997 ................................. 17
Condensed Consolidated Statements of Cash Flows for the nine months ended
September 30, 1996 and the three months ended March 31, 1997 ................................. 18
Notes to Condensed Consolidated Financial Statements ............................................ 19
Interconnection Systems (Holdings) Limited
Condensed Consolidated Profit and Loss Accounts for the three and nine months ended
September 27, 1996 and the three months ended April 4, 1997 .................................. 20
Condensed Consolidated Statements of Cash Flows for the nine months ended
September 27, 1996 and the three months ended April 4, 1997 .................................. 21
Notes to Condensed Consolidated Financial Statements ............................................ 22
Management's Discussion and Analysis of Financial Condition and Results of Operations ................. 23
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K ............................................................. 29
SIGNATURES ............................................................................................ 30
</TABLE>
<PAGE> 3
VIASYSTEMS, INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ............................. $ 31,330 $ 16,117
Accounts receivable, net .............................. 139,025 37,149
Inventories ........................................... 68,472 43,123
Prepaid expenses and other ............................ 10,313 7,333
--------- ---------
Total current assets ............................... 249,140 103,722
Property, plant and equipment, net .................... 414,658 208,748
Intangibles and other assets .......................... 311,086 75,271
--------- ---------
Total assets ....................................... $ 974,884 $ 387,741
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term obligations ........... $ 14,006 $ 10,804
Accounts payable ...................................... 53,634 5,185
Accrued and other liabilities ......................... 88,197 42,112
Income taxes payable .................................. 14,331 683
--------- ---------
Total current liabilities .......................... 170,168 58,784
Long-term obligations, less current maturities ........... 866,170 254,816
Other long-term liabilities .............................. 34,655 19,168
Stockholder's equity (deficit):
Contributed capital ................................... 282,745 103,794
Accumulated deficit ................................... (372,465) (48,742)
Cumulative translation adjustments .................... (6,389) (79)
--------- ---------
Total stockholder's equity (deficit) ............... (96,109) 54,973
--------- ---------
Total liabilities and stockholder's equity (deficit) $ 974,884 $ 387,741
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
2
<PAGE> 4
VIASYSTEMS, INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
September 30, September 30,
1997 1997
------------- -------------
<S> <C> <C>
Net sales ................................................... $ 216,828 $ 563,520
Operating expenses:
Cost of goods sold ....................................... 150,929 405,577
Selling, general and administrative ...................... 20,699 52,550
Depreciation and amortization ............................ 26,860 73,163
Write-off of acquired in-process R&D ..................... -- 294,500
--------- ---------
Operating income (loss) ............................... 18,340 (262,270)
Other expense:
Interest expense ......................................... 21,401 43,568
Amortization of deferred financing costs ................. 1,911 4,667
Other, net ............................................... 434 504
--------- ---------
Loss before income tax provision and extraordinary item (5,406) (311,009)
Provision for income taxes .................................. 4,027 4,918
--------- ---------
Loss before extraordinary item .............................. (9,433) (315,927)
Extraordinary item - loss on early extinguishment of debt,
net of income tax benefit of $4,332 ...................... -- 7,796
--------- ---------
Net loss .................................................... $ (9,433) $(323,723)
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 5
VIASYSTEMS, INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months
Ended
September 30,
1997
-------------
<S> <C>
Cash flows provided by (used in) operating activities:
Net loss .............................................................................. $(323,723)
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Extraordinary item ................................................................. 12,128
Write-off of acquired in-process R&D ............................................... 294,500
Deferred taxes ..................................................................... (876)
Depreciation and amortization ...................................................... 73,163
Amortization of deferred financing costs ........................................... 4,667
Change in assets and liabilities:
Accounts receivable ............................................................. (34,022)
Inventories ..................................................................... 1,944
Prepaid expenses and other ...................................................... (2,225)
Accounts payable, accrued and liabilities other ................................. 5,271
---------
Net cash from operating activities ....................................................... 30,827
---------
Cash flows provided by (used in) investing activities:
Capital expenditures, net ............................................................. (69,994)
Acquisitions, net of cash acquired .................................................... (155,904)
---------
Net cash from investing activities ....................................................... (225,898)
---------
Cash flows provided by (used in) financing activities:
Equity proceeds ....................................................................... 60,701
Proceeds from the issuance of Senior Subordinated Notes due 2007 ...................... 400,000
Proceeds from the Subordinated Credit Facility ........................................ 216,000
Repayment of amounts outstanding under the Credit Agreements and the Second Amended
and Restated Credit Agreement ...................................................... (151,464)
Repayment of the Senior Credit Facility ............................................... (216,000)
Repayment of other long-term obligations .............................................. (66,875)
Financing costs ....................................................................... (34,491)
---------
Net cash from financing activities ....................................................... 207,871
---------
Effect of exchange rate changes on cash .................................................. 2,413
---------
Net change in cash and cash equivalents .................................................. 15,213
Cash and cash equivalents - beginning of the period ...................................... 16,117
---------
Cash and cash equivalents - end of the period ............................................ $ 31,330
=========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 6
VIASYSTEMS, INC. & SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
1. BASIS OF PRESENTATION
Viasystems, Inc. ("Viasystems") is a wholly owned subsidiary of Viasystems
Group, Inc. ("Group"). Viasystems was formed on April 2, 1997, as a subsidiary
of Group. On April 10, 1997, Group contributed to Viasystems all of the capital
of its then existing subsidiaries--Circo Craft Co. Inc. ("Circo Craft"),
Viasystems Technologies Corp. ("Viasystems Technologies"), and PCB Acquisition
Limited. Prior to the contribution of this capital by Group, Viasystems had no
operations of its own. The unaudited interim condensed consolidated financial
statements included herein present the results of operations of Viasystems and
its subsidiaries subsequent to the capital contribution by Group, and the
results of operations of Group and its subsidiaries prior to the capital
contribution of such subsidiaries to Viasystems. As used herein, the Company
refers to Viasystems subsequent to the capital contribution by Group, and Group
and its subsidiaries prior to such contribution. The balance sheet as of
December 31, 1996, represents the balance sheet of Group as of December 31,
1996.
Unaudited Interim Condensed Consolidated Financial Statements
The unaudited interim condensed consolidated financial statements reflect
all adjustments consisting only of normal recurring adjustments which are, in
the opinion of management, necessary for a fair presentation of financial
position and results of operations. The results for the three and nine months
ended September 30, 1997, are not necessarily indicative of the results that may
be expected for a full fiscal year.
Statement of Cash Flows
Interest and income taxes paid for the nine months ended September 30, 1997
were approximately $30,913 and $1,463, respectively.
2. INVENTORIES
The composition of inventories at September 30, 1997, is as follows:
<TABLE>
<S> <C>
Raw materials ............................... $27,299
Work-in-process ............................. 22,319
Finished goods .............................. 18,854
-------
Total ....................................... $68,472
=======
</TABLE>
5
<PAGE> 7
VIASYSTEMS, INC. & SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
(DOLLARS IN THOUSANDS)
(UNAUDITED)
3. ACQUISITIONS
On April 11, 1997, the Company acquired all of the outstanding stock of
Forward Group, PLC ("Forward"), a manufacturer of rigid printed circuit boards
located in the U.K. The purchase price of approximately $208,483 consisted of
cash and notes payable to certain Forward stockholders plus $5,585 of
acquisition fees and expenses (the "Forward Acquisition"). The Forward
Acquisition and related transaction fees and expenses were funded with (i)
$40,000 from the issuance of 1,600,000 shares of Series C Preferred Stock of
Group and (ii) $216,000 from a Subordinated Credit Facility. The Subordinated
Credit Facility was paid off with a subsequent debt offering (see Note 4).
The Forward Acquisition has been accounted for using the purchase method of
accounting whereby the total purchase price has been preliminarily allocated to
the assets and liabilities based on their estimated respective fair values.
Accordingly, the results of operations of Forward since its acquisition are
included in the results of operations of the Company. The Company has allocated
a portion of the purchase price, as described below, to intangible assets,
including approximately $97,800 of in-process research and development
("in-process R&D"). The portion of the purchase price allocated to in-process
R&D projects that did not have a future alternative use totaled $97,800 and was
charged to expense as of the acquisition date. The other acquired intangibles
include developed technology, assembled workforce, and customer list. These
intangibles are being amortized over their estimated useful lives of 1-15 years.
The remaining unidentified intangible asset has been allocated to goodwill and
is being amortized over its estimated useful life of 20 years.
The total purchase price including fees and expenses has been preliminarily
allocated to the acquired net assets as follows:
<TABLE>
<S> <C>
Current assets .............................. $ 45,040
Property, plant and equipment ............... 60,524
Acquired intangibles ........................ 54,600
In-process R&D .............................. 97,800
Goodwill .................................... 25,808
Non-current assets .......................... 5,660
Current liabilities ......................... (33,026)
Non-current liabilities ..................... (42,338)
---------
Total .............................. $ 214,068
=========
</TABLE>
In connection with the Forward Acquisition, the Company entered into an
Amended and Restated Credit Agreement with terms substantially similar to the
Credit Agreements of Group. The Amended and Restated Credit Agreement provided
for a U.K. L32,000 (approximately US $51,500) Revolving Facility to
Forward.
On April 11, 1997, Viasystems made an optional prepayment of $20,000 under
the Term A Loan outstanding under the Amended and Restated Credit Agreement.
6
<PAGE> 8
VIASYSTEMS, INC. & SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
(DOLLARS IN THOUSANDS)
(UNAUDITED)
In April 1997, Group's stockholders and certain of its affiliates formed
Chips Holding, Inc., to acquire Interconnection Systems (Holdings) Limited
("ISL"), a manufacturer of rigid printed circuit boards located in the U.K. On
April 21, 1997, Chips Holdings, Inc. acquired ISL for $437,500 plus $8,953 of
acquisition fees and expenses (the "ISL Acquisition"). The purchase price
consisted entirely of notes payable to the former stockholders of ISL. In
connection with the transaction, the stockholders of Group invested $140,000 of
equity capital in Chips Holdings, Inc. On June 6, 1997, Chips Holdings, Inc.
merged with Group and the subsidiaries of Chips Holdings, Inc., including ISL,
became subsidiaries of Viasystems and certain of its subsidiaries in
consideration for the issuance to Group's stockholders and certain of its
affiliates of 140,000,000 shares of Group common stock valued at $140,000. Group
assumed the $437,500 of notes payable which were incurred by Chips Holdings,
Inc. (the "Chips Loan Notes") to finance the ISL acquisition.
The Chips Loan Notes mature on March 31, 2003 and bear interest, payable
quarterly, at approximately 6.22% per annum through April 1, 1998, with variable
rate thereafter discounted from the U.S. prime rate. The Chips Loan Notes may be
called by the holders on or after any interest payment date commencing April 1,
1998. The Chips Loan Notes have not been classified as current at September 30,
1997, since the Company has in place a long-term facility to replace the Chips
Loan Notes in the event they are called (see Note 4). The Chips Loan Notes are
collateralized by letters of credit issued by banks. Such letters of credit are
in turn collateralized in part by a fully cash collateralized $118,500
reimbursement obligation of Bisto Funding, Inc., a special purpose entity and
sister company of Viasystems established as a subsidiary of Group in connection
with the acquisition of ISL, with the remainder, including interest on the Chips
Loan Notes for one year, collateralized by a reimbursement obligation of
Viasystems.
The ISL Acquisition has been accounted for using the purchase method of
accounting whereby the total purchase price has been preliminarily allocated to
the assets and liabilities based on their estimated respective fair values. The
Company has allocated a portion of the purchase price, as described below, to
intangible assets, including approximately $196,700 of in-process research and
development ("in-process R&D"). The portion of the purchase price allocated to
in-process R&D projects that did not have a future alternative use totaled
$196,700 and was charged to expense as of the acquisition date. The other
acquired intangibles include developed technology, assembled workforce, and
customer list. These intangibles are being amortized over their estimated useful
lives of 1-15 years. The remaining unidentified intangible asset has been
allocated to goodwill and is being amortized over its estimated useful life of
20 years.
The merger of Chips Holdings, Inc. with Group has been accounted for as a
transfer of assets among companies under common control and will be recorded at
Chips Holdings, Inc.'s historical cost. In the merger of Chips Holdings, Inc.
with Group, ISL and its subsidiaries became wholly owned subsidiaries of
Viasystems, and as such, Viasystems will account for the acquisition of ISL as
of the acquisition by Chips Holdings, Inc. and the results of operations of ISL
since the acquisition by Chips Holdings, Inc. are included in the results of
operations of the Company.
7
<PAGE> 9
VIASYSTEMS, INC. & SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
(DOLLARS IN THOUSANDS)
(UNAUDITED)
The total purchase price including fees and expenses has been preliminarily
allocated to the acquired net assets as follows:
<TABLE>
<S> <C>
Current assets ........................................ $ 96,880
Property, plant and equipment ......................... 114,983
Acquired intangibles .................................. 92,400
In-process R&D ........................................ 196,700
Goodwill .............................................. 68,786
Non-current assets .................................... 12,971
Current liabilities ................................... (68,285)
Non-current liabilities ............................... (67,982)
---------
Total ........................................ $ 446,453
=========
</TABLE>
The Company will evaluate the capacities and production capabilities of all
acquired entities to assess potential cost savings from consolidating those
facilities and optimize its global plant utilization by shifting production
between facilities to most efficiently satisfy particular customer orders.
The intangible assets acquired are being amortized using systematic methods
over the estimated useful lives of the related assets as follows:
<TABLE>
Life Method
------------ ------------------------
<S> <C> <C>
Developed technologies ............ 15 years Double-declining balance
Assembled workforce ............... 1 year Straight-line
Customer list ..................... 3 years Straight-line
Goodwill .......................... 20 years Straight-line
</TABLE>
Included below is unaudited pro forma financial data setting forth
condensed results of operations of the Company for the nine months ended
September 30, 1997, as though the Forward Acquisition and the ISL Acquisition
and the related financing had occurred at the beginning of the year. In
preparing this data, the financial data of Forward and ISL for the first fiscal
quarter of 1997 has been translated at an exchange rate of
U.K. L0.61=U.S.$1.00, the exchange rate at March 31, 1997, which is not
materially different from the average exchange rate for the period.
<TABLE>
<S> <C>
Net sales ............................................. $ 667,705
Net loss before extraordinary item .................... (23,848)
Net loss .............................................. (31,644)
</TABLE>
8
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VIASYSTEMS, INC. & SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
(DOLLARS IN THOUSANDS)
(UNAUDITED)
4. LONG-TERM OBLIGATIONS
On June 5, 1997, Group, as guarantor, and Viasystems and certain of its
subsidiaries, as borrowers, entered into a Second Amended and Restated Credit
Agreement with terms substantially similar to the Credit Agreements of Group.
The Second Amended and Restated Credit Agreement provides for (i) an $88,000
term loan facility (the "U.S. Term Loan") and a $150,000 revolving credit
facility (the "U.S. Revolving Loan" and together with the U.S. Term Loan, the
"U.S. Loans"); (ii) a U.S.$25,000 revolving credit facility (the "Canadian
Revolving Loan"); (iii) a L32,000 revolving credit facility (the "Forward
Group Revolving Loan") and a L27,600 revolving credit facility (the "Chips
Revolving Loan," and together with the Forward Group Revolving Loan, the "U.K.
Revolving Loans," and together with the U.S. Revolving Loan and the Canadian
Revolving Loan, the "Revolving Loans"); and (iv) a U.S.$346,463 Letter of Credit
Facility in respect of the Chips Loan Notes comprised of (a) a U.S.$319,250 term
loan facility (the "Chips Term Loans" and together with the U.S. Term Loan, the
"Term Loans") in respect of the principal portion of the Chips Loan Notes and
(b) a U.S.$27,213 facility in respect of interest on the Chips Loan Notes.
The U.S. Term Loan consists of two tranches: (i) $55,000 of tranche B term
loans (the "Tranche B Loan") and (ii) $33,000 of tranche C term loans (the
"Tranche C Loan"). The Tranche B Loan amortizes semiannually over eight years
and the Tranche C Loan is payable $1,500 on December 31, 2004 and $31,500 on
June 30, 2005. The Chips Term Loans, if drawn, amortize semi-annually over six
years.
The Company may use the Revolving Loans for letters of credit in an amount
not to exceed $15,000, in the case of both the U.S. Revolving Loan and the
Canadian Revolving Loan, and related letters of credit and bankers' acceptances
in an amount not to exceed L5,000 in the case of the Forward Group
Revolving Loan and L10,000 in the case of the Chips Revolving Loan. Of the
Forward Group Revolving Loan, L14,800 is available solely to finance the
obligations of PCB Investments plc in respect of the Forward Group Loan Notes
and $100,000 of the U.S. Revolving Loan is available solely to finance future
acquisitions.
The U.S. Loans bear interest, at the Company's election, at either (i) the
Eurocurrency Base Rate plus (x) 2.5% in the case of the Chips Term Loan and U.S.
Revolving, (y) 3.0% in the case of the Tranche B Loan, or (z) 3.5% in the case
of the Tranche C Loan; or (ii) the Alternate Base Rate plus (x) 1.5% in the case
of the Chips Term Loan or U.S. Revolving Loan, (y) 2.0% in the case of the
Tranche B Loan, or (z) 2.5% in the case of the Tranche C Loan. The Alternate
Base Rate is the highest of The Chase Manhattan Bank's Prime Rate, the
Three-Month Secondary CD Rate (as defined therein) plus 0.5%. The Canadian
Revolving Loan denominated in U.S. dollars bears interest, at Circo Craft's
election, at either (i) the Eurocurrency Base Rate plus 2.5% or (ii) the
Canadian Alternate Base Rate plus 1.5%. The Canadian Revolving Loan denominated
in Canadian Dollars bears interest, at Circo Craft's election either (i) the
Canadian Bankers Acceptance Discount Rate plus 2.5% or (ii) the Canadian Prime
Rate plus 1.5%. The Canadian Alternate Base Rate is equal to the higher of the
Canadian Agent's prime rate or the Federal Funds Effective Rate (as defined in
the Credit Agreement) plus 0.5%. The U.K. Revolving Loans and any Chips Term
Loans converted to British Pounds Sterling bear interest at the Eurocurrency
Base Rate plus 2.5%.
9
<PAGE> 11
VIASYSTEMS, INC. & SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
(DOLLARS IN THOUSANDS)
(UNAUDITED)
The Company pays a per annum fee equal to the applicable margin on
Revolving Loans which bear interest at the Eurocurrency Base Rate, of the
average daily face amount of outstanding letters of credit, other than with
respect to the Chips Letter of Credit, which fee is equal to the applicable
margin on the Chips Term Loan bearing interest at the Eurocurrency Base Rate.
The Company pays a Commitment Fee equal to 0.5% on the undrawn portion of the
commitments in respect of Revolving Loans and a Facility Fee equal to 0.5% on
the Canadian revolving credit commitment. In addition, the Company pays a fee of
0.25% per annum of Bisto Funding, Inc.'s $118,500 portion of the Chips Letter of
Credit to the extent not paid by Bisto Funding, Inc.
The Second Amended and Restated Credit Agreement contains a number of
covenants customary for similar facilities which, among other things, restrict
the ability of the Company and its subsidiaries to incur additional
indebtedness, create liens on or dispose of assets, enter into business
combinations, and pay dividends. In addition, the Second Amended and Restated
Credit Agreement contains financial covenants which require the Company to
maintain certain financial ratios and limit the Company's amount of capital
expenditures.
On June 6, 1997, Viasystems completed an offering of $400,000 of 9.75%
Senior Subordinated Notes due 2007 (the "Offering"). Interest on the Senior
Subordinated Notes is due semiannually. Viasystems used the net proceeds of the
Offering to repay amounts totaling approximately $171,600 principal amount
previously outstanding under the Second Amended and Restated Credit Agreement,
plus interest, and to repay the $216,000 amount outstanding under the
Subordinated Credit Facility, plus interest.
The composition of long-term obligations at June 30, 1997, is as follows:
<TABLE>
<S> <C>
Second Amended and Restated Credit Agreement:
Term Facilities .................................... $ 87,750
Senior Subordinated Notes due 2007 .................... 400,000
Chips Loan Notes ...................................... 319,250
Forward Loan Notes .................................... 24,243
Other debt ............................................ 48,933
---------
880,176
Current maturities .................................... (14,006)
---------
$ 866,170
=========
</TABLE>
5. EXTRAORDINARY ITEM
The Company recorded, as an extraordinary item, a one-time, non-cash
write-off of deferred financing fees of approximately $7,796, net of income tax
benefit of $4,332, related to deferred financing fees incurred on debt retired
before maturity with the proceeds of the Offering.
10
<PAGE> 12
CIRCO CRAFT CO. INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(EXPRESSED IN THOUSANDS OF CANADIAN DOLLARS)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
September 30, September 30,
1996 1996
------------- -------------
(Unaudited)
<S> <C> <C>
Sales ............................................ C$ 44,329 C$ 129,633
Cost of sales .................................... 33,632 101,532
--------- ---------
Operating margin ................................. 10,697 28,101
--------- ---------
Selling, general and administrative expenses ..... 2,265 7,969
--------- ---------
Other expenses (income)
Depreciation of fixed assets ................ 3,436 8,456
Interest on long-term debt .................. 253 646
Interest income ............................. (309) (880)
Expenses related to sale .................... 5,907 5,907
--------- ---------
9,287 14,129
--------- ---------
Earnings (loss) before income taxes and
non-controlling interest .................... (855) 6,003
Provision for income taxes ....................... 913 3,847
--------- ---------
Earnings before non-controlling interest ......... (1,768) 2,156
Non-controlling interest ......................... 105 182
--------- ---------
Net earnings (loss) for the period ............... C$ (1,873) C$ 1,974
========= =========
</TABLE>
The Notes to Condensed Consolidated Financial Statements
are an integral part of these Financial Statements.
11
<PAGE> 13
CIRCO CRAFT CO. INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
(EXPRESSED IN THOUSANDS OF CANADIAN DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months
Ended
September 30,
1996
-------------
<S> <C>
Operating activities
Net earnings for the period ..........................................................................C$ 1,974
Non-cash items
Depreciation of fixed assets ................................................................ 8,456
Deferred income taxes ....................................................................... 1,050
Gain on sales of fixed assets ............................................................... (716)
Non-controlling interest .................................................................... 182
---------
10,946
Cash provided by non-cash operating working capital items ............................................ 7,191
---------
18,137
---------
Financing activities
Increase in long-term debt ........................................................................... 4,186
Repayment of long-term debt .......................................................................... (3,187)
Decrease in non-controlling interest ................................................................. (2,608)
Issue of common shares ............................................................................... 4,047
---------
2,438
---------
Investing activities
Acquisition of fixed assets .......................................................................... (13,058)
Proceeds from sale of fixed assets ................................................................... 1,018
---------
(12,040)
---------
Increase in cash .......................................................................................... 8,535
Cash - beginning of period ................................................................................ 17,730
---------
Cash - end of period ......................................................................................C$ 26,265
=========
Represented by -
Cash and short-term deposits .........................................................................C$ 28,438
Bank indebtedness .................................................................................... (2,173)
---------
C$ 26,265
=========
</TABLE>
The Notes to Condensed Consolidated Financial Statements
are an integral part of these Financial Statements.
12
<PAGE> 14
CIRCO CRAFT CO INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
(UNAUDITED)
1. BASIS OF PRESENTATION
General
The consolidated financial statements have been prepared in accordance with
accounting policies generally accepted in Canada.
Interim Financial Presentation
The unaudited condensed consolidated financial statements for the three and
nine months ended September 30, 1996, do not include all of the information
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting only of
normal recurring adjustments) considered necessary for a fair presentation have
been included.
13
<PAGE> 15
VIASYSTEMS TECHNOLOGIES CORP.
(FORMERLY MICROELECTRONICS GROUP,
INTERCONNECTION TECHNOLOGIES UNIT
OF LUCENT TECHNOLOGIES INC.)
CONDENSED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
September 30, September 30,
1996 1996
------------- -------------
<S> <C> <C>
Net Sales ........................................ $ 89,427 $ 260,726
Operating expenses:
Cost of goods sold .......................... 65,490 195,387
Selling, general and administrative ......... 6,990 23,456
Research and development .................... 2,019 6,118
Depreciation and amortization ............... 4,987 15,514
--------- ---------
Operating income ........................ 9,941 20,251
Other income (expenses):
Other income ................................ 24 588
Interest expense ............................ (277) (638)
--------- ---------
Income before income taxes .................. 9,688 20,201
Provision for income taxes ....................... 3,875 8,080
--------- ---------
Net income .................................. $ 5,813 $ 12,121
========= =========
</TABLE>
See accompanying notes to condensed statements of operations.
14
<PAGE> 16
VIASYSTEMS TECHNOLOGIES CORP.
(FORMERLY MICROELECTRONICS GROUP,
INTERCONNECTION TECHNOLOGIES UNIT
OF LUCENT TECHNOLOGIES INC.)
NOTES TO CONDENSED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
1. BACKGROUND AND BASIS OF PRESENTATION:
Pursuant to an Acquisition Agreement (the "Agreement") dated November 26,
1996, between Viasystems Technologies Corp. ("Viasystems Technologies"), a
wholly owned subsidiary of Group and Lucent Technologies, Inc. ("Lucent"),
Viasystems Technologies agreed to acquire certain assets and assume certain
liabilities from the Microelectronics Group, Interconnection Technologies Unit
(the "Business") of Lucent in exchange for consideration totaling $200,000. The
Business designs, manufactures and markets printed circuit boards, backpanels
and related products and components for the telecommunications and
computer-related markets. The effective date of the Agreement was December 1,
1996.
The Business' statements of operations are derived from the historical
books and records of the Microelectronics Group, Interconnection Technologies
Unit of Lucent and present the results of operations of the Business related to
the acquisition by Viasystems Technologies. The historical operating results may
not be indicative of the results after the acquisition by Viasystems
Technologies. No statement of cash flows has been presented since any
computation of historical cash flow data for the Business would be based on
arbitrary assumptions of the financial information necessary to prepare such
data and, in the opinion of management, would not be meaningful.
The Business' statements of operations include allocations of certain
expenses that have historically been accounted for by Lucent based on allocation
methods that depend on the nature of the account. For those costs that are labor
intensive, such as research and development, allocations are made based on
forecasted head count percentages. Most other costs are allocated based on
forecasted sales. Many of the marketing and sales costs are negotiated each year
between the department providing the service and the individual business unit.
The percentage of the negotiated cost of the business unit to the total
negotiated cost for that service is applied to the actual cost each month and
allocated to the individual business units. A portion of the operating expenses
are incurred at the Richmond Works location, particularly product management,
transportation and local research and development. These expenses are allocated
to the Business using estimates calculated by the department's manager. Some
transportation expense is based on specific service contracts when they can be
identified.
Allocated expenses include certain direct and indirect selling, marketing,
and research and development costs from the Microelectronics Group and services
from Lucent. Services from Lucent represent the allocated costs for services
such as employee benefits, human resources, labor relations, corporate tax and
business planning and overhead expenses, public relations, legal services,
environmental management, data processing and training.
Lucent's management believes that these allocations are based on
assumptions that are reasonable under the circumstances. However, these
allocations are not necessarily indicative of the costs and expenses that would
have resulted if the Business has been operated as a separate entity.
15
<PAGE> 17
VIASYSTEMS TECHNOLOGIES CORP.
(FORMERLY MICROELECTRONICS GROUP,
INTERCONNECTION TECHNOLOGIES UNIT
OF LUCENT TECHNOLOGIES INC.)
NOTES TO CONDENSED STATEMENTS OF OPERATIONS - (CONTINUED)
(DOLLARS IN THOUSANDS)
(UNAUDITED)
The allocations and other components of cost of goods sold and selling,
general and administrative expenses are as follows:
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
September 30, September 30,
1996 1996
------------- -------------
<S> <C> <C>
Allocated cost of goods sold ........... $ 1,170 $ 4,977
Other cost of goods sold ............... 64,320 190,410
-------- --------
$ 65,490 $195,387
======== ========
Allocated selling expense .............. $ 1,122 $ 3,370
Other selling expense .................. 638 2,098
Allocated general and administrative ... 2,286 7,771
Other general and administrative ....... 2,944 10,217
-------- --------
$ 6,990 $ 23,456
======== ========
Allocated research and development ..... $ -- $ --
Other research and development ......... 2,019 6,118
-------- --------
$ 2,019 $ 6,118
======== ========
</TABLE>
2. UNAUDITED INTERIM STATEMENTS
The unaudited statements of operations for the three and nine months ended
September 30, 1996 do not include all of the information required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments considered necessary for a fair presentation have
been included.
16
<PAGE> 18
FORWARD GROUP PLC
CONDENSED CONSOLIDATED PROFIT AND LOSS ACCOUNTS
(EXPRESSED IN THOUSANDS OF BRITISH POUNDS STERLING)
(UNAUDITED)
<TABLE>
<CAPTION>
Three months Nine months Three months
ended ended ended
September 30, September 30, March 31,
1996 1996 1997
------------- ------------- ---------
<S> <C> <C> <C>
Turnover
Continuing operations ............................ L23,821 L73,020 L25,287
Acquisitions ..................................... 4,623 5,323 --
------- ------- -------
28,444 78,343 25,287
------- ------- -------
Operating profit
Continuing operations ............................ 322 7,569 2,853
Acquisitions ..................................... 641 690 --
------- ------- -------
963 8,259 2,853
Expenses related to sale ......................... -- -- (1,318)
Net interest payable ............................. (336) (690) (381)
------- ------- -------
Profit on ordinary activities before taxation ......... 627 7,569 1,154
Tax on profit on ordinary activities .................. (213) (2,504) (833)
------- ------- -------
Profit for the financial period ....................... 414 5,065 321
------- ------- -------
Dividends ............................................. (545) (545) --
------- ------- -------
Retained profit for the financial period .............. L (131) L 4,520 L 321
======= ======= =======
</TABLE>
The Notes to Condensed Consolidated Financial Statements
are an integral part of these Financial Statements.
17
<PAGE> 19
FORWARD GROUP PLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(EXPRESSED IN THOUSANDS OF BRITISH POUNDS STERLING)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Three Months
Ended Ended
September 30, March 31,
1996 1997
------------- ---------
<S> <C> <C>
Net cash inflow from operating activities ............. L10,935 L 3,173
Returns on investments and serving of finance
Interest received ................................ 80 8
Interest paid .................................... (701) (332)
Dividends paid ................................... (1,090) (552)
------- -------
Net cash outflow from returns on investments
and serving of finance ........................... (1,711) (876)
UK tax paid ........................................... (109) (162)
Investing activities
Purchase of tangible fixed assets ................ (6,097) (488)
Acquisition of business (net of cash
and cash equivalents acquired) ............... (9,639) --
------- -------
Net cash inflow/(outflow) from
investing activities ............................. (15,736) (488)
------- -------
Net cash inflow/(outflow) before financing ............ (6,621) 1,647
Financing
Issue of ordinary share capital .................. -- 78
Repayment of bank loan ........................... (540) (180)
Capital element of hire purchase
and finance lease payments ................... (1,667) (734)
------- -------
Net cash (outflow)/inflow from financing .............. (2,207) (836)
------- -------
Net increase/(decrease) in cash and
cash equivalents ................................. L(8,828) L 811
======= =======
</TABLE>
The Notes to Condensed Consolidated Financial Statements
are an integral part of these Financial Statements.
18
<PAGE> 20
FORWARD GROUP PLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN THOUSANDS OF BRITISH POUNDS STERLING)
1. BASIS OF PRESENTATION
Accounting convention
The financial statements are prepared in accordance with applicable United
Kingdom accounting standards.
Consolidated Financial Data
The consolidated financial statements for the three and nine months ended
September 30, 1996 and the three months ended March 31, 1997 are unaudited.
However, in the opinion of management, all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation of the
results of operations have been included.
19
<PAGE> 21
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
CONDENSED CONSOLIDATED PROFIT AND LOSS ACCOUNTS
(EXPRESSED IN BRITISH POUNDS STERLING)
(UNAUDITED)
<TABLE>
<CAPTION>
Three months Nine months Three months
ended ended ended
September 27, September 27, April 4,
1996 1996 1997
------------- ------------- --------
<S> <C> <C> <C>
Turnover .................................... L31,715 L93,549 L38,266
Cost of sales .......................... 23,938 71,640 33,711
------- ------- -------
Gross profit ........................... 7,777 21,909 4,555
Distribution costs ..................... 278 947 525
Administrative expenses ................ 2,993 6,992 1,557
------- ------- -------
4,506 13,970 2,473
Other operating income ................. -- -- 44
------- ------- -------
Operating profit ............................ 4,506 13,970 2,517
Interest receivable .................... 83 83 48
Interest payable ....................... (176) (616) (308)
------- ------- -------
Profit on ordinary activities
before taxation ........................ 4,413 13,437 2,257
Tax on ordinary activities ............. 1,905 5,988 668
------- ------- -------
Profit for the year after taxation .......... 2,508 7,449 1,589
Dividends .............................. 93 293 150
------- ------- -------
Retained profit for the period .............. L 2,415 L 7,156 L 1,439
======= ======= =======
</TABLE>
The Notes to Condensed Consolidated Financial Statements
are an integral part of these Financial Statements.
20
<PAGE> 22
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(EXPRESSED IN THOUSANDS OF BRITISH POUNDS STERLING)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Three Months
Ended Ended
September 27, April 4,
1996 1997
------------- ------------
<S> <C> <C>
Net cash inflow from operating activities ............. L21,152 L12,430
Returns on investments and servicing of finance
Interest paid .................................... (589) (13)
Interest received ................................ 83 48
Dividends paid to parent company shareholders .... (350) (150)
------- -------
Net cash outflow from returns on investments
and servicing of finance ......................... (856) (115)
------- -------
Taxation
Corporation tax paid ............................. (1,952) (4,072)
------- -------
Tax paid .............................................. (1,952) (4,072)
------- -------
Investing activities:
Payments to acquire tangible fixed assets ........ (11,333) (9,490)
------- -------
Net cash outflow from investing activities ............ (11,333) (9,490)
------- -------
Net cash inflow/(outflow) before financing ............ L 7,011 L(1,247)
======= =======
Financing
New loans ........................................ (14) (6,089)
Repayment of loans ............................... 604 529
Repayment of finance leases ...................... 1,973 331
------- -------
Net cash outflow/(inflow) from financing .............. 2,563 (5,229)
Increase in cash and cash equivalents ................. (4,448) 3,982
------- -------
L 7,011 L(1,247)
======= =======
</TABLE>
The Notes to Condensed Consolidated Financial Statements
are an integral part of these Financial Statements.
21
<PAGE> 23
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN BRITISH POUNDS STERLING)
(UNAUDITED)
1. BASIS OF PRESENTATION
Accounting convention
The financial statements are prepared in accordance with applicable United
Kingdom accounting standards.
Condensed Consolidated Financial Data
The condensed consolidated financial statements for the three and nine
months ended September 27, 1996 and the three months ended April 4, 1997 are
unaudited. However, in the opinion of management, all adjustments (consisting of
normal recurring adjustments) considered necessary for a fair presentation of
the results of operations have been included.
22
<PAGE> 24
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Viasystems Group, Inc. ("Group") was formed in August 1996 to make
strategic acquisitions of PCB manufacturers and backpanel assemblers and to
integrate those acquisitions into a global enterprise that is the preferred
manufacturer and marketer of PCBs and backpanels. In October 1996, Group
completed the acquisition of Circo Craft Co. Inc. ("Circo Craft"), a rigid PCB
manufacturer, and in December 1996, Viasystems Technologies Corp. ("Viasystems
Technologies") a wholly owned subsidiary of Group acquired substantially all the
assets of the Microelectronics Group, Interconnection Technologies Unit of
Lucent Technologies Inc. (the "Lucent Division"). The combination of Circo Craft
and the former Lucent Division created one of the largest independent
manufacturers of PCBs and backpanels in North America. Prior to its acquisition
by Viasystems Technologies, the Lucent Division was a captive supplier of Lucent
Technologies. Accordingly, its historical results of operations are not
indicative of the results of operations to be expected for a stand-alone
enterprise.
In April 1997, an affiliate of Group's stockholders acquired Forward Group
PLC ("Forward"), a rigid PCB manufacturer located in the United Kingdom.
Subsequently, Group acquired Forward from the stockholder affiliate.
Concurrently with that transaction, Group organized Viasystems, Inc.
("Viasystems") as its direct subsidiary and, on April 10, 1997, contributed to
it the capital stock of Circo Craft, Viasystems Technologies, and PCB
Acquisition Limited (the acquisition parent of Forward). Prior to the
contribution of this capital by Group, Viasystems had no operations of its own.
The discussion included herein of the Company represents the results of
operations of Viasystems and its subsidiaries subsequent to the capital
contribution by Group and of Group and its subsidiaries prior to the capital
contribution of such subsidiaries to Viasystems.
Also in April 1997, an affiliate of Group's stockholders established Chips
Holdings, Inc., which, in turn, acquired Interconnection Systems (Holdings)
Limited ("ISL"), a rigid PCB manufacturer located in the United Kingdom. In June
1997, Chips Holdings, Inc. merged with Group and the subsidiaries of Chips
Holdings, Inc., including ISL, became subsidiaries of Viasystems and certain of
its subsidiaries. Group assumed the $437.5 million of notes payable which were
incurred by Chips Holdings, Inc. (the "Chips Loan Notes") to finance the ISL
acquisition.
Each of Group, Circo Craft, Viasystems Technologies, Forward and ISL are
predecessors of Viasystems. A discussion of the results of operations for each
of the separate entities follows the discussion below relating to the Company.
The separate results of each entity are impacted by a number of factors
including target markets, customers, and local economies. Differing demand for
printed circuit boards in general and demand for different technologies of
printed circuit boards may not be consistent for each of the predecessor
entities acquired. The Company believes that the combination of the predecessor
entities will provide it with a significant advantage in managing its operations
to meet demand. The discussion of the results of operations of the separate
entities has been prepared based upon the results of each of the separate entity
in accordance with the local GAAP of the entity and should be read in
conjunction with financial statements and notes thereto of Viasystems, Circo
Craft, Viasystems Technologies, Forward and ISL, all of which are included
elsewhere herein.
23
<PAGE> 25
RESULTS OF OPERATIONS
THE COMPANY
Viasystems is a wholly owned subsidiary of Group. Viasystems was formed on
April 2, 1997, as a subsidiary of Group. On April 10, 1997, Group contributed to
Viasystems all of the capital of its then existing subsidiaries - Circo Craft,
Viasystems Technologies, and PCB Acquisition Limited (the acquisition parent of
Forward). Prior to the contribution of this capital by Group, Viasystems had no
operations of its own. The discussion included herein of the Company represents
the results of operations of Viasystems and its subsidiaries subsequent to the
capital contribution by Group and of Group and its subsidiaries prior to the
capital contribution of such subsidiaries to Viasystems.
The following table presents statement of operations data of the Company on
a historical basis and expressed as percentage of net sales.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, 1997 September 30, 1997
------------------ ------------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales .................................................. $ 216,828 100.0% $ 563,520 100.0%
Cost of goods sold ......................................... 150,929 69.6 405,577 72.0
Selling, general and administrative expenses ............... 20,699 9.5 52,550 9.3
Depreciation and amortization .............................. 26,860 12.4 73,163 13.0
Write-off of acquired in-process research and
development (1) ......................................... -- 0.0 294,500 52.3
--------- ----- --------- -----
Operating loss ....................................... $ 18,340 8.5% $(262,270) (46.5)%
========= ===== ========= =====
</TABLE>
(1) Represents charges relating to the write-off of acquired in-process
research and development costs associated with the acquisitions of
Circo Craft, the Lucent Division, Forward and ISL. The write-off
related to acquired research and development for projects that do not
have a future alternative use. See "Notes to Condensed Consolidated
Financial Statements" of Viasystems.
Three Months Ended September 30, 1997
The Company's net sales for the three months ended September 30, 1997 were
$216.8 million and cost of goods sold were $150.9 million, or 69.6% of net
sales. Selling, general and administrative expenses for the same period were
$20.7 million, or 9.5% of net sales.
Nine Months Ended September 30, 1997
The Company's net sales for the nine months ended September 30, 1997 were
$563.5 million and cost of goods sold were $405.6 million, or 72.0% of net
sales. Selling, general and administrative expenses for the same period were
$52.6 million, or 9.3% of net sales.
The Company believes that the operating results of Viasystems are not
comparable to the operating results expected to be achieved in the future due
to, among other things, the acquisitions of Circo Craft, the Lucent Division,
Forward, and ISL and the completed debt and equity offerings. The Company
believes that, due to the acquisitions, sales in subsequent periods will
increase from that reported for the nine months ended September 30, 1997.
24
<PAGE> 26
CIRCO CRAFT
The following table presents, in accordance with Canadian GAAP, statement
of operations data of Circo Craft on a historical basis and expressed as a
percentage of net sales.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, 1996 September 30, 1996
------------------ ------------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales ............................................. C$44,329 100.0% C$129,633 100.0%
Cost of goods sold .................................... 33,632 75.9 101,532 78.3
Selling, general and administrative expenses .......... 2,265 5.1 7,969 6.2
Depreciation and amortization ......................... 3,436 7.8 8,456 6.5
-------- ----- --------- -----
Operating income ................................ C$ 4,996 11.3% C$ 11,676 9.0%
======== ===== ========= =====
</TABLE>
Three Months Ended September 30, 1996
Net sales and cost of goods sold for the three months ended September 30,
1996, were C$44.3 million and C$33.6 million, respectively. As a percentage of
sales, cost of goods sold for the nine months ended September 30, 1996, was
75.9%. Selling, general and administrative expenses for the nine months ended
September 30, 1996, of C$2.3 million represented 5.1% expressed as a percentage
of sales.
Nine Months Ended September 30, 1996
Net sales and cost of goods sold for the nine months ended September 30,
1996, were C$129.6 million and C$101.5 million, respectively. As a percentage of
sales, cost of goods sold for the nine months ended September 30, 1996, was
78.3%. Selling, general and administrative expenses for the nine months ended
September 30, 1996, were C$8.0 million represented 6.1% expressed as a
percentage of sales.
VIASYSTEMS TECHNOLOGIES
The following table presents statement of operations data of Viasystems
Technologies on a historical basis and expressed as a percentage of net sales.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, 1996 September 30, 1996
------------------ ------------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales ............................................. $ 89,427 100.0% $260,726 100.0%
Cost of goods sold .................................... 65,490 73.2 195,387 74.9
Selling, general and administrative expenses .......... 9,009 10.1 29,574 11.3
Depreciation and amortization ......................... 4,987 5.6 15,514 6.0
-------- ----- -------- -----
Operating income ................................ $ 9,941 11.1% $ 20,251 7.8%
======== ===== ======== =====
</TABLE>
25
<PAGE> 27
Three Months Ended September 30, 1996
Net sales for the three months ended September 30, 1996 were $89.4 million
and cost of goods sold were $65.5 million, or 73.2% of net sales. Selling,
general and administrative expenses for the same period were $9.0 million, or
10.1% of net sales.
Nine Months Ended September 30, 1996
Net sales for the nine months ended September 30, 1996 were $260.7 million
and cost of goods sold were $195.4 million, or 74.9% of net sales. Selling,
general and administrative expenses for the same period were $29.5 million, or
11.3% of net sales.
FORWARD
The following table presents, in accordance with U.K. GAAP, statement of
operations data of Forward on a historical basis and expressed as a percentage
of net sales.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended Three Months Ended
September 30, 1996 September 30, 1996 March 31, 1997
------------------ ------------------ ------------------
(Pounds sterling in thousands)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net Sales ......................... L28,444 100.0% L78,343 100.0% L25,287 100.0%
Cost of goods sold ................ 23,124 81.3 59,950 76.5 18,938 74.9
Selling, general and administrative
expenses ....................... 3,140 11.0 7,059 9.0 2,271 9.0
Depreciation and amortization ..... 1,324 4.7 3,303 4.2 1,265 5.0
------- ----- ------- ----- ------- -----
Operating income .................. L 856 3.0% L 8,031 10.2% L 2,813 11.1%
======= ===== ======= ===== ======= =====
</TABLE>
Three Months Ended March 31, 1997
Net sales for the three months ended March 31, 1997 were L25.3 million
and cost of goods sold were L18.9 million, or 74.9% of net sales. Selling,
general and administrative expenses for the same period were L2.3 million,
or 9.0% of net sales.
Three Months Ended September 30, 1996
Net sales for the three months ended September 30, 1996 were L28.4
million and cost of goods sold were L23.1 million, or 81.3% of net sales.
Selling, general and administrative expenses for the same period were L3.1
million, or 11.0% of net sales.
Nine Months Ended September 30, 1996
Net sales for the nine months ended September 30, 1996 were L78.3
million and cost of goods sold were L60.0 million, or 76.5% of net sales.
Selling, general and administrative expenses for the same period were L7.1
million, or 9.0% of net sales.
26
<PAGE> 28
ISL
The following table presents, in accordance with U.K. GAAP, statement of
operations data of ISL on a historical basis and expressed as a percentage of
net sales.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended Three Months Ended
September 27, 1996 September 27, 1996 April 4, 1997
------------------- ------------------ ------------------
(Pounds sterling in thousands)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales ................................... L31,715 100.0% L93,549 100.0% L38,266 100.0%
Cost of goods sold .......................... 19,570 61.7 58,570 62.6 28,848 75.4
Selling, general and administrative
expenses ................................. 3,136 9.9 7,535 8.1 1,895 5.0
Depreciation and amortization ............... 4,503 14.2 13,474 14.4 5,050 13.2
------- ----- ------- ----- ------- -----
Operating income ............................ L 4,506 14.2% L13,970 14.9% L 2,473 6.5%
======= ===== ======= ===== ======= =====
</TABLE>
Three Months Ended April 4, 1997
Net sales for the three months ended April 4, 1997 were L38.3 million
and cost of goods sold were L28.8 million, or 75.4% of net sales. Cost of
goods sold as a percentage of sales was abnormally high during the three months
ended April 4, 1997, primarily due to a special write-off of certain boards
which were scrapped since the boards failed to meet customers specifications.
The Company does not believe that the cost of goods sold percentage incurred
during the three months ended April 4, 1997, is indicative of a future trend.
Selling, general and administrative expenses for the same period were L1.9
million, or 5.0% of net sales.
Three Months Ended September 27, 1996
Net sales for the three months ended September 30, 1996 were L31.7 million
and cost of goods sold were L19.6 million, or 61.7% of net sales. Selling,
general and administrative expenses for the same period were L3.1 million, or
9.9% of net sales.
Nine Months Ended September 27, 1996
Net sales for the nine months ended September 27, 1996 were L93.5 million
and cost of goods sold were L58.6 million, or 62.6% of net sales. Selling,
general and administrative expenses for the same period were L7.5 million, or
8.1% of net sales.
27
<PAGE> 29
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal liquidity requirements will be for debt service
requirements, working capital needs and capital expenditures. In addition, the
acquisition of other businesses by the Company in the future likely would
require external sources of debt and/or equity financing.
For the nine months ended September 30, 1997, net cash provided by
operating activities was $30.8 million. For the same period the Company used
approximately $225.9 million in investing activities primarily for the Forward
Acquisition. The Forward Acquisition was funded primarily through the issuance
of a $216.0 million bridge loan. The ISL acquisition, which was also completed
during the nine months ended September 30, 1997, was funded almost entirely with
notes payable to the selling stockholders. The Company also completed a $400.0
million offering of 9 3/4% Senior Subordinated Notes due 2007 (the "Offering").
The proceeds from the Offering were used to pay down the $216.0 million bridge
loan plus interest and approximately $171.6 million of existing bank debt plus
interest. The Company incurred approximately $34.5 million of financing fees
related to the various financing activities.
28
<PAGE> 30
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 - Financial data schedule of Viasystems, Inc.
(b) Reports on Form 8-K
No reports on Form 8-K were filed for the three months
ended September 30, 1997.
29
<PAGE> 31
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
VIASYSTEMS, INC.
Dated: December 1, 1997 By: /s/ JAMES N. MILLS
--------------------------------
Name: James N. Mills
Title: Chairman of the Board and
Chief Executive Officer
By: /s/ DAVID M. SINDELAR
--------------------------------
Name: David M. Sindelar
Title: Senior Vice President
30
<PAGE> 32
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
27.1 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 31,330
<SECURITIES> 0
<RECEIVABLES> 140,027
<ALLOWANCES> 1,002
<INVENTORY> 68,472
<CURRENT-ASSETS> 249,140
<PP&E> 457,391
<DEPRECIATION> 42,733
<TOTAL-ASSETS> 974,884
<CURRENT-LIABILITIES> 170,168
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (96,109)
<TOTAL-LIABILITY-AND-EQUITY> 974,884
<SALES> 563,520
<TOTAL-REVENUES> 563,520
<CGS> 405,577
<TOTAL-COSTS> 405,577
<OTHER-EXPENSES> 420,213<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 48,235
<INCOME-PRETAX> (311,009)
<INCOME-TAX> 4,918
<INCOME-CONTINUING> (315,927)
<DISCONTINUED> 0
<EXTRAORDINARY> 7,796
<CHANGES> 0
<NET-INCOME> (323,723)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>INCLUDES CHARGES OF $294,500 RELATING TO THE WRITE-OFF OF ACQUIRED IN-PROCESS
RESEARCH AND DEVELOPMENT COSTS ASSOCIATED WITH THE ACQUISITIONS OF FORWARD
GROUP AND ISL. THE WRITE-OFF RELATES TO ACQUIRED RESEARCH AND DEVELOPMENT
PROJECTS THAT DO NOT HAVE A FUTURE ALTERNATIVE USE.
</FN>
</TABLE>
