MERX Merix (MM)

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

November 3, 2009

Viasystems, Inc.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation)		333-29727 (Commission File Number)		43-1777252 (IRS Employer Identification Number)

101 South Hanley Road, Suite 400, St. Louis, MO		63105
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (314) 727-2087

None
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 7.01 Regulation FD Disclosure

Viasystems, Inc. (the “Company”) is disclosing under Item 7.01 of this Current Report on Form 8-K the information included as Exhibit 99.1, which information is incorporated by reference herein. This information, which has not been previously reported or modifies previously reported information, is excerpted from a preliminary offering circular that is being disseminated in connection with the private offering by the Company of $220,000,000 in aggregate principal amount of senior secured notes due 2015 (the “Notes”). The net proceeds of this offering are intended to be used to fund the previously announced tender offer to repurchase any and all of the Company’s outstanding $200 million in aggregate principal amount of 10.50% Senior Subordinated Notes due 2011 (the “2011 Notes”), to redeem or otherwise repurchase any 2011 Notes that remain outstanding after the expiration of the tender offer and to pay transaction fees and expenses.

This Current Report shall not constitute an offer to sell or the solicitation of an offer to buy the offered Notes, nor shall there be any sales of Notes in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

The information included herein, including Exhibit 99.1, shall be deemed not to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, regardless of any incorporation by reference language in any such filing, except as expressly set forth by specific reference in such filing.

This Current Report contains forward-looking statements as defined by the federal securities laws, including without limitation, statements about the completion of the offering and the use of proceeds from the offering. These statements are based upon the Company’s current expectations and assumptions, which are inherently subject to various risks and uncertainties that could cause actual results to differ from those anticipated, projected, or implied. Certain factors that could cause actual results to differ include adverse conditions in the capital markets, the failure of holders to participate in the tender offer, the Company’s inability to secure financing on suitable terms or at all, changes in federal or state securities laws and other factors described in the Company’s filings with the Securities and Exchange Commission. The Company assumes no obligation to update forward-looking information contained in this Current Report.

Item 9.01. Financial Statements and Exhibits

(a)

Financial Statements:

None

(b)

Pro forma financial information:

None

(c)

Shell company transactions:

None

(d)

Exhibits:

Exhibit 99.1 Excerpts from Preliminary Offering Circular

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: November 3, 2009
By:		/s/ Gerald G. Sax
Gerald G. Sax
Chief Financial Officer

	•	Automotive (37%);
	•	Industrial and instrumentation/energy/medical/consumer/other (27%);
	•	Telecommunications (27%); and
	•	Computer/data communications (9%).

	•	Automotive products, such as Autoliv, Bosch, Continental, Delphi and TRW;
	•	Telecommunications equipment, such as Alcatel-Lucent, Ericsson, Huawei and Tellabs;

	•	Computer and data communication equipment, such as Hewlett-Packard, EMC, Sun Microsystems and Xyratex; and
	•	Industrial, instrumentation, medical, energy and other products, such as General Electric, Hitachi, Rockwell and Siemens.

	•	The Merger will allow us to leverage capabilities of Merix to meet existing demands of our customers for North American quick-turn production as a means to expand revenue opportunities with our large and diversified customer base;
	•	The combination with Merix will add high-volume production capacity in China as well as substantial North American quick-turn and low-to-mid volume production capabilities to our high-technology, high-volume Chinese production capabilities, which will better enable complementary market penetration as well as expansion into the military and aerospace industries;
	•	Our E-M Solutions provide an additional platform for extending Merix’ service offerings to its customers;
	•	The merged company is expected to create a financially sound industry leader with a publicly-traded capital structure and substantial liquidity;
	•	We will have access to Merix’ deep global industry experience in its sales force, its operational management team and its global technology resources; and
	•	We have identified approximately $20 million of annual cost synergies in connection with the Merger, consisting of the elimination of redundant corporate costs of approximately $11 million, selling, general and administrative expense reductions, materials savings and other rationalizations, in addition to the potential for revenue synergies. To realize these synergies, we expect to incur costs of approximately $3.9 million in 2009, $12.3 million in 2010 and $0.2 million in 2011, as well as additional capital expenditures of approximately $4.0 million in 2010 and $3.6 million in 2011.

(1)		If the Merger is consummated, Merix will guarantee the notes.
(2)		Following consummation of the Merger and the exchange, approximately 2%, or $1.4 million, of the Merix Convertible Notes are expected to remain outstanding. The holders of these outstanding Merix Convertible Notes will have the right to require Merix to purchase all or a portion of their outstanding Merix Convertible Notes in cash at a price equal to 100% of the principal amount of Merix Convertible Notes to be repurchased, plus accrued and unpaid interest to, but not including, the applicable repurchase date. See “Description of Other Indebtedness — Merix Convertible Notes.”
(3)		Non-U.S. subsidiaries of Viasystems and Merix will not guarantee the notes.
(4)		In connection with the Merger and conditioned upon the consummation of the Merger, we expect to enter into a new $75.0 million asset-based senior secured revolving credit facility to be arranged by Wachovia Bank, National Association (the “Wachovia Credit Facility”). The Wachovia Credit Facility will be guaranteed by Viasystems, Inc. and Merix and will replace Merix’ existing $55.0 million revolving credit facility. See “Description of Other Indebtedness — Wachovia Credit Facility.”
(5)		The U.S. dollar equivalent of this facility is approximately $29.3 million (based on the exchange rate as of September 30, 2009). See “Description of Other Indebtedness — Guangzhou 2009 Credit Facility.”

																										Pro
																										Forma
																						Pro Forma				for the
																						for this				Merger and
																						Offering				this Offering (1)
														Nine Months Ended								Twelve Months Ended
		Year Ended December 31,												September 30,								September 30,
		2006				2007				2008				2008				2009				2009				2009
														(Unaudited)								(Unaudited)
		(Dollars in thousands, except ratios)
Statements of Operations Data:
Net sales		$	734,992			$	714,343			$	712,830			$	565,019			$	365,085			$	512,896			$	767,193
Operating expenses:
Cost of goods sold, exclusive of items shown separately			601,232				570,384				568,356				446,462				296,300				418,194				643,724
Selling, general and administrative			56,325				58,215				52,475				42,938				32,115				41,652				66,747
Depreciation			45,422				49,704				53,285				39,839				37,832				51,278				71,384
Amortization			1,325				1,269				1,243				936				900				1,207				1,707
Restructuring and impairment			(4,915	)			278				15,069				—				5,153				20,222				46,600
Operating income (loss)			35,603				34,493				22,402				34,844				(7,215	)			(19,657	)			(62,969	)
Other expense (income):
Interest expense, net			30,715				21,687				21,815				16,330				16,484				27,589				27,861
Amortization of deferred financing costs			1,678				2,065				2,063				1,547				1,547				2,232				2,732
Loss on early extinguishment of debt			1,498				—				—				—				729				729				729
Other, net			1,406				277				(711	)			(2,028	)			479				1,796				2,013
Income (loss) before income taxes			306				10,464				(765	)			18,995				(26,454	)			(52,003	)			(96,304	)
Income tax provision			18,514				(6,853	)			4,938				7,652				4,395				1,681				4,490
(Loss) income from continuing operations			(18,208	)			17,317				(5,703	)			11,343				(30,849	)			(53,684	)			(100,794	)
Income from discontinued operations, net			9,475				—				—				—				—				—				—
Gain on disposition of discontinued operations, net			211,170				—				—				—				—				—				—
Net income (loss)		$	202,437			$	17,317			$	(5,703	)		$	11,343			$	(30,849	)		$	(53,684	)		$	(100,794	)
Balance Sheet Data (at period end):
Cash and cash equivalents		$	37,954			$	64,002			$	83,053			$	61,818			$	110,725			$	111,050			$	80,933
Working capital			95,475				110,460				119,118				125,970				114,882				119,182				106,189
Total assets			625,890				629,233				586,042				642,801				544,467				550,151				705,086
Total debt, including current maturities			206,914				206,613				220,663				224,105				215,167				228,567				228,567
Stockholder’s equity(2)			197,868				207,254				199,294				215,443				172,556				169,215				271,452
Consolidated Statement of Cash Flows Data:
Net cash provided by (used in) operating activities		$	(1,838	)		$	63,794			$	53,738			$	22,798			$	44,333
Net cash provided by (used in) investing activities			273,818				(36,992	)			(48,262	)			(41,982	)			(10,714	)
Net cash provided by (used in) financing activities			(270,546	)			(754	)			13,575				17,000				(5,947	)
Selected Other Financial Data and Credit Statistics (unaudited):
EBITDA(3)		$	79,446			$	85,189			$	77,641			$	77,647			$	30,309			$	30,303			$	6,934
Adjusted EBITDA (excluding synergies)(3)			78,835				87,829				92,614				76,270				39,620				55,964				61,586	(1)
Capital expenditures			55,940				37,197				48,925				42,623				14,689				20,991				30,991
Ratio of earnings to fixed charges(4)			1.01	x			1.39	x			—				1.92	x			—				—				—
Ratio of Adjusted EBITDA to cash interest expense			2.47	x			3.85	x			3.98	x			4.36	x			2.35	x			1.98	x			2.19	x
Ratio of total debt to Adjusted EBITDA			2.62	x			2.35	x			2.38	x											4.08	x			3.71	x
Ratio of net debt to Adjusted EBITDA(5)			2.14	x			1.62	x			1.49	x											2.10	x			2.40	x

(1)		Does not include anticipated annual cost synergies of approximately $20 million related to the Merger. See “Risk Factors — Risks related to the Proposed Merger with Merix — We may be unable to realize anticipated cost synergies or may incur additional costs.”
(2)		On January 1, 2007, we adopted Financial Accounting Standard Board (“FASB”) Interpretation No. 48, Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement No. 109 (“FIN 48”). As a result of the adoption of FIN 48, we recorded a $10.2 million increase in the net liability for unrecognized tax positions, which was recorded as a cumulative effect adjustment to the opening balance of accumulated deficit on January 1, 2007. During the fourth quarter of 2006, we adopted Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (“SAB No. 108”). As a result of the adoption of SAB No. 108, we recorded an $8.6 million cumulative effect adjustment to accumulated deficit on January 1, 2006.
(3)		We measure our performance primarily through our (loss) income from continuing operations. In addition to our consolidated financial statements presented in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), management uses certain non-GAAP financial measures, including “EBITDA” and “Adjusted EBITDA,” to evaluate financial performance. EBITDA is defined as net (loss) income attributable to common stockholders plus depreciation, amortization, amortization of deferred financing costs, interest expense, net, and income tax provision. Adjusted EBITDA is defined as EBITDA plus restructuring and impairment charges, loss on early extinguishment of debt, other, net, non-cash stock compensation expense and costs related to the Merger. EBITDA and Adjusted EBITDA are not recognized financial measures under U.S. GAAP, and do not purport to be an alternative to (loss) income from continuing operations or an indicator of operating performance. EBITDA and Adjusted EBITDA are presented to enhance an understanding of our operating results and are not intended to represent cash flow or results of operations. Our owners and management use Adjusted EBITDA as an additional measure of operating performance for matters including executive compensation and competitor comparisons. The compensation committee of our board of directors uses Adjusted EBITDA as its primary measure of performance for awarding incentive compensation under our Annual Incentive Compensation Plan. The use of this non-GAAP measure provides an indication of our ability to service debt, and we consider it an appropriate measure to use because of our leveraged position.
		EBITDA and Adjusted EBITDA have certain material limitations, primarily due to the exclusion of certain amounts that are material to our consolidated results of operations, such as interest expense, income tax expense and depreciation and amortization. In addition, Adjusted EBITDA may differ from the Adjusted EBITDA calculations of other companies in our industry, limiting its usefulness as a comparative measure.
		We use Adjusted EBITDA to provide meaningful supplemental information regarding our operating performance and profitability by excluding from EBITDA certain items that we believe are not indicative of our ongoing operating results or will not impact our future operating cash flows as follows:
		•  Restructuring and Impairment Charges  — which consist primarily of expenses incurred in connection with facility closures and other headcount reductions. A portion of these restructuring and impairment charges are non-cash charges related to the write-down of impaired property, plant and equipment to fair value. We exclude restructuring and impairment charges to more clearly reflect our ongoing operating performance. For the twelve-months ended September 30, 2009 on a pro forma basis to give effect to the Merger and this offering, these also include $26.4 million of restructuring and impairment charges of Merix, consisting primarily of goodwill and asset impairments, severance and facility closures.
		•  Loss on Early Extinguishment of Debt  — charges and expenses incurred in connection with our repayment and/or refinancing of debt prior to its maturity. We exclude these fees and expenses because they are not representative of our customary operating expenses.

		•  Other, Net  — includes foreign currency remeasurement gains and losses and miscellaneous non-operating expenses. We exclude these items because they are not representative of our ongoing operating performance or, for the twelve-months ended September 30, 2009 on a pro forma basis to give effect to the Merger and this offering, Merix’ ongoing operating performance.
		•  Stock Compensation  — non-cash charges associated with recognizing the fair value of stock options granted to employees. We exclude these charges to more clearly reflect a comparable year-over-year cash operating performance.
		•  Costs Relating to the Merger  — professional fees and expenses incurred in connection with the Merger. We exclude these fees and expenses because they are not representative of our customary operating expenses or, for the twelve-months ended September 30, 2009 on a pro forma basis to give effect to the Merger and this offering, Merix’ customary operating expenses.
		The following table reconciles net (loss) income attributable to common stockholders to EBITDA and Adjusted EBITDA:

																										Pro
																										Forma
																										for the
																						Pro Forma				Merger and
																						for this Offering				this Offering(1)
														Nine Months Ended								Twelve Months Ended
		Year Ended December 31,												September 30,								September 30,
		2006				2007				2008				2008				2009				2009				2009
		(Dollars in thousands)
Net (loss) income attributable to common stockholders		$	(18,208	)		$	17,317			$	(5,703	)		$	11,343			$	(30,849	)		$	(53,684	)		$	(101,240	)
Depreciation and amortization			46,747				50,973				54,528				40,775				38,732				52,485				73,091
Amortization of deferred financing costs			1,678				2,065				2,063				1,547				1,547				2,232				2,732
Interest expense, net			30,715				21,687				21,815				16,330				16,484				27,589				27,861
Income tax provision			18,514				(6,853	)			4,938				7,652				4,395				1,681				4,490
EBITDA			79,446				85,189				77,641				77,647				30,309				30,303				6,934
Adjustments:
Restructuring and impairment charges(a)			(4,915	)			278				15,069				—				5,153				20,222				46,600
Loss on early extinguishment of debt			1,498				—				—				—				729				729				729
Other, net(b)			1,406				277				(711	)			(2,028	)			479				1,796				2,013
Non-cash stock compensation expense			1,400				2,085				615				651				704				668				2,144
Costs related to the Merger			—				—				—				—				2,246				2,246				3,166
Adjusted EBITDA		$	78,835			$	87,829			$	92,614			$	76,270			$	39,620			$	55,964			$	61,586	(1)

(a)		For the year ended December 31, 2006, and the nine months ended September 30, 2009, amount includes gain on the disposal of assets for which we had previously incurred non-cash impairment charges related to the write-down of impaired property, plant and equipment of $5.0 million and $0.7 million, respectively. For the year ended December 31, 2008 and the twelve months ended September 30, 2009 on a pro forma basis to give effect to this offering, amount includes non-cash impairment charges related to the write-down of impaired property, plant and equipment of $5.6 million and $4.9 million, respectively. For the twelve-months ended September 30, 2009 on a pro forma basis to give effect to the Merger and this offering, these also include $26.4 million of restructuring and impairment charges of Merix, consisting primarily of goodwill and asset impairments, severance and facility closures.
(b)		Consists of foreign currency remeasurement gains and losses and miscellaneous non-operating expenses.

(4)		For purposes of calculating the ratio of earnings to fixed charges, earnings represents the sum of income (loss) before income taxes, fixed charges and amortization of capitalized interest, less

		capitalized interest. Fixed charges consist of interest expense, capitalized interest, amortization of deferred financing costs, write-off of deferred financing costs and the portion of rental expense which management believes is representative of the interest component of rent expense. Earnings were insufficient to cover fixed charges for the twelve months ended December 31, 2008, the nine months ended September 30, 2009 and the twelve months ended September 30, 2009 on a pro forma basis to give effect to this offering and the twelve months ended September 30, 2009 on a pro forma basis to give effect to the Merger and this offering, by $0.8 million, $26.5 million, $52.0 million and $96.2 million, respectively.
(5)		Net debt is not a defined term under U.S. GAAP. Net debt is calculated as total debt less total cash and cash equivalents.

 

Risks Related to the Proposed Merger with Merix

 

This offering is not conditioned upon the closing of the proposed Merger with Merix, and there can be no assurance that the Merger will be consummated on the terms described herein, or at all.

 

On October 6, 2009, we announced the approval by our board of directors of a definitive Merger Agreement pursuant to which Merger Sub will merge with and into Merix, with Merix continuing as the surviving corporation and as a wholly owned subsidiary of Viasystems Group and, immediately following the Merger, Viasystems Group will contribute the shares of Merix to us. We currently expect the Merger to close before the end of the 2009 calendar year, subject to required approvals by the stockholders of Merix, regulatory approvals and customary closing conditions; however, the closing may occur as late as March 31, 2010 pursuant to the Merger Agreement. This offering is not conditioned on the closing of the Merger, and there can be no assurance that the proposed Merger will be consummated on the terms described herein, or at all. If we do not complete the Merger, during the timeframe anticipated, or at all, the notes offered hereby will remain outstanding, and we will not be obligated to redeem or repay the notes prior to their maturity.

 

We may not realize the expected benefits of the Merger because of integration difficulties and other challenges.

 

The success of the Merger will depend, in part, on our ability to realize the anticipated synergies and cost savings from integrating the Merix business with our existing businesses. The integration process may be complex, costly and time-consuming. The difficulties of integrating the operations of the Merix business include, among others:

 

 

We may not accomplish the integration of Merix’ business smoothly, successfully or within the anticipated cost range or timeframe. The diversion of our management’s attention from our current operations to the integration effort and any difficulties encountered in combining operations could prevent us from realizing the full benefits anticipated to result from the Merger and could adversely affect our business.

We will incur significant transaction costs in connection with the Merger.

 

We expect to incur significant transaction costs in connection with the Merger, which we currently estimate to be approximately $19.5 million, including Merix’ expenses, in addition to approximately $35.0 million owed by Merix to the holders of Merix Convertible Notes pursuant to the Exchange Agreement. The substantial majority of these costs will be non-recurring expenses related to the Merger, including professional fees and other non-recurring expenses. These costs and expenses are not reflected in the pro forma financial information included in this offering circular. We may incur additional costs to retain key employees. Additional costs may be incurred in the integration of the Merix business. Although we expect that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the business, should allow us to more than offset the incremental costs of the Merger over time, this net benefit may not be achieved in the near term, or at all.

 

We may be unable to realize anticipated cost synergies or may incur additional costs.

 

We have identified approximately $20 million of annual cost synergies in connection with the Merger, consisting of the elimination of redundant corporate costs, selling, general and administrative expense reductions, materials savings and other rationalizations, in addition to the potential for revenue synergies. To realize these synergies, we expect to incur costs of approximately $3.9 million in 2009, $12.3 million in 2010 and $0.2 million in 2011, as well as additional capital expenditures of approximately $4.0 million in 2010 and $3.6 million in 2011. While management believes that these cost synergies are achievable, we may be unable to realize all of these cost synergies within the timeframe expected or at all. In addition, we may incur additional and/or unexpected costs in order to realize these cost synergies.

 

The purchase price allocation for Merix reflected in the unaudited pro forma condensed combined financial data contained elsewhere in this offering circular is preliminary, and the adjustment upon the completion of the final valuation of Merix after the merger may be materially different than as reflected herein.

 

The purchase price allocation for Merix reflected in the unaudited pro forma condensed combined financial data contained elsewhere in this offering circular is preliminary. For the purposes of the unaudited pro forma condensed combined financial data, we have made a preliminary allocation of the estimated purchase price paid as compared to the net assets expected to be acquired in the Merger, as if the Merger had closed on September 30, 2009. When the actual calculation and allocation of the purchase price to net assets acquired is performed, it will be based on the net assets assumed at the effective date of the Merger and other information at that date to support the allocation of the fair values of Merix’ assets and liabilities. Accordingly, the actual amounts of net assets will vary from the pro forma amounts, and the final valuation of Merix may be materially different than as reflected in the selected unaudited pro forma condensed combined financial data contained in this offering circular. See “Unaudited Pro Forma Condensed Combined Financial Data” and the notes thereto.

 

The following unaudited pro forma condensed combined balance sheet as of September 30, 2009, and the unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2009, the twelve months ended December 31, 2008, and the twelve months ended September 30, 2009, are based upon the historical consolidated financial statements of Viasystems, Inc. (the “Company”) and Merix Corporation (“Merix”) after giving effect to the pending merger and related transactions between Viasystems Group, Inc. (“Viasystems Group”) and Merix Corporation as described under the heading “Pending Merger with Merix Corporation and Related Transactions” (collectively, the “Merger”), and after applying the assumptions, reclassifications and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial data. The Company is a wholly owned subsidiary of Viasystems Group.

 

The Company and Merix have different fiscal year ends. For ease of reference, all pro forma statements use the Company’s period end date and no adjustments were made to Merix’ reported information for its different period end dates. Accordingly, the unaudited pro forma condensed combined balance sheet as of September 30, 2009, combines the Company’s historical unaudited condensed consolidated balance sheet as of September 30, 2009, and Merix’ historical unaudited consolidated balance sheet as of August 29, 2009, and is presented as if this offering, the application of the net proceeds therefrom, and the Merger had occurred on September 30, 2009. The unaudited pro forma condensed combined statement of operations for the twelve months ended December 31, 2008, combines the historical audited results of the Company for the twelve months ended December 31, 2008, and the historical unaudited results of Merix for twelve months ended November 29, 2008, which have been derived from Merix’ historical audited consolidated statements of operations for the twelve months ended May 31, 2008, and Merix’ historical unaudited consolidated statements of operations for the six months ended November 29, 2008 and December 1, 2007. The unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2009, combines the historical unaudited results of the Company for the nine months ended September 30, 2009, and the historical unaudited results of Merix for nine months ended August 29, 2009, which have been derived from Merix’ historical audited consolidated statement of operations for the twelve months ended May 30, 2009, Merix’ historical unaudited consolidated statement of operations for the three months ended August 29, 2009, and Merix’ historical unaudited consolidated statement of operations for the six months ended November 29, 2008. The unaudited pro forma condensed combined statement of operations for the twelve months ended September 30, 2009, combines the historical unaudited results of the Company for the twelve months ended September 30, 2009, which have been derived from the Company’s historical audited consolidated statement of operations for the twelve months ended December 31, 2008, and the Company’s historical unaudited condensed consolidated statements of operations for nine months ended September 30, 2009 and 2008; and the historical unaudited results of Merix for the twelve months ended August 29, 2009, which have been derived from Merix’ historical audited consolidated statement of operations for the twelve months ended May 30, 2009, Merix’ historical unaudited consolidated statement of operations for the three months ended August 29, 2009, and Merix’ historical unaudited consolidated statement of operations for the three months ended August 30, 2008. The unaudited pro forma condensed combined statements of operations are presented as if this offering, the application of the net proceeds therefrom and the Merger occurred on January 1, 2008.

 

The unaudited pro forma condensed combined financial data is presented for informational purposes only. The unaudited pro forma condensed combined financial data does not purport to represent what our actual consolidated results of operations or consolidated financial condition would have been had this offering, the application of the net proceeds therefrom, and the Merger actually occurred on the dates indicated, nor are they necessarily indicative of future consolidated results of operations or consolidated financial condition.

 

The unaudited pro forma condensed combined financial statements should be read in conjunction with the information contained in “Selected Historical Consolidated Financial Data,”

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements of the Company and Merix and related notes thereto appearing elsewhere in this offering circular.

 

The historical consolidated financial information has been adjusted in the unaudited pro forma condensed combined financial data to give effect to pro forma events that are, based upon available information and certain assumptions, (1) directly attributable to this offering and the Merger, (2) factually supportable and reasonable under the circumstances, and (3) with respect to the statements of operations, expected to have a continuing impact on the combined results.

 

The Merger between Viasystems Group and Merix will be accounted for using the acquisition method of accounting. The pro forma data presented assumes that, as part of a number of Merger related transactions to occur simultaneously, Merix will become a wholly owned subsidiary of the Company; and thus the Company will acquire all of the assets and assume all of the liabilities (the “Net Assets”) of Merix. For purpose of the unaudited pro forma condensed combined financial data, the Net Assets have been valued based on preliminary estimates of their fair values, which will be revised as additional information becomes available. The actual adjustments to the Company’s consolidated financial statements upon the closing of the Merger will depend on a number of factors, including additional information available and the actual balance of Merix’ Net Assets on the closing date of the Merger. Therefore, the actual adjustments will differ from the pro forma adjustments, and the differences may be material.

 

The unaudited pro forma condensed combined financial data does not reflect any costs required to integrate the operations of the Company and Merix or any cost savings, operating synergies or revenue enhancements that the combined companies may achieve as a result of the Merger.

Viasystems, Inc.

Unaudited Pro Forma Condensed Combined Balance Sheet
as of September 30, 2009
(in thousands)

 

 

See accompanying notes to unaudited pro forma condensed combined financial data.

Viasystems, Inc.

Unaudited Pro Forma Condensed Combined Statement of Operations
for the Year Ended December 31, 2008
(in thousands)

 

 

See accompanying notes to unaudited pro forma condensed combined financial data.

Viasystems, Inc.

Unaudited Pro Forma Condensed Combined Statement of Operations
for the Nine Months Ended September 30, 2009
(in thousands)

 

 

See accompanying notes to unaudited pro forma condensed combined financial data.

Viasystems, Inc.

Unaudited Pro Forma Condensed Combined Statement of Operations
for the Twelve Months September 30, 2009
(in thousands)

 

 

See accompanying notes to unaudited pro forma condensed combined financial data.

Viasystems, Inc.

 

Notes to Unaudited Pro Forma Condensed Combined Financial Data

(dollars in thousands, except per share data)

 

 

General

 

The unaudited pro forma condensed combined financial data was prepared using the acquisition method of accounting and was based on the historical financial statements of Viasystems, Inc. (the “Company”) and Merix Corporation (“Merix”). The Company and Merix have different fiscal year ends. For ease of reference, all pro forma statements use the Company’s period-end date and no adjustments were made to Merix’ reported information for its different period end dates.

 

Acquisition Accounting

 

The Merger will be accounted for using the acquisition method of accounting. As the Company is a wholly owned subsidiary of Viasystems Group, Inc. (“Viasystems Group”), and as Merix will become a wholly owned subsidiary of the Company as a result of the Merger (see Note 2), for the purposes of the unaudited pro forma financial data, the Company has been treated as the acquirer in the merger and will account for the transaction by using its historical accounting information and accounting policies and adding the tangible and intangible assets and liabilities of Merix as of the effective date of the Merger at their respective fair values. The process for estimating the fair values of identifiable intangible assets and certain tangible assets require the use of significant estimates and assumptions. The excess of the purchase price (consideration transferred) in the Merger (see Note 3) over the estimated amounts of identifiable tangible assets and liabilities of Merix (see Note 4) will be allocated to goodwill. The purchase price allocation is subject to finalization of the Company’s analysis of the fair value of the Net Assets as of the effective date of the Merger. Accordingly, the purchase price allocation reflected in this unaudited pro forma condensed combined financial data is preliminary and will be adjusted upon the completion of the final valuation. Such adjustments could be material. The final valuation is expected to be completed as soon as practicable but no later than one year after the consummation of the Merger.

 

Accounting Policies

 

The unaudited pro forma condensed combined financial data does not assume any differences in accounting policies between the Company and Merix. Upon consummation of the Merger, the Company will review Merix’ accounting polices and, as a result of that review, the Company may identify differences between the accounting policies of the two companies that, when conformed, could have a material impact on the combined financial statements. At this time, the Company is not aware of any difference that would have a material impact on the combined financial statements.

 

Earnings Per Share

 

The Company is exempt from the computation, presentation and disclosure requirements under U.S. GAAP related to earnings per share, as the Company has no publicly held common stock or potential common stock. Accordingly, no earning per share amounts have been presented in the unaudited pro forma condensed combined statements of operations.

 

Reclassifications

 

Certain reclassifications have been made to the historical financial statements of Merix to conform with the Company’s presentation. These adjustments are further described in Note 6.

 

As more fully described under the heading “Pending Merger with Merix Corporation and Related Transactions,” on October 6, 2009, Viasystems Group and Merix entered into a merger agreement, pursuant to which, Merix will become a wholly-owned subsidiary of the Company. Merix is a leading manufacturer of technologically advanced, multi-layer PCBs with operations in the United States and China. Under the terms of the merger agreement, Viasystems Group will acquire all of the outstanding common stock of Merix in exchange for shares of Viasystems Group common stock representing approximately 12.5% of the combined companies; and retire $70,000 of Merix’ convertible debt securities in exchange for approximately $36,318 of cash and shares of Viasystems Group common stock representing approximately 7.0% of the combined companies. The Merger is subject to Merix’ shareholders approval, certain regulatory approvals, and certain terms and conditions contained in the merger agreement. The Merger is expected to be completed during the fourth quarter of 2009.

 

 

The acquisition method of accounting requires that the purchase price (consideration transferred) in a business combination be measured at fair value as of the acquisition closing date. In addition to cash, the consideration transferred in the Merger will include shares of Viasystems Group’s common stock. As of September 30, 2009, Viasystems Group’s common stock was not marketable, and so for the purposes of the unaudited pro forma condensed combined financial data, the fair value of Merix was used to estimate the consideration transferred, as it is likely this method would provide the most reliably determinable fair value.

 

The following is a preliminary estimate of consideration expected to be transferred to effect the acquisition of Merix:

 

 

 

 

 

 

For the purposes of this unaudited pro forma condensed combined financial data, the Company has made a preliminary allocation of the estimated consideration expected to be transferred (see Note 3) to the Net Assets acquired, as if the Merger had closed on September 30, 2009, as follows: