Viasystems, Inc. Reports Results for 1999 Third Quarter.

ST. LOUIS--(BUSINESS WIRE)--Nov. 15, 1999--

Viasystems, Inc. (the "Company") and its wholly owned subsidiaries today announced financial results for the third quarter ended September 30, 1999. Net sales for the period were $270.1 million, up from the third quarter 1998 sales of $263.0. The sales increase was due primarily to the August 1999 acquisition of the printed circuit board manufacturing division of Termbray Industries International (Holdings) Limited ("Kalex" or the "Kalex Acquisition") partially offset by contractual price reductions effective January 1, 1999, and volume decreases experienced as a result of Y2K cautiousness throughout our end markets. Earnings before interest, taxes, depreciation and amortization ("EBITDA") was $32.7 million, or 12.1% of sales, $20.0 million lower than third quarter 1998. Cost of goods sold for the third quarter was $208.3 million, or 77.1% of net sales compared to $185.0 million, or 70.3% of net sales for the same period last year. Cost of goods sold as a percentage of net sales increased due to the above mentioned price and volume pressures partially offset by cost containment and reduction activities.

Selling, general and administrative expenses for the three months ended September 30, 1999, were $29.0 million, or 10.7% of sales, compared to $25.2 million, or 9.6% of sales, for the same period in 1998, a $3.8 million increase. Selling, general and administrative expenses increased due to the Kalex Acquisition partially offset by strict cost reduction efforts by the Company.

During the nine months ended September 30, 1999, the Company used approximately $3.5 million of cash in operating activities, approximately $313.8 million for the Kalex and PAGG acquisitions, and invested approximately $77.4 million in capital expenditures. Cash used during the first nine months of 1999 for acquisitions and capital expenditures for the operations were provided by the issuance of a total of $404.9 million of additional debt, and the issuance of additional equity units of $200 million.

As we discussed in connection with the refinancing, the Company is formulating a plan to restructure its current operations in connection with the Kalex Acquisition. The Company is performing a comprehensive review of the strategic position of its individual business units, which have and or may result in plant shutdowns, downsizing and consolidation of certain facilities as well as strategic refocus of other facilities. We have begun incurring and expensing start-up related costs due to the strategic refocus of certain facilities and our continued efforts of moving up the layer count in both Europe and North America. These costs include, but are not limited to, costs related to initiating a new process in an existing facility, introducing new products and conducting business with new customers. While having a negative impact on reported EBITDA to date, these costs are an allowable addback to EBITDA for covenant purposes. For fiscal year 1999 we estimate these costs will range from $10 million to $15 million.

In connection with the review and restructure of our current operations, the Company is assessing the carrying value of goodwill and other acquired intangibles. While the Company has not yet completed this assessment, a possible outcome may be a write-off of approximately $150 million to $295 million of the goodwill and acquired intangible assets presently carried on the books. The Company expects to conclude this matter in the near term with the appropriate adjustment being recorded before the fiscal year end.

James N. Mills, Chairman, said: "Despite the slow third quarter performance, we continue our efforts related to integration of our Chinese production facilities, the move up the layer count in both North America and Europe and the aggressive pursuit of cost reductions. As we finalize the transition of production to China and the related production expansion, we expect to capitalize on these opportunities during 2000 and the years to come."

Viasystems, headquartered in St. Louis, Missouri, is one of the largest manufacturers and marketers of printed circuit boards and backplanes in the world. PCBs are the basic platforms used to interconnect microprocessors, integrated circuits and other components essential to the functioning of virtually all electronic systems, ranging from sophisticated computers and industrial products to basic household appliances. Backplanes are used in electronic systems to distribute and ground power, to connect PCBs, power supplies and other elements, and to relay information into and out of electronic systems. The Company supplies over 800 customers globally, serving, among others, the telecommunications, computer, automotive, industrial and instrumentation, military, and consumer electronics industries.

This press release contains forward-looking statements as defined by the federal securities laws, and these statements are based upon Viasystems, Inc.'s current expectations and assumptions, which are inherently subject to various risks and uncertainties that could cause actual results to differ from those anticipated, projected, or implied. Certain factors that could cause actual results to differ are indicated in Viasystems, Inc.'s filings with the Securities and Exchange Commission.