VIASYSTEMS INC - 10-Q Quarterly Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the quarterly period ended September 30, 2002
--------------------------------------------------

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from to
------------------------- ---------------------

333-29727
(Commission File Number)

VIASYSTEMS, INC.
(Exact name of Registrant as specified in charter)

DELAWARE
(State or other jurisdiction of incorporation or organization)

43-1777252
(I.R.S. Employer Identification No.)

101 SOUTH HANLEY ROAD
ST. LOUIS, MO 63105
(314) 727-2087
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.

YES [X] NO [ ]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:

VIASYSTEMS, INC. & SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS

VIASYSTEMS, INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

See accompanying notes to condensed consolidated financial statements.

2

VIASYSTEMS, INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)

See accompanying notes to condensed consolidated financial statements.

3

VIASYSTEMS, INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

See accompanying notes to condensed consolidated financial statements.

4

VIASYSTEMS, INC. & SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)

1. BASIS OF PRESENTATION

The unaudited interim condensed consolidated financial statements of
Viasystems, Inc. ("Viasystems") and its subsidiaries reflect all adjustments
consisting only of normal recurring adjustments that are, in the opinion of
management, necessary for a fair presentation of financial position and results
of operations. Viasystems, together with its subsidiaries and its holding
company parent, Viasystems Group, Inc. ("Group"), is herein referred to as the
"Company." The results for the three and nine months ended September 30, 2002,
are not necessarily indicative of the results that may be expected for a full
fiscal year. These financial statements should be read in conjunction with the
audited consolidated financial statements and notes thereto included in
Viasystems' 2001 Annual Report on Form 10-K and other filings made with the
Securities and Exchange Commission.

2. SALE OF BUSINESSES AND JOINT VENTURE INTEREST

In September 2002, the Company sold certain assets of the Plastics Division
of Viasystems EMS-UK Ltd. to Plastic Products ABC Ltd. Total consideration was
GREAT BRITISH POUNDS 225 (approximately $338) consisting of cash of GREAT
BRITISH POUNDS 60 and a note receivable of GREAT BRITISH POUNDS 165, resulting
in a loss on sale of $1,838.

In September 2002, the Company sold its entire equity interest in
Viasystems Puerto Rico, Inc., a wholly owned subsidiary that previously
manufactured printed circuit boards, to P.C. B. Horizon Technology Inc. Total
consideration was $1,500, consisting of $1,200 in cash and a note receivable of
$300, resulting in a loss on sale of $593.

In June 2002, the Company sold its entire joint venture equity interest in
Raintherm Limited, a manufacturer of thermal management systems used in custom
metal enclosures to A/S Dantherm Holding Company. In connection with such
disposition, the Company entered into a supply agreement with Raintherm Limited,
whereby, the Company agreed to purchase, to the extent needed, certain thermal
management products from Raintherm Limited. Total consideration received was
$14,500 resulting in a gain on sale of $4,187 recorded in other income in the
condensed consolidated statement of operations.

3. RESTRUCTURING AND IMPAIRMENT CHARGES

In light of the continued economic downturn related to many of its key
telecommunication and networking customers, the Company has continued its
restructuring activities during 2002. The continued downturn has made it
necessary for the Company to regularly evaluate its cost position compared to
currently anticipated levels of business. During 2002, this continued evaluation
has resulted in additional plant shutdowns and downsizings to reduce costs to
more appropriate levels, in line with current and expected customer demand. A
summary of the restructuring activity taken during 2002 is as follows:

During the quarter ended March 31, 2002, the Company recorded a
restructuring charge of $1,646, primarily related to workforce reductions at its
Italian metal fabrication and assembly facility. The workforce reduction
impacted a total of 82 employees all of which were regular employees. Seven of
these employees were terminated by March 31, 2002, with an additional 31
employees to be terminated by the end of 2002 and the remainder to be terminated
in 2003.

Additionally, during the quarter ended March 31, 2002, the Company reversed
$1,646 of excess restructuring accruals, primarily related to the closure of its
Puerto Rico printed circuit board fabrication facility.

5

During the quarter ended June 30, 2002, the Company recorded a
restructuring charge of $2,818 primarily related to the closure of its remaining
printed circuit board assembly operation in San Jose, California and other
workforce reductions in North America. The San Jose facility closure impacted a
total of 198 employees, all of which were regular, non-union employees. 173 of
these employees were terminated by the end of July 2002, the last month of
operations with the remaining 25 transition team employees terminated during the
third quarter of 2002. The other North American workforce reductions impacted a
total of 73 employees, of which, 49 were regular, non-union employees and 24
were temporary employees.

In connection with the closure of the San Jose, California printed circuit
board assembly operation, the Company also recorded impairment charges totaling
$4,748 to write-down to fair value assets being held for sale related to this
operation. The impairment consisted of a write-down of $1,888 for land and
building and $2,860 for machinery and equipment as well as office equipment. The
Company is actively holding this property and equipment for sale and expects to
complete the disposal of these assets during the fourth quarter of 2002 or the
first quarter of 2003. At September 30, 2002, these assets had a net book value
of $6,598, of which, $4,600 related to the land and building.

During the quarter ended September 30, 2002, the Company recorded the
following charges related to its ongoing restructuring efforts:

A restructuring charge of $5,834 related to the closure of the Company's
Granby, Quebec printed circuit board fabrication facility. The charge consisted
of $4,304 related to personnel and severance, $160 related to lease and other
contractual obligations and $1,370 related to other. The Granby, Quebec facility
closure impacted a total of 118 employees, all of which were regular, non-union
employees. Forty-seven (47) of these employees were terminated during the third
quarter of 2002, with the remaining 71 employees to be terminated during the
fourth quarter of 2002.

A restructuring charge of $6,246 related to the closures of the Company's
regional headquarter offices in Richmond, Virginia and London, England. The
charge consisted of $2,746 related to personnel and severance and $3,500 related
to leases and other contractual commitments. The closures of these regional
headquarters impacted a total of 38 employees, all of which were regular,
non-union employees. Two (2) of these employees were terminated during the third
quarter of 2002, with the remaining employees to be terminated during the fourth
quarter of 2002 and the first quarter of 2003.

The Company also recorded charges totaling $711 related to other North
American and European workforce reductions that impacted a total of 108
employees, all of which were regular, non-union employees.

Additionally, during the third quarter of 2002, the Company reversed
restructuring charges totaling $1,064 primarily related to the remaining
restructuring accruals recorded in connection with the closure of its Puerto
Rico printed circuit board facility that was sold in September 2002.

Also, in connection with the continued economic downturn, during the third
quarter of 2002, the Company evaluated the carrying amount of certain long-lived
assets for impairment. The Company's evaluation identified the long-lived assets
related to its Juarez, Mexico EMS facility were impaired as the carrying amount
of these assets exceeded the undiscounted cash flows expected to be generated by
these assets. The Company then had these assets appraised based on prices for
similar assets in use, resulting in an impairment charge of $4,267.

6

Below is a table summarizing restructuring and impairment activity for the
nine months ended September 30, 2002:

The restructuring and impairment charges were determined based on formal
plans approved by the Company's management using the best information available
to it at the time. The amounts the Company may ultimately incur may change as
the balance of the plans are executed.

4. INVENTORIES

The composition of inventories at September 30, 2002, is as follows:

Raw materials.................................. $ 47,203
Work in process................................ 27,625
Finished goods................................. 31,365
---------
Total....................................... $ 106,193
=========

5. GOODWILL AND OTHER INTANGIBLE ASSETS

Effective January 1, 2002, the Company implemented Statement of Financial
Accounting Standards No. 142 ("SFAS 142"), "Goodwill and Other Intangible
Assets", and as a result, ceased amortizing goodwill and other indefinite lived
intangible assets.

Also in connection with the implementation, the Company evaluated its
goodwill and other indefinite lived intangible assets for impairment in
accordance with SFAS 142. The evaluation did not result in an impairment charge
at any of the Company's reporting units.

Had the implementation of SFAS 142 occurred at January 1, 2001, and
amortization of goodwill ceased, net loss, basic net loss per weighted average
common share and diluted net loss per weighted average common share for the
three and nine months ended September 30, 2001, would have been as follows:

7

Included in the Company's intangible assets at December 31, 2001 and
September 30, 2002 is goodwill totaling approximately $240,000 that is not
subject to amortization. During the three and nine months ended September 30,
2002, the Company paid $35 for acquisitions of patents. The components of
intangible assets subject to amortization were as follows:

Expected future annual amortization expense is as follows:

Fiscal Years:

2002*................................... $ 862
2003.................................... 2,819
2004.................................... 2,432
2005.................................... 2,185
2006.................................... 1,989
Thereafter.............................. 11,967
---------
$ 22,254
=========

*Represents remaining three month period ending December 31, 2002.

6. LONG-TERM OBLIGATIONS AND PREPACKAGED PLAN OF REORGANIZATION

The composition of long-term obligations at September 30, 2002, is as
follows:

Credit Agreement:
Term facilities..................................................... $ 436,750
Revolvers........................................................... 88,470
Senior Subordinated Notes due 2007...................................... 400,000
Series B Senior Subordinated Notes due 2007............................. 100,000
Series B Senior Subordinated Notes due 2007, Premium.................... 2,696
Senior Unsecured Notes, including paid-in-kind interest of $17,735...... 117,735
Senior Unsecured Notes, discount........................................ (21,800)
Other and capital lease obligations..................................... 6,979
-----------
1,130,830
Less: current maturities and amounts subject to acceleration............ 1,122,932
-----------
$ 7,898
===========

The Company has experienced and continues to experience financial
difficulties primarily as a result of the dramatic downturn in telecommunication
and networking component demand that occurred in 2001 and continues through
2002.

On October 1, 2002, Group and Viasystems, each filed, together with a
prepackaged plan of reorganization (the "Plan"), a voluntary petition for relief
under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy
Court for the Southern District of New York. None of Viasystems, Inc.'s
subsidiaries have filed for protection under the Bankruptcy Code.

8

Pursuant to a solicitation of acceptances of the Plan conducted prior to
filing the Plan with the Bankruptcy Court, the Company believes it received
sufficient votes in favor of the Plan to meet the requirements of the Bankruptcy
Code for confirmation of the Plan. Votes to accept the Plan were tendered by,
among others, (i) holders of approximately 87% of the bank debt under our senior
secured credit facility, (ii) holders of 100% of our senior unsecured notes, and
(iii) holders of approximately 77% of our senior subordinated notes. The holders
of Group's equity securities were not solicited.

Subject to the proposed modifications set forth below, the Plan, as filed
with the Bankruptcy Court on October 1, 2002, provides that:

(i) Viasystems' senior secured credit facility will be reduced by $77.4
million from proceeds of the Rights Offering and Exchange described below and
will be restructured to provide for an aggregate term loan facility of $448
million and a revolving facility ("Exit facility") of up to $62 million with a
letter of credit subfacility of $15 million;

(ii) Viasystems' senior unsecured notes will be cancelled, and in exchange
the holders thereof will receive (a) shares of a new class of junior preferred
stock of Group having a liquidation preference of $120.1 million and (b) shares
equaling 6.3% of the common stock of Group, determined on a fully diluted basis
(excluding the effects of a management incentive plan and warrants issued
pursuant to the Plan);

(iii) claims held by the Secretary of State for Trade and Industry of the
United Kingdom ("DTI") pursuant to a guaranty made by Viasystems with respect to
a 12 million pound loan made by DTI to Viasystems Tyneside Limited will be
cancelled, and in exchange DTI will receive (a) shares of a new class of junior
preferred stock of Group with a liquidation preference of up to $13.5 million
and (b) shares equaling up to 0.7% of the common stock of Group, determined on a
fully diluted basis (excluding the effects of a management incentive plan and
warrants issued pursuant to the Plan);

(iv) Viasystems' senior subordinated notes will be cancelled, and in
exchange the holders thereof will receive shares equaling up to 70.2% of the
common stock of Group, determined on a fully diluted basis (excluding the
effects of a management incentive plan and warrants issued pursuant to the
Plan);

(v) claims held by the general unsecured creditors of Group will be
cancelled, and in exchange the holders thereof will receive warrants, the
exercise price of which will be based on a $1.15 billion total enterprise value,
to purchase shares equaling 0.6% of the common stock of Group, determined on a
fully diluted basis (excluding the effects of a management incentive plan);

(vi) claims held by the general unsecured creditors of Viasystems will be
cancelled, and in exchange the holders thereof will receive non-transferable
subordinated promissory notes in amounts equal to 85% of such claims with all
accrued interest and principal payable on the tenth anniversary of the effective
date of the Plan;

(vii) the Series B Preferred Stock of Group will be cancelled, and in
exchange the holders thereof will receive warrants, the exercise price of which
will be based on a $1.15 billion total enterprise value, to purchase shares
equaling 5.4% of the common stock of Group, determined on a fully diluted basis
(excluding the effects of a management incentive plan);

(viii) the existing common stock, options and warrants of Group will be
cancelled, and the holders thereof will not receive any distribution under the
Plan; and

(ix) Group will adopt an incentive option plan authorizing the issuance of
stock options to purchase shares equaling 10.0% of the common stock of Group
and, on the effective date of the Plan, will issue up to 80% of such options,
the exercise price of which will be based on a $828 million total enterprise
value, to its employees.

The Company intends to file a motion to modify certain terms of the Plan.
If the Plan, as modified, is confirmed and becomes effective, the treatment of
claims described in clauses (iii), (v), and (vi) of the paragraph immediately
above will be modified as follows:

9

(i) claims held by the Secretary of State for Trade and Industry of the
United Kingdom ("DTI") pursuant to a guaranty made by Viasystems with respect to
a 12 million pound loan made by DTI to Viasystems Tyneside Limited ("VTL") will
be cancelled, and in exchange DTI will receive a note in an amount equal to 9
million pounds with interest payable semi-annually in cash on a current basis
and principal payable from December 31, 2008 through December 31, 2010 (provided
all amounts due and owing under our senior secured credit facility are not paid
in full prior to October 1, 2008); provided, however, proceeds received by DTI
pursuant to the liquidation of VTL will reduce the outstanding principal under
the note;

(ii) claims held by the general unsecured creditors of Group will be
cancelled, and in exchange each holder thereof will receive the lesser of (a) a
pro rata distribution of shares equaling 0.3% of the common stock of Group,
determined on a fully diluted basis (excluding the effects of a management
incentive plan and warrants issued pursuant to the Plan) and (b) shares of the
common stock of Group having a value equal to the amount of such holder's claim;
and

(iii) claims held by the general unsecured creditors of Viasystems will be
cancelled, and in exchange the holders thereof will receive non-transferable
subordinated promissory notes in amounts equal to 100% of such claims with
interest payable semi-annually in cash on a current basis and principal payable
from December 31, 2008 through December 31, 2010.

The Company does not believe that the modifications described above will
require it to resolicit acceptances of the Plan. Additionally, the Company
believes that prior to the date that any principal payments are due under the
note to be issued to DTI, that DTI will receive proceeds from the liquidation of
VTL in amounts sufficient to offset any principal payments that the Company
would otherwise be required to make.

In addition, pursuant to the Plan, the Company will (i) issue rights to
purchase shares of a new class of senior convertible preferred stock of Group
convertible into 16.3% of the common stock of Group, determined on a fully
diluted basis (excluding the effects of a management incentive plan and warrants
issued pursuant to the Plan), at an aggregate purchase price of $53.7 million to
affiliates of Hicks, Muse, Tate & Furst Incorporated, affiliates of GSC
Partners, TCW Share Opportunity Fund III, L.P., and other holders of Viasystems'
senior subordinated notes (the "Rights Offering") and (ii) exchange $23.7
million of bank debt under Viasystems' senior secured credit facility held by
affiliates of Hicks, Muse, Tate & Furst Incorporated for shares equaling 7.2% of
the common stock of Group, determined on a fully diluted basis (excluding the
effects of a management incentive plan and warrants issued pursuant to the Plan)
(the "Exchange"). Pursuant to commitment agreements, conditioned upon, among
other things, the effectiveness of the Plan, affiliates of Hicks, Muse, Tate &
Furst Incorporated, affiliates of GCS Partners, and TCW Share Opportunity Fund
III, L.P. have severally committed to purchase all of the senior convertible
preferred stock of Group offered in the Rights Offering. In consideration for
such commitment, such parties will receive a fee equal to two percent of the
price of the senior convertible preferred stock of Group that is purchased by
such parties in the Rights Offering.

On October 1, 2002, the Company entered into a $37.5 million dollar
revolving working capital facility ("DIP facility") that is available to provide
the Company with additional liquidity during the bankruptcy proceeding and prior
to the date the Plan becomes effective. On October 25, 2002, the Bankruptcy
Court entered an order authorizing the Company to borrow or obtain letters of
credit under the DIP facility up to the full aggregate principal amount of $37.5
million.

The Company continues to operate in Chapter 11 in the ordinary course of
business and is attempting to maintain normal and regular trade terms with its
suppliers and customers. There can be no assurance that the Company's suppliers
will continue to provide normal trade credit or credit on other terms acceptable
to the Company, if at all, or that the Company's customers will continue to do
business or enter into new business with the Company.

10

The Bankruptcy Court has set a hearing for the confirmation of the Plan for
November 21, 2002. If the Bankruptcy Court enters an order confirming the Plan
on or shortly after that date, the Company expects the effective date of the
Plan to occur prior to December 31, 2002 or as soon as practicable thereafter.
There can be no assurance that the Plan will be confirmed by the Bankruptcy
Court. In the event the Plan is not confirmed by the Bankruptcy Court, the
Company would be required to negotiate, prepare and seek approval of an
alternative plan of reorganization. No assurances can be given that the Company
would be successful in these efforts.

Borrowings under the Company's existing senior secured credit facility bear
interest at floating rates which vary according to the interest option it
selects. Base rate term loans bear interest at the then effective base rate plus
an applicable margin ranging from 2.50% to 3.00%. Eurocurrency term loans bear
interest at the then effective eurocurrency base rate plus an applicable margin
ranging from 3.50% to 4.00%. Revolving credit loans bear interest, at the
Company's option, at the then effective base rate plus 2.5% or the then
effective eurocurrency base rate plus 3.50%. The Company's senior subordinated
notes bear interest, payable semiannually, at the rate of 9 3/4% per annum.

Borrowings under the Company's DIP Facility bear interest, at its option,
at the then effective base rate plus 2.50% or the then effective eurocurrency
base rate plus 3.50%.

In the event that the Company is successful in consummating the
restructuring and the Plan becomes effective, borrowings under the restructured
senior secured credit facility will bear interest at floating rates which vary
according to the tranche of the loan and the interest option the Company
selects. Base rate Term Loan A facility loans will bear interest at the then
effective base rate plus 2.50%. Base rate Term Loan B facility loans will bear
interest at the then effective base rate plus 3.00%. Eurocurrency Term Loan A
facility loans will bear interest at the then effective eurocurrency base rate
plus 3.50%. Eurocurrency Term Loan B facility loans will bear interest at the
then effective eurocurrency base rate plus 4.00%. Revolving credit loans will
bear interest, at the Company's option, at the then effective base rate plus
2.25% or the then effective eurocurrency base rate plus 3.25%.

As a result of the Company's failure to satisfy certain financial
maintenance covenants contained in its senior secured credit facility and its
failure to make scheduled interest payments on its senior subordinated notes
events of default have occurred and are continuing thereunder. However, without
obtaining relief from the automatic stay in the Company's Chapter 11 cases, its
creditors do not have the right to accelerate payment or pursue other remedies
with respect to such events of default. Additionally, all of the lenders under
the

11

Company's senior secured credit facility, holders of 100% of the principal
amount of the Company's outstanding unsecured senior notes and holders of 72.8%
of the principal amount of the Company's outstanding senior subordinated notes
have entered into a "Lockup" agreement which provides, among other things, that
the parties thereto will not take any action or pursue any rights under the
Company's senior secured credit facility, the Company's senior unsecured notes,
or the Company's senior subordinated notes during the term of the Lockup
agreement. The Lockup agreement may be terminated in the event the Plan does not
become effective prior to January 31, 2003. As the Lockup agreement does not
extend beyond 12 months and that there can be no assurance that the Plan will be
successful, the Company has reclassified this indebtedness, in the approximate
aggregate amount of $1.0 billion, as current liabilities.

During the quarter ended September 30, 2002 and in connection with the
closure of the Company's San Jose, California facility, the Company entered into
an agreement to buyout the remaining lease payments due under certain capital
leases held by Viasystems San Jose, Inc. As a result of the buyout, the Company
recognized a gain on early extinguishment of capital leases of $656 that is
included in other expense (income) in the condensed consolidated statement of
operations.

7. COMPREHENSIVE INCOME

The components of comprehensive income, net of tax, are as follows:

8. BUSINESS SEGMENT INFORMATION

The Company operates in one business segment--a worldwide vertically
integrated independent provider of electronics manufacturing services, which are
sold throughout many diverse markets.

The Company's operations are located worldwide and are analyzed by three
geographical segments. Segment data includes intersegment revenues.

12

Pertinent financial data by major geographic segments is as follows:

9. NEW ACCOUNTING STANDARDS

In October 2001, the Financial Accounting Standards Board issued SFAS No.
143, "Accounting for Asset Retirement Obligations", to be effective for all
fiscal years beginning after June 15, 2002, with early adoption permitted. SFAS
No. 143 provides for the fair value of a liability for an asset retirement
obligation covered under the scope of SFAS No. 143 to be recognized in the
period in which the liability is incurred, with an offsetting increase in the
carrying amount of the related long-lived asset. Over time, the liability would
be accreted to its present value, and the capitalized cost would be depreciated
over the useful life of the related asset. Upon settlement of the liability, an
entity would either settle the obligation for its recorded amount or incur a
gain or loss upon settlement. The Company is currently assessing the impact, if
any, of SFAS No. 143 on its financial position, results of operations and cash
flows as well as timing of its adoption.

In April 2002, the Financial Accounting Standards Board issued SFAS No. 145
"Gain or loss on early extinguishment of debt" ("SFAS 145"), to be effective for
fiscal years beginning after May 15, 2002, with immediate effectiveness for
certain transactions occurring after May 15, 2002, with overall early adoption
permitted. SFAS 145 among other things, eliminated the prior requirement that
all gains and losses from the early extinguishment of debt be classified as an
extraordinary item. Upon adoption of SFAS 145, gains and losses from the early
extinguishment of debt are now classified as an extraordinary item only if they
meet the "unusual and infrequent" criteria contained in Accounting Principles
Bulletin ("APB") No. 30. In addition, upon adoption of SFAS 145, all gains and
losses from the early extinguishment of debt that had been classified as an
extraordinary item are to be reassessed to determine if they would have met the
"unusual and infrequent" criteria of APB No. 30; any such gain or loss that
would not have met the APB No. 30 criteria are retroactively reclassified and
reported as a component of income before extraordinary item. As required by SFAS
145, the Company has recorded a gain of $0.7 million on early extinguishment of
capital leases related to the closure of its San Jose, California facilities.
The gain was recorded in other income for the three months ended September 30,
2002.

In June 2002, Financial Accounting Standards Board issued SFAS No. 146,
"Accounting for Costs Associated with Exit or Disposal Activities" to be
effective for exit or disposal activities initiated after December 15, 2002 with
early adoption encouraged. SFAS No. 146 addresses financial accounting and
reporting for costs associated with exit or disposal activities and nullifies
Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." This statement requires
that a liability for a cost

13

associated with an exit or disposal activity be recognized when the liability is
incurred. SFAS No. 146 also establishes that fair value is the objective for
initial measurement of the liability. This Statement applies to costs associated
with an exit activity that does not involve an entity newly acquired in a
business combination or with a disposal activity covered by SFAB No. 144. This
statement does not apply to costs associated with the retirement of a long-lived
asset covered by SFAS No. 143. The Company is currently assessing the impact of
SFAS No. 146 on its financial position, results of operations and cash flows as
well as timing of its adoption.

10. SUBSEQUENT EVENT

On October 1, 2002, a hearing was held, whereby, a court in France
appointed an administrative receiver for Viasystems EMS - France SAS, an
indirect wholly owned subsidiary of Group. The administrative receiver will
evaluate the business during a six-month observation period to determine the
best means of disposition of the business, either by sale or liquidation. Upon
such appointment, the Company no longer has control of the entity and will no
longer reflect the results of Viasystems EMS - France SAS in the Company's
consolidated results. The Company expects to record a loss on disposition of
approximately $26,000 during the fourth quarter of 2002.

14

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following discussion should be read in conjunction with the unaudited
condensed consolidated financial statements and the notes thereto included in
this Form 10-Q.

We have made forward-looking statements in this Form 10-Q that are based on
our management's beliefs and assumptions and on information currently available
to our management. Forward-looking statements include the information concerning
our possible or assumed future results of operations, business strategies,
financing plans, competitive position, potential growth opportunities, and the
effects of competition. Forward-looking statements include all statements that
are not historical facts and can be identified by the use of forward-looking
terminology such as the words "believes," "expects," "anticipates," "intends,"
"plans," "estimates," or other similar expressions.

Forward-looking statements involve risks, uncertainties and assumptions.
Actual results may differ materially from those expressed in these
forward-looking statements. You should not put undue reliance on any
forward-looking statements. We do not have any intention or obligation to update
forward-looking statements after we file this Form 10-Q.

You should understand that many important factors could cause our results
to differ materially from those expressed in forward-looking statements. These
factors include, but are not limited to, fluctuations in our operating results
and customer orders, unexpected decreases in demand or increases in our
inventory levels, our competitive environment, our reliance on our largest
customers, risks associated with our international operations, our ability to
protect our patents and trade secrets, environmental laws and regulations, our
relationship with unionized employees, risks associated with our acquisition
strategy, our substantial indebtedness, control by our largest stockholders and
other factors.

RESULTS OF OPERATIONS

Three Months Ended September 30, 2002, Compared to Three Months Ended September
30, 2001

Net sales for the three months ended September 30, 2002 were $216.3
million, representing a $51.8 million, or 19.3% decrease, from the same period
in 2001. The decrease was primarily a result of continued weakness in sales to
North American and European telecommunication and networking customers.

Cost of goods sold for the three months ended September 30, 2002 was $171.3
million, or 79.2% of sales, compared to $225.5 million, or 84.1% of sales
(excluding one-time write-offs of inventory totaling $0.8 million related to
restructurings), for the three months ended September 30, 2001. Cost of goods
sold as a percent of net sales decreased as a result of an increase in PCB sales
as a percent of total sales and cost reductions realized during 2002, partially
offset by lower absorption of our fixed overhead cost in our facilities
throughout North America and Europe due to lower demand from our key
telecommunication and networking customers.

Selling, general and administrative expenses for the three months ended
September 30, 2002 of $23.1 million decreased by $0.3 million versus the
comparable period in 2001. These costs decreased primarily due to cost reduction
and restructuring activities implemented during 2001 and 2002.

Depreciation and amortization decreased $10.3 million, from $31.0 million
for the quarter ended September 30, 2001, to $20.7 million for the same period
of 2002, primarily due to the implementation of Statement of Accounting
Standards No. 142, "Goodwill and Other Intangible Assets", whereby, effective
January 1, 2002, goodwill and indefinite lived intangibles are no longer
amortized and due to the fixed assets disposed of in connection with the 2001
restructuring and impairment activity.

15

During the quarter ended September 30, 2002 we incurred $16.9 million in
professional fees related to our plan of reorganization to reduce debt on our
balance sheet.

In light of the continued economic downturn related to many of our key
telecommunication and networking customers, we have continued our restructuring
activities during 2002. The continued downturn has made it necessary for us to
regularly evaluate our cost position compared to currently anticipated levels of
business. During 2002, this continued evaluation has resulted in additional
plant shutdowns and downsizings to reduce costs to more appropriate levels, in
line with current and expected customer demand. A summary of the restructuring
activity taken during the quarter ended September 30, 2002 is as follows:

A restructuring charge of $5.8 million was taken related to the closure of
our Granby, Quebec printed circuit board fabrication facility. The charge
consisted of $4.3 million related to personnel and severance, $0.1 million
related to lease and other contractual obligations and $1.4 million related to
other. The Granby, Quebec facility closure impacted a total of 118 employees,
all of which were regular, non-union employees. Forty-seven (47) of these
employees were terminated during the third quarter of 2002, with the remaining
71 employees to be terminated during the fourth quarter of 2002.

A restructuring charge of $6.2 million was taken related to the closures of
our regional headquarter offices in Richmond, Virginia and London, England. The
charge consisted of $2.7 million related to personnel and severance and $3.5
million related to leases and other contractual commitments. The closures of
these regional headquarters impacted a total of 38 employees, all of which were
regular, non-union employees. Two (2) of these employees were terminated during
the third quarter of 2002, with the remaining employees to be terminated during
the fourth quarter of 2002 and the first quarter of 2003.

We also recorded charges totaling $0.7 million related to other North
American and European workforce reductions that impacted a total of 108
employees, all of which were regular, non-union employees.

Additionally, during the third quarter of 2002, we reversed restructuring
charges totaling $1.0 million primarily related to the remaining restructuring
accruals recorded in connection with the closure of our Puerto Rico printed
circuit board facility that was sold in September 2002.

Also, in connection with the continued economic downturn, during the third
quarter of 2002, we evaluated the carrying amount of certain long-lived assets
for impairment. The evaluation identified the long-lived assets related to our
Juarez, Mexico EMS facility were impaired as the carrying amount of these assets
exceeded the undiscounted cash flows expected to be generated by these assets.
We then had these assets appraised based on prices for similar assets in use,
resulting in an impairment charge of $4.3 million.

The restructuring and impairment charges were determined based on formal
plans approved by our management using the best information available to us at
the time. The amounts we may ultimately incur may change as the balance of the
plans are executed.

During the quarter ended September 30, 2002, we recorded a loss on sale of
businesses totaling $2.4 million related to the sale of the Plastics Division of
Viasystems EMS-UK Ltd. and the sale of the stock of Viasystems Puerto Rico, Inc.

Interest expense increased $0.3 million, from $24.9 million for the quarter
ended September 30, 2001, to $25.2 million for the same period of 2002,
primarily due to increased interest expense related to the Senior Unsecured
Notes partially offset by lower market benchmark interest rates compared to the
third quarter of 2001.

Amortization of deferred financing costs increased $0.2 million, from $1.1
million for the quarter ended September 30, 2001, to $1.3 million for the same
period in 2002 due to amortization of deferred financing fees related to
amendments to our Senior Credit Facility during 2002.

16

Other expense (income) decreased $1.0 million, from expense of $0.6 million
for the quarter ended September 30, 2001, to income of $0.4 million for the same
period in 2002. The decrease was due to a gain on early extinguishment of
capital leases of $0.7 million and foreign currency transaction gains recognized
during the quarter ended September 30, 2002.

Nine Months Ended September 30, 2002, Compared to Nine Months Ended September
30, 2001

Net sales for the nine months ended September 30, 2002 were $672.6 million,
representing a $293.8 million, or 30.4% decrease, from the same period in 2001.
The decrease was primarily a result of continued weakness in sales to North
American and European telecommunication and networking customers.

Cost of goods sold for the nine months ended September 30, 2002 was $545.0
million, or 81.0% of sales, compared to $792.4 million, or 82.0% of sales
(excluding one-time write-offs of inventory totaling $50.1 million related to
restructurings), for the nine months ended September 30, 2001. Cost of goods
sold as a percent of net sales decreased as a result of an increase in PCB sales
as a percent of total sales and cost reductions realized during 2002, partially
offset by lower absorption of our fixed overhead cost in our facilities
throughout North America, Europe and Asia due to lower demand from our key
telecommunication and networking customers.

Selling, general and administrative expenses for the nine months ended
September 30, 2002 of $69.0 million decreased by $6.2 million versus the
comparable period in 2001. These costs decreased primarily due to cost reduction
and restructuring activities implemented during 2001 and 2002.

Depreciation and amortization decreased $27.9 million, from $98.3 million
for the nine months ended September 30, 2001, to $70.4 million for the same
period of 2002, primarily due to the implementation of Statement of Accounting
Standards No. 142, "Goodwill and Other Intangible Assets", whereby, effective
January 1, 2002, goodwill and indefinite lived intangibles are no longer
amortized and due to the fixed assets disposed of in connection with the 2001
and 2002 restructuring and impairment activity.

During the nine months ended September 30, 2002, we incurred $21.5 million
in professional fees related to our plan of reorganization to reduce debt on our
balance sheet.

In light of the continued economic downturn related to many of our key
telecommunication and networking customers, we have continued our restructuring
activities during 2002. The continued downturn has made it necessary for us to
regularly evaluate our cost position compared to currently anticipated levels of
business. During 2002, this continued evaluation has resulted in additional
plant shutdowns and downsizings to reduce costs to more appropriate levels, in
line with current and expected customer demand. A summary of the restructuring
activity taken during 2002 is as follows:

During the quarter ended March 31, 2002, we recorded a restructuring charge
of $1.6 million, primarily related to workforce reductions at our Italian metal
fabrication and assembly facility. The workforce reduction impacted a total of
82 employees all of which were regular employees. Seven of these employees were
terminated by March 31, 2002, with an additional 31 employees to be terminated
by the end of 2002 and the remainder to be terminated in 2003.

Additionally, during the quarter ended March 31, 2002, we reversed $1.6
million of excess restructuring accruals, primarily related to the closure of
our Puerto Rico PCB fabrication facility.

During the quarter ended June 30, 2002, we recorded a restructuring charge
of $2.8 million primarily related to the closure of our remaining printed
circuit board assembly operation in San Jose, California and other workforce
reductions in North America. The San Jose facility closure impacted a total of
198 employees, all of

17

which were regular, non-union employees. 173 of these employees were terminated
by the end of July 2002, the last month of operations with the remaining 25
transition team employees terminated during the third quarter of 2002. The other
North American workforce reductions impacted a total of 73 employees, of which,
49 were regular, non-union employees and 24 were temporary employees.

In connection with the closure of the San Jose, California printed circuit
board assembly operation, we also recorded impairment charges totaling $4.8
million to write-down to fair value assets being held for sale related to this
operation. The impairment consisted of a write-down of $1.9 million for land and
building and $2.9 million for machinery and equipment as well as office
equipment. We are actively holding this property and equipment for sale and
expect to complete the disposal of these assets during the fourth quarter of
2002 or the first quarter of 2003. At September 30, 2002, these assets had a net
book value of $6.6 million, of which, $4.6 million related to the land and
building.

During the quarter ended September 30, 2002, we recorded the following
charges related to our ongoing restructuring efforts:

A restructuring charge of $5.8 million was taken related to the closure of
our Granby, Quebec printed circuit board fabrication facility. The charge
consisted of $4.3 million related to personnel and severance, $0.1 million
related to lease and other contractual obligations and $1.4 million related to
other. The Granby, Quebec facility closure impacted a total of 118 employees,
all of which were regular, non-union employees. Forty-seven (47) of these
employees were terminated during the third quarter of 2002, with the remaining
71 employees to be terminated during the fourth quarter of 2002.

A restructuring charge of $6.2 million was taken related to the closures
of our regional headquarter offices in Richmond, Virginia and London, England.
The charge consisted of $2.7 million related to personnel and severance and $3.5
million related to leases and other contractual commitments. The closures of
these regional headquarters impacted a total of 38 employees, all of which were
regular, non-union employees. Two (2) of these employees were terminated during
the third quarter of 2002, with the remaining employees to be terminated during
the fourth quarter of 2002 and the first quarter of 2003.

We also recorded charges totaling $0.7 million related to other North
American and European workforce reductions that impacted a total of 108
employees, all of which were regular, non-union employees.

Additionally, during the third quarter of 2002, we reversed restructuring
charges totaling $1.0 million primarily related to the remaining restructuring
accruals recorded in connection with the closure of our Puerto Rico printed
circuit board facility that was sold in September 2002.

Also, in connection with the continued economic downturn, during the third
quarter of 2002, we evaluated the carrying amount of certain long-lived assets
for impairment. The evaluation identified the long-lived assets related to our
Juarez, Mexico EMS facility were impaired as the carrying amount of these assets
exceeded the undiscounted cash flows expected to be generated by these assets.
We then had these assets appraised based on prices for similar assets in use,
resulting in an impairment charge of $4.3 million.

The restructuring and impairment charges were determined based on formal
plans approved by our management using the best information available to us at
the time. The amounts we may ultimately incur may change as the balance of the
plans are executed.

During the quarter ended September 30, 2002, we recorded a loss on sale of
businesses totaling $2.4 million related to the sale of the Plastics Division of
Viasystems EMS - UK Ltd. and the sale of the stock of Viasystems Puerto Rico,
Inc.

Interest expense increased $5.1 million, from $70.9 million for the nine
months ended September 30, 2001, to $76.0 million for the same period of 2002,
primarily due to increased interest expense related to the Senior Unsecured
Notes partially offset by lower market benchmark interest rates compared to
2001.

18

Amortization of deferred financing costs increased $0.7 million from $2.9
million for the nine months ended September 30, 2001, to $3.6 million for the
same period in 2002 due to amortization of deferred financing fees related to
amendments to our Senior Credit facility during 2002.

Other expense (income) decreased $6.8 million, from expense of $1.5 million
for the nine months ended September 30, 2001, to income of $5.3 million for the
same period in 2002. The decrease primarily related to a $4.2 million gain on
sale of our joint venture interest in Raintherm Limited, a gain on the early
extinguishment of capital leases of $0.7 million and foreign currency
transaction gains of $1.9 million recognized during the nine months ended
September 30, 2002.

HOLDING COMPANY STRUCTURE

Group is a holding company that has no significant assets other than the
capital stock of Viasystems, Inc. and therefore, Group relies on dividends and
distributions from Viasystems as its sole source of cash. Group's right to
participate in dividends or other distributions from Viasystems is subject to
restrictions imposed by the terms of our senior secured credit facility, senior
unsecured notes and senior subordinated notes, as well as the prior rights of
Viasystems' creditors and other statutory restrictions.

CASH FLOWS

Net cash used in operating activities was $14.3 million for the nine months
ended September 30, 2002, compared to net cash provided by operating activities
of $5.3 million for the same period in 2001. The increase in cash used in
operating activities relates to payments made for 2002 restructuring activities
and timing of collection of receipts from certain major customers, partially
offset by timing of payments to vendors.

Net cash used in investing activities was $8.2 million for the nine months
ended September 30, 2002, compared to $71.5 million for the nine months ended
September 30, 2001. The net cash used in investing activities for the nine
months ended September 30, 2002 related to capital expenditures of $24.0
million, offset by $15.8 million of cash received from the sales of our joint
venture interest, certain assets of the Plastics Division of Viasystems EMS-UK
Ltd. and the sale of our entire equity interest of Viasystems Puerto Rico, Inc.
The cash used in investing activities for the nine months ended September 30,
2001 was $71.5 million, of which, $60.9 million was related to capital
expenditures with the remainder related to two small acquisitions.

Net cash provided by financing activities was $71.3 million for the nine
months ended September 30, 2002 compared to $47.3 million for the same period in
2001. The net cash provided by financing activities for the nine months ended
September 30, 2002 related principally to borrowings of revolving loans under
our senior credit facility partially offset by financing fees of $3.2 million
paid related to the amendments to our senior credit facility. The net cash
provided by financing activities for the nine months ended September 30, 2001
related principally to borrowings of revolving and term loans under our senior
secured credit facility and borrowings related to the Senior Unsecured Notes,
partially offset by payments made for the chips loan notes, other long-term
obligations and financing fees.

LIQUIDITY AND CAPITAL RESOURCES

We have experienced and continue to experience financial difficulties
primarily as a result of the dramatic downturn in telecommunication and
networking component demand that occurred in 2001 and continues through 2002.

On October 1, 2002, Viasystems Group, Inc. and Viasystems, Inc., each
filed, together with a prepackaged plan of reorganization (the "Plan"), a
voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code

19

in the United States Bankruptcy Court for the Southern District of New York.
None of Viasystems, Inc.'s subsidiaries have filed for protection under the
Bankruptcy Code.

Pursuant to a solicitation of acceptances of the Plan conducted prior to
filing the Plan with the Bankruptcy Court, we believe we received sufficient
votes in favor of the Plan to meet the requirements of the Bankruptcy Code for
confirmation of the Plan. Votes to accept the Plan were tendered by, among
others, (i) holders of approximately 87% of the bank debt under our senior
secured credit facility, (ii) holders of 100% of our senior unsecured notes, and
(iii) holders of approximately 77% of our senior subordinated notes. The holders
of Group's equity securities were not solicited.

Subject to the proposed modifications set forth below, the Plan, as filed
with the Bankruptcy Court on October 1, 2002, provides that:

(i) our senior secured credit facility will be reduced by $77.4 million
from proceeds of the Rights Offering and Exchange described below and will be
restructured to provide for an aggregate term loan facility of $448 million and
a revolving facility ("Exit facility") of up to $62 million with a letter of
credit subfacility of $15 million;

(ii) our senior unsecured notes will be cancelled, and in exchange the
holders thereof will receive (a) shares of a new class of junior preferred stock
of Group having a liquidation preference of $120.1 million and (b) shares
equaling 6.3% of the common stock of Group, determined on a fully diluted basis
(excluding the effects of a management incentive plan and warrants issued
pursuant to the Plan);

(iii) claims held by the Secretary of State for Trade and Industry of the
United Kingdom ("DTI") pursuant to a guaranty made by Viasystems with respect to
a 12 million pound loan made by DTI to Viasystems Tyneside Limited will be
cancelled, and in exchange DTI will receive (a) shares of a new class of junior
preferred stock of Group with a liquidation preference of up to $13.5 million
and (b) shares equaling up to 0.7% of the common stock of Group, determined on a
fully diluted basis (excluding the effects of a management incentive plan and
warrants issued pursuant to the Plan);

(iv) our senior subordinated notes will be cancelled, and in exchange the
holders thereof will receive shares equaling up to 70.2% of the common stock of
Group, determined on a fully diluted basis (excluding the effects of a
management incentive plan and warrants issued pursuant to the Plan);

(v) claims held by the general unsecured creditors of Group will be
cancelled, and in exchange the holders thereof will receive warrants, the
exercise price of which will be based on a $1.15 billion total enterprise value,
to purchase shares equaling 0.6% of the common stock of Group, determined on a
fully diluted basis (excluding the effects of a management incentive plan);

(vi) claims held by the general unsecured creditors of Viasystems will be
cancelled, and in exchange the holders thereof will receive non-transferable
subordinated promissory notes in amounts equal to 85% of such claims with all
accrued interest and principal payable on the tenth anniversary of the effective
date of the Plan;

(vii) the Series B Preferred Stock of Group will be cancelled, and in
exchange the holders thereof will receive warrants, the exercise price of which
will be based on a $1.15 billion total enterprise value, to purchase shares
equaling 5.4% of the common stock of Group, determined on a fully diluted basis
(excluding the effects of a management incentive plan);

(viii) the existing common stock, options and warrants of Group will be
cancelled, and the holders thereof will not receive any distribution under the
Plan; and

20

(ix) Group will adopt an incentive option plan authorizing the issuance of
stock options to purchase shares equaling 10.0% of the common stock of Group
and, on the effective date of the Plan, will issue up to 80% of such options,
the exercise price of which will be based on a $828 million total enterprise
value, to its employees.

We intend to file a motion to modify certain terms of the Plan. If the
Plan, as modified, is confirmed and becomes effective, the treatment of claims
described in clauses (iii), (v), and (vi) of the paragraph immediately above
will be modified as follows:

(i) claims held by the Secretary of State for Trade and Industry of the
United Kingdom ("DTI") pursuant to a guaranty made by Viasystems with respect to
a 12 million pound loan made by DTI to Viasystems Tyneside Limited ("VTL") will
be cancelled, and in exchange DTI will receive a note in an amount equal to 9
million pounds with interest payable semi-annually in cash on a current basis
and principal payable from December 31, 2008 through December 31, 2010 (provided
all amounts due and owing under our senior secured credit facility are not paid
in full prior to October 1, 2008); provided, however, proceeds received by DTI
pursuant to the liquidation of VTL will reduce the outstanding principal under
the note;

(ii) claims held by the general unsecured creditors of Group will be
cancelled, and in exchange each holder thereof will receive the lesser of (a) a
pro rata distribution of shares equaling 0.3% of the common stock of Group,
determined on a fully diluted basis (excluding the effects of a management
incentive plan and warrants issued pursuant to the Plan) and (b) shares of the
common stock of Group having a value equal to the amount of such holder's claim;
and

(iii) claims held by the general unsecured creditors of Viasystems will be
cancelled, and in exchange the holders thereof will receive non-transferable
subordinated promissory notes in amounts equal to 100% of such claims with
interest payable semi-annually in cash on a current basis and principal payable
from December 31, 2008 through December 31, 2010.

We do not believe that the modifications described above will require us to
resolicit acceptances of the Plan. Additionally, we believe that prior to the
date that any principal payments are due under the note to be issued to DTI,
that DTI will receive proceeds from the liquidation of VTL in amounts sufficient
to offset any principal payments that we would otherwise be required to make.

In addition, pursuant to the Plan, we will (i) issue rights to purchase
shares of a new class of senior convertible preferred stock of Group convertible
into 16.3% of the common stock of Group, determined on a fully diluted basis
(excluding the effects of a management incentive plan and warrants issued
pursuant to the Plan), at an aggregate purchase price of $53.7 million to
affiliates of Hicks, Muse, Tate & Furst Incorporated, affiliates of GSC
Partners, TCW Share Opportunity Fund III, L.P., and other holders of our senior
subordinated notes (the "Rights Offering") and (ii) exchange $23.7 million of
bank debt under our senior secured credit facility held by affiliates of Hicks,
Muse, Tate & Furst Incorporated for shares equaling 7.2% of the common stock of
Group, determined on a fully diluted basis (excluding the effects of a
management incentive plan and warrants issued pursuant to the Plan) (the
"Exchange"). Pursuant to commitment agreements, conditioned upon, among other
things, the effectiveness of the Plan, affiliates of Hicks, Muse, Tate & Furst
Incorporated, affiliates of GCS Partners, and TCW Share Opportunity Fund III,
L.P. have severally committed to purchase all of the senior convertible
preferred stock of Group offered in the Rights Offering. In consideration for
such commitment, such parties will receive a fee equal to two percent of the
price of the senior convertible preferred stock of Group that is purchased by
such parties in the Rights Offering.

On October 1, 2002, we entered into a $37.5 million dollar revolving
working capital facility ("DIP facility") that is available to provide the
Company with additional liquidity during the bankruptcy proceeding and prior to
the date the Plan becomes effective. On October 25, 2002, the Bankruptcy Court
entered an order authorizing us to borrow or obtain letters of credit under the
DIP facility up to the full aggregate principal amount of $37.5 million.

We continue to operate in Chapter 11 in the ordinary course of business and
are attempting to maintain normal and regular trade terms with our suppliers and
customers. There can be no assurance that our suppliers

21

will continue to provide normal trade credit or credit on other terms acceptable
to the Company, if at all, or that our customers will continue to do business or
enter into new business with the Company.

The Bankruptcy Court has set a hearing for the confirmation of the Plan for
November 21, 2002. If the Bankruptcy Court enters an order confirming the Plan
on or shortly after that date, we expect the effective date of the Plan to occur
prior to December 31, 2002 or as soon as practicable thereafter. There can be no
assurance that the Plan will be confirmed by the Bankruptcy Court. In the event
the Plan is not confirmed by the Bankruptcy Court, we would be required to
negotiate, prepare and seek approval of an alternative plan of reorganization.
No assurances can be given that we would be successful in these efforts.

As of September 30, 2002, we had $82.9 million of cash and cash equivalents
and we had no revolver availability under the senior secured credit facility.

We anticipate that our primary uses of cash for the next twelve months will
be:

o to meet working capital requirements;

o for capital expenditures for maintenance, replacement and acquisitions of
equipment, expansion of capabilities, productivity improvements and
product and process technology development; and

o to pay interest on, and to repay principal of, indebtedness under our
restructured senior secured credit facility.

Our primary sources of cash are cash on hand, cash from operating
activities, and, during the bankruptcy proceeding, borrowings under our $37.5
million dollar DIP facility. Following the effective date of the Plan we expect
that our primary sources of cash will also include borrowings under the Exit
facility. We anticipate that these sources of cash will be sufficient to meet
our requirements for working capital, capital expenditures, and debt service
over the next 12 months.

Borrowings under our existing senior secured credit facility bear interest
at floating rates which vary according to the interest option we select. Base
rate term loans bear interest at the then effective base rate plus an applicable
margin ranging from 2.50% to 3.00%. Eurocurrency term loans bear interest at the
then effective eurocurrency base rate plus an applicable margin ranging from
3.50% to 4.00%. Revolving credit loans bear interest, at our option, at the then
effective base rate plus 2.5% or the then effective eurocurrency base rate plus
3.50%. Our senior subordinated notes bear interest, payable semiannually, at the
rate of 9 3/4% per annum.

Borrowings under our DIP Facility bear interest, at our option, at the then
effective base rate plus 2.50% or the then effective eurocurrency base rate plus
3.50%.

In the event that we are successful in consummating the restructuring and
the Plan becomes effective, borrowings under the restructured senior secured
credit facility will bear interest at floating rates which vary according to the
tranche of the loan and the interest option we select. Base rate Term Loan A
facility loans will bear interest at the then effective base rate plus 2.50%.
Base rate Term Loan B facility loans will bear interest at the then effective
base rate plus 3.00%. Eurocurrency Term Loan A facility loans will bear interest
at the then effective eurocurrency base rate plus 3.50%. Eurocurrency Term Loan
B facility loans will bear interest at the then effective eurocurrency base rate
plus 4.00%. Revolving credit loans will bear interest, at our option, at the
then effective base rate plus 2.25% or the then effective eurocurrency base rate
plus 3.25%.

As a result of our failure to satisfy certain financial maintenance
covenants contained in our senior secured credit facility and our failure to
make scheduled interest payments on our senior subordinated notes events of
default have occurred and are continuing thereunder. However, without obtaining
relief from the automatic stay in our Chapter 11 cases, our creditors do not
have the right to accelerate payment or pursue other remedies with

22

respect to such events of default. Additionally, all of the lenders under our
senior secured credit facility, holders of 100% of the principal amount of our
outstanding unsecured senior notes and holders of 72.8% of the principal amount
of our outstanding senior subordinated notes have entered into a "Lockup"
agreement which provides, among other things, that the parties thereto will not
take any action or pursue any rights under our senior secured credit facility,
our senior unsecured notes, or our senior subordinated notes during the term of
the Lockup agreement. The Lockup agreement may be terminated in the event the
Plan does not become effective prior to January 31, 2003.

NEW ACCOUNTING STANDARDS

In October 2001, the Financial Accounting Standards Board issued SFAS No.
143, "Accounting for Asset Retirement Obligations", to be effective for all
fiscal years beginning after June 15, 2002, with early adoption permitted. SFAS
No. 143 provides for the fair value of a liability for an asset retirement
obligation covered under the scope of SFAS No. 143 to be recognized in the
period in which the liability is incurred, with an offsetting increase in the
carrying amount of the related long-lived asset. Over time, the liability would
be accreted to its present value, and the capitalized cost would be depreciated
over the useful life of the related asset. Upon settlement of the liability, an
entity would either settle the obligation for its recorded amount or incur a
gain or loss upon settlement. We are currently assessing the impact, if any, of
SFAS No. 143 on our financial position, results of operations and cash flows as
well as timing of its adoption.

In April 2002, the Financial Accounting Standards Board issued SFAS No. 145
"Gain or loss on early extinguishment of debt"("SFAS 145"), to be effective for
fiscal years beginning after May 15, 2002, with immediate effectiveness for
certain transactions occurring after May 15, 2002, with overall early adoption
permitted. SFAS 145 among other things, eliminated the prior requirement that
all gains and losses from the early extinguishment of debt be classified as an
extraordinary item. Upon adoption of SFAS 145, gains and losses from the early
extinguishment of debt are now classified as an extraordinary item only if they
meet the "unusual and infrequent" criteria contained in Accounting Principles
Bulletin ("APB") No. 30. In addition, upon adoption of SFAS 145, all gains and
losses from the early extinguishment of debt that had been classified as an
extraordinary item are to be reassessed to determine if they would have met the
"unusual and infrequent" criteria of APB No. 30; any such gain or loss that
would not have met the APB No. 30 criteria are retroactively reclassified and
reported as a component of income before extraordinary item. As required by SFAS
145, we have recorded a gain of $0.7 million on early extinguishment of capital
leases related to the closure of our San Jose, California facilities. The gain
was recorded in other income for the three months ended September 30, 2002.

In June 2002, Financial Accounting Standards Board issued SFAS No. 146,
"Accounting for Costs Associated with Exit or Disposal Activities" to be
effective for exit or disposal activities initiated after December 15, 2002 with
early adoption encouraged. SFAS No. 146 addresses financial accounting and
reporting for costs associated with exit or disposal activities and nullifies
Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." This statement requires
that a liability for a cost associated with an exit or disposal activity be
recognized when the liability is incurred. SFAS No. 146 also establishes that
fair value is the objective for initial measurement of the liability. This
Statement applies to costs associated with an exit activity that does not
involve an entity newly acquired in a business combination or with a disposal
activity covered by SFAB No. 144. This statement does not apply to costs
associated with the retirement of a long-lived asset covered by SFAS No. 143. We
are currently assessing the impact of SFAS No. 146 on our financial position,
results of operations and cash flows as well as timing of its adoption.

23

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE RISK

At September 30, 2002, approximately $525.3 million of our long-term debt,
specifically borrowings outstanding under Viasystems' senior credit facility
bore interest at variable rates. Accordingly, our earnings and cash flow are
affected by changes in interest rates. Assuming the current level of borrowings
at variable rates and assuming a two-percentage point increase in the average
interest rate under these borrowings, it is estimated that our interest expense
for the nine months ended September 30, 2002, would have increased by
approximately $7.9 million. In the event of an adverse change in interest rates,
management would likely take actions that would mitigate our exposure to
interest rate risk; however, due to the uncertainty of the actions that would be
taken and their possible effects, this analysis assumes no such action. Further,
this analysis does not consider the effects of the change in the level of
overall economic activity that could exist in such an environment.

FOREIGN CURRENCY RISK

We conduct our business in various regions of the world, and export and
import products to and from several countries. Our operations may, therefore, be
subject to volatility because of currency fluctuations. Sales and expenses are
frequently denominated in local currencies, and results of operations may be
affected adversely as currency fluctuations affect our product prices and
operating costs or those of our competitors. From time to time, we enter into
foreign exchange forward contracts to minimize the short-term impact of foreign
currency fluctuations. We do not engage in hedging transactions for speculative
investment reasons. Our hedging operations historically have not been material
and gains or losses from these operations have not been material to our cash
flows, financial position or results from operations. There can be no assurance
that our hedging operations will eliminate or substantially reduce risks
associated with fluctuating currencies.

ITEM 4. CONTROLS AND PROCEDURES

(a) The Company maintains disclosure controls and procedures that
are designed to ensure that information required to be disclosed in the
Company's filings under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the periods specified in the rules and
forms of the Securities and Exchange Commission. Such information is accumulated
and communicated to the Company's management, including its chief executive
officer and chief financial officer, as appropriate, to allow timely decisions
regarding required disclosure. The Company's management, including the chief
executive officer and the chief financial officer, recognizes that any set of
controls and procedures, no matter how well designed and operated, can provide
only reasonable assurance of achieving the desired control objectives.

Within 90 days prior to the filing date of this quarterly report
on Form 10-Q, the Company has carried out an evaluation, under the supervision
and with the participation of the Company's management, including the Company's
chief executive officer and the Company's chief financial officer, of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures. Based on such evaluation, the Company's chief executive officer
and chief financial officer concluded that the Company's disclosure controls and
procedures are effective.

(b) There have been no significant changes in the Company's
internal controls or in other factors that could significantly affect the
internal controls subsequent to the date of their evaluation in connection with
the preparation of this quarterly report on Form 10-Q.

24

PART II. OTHER INFORMATION

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

The information required by this item is incorporated by reference
to the information in the section entitled "Liquidity and Capital
Resources" in Item 2 of Part I of this quarterly report on Form
10-Q.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On August 30, 2002, we commenced a solicitation of acceptances of
our prepackaged plan of reorganization under Chapter 11 of the
Bankruptcy Code from (i) holders of our bank debt under our senior
secured credit facility, (ii) holders of our unsecured senior
notes, (iii) holders of our senior subordinated notes, (iv) our
general unsecured creditors, and (v) certain of our other
creditors. The holders of Group's equity securities were not
solicited and were deemed to reject the plan of reorganization. On
October 2, 2002, we announced that we believe that we have
received sufficient votes in favor of the plan of reorganization
to meet the requirements of the Bankruptcy Code for confirmation
of the plan. Votes were tendered as follows:

(1) The term DTI Guaranty Claims refers to claims held by the
Secretary of State for Trade and Industry of the United Kingdom
("DTI") pursuant to a guaranty made by Viasystems with respect to
a 12 million pound loan made by DTI to Viasystems Tyneside
Limited.

25

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

2.10 Disclosure Statement, dated August 30, 2002, of Viasystems
Group, Inc. and Viasystems, Inc. (incorporated by reference to
exhibit 99.2 to the Form 8-K of Viasystems Group, Inc. filed
on September 3, 2002).

2.11 Prepackaged Joint Plan of Reorganization of Viasystems Group,
Inc. and Viasystems, Inc. under Chapter 11 of the Bankruptcy
Code, dated October 1, 2002. *

3.1 Certificate of Incorporation of Viasystems, Inc. (incorporated
by reference to exhibit 3.1 to the Registration Statement of
Viasystems, Inc. on Form S-1, Registration No. 333-29727 filed
on June 20, 1997).

3.2 Bylaws of Viasystems, Inc. (incorporated by reference to
exhibit 3.2 to the Registration Statement of Viasystems, Inc.
on Form S-1, Registration No. 333-29727 filed on June 20,
1997).

4.11 Third Amendment, dated March 29, 2002, to the Credit
Agreement, dated as of March 29, 2000, as amended by the First
Amendment dated as of April 23, 2001, and the Second Amendment
dated as of June 28, 2001, among Viasystems Group, Inc., as
Guarantor, Viasystems, Inc., as U.S. Borrower, Viasystems
Canada, Inc. and Print Service Holding N.V., as Foreign
Subsidiary Borrowers, the several banks and other Financial
Institutions parties thereto, The Chase Manhattan Bank of
Canada, as Canadian Administrative Agent, Chase Manhattan Bank
International Limited, as Multicurrency Administrative Agent,
and The Chase Manhattan Bank, as Administrative Agent
(incorporated by reference to exhibit 4.11 to Viasystems
Group, Inc.'s 2001 Annual Report on Form 10-K filed on April
1, 2002).

4.12 Fourth Amendment and Waiver, dated as of May 29, 2002, with
respect to the Credit Agreement, dated as of March 29, 2000,
as amended by the First Amendment dated as of April 23, 2001,
the Second Amendment dated as of June 28, 2001 and the Third
Amendment dated as of March 29, 2002, among Viasystems Group,
Inc., Viasystems, Inc., as U.S. Borrower, Viasystems Canada
Holdings, Print Service Holding N.V., the several banks and
other financial institutions from time-to-time parties
thereto, J.P. Morgan Bank Canada, as Canadian administrative
agent, J.P. Morgan Europe Limited, as the multicurrency
administrative agent, and J.P. Morgan Chase Bank, as
administrative agent (incorporated by reference to exhibit
4.12 to Viasystems Group, Inc.'s Quarterly Report on Form 10-Q
filed August 14, 2002).

4.13 Revolving Credit Agreement, dated as of October 1, 2002, among
Viasystems Group, Inc., as Guarantor, Viasystems, Inc., as
Borrower, the Lender party thereto, JPMorgan Chase Bank, as
Administrative Agent, and Deutsche Bank Trust Company
Americas, as Documentation Agent (incorporated by reference to
exhibit 4.13 to Viasystems Group, Inc.'s Quarterly Report on
Form 10-Q filed November 14, 2002.)

26

10.23 Agreement, dated as of February 4, 2002, among Viasystems
Group, Inc., Viasystems, Inc., Viasystems Technologies Corp.
LLC, Viasystems Milwaukee, Inc., Viasystems International,
Inc., Wire Harness LLC, Viasystems Milford LLC, Viasystems San
Jose, Inc., Viasystems Portland, Inc., and James N. Mills
(incorporated by reference to exhibit 10.23 to Amendment No. 2
to Viasystems Group, Inc.'s 2001 Annual Report on Form 10-K
filed on April 29, 2002).

99.1 Certification by Joseph S. Catanzaro, Chief Financial Officer,
pursuant to 18 U.S.C. Section 1350, as adopted by Section 906
of the "Sarbanes-Oxley Act of 2002". *

99.2 Certification by David M. Sindelar, Chief Executive Officer,
pursuant to 18 U.S.C. Section 1350, as adopted by Section 906
of the "Sarbanes-Oxley Act of 2002". *

(b) Reports on Form 8-K

Filed March 28, 2002, Reporting Item 5. We announced that Hicks, Muse,
Tate & Furst Incorporated increased its investment in Viasystems,
Inc., a wholly owned subsidiary of the Registrant.

Filed April 23, 2002, Reporting Item 5. We announced that the New York
Stock Exchange would suspend trading of the Registrant's common stock
prior to the opening of business on Thursday, April 18, 2002, and
initiate procedures to delist the common stock.

Filed July 3, 2002, Reporting Item 5. We announced that we had reached
an agreement in principle with (i) a Steering Committee of the holders
of indebtedness of Viasystems, Inc. under Viasystems, Inc.'s senior
credit facility, (ii) certain affiliates of Hicks, Muse, Tate & Furst
Incorporated, and (iii) an Ad Hoc Committee of the holders of
Viasystems, Inc.'s 9 3/4% senior subordinated notes due 2007 related
to the recapitalization of our balance sheet.

Filed September 3, 2002, Reporting Item 5. We announced that we had
reached a final agreement with Viasystems Group, Inc. and Viasystems,
Inc.'s bank lenders, Hicks, Muse, Tate & Furst, Incorporated and an Ad
Hoc Committee of Bondholders regarding our previously announced
financial restructuring, securing sufficient agreements to the
restructuring to meet the requirements of the United States Bankruptcy
Code for confirmation of the restructuring plan. We also announced
that we had commenced soliciting acceptances of our proposed Chapter
11 Prepackaged Reorganization Plan from creditors.

Filed October 2, 2002, Reporting Item 5. We announced that Viasystems
Group, Inc. and Viasystems, Inc. filed a voluntary petition for
bankruptcy protection under Chapter 11 of the United States Bankruptcy
Code in the United States Bankruptcy Court for the Southern District
of New York.

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* Filed herewith.

27

SIGNATURES

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

VIASYSTEMS, INC.

Dated: November 14, 2002 By:
/s/ David M. Sindelar
-----------------------------
Name: David M. Sindelar
Title: Chief Executive Officer

By:
/s/ Joseph S. Catanzaro
-----------------------------
Name: Joseph S. Catanzaro
Title: Senior Vice President and
Chief Financial Officer

28

CERTIFICATIONS

I, David M. Sindelar, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Viasystems, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in the
quarterly report;

4. The registrants' other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusion about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.

Dated: November 14, 2002 /s/ David M. Sindelar
-------------------- ---------------------------
David M. Sindelar
Chief Executive Officer

29

I, Joseph S. Catanzaro, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Viasystems, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in the
quarterly report;

4. The registrants' other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusion about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.

Dated: November 14, 2002 /s/ Joseph S. Catanzaro
-------------------- ---------------------------
Joseph S. Catanzaro
Chief Financial Officer

30

INDEX TO EXHIBITS

10.23 Agreement, dated as of February 4, 2002, among Viasystems
Group, Inc., Viasystems, Inc., Viasystems Technologies Corp.
LLC, Viasystems Milwaukee, Inc., Viasystems International,
Inc., Wire Harness LLC, Viasystems Milford LLC, Viasystems San
Jose, Inc., Viasystems Portland, Inc., and James N. Mills
(incorporated by reference to exhibit 10.23 to Amendment No. 2
to Viasystems Group, Inc.'s 2001 Annual Report on Form 10-K
filed on April 29, 2002).

99.1 Certification by Joseph S. Catanzaro, Chief Financial Officer,
pursuant to 18 U.S.C. Section 1350, as adopted by Section 906
of the "Sarbanes-Oxley Act of 2002". *

99.2 Certification by David M. Sindelar, Chief Executive Officer,
pursuant to 18 U.S.C. Section 1350, as adopted by Section 906
of the "Sarbanes-Oxley Act of 2002". *

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* Filed herewith.