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to
Delaware | 3672 | 75-2668620 | ||
(State or other jurisdiction of | (Primary Standard Industrial | (IRS Employer | ||
incorporation or organization) | Classification Code Number) | Identification Number) |
St. Louis, Missouri 63105
(314) 727-2087
Vice President and General Counsel
101 South Hanley Road, Suite 400
St. Louis, Missouri 63105
(314) 746-2205
R. Scott Cohen | Todd R. Chandler | |
Weil, Gotshal & Manges LLP | Weil, Gotshal & Manges LLP | |
200 Crescent Court, Suite 300 | 767 Fifth Avenue | |
Dallas, Texas 75201 | New York, New York 10153 | |
(214) 746-7700 | (212) 310-8000 |
Large accelerated filero | Accelerated filero | Non-accelerated filerþ | Smaller reporting companyo | |||
(Do not check if a smaller reporting company) |
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The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state or other jurisdiction where such offer or sale is not permitted.
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• | declines in gross margin as a result of excess capacity; | ||
• | our significant reliance on net sales to our largest customers; | ||
• | fluctuations in our operating results; | ||
• | our history of losses and inability to become profitable in the future; | ||
• | our reliance on the automotive industry and the telecommunications and networking industries; | ||
• | risks associated with the credit risk of our customers and suppliers; | ||
• | influence of significant stockholders; | ||
• | our qualification as a “controlled company” within the meaning of the rules of NASDAQ; | ||
• | our significant foreign operations and risks relating to currency fluctuations; | ||
• | relations with and regulations imposed by the Chinese government, including power rationing; | ||
• | our dependence on the electronics industry, which is highly cyclical and subject to significant downturns in demand; | ||
• | shortages of, or price fluctuations with respect to, raw materials and increases in oil prices; | ||
• | our ability to compete in a highly competitive industry or our inability to respond to rapid technological changes; | ||
• | reduction in, or cancellation of, customer orders; | ||
• | risks associated with manufacturing defective products and failure to meet quality control standards; | ||
• | uncertainty and adverse changes in the economy and financial markets; | ||
• | failure to realize the expected benefits of the Merix Acquisition (as defined below) and the incurrence of significant costs in connection with the Merix Acquisition; | ||
• | failure to realize anticipated cost synergies or the incurrence of additional costs in connection with the Merix Acquisition; |
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• | compliance with the requirements of NASDAQ and the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”); | ||
• | risks relating to success of PCB manufacturers in Asia; | ||
• | failure to maintain good relations with minority investors in China; | ||
• | any material weaknesses in Merix’ internal control over financial reporting; | ||
• | failure to align manufacturing capacity with customer demand; | ||
• | risks relating to our common stock; | ||
• | damage to our manufacturing facilities or information systems; | ||
• | loss of key personnel and high employee turnover; | ||
• | risks associated with governmental and environmental regulation; | ||
• | our exposure to income tax fluctuations; | ||
• | failure to comply with, or expenses related to compliance with, export laws or other laws applicable to our foreign operations, including the Foreign Corrupt Practices Act (“FCPA”); | ||
• | risks relating to our substantial indebtedness; and | ||
• | other risks described under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” |
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• | Automotive (38.4%); | ||
• | Industrial and instrumentation, medical, consumer and other (26.1%); | ||
• | Telecommunications (26.0%); and | ||
• | Computer and data communications (9.5%). | ||
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• | 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. |
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Common stock being offered for resale to the public by the selling stockholders | 1,390,087 shares | |
Common stock to be outstanding after this offering, the Merix Acquisition and the Recapitalization | 20,000,000 shares | |
Use of proceeds | We will not receive any proceeds from the resale of our common stock under this offering. | |
Listing | Our common stock is listed on NASDAQ under the symbol “VIAS.” | |
Risk factors | See “Risk Factors” and the other information included in this prospectus for a discussion of risk factors you should carefully consider before deciding to invest in our common stock. |
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• | overall economic conditions in the electronics industry and global economy; | ||
• | pricing pressures; | ||
• | timing of orders from and shipments to major customers; | ||
• | our capacity relative to the volume of orders; | ||
• | expenditures in anticipation of future sales; | ||
• | expenditures or write-offs related to acquisitions; | ||
• | expenditures or write-offs related to restructuring activities; | ||
• | start-up expenses relating to new manufacturing facilities; and | ||
• | variations in product mix. | ||
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• | inflation or changes in political and economic conditions; | ||
• | unstable regulatory environments; | ||
• | changes in import and export duties; | ||
• | domestic and foreign customs and tariffs; | ||
• | potentially adverse tax consequences; | ||
• | trade restrictions; | ||
• | restrictions on the transfer of funds into or out of a country; | ||
• | labor unrest; | ||
• | logistical and communications challenges; | ||
• | difficulties associated with managing a large organization spread throughout various countries; | ||
• | differing protection of intellectual property and trade secrets; and | ||
• | other restraints and burdensome taxes. |
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• | adversely affect our operating results by reducing the volume of products that we manufacture for our customers; | ||
• | delay or eliminate recoupment of our expenditures for inventory purchased in preparation for customer orders; and | ||
• | lower our asset utilization, which would result in lower gross margins. |
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• | failure to implement our business plan for the combined business; | ||
• | unanticipated issues in integrating manufacturing, logistics, information, communications and other systems; | ||
• | unanticipated changes in applicable laws and regulations; | ||
• | failure to retain key employees; | ||
• | failure to retain customers; | ||
• | the impact of the Merix Acquisition on our internal controls and compliance with the regulatory requirements under the Sarbanes-Oxley Act; | ||
• | unanticipated issues, expenses and liabilities; and | ||
• | operating, competitive and market risks inherent in Merix’ business and our business. |
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• | market conditions in the broader stock market; | ||
• | actual or anticipated fluctuations in our quarterly financial and operating results; | ||
• | introduction of new products or services by us or our competitors; | ||
• | issuance of new or changed securities analysts’ reports or recommendations; | ||
• | investor perceptions of us and the electronics industry or telecommunications industry; | ||
• | sales, or anticipated sales, of large blocks of our stock; | ||
• | additions or departures of key personnel; | ||
• | regulatory or political developments; | ||
• | litigation and governmental investigations; and | ||
• | changing economic conditions. |
• | restrictions on the ability of our stockholders to call a special meeting and the business that can be conducted at such meeting; | ||
• | restrictions on the ability of our stockholders to remove a director or fill a vacancy on the board of directors; | ||
• | our ability to issue preferred stock with terms that the board of directors may determine, without stockholder approval; | ||
• | the absence of cumulative voting in the election of directors; | ||
• | a prohibition of action by written consent of stockholders unless such action is approved by all stockholders; providing, however, that if VG Holdings owns 50% or more of our outstanding capital stock, then action may be taken by the stockholders by written consent if signed by stockholders having not less than the minimum of votes necessary to take such action; and | ||
• | advance notice requirements for stockholder proposals and nominations. |
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• | the effects of a mix of profits or losses earned in numerous tax jurisdictions with a broad range of income tax rates; | ||
• | our ability to utilize net operating losses; | ||
• | changes in contingencies related to taxes, interest or penalties resulting from tax audits; and | ||
• | changes in tax laws or the interpretation of such laws. |
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• | result in our inability to comply with the financial and other restrictive covenants in our credit facilities; | ||
• | increase our vulnerability to adverse industry and general economic conditions; | ||
• | require us to dedicate a substantial portion of our cash flow from operations to make scheduled principal payments on our debt, thereby reducing the availability of our cash flow for working capital, capital investments and other business activities; | ||
• | limit our ability to obtain additional financing to fund future working capital, capital investments and other business activities; | ||
• | limit our ability to refinance our indebtedness on terms that are commercially reasonable, or at all; | ||
• | expose us to the risk of interest rate fluctuations to the extent we pay interest at variable rates on the debt; | ||
• | limit our flexibility to plan for, and react to, changes in our business and industry; and | ||
• | place us at a competitive disadvantage relative to our less leveraged competitors. |
• | our business will generate sufficient cash flow from operations; | ||
• | we will realize the cost savings, revenue growth and operating improvements related to the execution of our long-term strategic plan; or | ||
• | future sources of funding will be available to us in amounts sufficient to enable us to fund our liquidity needs. |
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High | Low | |||||||
Fiscal 2010 | ||||||||
First Quarter (through March 11, 2010) | $ | 22.50 | $ | 19.00 |
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• | on an actual basis; and | ||
• | on a pro forma basis giving effect to the Merix Acquisition and related transactions. |
As of December 31, 2009 | ||||||||
Actual | Pro Forma | |||||||
(Unaudited) | ||||||||
(dollars in thousands) | ||||||||
Cash and cash equivalents | $ | 108,993 | $ | 75,185 | ||||
Long-term debt (including current portion): | ||||||||
2010 Credit Agreement(1) | — | — | ||||||
12.00% Senior Secured Notes due 2015 | 211,956 | 211,956 | ||||||
10.50% Senior Subordinated Notes due 2011(2) | 105,876 | 105,876 | ||||||
4.0% Convertible Senior Subordinated Notes due 2013(3) | — | 1,410 | ||||||
2009 Guangzhou Credit Facility | 10,000 | 10,000 | ||||||
2009 Huiyang Credit Facility(3) | — | 5,200 | ||||||
Capital leases | 3,048 | 3,048 | ||||||
Total long-term debt | 330,880 | 337,490 | ||||||
Mandatory Convertible Class A Junior preferred stock | 118,836 | — | ||||||
Redeemable Class B Senior preferred stock | 98,327 | — | ||||||
Stockholder’s (deficit) equity: | ||||||||
Common shares, $0.01 par value; 110,000,000 shares authorized and 2,415,266 shares issued and outstanding (actual); 100,000,000 shares authorized and approximately 20,000,000 shares issued and outstanding (pro forma to give effect to the Merix Acquisition and the Recapitalization) | 24 | 200 | ||||||
Paid-in capital | 1,944,413 | 2,288,362 | ||||||
Accumulated deficit | (2,010,069 | ) | (2,065,185 | ) | ||||
Accumulated other comprehensive income | 7,592 | 7,592 | ||||||
Noncontrolling interests | — | 4,889 | ||||||
Total stockholder’s (deficit) equity | (58,040 | ) | 235,858 | |||||
Total capitalization | $ | 598,996 | $ | 648,533 | ||||
(1) | In connection with the Merix Acquisition, we entered into the 2010 Credit Agreement which provides a secured revolving credit facility in an aggregate principal amount of up to $75 million. As of the date of this prospectus, we have not yet borrowed any amounts under the 2010 Credit Agreement. | |
(2) | On November 25, 2009, Viasystems, Inc. purchased $94,124,000 of the $200.0 million original principal amount of 10.50% Senior Subordinated Notes due 2011 pursuant to a tender offer. Viasystems, Inc. redeemed the remaining amount of such notes on January 15, 2010. | |
(3) | In connection with the Merix Acquistion, on a pro forma basis as of December 31, 2009, we assumed $6,610,000 of Merix’ indebtedness. |
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Year Ended December 31, | ||||||||||||||||||||
2005 | 2006 | 2007 | 2008 | 2009 | ||||||||||||||||
(dollars in thousands, except per share data) | ||||||||||||||||||||
Statements of Operations Data: | ||||||||||||||||||||
Net sales | $ | 652,821 | $ | 734,992 | $ | 714,343 | $ | 712,830 | $ | 496,447 | ||||||||||
Operating expenses: | ||||||||||||||||||||
Cost of goods sold(1) | 560,974 | 601,232 | 570,384 | 568,356 | 398,144 | |||||||||||||||
Selling, general and administrative(1) | 66,190 | 56,339 | 58,215 | 52,475 | 45,073 | |||||||||||||||
Depreciation | 44,234 | 45,422 | 49,704 | 53,285 | 50,161 | |||||||||||||||
Amortization | 1,436 | 1,325 | 1,269 | 1,243 | 1,191 | |||||||||||||||
Restructuring and impairment(2) | 27,662 | (4,915 | ) | 278 | 15,069 | 6,626 | ||||||||||||||
Operating (loss) income | (47,675 | ) | 35,589 | 34,493 | 22,402 | (4,748 | ) | |||||||||||||
Other expense (income): | ||||||||||||||||||||
Interest expense, net | 48,137 | 38,768 | 30,573 | 31,585 | 34,399 | |||||||||||||||
Amortization of deferred financing costs | 1,613 | 1,678 | 2,065 | 2,063 | 1,954 | |||||||||||||||
Loss on early extinguishment of debt(3) | — | 1,498 | — | — | 2,357 | |||||||||||||||
Other, net | 13,110 | 742 | 277 | (711 | ) | 3,502 | ||||||||||||||
(Loss) income before income taxes | (110,535 | ) | (7,097 | ) | 1,578 | (10,535 | ) | (46,960 | ) | |||||||||||
Income taxes | 3,953 | 18,514 | (6,853 | ) | 4,938 | 7,757 | ||||||||||||||
(Loss) income from continuing operations(4) | (114,488 | ) | (25,611 | ) | 8,431 | (15,473 | ) | (54,717 | ) | |||||||||||
Income from discontinued operations, net of tax(1)(4) | 25,739 | 9,475 | — | — | — | |||||||||||||||
Gain on disposition of discontinued operations, net of tax(4) | — | 214,085 | — | — | — | |||||||||||||||
Net income (loss) | $ | (88,749 | ) | $ | 197,949 | $ | 8,431 | $ | (15,473 | ) | $ | (54,717 | ) | |||||||
Accretion of Class B Senior Convertible preferred stock | 6,114 | 6,633 | 7,203 | 7,829 | 8,515 | |||||||||||||||
Net (loss) income available to common stockholders | $ | (94,863 | ) | $ | 191,316 | $ | 1,228 | $ | (23,302 | ) | $ | (63,232 | ) | |||||||
Basic and diluted (loss) income per share from continuing operations (unaudited) | $ | (49.93 | ) | $ | (13.35 | ) | $ | 0.51 | $ | (9.65 | ) | $ | (26.18 | ) | ||||||
Shares used in basic and diluted share calculations | 2,415,266 | 2,415,266 | 2,415,266 | 2,415,266 | 2,415,266 | |||||||||||||||
Balance Sheet Data (at period end): | ||||||||||||||||||||
Cash and cash equivalents | $ | 35,923 | $ | 37,954 | $ | 64,002 | $ | 83,053 | $ | 108,933 | ||||||||||
Restricted cash(5) | — | 1,000 | 303 | 303 | 105,734 | |||||||||||||||
Working capital | 91,071 | 95,475 | 110,460 | 119,118 | 113,608 | |||||||||||||||
Total assets | 710,237 | 625,085 | 628,429 | 585,238 | 657,238 | |||||||||||||||
Mandatory Redeemable Class A Junior Preferred stock(6) | 81,385 | 89,439 | 98,326 | 108,096 | 118,836 | |||||||||||||||
Total debt, including current maturities | 462,535 | 206,914 | 206,613 | 220,663 | 330,880 | |||||||||||||||
Redeemable Class B Senior Convertible Preferred stock(6) | 68,147 | 74,780 | 81,983 | 89,812 | 98,327 | |||||||||||||||
Stockholders’ equity (deficit)(7) | (155,631 | ) | 32,844 | 26,141 | 582 | (58,040 | ) | |||||||||||||
Consolidated Statement of Cash Flows Data: | ||||||||||||||||||||
Net cash provided by (used in) operating activities | 11,646 | (1,838 | ) | 63,794 | 53,738 | 47,578 | ||||||||||||||
Net cash provided by (used in) investing activities | (85,022 | ) | 273,818 | (36,992 | ) | (48,262 | ) | (17,573 | ) | |||||||||||
Net cash provided by (used in) financing activities | (3,245 | ) | (270,546 | ) | (754 | ) | 13,575 | (4,065 | ) |
(1) | Stock compensation expense included in cost of goods sold and selling, general and administrative expenses for the years ended December 31, 2009, 2008, 2007, 2006, and 2005 was $948, $615, $2,085, $1,400 and $6,152, respectively. Stock compensation expense included in income from discontinued operations, net for the years ended December 31, 2009, 2008, 2007, 2006, and 2005 was $0, $0, $0, $105 and $641, respectively. | |
(2) | Represents restructuring charges taken to downsize and close facilities, and impairment losses related to the write-off of long-lived assets. In 2006, restructuring and impairment includes realized gains of $5,463 related to property held for sale that was disposed of in 2006. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the accompanying notes to consolidated financial statements contained elsewhere in this prospectus. | |
(3) | In 2009, in connection with the repurchase of $94,124 par value of the 2011 Notes and the termination of our credit agreement, dated as of August 17, 2006 with UBS AG Hong Kong Branch and UBS AG, Singapore Branch (the “2006 Credit Agreement”), and in 2006, in connection with the termination of our 2003 credit facility, we recorded losses on early extinguishment of debt of $2,357 and $1,498, respectively. | |
(4) | On May 1, 2006, we sold our wire harness business. All periods have been restated to reflect the wire harness business as a discontinued operation. | |
(5) | Restricted cash of $105,734 as of December 31, 2009, was held in escrow for the redemption of the 2011 Notes, which occurred in January 2010. | |
(6) | The Mandatory Redeemable Class A Junior preferred stock and the Redeemable Class B Senior Convertible preferred stock were reclassified as, and converted into, common stock in February 2010, in accordance with the Recapitalization Agreement. | |
(7) | On January 1, 2007, we recorded a $10,213 increase in the net liability for unrecognized tax positions, which was recorded as a cumulative effect adjustment to the opening balance of accumulated deficit. During the fourth quarter of 2006, we adopted the SEC’s 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 $8,628 cumulative effect adjustment to accumulated deficit on January 1, 2006. | |
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as of December 31, 2009
Pro Forma | ||||||||||||||||||||||||||||
for the | ||||||||||||||||||||||||||||
Historical | Historical | Merix Acquisition | ||||||||||||||||||||||||||
December 31, | November 28, | December 31, | ||||||||||||||||||||||||||
2009 | 2009 | (See Note 6) | (See Note 6) | 2009 | ||||||||||||||||||||||||
Reclassifications | Adjustments | |||||||||||||||||||||||||||
Viasystems, | Merix | for the Merix | for the Merix | |||||||||||||||||||||||||
Group, Inc. | Corporation | Acquisition | Acquisition | Combined | ||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 108,993 | $ | 10,472 | $ | — | $ | (44,280 | ) | E,F,O,R | $ | 75,185 | ||||||||||||||||
Restricted cash | 105,734 | — | — | — | 105,734 | |||||||||||||||||||||||
Accounts receivable, net | 89,512 | 53,523 | — | — | 143,035 | |||||||||||||||||||||||
Inventories | 49,197 | 17,203 | — | 1,153 | G | 67,553 | ||||||||||||||||||||||
Deferred taxes | 3,115 | 265 | — | — | 3,380 | |||||||||||||||||||||||
Prepaid expenses and other | 8,273 | 9,815 | — | — | 18,088 | |||||||||||||||||||||||
Total current assets | 364,824 | 91,278 | — | (43,127 | ) | 412,975 | ||||||||||||||||||||||
Property, plant and equipment, net | 199,044 | 85,283 | 1,183 | A | (8,000 | ) | G | 277,510 | ||||||||||||||||||||
Goodwill | 79,485 | 11,392 | — | (7,581 | ) | H | 83,296 | |||||||||||||||||||||
Intangible assets, net | 4,676 | 5,890 | — | (890 | ) | H | 9,676 | |||||||||||||||||||||
Deferred financing costs, net | 7,986 | — | 2,629 | B | (629 | ) | E, F,O | 9,986 | ||||||||||||||||||||
Assets held for sale | — | 1,146 | — | 9,000 | G | 10,146 | ||||||||||||||||||||||
Other assets | 1,223 | 5,718 | (3,812 | ) | A,B | — | 3,129 | |||||||||||||||||||||
Total assets | $ | 657,238 | $ | 200,707 | $ | — | (51,227 | ) | $ | 806,718 | ||||||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||||||||
Current maturities of long-term debt | $ | 118,207 | $ | — | $ | — | $ | — | $ | 118,207 | ||||||||||||||||||
Accounts payable | 90,661 | 41,866 | — | — | 132,527 | |||||||||||||||||||||||
Income taxes payable | 3,597 | — | — | — | 3,597 | |||||||||||||||||||||||
Accrued and other liabilities | 38,751 | 12,521 | — | 6,977 | E,F,S,T | 58,249 | ||||||||||||||||||||||
Total current liabilities | 251,216 | 54,387 | — | 6,977 | 312,580 | |||||||||||||||||||||||
Long-term debt, less current maturities | 212,673 | 78,000 | — | (71,390 | ) | E,F | 219,283 | |||||||||||||||||||||
Mandatory redeemable Class A Junior preferred stock | 118,836 | — | — | (118,836 | ) | J | — | |||||||||||||||||||||
Other non-current liabilities | 34,226 | 4,771 | — | — | 38,997 | |||||||||||||||||||||||
Total liabilities | 616,951 | 137,158 | — | (183,249 | ) | 570,860 | ||||||||||||||||||||||
Redeemable Class B Senior Convertible preferred stock | 98,327 | — | — | (98,327 | ) | J | — | |||||||||||||||||||||
Stockholders’ equity: | ||||||||||||||||||||||||||||
Total stockholders’ controlling interest | (58,040 | ) | 59,409 | — | 229,600 | * | 230,969 | |||||||||||||||||||||
Noncontrolling interests | — | 4,140 | — | 749 | G | 4,889 | ||||||||||||||||||||||
Total stockholders’ (deficit) equity | (58,040 | ) | 63,549 | — | 230,349 | 235,858 | ||||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 657,238 | $ | 200,707 | $ | — | $ | (51,227 | ) | $ | 806,718 | |||||||||||||||||
(*) | Includes adjustments described in Note 6, items E, F, G, H, I, J, K, P, S and T. | |
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for the Year Ended December 31, 2008
Pro Forma | ||||||||||||||||||||||||||||
for the | ||||||||||||||||||||||||||||
Historical | Historical | Merix Acquisition | ||||||||||||||||||||||||||
Year Ended | Year Ended | Year Ended | ||||||||||||||||||||||||||
December 31, | November 29, | December 31, | ||||||||||||||||||||||||||
2008 | 2008 | (See Note 6) | (See Note 6) | 2008 | ||||||||||||||||||||||||
Reclassifications | Adjustments | |||||||||||||||||||||||||||
Viasystems, | Merix | for the Merix | for the Merix | |||||||||||||||||||||||||
Group, Inc. | Corporation | Acquisition | Acquisition | Combined | ||||||||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||||||||||
Net sales | $ | 712,830 | $ | 349,356 | $ | — | $ | — | $ | 1,062,186 | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||
Cost of goods sold, exclusive of items shown separately below | 568,356 | 315,754 | (12,331 | ) | C,D | — | 871,779 | |||||||||||||||||||||
Engineering | — | 2,120 | (2,120 | ) | C,D | — | — | |||||||||||||||||||||
Selling, general and administrative | 52,475 | 36,423 | (3,546 | ) | C | (200 | ) | L | 85,152 | |||||||||||||||||||
Depreciation | 53,285 | — | 18,025 | C | (800 | ) | P | 70,510 | ||||||||||||||||||||
Amortization | 1,243 | 2,087 | (28 | ) | C | (1,559 | ) | M | 1,743 | |||||||||||||||||||
Restructuring and impairment | 15,069 | 15,027 | — | — | 30,096 | |||||||||||||||||||||||
Operating income (loss) | 22,402 | (22,055 | ) | — | 2,559 | 2,906 | ||||||||||||||||||||||
Other expense (income): | ||||||||||||||||||||||||||||
Interest expense, net | 31,585 | 3,487 | (844 | ) | B | (11,966 | ) | E,F,J,N | 22,262 | |||||||||||||||||||
Amortization of deferred financing costs | 2,063 | — | 844 | B | (344 | ) | E,F,O | 2,563 | ||||||||||||||||||||
Gain on extinguishment of debt | — | (4,618 | ) | — | — | (4,618 | ) | |||||||||||||||||||||
Other, net | (711 | ) | 1,158 | — | (1,500 | ) | R | (1,053 | ) | |||||||||||||||||||
Loss before taxes | (10,535 | ) | (22,082 | ) | — | 16,369 | (16,248 | ) | ||||||||||||||||||||
Income tax provision | 4,938 | 1,967 | — | — | Q | 6,905 | ||||||||||||||||||||||
Net loss | (15,473 | ) | (24,049 | ) | — | 16,369 | (23,153 | ) | ||||||||||||||||||||
Less: Net income attributable to noncontrolling interests | — | 1,079 | — | — | 1,079 | |||||||||||||||||||||||
Net loss attributable to controlling interest | (15,473 | ) | (25,128 | ) | — | 16,369 | (24,232 | ) | ||||||||||||||||||||
Less: Accretion of Class B Senior Convertible preferred stock | 7,829 | — | — | (7,829 | ) | J | — | |||||||||||||||||||||
Net loss attributable to common stockholders | $ | (23,302 | ) | $ | (25,128 | ) | $ | — | $ | 24,198 | $ | (24,232 | ) | |||||||||||||||
Basic and diluted loss per share attributable to common stockholders | $ | (9.65 | ) | $ | (1.21 | ) | $ | (1.21 | ) | |||||||||||||||||||
Weighted average number of shares — basic and diluted | 2,415 | 20,812 | (3,227 | ) | E,I,J,K | 20,000 | ||||||||||||||||||||||
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for the Year Ended December 31, 2009
Pro Forma | ||||||||||||||||||||||||||||
for the | ||||||||||||||||||||||||||||
Historical | Historical | Merix Acquisition | ||||||||||||||||||||||||||
Year Ended | Year Ended | Year Ended | ||||||||||||||||||||||||||
December 31, | November 28, | December 31, | ||||||||||||||||||||||||||
2009 | 2009 | (See Note 6) | (See Note 6) | 2009 | ||||||||||||||||||||||||
Reclassifications | Adjustments | |||||||||||||||||||||||||||
Viasystems, | Merix | for the Merix | for the Merix | |||||||||||||||||||||||||
Group, Inc. | Corporation | Acquisition | Acquisition | Combined | ||||||||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||||||||||
Net sales | $ | 496,447 | $ | 248,695 | $ | — | $ | — | $ | 745,142 | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||
Cost of goods sold, exclusive of items shown separately below | 398,144 | 230,222 | (13,774 | ) | C,D | — | 614,592 | |||||||||||||||||||||
Engineering | — | 1,465 | (1,465 | ) | C,D | — | — | |||||||||||||||||||||
Selling, general and administrative | 45,073 | 34,055 | (4,739 | ) | C | (6,190 | ) | L | 68,199 | |||||||||||||||||||
Depreciation | 50,161 | — | 20,006 | C | (800 | ) | P | 69,367 | ||||||||||||||||||||
Amortization | 1,191 | 1,879 | (28 | ) | C | (1,351 | ) | M | 1,691 | |||||||||||||||||||
Restructuring and impairment | 6,626 | 25,289 | — | — | 31,915 | |||||||||||||||||||||||
Operating (loss) income | (4,748 | ) | (44,215 | ) | — | 8,341 | (40,622 | ) | ||||||||||||||||||||
Other expense (income): | ||||||||||||||||||||||||||||
Interest expense, net | 34,399 | 4,075 | (789 | ) | B | (13,747 | ) | E,F,J,N | 23,938 | |||||||||||||||||||
Amortization of deferred financing costs | 1,954 | — | 789 | B | (289 | ) | E,F,O | 2,454 | ||||||||||||||||||||
Loss on extinguishment of debt | 2,357 | — | — | — | 2,357 | |||||||||||||||||||||||
Other, net | 3,502 | (1,364 | ) | — | (1,159 | ) | R | 979 | ||||||||||||||||||||
Loss before income taxes | (46,960 | ) | (46,926 | ) | — | 23,536 | (70,350 | ) | ||||||||||||||||||||
Income taxes | 7,757 | 1,102 | — | — | 8,859 | |||||||||||||||||||||||
Net loss | (54,717 | ) | (48,028 | ) | — | 23,536 | (79,209 | ) | ||||||||||||||||||||
Less: Net income attributable to noncontrolling interests | — | 771 | — | — | 771 | |||||||||||||||||||||||
Net loss attributable to controlling interest | (54,717 | ) | (48,799 | ) | — | 23,536 | (79,980 | ) | ||||||||||||||||||||
Less: Accretion of Class B Senior Convertible preferred stock | 8,515 | — | — | (8,515 | ) | J | — | |||||||||||||||||||||
Net loss attributable to common stockholders | $ | (63,232 | ) | $ | (48,799 | ) | $ | — | $ | 32,051 | $ | (79,980 | ) | |||||||||||||||
Basic and diluted loss per share attributable to common stockholders | $ | (26.18 | ) | $ | (2.27 | ) | $ | (4.00 | ) | |||||||||||||||||||
Weighted average number of shares — basic and diluted | 2,415 | 21,496 | (3,911 | ) | E,I,J,K | 20,000 | ||||||||||||||||||||||
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(in thousands, except per share data)
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Viasystems common shares issued as consideration paid in the Merix Acquisition | 3,898,251 | |||
Multiplied by the implied Viasystems per share stock price (a) | $ | 19.57 | ||
$ | 76,287 | |||
Cash consideration paid | $ | 34,908 | ||
Preliminary purchase price | $ | 111,195 | ||
(a) | Represents the closing price of a share of Merix common stock on February 16, 2010 ($2.19) divided by the Exchange Ratio (0.1119086) as defined in the Merger Agreement. |
Tangible assets and liabilities: | ||||
Cash and cash equivalents | $ | 7,541 | ||
Accounts receivable, net | 53,523 | |||
Inventories | 18,356 | |||
Property, plant and equipment | 78,466 | |||
Assets held for sale | 10,146 | |||
Other assets | 11,986 | |||
Accounts payable | (41,866 | ) | ||
Debt assumed | (6,610 | ) | ||
Accrued and other liabilities assumed | (24,269 | ) | ||
Intangible assets: | ||||
Customer contracts and related relationships | 5,000 | |||
Goodwill | 3,811 | |||
116,084 | ||||
Less: Fair value of noncontrolling interests | (4,889 | ) | ||
Total preliminary purchase price allocation | $ | 111,195 | ||
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Historical value of Net Assets, net of noncontrolling interests, as of December 31, 2009 | $ | 59,409 | ||
Elimination of the Merix Notes and related accrued interest pursuant to the the Merix Acquisition | 68,682 | |||
Elimination of deferred financing costs | (2,629 | ) | ||
Elimination of the historical value of goodwill and intangible assets | (17,282 | ) | ||
Recognition of intangible assets acquired: | ||||
Amortizable intangible assets | 5,000 | |||
Goodwill | 3,811 | |||
Adjustments to the historical carrying value of the Net Assets acquired and historical value of noncontrolling interests based on the preliminary estimates of fair value: | ||||
Inventories | 1,153 | |||
Property, plant and equipment | (8,000 | ) | ||
Assets held for sale | 9,000 | |||
Accrued liabilities | (7,200 | ) | ||
Noncontrolling interests | (749 | ) | ||
Preliminary purchase price | $ | 111,195 | ||
A. | Reflects the reclassification of Merix’ $1,183 of capitalized long-term land use rights agreements from other assets to property, plant and equipment, net. | |
B. | Reflects the reclassification of Merix’ $2,629 of capitalized deferred financing costs from other assets to deferred financing costs, net; and the reclassification of the related amortization of $844 and $789 for the years ended |
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December 31, 2008, and 2009, respectively, from interest expense, net to the amortization of deferred financing costs caption (see item F below). | ||
C. | Reflects the the reclassification of Merix’ depreciation expense to the depreciation caption from other captions as follows: |
Year Ended | Year Ended | |||||||
December 31, 2008 | December 31, 2009 | |||||||
Depreciation reclassified from: | ||||||||
Cost of goods sold | $ | 14,445 | $ | 15,234 | ||||
Engineering | 6 | 5 | ||||||
Selling, general and administration | 3,546 | 4,739 | ||||||
Amortization | 28 | 28 | ||||||
Total Depreciation | $ | 18,025 | $ | 20,006 | ||||
D. | Reflects the reclassification of Merix’ engineering expenses other than depreciation to cost of goods sold of $2,114 and $1,460 for the years and December 31, 2008 and 2009, respectively. |
E. | Reflects the elimination of $68,590 of Merix Notes (see Note 3), for $34,908 of cash consideration and the issuance of approximately 1.4 million shares of newly issued $0.01 par value Viasystems’ common stock (see Note 5); the write-off of $2,111 of unamortized deferred financing costs associated with the Merix Notes, the elimination of related amortization of deferred financing costs of $624 for each of the years ended December 31, 2008 and 2009, and the elimination of accrued interest payable of $92 and related interest expense of $2,744 for each of the years ended December 31, 2008 and 2009. Because the write-off of the unamortized deferred financing costs will not have a continuing impact, they are not reflected in the unaudited pro forma condensed combined statements of operations. | |
F. | Reflects the cancellation of certain Merix revolving credit facilities, including the repayment of $2,800 of outstanding credit facility debt plus accrued interest of $131; the write-off of $518 of unamortized deferred financing costs associated with Merix’ credit facility debt, the elimination of related amortization of deferred financing costs of $220 and $165 for the years ended December 31, 2008 and 2009, respectively, and the elimination of related interest expense of $322 and $483 for the years ended December 31, 2008 and 2009, respectively. Because the write-off of the unamortized deferred financing costs will not have a continuing impact, they are not reflected in the unaudited pro forma condensed combined statements of operations. | |
G. | Reflects adjustments necessary to reflect the preliminary estimate of the fair value of the tangible Net Assets acquired and the fair value of noncontrolling interests pursuant to the Merix Acquisition (see Note 4), as follows: |
As of | ||||
December 31, 2009 | ||||
Inventories | $ | 1,153 | ||
Property, plant and equipment, net | (8,000 | ) | ||
Assets held for sale | 9,000 | |||
Noncontrolling interests | (749 | ) |
Viasystems’ cost of sales will reflect the increased valuation of Merix’ inventory as the acquired inventory is sold, which for the purposes of these unaudited pro forma condensed combined financial statements is assumed will occur within the first year post-Merix Acquisition. There is no continuing impact of the acquired inventory adjustment on the combined operating results and such is not included in the unaudited pro forma condensed combined statements of operations. |
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As of December 31, 2009, Merix has assets held for sale which include land adjacent to one of Merix’ U.S. manufacturing facilities and as an industrial building in Hong Kong. | ||
Viasystems has made a preliminary estimate of the fair value of certain of Merix’ property, plant and equipment, however; a final valuation including all of Merix’ property, plant and equipment has not been completed. | ||
H. | Reflects the elimination of Merix’ historical goodwill and other intangible assets in accordance with acquisition accounting, and the establishment of intangible assets of $5,000 for customer contracts and relationships and $3,811 for goodwill resulting from the Merix Acquisition (see item M, below). | |
I. | Reflects the issuance of approximately 2.5 million shares of newly issued $0.01 par value shares of Viasystems’ common stock (see Note 5) to the former holders of Merix common stock. | |
J. | Reflects, pursuant to the Recapitalization Agreement (see Note 5), the issuance of approximately 13.7 million shares of newly issued $0.01 par value shares of Viasystems’ common stock, and the cancellation of Viasystems’ Class B Preferred and Class A Preferred including the elimination of interest expense related to the Class A Preferred of $9,770 and $10,740 for the years ended December 31, 2008, and 2009, respectively; the elimination of the accretion of Class B senior convertible preferred stock; and the issuance of approximately 2.4 million shares of newly issued $0.01 par value shares of Viasystems’ common stock pursuant to a reverse common stock split. | |
K. | Reflects the elimination of the historical equity of Merix. | |
L. | Reflects the elimination of Viasystems’ merger related costs of $4,048 for the year ending December 31, 2009, and Merix’ merger related costs of $200 and $2,142 for the years ended December 31, 2008 and 2009, respectively. On a combined basis, total transaction related costs, including costs incurred to date, are estimated to approximate $19,500. Merix Acquisition related costs do not have a continuing impact and therefore are not reflected in the unaudited pro forma condensed combined financial data. | |
M. | Reflects the elimination of Merix’ historical intangible asset amortization expense of $2,059 and $1,851 for the years ended December 31, 2008, and 2009, respectively, and the recognition of amortization expense of $500 for each of the years ended December 31, 2008 and 2009, related to amortizable intangible assets established (see item H, above), assuming a useful life of ten years. | |
N. | Reflects an estimate of forgone interest income related to the $34,908 cash consideration paid (see item E, above), the repayment of $2,800 of outstanding credit facility debt (see item F, above), the $2,000 of financing costs (see item O, below) and the $4,441 termination fee (see item R, below) of $870 and $220 for the years ended December 31, 2008 and 2009, respectively. | |
O. | Reflects the capitalization of $2,000 of deferred financing costs associated with a new $75,000 revolving credit facility entered into pursuant to the Merix Acquisition, and related amortization of $500, for each of the years ended December 31, 2008 and 2009. The unaudited pro forma condensed combined statements of operations do not reflect any interest expense that may result from Viasystems’ utilization of this credit facility. | |
P. | Reflects reduced depreciation costs associated with the write-down of certain items of property, plant and equipment (see item G, above) of $800 for each of the years ending December 31, 2008 and 2009. Viasystems has not completed a final valuation including all of Merix’ property, plant and equipment. For each $10,000 fair value adjustment to property, plant and equipment, assuming a weighted-average useful life of 10 years, deprecation expense would change by approximately $1,000 in the each annual period. | |
Q. | As a result of Viasystems’ and Merix’ existing income tax loss carry-forwards in the United States, for which full valuation allowances have been provided, no deferred income taxes have been established, and no income tax has been provided related to the pro forma adjustments for the Merix Acquisition. |
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R. | Reflects, pursuant to the Recapitalization Agreement, the payment of a $4,441 termination fee related to a monitoring and oversight agreement (see Note 5), and the elimination of related management fees of $1,500 and $1,159 for each of the years ended December 31, 2008 and 2009, respectively. | |
S. | Reflects a liability of $6,600 incurred for certain Merix employee benefit related amounts that became payable as a result of the Merix Acquisition pursuant to the terms of existing contractual arrangements. | |
T. | Reflects an additional liability of $600 related to certain restructuring activities initiated by Merix prior to, and unrelated to the Merix Acquisition. |
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OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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End-User Market (dollars in millions) | 2009 | 2008 | ||||||
Automotive | $ | 191.0 | $ | 266.6 | ||||
Industrial & Instrumentation, Medical, Consumer, and Other | 129.6 | 189.7 | ||||||
Telecommunications | 128.8 | 184.2 | ||||||
Computer and Datacommunications | 47.0 | 72.3 | ||||||
Total net sales | $ | 496.4 | $ | 712.8 | ||||
Segment (dollars in millions) | 2009 | 2008 | ||||||
Printed Circuit Boards | $ | 350.3 | $ | 489.8 | ||||
Assembly(a) | 141.7 | 196.6 | ||||||
Other(a) | 14.1 | 46.0 | ||||||
Eliminations | (9.7 | ) | (19.6 | ) | ||||
Total net sales | $ | 496.4 | $ | 712.8 | ||||
(a) | With the closure of the Milwaukee Facility in 2009, we reclassified the operating results of the Milwaukee Facility to “Other.” Segment results for all periods presented have been reclassified for comparison purposes. |
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Restructuring Activity (dollars in millions) | 2009 | 2008 | ||||||
Personnel and severance | $ | 0.6 | $ | 9.5 | ||||
Lease and other contractual commitment expenses | 5.1 | — | ||||||
Asset impairments | 0.9 | 5.6 | ||||||
Total expense, net | $ | 6.6 | $ | 15.1 | ||||
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Source (dollars in millions) | 2009 | 2008 | ||||||
Printed Circuit Boards segment | $ | 3.3 | $ | 23.8 | ||||
Assembly segment (a) | 4.1 | 8.8 | ||||||
Other (a) | (12.1 | ) | (10.2 | ) | ||||
Operating (loss) income | $ | (4.7 | ) | $ | 22.4 | |||
(a) | With the closure of the Milwaukee Facility in 2009, we reclassified the operating results of the Milwaukee Facility to “Other.” Segment results for all periods presented have been reclassified for comparison purposes. |
• | Restructuring and Impairment Charges — which consist primarily of facility closures and other headcount reductions. Historically, a significant amount of these restructuring and impairment charges have been non-cash charges related to the write-down of property, plant and equipment to estimated net realizable value. We exclude these restructuring and impairment charges to more clearly reflect our 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 comparable year-over-year cash operating performance. | ||
• | Costs Relating to the Merix Acquisition — professional fees and expenses incurred in connection with effecting the Merix Acquisition. We exclude these fees and expenses because they are not representative of our customary operating expenses. |
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December 31, | ||||||||
Source (dollars in millions) | 2009 | 2008 | ||||||
Operating (loss) income | $ | (4.7 | ) | $ | 22.4 | |||
Add-back: | ||||||||
Depreciation and amortization | 51.4 | 54.5 | ||||||
Restructuring and impairment | 6.6 | 15.1 | ||||||
Non-cash stock compensation expense | 0.9 | 0.6 | ||||||
Costs related to the Merix Acquisition | 4.0 | — | ||||||
Adjusted EBITDA | $ | 58.2 | $ | 92.6 | ||||
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End-User Market (dollars in millions) | 2008 | 2007 | ||||||
Automotive | $ | 266.6 | $ | 258.8 | ||||
Industrial & Instrumentation, Medical, Consumer, and Other | 189.7 | 159.3 | ||||||
Telecommunications | 184.2 | 221.2 | ||||||
Computer and Datacommunications | 72.3 | 75.0 | ||||||
Total net sales | $ | 712.8 | $ | 714.3 | ||||
Segment (dollars in millions) | 2008 | 2007 | ||||||
Printed Circuit Boards | $ | 489.8 | $ | 489.8 | ||||
Assembly(a) | 196.6 | 187.3 | ||||||
Other(a) | 46.0 | 58.5 | ||||||
Eliminations | (19.6 | ) | (21.3 | ) | ||||
Total net sales | $ | 712.8 | $ | 714.3 | ||||
(a) | With the closure of the Milwaukee Facility in 2009, we reclassified the operating results of the Milwaukee Facility to “Other.” Segment results for all periods presented have been reclassified for comparison purposes. |
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Restructuring Activity (dollars in millions) | 2008 | 2007 | ||||||
Personnel and severance | $ | 9.5 | $ | — | ||||
Lease and other contractual commitment expenses | — | 0.3 | ||||||
Asset impairments | 5.6 | — | ||||||
Total expense, net | $ | 15.1 | $ | 0.3 | ||||
December 31, | ||||||||
Source (dollars in millions) | 2008 | 2007 | ||||||
Printed Circuit Boards segment (a) | $ | 23.8 | $ | 26.1 | ||||
Assembly segment (a)(b) | 8.8 | 8.4 | ||||||
Other (b) | (10.2 | ) | — | |||||
Operating income | $ | 22.4 | $ | 34.5 | ||||
(a) | During 2008, we refined our methodology for allocating common selling, general and administrative expenses to our segments to better reflect the efforts undertaken to support each segment. Previously, these costs were allocated based solely on each segment’s percentage of total net sales. For the year ended December 31, 2007, operating income has been restated to conform to the presentation in the current period. | |
(b) | With the closure of the Milwaukee Facility in 2009, we reclassified the operating results of the Milwaukee Facility to “Other.” Segment results for all periods presented have been reclassified for comparison purposes. |
December 31, | ||||||||
Source (dollars in millions) | 2008 | 2007 | ||||||
Operating Income | $ | 22.4 | $ | 34.5 | ||||
Add-back: | ||||||||
Depreciation and amortization | 54.5 | 51.0 | ||||||
Restructuring and impairment | 15.1 | 0.3 |
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December 31, | ||||||||
Source (dollars in millions) | 2008 | 2007 | ||||||
Non-cash stock compensation expense | 0.6 | 2.1 | ||||||
Adjusted EBITDA | $ | 92.6 | $ | 87.9 | ||||
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• | incur additional indebtedness or issue disqualified stock or preferred stock; | ||
• | create liens; | ||
• | pay dividends, make investments or make other restricted payments; | ||
• | sell assets; |
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• | consolidate, merge, sell or otherwise dispose of all or substantially all of our or their assets; | ||
• | enter into transactions with our or their affiliates; and | ||
• | designate our or their subsidiaries as unrestricted. |
• | incur debt, incur contingent obligations and issue certain types of preferred stock; | ||
• | create liens; | ||
• | pay dividends, distributions or make other specified restricted payments; | ||
• | make certain investments and acquisitions; | ||
• | enter into certain transactions with affiliates; and | ||
• | merge or consolidate with any other entity or sell, assign, transfer, lease, convey or otherwise dispose of assets. |
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Payments due by period | ||||||||||||||||||||
Less than | 1-3 | 3-5 | More than | |||||||||||||||||
Contractual Obligations (dollars in millions) | 1 year | years | years | 5 years | Total | |||||||||||||||
2015 Notes | $ | — | $ | — | $ | — | $ | 220.0 | $ | 220.0 | ||||||||||
Interest on 2015 Notes | 17.0 | 52.8 | 52.8 | 13.2 | 135.8 | |||||||||||||||
2011 Notes | 105.9 | — | — | — | 105.9 | |||||||||||||||
Interest on 2011 Notes | 5.7 | — | — | — | 5.7 | |||||||||||||||
Guangzhou 2009 Credit Facility | 10.0 | — | — | — | 10.0 | |||||||||||||||
Capital lease payments | 2.6 | 0.2 | 0.2 | 0.8 | 3.8 | |||||||||||||||
Operating leases | 3.7 | 3.0 | 0.8 | 1.3 | 8.8 | |||||||||||||||
Restructuring payments | 2.6 | 0.2 | 0.1 | 1.2 | 4.1 | |||||||||||||||
Management fees (a) | 1.5 | 0.6 | 0.7 | 12.3 | 15.1 | |||||||||||||||
Unrecognized tax benefits (b) | 0.1 | — | — | — | 0.1 | |||||||||||||||
Deferred compensation | 0.1 | 0.2 | 0.2 | 1.7 | 2.2 | |||||||||||||||
Purchase orders | 19.4 | 0.3 | — | — | 19.7 | |||||||||||||||
Total (c) | $ | 168.6 | $ | 57.3 | $ | 54.8 | $ | 250.5 | $ | 531.2 | ||||||||||
(a) | Includes a management fee of $1.2 million owed to HM Co. in 2009 in connection with the monitoring and oversight agreement, and excludes a $4.4 million termination fee that we became contractually obligated to pay HM Co. in February 2010, pursuant to the Recapitalization Agreement. | |
(b) | Includes the liability for unrecognized tax benefits that could be settled in the next twelve months and has been classified as current income taxes payable in the consolidated balance sheet at December 31, 2009. The liability for unrecognized tax benefits of $18.7 million included in other non-current liabilities at December 31, 2009, has been excluded from the above table as we cannot make a reasonably reliable estimate of the timing of future payments. | |
(c) | Excludes the redemption of Class B Senior preferred stock and Class A Junior preferred stock of $203.6 million and $159.2 million, respectively, as, in connection with the Recapitalization Agreement, these obligations were satisfied by a conversion to common stock on February 16, 2010. |
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• | Automotive (38.4%); | ||
• | Industrial and instrumentation, medical, consumer and other (26.1%); | ||
• | Telecommunications (26.0%); and | ||
• | Computer/data communications (9.5%). |
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Year Ended December 31, | ||||||||||||
Markets | 2009 | 2008 | 2007 | |||||||||
Automotive | 38.4 | % | 37.4 | % | 36.2 | % | ||||||
Industrial & Instrumentation, Medical, Consumer and Other | 26.1 | 26.6 | 22.3 | |||||||||
Telecommunications | 26.0 | 25.9 | 31.0 | |||||||||
Computer and Datacommunications | 9.5 | 10.1 | 10.5 | |||||||||
Total Net Sales | 100.0 | % | 100.0 | % | 100.0 | % |
Year Ended December 31, | ||||||||||||
Customer | 2009 | 2008 | 2007 | |||||||||
Alcatel-Lucent SA | 14.2 | % | 16.3 | % | 20.2 | % | ||||||
Bosch Group | 13.7 | 11.2 | 10.7 | |||||||||
Continental AG (a) | 11.8 | 13.4 | (b | ) | ||||||||
General Electric Company | 11.4 | 10.2 | (b | ) | ||||||||
Siemens AG (a) | (b | ) | (b | ) | 12.4 |
(a) | In December 2007, Continental AG concluded the purchase of the automotive parts business unit of Siemens AG. Sales to that business unit in 2008 are included in the table for Continental AG. Sales to that business unit in 2007 are included in the table for Siemens AG. Through their other business units, Siemens AG remains our customer. | |
(b) | Represents less than ten percent of consolidated net sales. |
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Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
United States | $ | 138,632 | $ | 264,490 | $ | 263,680 | ||||||
People’s Republic of China, including Hong Kong | 126,105 | 147,638 | 170,579 | |||||||||
Germany | 39,338 | 56,951 | 50,167 | |||||||||
Malaysia | 22,298 | 19,844 | 26,121 | |||||||||
Mexico | 21,706 | 18,570 | 12,743 | |||||||||
France | 20,794 | 29,827 | 40,425 | |||||||||
Hungary | 16,323 | 18,734 | 20,788 | |||||||||
Canada | 15,082 | 14,115 | 9,824 | |||||||||
Thailand | 12,057 | 5,719 | 6,919 | |||||||||
Czech Republic | 11,745 | 16,009 | 15,945 | |||||||||
Singapore | 8,429 | 9,922 | 6,893 | |||||||||
United Kingdom | 8,059 | 10,309 | 9,277 | |||||||||
Belgium | 7,838 | 17,372 | 31,999 | |||||||||
Portugal | 7,283 | 8,688 | 7,414 | |||||||||
Japan | 7,191 | 6,191 | 1,813 | |||||||||
Poland | 4,689 | 7,271 | 2,357 | |||||||||
Other | 28,878 | 61,180 | 37,399 | |||||||||
Total | $ | 496,447 | $ | 712,830 | $ | 714,343 | ||||||
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December 31, | ||||||||
2009 | 2008 | |||||||
People’s Republic of China | $ | 193,672 | $ | 225,222 | ||||
Mexico | 2,877 | 3,571 | ||||||
United States | 2,495 | 3,948 | ||||||
$ | 199,044 | $ | 232,741 | |||||
Size (Appx. | Type of | |||||||
Location | Sq. Ft.) | Interest | Description of Primary Products | |||||
United States | ||||||||
Forest Grove, Oregon | 310,500 | Owned(a) | PCB fabrication and warehousing | |||||
San Jose, California | 40,000 | Leased(a) | PCB fabrication and warehousing | |||||
El Paso, Texas | 29,000 | Leased | Warehousing and distribution of E-M Solutions products, backpanel assemblies, full system assemblies and PCB assemblies | |||||
Mexico | ||||||||
Juarez, Mexico | 90,000 | Leased | Backpanel assembly, PCB assembly, custom metal enclosure fabrication, and full system assembly and test | |||||
Asia | ||||||||
Guangzhou, China | 2,250,000 | Owned(b) | PCB and backpanel fabrication | |||||
106,000 | Leased | |||||||
Zhongshan, China | 799,000 | Owned(b) | PCB fabrication | |||||
Huiyang, China | 250,000 | Owned(a)(b) | PCB fabrication and warehousing | |||||
Huizhou, China | 135,000 | Leased(a) | PCB fabrication and warehousing | |||||
Shanghai, China | 430,000 | Owned(b) | Custom metal enclosure fabrication, backpanel assembly, PCB assembly and full system assembly and test | |||||
Shenzhen, China | 286,000 | Leased | Custom metal enclosure fabrication, PCB assembly and full system assembly and test | |||||
Qingdao, China | 93,000 | Leased | Full system assembly and test/cable assembly | |||||
Hong Kong | 53,000 | Owned | Warehousing and distribution of PCBs, backpanel assemblies, full system assemblies and PCB assemblies |
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(a) | These properties were acquired in February 2010, in connection with the Merix Acquisition. | |
(b) | Although these facilities are owned, we lease the underlying land pursuant to land use rights agreements with the Chinese government, which expire from 2043 to 2050. |
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Name | Age | Position | ||||
Executive Officers | ||||||
David M. Sindelar | 52 | Chief Executive Officer and Director | ||||
Timothy L. Conlon | 58 | President, Chief Operating Officer and Director | ||||
Gerald G. Sax | 49 | Senior Vice President and Chief Financial Officer | ||||
Brian W. Barber | 54 | Senior Vice President Operations-Printed Circuit Board & Supply Chain Management | ||||
Richard B. Kampf | 54 | Senior Vice President Sales and Marketing | ||||
Non-Employee Directors | ||||||
Christopher J. Steffen(1)(2)(3)* | 68 | Chairman | ||||
Jack D. Furst | 51 | Director | ||||
Edward Herring(1) | 39 | Director | ||||
Robert F. Cummings Jr.(1)(3)** | 60 | Director | ||||
Richard A. McGinn(1)(2)** | 63 | Director | ||||
Philip Raygorodetsky(3) | 36 | Director | ||||
Richard W. Vieser(2)** | 82 | Director | ||||
William C. McCormick(2)(3)** | 76 | Director | ||||
Michael D. Burger** | 51 | Director | ||||
Kirby A. Dyess(1)(3)** | 63 | Director |
(1) | Member of our Compensation Committee. | |
(2) | Member of our Audit Committee. | |
(3) | Member of our Nominating and Corporate Governance Committee. | |
* | Denotes financial expert of the Audit Committee and independent Director. | |
** | Denotes an independent Director. |
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• | attract, motivate and retain superior talent; | ||
• | encourage high performance and promote accountability; | ||
• | ensure that compensation is commensurate with our annual performance; and | ||
• | provide performance awards for the achievement of financial and operational targets and strategic objectives that are critical to our long-term growth. |
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Adjusted EBITDA | % of Adjusted | Executive Team | Executive Team | |||||||||||||||||
Performance | EBITDA Target | Management | Company | Bonus Based on | Bonus Based on | |||||||||||||||
($ in millions) | Achieved | Bonus | Leaders Bonus | Adjusted EBITDA | MBO Goals | |||||||||||||||
Below $56.0 | Below 80% | 0 | % | 0 | % | 0.00 | % | 0.00 | % | |||||||||||
59.5 | 85 | 25 | 25 | 21.25 | 15.00 | |||||||||||||||
63.0 | 90 | 50 | 50 | 42.50 | 15.00 | |||||||||||||||
66.5 | 95 | 75 | 75 | 63.75 | 15.00 | |||||||||||||||
70.0 | 100 | 100 | 100 | 85.00 | 15.00 | |||||||||||||||
73.5 | 105 | 100 | 125 | 110.00 | 15.00 | |||||||||||||||
77.0 | 110 | 100 | 150 | 135.00 | 15.00 | |||||||||||||||
80.5 | 115 | 100 | 175 | 160.00 | 15.00 | |||||||||||||||
84.0 | 120 | 100 | 200 | 185.00 | 15.00 |
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• | stock options and the related vesting period help attract and retain executives; | ||
• | the value received by the recipient of a stock option is based on the growth of our enterprise value; and | ||
• | stock options help to provide a balance to the overall executive compensation program as base salary and the AICP focus on short-term compensation, while stock options reward executives for increases in our overall enterprise value. |
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Change in | ||||||||||||||||||||||||||||||||||||
Pension Value | ||||||||||||||||||||||||||||||||||||
and Non- | ||||||||||||||||||||||||||||||||||||
Qualified | ||||||||||||||||||||||||||||||||||||
Name of | Nonequity | Deferred | ||||||||||||||||||||||||||||||||||
Participant, | Fiscal | Stock | Option | Incentive Plan | Compensation | All Other | ||||||||||||||||||||||||||||||
Position | Year | Salary | Bonus | Awards | Awards(1) | Compensation(2) | Earnings(3) | Compensation | Total | |||||||||||||||||||||||||||
David M. Sindelar, | 2009 | $ | 954,354 | (4a)(20) | $ | 126,500 | (5) | $ | — | $ | — | $ | 333,500 | $ | 7,250 | $ | 95,191 | (9a)(10a)(11a)(12)(14)(17a) | $ | 1,516,795 | ||||||||||||||||
Chief Executive | 2008 | 953,994 | (4a) | 506,000 | (5) | — | — | — | 6,900 | 92,358 | (7)(9a)(10a)(11a)(12)(13a)(14) | 1,559,252 | ||||||||||||||||||||||||
Officer | 2007 | 953,994 | (4a) | 184,000 | (5) | — | — | 644,000 | 6,750 | 66,239 | (9a)(10a)(11a)(12)(13a)(14) | 1,854,983 | ||||||||||||||||||||||||
Timothy L. Conlon, | 2009 | $ | 572,663 | (4b) | $ | 75,625 | (5) | $ | — | $ | — | $ | 199,375 | $ | 7,250 | $ | 705,488 | (6a)(8)(9b)(10b)(11b)(12)(15)(16)(17b)(18) | $ | 1,560,401 | ||||||||||||||||
President and Chief | 2008 | 572,663 | (4b) | 302,500 | (5) | — | — | — | 6,900 | 631,976 | (6a)(8)(9b)(10b)(11b)(12)(15)(16)(17b) | 1,514,039 | ||||||||||||||||||||||||
Operating Officer | 2007 | 572,663 | (4b) | 110,000 | (5) | — | — | 385,000 | 6,750 | 465,962 | (8)(9b)(10b)(11b)(12)(15)(16)(17b)(18)(19) | 1,540,375 | ||||||||||||||||||||||||
Gerald G. Sax, | 2009 | $ | 373,312 | (4c)(20) | $ | 32,175 | (5) | $ | — | $ | — | $ | 84,825 | $ | 7,350 | $ | 15,932 | (9c)(10c)(11c)(12) | $ | 513,594 | ||||||||||||||||
Sr. Vice President | 2008 | 387,734 | (4c)(20) | 128,700 | (5) | — | — | — | 6,900 | 36,098 | (9c)(10c)(11c)(12)(13b) | 559,432 | ||||||||||||||||||||||||
and Chief Financial Officer | 2007 | 377,895 | (4c)(20) | 46,800 | (5) | — | — | 163,800 | 6,750 | 17,369 | (9c)(10c)(11c)(13b) | 612,614 | ||||||||||||||||||||||||
Brian W. Barber, | 2009 | $ | 319,558 | (4d) | $ | 27,500 | (5) | $ | — | $ | — | $ | 72,502 | $ | 6,749 | $ | 12,077 | (6b)(9d)(10d)(11d)(12) | $ | 438,386 | ||||||||||||||||
Sr. Vice President Operations PCB & Supply Chain Management | 2008 | 319,558 | (4d) | 110,003 | (5) | — | — | — | 6,240 | 19,289 | (6b)(9d)(10d)(11d)(12) | 455,090 | ||||||||||||||||||||||||
Richard B. Kampf, | 2009 | $ | 318,440 | (4e) | $ | 27,492 | (5) | $ | — | $ | — | $ | 72,478 | $ | 7,250 | $ | 7,818 | (9e)(11e)(12) | $ | 433,478 | ||||||||||||||||
Sr. Vice President Sales and Marketing | 2008 | 318,440 | (4e) | 109,967 | (5) | — | — | — | 6,525 | 8,171 | (9e)(11e)(12) | 433,103 |
(1) | Amounts reflect the compensation cost associated with for grants made during each respective year, calculated in accordance FASB Accounting Standard Codification Topic 718 as of the date of the grant. | |
(2) | Includes bonus paid in 2010 and 2008 for incentive compensation earned in 2009 and 2007, respectively, under the Company’s AICP. | |
(3) | Matching contributions made by the Company pursuant to the Company’s 401(k) Plan. | |
(4) | (a) Includes a car allowance of $33,994 for 2009, 2008 and 2007. | |
(4) | (b) Includes a car allowance of $22,663 for 2009, 2008 and 2007. | |
(4) | (c) Includes a car allowance of $12,834 for 2009, 2008 and 2007. | |
(4) | (d) Includes a car allowance of $11,858 for 2009, 2008 and 2007. | |
(4) | (e) Includes a car allowance of $10,840 for 2009, 2008 and 2007. | |
(5) | Includes discretionary bonus award paid in 2010, 2009 and 2008 for incentive compensation earned in 2009, 2008 and 2007, respectively. |
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(6) | (a) Includes $392,410 and $273,594 income tax expenses and tax gross-up paid by the Company in foreign jurisdiction on behalf of individual in 2009 and 2008, respectively. | |
(6) | (b) Includes $6,740 and $13,593 income tax expenses and tax gross-up paid by the Company in foreign jurisdiction on behalf of individual in 2009 and 2008, respectively. | |
(7) | Includes 4 personal seat licenses for St. Louis Cardinals Baseball in Mr. Sindelar’s name in the amount of $10,000 in 2008. | |
(8) | All or a substantial portion of the perquisites are paid in Hong Kong dollars at the exchange rate of approximately US $1 to HK $7.8. | |
(9) | (a) Includes club dues of $22,480 in 2009, $27,088 in 2008 and $26,875 in 2007. | |
(9) | (b) Includes club dues of $14,157 in 2009, $16,253 in 2008 and $62,658 in 2007. | |
(9) | (c) Includes club dues of $7,395 in 2009, $7,771 in 2008 and $6,502 in 2007. | |
(9) | (d) Includes club dues of $50 in 2009 and $700 in 2008. | |
(9) | (e) Includes club dues of $4,976 in 2009 and $5,400 in 2008. | |
(10) | (a) Includes financial consulting services in the amounts of $16,163 in 2009, $18,715 in 2008 and $10,314 in 2007. | |
(10) | (b) Includes financial consulting services in the amounts of $7,895 in 2009, $7,220 in 2008 and $7,375 in 2007. | |
(10) | (c) Includes financial consulting services in the amounts of $3,700 in 2009, $3,475 in 2008 $5,125 in 2007. | |
(10) | (d) Includes financial consulting services in the amounts of $2,445 in 2009 and $2,225 in 2008. | |
(11) | (a) Includes Supplemental Life Insurance premiums in the amounts of $5,252 in 2009, $5,530 in 2008 and $5,963 in 2007. | |
(11) | (b) Includes Supplemental Life Insurance premiums in the amounts of $8,754 in 2009, $8,751 in 2008 and $9,596 in 2007. | |
(11) | (c) Includes Supplemental Life Insurance premiums in the amounts of $4,146 in 2009, $4,143 in 2008 and $4,377 in 2007. | |
(11) | (d) Includes Supplemental Life Insurance premiums in the amounts of $1,582 in 2009 and $1,506 in 2008. | |
(11) | (e) Includes Supplemental Life Insurance premiums in the amounts of $1,582 in 2009 and $1,506 in 2008. | |
(12) | Includes medical premiums. | |
(13) | (a) Includes designation of charitable donations by the Company in the amounts of $20,000 in 2008 and $13,300 in 2007. | |
(13) | (b) Includes designation of charitable donations by the Company in the amounts of $20,000 in 2008 and $1,365 in 2007. | |
(14) | Includes continuing education in the amounts of $9,120 in both 2009 and 2008 and $8,500 in 2007. | |
(15) | Includes expenses of $52,332 in 2009, $60,359 in 2008 and $69,516 in 2007 for a car, driver and parking in Hong Kong. | |
(16) | Includes $180,265 in 2009, $176,398 in 2008 and $284,215 in 2007 of expenses related to the relocation to Hong Kong, housing, additional living expenses, and expenses related to additional domestic services provided in the United States and in Hong Kong due to expatriate assignment. | |
(17) | (a) Includes tickets to sporting events in the amount of $26,404, use of a private airline charter and spouse tag along travel of $14,289. | |
(17) | (b) Includes entertainment and spouse tag-along travel in 2009 $45,958, tickets to sporting events and spouse tag-along travel in the amount of $53,914 in 2008, spouse tag along travel in the amount of $26,848 in 2007. | |
(18) | Includes $18,951 in additional electronic equipment for home in Hong Kong. | |
(19) | Includes supplemental medical and dental expenses for insurance in Hong Kong in the amount of $15,272 in 2008 and $13,653 in 2007. | |
(20) | Includes medical claims grossed up for tax purposes. |
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All Other | All Other | |||||||||||||||||||||||||||||||||||||||||||
Stock | Option | Grant | ||||||||||||||||||||||||||||||||||||||||||
Awards: | Awards: | Exercise or | Date Fair | |||||||||||||||||||||||||||||||||||||||||
Estimated Future Payouts Under | Estimated Future Payouts Under | Number of | Number of | Base Price | Value of | |||||||||||||||||||||||||||||||||||||||
Non-Equity Incentive Plan Awards(1) | Equity Incentive Plan Awards(2) | Shares of | Securities | of Option | Stock and | |||||||||||||||||||||||||||||||||||||||
Threshold | Target | Maximum | Threshold | Target | Maximum | Stock | Underlying | Awards | Option | |||||||||||||||||||||||||||||||||||
Name | Grant Date | ($)(1) | ($)(1) | ($)(1) | ($) | ($) | ($) | or Units (#) | Options | ($/sh) | Awards ($) | |||||||||||||||||||||||||||||||||
David M. Sindelar | — | 195,500 | 920,000 | 1,840,000 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Timothy L. Conlon | — | 116,075 | 550,000 | 1,100,000 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Gerald G. Sax | — | 49,725 | 234,000 | 468,000 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Brian W. Barber | — | 42,501 | 200,005 | 400,010 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Richard B. Kampf | — | 42,487 | 199,940 | 399,880 | — | — | — | — | — | — | — |
(1) | Pursuant to the AICP for 2009. | |
(2) | The current fair market value of our common stock is well below the stock option price of $150.99 per share. |
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Option Awards | ||||||||||||||||||||
Equity Incentive Plan | ||||||||||||||||||||
Number of Securities | Awards: Number of | |||||||||||||||||||
Underlying Unexercised Options | Securities Underlying | Option Exercise | Option Expiration | |||||||||||||||||
Name | Exercisable(1) | Unexercisable (#) | Unexercised | Price ($) | Date | |||||||||||||||
Unearned Options (#) | ||||||||||||||||||||
David M. Sindelar | 29,276 | — | — | 150.99 | 1/31/2013 | |||||||||||||||
5,855 | — | — | 150.99 | 8/17/2014 | ||||||||||||||||
Timothy L. Conlon | 27,603 | — | — | 150.99 | 1/31/2013 | |||||||||||||||
5,855 | — | — | 150.99 | 8/17/2014 | ||||||||||||||||
Gerald G. Sax | 5,019 | — | — | 150.99 | 1/31/2013 | |||||||||||||||
1,255 | — | — | 150.99 | 8/17/2014 | ||||||||||||||||
10,455 | — | — | 150.99 | 8/08/2015 | ||||||||||||||||
Brian W. Barber | 2,509 | — | — | 150.99 | 1/31/2013 | |||||||||||||||
2,788 | 1,394 | — | 150.99 | 2/6/2017 | ||||||||||||||||
2,231 | 1,115 | — | 150.99 | 11/1/2017 | ||||||||||||||||
Richard B. Kampf | 2,509 | — | — | 150.99 | 1/31/2013 | |||||||||||||||
2,788 | 1,394 | — | 150.99 | 2/6/2017 | ||||||||||||||||
2,231 | 1,115 | — | 150.99 | 11/1/2017 |
(1) | All options have a vesting schedule of (i) 33% on the date of grant, (ii) 33% two years following the date of grant and (iii) 33% three years after the date of grant. |
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Number of Shares | ||||||||||||||||
Acquired on | Value Realized on | Number of Shares | Value Realized on | |||||||||||||
Name | Exercise | Exercise | Acquired on Vesting | Vesting | ||||||||||||
David M. Sindelar | — | — | — | — | ||||||||||||
Timothy L. Conlon | — | — | — | — | ||||||||||||
Gerald G. Sax | — | — | — | — | ||||||||||||
Brian W. Barber | — | — | 2,509 | — | ||||||||||||
Richard B. Kampf | — | — | 2,509 | — |
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Termination | Change | |||||||||
Termination | Termination | Due to | of | |||||||
NEO | Voluntary Resignation | for Cause | without Cause | Death or Disability | Control | |||||
David M. Sindelar | Lifetime medical benefits | Lifetime medical benefits | $2,809,500 plus lifetime medical benefits | $2,809,500 plus lifetime medical benefits | None | |||||
Timothy L. Conlon | Lifetime medical benefits | Lifetime medical benefits | $858,000 plus lifetime medical benefits | $858,000 plus lifetime medical benefits | None | |||||
Gerald G. Sax | Lifetime medical benefits | Lifetime medical benefits | $910,500 plus lifetime medical benefits | $910,500 plus lifetime medical benefits | None | |||||
Brian W. Barber | — | — | $307,700 plus medical benefits for 12 months | $307,700 | None | |||||
Richard B. Kampf | — | — | $307,600 plus medical benefits for 12 months | $307,600 | None |
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Fees Earned or | ||||||||||||||||
Name | Paid in Cash | Stock Awards | Option Awards | Total | ||||||||||||
Christopher J. Steffen | $ | 154,000 | $ | $ | $ | 154,000 | ||||||||||
Jack D. Furst | 35,000 | (1) | — | — | 35,000 | |||||||||||
Edward Herring | 47,000 | (1) | — | — | 47,000 | |||||||||||
Philip Raygorodetsky | 32,250 | (2) | — | — | 32,250 | |||||||||||
Robert F. Cummings | 47,000 | — | — | 47,000 | ||||||||||||
Diane H. Gulyas | 47,000 | — | — | 47,000 | ||||||||||||
Richard W. Vieser | 54,000 | — | — | 54,000 | ||||||||||||
Richard A. McGinn | 66,000 | — | — | 66,000 | ||||||||||||
Peter R. Frank | 11,750 | (2)(3) | — | — | 11,750 | |||||||||||
William C. McCormick(4) | — | — | — | — | ||||||||||||
Michael D. Burger(4) | — | — | — | — | ||||||||||||
Kirby A. Dyess(4) | — | — | — | — |
(1) | Compensation paid directly from us to HMTF. | |
(2) | Compensation paid directly from us to GSC. | |
(3) | Mr. Frank served on as Board of Directors for only one quarter of the year 2009. | |
(4) | Became a member of the Board of Directors on February 16, 2010. |
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• | each person or group who is known by us to own beneficially more than 5% of our common stock; | ||
• | each member of our board of directors and each of our named executive officers; and | ||
• | all members of our board of directors and named executive officers as a group. |
Shares of Common | ||||||||
Stock Beneficially Owned | ||||||||
Name of Beneficial Owner | Number | Percentage | ||||||
VG Holdings, LLC(1) c/o HM Capital Partners 200 Crescent Court, Suite 1600 Dallas, Texas 75201 | 15,562,570 | 77.8 | ||||||
Jack D. Furst(1) | 15,562,570 | 77.8 | ||||||
Philip Raygorodetsky(1) | 15,562,570 | 77.8 | ||||||
Edward Herring(1) | 15,562,570 | 77.8 | ||||||
Richard W. Vieser(2) | 4,600 | * | ||||||
Robert F. Cummings(1) | 15,562,570 | 77.8 | ||||||
Richard A. McGinn(2) | 4,600 | * | ||||||
Christopher J. Steffen(2) | 8,782 | * | ||||||
David M. Sindelar(2) | 35,131 | 0.2 | ||||||
Timothy L. Conlon(2) | 35,458 | 0.2 | ||||||
Gerald G. Sax(2) | 16,729 | * | ||||||
Brian W. Barber(2) | 5,018 | * | ||||||
Richard B. Kampf(2) | 5,018 | * | ||||||
William C. McCormick | 3,837 | * | ||||||
Michael D. Burger | 264 | * | ||||||
Kirby A. Dyess | 1,069 | * | ||||||
All executive officers and directors as a group (15 persons) | 15,685,682 | 78.4 |
* | Represents beneficial ownership of less than 0.1% of the outstanding shares of our common stock. |
(1) | All of the members’ interests in VG Holdings, LLC are owned by the Funds. As a result of the transactions pursuant to the Recapitalization Agreement, VG Holdings, LLC holds approximately 77.8% of our common stock. Please see “Summary — Recent Developments — Recapitalization Agreement.” Each of the Funds may be deemed to have shared voting power and investment power with respect to shares of our common stock owned by VG Holdings, LLC. Messrs. Furst, Herring, Cummings and Raygordetsky each disclaims beneficial ownership of shares of our common stock not owned of record by him, except to the extent of each entity’s and individuals pecuniary interest in our common stock. | |
(2) | Represents shares of common stock issuable upon the exercise of options that are exercisable within 60 days. |
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Number of | Number of | Number of | ||||||||||||||||||
Shares of | Percentage | Shares of | Shares of | Percentage | ||||||||||||||||
Common | of Common | Common | Common | of Common | ||||||||||||||||
Stock | Stock | Stock Being | Stock | Stock | ||||||||||||||||
Owned | Owned | Offered | Owned | Owned | ||||||||||||||||
Prior to the | Prior to the | in this | After the | After the | ||||||||||||||||
Name of Selling Stockholder | Offering | Offering(1) | Offering | Offering | Offering(1) | |||||||||||||||
2B LLC(2) | 11,955 | 0.06 | % | 11,955 | — | — | % | |||||||||||||
ACE Bermuda Insurance Ltd.(2) | 14,288 | 0.07 | 14,288 | — | — | |||||||||||||||
ACE Tempest Reinsurance Ltd.(2) | 14,288 | 0.07 | 14,288 | — | — | |||||||||||||||
Arch Reinsurance Ltd.(2) | 18,953 | 0.09 | 18,953 | — | — | |||||||||||||||
Brown University(2) | 14,025 | 0.07 | 14,025 | — | — | |||||||||||||||
Fidelity Financial Trust: Fidelity Convertible Securities Fund(3) | 549,643 | 2.75 | 549,643 | — | — | |||||||||||||||
General Motors Foundation, Inc.(2) | 2,916 | 0.01 | 2,916 | — | — | |||||||||||||||
HPK Zinsplus(2) | 11,168 | 0.06 | 11,168 | — | — | |||||||||||||||
LC Capital Master Fund, LTD(4) | 161,831 | 0.81 | 161,831 | — | — | |||||||||||||||
MainStay Convertible Fund, a Series of the MainStay Funds(5) | 152,529 | 0.76 | 152,529 | — | — | |||||||||||||||
MainStay VP Convertible Fund, a Portfolio of MainStay VP Series Fund, Inc.(5) | 106,255 | 0.53 | 106,255 | — | — | |||||||||||||||
Oaktree TT Multi-Strategy Fund, L.P.(2) | 11,518 | 0.06 | 11,518 | — | — | |||||||||||||||
OCM Global Convertible Securities Fund(2) | 2,478 | 0.01 | 2,478 | — | — | |||||||||||||||
OCM High Income Convertible Fund II, L.P.(2) | 13,705 | 0.07 | 13,705 | — | — | |||||||||||||||
OCM High Income Convertible Limited Partnership(2) | 11,372 | 0.06 | 11,372 | — | — | |||||||||||||||
Promark Global Advisors(2) | 58,901 | 0.29 | 58,901 | — | — | |||||||||||||||
Quintessence Fund L.P.(6) | 7,319 | 0.04 | 7,319 | — | — | |||||||||||||||
QVT Fund LP(6) | 68,640 | 0.34 | 68,640 | — | — | |||||||||||||||
Richard King Mellon Foundation(2) | 10,060 | 0.05 | 10,060 | — | — | |||||||||||||||
StarVest Convertible Securities Fund, Ltd.(2) | 8,573 | 0.04 | 8,573 | — | — | |||||||||||||||
The Long-Term Investment Trust(2) | 42,572 | 0.21 | 42,572 | — | — | |||||||||||||||
Virginia Retirement System(2) | 76,629 | 0.38 | 76,629 | — | — | |||||||||||||||
Winchester Convertible Plus, Ltd.(2) | 20,469 | 0.10 | 20,469 | — | — |
(1) | Based on an approximate number of 20,000,000 shares of outstanding common stock after consummation of the Merix Acquisition, the Recapitalization, the Exchange and related transactions. | |
(2) | Oaktree Capital Management, L.P. (“Oaktree”), 333 S. Grand Ave., 28th Floor, Los Angeles, California 90071, is the general partner or the discretionary investment manager of the accounts of the selling stockholder with respect to its shares of our common stock and has voting and dispositive power with respect to such shares. Oaktree Holdings, Inc. (“OHI”) is the general partner of Oaktree and controls the decisions of Oaktree regarding the vote and disposition with respect to such shares. Oaktree Capital Group, LLC (“OCG”) is the sole shareholder of OHI and has the sole power to appoint and remove the directors of OHI and, as such, may indirectly control the decisions of OHI regarding the vote and disposition with respect to such shares. Oaktree Capital Group Holdings, L.P. (“OCGH”) is the holder of a substantial majority of the voting units of OCG and has the ability to appoint and remove the directors of OCG and, as such, may indirectly control the decisions of OCG regarding the vote and disposition with respect to such shares. Oaktree Capital Group Holdings GP, LLC (“OCGH GP” and, together with Oaktree, OHI, OCG and OCGH, the “Oaktree Entities”) is the general partner of OCGH. OCGH GP is a limited liability company managed by an executive committee, the members of which are Howard Marks, Bruce Karsh, Sheldon Stone, Larry Keele, Stephen Kaplan, John Frank, David Kirchheimer and Kevin Clayton (collectively, the “Principals”). Additionally, Andrew Watts, a managing director of Oaktree, is the portfolio manager for the accounts of the selling stockholder. Under applicable law, by virtue of their respective status each of the Oaktree Entities, the Principals and Mr. Watts may be deemed to be beneficial owners having indirect ownership of the shares owned of by the selling stockholder. Each of the Oaktree Entities, the Principals and Mr. Watts hereby disclaims beneficial ownership of our common stock listed, except to the extent of their respective pecuniary interest therein, if any. Oaktree is an affiliate of a registered broker-dealer, OCM Investments, LLC. Oaktree is the majority owner of OCM Investments, LLC. Inasmuch as Oaktree does not have information regarding all of the investment and other activities of the selling stockholders that constitute separately managed accounts, Oaktree, to its actual |
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knowledge, is not aware that any such separately managed account is registered as a broker dealer or is an affiliate of a registered broker–dealer. The selling stockholder has informed us, that the shares were acquired in the ordinary course of business and at the time it obtained the shares, it did not have any intent, agreements or understandings, directly or indirectly, with any person to distribute the shares. | ||
(3) | Fidelity Management & Research Company (“Fidelity”), 82 Devonshire Street, Boston, Massachusetts 02109, a wholly-owned subsidiary of FMR LLC and an investment adviser registered under Section 203 of the Investment Advisers Act of 1940, is the beneficial owner of 549,643 shares of our common stock resulting from the Merix Acquisition as a result of acting as investment adviser to various investment companies registered under Section 8 of the Investment Company Act of 1940. | |
Edward C. Johnson III and FMR LLC, through its control of Fidelity, and the funds each has sole power to dispose of the 549,643 shares owned by the Funds. | ||
Members of the family of Edward C. Johnson III, Chairman of FMR LLC, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR LLC, representing 49% of the voting power of FMR LLC. The Johnson family group and all other Series B shareholders have entered into a shareholders’ voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of the shareholders’ voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR LLC. | ||
Neither FMR LLC nor Edward C. Johnson III, Chairman of FMR LLC, has the sole power to vote or direct the voting of the shares owned directly by the selling stockholder, which power resides with the selling stockholder’s Boards of Trustees. Fidelity carries out the voting of the shares under written guidelines established by the Funds’ Boards of Trustees. | ||
The selling stockholder is an affiliate of a broker-dealer. The selling stockholder has informed us, that the shares were acquired in the ordinary course of business and at the time it obtained the shares, it did not have any intent, agreements or understandings, directly or indirectly, with any person to distribute the shares. | ||
(4) | Lampe, Conway & Co. LLC, 680 Fifth Avenue, 12th Floor, New York, New York 10019, is the beneficial owner of 161,831 shares of our common stock resulting from the Merix Acquisition as investment manager to LC Capital Master Fund, LTD. Steven G. Lampe and Richard F. Conway, as managing members of Lampe, Conway & Co. LLC, each has power to dispose of the 161,831 shares owned by LC Capital Master Fund, LTD. | |
(5) | MacKay Shields LLC, 9 West 57th Street, New York, New York 10019, is the beneficial owner of such shares of our common stock as a result of acting as subadviser to the selling stockholder. Additionally, Edward Silverstein, a Managing Director of MacKay Shields LLC, is the portfolio manager for the accounts of the selling stockholder and has voting and dispositive powers over such shares. MacKay Shields LLC is a subadviser to the selling stockholder, a mutual fund. Both MacKay Shields LLC and the selling stockholder’s investment advisor are affiliates of a broker-dealer. The selling stockholder has informed us, that the shares were acquired in the ordinary course of business and at the time it obtained the shares, it did not have any intent, agreements or understandings, directly or indirectly, with any person to distribute the shares. | |
(6) | Management of the selling stockholder is vested in its general partner, QVT Associates GP LLC, which may be deemed to beneficially own the shares of our common stock held by the selling stockholder. QVT Financial LP, 1177 Avenue of the Americas, 9th Floor, New York, New York 10036, is the investment manager of the selling stockholder and shares voting and investment control over such shares. QVT Financial GP LLC is the general partner of QVT Financial LP and as such has complete discretion in the management and control of the business affairs of QVT Financial LP. The managing members of QVT Financial GP LLC are Daniel Gold, Nicholas Brumm, Arthur Chu and Tracy Fu and such managing members share voting and dispositive powers over such shares. Each of QVT Financial LP, QVT Financial GP LLC, Daniel Gold, Nicholas Brumm, Arthur Chu and Tracy Fu disclaims beneficial ownership of the shares held by the selling stockholder. QVT Associates GP LLC disclaims beneficial ownership of the shares held by the selling stockholder, except to the extent of its pecuniary interest therein. |
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Designation | Class | No. of Shares Authorized | Par Value | |||||||||
Common Stock | Common | 100,000,000 | $ | 0.01 | ||||||||
Preferred Stock | Preferred | 25,000,000 | $ | 0.01 |
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• | prior to such time, our board of directors approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; | ||
• | upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock outstanding at the time the transaction commenced, excluding certain shares; or | ||
• | at or subsequent to that time, the business combination is approved by our board of directors and by the affirmative vote (at a stockholder meeting and not by written consent) of the holders of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder. |
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• | the voting rights of the class or series; | ||
• | the number of shares constituting the class or series and the designation of the class or series; | ||
• | the preferences, and relative, participating, optional, or other special rights, if any, and the qualifications, limitations, or restrictions thereof, if any, with respect to any class or series; | ||
• | whether or not the shares of the class or series will be redeemable at our option or the holders of the class or series or upon a specified event, and, if redeemable, the redemption price or prices and the time or times at which the shares will be redeemable; | ||
• | whether or not the shares of the class or series will be subject to the operation of retirement or sinking funds to be applied to the purchase or redemption of the shares for retirement, and if retirement or sinking funds are to be established, the annual amount of those funds; | ||
• | the dividend rate, the conditions upon which and the times when dividends are payable, the preference to the payment of dividends payable on any other class or series of stock, whether the dividends will be cumulative, and if cumulative, the date from which the dividends will accumulate; | ||
• | the preferences, if any, and the amounts of those preferences which the holders of the class or series will be entitled to receive upon the voluntary or involuntary dissolution of, or upon any distribution of the assets of, us; | ||
• | whether or not the shares of the class or series will be convertible into or exchangeable for, the shares of any other class or series of stock, and the conversion price or ratio or rate at which the exchange may be made; and | ||
• | other special rights and protective provisions as the board of directors deems advisable. |
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• | one percent of the total number of shares of our common stock outstanding; or | ||
• | the average weekly reported trading volume of our common stock for the four calendar weeks prior to the sale. |
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• | purchases by underwriters, brokers, dealers, and agents who may receive compensation in the form of underwriting discounts, concessions or commissions from the selling stockholders and/or the purchasers of the shares for whom they may act as agent; | ||
• | ordinary brokerage transactions and transactions in which the broker solicits purchasers; | ||
• | one or more block trades in which a broker or dealer so engaged will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction or, in crosses, in which the same broker acts as agent on both sides; | ||
• | purchases by a broker or dealer (including a specialist or market maker) as principal and resale by such broker or dealer for its account pursuant to this prospectus; | ||
• | an exchange distribution in accordance with the rules of any stock exchange on which the shares of our common stock are listed; | ||
• | face-to-face privately negotiated transactions between sellers and purchasers without a broker-dealer; | ||
• | the pledge of shares as security for any loan or obligation, including pledges to brokers or dealers who may from time to time effect distributions of the shares or other interests in the shares; | ||
• | settlement of short sales or transactions to cover short sales relating to the shares entered into after the effective date of the registration statement of which this prospectus is a part; | ||
• | distributions to creditors, equity holders, partners and members of the selling stockholders; | ||
• | transactions in options, swaps or other derivatives (whether listed on an exchange or otherwise); | ||
• | sales in other ways not involving market makers or established trading markets, including direct sales to institutions or individual purchasers; and | ||
• | any combination of the foregoing or by any other legally available means. |
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St. Louis, Missouri 63105
(314) 746-2205
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VIASYSTEMS GROUP, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS | ||
F-2 | ||
F-3 | ||
F-4 | ||
F-5 | ||
F-6 | ||
F-7 | ||
MERIX CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS | ||
F-31 | ||
F-32 | ||
F-33 | ||
F-34 | ||
F-35 | ||
F-36 | ||
F-73 | ||
F-74 | ||
F-75 | ||
F-77 | ||
F-78 |
F-1
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Viasystems Group, Inc.
/s/ Ernst & Young LLP | ||||
February 25, 2010
F-2
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December 31, | ||||||||
2009 | 2008 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 108,993 | $ | 83,053 | ||||
Restricted cash | 105,734 | 303 | ||||||
Accounts receivable, net | 89,512 | 96,564 | ||||||
Inventories | 49,197 | 70,419 | ||||||
Deferred taxes | 3,115 | — | ||||||
Prepaid expenses and other | 8,273 | 11,599 | ||||||
Total current assets | 364,824 | 261,938 | ||||||
Property, plant and equipment, net | 199,044 | 232,741 | ||||||
Goodwill | 79,485 | 79,485 | ||||||
Intangible assets, net | 4,676 | 5,780 | ||||||
Deferred financing costs, net | 7,986 | 3,917 | ||||||
Other assets | 1,223 | 1,377 | ||||||
Total assets | $ | 657,238 | $ | 585,238 | ||||
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY | ||||||||
Current liabilities: | ||||||||
Current maturities of long-term debt | $ | 118,207 | $ | 9,617 | ||||
Accounts payable | 90,661 | 74,668 | ||||||
Accrued and other liabilities | 38,751 | 50,832 | ||||||
Income taxes payable | 3,597 | 7,224 | ||||||
Deferred taxes | — | 479 | ||||||
Total current liabilities | 251,216 | 142,820 | ||||||
Long-term debt, less current maturities | 212,673 | 211,046 | ||||||
Other non-current liabilities | 34,226 | 32,882 | ||||||
Mandatory redeemable Class A Junior preferred stock | 118,836 | 108,096 | ||||||
Total liabilities | 616,951 | 494,844 | ||||||
Redeemable Class B Senior Convertible preferred stock | 98,327 | 89,812 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ (deficit) equity: | ||||||||
Common stock, $0.01 par value, 110,000,000 shares authorized; 2,415,266 shares issued and outstanding in 2009 and 2008 | 24 | 24 | ||||||
Paid-in capital | 1,944,413 | 1,951,980 | ||||||
Accumulated deficit | (2,010,069 | ) | (1,955,352 | ) | ||||
Accumulated other comprehensive income | 7,592 | 3,930 | ||||||
Total stockholders’ (deficit) equity | (58,040 | ) | 582 | |||||
Total liabilities and stockholders’ (deficit) equity | $ | 657,238 | $ | 585,238 | ||||
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Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Net sales | $ | 496,447 | $ | 712,830 | $ | 714,343 | ||||||
Operating expenses: | ||||||||||||
Cost of goods sold, exclusive of items shown separately below | 398,144 | 568,356 | 570,384 | |||||||||
Selling, general and administrative | 45,073 | 52,475 | 58,215 | |||||||||
Depreciation | 50,161 | 53,285 | 49,704 | |||||||||
Amortization | 1,191 | 1,243 | 1,269 | |||||||||
Restructuring and impairment | 6,626 | 15,069 | 278 | |||||||||
Operating (loss) income | (4,748 | ) | 22,402 | 34,493 | ||||||||
Other expense : | ||||||||||||
Interest expense, net | 34,399 | 31,585 | 30,573 | |||||||||
Loss on early extinguishment of debt | 2,357 | — | — | |||||||||
Amortization of deferred financing costs | 1,954 | 2,063 | 2,065 | |||||||||
Other, net | 3,502 | (711 | ) | 277 | ||||||||
(Loss) income before income taxes | (46,960 | ) | (10,535 | ) | 1,578 | |||||||
Income taxes | 7,757 | 4,938 | (6,853 | ) | ||||||||
Net (loss) income | (54,717 | ) | (15,473 | ) | 8,431 | |||||||
Less: Accretion of Class B Senior Convertible preferred stock | 8,515 | 7,829 | 7,203 | |||||||||
Net (loss) income attributable to common stockholders | $ | (63,232 | ) | $ | (23,302 | ) | $ | 1,228 | ||||
Basic and diluted (loss) income per share | $ | (26.18 | ) | $ | (9.65 | ) | $ | 0.51 | ||||
Shares used in basic and diluted share calculations | 2,415,266 | 2,415,266 | 2,415,266 | |||||||||
F-4
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Accumulated | ||||||||||||||||||||||||
Other | ||||||||||||||||||||||||
Common | Common | Paid-in | Accumulated | Comprehensive | ||||||||||||||||||||
Stock Shares | Stock | Capital | Deficit | Income (Loss) | Total | |||||||||||||||||||
Balance at December 31, 2006 | 2,415,266 | $ | 24 | $ | 1,964,312 | $ | (1,938,097 | ) | $ | 6,605 | $ | 32,844 | ||||||||||||
Cumulative effect of adoption of new accounting guidance (See Note 11) | — | — | — | (10,213 | ) | — | (10,213 | ) | ||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||
Net income | — | — | — | 8,431 | — | 8,431 | ||||||||||||||||||
Change in fair value of derivatives, net of taxes of $0 | — | — | — | — | 241 | 241 | ||||||||||||||||||
Foreign currency translation, net of taxes of $0 | — | — | — | — | (44 | ) | (44 | ) | ||||||||||||||||
Total comprehensive income | 8,628 | |||||||||||||||||||||||
Accretion of Class B Senior Convertible preferred stock | — | — | (7,203 | ) | — | — | (7,203 | ) | ||||||||||||||||
Stock compensation expense | — | — | 2,085 | — | — | 2,085 | ||||||||||||||||||
Balance at December 31, 2007 | 2,415,266 | 24 | 1,959,194 | (1,939,879 | ) | 6,802 | 26,141 | |||||||||||||||||
Comprehensive loss: | ||||||||||||||||||||||||
Net loss | — | — | — | (15,473 | ) | — | (15,473 | ) | ||||||||||||||||
Change in fair value of derivatives, net of taxes of $0 | — | — | — | — | (2,872 | ) | (2,872 | ) | ||||||||||||||||
Total comprehensive loss | (18,345 | ) | ||||||||||||||||||||||
Accretion of Class B Senior Convertible preferred stock | — | — | (7,829 | ) | — | — | (7,829 | ) | ||||||||||||||||
Stock compensation expense | — | — | 615 | — | — | 615 | ||||||||||||||||||
Balance at December 31, 2008 | 2,415,266 | 24 | 1,951,980 | (1,955,352 | ) | 3,930 | 582 | |||||||||||||||||
Comprehensive loss: | ||||||||||||||||||||||||
Net loss | — | — | — | (54,717 | ) | — | (54,717 | ) | ||||||||||||||||
Change in fair value of derivatives, net of taxes of $0 | — | — | — | — | 2,195 | 2,195 | ||||||||||||||||||
Foreign currency translation, net of taxes of $0 | — | — | — | — | 1,467 | 1,467 | ||||||||||||||||||
Total comprehensive loss | (51,055 | ) | ||||||||||||||||||||||
Accretion of Class B Senior Convertible preferred stock | — | — | (8,515 | ) | — | — | (8,515 | ) | ||||||||||||||||
Stock compensation expense | — | — | 948 | — | — | 948 | ||||||||||||||||||
Balance at December 31, 2009 | 2,415,266 | $ | 24 | $ | 1,944,413 | $ | (2,010,069 | ) | $ | 7,592 | $ | (58,040 | ) | |||||||||||
2009 | 2008 | 2007 | ||||||||||
Foreign currency translation | $ | 7,919 | $ | 6,452 | $ | 6,452 | ||||||
Unrecognized loss on derivatives | (327 | ) | (2,522 | ) | 350 | |||||||
$ | 7,592 | $ | 3,930 | $ | 6,802 | |||||||
F-5
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Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net (loss) income | $ | (54,717 | ) | $ | (15,473 | ) | $ | 8,431 | ||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 51,352 | 54,528 | 50,973 | |||||||||
Accretion of Class A Junior preferred stock dividends | 7,270 | 6,880 | 6,510 | |||||||||
Amortization of preferred stock discount | 3,470 | 2,890 | 2,377 | |||||||||
Non-cash impact of exchange rates | 2,035 | (631 | ) | 595 | ||||||||
Amortization of deferred financing costs | 1,954 | 2,063 | 2,065 | |||||||||
Impairment of assets | 1,592 | 5,558 | — | |||||||||
Loss on early extinguishment of debt | 2,357 | — | — | |||||||||
Non-cash stock compensation charge | 948 | 615 | 2,085 | |||||||||
Amortization of original issue discount | 164 | — | — | |||||||||
Deferred taxes | (3,469 | ) | (2,822 | ) | (1,121 | ) | ||||||
(Loss) gain on sale of property, plant and equipment | (483 | ) | 671 | 967 | ||||||||
Change in assets and liabilities: | ||||||||||||
Accounts receivable | 7,052 | 38,762 | (3,831 | ) | ||||||||
Inventories | 21,222 | 10,639 | 4,127 | |||||||||
Prepaid expenses and other | 3,578 | (1,456 | ) | 4,114 | ||||||||
Accounts payable | 15,993 | (38,097 | ) | (2,345 | ) | |||||||
Accrued and other liabilities | (9,113 | ) | (13,096 | ) | (12,523 | ) | ||||||
Income taxes payable | (3,627 | ) | 2,707 | 1,370 | ||||||||
Net cash provided by operating activities | 47,578 | 53,738 | 63,794 | |||||||||
Cash flows from investing activities: | ||||||||||||
Proceeds from disposals of property, plant and equipment | 4,352 | 663 | 205 | |||||||||
Capital expenditures | (21,925 | ) | (48,925 | ) | (37,197 | ) | ||||||
Net cash used in investing activities | (17,573 | ) | (48,262 | ) | (36,992 | ) | ||||||
Cash flows from financing activities: | ||||||||||||
Proceeds from issuance of 12% Senior Secured Notes | 211,792 | — | — | |||||||||
Repayment of 101/2% Senior Subordinated Notes | (95,065 | ) | — | — | ||||||||
Change in restricted cash | (105,734 | ) | — | — | ||||||||
Proceeds from borrowing under credit facilities | 10,000 | 20,000 | — | |||||||||
Repayment of amounts due under credit facilities | (15,500 | ) | (4,500 | ) | — | |||||||
Repayment of capital lease obligations | (2,119 | ) | (1,925 | ) | (754 | ) | ||||||
Financing and other fees | (7,439 | ) | — | — | ||||||||
Net cash (used in) provided by financing activities | (4,065 | ) | 13,575 | (754 | ) | |||||||
Net change in cash and cash equivalents | 25,940 | 19,051 | 26,048 | |||||||||
Cash and cash equivalents, beginning of year | 83,053 | 64,002 | 37,954 | |||||||||
Cash and cash equivalents, end of year | $ | 108,993 | $ | 83,053 | $ | 64,002 | ||||||
Supplemental cash flow information: | ||||||||||||
Interest paid | $ | 25,326 | $ | 22,152 | $ | 21,585 | ||||||
Income taxes paid, net | $ | 10,223 | $ | 6,400 | $ | 7,804 | ||||||
F-6
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(Dollars in thousands, except per share data)
• | allowances for doubtful accounts; | ||
• | inventory valuation; | ||
• | fair value of derivative instruments and related hedged items; | ||
• | useful lives of property, plant, equipment and intangible assets; | ||
• | long-lived and intangible asset impairments; | ||
• | restructuring charges; | ||
• | warranty and product returns allowances; | ||
• | deferred compensation agreements; | ||
• | tax related items; | ||
• | contingencies; and | ||
• | fair value of options granted under our stock-based compensation plan. |
F-7
Table of Contents
Buildings | 20-50 years | |
Leasehold improvements | 3-15 years | |
Machinery, equipment, systems and other | 3-10 years |
F-8
Table of Contents
Life | Method | |||
Developed technologies | 15 years | Double-declining balance | ||
Patents and trademarks | 5 years | Straight-line |
F-9
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December 31, 2009 | ||||||||||
Carrying | ||||||||||
Fair Value | Amount | Balance Sheet Classification | ||||||||
Senior Secured Notes due 2015 | $ | 231,000 | $ | 211,956 | Long-term debt, less current maturities | |||||
Senior Subordinated Notes due 2011 | 105,876 | 105,876 | Current maturities of long-term debt | |||||||
Guangzhou 2009 Credit Facility | 10,000 | 10,000 | Current maturities of long-term debt | |||||||
Class A Junior preferred stock | 124,943 | 118,836 | Mandatory redeemable Class A Junior preferred stock | |||||||
Class B Senior Convertible preferred stock | 98,823 | 98,324 | Redeemable Class B Senior Convertible preferred stock | |||||||
Cash flow hedges | (327 | ) | (327 | ) | Accrued and other liabilities |
December 31, 2008 | ||||||||||
Carrying | ||||||||||
Fair Value | Amount | Balance Sheet Classification | ||||||||
Senior Subordinated Notes due 2011 | $ | 150,000 | $ | 200,000 | Long-term debt, less current maturities | |||||
2006 Credit Agreement | 15,500 | 15,500 | Long-term debt, including current maturities | |||||||
Class A Junior preferred stock | 115,517 | 108,096 | Mandatory redeemable Class A Junior preferred stock | |||||||
Class B Senior Convertible preferred stock | 90,495 | 89,812 | Redeemable Class B Senior Convertible preferred stock | |||||||
Cash flow hedges | (2,522 | ) | (2,522 | ) | Accrued and other liabilities |
F-10
Table of Contents
Fiscal Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Net (loss) income attributable to common stockholders | $ | (63,232 | ) | $ | (23,302 | ) | $ | 1,228 | ||||
Weighted average shares used to compute basic and diluted net (loss) income per share | 2,415,266 | 2,415,266 | 2,415,266 | |||||||||
Net (loss) income per share attributable to common stockholders-basic and diluted | $ | (26.18 | ) | $ | (9.65 | ) | $ | 0.51 | ||||
F-11
Table of Contents
2009 | 2008 | 2007 | ||||||||||
Balance, beginning of year | $ | 3,194 | $ | 2,104 | $ | 3,333 | ||||||
Provision | 1,987 | 2,341 | 1,269 | |||||||||
Write-offs, credits and adjustments | (2,766 | ) | (1,251 | ) | (2,498 | ) | ||||||
Balance, end of year | $ | 2,415 | $ | 3,194 | $ | 2,104 | ||||||
F-12
Table of Contents
Customer | 2009 | 2008 | 2007 | |||||||||
Alcatel-Lucent SA | 14.2 | % | 16.3 | % | 20.2 | % | ||||||
Bosch Group | 13.7 | 11.2 | 10.7 | |||||||||
Continental AG (a) | 11.8 | 13.4 | (b | ) | ||||||||
General Electric Company | 11.4 | 10.2 | (b | ) | ||||||||
Siemens AG (a) | (b | ) | (b | ) | 12.4 |
(a) | In December 2007, Continental AG concluded the purchase of the automotive parts business unit of Siemens AG. Sales to that business unit in 2008 are included in the table for Continental AG. Sales to that business unit in 2007 are included in the table for Siemens AG. Through its other business units, Siemens AG remains a customer. | |
(b) | Represents less than 10% of consolidated net sales. |
2009 | 2008 | |||||||
Raw materials | $ | 15,090 | $ | 26,388 | ||||
Work in process | 15,720 | 18,488 | ||||||
Finished goods | 18,387 | 25,543 | ||||||
Total | $ | 49,197 | $ | 70,419 | ||||
2009 | 2008 | |||||||
Land and buildings | $ | 54,603 | $ | 54,885 | ||||
Machinery, equipment and systems | 427,619 | 422,489 | ||||||
Leasehold improvements | 42,102 | 40,355 | ||||||
Construction in progress | 1,063 | 1,537 | ||||||
525,387 | 519,266 | |||||||
Less: Accumulated depreciation | (326,343 | ) | (286,525 | ) | ||||
Total | $ | 199,044 | $ | 232,741 | ||||
F-13
Table of Contents
December 31, 2009 | December 31, 2008 | |||||||||||||||||||||||
Gross | Gross | |||||||||||||||||||||||
Carrying | Accumulated | Net Book | Carrying | Accumulated | Net Book | |||||||||||||||||||
Amount | Amortization | Value | Amount | Amortization | Value | |||||||||||||||||||
Developed technologies | $ | 20,371 | $ | (16,126 | ) | $ | 4,245 | $ | 20,371 | $ | (15,200 | ) | $ | 5,171 | ||||||||||
Other | 2,472 | (2,041 | ) | 431 | 2,385 | (1,776 | ) | 609 | ||||||||||||||||
Total | $ | 22,843 | $ | (18,167 | ) | $ | 4,676 | $ | 22,756 | $ | (16,976 | ) | $ | 5,780 | ||||||||||
Year Ended December 31, | ||||
2010 | $ | 1,119 | ||
2011 | 1,063 | |||
2012 | 989 | |||
2013 | 957 | |||
2014 | 548 | |||
Thereafter | — | |||
Total | $ | 4,676 | ||
Year Ended December 31, 2009 | ||||||||||||||||||||||||||||
12/31/08 | Charges | Reversals | Total | Cash Payments | Adjustments | 12/31/09 | ||||||||||||||||||||||
Restructuring activities: | ||||||||||||||||||||||||||||
Personnel and severance | $ | 8,896 | $ | 2,298 | $ | (1,676 | ) | $ | 622 | $ | (8,675 | ) | $ | — | $ | 843 | ||||||||||||
Lease and other contractual commitments | 3,226 | 5,806 | (731 | ) | 5,075 | (5,414 | ) | (406 | )(a) | 2,481 | ||||||||||||||||||
Asset impairments | — | 1,592 | (663 | ) | 929 | — | (929 | ) | — | |||||||||||||||||||
Total restructuring and impairment charges | $ | 12,122 | $ | 9,696 | $ | (3,070 | ) | $ | 6,626 | $ | (14,089 | ) | $ | (1,335 | ) | $ | 3,324 | |||||||||||
(a) | Represents $183 of accretion of interest on discounted restructuring liabilities, net of $589 of non-cash restructuring expense related to the 2001 Restructuring. |
F-14
Table of Contents
Year Ended December 31, 2008 | ||||||||||||||||||||||||||||
Cash | ||||||||||||||||||||||||||||
12/31/07 | Charges | Reversals | Total | Payments | Adjustments | 12/31/08 | ||||||||||||||||||||||
Restructuring activities: | ||||||||||||||||||||||||||||
Personnel and severance | $ | 349 | $ | 9,511 | $ | — | $ | 9,511 | $ | (964 | ) | $ | — | $ | 8,896 | |||||||||||||
Lease and other contractual commitments | 4,818 | — | — | — | (870 | ) | (722 | )(a) | 3,226 | |||||||||||||||||||
Asset impairments | — | 5,558 | — | 5,558 | — | (5,558 | ) | — | ||||||||||||||||||||
Total restructuring and impairment charges | $ | 5,167 | $ | 15,069 | $ | — | $ | 15,069 | $ | (1,834 | ) | $ | (6,280 | ) | $ | 12,122 | ||||||||||||
(a) | Represents $1,044 decrease due to changes in foreign currency exchange rates, net of $322 of accretion of interest on discounted restructuring liabilities. |
Year Ended December 31, 2007 | ||||||||||||||||||||||||||||
Cash | ||||||||||||||||||||||||||||
12/31/06 | Charges | Reversals | Total | Payments | Adjustments | 12/31/07 | ||||||||||||||||||||||
Restructuring activities: | ||||||||||||||||||||||||||||
Personnel and severance | $ | 596 | $ | — | $ | — | $ | — | $ | (247 | ) | $ | — | $ | 349 | |||||||||||||
Lease and other contractual commitments | 5,471 | 278 | — | 278 | (1,270 | ) | 339 | (a) | 4,818 | |||||||||||||||||||
Total restructuring and impairment charges | $ | 6,067 | $ | 278 | $ | — | $ | 278 | $ | (1,517 | ) | $ | 339 | $ | 5,167 | |||||||||||||
(a) | Represents accretion of interest on discounted restructuring liabilities. |
Year Ended December 31, | ||||
2010 | $ | 2,621 | ||
2011 | 120 | |||
2012 | 55 | |||
2013 | 51 | |||
2014 | 52 | |||
Thereafter | 1,160 | |||
Total | 4,059 | |||
Less: Amounts representing interest | (735 | ) | ||
Restructuring liability | $ | 3,324 | ||
F-15
Table of Contents
2009 | 2008 | |||||||
Accrued payroll and related costs | $ | 8,965 | $ | 12,130 | ||||
Accrued interest | 7,873 | 9,919 | ||||||
Accrued restructuring costs | 2,621 | 9,310 | ||||||
Accrued other | 19,292 | 19,473 | ||||||
Total | $ | 38,751 | $ | 50,832 | ||||
2009 | 2008 | |||||||
Senior Secured Notes due 2015 | $ | 211,956 | $ | — | ||||
Senior Subordinated Notes due 2011 | 105,876 | 200,000 | ||||||
Guangzhou 2009 Credit Facility | 10,000 | — | ||||||
2006 Credit Agreement; Term loan | — | 15,500 | ||||||
Capital leases | 3,048 | 5,163 | ||||||
330,880 | 220,663 | |||||||
Less: Current maturities | (118,207 | ) | (9,617 | ) | ||||
$ | 212,673 | $ | 211,046 | |||||
Year Ended December 31, | ||||
2010 | $ | 118,207 | ||
2011 | 45 | |||
2012 | 50 | |||
2013 | 55 | |||
2014 | 60 | |||
Thereafter | 220,507 | |||
Total | $ | 338,924 | ||
F-16
Table of Contents
F-17
Table of Contents
• | incur debt, incur contingent obligations and issue certain types of preferred stock; | ||
• | create liens; | ||
• | pay dividends, distributions or make other specified restricted payments; | ||
• | make certain investments and acquisitions; | ||
• | enter into certain transactions with affiliates; and | ||
• | merge or consolidate with any other entity or sell, assign, transfer, lease, convey or otherwise dispose of assets. |
F-18
Table of Contents
Year Ended December 31, | Capital | Operating | ||||||
2010 | $ | 2,636 | $ | 3,678 | ||||
2011 | 117 | 2,405 | ||||||
2012 | 117 | 550 | ||||||
2013 | 117 | 392 | ||||||
2014 | 117 | 365 | ||||||
Thereafter | 697 | 1,431 | ||||||
Total | 3,801 | $ | 8,821 | |||||
Less: Amounts representing interest | (753 | ) | ||||||
Capital lease obligations | $ | 3,048 | ||||||
2009 | 2008 | 2007 | ||||||||||
Current: | ||||||||||||
Federal | $ | — | $ | (28 | ) | $ | (316 | ) | ||||
State | (923 | ) | 72 | 22 | ||||||||
Foreign | 11,119 | 7,716 | (5,237 | ) | ||||||||
10,196 | 7,760 | (5,531 | ) | |||||||||
Deferred: | ||||||||||||
Federal | (1,508 | ) | — | — | ||||||||
State | — | — | — | |||||||||
Foreign | (931 | ) | (2,822 | ) | (1,322 | ) | ||||||
(2,439 | ) | (2,822 | ) | (1,322 | ) | |||||||
Total | $ | 7,757 | $ | 4,938 | $ | (6,853 | ) | |||||
F-19
Table of Contents
2009 | 2008 | 2007 | ||||||||||
U.S. Federal Statutory Rate | $ | (16,436 | ) | $ | (3,687 | ) | $ | 552 | ||||
State taxes, net of federal benefit | (1,018 | ) | (134 | ) | (1,071 | ) | ||||||
Impact from permanent items | 7,676 | 11,442 | 5,783 | |||||||||
Foreign tax (under) U.S. Statutory rate | (1,581 | ) | (5,372 | ) | (4,799 | ) | ||||||
Translation revaluation of deferred taxes | (13,397 | ) | 24,608 | 113,434 | ||||||||
Change in the valuation allowance for deferred tax assets | 27,580 | (24,664 | ) | (100,502 | ) | |||||||
Tax contingencies | 1,925 | (900 | ) | (8,763 | ) | |||||||
Foreign tax rate changes and withholdings | 2,937 | (1,218 | ) | 2,402 | ||||||||
Expired foreign tax credit | — | 3,057 | — | |||||||||
Foreign dividend reinvestment tax credit | — | — | (3,223 | ) | ||||||||
Other | 71 | 1,806 | (10,666 | ) | ||||||||
$ | 7,757 | $ | 4,938 | $ | (6,853 | ) | ||||||
2009 | 2008 | |||||||
Deferred tax assets: | ||||||||
Net operating loss carryforwards | $ | 357,925 | $ | 345,829 | ||||
Capital loss carryforwards | 117,455 | 98,793 | ||||||
AMT credit carryforwards | 1,508 | 1,508 | ||||||
Accrued liabilities not yet deductible | 12,299 | 11,765 | ||||||
Property, plant and equipment | 2,763 | 3,290 | ||||||
Other | 3,364 | 4,658 | ||||||
495,314 | 465,843 | |||||||
Valuation allowance | (486,881 | ) | (459,301 | ) | ||||
8,433 | 6,542 | |||||||
Deferred tax liabilities: | ||||||||
Intangibles | (283 | ) | (283 | ) | ||||
Other | (4,561 | ) | (6,135 | ) | ||||
(4,844 | ) | (6,418 | ) | |||||
Net deferred tax assets (liabilities) | $ | 3,589 | $ | 124 | ||||
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Domestic | $ | (57,809 | ) | $ | (12,822 | ) | $ | (153,570 | ) | |||
Foreign | 10,849 | 2,287 | 155,148 | |||||||||
$ | (46,960 | ) | $ | (10,535 | ) | $ | 1,578 | |||||
F-20
Table of Contents
Balance at December 31, 2008 | $ | 13,644 | ||
Tax positions related to current year: | ||||
Additions | 1,194 | |||
Reductions | — | |||
Tax positions related to prior years: | ||||
Additions | — | |||
Reductions | — | |||
Settlements | (1,603 | ) | ||
Lapses in statutes of limitations | — | |||
Balance at December 31, 2009 | $ | 13,235 | ||
F-21
Table of Contents
Weighted | ||||||||||||
Average | ||||||||||||
Remaining | Average | |||||||||||
Notional | Maturity in | Exchange | ||||||||||
Amount | Months | Rate | ||||||||||
Cash flow hedges: | ||||||||||||
Chinese RMB | 480,000 | 4.0 | 6.770 | |||||||||
Deferred loss, net of tax | $ | 327 | ||||||||||
F-22
Table of Contents
2009 | 2008 | 2007 | ||||||||||
Cost of goods sold | $ | 144 | $ | 91 | $ | 217 | ||||||
Selling, general and administrative | 804 | 524 | 1,868 | |||||||||
$ | 948 | $ | 615 | $ | 2,085 | |||||||
2008 | 2007 | |||||||
Expected life of options | 5 years | 5 years | ||||||
Risk-free interest rate | 2.71 | % | 4.02% to 4.76% | |||||
Expected volatility of stock | 52 | % | 54% to 64% | |||||
Expected dividend yield | None | None |
2009 | 2008 | 2007 | ||||||||||||||||||||||
Exercise | Exercise | Exercise | ||||||||||||||||||||||
Options | Price(1) | Options | Price(1) | Options | Price(1) | |||||||||||||||||||
Beginning balance | 218,185 | $ | 150.99 | 231,334 | $ | 150.99 | 214,839 | $ | 150.99 | |||||||||||||||
Granted | — | 150.99 | 1,004 | 150.99 | 39,732 | 150.99 | ||||||||||||||||||
Exercised | — | — | — | — | — | — | ||||||||||||||||||
Forfeited | (8,750 | ) | 150.99 | (14,153 | ) | 150.99 | (23,237 | ) | 150.99 | |||||||||||||||
Ending balance | 209,435 | $ | 150.99 | 218,185 | $ | 150.99 | 231,334 | $ | 150.99 | |||||||||||||||
Exercisable at year end | 198,699 | $ | 150.99 | 193,491 | $ | 150.99 | 196,546 | $ | 150.99 | |||||||||||||||
(1) | Weighted average. |
F-23
Table of Contents
Class A Preferred | Class B Preferred | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Balance at December 31, 2007 | 903,233 | $ | 98,326 | 4,255,546 | $ | 81,983 | ||||||||||
Accretion and amortization | — | 9,770 | — | 7,829 | ||||||||||||
Balance at December 31, 2008 | 903,233 | $ | 108,096 | 4,255,546 | $ | 89,812 | ||||||||||
Accretion and amortization | — | 10,740 | — | 8,515 | ||||||||||||
Balance as of December 31, 2009 | 903,233 | $ | 118,836 | 4,255,546 | $ | 98,327 | ||||||||||
F-24
Table of Contents
December 31, | ||||||||
2009 | 2008 | |||||||
Total assets: | ||||||||
Printed Circuit Boards | $ | 382,238 | $ | 435,664 | ||||
Assembly | 85,448 | 102,208 | ||||||
Other | 189,552 | 47,366 | ||||||
Total assets | $ | 657,238 | $ | 585,238 | ||||
F-25
Table of Contents
2009 | 2008 | 2007 | ||||||||||
Net sales to external customers: | ||||||||||||
Printed Circuit Boards | $ | 340,993 | $ | 471,386 | $ | 471,211 | ||||||
Assembly | 141,693 | 196,552 | 187,338 | |||||||||
Other | 13,761 | 44,892 | 55,794 | |||||||||
$ | 496,447 | $ | 712,830 | $ | 714,343 | |||||||
Intersegment sales: | ||||||||||||
Printed Circuit Boards | $ | 9,273 | $ | 18,398 | $ | 18,616 | ||||||
Assembly | 13 | 9 | 7 | |||||||||
Other | 363 | 1,113 | 2,655 | |||||||||
$ | 9,649 | $ | 19,520 | $ | 21,278 | |||||||
Operating income (loss): | ||||||||||||
Printed Circuit Boards | $ | 3,244 | $ | 23,838 | $ | 26,078 | ||||||
Assembly | 4,120 | 8,836 | 8,365 | |||||||||
Other | (12,112 | ) | (10,272 | ) | 50 | |||||||
Total operating (loss) income | (4,748 | ) | 22,402 | 34,493 | ||||||||
Interest expense, net | 34,399 | 31,585 | 30,573 | |||||||||
Amortization of deferred financing costs | 1,954 | 2,063 | 2,065 | |||||||||
Loss on early extinguishment of debt | 2,357 | — | — | |||||||||
Other, net | 3,502 | (711 | ) | 277 | ||||||||
(Loss) income before income taxes | $ | (46,960 | ) | $ | (10,535 | ) | $ | 1,578 | ||||
2009 | 2008 | 2007 | ||||||||||
Capital expenditures: | ||||||||||||
Printed Circuit Boards | $ | 17,524 | $ | 42,920 | $ | 29,549 | ||||||
Assembly | 2,190 | 2,846 | 4,046 | |||||||||
Other | 2,211 | 3,159 | 3,602 | |||||||||
Total capital expenditures | $ | 21,925 | $ | 48,925 | $ | 37,197 | ||||||
Depreciation expense: | ||||||||||||
Printed Circuit Boards | $ | 45,579 | $ | 46,262 | $ | 43,722 | ||||||
Assembly | 4,582 | 4,979 | 4,752 | |||||||||
Other | — | 2,044 | 1,230 | |||||||||
Total depreciation expense | $ | 50,161 | $ | 53,285 | $ | 49,704 | ||||||
F-26
Table of Contents
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
United States | $ | 138,632 | $ | 264,490 | $ | 263,680 | ||||||
People’s Republic of China, including Hong Kong | 126,105 | 147,638 | 170,579 | |||||||||
Germany | 39,338 | 56,951 | 50,167 | |||||||||
Malaysia | 22,298 | 19,844 | 26,121 | |||||||||
Mexico | 21,706 | 18,570 | 12,743 | |||||||||
France | 20,794 | 29,827 | 40,425 | |||||||||
Hungary | 16,323 | 18,734 | 20,788 | |||||||||
Canada | 15,082 | 14,115 | 9,824 | |||||||||
Thailand | 12,057 | 5,719 | 6,919 | |||||||||
Czech Republic | 11,745 | 16,009 | 15,945 | |||||||||
Singapore | 8,429 | 9,922 | 6,893 | |||||||||
United Kingdom | 8,059 | 10,309 | 9,277 | |||||||||
Belgium | 7,838 | 17,372 | 31,999 | |||||||||
Portugal | 7,283 | 8,688 | 7,414 | |||||||||
Japan | 7,191 | 6,191 | 1,813 | |||||||||
Poland | 4,689 | 7,271 | 2,357 | |||||||||
Other | 28,878 | 61,180 | 37,399 | |||||||||
Total | $ | 496,447 | $ | 712,830 | $ | 714,343 | ||||||
December 31, | ||||||||
2009 | 2008 | |||||||
People’s Republic of China | $ | 193,672 | $ | 225,222 | ||||
Mexico | 2,877 | 3,571 | ||||||
United States | 2,495 | 3,948 | ||||||
$ | 199,044 | $ | 232,741 | |||||
F-27
Table of Contents
F-28
Table of Contents
Quarter | ||||||||||||||||||||
1st | 2nd | 3rd | 4th | Year | ||||||||||||||||
2009: | ||||||||||||||||||||
Net Sales | $ | 123,437 | $ | 120,561 | $ | 121,087 | $ | 131,362 | $ | 496,447 | ||||||||||
Cost of goods sold | 102,876 | 97,323 | 96,101 | 101,844 | 398,144 | |||||||||||||||
Selling, general and administrative | 10,204 | 11,455 | 10,456 | 12,958 | 45,073 | |||||||||||||||
Depreciation and amortization | 12,984 | 12,913 | 12,835 | 12,620 | 51,352 | |||||||||||||||
Restructuring and impairment | 723 | 3,847 | 583 | 1,473 | 6,626 | |||||||||||||||
Operating (loss) income | (3,350 | ) | (4,977 | ) | 1,112 | 2,467 | (4,748 | ) | ||||||||||||
Net loss | (14,500 | ) | (12,864 | ) | (11,444 | ) | (15,909 | ) | (54,717 | ) | ||||||||||
Accretion of Class B Senior Convertible preferred stock | 2,084 | 2,085 | 2,173 | 2,173 | 8,515 | |||||||||||||||
Net loss attributable to common stockholders | $ | (16,584 | ) | $ | (14,949 | ) | $ | (13,617 | ) | $ | (18,082 | ) | $ | (63,232 | ) | |||||
Basic and diluted loss per share | $ | (6.87 | ) | $ | (6.19 | ) | $ | (5.64 | ) | $ | (7.48 | ) | $ | (26.18 | ) | |||||
2008: | ||||||||||||||||||||
Net Sales | $ | 180,519 | $ | 188,157 | $ | 196,343 | $ | 147,811 | $ | 712,830 | ||||||||||
Cost of goods sold | 140,430 | 147,452 | 158,580 | 121,894 | 568,356 | |||||||||||||||
Selling, general and administrative | 15,324 | 14,365 | 13,249 | 9,537 | 52,475 | |||||||||||||||
Depreciation and amortization | 13,352 | 13,562 | 13,861 | 13,753 | 54,528 | |||||||||||||||
Restructuring and impairment | — | — | — | 15,069 | 15,069 | |||||||||||||||
Operating income (loss) | 11,413 | 12,778 | 10,653 | (12,442 | ) | 22,402 | ||||||||||||||
Net income (loss) | 1,733 | 1,768 | 602 | (19,576 | ) | (15,473 | ) | |||||||||||||
Accretion of Class B Senior Convertible preferred stock | 1,917 | 1,916 | 1,999 | 1,997 | 7,829 | |||||||||||||||
Net loss attributable to common stockholders | $ | (184 | ) | $ | (148 | ) | $ | (1,397 | ) | $ | (21,573 | ) | $ | (23,302 | ) | |||||
Basic and diluted loss per share | $ | (0.08 | ) | $ | (0.06 | ) | $ | (0.58 | ) | $ | (8.93 | ) | $ | (9.65 | ) | |||||
F-29
Table of Contents
F-30
Table of Contents
F-31
Table of Contents
2009 | 2008 | |||||||
(In thousands) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 17,571 | $ | 5,728 | ||||
Accounts receivable, net of allowances for doubtful accounts of $1,502 and $2,252 | 43,285 | 73,153 | ||||||
Inventories, net | 14,367 | 23,631 | ||||||
Assets held for sale | 3 | 1,477 | ||||||
Deferred income taxes | 160 | 75 | ||||||
Prepaid and other current assets | 4,896 | 12,961 | ||||||
Total current assets | 80,282 | 117,025 | ||||||
Property, plant and equipment, net of accumulated depreciation of $137,772 and $121,253 | 95,883 | 103,012 | ||||||
Goodwill | 11,392 | 31,794 | ||||||
Definite-lived intangible assets, net of accumulated amortization of $10,324 and $8,342 | 6,884 | 8,866 | ||||||
Deferred income taxes, net | 612 | 885 | ||||||
Assets held for sale | 1,146 | — | ||||||
Other assets | 4,471 | 5,859 | ||||||
Total assets | $ | 200,670 | $ | 267,441 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 33,263 | $ | 59,789 | ||||
Accrued liabilities | 14,715 | 15,783 | ||||||
Total current liabilities | 47,978 | 75,572 | ||||||
Long-term debt | 78,000 | 70,000 | ||||||
Other long-term liabilities | 4,234 | 3,522 | ||||||
Total liabilities | 130,212 | 149,094 | ||||||
Minority interest | 3,935 | 4,573 | ||||||
Commitments and Contingencies (Note 19) | ||||||||
Shareholders’ equity: | ||||||||
Preferred stock, no par value; 10,000 shares authorized; none issued | — | — | ||||||
Common stock, no par value; 50,000 shares authorized; 21,781 and 21,073 issued and outstanding | 217,112 | 215,085 | ||||||
Accumulated deficit | (150,622 | ) | (101,358 | ) | ||||
Accumulated other comprehensive income | 33 | 47 | ||||||
Total shareholders’ equity | 66,523 | 113,774 | ||||||
Total liabilities and shareholders’ equity | $ | 200,670 | $ | 267,441 | ||||
F-32
Table of Contents
May 30, | May 31, | May 26, | ||||||||||
2009 | 2008 | 2007 | ||||||||||
(In thousands, except | ||||||||||||
per share data) | ||||||||||||
Net sales | $ | 287,127 | $ | 378,637 | $ | 400,496 | ||||||
Cost of sales | 264,941 | 340,778 | 334,925 | |||||||||
Gross profit | 22,186 | 37,859 | 65,571 | |||||||||
Operating expenses: | ||||||||||||
Engineering | 2,121 | 1,810 | 1,705 | |||||||||
Selling, general and administration | 34,915 | 40,963 | 44,477 | |||||||||
Amortization of intangible assets | 1,981 | 2,305 | 2,745 | |||||||||
Severance, asset impairment and restructuring charges | 24,895 | 15,686 | 81,414 | |||||||||
Total operating expenses | 63,912 | 60,764 | 130,341 | |||||||||
Operating loss | (41,726 | ) | (22,905 | ) | (64,770 | ) | ||||||
Other income (expense): | ||||||||||||
Interest income | 134 | 793 | 1,378 | |||||||||
Interest expense | (3,923 | ) | (4,119 | ) | (5,353 | ) | ||||||
Debt extinguishment costs | — | (476 | ) | — | ||||||||
Gain on settlement of debt | — | 5,094 | — | |||||||||
Other expense, net | (528 | ) | (1,271 | ) | (1,019 | ) | ||||||
Total other income (expense), net | (4,317 | ) | 21 | (4,994 | ) | |||||||
Loss from continuing operations before income taxes and minority interests | (46,043 | ) | (22,884 | ) | (69,764 | ) | ||||||
Provision for income taxes | 2,628 | 1,502 | 1,412 | |||||||||
Income (loss) from continuing operations before minority interests | (48,671 | ) | (24,386 | ) | (71,176 | ) | ||||||
Minority interest in net income of consolidated subsidiaries | 593 | 1,165 | 739 | |||||||||
Loss from continuing operations | (49,264 | ) | (25,551 | ) | (71,915 | ) | ||||||
Loss from discontinued operations, net of provision for income taxes of $0, $0 and $47, respectively | — | — | (517 | ) | ||||||||
Net loss | $ | (49,264 | ) | $ | (25,551 | ) | $ | (72,432 | ) | |||
Basic loss per share from continuing operations | $ | (2.34 | ) | $ | (1.22 | ) | $ | (3.52 | ) | |||
Basic loss per share from discontinued operations | — | — | (0.03 | ) | ||||||||
Basic net loss per share | $ | (2.34 | ) | $ | (1.22 | ) | $ | (3.55 | ) | |||
Diluted loss per share from continuing operations | $ | (2.34 | ) | $ | (1.22 | ) | $ | (3.52 | ) | |||
Diluted loss per share from discontinued operations | — | — | (0.03 | ) | ||||||||
Diluted net loss per share | $ | (2.34 | ) | $ | (1.22 | ) | $ | (3.55 | ) | |||
Weighted average number of shares — basic | 21,098 | 21,019 | 20,406 | |||||||||
Weighted average number of shares — diluted | 21,098 | 21,019 | 20,406 | |||||||||
F-33
Table of Contents
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
AND COMPREHENSIVE INCOME (LOSS)
For the fiscal years ended May 30, 2009, May 31, 2008 and May 26, 2007
Accumulated | ||||||||||||||||||||||||
Other | ||||||||||||||||||||||||
Unearned | Comprehensive | Total | ||||||||||||||||||||||
Common Stock | Stock | Accumulated | Income | Shareholders’ | ||||||||||||||||||||
Shares | Amount | Compensation | Deficit | (Loss) | Equity | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Balance at May 27, 2006 | 19,806 | $ | 204,831 | $ | (1,096 | ) | $ | (1,623 | ) | $ | 13 | $ | 202,125 | |||||||||||
Stock Plans: | ||||||||||||||||||||||||
Exercise of stock options | 724 | 5,586 | — | — | — | 5,586 | ||||||||||||||||||
Issuance of restricted stock to employees | 198 | — | — | — | — | — | ||||||||||||||||||
Share-based compensation expense | — | 1,850 | — | — | — | 1,850 | ||||||||||||||||||
Issuance of stock under defined contribution plan | 126 | 1,234 | — | — | — | 1,234 | ||||||||||||||||||
Reversal of unearned stock compensation upon adoption of SFAS No 123(R) | — | (1,096 | ) | 1,096 | — | — | — | |||||||||||||||||
Shares repurchased, surrendered or cancelled | (10 | ) | (71 | ) | — | — | — | (71 | ) | |||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||
Net loss | — | — | — | (72,432 | ) | — | (72,432 | ) | ||||||||||||||||
Change in pension cost, net of tax | 17 | 17 | ||||||||||||||||||||||
Foreign currency translation adjustment, net of tax | — | — | — | — | 3 | 3 | ||||||||||||||||||
Annual comprehensive loss | (72,412 | ) | ||||||||||||||||||||||
Effect of adoption of SFAS No. 158, net of tax | — | — | — | — | 132 | 132 | ||||||||||||||||||
Balance at May 26, 2007 | 20,844 | 212,334 | — | (74,055 | ) | 165 | 138,444 | |||||||||||||||||
Effect of adoption of FIN 48 | — | — | — | (1,752 | ) | — | (1,752 | ) | ||||||||||||||||
Stock Plans: | ||||||||||||||||||||||||
Exercise of stock options | 1 | 2 | — | — | — | 2 | ||||||||||||||||||
Issuance of restricted stock to employees | 139 | — | — | — | — | — | ||||||||||||||||||
Share-based compensation expense | — | 1,965 | — | — | — | 1,965 | ||||||||||||||||||
Issuance of stock under defined contribution plan | 133 | 873 | — | — | — | 873 | ||||||||||||||||||
Shares repurchased, surrendered or cancelled | (44 | ) | (89 | ) | — | — | — | (89 | ) | |||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||
Net loss | — | — | — | (25,551 | ) | — | (25,551 | ) | ||||||||||||||||
Foreign currency translation adjustment, net of tax | — | — | — | — | 37 | 37 | ||||||||||||||||||
Change in pension cost, net of tax | — | — | — | — | (155 | ) | (155 | ) | ||||||||||||||||
Annual comprehensive loss | (25,669 | ) | ||||||||||||||||||||||
Balance at May 31, 2008 | 21,073 | 215,085 | — | (101,358 | ) | 47 | 113,774 | |||||||||||||||||
Stock Plans: | ||||||||||||||||||||||||
Issuance of restricted stock to employees | 26 | — | — | — | — | — | ||||||||||||||||||
Share-based compensation expense | — | 1,617 | — | — | — | 1,617 | ||||||||||||||||||
Issuance of stock under employee stock purchase plan | 750 | 447 | — | — | — | 447 | ||||||||||||||||||
Shares repurchased, surrendered or cancelled | (68 | ) | (37 | ) | — | — | — | (37 | ) | |||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||
Net loss | — | — | — | (49,264 | ) | — | (49,264 | ) | ||||||||||||||||
Foreign currency translation adjustment, net of tax | — | — | — | — | (14 | ) | (14 | ) | ||||||||||||||||
Annual comprehensive loss | (49,278 | ) | ||||||||||||||||||||||
Balance at May 30, 2009 | 21,781 | $ | 217,112 | $ | — | $ | (150,622 | ) | $ | 33 | $ | 66,523 | ||||||||||||
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May 30, | May 31, | May 26, | ||||||||||
2009 | 2008 | 2007 | ||||||||||
(In thousands) | ||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
Net loss | $ | (49,264 | ) | $ | (25,551 | ) | $ | (72,432 | ) | |||
Adjustments to reconcile net loss to cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 22,605 | 20,992 | 23,226 | |||||||||
Contribution of common stock to defined contribution plan | — | 873 | 1,234 | |||||||||
Share-based compensation expense | 1,617 | 1,965 | 1,850 | |||||||||
Minority interest in net income of consolidated subsidiaries | 593 | 1,165 | 739 | |||||||||
Asset impairment charges | 21,202 | 13,056 | 80,773 | |||||||||
Accrual of lease termination liability | 1,090 | 95 | — | |||||||||
Debt extinguishment charges | — | 476 | — | |||||||||
Gain on settlement of debt | — | (5,094 | ) | — | ||||||||
Gain on disposition of assets | (594 | ) | (343 | ) | — | |||||||
Other non-cash (income) expense | — | 236 | — | |||||||||
Deferred income taxes | 89 | (485 | ) | — | ||||||||
Changes in operating accounts: | ||||||||||||
(Increase) decrease in accounts receivable, net | 29,843 | 3,672 | (1,863 | ) | ||||||||
(Increase) decrease in inventories, net | 9,264 | 1,600 | (847 | ) | ||||||||
Increase in income taxes receivable | (10 | ) | (23 | ) | (295 | ) | ||||||
(Increase) decrease in other assets | 8,320 | (5,968 | ) | 196 | ||||||||
Increase (decrease) in accounts payable | (20,936 | ) | 9,775 | (62 | ) | |||||||
Decrease in other accrued liabilities | (2,745 | ) | (3,318 | ) | (6,165 | ) | ||||||
Increase (decrease) in due to affiliate, net | 1,607 | (1,054 | ) | (387 | ) | |||||||
Net cash provided by operating activities | 22,681 | 12,069 | 25,967 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
Purchases of property, plant and equipment | (19,005 | ) | (28,394 | ) | (19,795 | ) | ||||||
Proceeds from disposal of property, plant and equipment | 988 | 278 | 999 | |||||||||
Purchases of investments | — | (12,775 | ) | (179,025 | ) | |||||||
Proceeds from sales and maturity of securities | — | 21,800 | 188,525 | |||||||||
Net cash used in investing activities | (18,017 | ) | (19,091 | ) | (9,296 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
Proceeds from long-term borrowings | 40,000 | — | — | |||||||||
Principal payments on long-term borrowings | (32,000 | ) | (2,500 | ) | (16,125 | ) | ||||||
Payment of deferred financing costs | (4 | ) | (257 | ) | — | |||||||
Payments on capital lease obligations | — | (438 | ) | (1,166 | ) | |||||||
Proceeds from exercise of stock options and stock plan transactions | 447 | 1 | 5,586 | |||||||||
Reacquisition of common stock | (34 | ) | (89 | ) | (71 | ) | ||||||
Distribution to minority shareholder | (1,230 | ) | (1,142 | ) | — | |||||||
Net cash provided by (used in) financing activities | 7,179 | (4,425 | ) | (11,776 | ) | |||||||
NET CHANGE IN CASH AND CASH EQUIVALENTS | 11,843 | (11,447 | ) | 4,895 | ||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 5,728 | 17,175 | 12,280 | |||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 17,571 | $ | 5,728 | $ | 17,175 | ||||||
SUPPLEMENTAL CASH FLOW INFORMATION | ||||||||||||
Cash paid for income taxes, net | $ | 1,783 | $ | 1,562 | $ | 1,413 | ||||||
Cash paid for interest | 3,342 | 3,740 | 5,300 | |||||||||
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY | ||||||||||||
Issuance (reduction) of promissory note related to acquisition | $ | — | $ | — | $ | (3,406 | ) | |||||
Other purchase price adjustments | — | — | (1,435 | ) | ||||||||
Increase to asset retirement obligation | — | 130 | (74 | ) | ||||||||
FIN 48 transition adjustment | — | 2,906 | — |
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Note 1. | Summary of Significant Accounting Policies |
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Fiscal 2008 | Fiscal 2007 | |||||||||||||||
(As Reported) | (As Revised) | (As Reported) | (As Revised) | |||||||||||||
Net sales | $ | 378,637 | $ | 378,637 | $ | 400,496 | $ | 400,496 | ||||||||
Cost of sales | 334,035 | 340,778 | 328,569 | 334,925 | ||||||||||||
Gross profit | 44,602 | 37,859 | 71,927 | 65,571 | ||||||||||||
Gross margin | 11.8 | % | 10.0 | % | 18.0 | % | 16.4 | % | ||||||||
Engineering expense | 8,553 | 1,810 | 8,061 | 1,705 | ||||||||||||
Other operating expenses | 58,954 | 58,954 | 128,636 | 128,636 | ||||||||||||
Loss from operations | $ | (22,905 | ) | $ | (22,905 | ) | $ | (64,770 | ) | $ | (64,770 | ) | ||||
• | the allowance for doubtful accounts; | |
• | the valuation of excess and obsolete inventories and idle facilities; | |
• | product warranty liabilities; | |
• | the valuation and impairment of long-lived assets; | |
• | the valuation and impairment of goodwill and other intangible assets; |
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• | share-based compensation; | |
• | legal contingencies; and | |
• | accounting for income taxes. |
2009 | 2008 | |||||||
Book value of fixed rate debt | $ | 70,000 | $ | 70,000 | ||||
Fair value of fixed rate debt | $ | 28,000 | $ | 38,106 | ||||
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2009 | 2008 | 2007 | ||||||||||
Balance, beginning of period | $ | 2,147 | $ | 2,129 | $ | 2,297 | ||||||
Provision for warranty charges | 2,504 | 3,565 | 3,383 | |||||||||
Change in estimate for existing warranties | (742 | ) | — | — | ||||||||
Warranty charges incurred | (2,948 | ) | (3,547 | ) | (3,551 | ) | ||||||
Balance, end of period | $ | 961 | $ | 2,147 | $ | 2,129 | ||||||
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2009 | 2008 | 2007 | ||||||||||
Stock options | 3,221 | 2,970 | 1,607 | |||||||||
Convertible notes | 4,608 | 4,608 | 4,608 | |||||||||
7,829 | 7,578 | 6,215 | ||||||||||
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• | Level 1 — Quoted prices in active markets for identical asset or liabilities. | |
• | Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. | |
• | Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. |
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Note 2. | Transactions Related to Merix Asia Acquisition |
Note 3. | Inventories, Net |
2009 | 2008 | |||||||
Raw materials | $ | 2,986 | $ | 4,876 | ||||
Work in process | 4,129 | 7,542 | ||||||
Finished goods | 3,398 | 3,901 | ||||||
Consigned finished goods | 3,854 | 7,312 | ||||||
$ | 14,367 | $ | 23,631 | |||||
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Note 4. | Assets Held for Sale |
2009 | 2008 | |||||||
Two parcels of land | $ | 1,146 | $ | 1,146 | ||||
Excess equipment | 3 | 331 | ||||||
1,149 | 1,477 | |||||||
Assets held for sale included in current assets | (3 | ) | (1,477 | ) | ||||
Assets held for sales included in non-current assets | $ | 1,146 | $ | — | ||||
Note 5. | Prepaid and Other Current Assets |
2009 | 2008 | |||||||
Prepaid expenses | $ | 1,410 | $ | 1,778 | ||||
Income taxes receivable (Note 16) | 328 | 318 | ||||||
Value-added tax receivable | 1,646 | 7,176 | ||||||
Intercompany receivable (Note 1) | — | 227 | ||||||
Other | 1,512 | 3,462 | ||||||
$ | 4,896 | $ | 12,961 | |||||
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Note 6. | Property, Plant and Equipment |
2009 | 2008 | |||||||
Land | $ | 922 | $ | 922 | ||||
Buildings and grounds | 47,116 | 40,098 | ||||||
Leasehold improvements | 2,640 | 1,979 | ||||||
Machinery and equipment | 182,645 | 162,486 | ||||||
Construction in progress | 332 | 18,780 | ||||||
233,655 | 224,265 | |||||||
Accumulated depreciation | (137,772 | ) | (121,253 | ) | ||||
$ | 95,883 | $ | 103,012 | |||||
Note 7. | Goodwill and Definite-Lived Intangible Assets |
2009 | 2008 | 2007 | ||||||||||
Balance, beginning of period | $ | 31,794 | $ | 31,614 | $ | 89,889 | ||||||
Recognition of deferred tax assets related to Asia acquisition in accordance with SFAS No. 109, “Accounting for Income Taxes” | 98 | (545 | ) | (123 | ) | |||||||
Impairment (Note 15) | (20,500 | ) | — | (53,311 | ) | |||||||
Adjustment related to $3.4 million decrease in promissory note and $1.4 million purchase allocation adjustment | — | — | (4,841 | ) | ||||||||
Adjustment related to adoption of FIN 48 | — | 725 | — | |||||||||
Balance, end of period | $ | 11,392 | $ | 31,794 | $ | 31,614 | ||||||
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Amortization | ||||||||||
Period | 2009 | 2008 | ||||||||
Customer relationships | 6.5-10 years | $ | 17,168 | $ | 17,168 | |||||
Accumulated amortization | (10,291 | ) | (8,317 | ) | ||||||
6,877 | 8,851 | |||||||||
Manufacturing sales representatives network | 5.5 years | $ | 40 | $ | 40 | |||||
Accumulated amortization | (33 | ) | (25 | ) | ||||||
7 | 15 | |||||||||
Total definite-lived intangible assets | $ | 6,884 | $ | 8,866 | ||||||
2009 | 2008 | 2007 | ||||||||||
Customer relationships | $ | 1,975 | $ | 2,298 | $ | 2,415 | ||||||
Non-compete agreement | — | — | 323 | |||||||||
Manufacturing sales representatives network | 7 | 7 | 7 | |||||||||
$ | 1,982 | $ | 2,305 | $ | 2,745 | |||||||
Fiscal Year | Total | |||
2010 | $ | 1,765 | ||
2011 | 1,553 | |||
2012 | 1,120 | |||
2013 | 727 | |||
2014 | 727 | |||
Thereafter | 992 | |||
$ | 6,884 | |||
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Note 8. | Other Assets |
2009 | 2008 | |||||||
Leasehold land use rights, net | $ | 1,199 | $ | 1,227 | ||||
Deferred financing costs, net | 3,022 | 3,842 | ||||||
Other assets | 250 | 790 | ||||||
$ | 4,471 | $ | 5,859 | |||||
Note 9. | Accrued Liabilities |
2009 | 2008 | |||||||
Accrued compensation | $ | 6,686 | $ | 7,177 | ||||
Accrued warranty (Note 1) | 961 | 2,147 | ||||||
Income taxes payable (Note 16) | 469 | 316 | ||||||
Intercompany payable (Note 1) | 1,380 | — | ||||||
Asset retirement obligation — current portion (Note 10) | — | 873 | ||||||
Other liabilities | 5,219 | 5,270 | ||||||
$ | 14,715 | $ | 15,783 | |||||
Note 10. | Asset Retirement Obligations |
2009 | 2008 | |||||||
Asset retirement obligations at the beginning of the period | $ | 1,328 | $ | 1,106 | ||||
Costs incurred for restoration of facilities | (841 | ) | (108 | ) | ||||
Revisions in estimated cash flows | — | 130 | ||||||
Accretion expense | 17 | 200 | ||||||
Asset retirement obligations at the end of the period | 504 | 1,328 | ||||||
Asset retirement obligations included in current liabilities | — | (873 | ) | |||||
Asset retirement obligations included in other long-term liabilities | $ | 504 | $ | 455 | ||||
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Note 11. | Revolving Lines of Credit and Long-Term Debt |
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2009 | 2008 | |||||||
4% Convertible debenture | $ | 70,000 | $ | 70,000 | ||||
Borrowings on revolving credit facilities | 8,000 | — | ||||||
78,000 | 70,000 | |||||||
Less current maturities | — | — | ||||||
$ | 78,000 | $ | 70,000 | |||||
• | it has no net cash settlement feature; | |
• | delivery of the shares is within the control of the Company since the settlement shares were registered contemporaneously with the registration of the Notes due 2013; | |
• | the Company has sufficient authorized shares to meet the settlement requirements; | |
• | the contract has an explicit limit on the number of shares in settlement; | |
• | there are no cash payments to the counterparty in the event the Company fails to make timely filings with the SEC; |
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• | there are no required cash payments to the counterparty if the shares initially delivered upon settlement are subsequently sold by the counterparty and the sales proceeds are insufficient to provide the counterparty with full return of the amount due; | |
• | there are no provisions in the contract that indicate that the counterparty has rights that rank higher than those of a shareholder of the stock underlying the contract; and | |
• | there is no requirement in the contract to post collateral at any point or for any reason. |
Note 12. | Discontinued Operations |
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2007 | ||||
Revenue | $ | 8,597 | ||
Net impairment related to assets of discontinued operations | (1,062 | ) | ||
Pre-tax loss | (470 | ) |
Note 13. | Lease Agreements |
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Fiscal Year: | ||||
2010 | $ | 2,108 | ||
2011 | 1,808 | |||
2012 | 960 | |||
2013 | 903 | |||
2014 | 830 | |||
Thereafter | 1,088 | |||
$ | 7,697 | |||
Note 14. | Stock Incentive Plans and Share-Based Compensation |
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Weighted | ||||||||||||||||
Weighted | Average | |||||||||||||||
Shares | Average | Remaining | Aggregate | |||||||||||||
Subject | Exercise | Contractual | Intrinsic | |||||||||||||
to Options | Price | Term (Years) | Value | |||||||||||||
Balances, May 31, 2008 | 3,304,842 | $ | 8.48 | |||||||||||||
Granted | 588,250 | $ | 1.73 | |||||||||||||
Forfeited | (474,314 | ) | $ | 4.43 | ||||||||||||
Expired | (835,105 | ) | $ | 8.41 | ||||||||||||
Exercised | — | $ | — | |||||||||||||
Balances, May 30, 2009 | 2,583,673 | $ | 7.71 | 4.09 | $ | — | ||||||||||
Vested and expected to vest as of May 30, 2009 | 2,003,218 | $ | 8.48 | 3.66 | $ | — | ||||||||||
Exercisable as of May 30, 2009 | 1,396,560 | $ | 10.23 | 2.79 | $ | — | ||||||||||
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Weighted | ||||||||
Average | ||||||||
Restricted | Grant Date | |||||||
Stock | Per Share | |||||||
Awards | Fair Value | |||||||
Balances, May 31, 2008 | 344,061 | $ | 7.36 | |||||
Granted | 26,000 | $ | 2.13 | |||||
Vested | (122,945 | ) | $ | 7.59 | ||||
Forfeited | (40,858 | ) | $ | 6.32 | ||||
Balances, May 30, 2009 | 206,258 | $ | 6.76 | |||||
2009 | 2008 | 2007 | ||||||||||
Weighted average grant-date per share fair value of share options granted | $ | 1.73 | $ | 4.56 | $ | 9.47 | ||||||
Total intrinsic value of share options exercised | — | 1 | 2,591 | |||||||||
Fair value of non-vested shares that vested during the period | 130 | 270 | 582 | |||||||||
Share-based compensation recognized in results of operations | 1,617 | 1,963 | 1,850 | |||||||||
Cash received from options exercised and shares purchased under all share-based arrangements | 447 | 1 | 5,586 | |||||||||
Weighted average grant-date per share fair value of shares issued under ESPP | 0.70 | 2.45 | — | |||||||||
Total fair value expensed for shares issued under the ESPP | 248 | 278 | — |
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2009 | 2008 | 2007 | ||||||||||
Cost of sales | $ | 300 | $ | 163 | $ | 296 | ||||||
Engineering | 89 | 66 | 58 | |||||||||
Selling, general and administrative | 1,228 | 1,734 | 1,496 | |||||||||
$ | 1,617 | $ | 1,963 | $ | 1,850 | |||||||
2009 | 2008 | 2007 | ||||
Risk-free interest rate | 1.85% - 3.64% | 1.59% - 5.13% | 4.48% - 5.10% | |||
Dividend yield | 0% | 0% | 0% | |||
Expected term | 2.09 - 5.22 years | 1.57 - 5.27 years | 2.17 - 5.67 years | |||
Volatility | 55% - 65% | 46% - 93% | 46% - 91% | |||
Discount for post vesting restrictions | 0% | 0% | 0% | |||
Assumed forfeiture rate | 21.86% | 20.34% | 11.57% |
2009 | 2008 | |||
Risk-free interest rate | 1.91% - 3.01% | 3.01% | ||
Dividend yield | 0% | 0% | ||
Expected term | 6 months | 6 months | ||
Volatility | 69% - 81% | 81% |
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Note 15. | Severance, Asset Impairment and Restructuring Charges |
2009 | 2008 | 2007 | ||||||||||
Goodwill impairment | $ | 20,500 | $ | — | $ | 53,310 | ||||||
Asset impairment | 702 | 12,465 | 26,628 | |||||||||
Severance charges | 3,121 | 3,188 | 1,476 | |||||||||
Wood Village plant closure charges | 1,090 | 241 | — | |||||||||
Gain on sale of Hong Kong facility equipment | (567 | ) | (301 | ) | — | |||||||
Legal and other restructuring costs | 49 | 93 | — | |||||||||
$ | 24,895 | $ | 15,686 | $ | 81,414 | |||||||
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• | a lump-sum cash payment of $0.6 million and non-cash share-based compensation of $0.1 million related to the issuance of share-based awards upon the resignation of the former Chief Executive Officer; | |
• | the cost of $0.1 million for fees related to recruiting a new Chief Executive Officer; |
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• | $0.2 million of cash severance related to the termination of another senior manager of Merix Asia; and | |
• | $0.5 million of cash severance related to the resignation of Merix Asia’s Chief Executive Officer in the fourth quarter of fiscal 2007. |
Balance | Balance | |||||||||||||||
May 31, | Charged to | Amounts | May 31, | |||||||||||||
2008 | Expense | Paid | 2009 | |||||||||||||
Hong Kong plant closure | $ | 134 | $ | 60 | $ | (194 | ) | $ | — | |||||||
Executive severance | — | 1,081 | (646 | ) | 435 | |||||||||||
$ | 134 | $ | 1,141 | $ | (840 | ) | $ | 435 | ||||||||
Balance | Balance | |||||||||||||||
May 26, | Charged to | Amounts | May 31, | |||||||||||||
2007 | Expense | Paid | 2008 | |||||||||||||
Merix Asia’s Chief Executive Officer severance | $ | 453 | $ | — | $ | (453 | ) | $ | — | |||||||
Hong Kong plant closure | — | 1,462 | (1,328 | ) | 134 | |||||||||||
$ | 453 | $ | 1,462 | $ | (1,781 | ) | $ | 134 | ||||||||
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Note 16. | Income Taxes |
2009 | 2008 | 2007 | ||||||||||
U.S. | $ | (31,644 | ) | $ | (28,041 | ) | $ | 5,294 | ||||
Foreign | (14,399 | ) | 5,157 | (75,058 | ) | |||||||
Loss from continuing operations before minority interests and income taxes | $ | (46,043 | ) | $ | (22,884 | ) | $ | (69,764 | ) | |||
Tax provision: | ||||||||||||
Current: | ||||||||||||
Federal | $ | (123 | ) | $ | 19 | $ | 362 | |||||
State | 61 | 53 | 257 | |||||||||
Foreign | 2,430 | 1,826 | 671 | |||||||||
2,368 | 1,898 | 1,290 | ||||||||||
Deferred: | ||||||||||||
Federal | (10,700 | ) | (9,714 | ) | 5,040 | |||||||
State | (170 | ) | (1,177 | ) | (2,559 | ) | ||||||
Foreign | 747 | (77 | ) | (6,939 | ) | |||||||
(10,123 | ) | (10,968 | ) | (4,458 | ) | |||||||
Valuation allowance: | ||||||||||||
Federal | 10,700 | 9,714 | (5,040 | ) | ||||||||
State | 170 | 1,177 | 2,559 | |||||||||
Foreign | (487 | ) | (319 | ) | 7,061 | |||||||
10,383 | 10,572 | 4,580 | ||||||||||
Total tax provision | $ | 2,628 | $ | 1,502 | $ | 1,412 | ||||||
2009 | 2008 | 2007 | ||||||||||
Tax expense at statutory rates | $ | (16,115 | ) | $ | (8,009 | ) | $ | (24,418 | ) | |||
Increase (decrease) resulting from: | ||||||||||||
State income taxes, net of federal benefit | (692 | ) | (338 | ) | (1,788 | ) | ||||||
Effect of foreign income tax rates | (293 | ) | (663 | ) | 5,360 | |||||||
Effect of enacted change in future foreign tax rates | — | — | (1,035 | ) | ||||||||
Federal qualified research and experimentation credit | — | — | (44 | ) | ||||||||
State tax credits, net of federal benefits | (7 | ) | (6 | ) | — | |||||||
Stock option windfall | — | — | (863 | ) | ||||||||
Non-deductible items: | ||||||||||||
Goodwill impairment | 7,175 | — | 18,698 | |||||||||
Intercompany charges not deductible in certain foreign jurisdictions | 194 | 78 | 411 | |||||||||
Interest expense not deductible in certain foreign jurisdictions | 345 | 428 | 1,347 | |||||||||
Amortization of intangibles | 120 | 125 | 254 | |||||||||
Capital loss not deductible in foreign jurisdiction | — | — | (678 | ) | ||||||||
Other | 127 | 196 | 116 | |||||||||
Change in valuation allowance | 10,383 | 10,572 | 4,580 | |||||||||
Other, net | 1,391 | (881 | ) | (528 | ) | |||||||
$ | 2,628 | $ | 1,502 | $ | 1,412 | |||||||
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2009 | 2008 | |||||||
Deferred tax assets — current: | ||||||||
Inventories | $ | 2,190 | $ | 1,856 | ||||
Vacation accrual | 431 | 481 | ||||||
Sales allowances | 563 | 556 | ||||||
Other | 835 | 900 | ||||||
4,019 | 3,793 | |||||||
Deferred tax assets — long-term: | ||||||||
Alternative minimum tax credit | 1,130 | 1,130 | ||||||
Fixed asset basis difference | 1,765 | 359 | ||||||
Net operating loss carryforwards | 30,478 | 21,511 | ||||||
Qualified research and experimentation credits and other | 5,808 | 6,475 | ||||||
39,181 | 29,475 | |||||||
Deferred tax liabilities — long-term: | ||||||||
Intangible basis difference | (484 | ) | (844 | ) | ||||
Other | (558 | ) | (461 | ) | ||||
(1,042 | ) | (1,305 | ) | |||||
Net deferred tax asset before valuation allowance | 42,158 | 31,963 | ||||||
Valuation allowance | (41,386 | ) | (31,003 | ) | ||||
$ | 772 | $ | 960 | |||||
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2009 | 2008 | |||||||
Beginning Balance | $ | 2,124 | $ | — | ||||
Additions for tax positions taken in prior periods | — | 2,119 | ||||||
Additions for tax positions taken in current period | 318 | 5 | ||||||
Decreases for lapses in statutes of limitation | — | — | ||||||
Decreases for settlements with taxing authorities | — | — | ||||||
Ending Balance | $ | 2,442 | $ | 2,124 | ||||
Net Change | $ | 318 | $ | 2,124 | ||||
Note 17. | Segment and Enterprise-Wide Disclosures |
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2009 | 2008 | 2007 | ||||||||||
North America | $ | 137,149 | $ | 203,202 | $ | 245,347 | ||||||
Asia | 149,978 | 175,435 | 155,149 | |||||||||
$ | 287,127 | $ | 378,637 | $ | 400,496 | |||||||
2009 | 2008 | 2007 | ||||||||||
North America | $ | 4,739 | $ | 21,489 | $ | 54,037 | ||||||
Asia | 17,447 | 16,370 | 11,534 | |||||||||
$ | 22,186 | $ | 37,859 | $ | 65,571 | |||||||
Effect of | ||||||||||||||||
Fiscal | Engineering | Effect of | Fiscal | |||||||||||||
2008 | Cost | Global Cost | 2008 | |||||||||||||
Fiscal 2008: | (As Reported) | Reclassification | Allocation | (As Revised) | ||||||||||||
Merix North America | 12.2 | % | (2.4 | )% | 0.8 | % | 10.6 | % | ||||||||
Merix Asia | 11.3 | % | (1.1 | )% | (0.9 | )% | 9.3 | % | ||||||||
Consolidated | 11.8 | % | (1.8 | )% | — | 10.0 | % |
Effect of | ||||||||||||||||
Fiscal | Engineering | Effect of | Fiscal | |||||||||||||
2007 | Cost | Global Cost | 2007 | |||||||||||||
Fiscal 2007: | (As Reported) | Reclassification | Allocation | (As Revised) | ||||||||||||
Merix North America | 23.5 | % | (2.2 | )% | 0.7 | % | 22.0 | % | ||||||||
Merix Asia | 9.2 | % | (0.7 | )% | (1.1 | )% | 7.4 | % | ||||||||
Consolidated | 18.0 | % | (1.6 | )% | — | 16.4 | % |
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2009 | 2008 | |||||||
North America | $ | 132,225 | $ | 153,075 | ||||
Asia | 68,445 | 114,366 | ||||||
$ | 200,670 | $ | 267,441 | |||||
2009 | 2008 | |||||||
United States | $ | 63,305 | $ | 79,172 | ||||
People’s Republic of China (including Hong Kong) | 57,083 | 71,244 | ||||||
$ | 120,388 | $ | 150,416 | |||||
Note 18. | Benefit Plans |
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Note 19. | Commitments and Contingencies |
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Note 20. | Related Party Transactions |
2009 | 2008 | 2007 | ||||||||||
Consulting fees | $ | 213 | $ | 198 | $ | 174 | ||||||
Operating lease rental fees | 329 | 305 | 270 | |||||||||
Management fees | 146 | 78 | 50 | |||||||||
Capitalized construction costs | 325 | 1,597 | — | |||||||||
Other fees | 287 | 406 | 400 | |||||||||
$ | 1,300 | $ | 2,584 | $ | 894 | |||||||
Note 21. | Subsequent Events |
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Note 22. | Quarterly Data (Unaudited) |
1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | |||||||||||||
Fiscal 2009 | ||||||||||||||||
Net sales | $ | 90,627 | $ | 76,900 | $ | 60,721 | $ | 58,879 | ||||||||
Gross profit | 10,274 | 6,035 | 876 | 5,001 | ||||||||||||
Operating income (loss)(1) | 16 | (4,260 | ) | (30,833 | ) | (6,649 | ) | |||||||||
Net loss(1) | (2,147 | ) | (6,088 | ) | (32,666 | ) | (8,363 | ) | ||||||||
Basic net loss per share | (0.10 | ) | (0.29 | ) | (1.54 | ) | (0.39 | ) | ||||||||
Diluted net loss per share | (0.10 | ) | (0.29 | ) | (1.54 | ) | (0.39 | ) | ||||||||
Fiscal 2008 | ||||||||||||||||
Net sales | $ | 99,430 | $ | 97,378 | $ | 94,275 | $ | 87,544 | ||||||||
Gross profit | 11,043 | 9,523 | 7,924 | 9,369 | ||||||||||||
Operating loss(2) | (1,878 | ) | (3,216 | ) | (17,510 | ) | (301 | ) | ||||||||
Net loss(2) | (3,649 | ) | (5,009 | ) | (13,354 | ) | (3,539 | ) | ||||||||
Basic net loss per share | (0.17 | ) | (0.24 | ) | (0.63 | ) | (0.17 | ) | ||||||||
Diluted net loss per share | (0.17 | ) | (0.24 | ) | (0.63 | ) | (0.17 | ) |
(1) | Includes $24.9 million of severance, impairment and restructuring charges in fiscal 2009. See Note 15 for additional information. | |
(2) | Includes $15.7 million of severance, impairment and restructuring charges in fiscal 2008. See Note 15 for additional information. |
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Additions | ||||||||||||||||||||||||
Balance at | Charged to | Charged to | Acquired | Balance at | ||||||||||||||||||||
Beginning | Costs and | Other | through | End of | ||||||||||||||||||||
of Period | Expenses | Accounts(1) | Acquisitions | Deductions(2) | Period | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
For the fiscal year ended May 30, 2009 | ||||||||||||||||||||||||
Allowance for sales adjustments and doubtful accounts | $ | 2,252 | $ | 1,162 | $ | 1,975 | $ | — | $ | (3,887 | ) | $ | 1,502 | |||||||||||
Inventory obsolescence reserve | 3,719 | 5,311 | — | — | (5,410 | ) | 3,620 | |||||||||||||||||
Tax valuation allowance | 31,003 | 10,383 | — | — | — | 41,386 | ||||||||||||||||||
For the fiscal year ended May 31, 2008 | ||||||||||||||||||||||||
Allowance for sales adjustments and doubtful accounts | $ | 3,168 | $ | 304 | $ | 1,236 | $ | — | $ | (2,456 | ) | $ | 2,252 | |||||||||||
Inventory obsolescence reserve | 3,379 | 5,658 | — | — | (5,318 | ) | 3,719 | |||||||||||||||||
Tax valuation allowance | 20,976 | 10,572 | — | (545 | ) | — | 31,003 | |||||||||||||||||
For the fiscal year ended May 26, 2007 | ||||||||||||||||||||||||
Allowance for sales adjustments and doubtful accounts | $ | 2,683 | $ | 1,655 | $ | 1,442 | $ | — | $ | (2,612 | ) | $ | 3,168 | |||||||||||
Inventory obsolescence reserve | 2,592 | 3,020 | — | — | (2,233 | ) | 3,379 | |||||||||||||||||
Tax valuation allowance | 16,518 | 4,580 | — | (122 | ) | — | 20,976 |
(1) | Charged to net sales. | |
(2) | Charges to the accounts included in this column are for the purposes for which the reserves were created and include write-offs, net of recoveries. |
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November 28, | May 30, | |||||||
2009 | 2009 | |||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 10,472 | $ | 16,141 | ||||
Accounts receivable, net of allowances for doubtful accounts of $1,640 and $1,503 | 53,523 | 43,290 | ||||||
Inventories, net | 17,203 | 14,593 | ||||||
Assets held for sale | 112 | 3 | ||||||
Deferred income taxes | 265 | 160 | ||||||
Prepaid and other current assets | 9,703 | 5,437 | ||||||
Total current assets | 91,278 | 79,624 | ||||||
Property, plant and equipment, net of accumulated depreciation of $146,729 and $138,482 | 85,283 | 95,170 | ||||||
Goodwill | 11,392 | 11,392 | ||||||
Definite-lived intangible assets, net of accumulated amortization of $11,318 and $10,380 | 5,890 | 6,828 | ||||||
Deferred income taxes, net | 1,656 | 521 | ||||||
Assets held for sale | 1,146 | 1,146 | ||||||
Other assets | 4,062 | 4,470 | ||||||
Total assets | $ | 200,707 | $ | 199,151 | ||||
Liabilities and Shareholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 41,866 | $ | 33,371 | ||||
Accrued liabilities | 12,521 | 13,088 | ||||||
Total current liabilities | 54,387 | 46,459 | ||||||
Long-term debt | 78,000 | 78,000 | ||||||
Other long-term liabilities | 4,771 | 4,374 | ||||||
Total liabilities | 137,158 | 128,833 | ||||||
Commitments and Contingencies (Note 15) | ||||||||
Shareholders’ equity: | ||||||||
Preferred stock, no par value; 10,000 shares authorized; none issued | — | — | ||||||
Common stock, no par value; 50,000 shares authorized; 21,880 and 21,781 issued and outstanding | 217,953 | 217,112 | ||||||
Accumulated deficit | (158,583 | ) | (150,813 | ) | ||||
Accumulated other comprehensive income | 39 | 34 | ||||||
Total Merix shareholders’ controlling interest | 59,409 | 66,333 | ||||||
Noncontrolling interest | 4,140 | 3,985 | ||||||
Total shareholders’ equity | 63,549 | 70,318 | ||||||
Total liabilities and shareholders’ equity | $ | 200,707 | $ | 199,151 | ||||
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Fiscal Quarter Ended | Six Months Ended | |||||||||||||||
November 28, | November 29, | November 28, | November 29, | |||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
(In thousands, except per share data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Net sales | $ | 71,298 | $ | 76,900 | $ | 129,095 | $ | 167,527 | ||||||||
Cost of sales | 62,216 | 70,865 | 116,499 | 151,218 | ||||||||||||
Gross profit | 9,082 | 6,035 | 12,596 | 16,309 | ||||||||||||
Operating expenses: | ||||||||||||||||
Engineering | 343 | 697 | 604 | 1,260 | ||||||||||||
Selling, general and administration | 8,865 | 7,989 | 16,831 | 17,691 | ||||||||||||
Amortization of intangible assets | 469 | 520 | 938 | 1,040 | ||||||||||||
Impairment of fixed assets (Note 17) | — | 702 | 642 | 702 | ||||||||||||
Severance charges and other restructuring costs (Note 17) | — | 387 | 314 | (140 | ) | |||||||||||
Total operating expenses | 9,677 | 10,295 | 19,329 | 20,553 | ||||||||||||
Operating loss | (595 | ) | (4,260 | ) | (6,733 | ) | (4,244 | ) | ||||||||
Other income (expense): | ||||||||||||||||
Interest income | 5 | 45 | 11 | 96 | ||||||||||||
Interest expense | (1,020 | ) | (984 | ) | (2,061 | ) | (1,860 | ) | ||||||||
Other income (expense), net | 1,491 | (90 | ) | 1,438 | (454 | ) | ||||||||||
Total other income (expense), net | 476 | (1,029 | ) | (612 | ) | (2,218 | ) | |||||||||
Loss before income taxes and minority interests | (119 | ) | (5,289 | ) | (7,345 | ) | (6,462 | ) | ||||||||
Provision for (benefit from) income taxes | (1,014 | ) | 693 | (105 | ) | 1,421 | ||||||||||
Net income (loss) | 895 | (5,982 | ) | (7,240 | ) | (7,883 | ) | |||||||||
Net income attributable to noncontrolling interest | 431 | 106 | 530 | 352 | ||||||||||||
Net income (loss) attributable to controlling interest | $ | 464 | $ | (6,088 | ) | $ | (7,770 | ) | $ | (8,235 | ) | |||||
Basic and diluted income (loss) per share attributable to Merix common shareholders | $ | 0.02 | $ | (0.29 | ) | $ | (0.36 | ) | $ | (0.39 | ) | |||||
Weighted average number of shares — basic | 21,628 | 20,945 | 21,621 | 20,867 | ||||||||||||
Weighted average number of shares — diluted | 22,296 | 20,945 | 21,621 | 20,867 | ||||||||||||
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CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
AND COMPREHENSIVE INCOME (LOSS)
For the six months ended November 28, 2009 and November 29, 2008
Accumulated | ||||||||||||||||||||||||
Other | ||||||||||||||||||||||||
Non- | Comprehensive | Total | ||||||||||||||||||||||
controlling | Common Stock | Accumulated | Income | Shareholders’ | ||||||||||||||||||||
Interest | Shares | Amount | Deficit | (Loss) | Equity | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Balance at May 31, 2008 | $ | 4,573 | 21,073 | $ | 215,085 | $ | (101,358 | ) | $ | 47 | $ | 118,347 | ||||||||||||
Dividend declared for distribution to non-controlling interest | (297 | ) | — | — | — | — | (297 | ) | ||||||||||||||||
Stock Plans: | ||||||||||||||||||||||||
Issuance of restricted stock to employees | — | 26 | — | — | — | — | ||||||||||||||||||
Issuance of stock under employee stock purchase plan | — | 147 | 262 | — | — | 262 | ||||||||||||||||||
Share-based compensation expense | — | — | 566 | — | — | 566 | ||||||||||||||||||
Shares repurchased, surrendered or cancelled | — | (8 | ) | (18 | ) | — | — | (18 | ) | |||||||||||||||
Comprehensive loss: | ||||||||||||||||||||||||
Net income (loss) | 246 | — | — | (2,147 | ) | — | (1,901 | ) | ||||||||||||||||
Foreign currency translation adjustment, net of tax | — | — | — | — | (2 | ) | (2 | ) | ||||||||||||||||
Quarterly comprehensive loss | (1,903 | ) | ||||||||||||||||||||||
Balance at August 30, 2008 | $ | 4,522 | 21,238 | $ | 215,895 | $ | (103,505 | ) | $ | 45 | $ | 116,957 | ||||||||||||
Dividend declared for distribution to non-controlling interest | (934 | ) | — | — | — | — | (934 | ) | ||||||||||||||||
Stock Plans: | ||||||||||||||||||||||||
Share-based compensation expense | — | — | 406 | — | — | 406 | ||||||||||||||||||
Comprehensive loss: | ||||||||||||||||||||||||
Net income (loss) | 106 | — | — | (6,088 | ) | — | (5,982 | ) | ||||||||||||||||
Foreign currency translation adjustment, net of tax | — | — | — | — | (14 | ) | (14 | ) | ||||||||||||||||
Quarterly comprehensive loss | (5,996 | ) | ||||||||||||||||||||||
Balance at November 29, 2008 | $ | 3,694 | 21,238 | $ | 216,301 | $ | (109,593 | ) | $ | 31 | $ | 110,433 | ||||||||||||
Comprehensive loss — six months ended November 29, 2008: | ||||||||||||||||||||||||
Net loss | $ | (7,883 | ) | |||||||||||||||||||||
Foreign currency translation adjustment, net of tax | (16 | ) | ||||||||||||||||||||||
Net comprehensive loss | $ | (7,899 | ) | |||||||||||||||||||||
Balance at May 30, 2009 | $ | 3,935 | 21,781 | $ | 217,112 | $ | (150,622 | ) | $ | 33 | $ | 70,458 | ||||||||||||
Elimination of one-month reporting lag for Asia subsidiary | 50 | — | — | (191 | ) | 1 | (140 | ) | ||||||||||||||||
Dividend declared for distribution to non-controlling interest | (375 | ) | — | — | — | — | (375 | ) | ||||||||||||||||
Stock Plans: | ||||||||||||||||||||||||
Issuance of restricted stock to employees | — | 108 | — | — | — | — | ||||||||||||||||||
Share-based compensation expense | — | — | 475 | — | — | 475 | ||||||||||||||||||
Shares repurchased, surrendered or cancelled | — | (8 | ) | (8 | ) | — | — | (8 | ) |
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Accumulated | ||||||||||||||||||||||||
Other | ||||||||||||||||||||||||
Non- | Comprehensive | Total | ||||||||||||||||||||||
controlling | Common Stock | Accumulated | Income | Shareholders’ | ||||||||||||||||||||
Interest | Shares | Amount | Deficit | (Loss) | Equity | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Comprehensive loss: | ||||||||||||||||||||||||
Net income (loss) | 99 | — | — | (8,234 | ) | — | (8,135 | ) | ||||||||||||||||
Foreign currency translation adjustment, net of tax | — | — | — | — | (1 | ) | (1 | ) | ||||||||||||||||
Quarterly comprehensive loss | (8,136 | ) | ||||||||||||||||||||||
Balance at August 29, 2009 | $ | 3,709 | 21,881 | $ | 217,579 | $ | (159,047 | ) | $ | 33 | $ | 62,274 | ||||||||||||
Dividend declared for distribution to non-controlling interest | — | — | — | — | — | |||||||||||||||||||
Stock Plans: | ||||||||||||||||||||||||
Share-based compensation expense | — | — | 376 | — | — | 376 | ||||||||||||||||||
Shares repurchased, surrendered or cancelled | — | (1 | ) | (2 | ) | — | — | (2 | ) | |||||||||||||||
Comprehensive loss: | ||||||||||||||||||||||||
Net income | 431 | — | — | 464 | — | 895 | ||||||||||||||||||
Foreign currency translation adjustment, net of tax | — | — | — | — | 6 | 6 | ||||||||||||||||||
Quarterly comprehensive income | 901 | |||||||||||||||||||||||
Balance at November 28, 2009 | $ | 4,140 | 21,880 | $ | 217,953 | $ | (158,583 | ) | $ | 39 | $ | 63,549 | ||||||||||||
Comprehensive loss — six months ended November 28, 2009: | ||||||||||||||||||||||||
Net loss | $ | (7,240 | ) | |||||||||||||||||||||
Foreign currency translation adjustment, net of tax | 5 | |||||||||||||||||||||||
Net comprehensive loss | $ | (7,235 | ) | |||||||||||||||||||||
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Six Months Ended | ||||||||
November 28, | November 29, | |||||||
2009 | 2008 | |||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net loss | $ | (7,240 | ) | $ | (7,883 | ) | ||
Adjustments to reconcile net loss to cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 11,353 | 11,125 | ||||||
Share-based compensation expense | 850 | 973 | ||||||
Impairment of fixed assets | 642 | 702 | ||||||
Gain on disposition of assets | (25 | ) | (628 | ) | ||||
VAT penalty accrual reversal | (1,522 | ) | — | |||||
Alternative minimum tax refund receivable | (580 | ) | — | |||||
Deferred income taxes | (1,240 | ) | 13 | |||||
Changes in operating accounts: | ||||||||
(Increase) decrease in accounts receivable, net | (10,345 | ) | 7,471 | |||||
(Increase) decrease in inventories, net | (2,610 | ) | 1,222 | |||||
(Increase) decrease in other assets | (3,630 | ) | 1,724 | |||||
Increase (decrease) in accounts payable | 8,724 | (1,498 | ) | |||||
Increase (decrease) in other accrued liabilities | 1,380 | (1,652 | ) | |||||
Increase (decrease) in due to affiliate, net | — | 1,519 | ||||||
Net cash provided by (used in) operating activities | (4,243 | ) | 13,088 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Purchases of property, plant and equipment | (1,069 | ) | (14,844 | ) | ||||
Proceeds from disposal of property, plant and equipment | 28 | 599 | ||||||
Net cash used in investing activities | (1,041 | ) | (14,245 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Borrowing on revolving line of credit | 5,000 | 28,983 | ||||||
Borrowing on long-term notes payable | 5,200 | — | ||||||
Principal payments on revolving line of credit | (10,200 | ) | (22,000 | ) | ||||
Proceeds from exercise of stock options and stock plan transactions | — | 263 | ||||||
Reacquisition of common stock | (10 | ) | (18 | ) | ||||
Dividend distribution to non-controlling interest | (375 | ) | (296 | ) | ||||
Other financing activities | — | (20 | ) | |||||
Net cash provided by (used in) financing activities | (385 | ) | 6,912 | |||||
NET CHANGE IN CASH AND CASH EQUIVALENTS | (5,669 | ) | 5,755 | |||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 16,141 | 5,728 | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 10,472 | $ | 11,483 | ||||
SUPPLEMENTAL CASH FLOW INFORMATION | ||||||||
Cash paid for income taxes, net | $ | 1,580 | $ | 1,664 | ||||
Cash paid for interest | 738 | 976 |
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NOTE 1. | NATURE OF BUSINESS |
NOTE 2. | BASIS OF PRESENTATION AND CONSOLIDATION |
NOTE 3. | MERGER AGREEMENT |
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NOTE 4. | FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES |
November 28, | May 30, | |||||||
2009 | 2009 | |||||||
Book value of fixed rate debt | $ | 70,000 | $ | 70,000 | ||||
Fair value of fixed rate debt | $ | 40,885 | $ | 28,000 | ||||
NOTE 5. | ELIMINATION OF ONE MONTH REPORTING LAG FOR MERIX ASIA |
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Net Sales | $ | 8,182 | ||
Cost of Sales | 7,389 | |||
Gross Profit | 793 | |||
Gross margin | 9.7 | % | ||
Engineering expense | 56 | |||
Selling, general and administration | 510 | |||
Amortization of intangible assets | 56 | |||
Severance, asset impairment and restructuring charges | 197 | |||
Loss from operations | (26 | ) | ||
Other expense, net | 16 | |||
Provision for income taxes | 99 | |||
Net loss | (141 | ) | ||
Net income attributable to noncontrolling interest | 50 | |||
Net increase to accumulated deficit | $ | (191 | ) | |
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May 30, | May 30, | |||||||
2009 | 2009 | |||||||
(As Reported) | (As Revised) | |||||||
Assets | ||||||||
Cash | $ | 17,571 | $ | 16,141 | ||||
Accounts receivable, net | 43,285 | 43,290 | ||||||
Inventories, net | 14,367 | 14,593 | ||||||
Other current assets | 5,059 | 5,600 | ||||||
Total current assets | 80,282 | 79,624 | ||||||
Property, plant and equipment, net | 95,883 | 95,170 | ||||||
Other assets | 24,505 | 24,357 | ||||||
Total assets | $ | 200,670 | $ | 199,151 | ||||
Liabilities and Shareholder’s Equity | ||||||||
Accounts payable | $ | 33,263 | $ | 33,371 | ||||
Accrued liabilities | 14,715 | 13,088 | ||||||
Total current liabilities | 47,978 | 46,459 | ||||||
Long-term debt | 78,000 | 78,000 | ||||||
Other long-term liabilities | 4,234 | 4,374 | ||||||
Total liabilities | 130,212 | 128,833 | ||||||
Noncontrolling interest | 3,935 | 3,985 | ||||||
Common stock | 217,112 | 217,112 | ||||||
Accumulated other comprehensive income | 33 | 34 | ||||||
Accumulated deficit | (150,622 | ) | (150,813 | ) | ||||
Total shareholder’s equity | 70,458 | 70,318 | ||||||
Total liabilities and shareholder’s equity | $ | 200,670 | $ | 199,151 | ||||
NOTE 6. | INVENTORIES |
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November 28, | May 30, | |||||||
2009 | 2009 | |||||||
Raw materials | $ | 3,394 | $ | 2,910 | ||||
Work-in-process | 5,913 | 3,967 | ||||||
Finished goods | 3,454 | 3,930 | ||||||
Consignment finished goods | 4,442 | 3,786 | ||||||
Total inventories | $ | 17,203 | $ | 14,593 | ||||
NOTE 7. | PREPAID AND OTHER CURRENT ASSETS |
November 28, | May 30, | |||||||
2009 | 2009 | |||||||
Prepaid expenses | $ | 1,266 | $ | 1,578 | ||||
Income taxes receivable | 658 | 328 | ||||||
Value-added tax receivable | 5,317 | 2,009 | ||||||
Other assets | 2,462 | 1,522 | ||||||
$ | 9,703 | $ | 5,437 | |||||
NOTE 8. | DEFINITE-LIVED INTANGIBLE ASSETS |
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Amortization | November 28, | May 30, | ||||||||||
Period | 2009 | 2009 | ||||||||||
Customer relationships | 6.5-10 years | $ | 17,168 | $ | 17,168 | |||||||
Manufacturing sales representatives network | 5.5 years | 40 | 40 | |||||||||
17,208 | 17,208 | |||||||||||
Accumulated amortization | (11,318 | ) | (10,380 | ) | ||||||||
$ | 5,890 | $ | 6,828 | |||||||||
Six Months Ended | ||||||||
November 28, | November 29, | |||||||
2009 | 2008 | |||||||
Customer relationships | $ | 934 | $ | 1,036 | ||||
Manufacturing sales representatives network | 4 | 4 | ||||||
$ | 938 | $ | 1,040 | |||||
Remainder of fiscal 2010 | $ | 828 | ||
2011 | 1,552 | |||
2012 | 1,120 | |||
2013 | 727 | |||
2014 | 727 | |||
Thereafter | 936 | |||
$ | 5,890 | |||
NOTE 9. | OTHER ASSETS |
November 28, | May 30, | |||||||
2009 | 2009 | |||||||
Leasehold land use rights, net | $ | 1,183 | $ | 1,197 | ||||
Deferred financing costs, net | 2,629 | 3,022 | ||||||
Other assets | 250 | 251 | ||||||
$ | 4,062 | $ | 4,470 | |||||
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NOTE 10. | ACCRUED LIABILITIES |
November 28, | May 30, | |||||||
2009 | 2009 | |||||||
Accrued compensation | $ | 7,570 | $ | 6,602 | ||||
Accrued warranty (Note 11) | 879 | 986 | ||||||
Income taxes payable | 848 | 321 | ||||||
Contingent customs penalty accrual | — | 1,522 | ||||||
Other liabilities | 3,224 | 3,657 | ||||||
$ | 12,521 | $ | 13,088 | |||||
NOTE 11. | ACCRUED WARRANTY |
Fiscal Quarter Ended | Six Months Ended | |||||||||||||||
November 28, | November 29, | November 28, | November 29, | |||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Balance, beginning of period | $ | 701 | $ | 2,320 | $ | 986 | $ | 2,147 | ||||||||
Provision for warranty charges | 913 | 828 | 1,371 | 1,509 | ||||||||||||
Warranty charges incurred | (735 | ) | (1,078 | ) | (1,478 | ) | (1,586 | ) | ||||||||
Balance, end of period | $ | 879 | $ | 2,070 | $ | 879 | $ | 2,070 | ||||||||
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NOTE 12. | EARNINGS PER SHARE AND ANTIDILUTIVE SHARES |
Potential common | ||||||||||||||||
shares excluded from | ||||||||||||||||
diluted EPS since | Fiscal Quarter Ended | Six Months Ended | ||||||||||||||
their effect would be | November 28, | November 29, | November 28, | November 29, | ||||||||||||
antidilutive: | 2009 | 2008 | 2009 | 2008 | ||||||||||||
Stock options | 1,821 | 3,371 | 1,953 | 3,310 | ||||||||||||
Restricted stock awards | — | 293 | 252 | 293 | ||||||||||||
Convertible notes | 4,608 | 4,608 | 4,608 | 4,608 |
NOTE 13. | SEGMENT INFORMATION |
Fiscal Quarter Ended | Six Months Ended | |||||||||||||||
November 28, | November 29, | November 28, | November 29, | |||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
North America | $ | 32,735 | $ | 36,151 | $ | 59,032 | $ | 81,068 | ||||||||
Asia | 38,563 | 40,749 | 70,063 | 86,459 | ||||||||||||
$ | 71,298 | $ | 76,900 | $ | 129,095 | $ | 167,527 | |||||||||
Fiscal Quarter Ended | Six Months Ended | |||||||||||||||
November 28, | November 29, | November 28, | November 29, | |||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
North America | $ | 3,324 | $ | 1,484 | $ | 2,553 | $ | 6,648 | ||||||||
Asia | 5,758 | 4,551 | 10,043 | 9,661 | ||||||||||||
$ | 9,082 | $ | 6,035 | $ | 12,596 | $ | 16,309 | |||||||||
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November 28, | May 30, | |||||||
2009 | 2009 | |||||||
North America | $ | 131,078 | $ | 131,535 | ||||
Asia | 69,629 | 67,616 | ||||||
$ | 200,707 | $ | 199,151 | |||||
NOTE 14. | SIGNIFICANT CUSTOMERS |
NOTE 15. | COMMITMENTS AND CONTINGENCIES |
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NOTE 16. | RELATED PARTY TRANSACTIONS |
Fiscal Quarter Ended | Six Months Ended | |||||||||||||||
November 28, | November 29, | November 28, | November 29, | |||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Consulting fees | $ | 53 | $ | 53 | $ | 106 | $ | 145 | ||||||||
Operating lease rental fees | 83 | 81 | 164 | 224 | ||||||||||||
Management fees | 36 | 39 | 72 | 55 | ||||||||||||
Capitalized construction costs for factory expansion | — | 247 | — | 1,406 | ||||||||||||
Other fees | 77 | 84 | 143 | 322 | ||||||||||||
$ | 249 | $ | 504 | $ | 485 | $ | 2,152 | |||||||||
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NOTE 17. | SEVERANCE, ASSET IMPAIRMENT AND RESTRUCTURING CHARGES |
Fiscal Quarter Ended | Six Months Ended | |||||||||||||||
November 28, | November 29, | November 28, | November 29, | |||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Severance charges — Asia | $ | — | $ | 81 | $ | 95 | $ | 121 | ||||||||
Gain on sale of Merix Asia equipment | — | — | — | (567 | ) | |||||||||||
Other restructuring — Asia | — | — | 56 | — | ||||||||||||
Severance charges — North America | — | 306 | 150 | 306 | ||||||||||||
Asset impairment — North America | — | 702 | 642 | 702 | ||||||||||||
Legal and other restructuring charges | — | — | 13 | — | ||||||||||||
$ | — | $ | 1,089 | $ | 956 | $ | 562 | |||||||||
Beginning | Charged to | Ending | ||||||||||||||
Balance | Expense | Expenditures | Balance | |||||||||||||
First quarter | $ | 435 | $ | 245 | $ | (572 | ) | $ | 108 | |||||||
Second quarter | 108 | — | (108 | ) | — |
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NOTE 18. | NEW ACCOUNTING PRONOUNCEMENTS |
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NOTE 20. | SUBSEQUENT EVENTS |
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INFORMATION NOT REQUIRED IN PROSPECTUS
Securities and Exchange Commission Registration Fee | $ | 2,447 | ||
NASDAQ Listing Fee | 100,000 | |||
Printing and Engraving | 170,000 | |||
Legal Fees and Expenses | 125,000 | |||
Accounting Fees and Expenses | 50,000 | |||
Transfer Agent Fees | 10,000 | |||
Miscellaneous | 50,000 | |||
Total | $ | 507,447 | ||
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2.1 | Agreement and Plan of Merger, dated as of October 6, 2009, among Viasystems Group, Inc., Maple Acquisition Corp., and Merix Corporation (included as Annex A to the proxy statement/prospectus).(6) | |
2.2 | Prepackaged Joint Plan of Reorganization of Viasystems Group, Inc. and Viasystems, Inc. under Chapter 11 of the Bankruptcy Code, dated August 30, 2002.(1) | |
2.3 | Modification, dated January 2, 2003, to Prepackaged Joint Plan of Reorganization of Viasystems Group, Inc. and Viasystems, Inc. under Chapter 11 of the Bankruptcy Code dated August 30, 2002.(1) | |
2.4 | Stock Purchase Agreement, dated as of March 21, 2006, by and among Electrical Components International Holdings Company, Viasystems Group, Inc., Wire Harness Holding Company, Inc. and Wire Harness Industries, Inc.(4) | |
3.1 | Third Amended and Restated Certificate of Incorporation of Viasystems Group, Inc. (10) | |
3.2 | Second Amended and Restated Bylaws of Viasystems Group, Inc. (10) | |
4.1 | Specimen Common Stock Certificate.(10) | |
4.2 | Warrant Agreement, dated as of January 31, 2003, by and between Viasystems Group, Inc. and Computershare Investor Services, LLC, as Warrant Agent.(1) | |
4.3 | Indenture dated as of November 24, 2009, among Viasystems, Inc., the Guarantors party thereto and Wilmington Trust FSB, as Trustee.(8) | |
4.4 | Form of 12% Senior Secured Note (included as Exhibit A1 to the Indenture filed as Exhibit 4.5 hereto).(8) | |
4.5 | First Supplemental Indenture, dated as of February 22, 2010, by and among Merix Corporation, Merix Asia, Inc., Viasystems, Inc., the other guarantors as defined in the indenture dated as of November 24, 2009 providing for the issuance of Viasystems, Inc.’s 12.00% Senior Secured Notes due 2015, and Wilmington Trust FSB, as trustee under the Indenture.(11) | |
4.6 | Second Supplemental Indenture, dated as of February 22, 2010, by and among Viasystems Group, Inc., Viasystems, Inc., the other guarantors as defined in the indenture dated as of November 24, 2009 providing for the issuance of Viasystems, Inc.’s 12.00% Senior Secured Notes due 2015, and Wilmington Trust, FSB, as trustee under the Indenture.(11) | |
4.7 | Indenture dated May 16, 2006 between Merix Corporation and U.S. Bank National Association, as trustee.(12) | |
4.8 | Form of 4% Convertable Senior Subordinated Note Due 2013 (included in Section 2.2 of the Indenture filed as Exhibit 4.3 hereto).(12) | |
4.9 | First Supplemental Indenture dated as of February 16, 2010 among Viasystems Group, Inc., Merix Corporation and U.S. |
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Bank National Association, as trustee.(10) | ||
5.1 | Opinion of Weil, Gotshal & Manges LLP as to the validity of the securities being registered.(9) | |
10.1 | Viasystems Group, Inc. 2003 Stock Option Plan.(1) | |
10.2 | Amended and Restated Executive Employment Agreement, dated October 13, 2003, among Viasystems Group, Inc., Viasystems, Inc., Viasystems Technologies Corp. LLC, the other subsidiaries party thereto, and David M. Sindelar.(1) | |
10.3 | Amended and Restated Executive Employment Agreement, dated January 31, 2003, among Viasystems Group, Inc., Viasystems, Inc., Viasystems Technologies Corp. LLC, and Timothy L. Conlon.(1) | |
10.4 | Amended and Restated Executive Employment Agreement, dated as of August 15, 2005, as of August 15, 2005, by and among Viasystems Group, Inc., Viasystems, Inc., the other subsidiaries of Viasystems Group, Inc. set forth on the signature page thereto and Gerald G. Sax.(3) | |
10.5 | Amended and Restated Executive Employment Agreement, dated as of January 31, 2003, among Viasystems Group, Inc., Viasystems, Inc., Viasystems Technologies Corp., LLC and Joseph Catanzaro.(1) | |
10.6 | Monitoring and Oversight Agreement, dated as of January 31, 2003, by and among Viasystems Group, Inc., Viasystems, Inc., the subsidiaries party thereto, and Hicks, Muse & Co. Partners, L.P.(1) | |
10.7 | Recapitalization Agreement, dated as of October 6, 2009, by and among Viasystems Group, Inc., Hicks, Muse, Tate & Furst Equity Fund III, LP and certain of its affiliates, GSC Recovery II, L.P. and certain of its affiliates, and TCW Shared Opportunities Fund III, L.P.(6) | |
10.8 | Note Exchange Agreement, dated as of October 6, 2009, by and among Viasystems Group, Inc., Maple Acquisition Corp., and the entities listed on Schedule I attached thereto.(6) | |
10.9 | Stockholders Agreement, dated as of January 31, 2003, by and among Viasystems Group, Inc. and the other parties thereto.(2) | |
10.10 | First Amendment and Consent to Stockholders Agreement, dated as of October 2003, by and among Viasystems Group, Inc. and the other parties thereto.(2) | |
10.11 | Stockholder Agreement, dated as of February 11, 2010, by and between Viasystems Group, Inc. and VG Holdings, LLC.(10) | |
10.12 | Viasystems Group Annual Incentive Compensation Plan(2) | |
10.13 | English translation of the Guangzhou 2009 Credit Facility Contract, dated as of August 17, 2009, by and between Guangzhou Termbray Electronics Technology Co., Ltd, as Borrower, and China Construction Bank Guangzhou Economic and Technological Development District Branch, as Lender.(5) | |
10.14 | English translation of the Maximum-Amount Mortgage Contract by and between Guangzhou Termbray Electronics Technology Co., Ltd, as Borrower, and China Construction Bank Guangzhou Economic and Technological Development District Branch, as Lender.(5) | |
10.15 | Industrial Lease, dated as of April 16, 2008, by and between Verde 9580 Joe Rodriquez LP and Viasystems Technologies Corp., LLC.(7) | |
10.16 | First Amendment to Industrial Lease, dated as of December 8, 2008, by and between Verde 9580 Joe Rodriquez LP and Viasystems Technologies Corp., LLC.(7) | |
10.17 | English translation of the Lease Agreement on Tong Fu Kang Plant Building (Building A, Shenzhen), dated as of October 26, 2006, by and between Shenzhen Tong Fu Kang Industry Development Co., Ltd and Viasystems Chang Yuan EMS (Shenzhen) Co., Ltd (now known as Viasystems EMS (Shenzhen) Co., Ltd).(7) | |
10.18 | English translation of the Lease Agreement on Tong Fu Kang Plant Building (Building D, Shenzhen), dated as of May 6, 2003, by and between Shenzhen Tong Fu Kang Industry Development Co., Ltd and Viasystems Chang Yuan EMS (Shenzhen) Co., Ltd (now known as Viasystems EMS (Shenzhen) Co., Ltd).(7) | |
10.19 | English translation of the Lease Agreement, dated as of October 18, 2008, by and between Qingdao Jijia Electronics Co., |
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Ltd and Qingdao Viasystems Telecommunications Technologies Co., Ltd.(7) | ||
10.20 | English translation of the Lease Agreement, dated as of September 1, 2002, by and among Parque Industrial Internacional Mexicano, S.A. de C.V., Electrocomponentes de Mexico, S.A. de C.V.(7) | |
10.21 | Amendment Agreement to the Lease Agreement, dated as of June 25, 2004, by and among Parque Industrial Internacional Mexicano, S.A. de C.V., Electrocomponentes de Mexico, S.A. de C.V. and Viasystems, Inc.(7) | |
10.22 | Second Amendment to the Lease Agreement, dated as of October 15, 2007, by and among Banco J.P. Morgan, Sociedad Anónima, Institución de Banca Múltiple, J.P. Morgan Grupo Financiero, División Fiduciaria, International Manufacturing Solutions Operaciones, S. de R.L. de C.V. and Viasystems, Inc.(7) | |
10.23 | Third Amendment to the Lease Agreement, dated as of August 26, 2009, by and among The Bank of New York Mellon, S.A., Institución de Banca Múltiple (Final Successor of Banco J.P. Morgan, Sociedad Anónima, Institución de Banca Múltiple, J.P. Morgan Grupo Financiero, División Fiduciaria), International Manufacturing Solutions Operaciones, S. de R.L. de C.V. and Viasystems, Inc.(7) | |
10.24 | Collateral Trust Agreement, dated as of November 24, 2009, among Viasystems, Inc., the guarantors named therein, Wilmington Trust FSB, as trustee and collateral trustee, and the other party lien representatives from time to time party thereto.(8) | |
10.25 | Loan and Security Agreement, dated as of February 16, 2010, by and among Viasystems Technologies Corp., L.L.C. and Merix Corporation, as borrowers, and Viasystems, Inc., Viasystems International, Inc. and Merix Asia, Inc., as guarantors, the lenders and issuing bank from time to time party thereto, Wachovia Capital Finance Corporation (New England), as administrative agent, and Wells Fargo Capital Finance, LLC, as sole lead arranger, manager and bookrunner.(11) | |
11.1 | Statement Regarding Computation of Per Share Earnings (incorporated by reference to “Selected Historical Consolidated Financial Data” included in Part I of this Registration Statement). | |
21.1 | List of Subsidiaries of Viasystems Group, Inc.(13) | |
23.1 | Consent of Ernst & Young LLP.(14) | |
23.2 | Consent of Grant Thornton LLP.(14) | |
23.3 | Consent of Weil, Gotshal & Manges LLP (included as part of Exhibit 5.1 to this Registration Statement on Form S-1).(9) | |
24.1 | Power of Attorney (included on the signature pages to the initial Form S-1 filing). |
(1) | Incorporated by reference to Registration Statement No. 333-113664 on Form S-1/A of Viasystems Group, Inc. filed on April 28, 2004. | |
(2) | Incorporated by reference to Registration Statement No. 333-114467 on Form S-4/A of Viasystems, Inc. filed on June 22, 2004. | |
(3) | Incorporated by reference to the Quarterly Report on Form 10-Q of Viasystems, Inc. filed on November 14, 2005. | |
(4) | Incorporated by reference to the Form 8-K of Viasystems, Inc. filed on March 22, 2006. | |
(5) | Incorporated by reference to the Form 8-K of Viasystems, Inc. filed on September 10, 2009. | |
(6) | Incorporated by reference to the Registration Statement No. 333-163040 on Form S-4 of Viasystems Group, Inc. filed on November 12, 2009. | |
(7) | Incorporated by reference to Registration Statement No. 333-163040 on Form S-4/A of Viasystems Group, Inc. filed on December 17, 2009. | |
(8) | Incorporated by reference to the Form 8-K of Viasystems, Inc. filed on December 2, 2009. | |
(9) | Incorporated by reference to Registration Statement No. 333-164186 on Form S-1/A of Viasystems Group, Inc. filed on February 5, 2010. | |
(10) | Incorporated by reference to the Form 8-K of Viasystems Group, Inc. filed on February 17, 2010. | |
(11) | Incorporated by reference to the Form 8-K of Viasystems Group, Inc. filed on February 22, 2010. | |
(12) | Incorporated by reference to the Form 8-K of Merix Corporation filed on May 16, 2006. | |
(13) | Incorporated by reference to the Annual Report on Form 10-K of Viasystems Group, Inc. filed on February 25, 2010. | |
(14) | Filed herewith. | |
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VIASYSTEMS GROUP, INC. | ||||
By: | /s/ Gerald G. Sax | |||
Gerald G. Sax | ||||
Chief Financial Officer | ||||
Signature | Title | |
* David M. Sindelar | Chief Executive Officer and Director | |
* Timothy L. Conlon | President, Chief Operating Officer and Director | |
/s/ Gerald G. Sax Gerald G. Sax | Senior Vice President, Chief Financial Officer and Principal Accounting Officer | |
* Christopher J. Steffen | Chairman | |
* Jack D. Furst | Director | |
* Edward Herring | Director | |
* Robert F. Cummings, Jr. | Director | |
* Richard A. McGinn | Director | |
* Philip Raygorodetsky | Director | |
* Richard W. Vieser | Director | |
Michael D. Burger | Director | |
William C. McCormick | Director | |
Kirby A. Dyess | Director |
*By: | /s/ Gerald G. Sax | |||
Attorney-in-Fact |
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2.1 | Agreement and Plan of Merger, dated as of October 6, 2009, among Viasystems Group, Inc., Maple Acquisition Corp., and Merix Corporation (included as Annex A to the proxy statement/prospectus).(6) | |
2.2 | Prepackaged Joint Plan of Reorganization of Viasystems Group, Inc. and Viasystems, Inc. under Chapter 11 of the Bankruptcy Code, dated August 30, 2002.(1) | |
2.3 | Modification, dated January 2, 2003, to Prepackaged Joint Plan of Reorganization of Viasystems Group, Inc. and Viasystems, Inc. under Chapter 11 of the Bankruptcy Code dated August 30, 2002.(1) | |
2.4 | Stock Purchase Agreement, dated as of March 21, 2006, by and among Electrical Components International Holdings Company, Viasystems Group, Inc., Wire Harness Holding Company, Inc. and Wire Harness Industries, Inc.(4) | |
3.1 | Third Amended and Restated Certificate of Incorporation of Viasystems Group, Inc. (10) | |
3.2 | Second Amended and Restated Bylaws of Viasystems Group, Inc. (10) | |
4.1 | Specimen Common Stock Certificate.(10) | |
4.2 | Warrant Agreement, dated as of January 31, 2003, by and between Viasystems Group, Inc. and Computershare Investor Services, LLC, as Warrant Agent.(1) | |
4.3 | Indenture dated as of November 24, 2009, among Viasystems, Inc., the Guarantors party thereto and Wilmington Trust FSB, as Trustee.(8) | |
4.4 | Form of 12% Senior Secured Note (included as Exhibit A1 to the Indenture filed as Exhibit 4.5 hereto).(8) | |
4.5 | First Supplemental Indenture, dated as of February 22, 2010, by and among Merix Corporation, Merix Asia, Inc., Viasystems, Inc., the other guarantors as defined in the indenture dated as of November 24, 2009 providing for the issuance of Viasystems, Inc.’s 12.00% Senior Secured Notes due 2015, and Wilmington Trust FSB, as trustee under the Indenture.(11) | |
4.6 | Second Supplemental Indenture, dated as of February 22, 2010, by and among Viasystems Group, Inc., Viasystems, Inc., the other guarantors as defined in the indenture dated as of November 24, 2009 providing for the issuance of Viasystems, Inc.’s 12.00% Senior Secured Notes due 2015, and Wilmington Trust, FSB, as trustee under the Indenture.(11) | |
4.7 | Indenture dated May 16, 2006 between Merix Corporation and U.S. Bank National Association as trustee.(12) | |
4.8 | Form of 4% Convertible Senior Subordinated Note Due 2013 (included in Section 2.2 of the Indenture filed as Exhibit 4.3 hereto).(12) | |
4.9 | First Supplemental Indenture dated as of February 16, 2010 among Viasystems Group, Inc., Merix Corporation and U.S. Bank National Association, as trustee.(10) | |
5.1 | Opinion of Weil, Gotshal & Manges LLP as to the validity of the securities being registered.(9) | |
10.1 | Viasystems Group, Inc. 2003 Stock Option Plan.(1) | |
10.2 | Amended and Restated Executive Employment Agreement, dated October 13, 2003, among Viasystems Group, Inc., Viasystems, Inc., Viasystems Technologies Corp. LLC, the other subsidiaries party thereto, and David M. Sindelar.(1) | |
10.3 | Amended and Restated Executive Employment Agreement, dated January 31, 2003, among Viasystems Group, Inc., Viasystems, Inc., Viasystems Technologies Corp. LLC, and Timothy L. Conlon.(1) | |
10.4 | Amended and Restated Executive Employment Agreement, dated as of August 15, 2005, as of August 15, 2005, by and among Viasystems Group, Inc., Viasystems, Inc., the other subsidiaries of Viasystems Group, Inc. set forth on the signature page thereto and Gerald G. Sax.(3) | |
10.5 | Amended and Restated Executive Employment Agreement, dated as of January 31, 2003, among Viasystems Group, Inc., Viasystems, Inc., Viasystems Technologies Corp., LLC and Joseph Catanzaro.(1) | |
10.6 | Monitoring and Oversight Agreement, dated as of January 31, 2003, by and among Viasystems Group, Inc., Viasystems, Inc., the subsidiaries party thereto, and Hicks, Muse & Co. Partners, L.P.(1) | |
10.7 | Recapitalization Agreement, dated as of October 6, 2009, by and among Viasystems Group, Inc., Hicks, Muse, Tate & |
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Furst Equity Fund III, LP and certain of its affiliates, GSC Recovery II, L.P. and certain of its affiliates, and TCW Shared Opportunities Fund III, L.P.(6) | ||
10.8 | Note Exchange Agreement, dated as of October 6, 2009, by and among Viasystems Group, Inc., Maple Acquisition Corp., and the entities listed on Schedule I attached thereto.(6) | |
10.9 | Stockholders Agreement, dated as of January 31, 2003, by and among Viasystems Group, Inc. and the other parties thereto.(2) | |
10.10 | First Amendment and Consent to Stockholders Agreement, dated as of October 2003, by and among Viasystems Group, Inc. and the other parties thereto.(2) | |
10.11 | Stockholder Agreement, dated as of February 11, 2010, by and between Viasystems Group, Inc. and VG Holdings, LLC.(10) | |
10.12 | Viasystems Group Annual Incentive Compensation Plan(2) | |
10.13 | English translation of the Guangzhou 2009 Credit Facility Contract, dated as of August 17, 2009, by and between Guangzhou Termbray Electronics Technology Co., Ltd, as Borrower, and China Construction Bank Guangzhou Economic and Technological Development District Branch, as Lender.(5) | |
10.14 | English translation of the Maximum-Amount Mortgage Contract by and between Guangzhou Termbray Electronics Technology Co., Ltd, as Borrower, and China Construction Bank Guangzhou Economic and Technological Development District Branch, as Lender.(5) | |
10.15 | Industrial Lease, dated as of April 16, 2008, by and between Verde 9580 Joe Rodriquez LP and Viasystems Technologies Corp., LLC.(7) | |
10.16 | First Amendment to Industrial Lease, dated as of December 8, 2008, by and between Verde 9580 Joe Rodriquez LP and Viasystems Technologies Corp., LLC.(7) | |
10.17 | English translation of the Lease Agreement on Tong Fu Kang Plant Building (Building A, Shenzhen), dated as of October 26, 2006, by and between Shenzhen Tong Fu Kang Industry Development Co., Ltd and Viasystems Chang Yuan EMS (Shenzhen) Co., Ltd (now known as Viasystems EMS (Shenzhen) Co., Ltd).(7) | |
10.18 | English translation of the Lease Agreement on Tong Fu Kang Plant Building (Building D, Shenzhen), dated as of May 6, 2003, by and between Shenzhen Tong Fu Kang Industry Development Co., Ltd and Viasystems Chang Yuan EMS (Shenzhen) Co., Ltd (now known as Viasystems EMS (Shenzhen) Co., Ltd).(7) | |
10.19 | English translation of the Lease Agreement, dated as of October 18, 2008, by and between Qingdao Jijia Electronics Co., Ltd and Qingdao Viasystems Telecommunications Technologies Co., Ltd.(7) | |
10.20 | English translation of the Lease Agreement, dated as of September 1, 2002, by and among Parque Industrial Internacional Mexicano, S.A. de C.V., Electrocomponentes de Mexico, S.A. de C.V.(7) | |
10.21 | Amendment Agreement to the Lease Agreement, dated as of June 25, 2004, by and among Parque Industrial Internacional Mexicano, S.A. de C.V., Electrocomponentes de Mexico, S.A. de C.V. and Viasystems, Inc.(7) | |
10.22 | Second Amendment to the Lease Agreement, dated as of October 15, 2007, by and among Banco J.P. Morgan, Sociedad Anónima, Institución de Banca Múltiple, J.P. Morgan Grupo Financiero, División Fiduciaria, International Manufacturing Solutions Operaciones, S. de R.L. de C.V. and Viasystems, Inc.(7) | |
10.23 | Third Amendment to the Lease Agreement, dated as of August 26, 2009, by and among The Bank of New York Mellon, S.A., Institución de Banca Múltiple (Final Successor of Banco J.P. Morgan, Sociedad Anónima, Institución de Banca Múltiple, J.P. Morgan Grupo Financiero, División Fiduciaria), International Manufacturing Solutions Operaciones, S. de R.L. de C.V. and Viasystems, Inc.(7) | |
10.24 | Collateral Trust Agreement, dated as of November 24, 2009, among Viasystems, Inc., the guarantors named therein, Wilmington Trust FSB, as trustee and collateral trustee, and the other party lien representatives from time to time party thereto.(8) | |
10.25 | Loan and Security Agreement, dated as of February 16, 2010, by and among Viasystems Technologies Corp., L.L.C. and Merix Corporation, as borrowers, and Viasystems, Inc., Viasystems International, Inc. and Merix Asia, Inc., as guarantors, the lenders and issuing bank from time to time party thereto, Wachovia Capital Finance Corporation (New England), as administrative agent, and Wells Fargo Capital Finance, LLC, as sole lead arranger, manager and bookrunner.(11) | |
11.1 | Statement Regarding Computation of Per Share Earnings (incorporated by reference to “Selected Historical Consolidated Financial Data” included in Part I of this Registration Statement). | |
21.1 | List of Subsidiaries of Viasystems Group, Inc.(13) | |
23.1 | Consent of Ernst & Young LLP.(14) |
Table of Contents
23.2 | Consent of Grant Thornton LLP.(14) | |
23.3 | Consent of Weil, Gotshal & Manges LLP (included as part of Exhibit 5.1 to this Registration Statement on Form S-1).(9) | |
24.1 | Power of Attorney (included on the signature pages to the initial Form S-1 filing). |
(1) | Incorporated by reference to Registration Statement No. 333-113664 on Form S-1/A of Viasystems Group, Inc. filed on April 28, 2004. | |
(2) | Incorporated by reference to Registration Statement No. 333-114467 on Form S-4/A of Viasystems, Inc. filed on June 22, 2004. | |
(3) | Incorporated by reference to the Quarterly Report on Form 10-Q of Viasystems, Inc. filed on November 14, 2005. | |
(4) | Incorporated by reference to the Form 8-K of Viasystems, Inc. filed on March 22, 2006. | |
(5) | Incorporated by reference to the Form 8-K of Viasystems, Inc. filed on September 10, 2009. | |
(6) | Incorporated by reference to the Registration Statement No. 333-163040 on Form S-4 of Viasystems Group, Inc. filed on November 12, 2009. | |
(7) | Incorporated by reference to Registration Statement No. 333-163040 on Form S-4/A of Viasystems Group, Inc. filed on December 17, 2009. | |
(8) | Incorporated by reference to the Form 8-K of Viasystems, Inc. filed on December 2, 2009. | |
(9) | Incorporated by reference to Registration Statement No. 333-164186 on Form S-1/A of Viasystems Group, Inc. filed on February 5, 2010. | |
(10) | Incorporated by reference to the Form 8-K of Viasystems Group, Inc. filed on February 17, 2010. | |
(11) | Incorporated by reference to the Form 8-K of Viasystems Group, Inc. filed on February 22, 2010. | |
(12) | Incorporated by reference to the Form 8-K of Merix Corporation filed on May 16, 2006. | |
(13) | Incorporated by reference to the Annual Report on Form 10-K of Viasystems Group, Inc. filed on February 25, 2010. | |
(14) | Filed herewith. | |