<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
---------------------------------------------
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 [ X ] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Outstanding at
Class May 13, 1998
---------------- -------------
Viasystems, Inc.
Common Stock 1,000 shares
<PAGE> 2
VIASYSTEMS, INC. & SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
PART I - FINANCIAL INFORMATION
VIASYSTEMS, INC. & SUBSIDIARIES
<S> <C>
Condensed Consolidated Balance Sheets as of December 31, 1997 and March 31, 1998.............................. 2
Condensed Consolidated Statements of Operations for the three months ended
March 31, 1997 and 1998................................................................................... 3
Condensed Consolidated Statements of Cash Flows for the three months ended
March 31, 1997 and 1998................................................................................... 4
Notes to Condensed Consolidated Financial Statements.......................................................... 5
FORWARD GROUP PLC
Condensed Consolidated Profit and Loss Accounts for the three months ended
March 31, 1997............................................................................................ 11
Condensed Consolidated Statement of Cash Flows for the three months ended
March 31, 1997............................................................................................ 12
Notes to the Condensed Consolidated Financial Statements...................................................... 13
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
Condensed Consolidated Profit and Loss Accounts for the three months ended
April 4, 1997............................................................................................. 14
Condensed Consolidated Statement of Cash Flows for the three months ended
April 4, 1997............................................................................................. 15
Notes to the Condensed Consolidated Financial Statements...................................................... 16
Management's Discussion and Analysis of Financial Condition and Results of Operations............................... 17
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K........................................................................... 19
SIGNATURES.......................................................................................................... 21
</TABLE>
<PAGE> 3
VIASYSTEMS, INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
December 31, March 31,
1997 1998
----------- -----------
ASSETS (Unaudited)
Current assets:
<S> <C> <C>
Cash and cash equivalents ............................. $ 27,538 $ 36,924
Accounts receivable, net .............................. 113,269 209,739
Inventories, net ...................................... 84,631 107,327
Prepaid expenses and other ............................ 26,240 33,894
----------- -----------
Total current assets ............................... 251,678 387,884
Property, plant and equipment, net .................... 448,128 564,602
Intangibles and other assets .......................... 369,106 437,837
----------- -----------
Total assets ....................................... $ 1,068,912 $ 1,390,323
=========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term obligations ........... $ 31,363 $ 42,642
Accounts payable ...................................... 86,941 146,494
Accrued and other liabilities ......................... 85,860 136,600
Income taxes payable .................................. 30,855 13,371
----------- -----------
Total current liabilities ................................ 235,019 339,107
Long-term obligations, less current maturities ........... 816,012 1,008,590
Other long-term liabilities .............................. 110,074 150,671
Stockholder's equity (deficit):
Contributed capital ................................... 282,763 338,316
Accumulated deficit ................................... (376,230) (453,725)
Cumulative translation adjustments .................... 1,274 7,364
----------- -----------
Total stockholder's equity (deficit) ............... (92,193) (108,045)
----------- -----------
Total liabilities and stockholder's equity (deficit) $ 1,068,912 $ 1,390,323
=========== ===========
</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 Ended
March 31,
------------------------
1997 1998
--------- ---------
<S> <C> <C>
Net sales ................................. $ 119,884 $ 242,446
Operating expenses:
Cost of goods sold ..................... 90,069 177,689
Selling, general and administrative .... 11,156 27,709
Depreciation and amortization .......... 14,477 32,303
Write-off of acquired in-process R&D ... -- 62,000
--------- ---------
Operating income (loss) ............. 4,182 (57,255)
Other expense:
Interest expense ....................... 5,055 23,087
Amortization of deferred financing costs 937 1,992
Other, net ............................. (52) 428
--------- ---------
Loss before income tax provision .... (1,758) (82,762)
Provision (benefit) for income taxes ...... 595 (5,267)
--------- ---------
Net loss .................................. $ (2,353) $ (77,495)
========= =========
</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>
Three Months Ended
March 31,
------------------------
1997 1998
--------- ---------
Cash flows provided by (used in) operating activities:
<S> <C> <C>
Net loss ............................................................... $ (2,353) $ (77,495)
Adjustments to reconcile net loss to net cash from operating activities:
Write-off of acquired in-process research and development ........... -- 62,000
Depreciation ........................................................ 7,654 16,819
Amortization of intangibles ......................................... 6,823 15,484
Amortization of deferred financing costs ............................ 937 1,992
Deferred taxes ...................................................... 228 (2,705)
Change in assets and liabilities, net of acquisitions:
Accounts receivable ............................................. (24,640) (49,412)
Inventories ..................................................... 3,397 (446)
Prepaid expenses and other ...................................... 633 1,536
Accounts payable and accrued and other liabilities .............. 5,259 10,550
Income taxes payable ............................................ (341) (18,130)
--------- ---------
Net cash from operating activities ..................................... (2,403) (39,807)
--------- ---------
Cash flows provided by (used in) investing activities:
Acquisitions, net of cash acquired .................................. -- (145,464)
Capital expenditures ................................................ (8,712) (33,021)
--------- ---------
Net cash from investing activities ..................................... (8,712) (178,485)
--------- ---------
Cash flows provided by (used in) financing activities:
Equity proceeds ..................................................... -- 55,552
Proceeds from the issuance of Series B Senior Subordinated
Notes due 2007 .................................................. -- 104,500
Borrowings under the Term Facilities ................................ -- 70,000
Net borrowings under the Revolvers .................................. -- 7,544
Repayment of other long-term obligations ............................ (2,463) (53)
Financing costs ..................................................... -- (11,836)
--------- ---------
Net cash from financing activities ..................................... (2,463) 225,707
--------- ---------
Effect of exchange rate changes on cash ................................ 1,017 1,971
--------- ---------
Net change in cash and cash equivalents ................................ (12,561) 9,386
Cash and cash equivalents - beginning of the period .................... 16,117 27,538
--------- ---------
Cash and cash equivalents - end of the period .......................... $ 3,556 $ 36,924
========= =========
</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.
Unaudited Interim Condensed Consolidated Financial Statements
The unaudited interim condensed consolidated financial statements reflect
all adjustments consisting only of normal recurring adjustments that are, in the
opinion of management, necessary for a fair presentation of financial position
and results of operations. The results for the three months ended March 31,
1998, are not necessarily indicative of the results that may be expected for a
full fiscal year. These financial statements should be read in conjunction with
the audited consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-K filed with the Securities and Exchange
Commission for the year ended December 31, 1997.
Statement of Cash Flows
Interest paid for the three months ended March 31, 1997 and 1998 was
approximately $5,054 and 12,860, respectively. Income taxes paid for the three
months ended March 31, 1997 and 1998 was approximately $1,573 and $15,582,
respectively.
2. INVENTORIES
The composition of inventories at March 31, 1998, is as follows:
<TABLE>
<S> <C>
Raw materials........................................................................... $ 32,762
Work-in-process......................................................................... 37,246
Finished goods.......................................................................... 37,319
----------
Total................................................................................... $ 107,327
==========
</TABLE>
5
<PAGE> 7
3. ACQUISITIONS
In February, 1998, the Company acquired all the outstanding shares of Print
Service Holding N.V., the holding company parent of Mommers Print Service B.V.
("Mommers"), a PCB manufacturer located in The Netherlands and specializing in
the production of high-volume, medium to high-complexity PCBs and backplanes,
for a cash purchase price of approximately $59,399, plus assumed obligations.
Accordingly, the results of operations of Mommers since its acquisition are
included in the results of operations of the Company.
The Mommers 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 $20,000 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
$20,000 and was charged to expense as of the acquisition date. The other
acquired intangibles include developed technologies, 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.
6
<PAGE> 8
The total purchase price including fees and expenses has been preliminarily
allocated to the acquired net assets as follows:
<TABLE>
<S> <C>
Current assets.......................................................................... $ 20,451
Property, plant and equipment........................................................... 40,685
Acquired intangibles.................................................................... 13,000
In-process R&D.......................................................................... 20,000
Goodwill................................................................................ 6,360
Current liabilities..................................................................... (30,378)
Non-current liabilities................................................................. (10,719)
----------
Total.......................................................................... $ 59,399
==========
</TABLE>
In March, 1998, the Company acquired all the outstanding shares of
Zincocelere S.p.A. ("Zincocelere"), a PCB manufacturer located in northern Italy
and specializing in the production of high-volume medium- to high-complexity
PCBs, for a cash purchase price of approximately $85,012, plus assumed
obligations.
The Zincocelere 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 $42,000 of 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 $42,000 and was charged to expense as
of the acquisition date. The other acquired intangibles include developed
technologies, 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.......................................................................... $ 54,643
Property, plant and equipment........................................................... 51,706
Acquired intangibles.................................................................... 21,000
In-process R&D.......................................................................... 42,000
Goodwill................................................................................ 16,619
Current liabilities..................................................................... (58,846)
Non-current liabilities................................................................. (42,110)
----------
Total.......................................................................... $ 85,012
==========
</TABLE>
The Mommers and Zincocelere acquisitions were funded by a February 1998
offering of an additional $100,000 of 9 3/4% Series B Senior Subordinated Notes
due 2007 (see Note 4), a $70,000 term loan and an additional equity contribution
of $50,000. A portion of the funds raised during the three months ended March
31, 1998, were also used to repay indebtedness outstanding under the Revolvers
(see Note 4).
7
<PAGE> 9
The intangible assets acquired are being amortized using systematic methods
over the estimated useful lives of the related assets as follows:
<TABLE>
<CAPTION>
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 three months ended March
31, 1997 and 1998, as though the Ericsson facility, Mommers and Zincocelere
Acquisitions and the related financings and equity contribution had occurred at
January 1, 1997 and January 1, 1998, respectively. In preparing this data, the
financial data of the Ericsson facility, Mommers and Zincocelere for the first
fiscal quarter of 1997 has been translated at an exchange rate of Swedish Krona
("SEK") 7.559=U.S.$1.00 for the Ericsson facility, of Dutch Guilders ("NGL")
1.886=U.S.$1.00 for Mommers and of Italian Lira ("ITL") 1,676=U.S.$1.00 for
Zincocelere. The financial data for the Ericsson facility, Mommers and
Zincocelere for January and February, 1998 has been translated at exchange rates
of SEK 7.9491=U.S.$1.00, NGL 2.0825=U.S.$1.00, and ITL 1,821=U.S.$1.00,
respectively. These exchange rates represent the rates in effect at March 31,
1997 and 1998, respectively, which are not materially different from the average
exchange rates for the respective periods.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------
1997 1998
-------- ------
<S> <C> <C>
Net sales..................................................................... $176,373 $277,598
Net loss...................................................................... (10,949) (84,807)
</TABLE>
4. LONG-TERM OBLIGATIONS
On February 9, 1998, the Company completed the offering of $100,000 of
9 3/4% Series B Senior Subordinated Notes due 2007 (the "1998 Offering") priced
at 104.5%. As a condition of the 1998 Offering, the Second Amended and Restated
Credit Agreement (the "Credit Agreement") was amended to, among other things,
establish an additional $70,000 term loan and increase the U.S. Revolving Loan
by $25,000. Additionally, Hicks, Muse, Tate & Furst, Incorporated ("Hicks Muse")
agreed to contribute $50,000 of equity to the Company.
8
<PAGE> 10
The composition of long-term obligations at March 31, 1998, is as follows:
<TABLE>
<CAPTION>
Credit Agreement:
<S> <C>
Term Facilities ................................. $ 157,500
Revolvers ....................................... 7,544
Senior Subordinated Notes due 2007 ................. 400,000
Series B Senior Subordinated Notes due 2007 ........ 100,000
Series B Senior Subordinated Notes due 2007, premium 4,461
Chips Loan Notes Liability ......................... 319,250
Other debt ......................................... 62,477
-----------
1,051,232
Less: current maturities ........................... (42,642)
-----------
$ 1,008,590
===========
</TABLE>
5. COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standards Board ("FASB") adopted
Statement of Financial Accounting Standard ("SFAS") No. 130, "Reporting
Comprehensive Income," which establishes standards for reporting and disclosure
of comprehensive income (loss) and its components. Effective January 1, 1998,
the Company adopted SFAS No. 130. For the periods ended March 31, 1997 and 1998,
comprehensive loss was $(2,350) and $(71,405), respectively. The Company's other
comprehensive income/loss consists solely of foreign currency translation
adjustments.
6. NEW ACCOUNTING PRONOUNCEMENTS
In April 1998, the FASB adopted Statement of Position ("SOP") 98-5,
"Reporting on the Costs of Start-Up Activities," which requires costs of
start-up activities and organization costs to be expensed as incurred. SOP 98-5
is effective for financial statements for fiscal years beginning after December
15, 1998. The Company will adopt SOP 98-5 in fiscal year 1999 and does not
expect adoption to have a material impact on its consolidated financial
statements.
In June 1997, the FASB adopted SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information," which establishes reporting requirements
related to a business' operating segments, products and services, geographic
areas of operations and major customers. SFAS No. 131 is effective for fiscal
years beginning after December 15, 1997, and does not apply to interim financial
statements in the year of adoption. The Company will adopt SFAS No. 131 for the
fiscal year ended December 31, 1998. The Company does not expect SFAS No. 131 to
have a significant impact on its consolidated financial statements and the
related disclosures.
In February 1998, the FASB adopted SFAS No. 132, "Employer's Disclosure
about Pensions and Other Post Retirement Benefits," which establishes reporting
requirements related to a business' pension and other post retirement benefits.
SFAS No. 132 is effective for fiscal years beginning after December 15, 1997,
and does not apply to interim financial statements in the year of adoption. The
Company will adopt SFAS No. 132 for the fiscal year ended December 31, 1998. The
Company does not expect SFAS No. 132 to have a significant impact on its
consolidated financial statements and the related disclosures.
9
<PAGE> 11
7. SUBSEQUENT EVENT
On April 24, 1998, the holders of the Chips Loan Notes redeemed $152,188 of
the Chips Loan Notes. As such, $118,250 of cash held by Bisto Funding, Inc. (a
sister company of Viasystems, Inc.) was paid to the holders of the Chips Loan
Notes. The remaining $33,938 was paid to the holders of the Chips Loan Notes by
the Company. The Company borrowed $33,938 of the available Chips Term Loan to
fund its portion of the payment of the Chips Loan Notes.
10
<PAGE> 12
FORWARD GROUP PLC
CONDENSED CONSOLIDATED PROFIT AND LOSS ACCOUNTS
(EXPRESSED IN THOUSANDS OF BRITISH POUNDS STERLING)
(UNAUDITED)
<TABLE>
<CAPTION>
Three months
ended
March 31,
1997
-------
Turnover
<S> <C>
Continuing operations .................. (pound) 25,287
------
25,287
------
Operating profit
Continuing operations .................. 2,853
------
2,853
Expenses related to sale ............... (1,318)
Net interest payable ................... (381)
------
Profit on ordinary activities before taxation 1,154
Tax on profit on ordinary activities ........ (833)
------
Profit for the financial period ............. 321
------
Retained profit for the financial period .... (pound) 321
======
</TABLE>
The Notes to the Condensed Consolidated Financial Statements
are an integral part of this Financial Statement.
11
<PAGE> 13
FORWARD GROUP PLC
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(EXPRESSED IN THOUSANDS OF BRITISH POUNDS STERLING)
<TABLE>
<CAPTION>
Three Months
Ended
March 31,
1997
<S> <C>
Net cash inflow from operating activities................................................................(pound) 3,173
Returns on investments and serving of finance
Interest received................................................................................... 8
Interest paid....................................................................................... (332)
Dividends paid...................................................................................... (552)
-------
Net cash outflow from returns on investments
and serving of finance.............................................................................. (876)
UK tax paid ........................................................................................... (162)
Investing activities
Purchase of tangible fixed assets................................................................... (488)
-------
Net cash (outflow) from
investing activities................................................................................ (488)
-------
Net cash inflow/(outflow) before financing............................................................... 1,647
Financing
Issue of ordinary share capital..................................................................... 78
Repayment of bank loan.............................................................................. (180)
Capital element of hire purchase
and finance lease payments...................................................................... (734)
-------
Net cash (outflow) from financing........................................................................ (836)
-------
Net increase in cash and
cash equivalents....................................................................................(pound) 811
=======
</TABLE>
The Notes to the Condensed Consolidated Financial Statements
are an integral part of this Financial Statement.
12
<PAGE> 14
FORWARD GROUP PLC
NOTES TO THE 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 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.
13
<PAGE> 15
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
CONDENSED CONSOLIDATED PROFIT AND LOSS ACCOUNTS
(EXPRESSED IN BRITISH POUNDS STERLING)
(UNAUDITED)
<TABLE>
<CAPTION>
Three months
ended
April 4,
1997
-----------
<S> <C>
Turnover ...............................................................................................(pound) 38,266
Cost of sales...................................................................................... 33,711
------------
Gross profit....................................................................................... 4,555
Distribution costs................................................................................. 525
Administrative expenses............................................................................ 1,557
------------
2,473
Other operating income............................................................................. 44
------------
Operating profit........................................................................................ 2,517
Interest receivable................................................................................ 48
Interest payable................................................................................... (308)
-----------
Profit on ordinary activities
before taxation.................................................................................... 2,257
Tax on ordinary activities......................................................................... 668
-----------
Profit for the year after taxation...................................................................... 1,589
Dividends.......................................................................................... 150
-----------
Retained profit for the period..........................................................................(pound) 1,439
===========
</TABLE>
The Notes to the Condensed Consolidated Financial Statements
are an integral part of this Financial Statement.
14
<PAGE> 16
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(EXPRESSED IN THOUSANDS OF BRITISH POUNDS STERLING)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months
Ended
April 4,
1997
----------
<S> <C>
Net cash inflow from operating activities................................................................(pound)12,430
Returns on investments and servicing of finance
Interest paid....................................................................................... (13)
Interest received................................................................................... 48
Dividends paid to parent company shareholders....................................................... (150)
----------
Net cash outflow from returns on investments
and servicing of finance............................................................................ (115)
----------
Taxation
Corporation tax paid................................................................................ (4,072)
---------
Tax paid ................................................................................................ (4,072)
---------
Investing activities:
Payments to acquire tangible fixed assets........................................................... (9,490)
---------
Net cash outflow from investing activities............................................................... (9,490)
---------
Net cash (outflow) before financing...................................................................... (1,247)
=========
Financing
New loans........................................................................................... (6,089)
Repayment of loans.................................................................................. 529
Repayment of finance leases......................................................................... 331
----------
Net cash (inflow) from financing......................................................................... (5,229)
Increase in cash and cash equivalents.................................................................... 3,982
----------
(pound) (1,247)
==========
</TABLE>
The Notes to the Condensed Consolidated Financial Statements
are an integral part of this Financial Statement.
15
<PAGE> 17
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENT
(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 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.
16
<PAGE> 18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The discussion included herein of the Company represents the results of
operations of Viasystems, Inc. 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, Inc.
Each of Group, Circo Craft, Viasystems Technologies, Forward Group, PLC
("Forward") and Interconnection Systems (Holdings) Limited ("ISL") are
predecessors to Viasystems, Inc. A discussion of the results of operations for
Forward and ISL follows the discussion below relating to the Company. The
separate results of Forward and ISL are impacted by a number of factors
including target markets, customers, and local economics. Differing demand for
printed circuit boards in general and demands 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 Forward and ISL
has been prepared based upon the results of each separate entity in accordance
with the local GAAP of the entity and should be read in conjunction with
unaudited condensed consolidated financial statements and notes thereto of
Viasystems, Inc., Forward, and ISL, all of which are included elsewhere herein.
RESULTS OF OPERATIONS
THE COMPANY
Three Months Ended March 31, 1997 Compared to Three Months Ended March 31, 1998
Net sales for the three months ended March 31, 1998 were $242.5 million,
representing a $122.6 million, or 102.3% increase from the comparable period in
1997. The increase is due primarily to the acquisitions of Forward and ISL
completed in the second quarter of 1997 and the acquisitions of the Ericsson
facility, Mommers and Zincocelere completed in the first quarter of 1998. The
acquisitions of Forward, ISL, the Ericsson facility, Mommers and Zincocelere are
collectively herein referred to as the Acquisitions.
Cost of goods sold for the three months ended March 31, 1998 was $177.7
million, or 73.3% of sales compared to $90.1 million, or 75.1% of sales for the
three months ended March 31, 1997. Cost of goods sold as a percent of sales
decreased to 73.3% from 75.1% primarily due to improved pricing on raw materials
purchases yielded by the purchasing power of the Company after the acquisitions
of the separate entities.
Selling, general and administrative expenses for the three months ended
March 31, 1998 increased by $16.5 million, or 147.3%, versus the comparable
period in 1997. These costs increased from the first quarter of 1997, primarily
due to the acquisitions, the implementation of the Company's redesigned
path-to-market, or sales and marketing approach and planned increases in general
and administrative expenses at our Richmond facility as a part of the required
separation from the Lucent Technologies' systems.
17
<PAGE> 19
Other expense increased $19.6 million, from $5.9 million in the first
fiscal quarter of 1997 to $25.5 million in the same period of 1998, due
primarily to increased interest expense and amortization of deferred financing
costs related to the debt financing incurred to fund the Acquisitions.
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 and the completed debt and equity
offerings in the first fiscal quarter of 1998. The Company believes that, due to
the Acquisitions, sales in subsequent periods will increase from that reported
for the three months ended March 31, 1998.
FORWARD
Three Months Ended March 31, 1997
Net sales for the three months ended March 31, 1997 were (pound)25.3
million and cost of goods sold were (pound)18.9 million, or 74.9% of net sales.
Selling, general and administrative expenses for the same period were (pound)2.3
million, or 9.0% of net sales.
ISL
Three Months Ended April 4, 1997
Net sales for the three months ended April 4, 1997 were (pound)38.3 million
and cost of goods sold were (pound)28.8 million, or 75.4% of net sales. Selling,
general and administrative expenses for the same period were (pound)1.9 million,
or 5.0% of net sales.
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
potential for acquisitions of other businesses by the Company in the future
likely may require external sources of debt and/or equity financing.
For the three months ended March 31, 1998, net cash used in operating
activities was $39.8 million. For the same period the Company used approximately
$178.5 million in investing activities primarily for acquisitions of the
Ericsson facility, Mommers and Zincocelere. The acquisitions of Mommers and
Zincocelere were funded primarily through the proceeds from the offering of an
additional $100.0 million of 9 3/4% Series B Senior Subordinated Notes due 2007
(the "1998 Offering"), an equity contribution of $50.0 million and additional
term loan borrowings of $70.0 million. A portion of the funds raised during the
three months ended March 31, 1998, were also used to repay indebtedness
outstanding under the Revolvers. The acquisition of the Ericsson facility was
funded from cash provided by operations.
18
<PAGE> 20
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<S> <C>
2.1 - Acquisition Agreement dated as of January 28,
1998, among Viasystems B.V. and Print Service
Holding N.V. (incorporated by reference to exhibit
2.6 of the annual report for the fiscal year ended
December 31, 1997, filed by the Company on Form
10-K).
2.2 - Sale and Purchase Agreement dated as of February
11, 1998, between Viasystems S.r.l., as purchaser,
European Circuits S.A. and individuals named
therein, as sellers (incorporated by reference to
exhibit 2.7 of the annual report for the fiscal
year ended December 31, 1997, filed by the Company
on Form 10-K).
3.1 - Certificate of Incorporation of Viasystems, Inc.
(incorporated by reference to exhibit 3.1 to the
Registration Statement filed by the Company on
Form S-1, Registration No. 333-29727).
3.2 - Bylaws of Viasystems, Inc. (incorporated by
reference to exhibit 3.2 to the Registration
Statement filed by the Company on Form S-1).
4.1 - Indenture, dated as of February 17, 1998, by and
between Viasystems, Inc. and the Bank of New York,
as Trustee (incorporated by reference to exhibit
4.7 of the annual report for the fiscal year ended
December 31, 1997, filed by the Company on Form
10-K).
4.2 - Form of the Old Note (included in Exhibit 4.1,
Exhibit A) (incorporated by reference to exhibit
4.8 of the annual report for the fiscal year ended
December 31, 1997, filed by the Company on Form
10-K).
4.3 - Form of the New Note (included in Exhibit 4.1,
Exhibit B) (incorporated by reference to exhibit
4.9 of the annual report for the fiscal year ended
December 31, 1997, filed by the Company on Form
10-K).
10.1 - Second Amendment, dated as of February 3, 1998, to
the Second Amended and Restated Credit Agreement,
dated June 5, 1997, among Viasystems Group, Inc.,
Viasystems, Inc., Circo Craft Co. Inc., PCB
Investments Plc, Forward Group Plc, Chips
Acquisition Limited and Interconnection Systems
(Holdings) Limited; and the Chase Manhattan Bank
of Canada, Chase Manhattan Bank International
Limited and the Chase Manhattan Bank (incorporated
by reference to exhibit 4.11 of the annual report
for the fiscal year ended December 31, 1997, filed
by the Company on Form 10-K).
</TABLE>
19
<PAGE> 21
<TABLE>
<S> <C>
10.2 - Purchase Agreement dated as of February 9, 1998,
by and among Viasystems, Inc. and Chase Securities
Inc. and NatWest Capital Markets Limited
(incorporated by reference to exhibit 10.26 of the
annual report for the fiscal year ended December
31, 1997, filed by the Company on Form 10-K).
10.3 - Exchange and Registration Rights Agreement, dated
as of February 17, 1998, by and among Viasystems,
Inc. and Chase Securities Inc. and NatWest Capital
Markets Limited (incorporated by reference to
exhibit 10.27 of the annual report for the fiscal
year ended December 31, 1997, filed by the Company
on Form 10-K).
27.1 - Financial data schedule of Viasystems, Inc.
</TABLE>
(b) Reports on Form 8-K
No reports on Form 8-K were filed for the three months ended
March 31, 1998.
20
<PAGE> 22
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: May 15, 1998 By:
/s/ David M. Sindelar
-----------------------------
Name: David M. Sindelar
Title: Senior Vice President and
Chief Financial Officer
21
<PAGE> 23
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
27.1 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001041380
<NAME> VIASYSTEMS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 36,924
<SECURITIES> 0
<RECEIVABLES> 212,394
<ALLOWANCES> 2,655
<INVENTORY> 107,327
<CURRENT-ASSETS> 387,884
<PP&E> 633,273
<DEPRECIATION> 68,671
<TOTAL-ASSETS> 1,390,323
<CURRENT-LIABILITIES> 339,107
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (108,045)
<TOTAL-LIABILITY-AND-EQUITY> 1,390,323
<SALES> 242,446
<TOTAL-REVENUES> 242,446
<CGS> 177,689
<TOTAL-COSTS> 177,689
<OTHER-EXPENSES> 122,012<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,079
<INCOME-PRETAX> (82,762)
<INCOME-TAX> (5,267)
<INCOME-CONTINUING> (77,495)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (77,495)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>INCLUDES CHARGES OF $62,000 RELATING TO THE WRITE-OFF OF ACQUIRED IN-PROCESS
RESEARCH AND DEVELOPMENT COSTS ASSOCIATED WITH THE ACQUISITIONS OF MOMMERS AND
ZINCOCELERE, THE WRITE-OFF RELATES TO ACQUIRED RESEARCH AND DEVELOPMENT
PROJECTS THAT DO NOT HAVE A FUTURE ALTERNATIVE USE.
</FN>
</TABLE>
