3/25/2005 10:56 AM

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

[X] ~~ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)~~

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2004~~2008

orOr

[ ] ~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)~~

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

333-~~114467~~29727

(Commission File Number)

Viasystems, Inc.

(Exact name of registrant as specified in its charter)


Delaware	43-1777252
(State or other jurisdiction	(I.R.S. Employer
of incorporation or organization)	Identification No.)

101 South Hanley Road, Suite 400

St. Louis, Missouri 63105

(314) 727-2087

(Address, including zip code, and telephone number, including

area code, of registrant's principal executive offices)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark ~~whether~~if the registrant ~~(1)~~is ~~has~~a ~~filed~~well-known ~~all~~seasoned ~~reports~~issuer, ~~required~~as todefined bein ~~filed~~Rule by405 ~~Section 13 or 15(d)~~ of the Securities 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 [ X]

Indicate by check mark if ~~disclosure~~the ofregistrant ~~delinquent filers pursuant to Item 405 of Regulation S-K~~ is not ~~contained~~required ~~herein,~~to ~~and~~file ~~will~~reports ~~not~~pursuant ~~be contained,~~ to ~~the best~~ ofSection ~~registrant's~~13 ~~knowledge, in definitive proxy~~ or ~~information~~Section ~~statements incorporated~~15(d) ~~by reference in Part III~~ of ~~this~~the ~~Form 10-K or any amendment to this Form 10-K~~Act. Yes [ X] No [ ]

Indicate by check mark whether the ~~Registrant~~registrant is(1) anhas ~~accelerated~~filed ~~filer~~all asreports ~~defined~~required into ~~Rule~~be ~~12b-2~~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 [ ] No [X]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

Indicated by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a small reporting company. See definition of “large accelerated filer,” “accelerated filer,” “non-accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer [ ]

Accelerated Filer [ ]

Non-Accelerated Filer [X]

Smaller Reporting Company [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

No established published trading market exists for the common stock, par value $.01 per share, of Viasystems, Inc. All of the 1,000 outstanding shares of common stock, par value $.01 per share, of Viasystems, Inc. are held by Viasystems Group, Inc.

Indicate by check mark whether the Registrant has filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court Yes [X ] No [ ]

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

	Outstanding at
Class	March 31, 2005
Common Stock	1,000

Outstanding at

Class

March 30, 2009

Common Stock

1,000

Documents incorporated by reference: None

____________________________________________________________________________________________

VIASYSTEMS, INC.

FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2008

TABLE OF CONTENTS

Page

PART I

~~CAUTIONARY~~Item ~~STATEMENTS CONCERNING~~1.

~~FORWARD-LOOKING STATEMENTS~~Business

Statements made in this Annual Report on Form 10-K (“Report”) include the use of “Viasystems”, “we” and “our”, which unless specified otherwise refer collectively to Viasystems, Inc., and its subsidiaries. Additionally, reference to “Group” refers to Viasystems’ holding company parent Viasystems Group, Inc.

We have made forward-looking statements in this Report, including those made in the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations," that are based on our management's beliefs and assumptions and on information currently available to our management. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, potential growth opportunities and 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 Report.

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, 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 substantial indebtedness and our ability to comply with the terms thereof, control by our largest stockholders and other factors.

ITEM 1. Business

General

We are a leading worldwide provider of complex multi-layer printed circuit boards (“PCBs”),wire harnesses and electro-mechanical solutions (“EMS”). We conduct our operations in two primary segments (i) printed circuit board manufacturing and (ii) assembly. The products we manufacture include, or can be found in, a wide array of products including automotive dash panels and control modules, major household appliances, data networking equipment, telecommunications switching equipment and a variety of complex medical and technical instruments. We have 16 facilities strategically located in five countries around the world. We have chosen sites in China and Mexico to take advantage of low cost, high quality manufacturing environments.

We are a supplier to over 200 original equipment manufacturers (“OEMs”) in numerous end markets, including industry leaders Alcatel SA, Bosch Group, Cisco Systems, Inc., Delphi Corp., Electrolux AB, General Electric Company, Huawei Technologies, Lucent Technologies Inc., Maytag Corporation, Siemens AG, Sun Microsystems, Inc. and Whirlpool Corporation. We have also forged strategic alliances with leading EMS providers such as Celestica, Inc. and Solectron Corporation. We supply PCBs to our EMS partners through these strategic alliances.

Our Development

Viasystems is a wholly owned subsidiary of Group. Group was formed in 1996 by Hicks, Muse, Tate & Furst Incorporated under the name Circo Craft Holding Company to create a preferred global manufacturing provider to leading original equipment manufacturers through acquisitions of PCB fabricators and backpanel assemblers. In August 1996, Group changed its name to CC Canada Holding Company and then back to Circo Craft Holding Company in September 1996. Group had no operations prior to its first acquisition in October 1996, when its name changed to Circo Technologies, Inc. In January 1997, Group changed its name to Viasystems Group, Inc. On April 10, 1997, Group contributed to Viasystems all of the capital stock of its then existing subsidiaries.

From 1998 through 2001 we expanded rapidly through the acquisitions of several businesses throughout Europe and North America. During that time, we expanded our business model to include wire harnesses and cable assemblies. In addition, in late 1999, we purchased our first business based in China.

In early 2001, the telecommunications and networking industries began a significant business downturn, as overcapacity of voice and data bandwidth reduced demand for high-end network switches, routers and other infrastructure equipment. The decline in capital spending was exacerbated by excess inventories within the EMS supply chain as indicated by the fact that the five largest EMS companies in the world collectively experienced a 138% increase in inventories during 2000.

The major appliance wire harness business was generally unaffected by the economic recession which commenced in 2001. The wire harness business is driven primarily by sales of household major appliances. Sales of major appliances are related to macroeconomic factors such as interest rates, employment levels, housing starts and the rate at which consumers replace appliances.

Since April 2001, we have conducted an extensive review of our operations and closed or sold 19 under-performing or non-strategic facilities. During that time, we streamlined our business to focus on PCBs, wire harnesses and electro-mechanical solutions, and we significantly diversified our end markets and customer base. In 2003, we completed a reorganization pursuant to Chapter 11 of the United States Bankruptcy Code (the “Reorganization”) that has enabled us to improve our asset base, profitability, operating flexibility and balance sheet and to reduce our debt leverage.

In 2004, we continued to further our strategy of expanding our capacity and manufacturing capabilities in low cost jurisdictions by our $60.0 million investment in our China PCB operations. Additionally, we continued to diversify our customer base and to streamline operations in our high cost manufacturing areas. In an effort to improve our operational efficiency and to adapt to our customers’ needs, in the first quarter of 2005 we announced our plan to close all of our remaining printed circuit board facilities located in Montreal, Quebec and Echt, the Netherlands by the end of 2005.

~~We are~~Item ~~headquartered in St~~1A. Louis, Missouri. The mailing address for our headquarters is 101 South Hanley Road, Suite 400, St. Louis, Missouri 63105 and our telephone number at that location is (314) 727-2087. We can also be reached at our web site www.viasystems.com. Upon written request, a copy of this Form 10-K will be provided to any senior subordinated note holder. In addition, copies of our filings are available on the SEC website at www.sec.gov.

~~Our~~Risk ~~Industries~~Factors

We serve the PCB fabrication and assembly services industries through our two primary operating segments (i) printed circuit board manufacturing and (ii) assembly. Our assembly services segment includes both wire harness assemblies and electro-mechanical assemblies.

Printed Circuit Boards - PCBs serve as the foundation of almost all electronic equipment, providing the circuitry and mounting surfaces necessary to interconnect discrete electronic components, including integrated circuits, capacitors and resistors. PCBs consist of a pattern of electrical circuitry etched from copper and laminated to a board made of insulating material, thereby providing electrical interconnection between the components mounted onto it.

Wire Harnesses and Cable Assemblies - Wire harnesses are used in major appliances to connect the motors, pumps, switches and other control devices to a central point at which power is delivered.

Electro-Mechanical Solutions - Companies that provide electro-mechanical solutions offer a wide variety of products and services, primarily including assembly of backplanes, custom and standard metal enclosures and racks, "box build" systems integration and assembly, final product testing and fulfillment.

Our Business Strategy

We believe we are well positioned for growth in sales and operating income through a strategy based on the following:

Maintain Diverse End Market Mix - Due to a dramatic economic downturn during 2001 and 2002 in the telecommunications and computer/data communications markets, we expanded our offerings into the automotive, consumer and industrial/ instrumentation markets. Our sales to each of these segments, both in absolute dollars as well as percentage of sales, have grown in recent years. From 2002 to 2004, we increased our net sales in the automotive, consumer and industrial/instrumentation markets by 28.1%, 23.6% and 15.8%, respectively. In order to take advantage of our low cost manufacturing capabilities, reduce our exposure and reliance on unpredictable end markets and provide alternative growth paths, we intend to continue to maintain our focus on a diverse mix of end markets.

Expand Capacity and Manufacturing Capabilities in Low Cost Locations - To meet our customers' demands for high quality, low cost products and services, we have and will continue to invest in facilities and equipment in low cost locations. As of December 31, 2004 approximately 77.3% of our total manufacturing capacity was located in China and Mexico. Consistent with this strategy, we announced our intention to closeour three remaining printed circuit board facilities located in Montreal, Quebec and Echt, the Netherlands by the end of 2005.

Enhance Our Strong Customer Relationships - We are focused on expanding our business with existing customers by leveraging our history of quality, high levels of customer service and operational excellence, all of which we believe provide us with the opportunity to bid for additional programs from the strong position of a preferred provider. In addition, we have forged strategic alliances with leading EMS providers such as Celestica and Solectron. These types of alliances provide us access to additional PCB sales opportunities and provide our strategic partners the ability to market a fully integrated product offering. Our management team has created a culture that is focused on providing customers with high-quality service and technical support, and this is reflected in our continuing ability to obtain new business and expand our current customer relationships.

Expand Our Relationships with Existing Customers Through Cross-Selling - Building on our broad product offering, we pursue cross-selling opportunities with our existing base of customers. We leverage our PCB capabilities to provide our customers with an integrated manufacturing solution, which can range from fabrication of bare PCBs to final system assembly and test. We intend to continue to leverage our customer relationships to expand the products we sell to our customers.

Concentrate on High Value-Added Products and Services - We focus on providing electro-mechanical solutions to leading manufacturers of advanced electronics products that generally require custom designed, more complex products and short lead-time manufacturing services. These products are typically lower volume, higher margin products. According to N.T. Information, we are an industry leader in the manufacture of complex, technologically advanced multi-layer printed circuit boards and custom designed backpanel assemblies. We differentiate ourselves from many of our global competitors by limiting our participation in programs for high volume, low margin products such as cell phone handsets, personal computers or peripherals and consumer electronics.

Focus on Operational Excellence - We continuously implement strategic initiatives designed to improve product quality while reducing manufacturing costs. We continue to focus on opportunities to improve operating income, including: (1) further rationalization of manufacturing capacity; (2) streamlining of marketing and general and administrative overhead; (3) continued implementation of lean manufacturing and six sigma initiatives; (4) efficient investment in new equipment and technologies and the upgrading of existing equipment; and (5) continued improvement of our internal controls and centralization of certain aspects of our accounting and finance functions. Our management team is focused on maximizing our current asset base to improve our operational efficiency while also adapting to the needs of our customers and the market.

Markets and Customers - We provide services to more than 200 OEMs. We believe our position as a strategic supplier of printed circuit boards, wire harnesses and electro-mechanical solutions, fosters close relationships with our customers. These relationships have resulted in additional growth opportunities as we have expanded our capabilities and capacity to meet our customers' wide range of needs.

The following table shows our net sales as a percentage by principal end-user markets we serve:

	Year Ended
	December 31,
Markets		2002		2003		2004
Consumer		26.9	%	32.1	%	31.9	%
Automotive		18.9		24.2		23.2
Telecommunications		28.4		19.7		22.5
Computer/Datacommunications		16.3		14.1		11.9
Industrial & Instrumentation/Other		9.5		9.9		10.5
Total Net Sales		100.0	%	100.0	%	100.0	%

Although we seek to diversify our customer base, a small number of customers are responsible for a significant portion of our net sales. For the years ended December 31, 2002, 2003 and 2004, sales to our 10 largest customers accounted for 62.8%, 72.4% and 72.1% of our net sales, respectively, and sales to our largest customer, General Electric, represented 11.7%, 12.1% and 11.3% of our net sales, respectively.

Manufacturing Services

Our offering of manufacturing services includes the following:

Design and Prototyping Services - We provide comprehensive front-end engineering services, including custom enclosure design, circuit board layout and related design services leading to efficient manufacturing and delivery. We offer quick-turn prototyping, which is the rapid production of a new product sample. Our quick-turn prototype service allows us to provide small test quantities to our customers' product development groups. Our participation in product design and prototyping allows us to reduce our customers' manufacturing costs and their time-to-market and time-to-volume. These services enable us to strengthen our relationships with customers that require advanced engineering services. In addition, by working closely with customers throughout the development and manufacturing process, we often gain insight into their future product requirements.

Printed Circuit Board and Backpanel Fabrication - Printed circuit boards and backpanels are platforms that connect semiconductors and other electronic components. Backpanels connect printed circuit boards. We manufacture multi-layer printed circuit boards and backpanels on a low-volume, quick-turn basis, as well as on a high-volume production basis. In recent years, the trend in the electronics industry has been to increase the speed and performance of components while reducing their size. Semiconductor designs are currently so complex that they often require printed circuit boards with many layers of narrow, tightly spaced wiring. These advancements in component technologies have driven the change in printed circuit board design to higher density printed circuits.

Wire Harnesses and Cable Assemblies - A wire harness and cable assembly is an assembly of wires with connectors and terminals attached to their ends that transmits electricity between two or more points. We are one of the leading suppliers of wire harnesses and cable assemblies for use in household appliances. Due to the similarity in the process technology used in the manufacture of wire harnesses and cable assemblies for many other products and in the manufacture of wire harnesses for use in household appliances, we strive to leverage this expertise to enhance the value of the products and services we supply to our OEM customers in the other industries.

Backpanel Assembly - We provide backpanel assemblies, which are manufactured by mounting interconnect devices, integrated circuits and other electronic components on a bare backpanel. This process differs from that used to provide printed circuit board assemblies primarily because of the larger size of the backpanel and the more complex placement techniques that must be used with higher layer count printed circuits. We also perform functional and in-circuit testing on assembled backpanels.

Printed Circuit Board Assembly - As a complement to our electro-mechanical solutions offering, we manufacture printed circuit board assemblies. Generally, we do not produce printed circuit board assemblies separately, but rather we integrate them with other components as part of a full electro-mechanical solution. In addition, we offer testing of assembled printed circuit boards and testing of all of the functions of the completed product, and we work with our customers to develop product-specific test strategies. Our test capabilities include manufacturing defect analysis, in-circuit tests, functional tests and environmental stress tests of board or system assemblies.

Custom Enclosures - We specialize in the manufacture of custom designed chassis and enclosures primarily used in the electronics, telecommunications, industrial and computer industries. As a fully integrated supply chain partner with expertise in design, rapid prototyping, manufacturing, packaging and logistics, we provide our customers with reduced manufacturing costs and shortened time to market throughout a product's life cycle.

Full System Assembly and Test - We provide full system assembly services to OEMs from our facilities in China and Mexico. These services require sophisticated logistics capabilities and supply chain management capabilities to rapidly procure components, assemble products, perform complex testing and deliver products to end users around the world. Our full system assembly services involve combining custom metal enclosures and a wide range of subassemblies, including printed circuit board assembly. We also employ advanced test techniques to various subassemblies and final end products.

Packaging and Global Distribution - We offer our customers flexible, just-in-time and build-to-order delivery programs, allowing product shipments to be closely coordinated with customers' inventory requirements. We ship products directly into customers' distribution channels or directly to the end-user.

After-Sales Support - We offer a wide range of after-sales support services. This support can be tailored to meet customer requirements, including field failure analysis, product upgrades, repair and engineering change management.

Supply Chain Management - Effective management of the supply chain is critical to the success of OEMs as it directly impacts the time required to deliver product to market and the capital requirements associated with carrying inventory. Our global supply chain organization works with customers and suppliers to meet production requirements and procure materials.

Sales and Marketing

We focus on developing close relationships with our customers at the earliest development and design phases and continuing throughout all stages of production. We identify, develop and market new technologies that benefit our customers and position us as a preferred product or service provider.

We market our products through our own sales and marketing organization and through sales representatives. This global sales organization is structured to ensure global account coverage by industry-specific teams of account managers. As of December 31, 2004, we employed approximately 251 sales and marketing employees, of which 111 are direct sales representatives strategically located throughout North America, Europe and Asia. Each customer segment marketing team shares support staff of sales engineers, program managers, technical service personnel and customer service organizations to ensure high-quality, customer-focused service. The global marketing organization further supports the sales organization through market research, market development and communications.

Manufacturing and Engineering

We produce highly complex, technologically advanced multi-layer and standardized technology printed circuit boards, backpanel assemblies, printed circuit board assemblies, wire harnesses and custom cable assemblies, custom enclosures and full systems that meet increasingly tight tolerances and specifications demanded by OEMs. Multi-layering, which involves placing multiple layers of electronic circuitry on a single printed circuit board or backpanel, expands the number of circuits and components that can be contained on the interconnect product and increases the operating speed of the system by reducing the distance that electrical signals must travel. Increasing the density of the circuitry in each layer is accomplished by reducing the width of the circuit tracks and placing them closer together on the printed circuit board or backpanel. Interconnect products having narrow, closely spaced circuit tracks are known as fine line products. The manufacture of complex multi-layer interconnect products often requires the use of sophisticated circuit interconnections between layers, called blind or buried vias, and adherence to strict electrical characteristics to maintain consistent circuit transmission speeds, referred to as controlled impedance. These technologies require very tight lamination and etching tolerances and are especially critical for printed circuit boards with ten or more layers.

The manufacture of printed circuit boards involves several steps: etching the circuit image on copper-clad epoxy laminate, pressing the laminates together to form a panel; drilling holes and depositing copper or other conductive material to form the innerlayer electrical connections; and cutting the panels to shape. Advanced interconnect products may also require additional critical steps, including dry film imaging, photoimageable soldermask processing, computer controlled drilling and routing, automated plating and process controls and achievement of controlled impedance. Manufacture of printed circuit boards used in backpanel assemblies requires specialized expertise and equipment because of the larger size of the backpanel relative to other printed circuit boards and the increased number of holes for component mounting.

The manufacture of wire harnesses and cable assemblies involves four steps: (1) insulated copper wire is fed through cutting machines that are programmed to cut wire to a specific length, strip the end of the wire and attach terminals or connectors; (2) the lengths of wire are spliced or joined together and additional connectors and/or terminals are attached; (3) the cut and spliced wires are brought to the assembly area where assembly boards are used to guide employees on the placement of designated wires; and (4) each assembled harness is tested for continuity and analyzed by a trained inspector. Every assembly board is equipped with 100% continuity testers that are designed into the board. These testers will pinpoint any defective circuits for repair or rework.

The manufacture of printed circuit board assemblies involves the attachment of various electronic components, such as integrated circuits, capacitors, microprocessors and resistors to printed circuit boards. The manufacture of backpanel assemblies involves attachment of electronic components, including printed circuit boards, integrated circuits and other components, to the backpanel, which is a large printed circuit board. We use surface mount, pin-through hole and press fit technologies in backpanel assembly. We also assemble higher-level sub-systems and full systems incorporating printed circuit boards and complex electro-mechanical components.

We also provide computer-aided testing of printed circuit boards, sub-systems and full systems, which contributes significantly to our ability to deliver high quality products on a consistent basis. We test boards and system level assemblies to verify that all components have been properly inserted and that the electrical circuits are complete. Further functional tests determine if the board or system assembly is performing to customer specifications.

Quality Standards

Our quality systems are defect prevention based, customer focused and compliant to international standards. All of our facilities are compliant or certified to ISO 9002:1994. ISO 9002:1994 specifies requirements that focus on the effectiveness of the quality management system in meeting customer requirements. In addition to ISO 9002:1994, we have facilities that are certified to ISO 9001:2000, ISO 14001:1996, QS 9000, TS9000 and ISO/TS 16949.

Our facilities are also compliant to industry and regulatory requirements including Bellcore, British Approval Board for Telecommunications (“BABT”), Underwriters Laboratory (“UL”), and Canadian Standards Association (“CSA”). These requirements include quality, manufacturing process controls, manufacturing documentation and supplier certification of raw materials.

Supplier Relationships

We order materials and components based on purchase orders, and forecasts, received and accepted from our customers and seek to minimize our inventory of materials or components that are not identified for use in filling specific orders or specific customer contracts. We continue to work with our suppliers to develop just-in-time supply systems which reduce inventory carrying costs, and contract globally, where appropriate, to leverage our purchasing volumes. We also certify our suppliers and potential suppliers on the basis of quality, on-time delivery, costs, technical capability, and potential technical advancement.

Competition

Our industry is a highly competitive industry, and we believe our markets are highly fragmented. We face competition from numerous local, numerous regional and a number of large international providers of PCBs, wire harnesses and electro-mechanical solutions. Our primary direct competitors are Flextronics, Sanmina-SCI, LG,

Nan Ya, Compeq, Elec & Eltek, and Noma (a division of Gentek). We believe that competition in the market segments we serve is based more on product quality and responsive customer service and support as well as price, because many of the products manufactured by us require high levels of product technology, reliability, prompt delivery, and competitive pricing. The supplier that can provide the highest level of all the above gains the greatest market share.

International Operations

As of December 31, 2004, we had 14 manufacturing facilities located outside the United States, with sales offices throughout Europe and Asia Pacific. Our international operations account for 94.1% of our net sales. We believe that our global presence is important as it allows us to provide consistent, quality products on a timely basis to our multinational customers worldwide. We rely heavily on our international operations and are subject to risks generally associated with operating in foreign countries, including price and exchange controls, fluctuations in currency exchange rates and other restrictive actions that could have a material affect on our results of operations, financial condition and cash flows. For information about our business broken down by geographic area, see Note 17 of our consolidated financial statements.

Environmental

Some of our operations are subject to federal, state, local and foreign environmental laws and regulations that govern, among other things, the discharge of pollutants into the air and water, as well as the handling, storage, manufacture and disposal of, or exposure to, solid and hazardous wastes, and occupational safety and health. We believe that we are in material compliance with applicable environmental laws and that the costs of compliance with such current or proposed environmental laws and regulations will not have a material adverse effect on us. Further, we are not a party to any current claim or proceeding and we are not aware of any threatened claim or proceeding under environmental laws that could, if adversely decided, reasonably be expected to have a material adverse effect on us. Currently, remediation of contamination is being undertaken at our facility in Virginia. This facility was closed during 2001 and has no ongoing production. While the cost of the remediation could be material, we believe that the contamination pre-dates our use of the property. As such, the prior owners are conducting the requisite remedial actions and have agreed to indemnify us for costs associated with the remediation. We believe that the prior owner of this facility is fully capable of performing and will perform under such agreements. Accordingly, we do not believe that any of these matters are reasonably likely to have a material adverse effect on our business, results of operations, financial condition, prospects and ability to service debt. However, there can be no assurance that any material environmental liability will not arise in the future, including for example liabilities due to a change in the law or the discovery of currently unknown conditions.

Employees

As of December 31, 2004, we had 23,288 employees. Of these employees, 19,902 were involved in manufacturing, 1,410 in engineering, 251 in sales and marketing, and 1,725 in accounting and administrative capacities. No employees are represented by a union pursuant to a collective bargaining agreement. We have not experienced any labor problems resulting in a work stoppage or work slowdown, and believe we have good relations with our employees.

Backlog

We estimate that our backlog of unfilled orders on December 31, 2003 and 2004 were approximately $154.3 million and $167.8 million, respectively. The increase in backlog from December 31, 2003 was primarily due to increased customer demand in our Asian assembly facilities, partially offset by decreases in our western world PCB facilities. Because unfilled orders may be cancelled prior to delivery, the backlog outstanding at any point in time is not necessarily indicative of the level of business to be expected in the ensuing period.

Segments

We have determined that there are four reportable segments under the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 131: China Printed Circuit Boards, North America Printed Circuit Boards, European Printed Circuit Boards, and assembly. See discussion of our segments in Note 17 to our consolidated financial statements.

ITEM 2. Properties

In addition to our executive offices in St. Louis, Missouri, as of December 31, we operated 16 principal manufacturing and distribution facilities, located in 5 different countries with a total area of approximately 4.8 million square feet. All of our domestic owned properties are pledged to secure our indebtedness under our senior credit facility. Our leased properties are leased for terms ranging from one to ten years. The leases for our Qingdao, China and two of the three Juarez, Mexico properties will expire within the next two years. We anticipate that we will be able to renew those leases on terms that are not materially different than the current terms.

Listed below are the principal manufacturing and distribution facilities we operated as of December 31, 2004:

Location	Size (Appx. Sq. Ft.)	Type of Interest	Description of Primary Products
United States
Mishawaka, Indiana	38,000	Owned	Wire harness and cable assembly
Milwaukee, Wisconsin	305,000	Leased	Custom metal enclosure fabrication
Canada
Pointe-Claire (Montreal), Quebec (2)	168,000	Owned	Printed circuit board fabrication
Kirkland (Montreal), Quebec (2)	121,000	Owned	Printed circuit board fabrication
Mexico
Juarez, Mexico	69,000	Leased	Backpanel assembly
Juarez, Mexico	178,000	Leased	Wire harness and cable assembly
Juarez, Mexico	54,000	Leased	Wire harness and cable assembly
Chihuahua, Mexico	282,000	Owned	Wire harness and cable assembly
Chihuahua, Mexico	253,000	Leased	Wire harness and cable assembly
Europe
Echt, the Netherlands (2)	462,000	Owned	Printed circuit board fabrication / backpanel assembly
Asia
Guangzhou, China (1)	2,000,000	Owned	Printed circuit board fabrication and wire harness
Zhongshan, China (3).	318,000	Owned	Printed circuit board fabrication
Shanghai, China	229,000	Owned	Backpanel assembly / custom metal enclosure fabrication
Shenzhen, China	286,000	Leased	Full system assembly
Qingdao, China	54,000	Leased	Full system assembly

(1) In Guangzhou we have a campus which we consider as two separate facilities. One facility is dedicated to printed circuit board fabrication and the other to wire harness assembly.

(2) In February 2005, we announced our intention to close the three printed circuit board facilities listed above by the end of 2005.

(3) In conjunction with the closures of the three printed circuit board facilities noted above, we are increasing capital spending on our China PCB facilities. By mid 2005, we expect to increase the square footage of Zhongshan by at least 175,000 sq. ft.

In addition to the facilities listed above, we maintained several leased sales and marketing and other facilities located throughout North America, Europe and Asia.

ITEM 3. Legal Proceedings

On October 1, 2002, Group and Viasystems filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York seeking court supervision of our restructuring efforts and confirmation of our plan of reorganization. The plan of reorganization was confirmed on January 14, 2003 and we emerged from bankruptcy on January 31, 2003.

We have certain bankruptcy claims that remain unsettled and are subject to ongoing negotiations and possible litigation. The aggregate amount of the outstanding claims is $1.0 million. To the extent these claims become allowed claims, the payment of these claims will be funded by the issuance of subordinated promissory notes pursuant to the terms of the confirmed plan of reorganization.

We are presently involved in various legal proceedings arising in the ordinary course of our business operations, including employment matters and contract claims, as well as in connection with the Chapter 11 claims reconciliation process described above. We believe that any liability with respect to the above proceedings will not be material in the aggregate to our consolidated financial position, results of operations or cash flow.

ITEM 4. Submission Of Matters To A Vote Of Security Holders

No matters were submitted to a vote of security holders in the fourth quarter of 2004.

~~PART~~Item II1B.

~~ITEM~~Unresolved 5.Staff ~~Market For The Registrant's Common Equity And Related Stockholder Matters, And Issuer Purchases of Equity Securities~~Comments

All of Viasystems’ outstanding common stock is held by Group and, accordingly, there is no established public trading market for Viasystems’ common stock. Viasystems has paid no dividends since inception, and its ability to pay dividends is limited by the terms of certain agreements related to its indebtedness. We have no intention to pay dividends in the near future.

ITEM 6. Selected Financial Data

The selected financial and other data below for the years ended December 31, 2000, 2001, 2002 (restated), 2003 (restated) and 2004 presents consolidated financial information of Viasystems and its subsidiaries and have been derived from our audited consolidated financial statements.

You should read the selected historical consolidated financial data set forth below in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the notes thereto included elsewhere in this document.

Restatement of previously issued consolidated financial statements

As discussed in Note 2 to the consolidated financial statements, we have restated our previously issued financial statements for the years ended December 31, 2002 and 2003. The restatement arises from errors made in the application of the accounting principles set forth by SFAS No. 142 and SFAS No. 131. In addition, we adjusted the 2003 restructuring and impairment loss for an error identified during the recording of the SFAS No. 142 impairment adjustments attributable to currency effects of the SFAS No. 144 impairment recognized at our Echt, the Netherlands facility. See Note 2 to the consolidated financial statements for further information, including the impact of the restatements for each of the restated periods in this filing. A summary of these restatements is as follows:

· For the year ended December 31, 2002, there was a $36.7 million increase in goodwill (non-cash) impairment expense, which resulted in a 24.4% increase in our operating loss and a 14.2% increase in our net loss. These impairments further caused a 4.5% decrease in our total assets.

· For the year ended December 31, 2003, there was a $22.5 million increase in goodwill (non-cash) impairment expense, which resulted in a 45.8% increase in our operating loss and a 15.8% increase in our net loss. These impairments further caused an 8.3% decrease in our total assets. In addition, we reduced the restructuring and impairment expense $0.9 million, or 1.3%, for a currency error related to the 2003 SFAS No. 144 impairment.

· For the years ended December 31, 2002 and 2003, we restated our reportable segments to change from one reportable segment to four reportable segments.

This information in this selected financial data reflects these restatements, but is not otherwise updated.

The information in this selected financial data reflects the restatements, but is not otherwise updated.

	Year Ended December 31,
								Restated			Restated
		2000			2001			2002			2003			2004
	(in thousands)
Statement of Operations Data:
Net sales	$	1,604,985		$	1,206,536		$	864,047		$	751,483		$	901,363
Cost of goods sold		1,230,552			1,042,886			697,802			597,546			728,249
Selling, general and administrative expenses (1)		225,611			96,838			88,160			64,119			77,977
Stock compensation expense (2)		—			—			—			1,383			3,837
Depreciation		98,457			79,718			74,221			66,070			48,232
Amortization		46,409			46,574			16,344			3,065			1,570
Write-off of amounts due from affiliates (3)		—			144,099			—			—			—
Restructuring and impairment charges (4)		—			152,265			52,697			66,199			1,013
Goodwill impairment (5)		—			129,109			36,710			22,697			—
Loss (gain) on dispositions of businesses, net (6)		—			—			85,531			1,226			(465	)
Operating income (loss)		3,956			(484,953	)		(187,418	)		(70,822	)		40,950
Interest expense, net		105,514			97,174			81,898			29,729			37,818
Amortization of deferred financing costs		4,296			4,013			4,955			104			1,305
Loss on early retirement of debt		31,196			—			—			—			—
Reorganization items:
Reorganization expenses (reversals) (7)		—			—			22,537			55,255			(9,776	)
(Loss) income from debt forgiveness (8)		—			—			—			1,517			—
Other expense (income), net		1,857			879			(900	)		6,882			(987	)
Loss(income) before income taxes		(138,907	)		(587,019	)		(295,908	)		(164,309	)		12,590
Income taxes		(2,923	)		—			—			—			6,842
Net (loss) income	$	(135,984	)	$	(587,019	)	$	(295,908	)	$	(164,309	)	$	5,748
Balance Sheet Data (as
of end of period):
Cash and cash equivalents	$	45,676		$	34,202		$	83,060		$	62,676		$	112,891
Working capital (9)		259,759			122,054			(383,521	)		111,573			144,565
Total assets		1,611,284			988,045			777,530			694,335			750,409
Total debt, including current maturities		1,024,317			1,040,919			1,125,189			456,243			465,555
Stockholder's equity (deficit)		135,932			(310,324	)		(584,709	)		2,480			56,534

__________

(1) During the year ended December 31, 2000, we recorded non-cash compensation charges of $104,351, which reflects the difference between the cost of certain convertible securities and the value of the common stock that such securities were convertible into at those dates.

(2) In connection with the Reorganization, we terminated our 1997 and 2001 stock option plans and adopted the 2003 Stock Option Plan. The options we have issued under the 2003 Stock Option Plan have a fixed exercise price of $12.63 per share and vest one-third at the grant date, one-third on the 24-month anniversary of the grant date, and one-third on the 36-month anniversary of the grant date. As a result of the termination of the 1997 and 2001 stock option plans and the adoption of the 2003 Stock Option Plan, under provision of FIN No. 44, Accounting for Certain Transactions Involving Stock Compensation an Interpretation of APB Opinion No. 25, certain options issued under the 2003 Stock Option Plan are treated as “variable” options. Effective January 1, 2004, we adopted SFAS No. 123, Accounting for Stock-Based Compensation.

(3) In 2000, we transferred nine European Printed Circuit Board facilities to European PCB Group in consideration of subordinated notes payable to us. This line item represents charges relating to the write-off of such subordinated notes due from European PCB Group. European PCB Group has disposed of substantially all of its assets and is in the process of being liquidated. Accordingly, we compared the carrying amounts to the undiscounted expected future cash flows and concluded the amounts due were impaired.

(4) This line item represents impairment charges related to the write-off of long-lived assets in accordance with SFAS No. 121, "Accounting for the impairment of long-lived assets and for long-lived assets to be disposed of" and SFAS No. 144 "Accounting for the impairment or disposal of long-lived assets," as applicable. In addition, due to the industry downturn, numerous restructuring charges were taken to downsize and close facilities. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Restructuring, Impairment Charges and Loss (Gain) on Dispositions of Businesses" and our consolidated financial statements and the notes thereto.

(5) The goodwill impairment recognized in 2002 is attributable to $13.4 million goodwill impairment recognized in our North American PCB reporting unit, $10.1 million goodwill impairment recognized in our Asian EMS reporting unit and $13.2 million goodwill impairment recognized in our North American EMS reporting unit. The goodwill impairment recognized in 2003 is attributable to $22.7 million goodwill impairment recognized in our European Printed Circuit Boards reporting unit.

(6) During 2002, in connection with the continued economic downturn, we sold six businesses, including our joint venture interest, and finalized the dispositions of several closed facilities. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Restructuring, Impairment Charges and Loss on Dispositions of Businesses" and our consolidated financial statements and the notes thereto.

(7) Reorganization expenses consisted primarily of professional and bank fees and expenses related to the issuance of a promissory note to the Secretary of State for Trade and Industry of the United Kingdom incurred in conjunction with the Reorganization. In May 2004, this promissory note was discharged in full as a result of proceeds received by the Secretary of State for Trade and Industry of the United Kingdom in connection with the liquidation of Viasystems Tyneside Limited, resulting in a gain of $9.8 million.

(8) In connection with our Reorganization, we recorded a loss from debt forgiveness of $1.5 million in respect of allowed senior subordinated note claims.

(9) Working capital for the year ended December 31, 2002 includes $526.0 million of long-term debt classified as currently due in connection with the Reorganization. Excluding this amount, working capital for the year ended December 31, 2002 would have been $142.5 million.

ITEM 7. Management's Discussion And Analysis Of Financial Condition And Results Of Operations

The following discussion and analysis of our financial condition and results of operations covers certain periods prior to our emergence from bankruptcy on January 31, 2003 in accordance with the Reorganization. Accordingly, the discussion and analysis of historical periods prior to that date does not reflect our new capital structure. You should read the following discussion of our financial condition and results of operations with "Selected Financial Data" and our consolidated financial statements and related notes included elsewhere in this Form 10-K. This discussion contains forward-looking statements about our markets, the demand for our products and services and our future results. We based these statements on assumptions that we consider reasonable. Actual results may differ materially from those suggested by our forward-looking statements for various reasons including those discussed in Part I “Cautionary Statements Concerning Forward-Looking Statements”.

Restatement of previously issued consolidated financial statements

· For the year ended December 31, 2002 there was a $36.7 million increase in goodwill (non-cash) impairment expense, which resulted in a 24.4% increase in our operating loss and a 14.2% increase in our net loss. These impairments further caused a 4.5% decrease in our total assets of Viasystems.

· For the year ended December 31, 2003 there was a $22.5 million increase in goodwill (non-cash) impairment expense, which resulted in a 45.8% increase in our operating loss and a 15.8% increase in our net loss. These impairments further caused an 8.3% decrease in the total assets of the Company. In addition, we reduced the restructuring and impairment expense $0.9 million, or 1.3%, for a currency error related to the 2003 SFAS No. 144 and SFAS No. 131 impairment.

· For the years ended December 31, 2002 and 2003, we restated our reportable segments to change from one reportable segment to four reportable segments.

The information in this discussion and analysis reflects these restatements, but is not otherwise updated.

General

We are a leading worldwide provider of complex multi-layer PCBs, wire harnesses and electro-mechanical solutions. We conduct our operations in two primary segments (i) printed circuit board manufacturing and (ii) assembly. The products we manufacture include, or can be found in, a wide array of products including automotive dash panels and control modules, major household appliances, data networking equipment, telecommunications switching equipment and a variety of complex medical and technical instruments. We have 16 facilities strategically located in five countries around the world. We have chosen sites in China and Mexico to take advantage of low cost, high quality manufacturing environments.

We are a supplier to over 200 manufacturers of original equipment in numerous end markets, including industry leaders Alcatel SA, Bosch Group, Cisco Systems, Inc., Delphi Corp., Electrolux AB, General Electric Company, Huawei Technologies, Lucent Technologies Inc., Maytag Corporation, Siemens AG, Sun Microsystems, Inc. and Whirlpool Corporation. For the year ended December 31, 2004, approximately 31.9%, 23.2%, 22.5%, 11.9%, and 10.5% of our net sales were generated from sales to the consumer, automotive, telecommunications, computer/data communications and industrial and instrumentation/other industries, respectively. We have also forged strategic alliances with leading EMS providers such as Celestica, Inc. and Solectron Corporation. We supply PCBs to our EMS partners through these strategic alliances.

The Reorganization

The telecommunications and networking industries experienced a dramatic economic downturn during 2001 and 2002, which had a significant adverse impact on our sales and cash flow, and ultimately impeded our ability to service our long-term debt. As a consequence, after reviewing our business and prospects, our board of directors concluded that the long-term interests of our business and of our creditors and equity holders would be best served by a consensual restructuring implemented under Chapter 11 of the Bankruptcy Code for the purpose of reducing our debt and strengthening our balance sheet. On October 1, 2002, we filed a consensual pre-packaged plan of reorganization under Chapter 11 of the Bankruptcy Code, which was confirmed on January 14, 2003, and was consummated on January 31, 2003. In connection with the Reorganization, we extinguished approximately $716.6 million of indebtedness in exchange for 4.3 million shares of Group senior convertible preferred stock with an aggregate liquidation preference of $53.7 million, 1.2 million shares of Group junior preferred stock with an aggregate liquidation preference of $120.1 million and 20.7 million shares of Group common stock. Also in connection with the Reorganization, all of the then outstanding Group preferred stock and common stock was cancelled, in the case of the preferred stock, in exchange for warrants to purchase Group common stock. In addition, our senior secured indebtedness was restructured in connection with the Reorganization under a new senior credit facility providing for term loans of approximately $447.9 million and revolving credit loans of approximately $51.3 million. Since our emergence, we have issued new senior subordinated notes and have amended the terms of the credit agreement to provide for a new senior credit facility. For a discussion of our new senior subordinated notes and new senior credit facility, see Note 8 of our consolidated financial statements.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, net sales and expenses and related disclosure of contingent assets and liabilities. On an on-going basis we evaluate our estimates, including: allowance for bad debts; valuation and recoverability of inventory; amortization periods; recoverability of long-term assets, intangible assets and goodwill; income taxes; pensions and other post- retirement benefits and contingencies; and litigation. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Revenue Recognition

We recognize revenue when all of the following criteria are satisfied: persuasive evidence of an arrangement exists; risk of loss and title transfer to the customer; the price is fixed and determinable; and collectibility is reasonably assured. Sales and related costs of goods sold are included in income when goods are shipped to the customer in accordance with the delivery terms, except in the case of vendor managed inventory arrangements, whereby sales and the related costs of goods sold are included in income when goods are taken into production by the customer. All services are performed prior to invoicing customers for any products manufactured by the Company. Reserves for product returns are recorded based on historical trend rates at the time of sale.

Accounts Receivable

We perform ongoing credit evaluations of our customers and we adjust credit limits based upon each customer's payment history and current credit worthiness, as determined by credit information available at that time. We continuously monitor collections and payments from our customers and we maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. While such losses have historically been within our expectations and the provisions established, if the condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

Inventories

We write down our inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of the inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual future demand or market conditions are less favorable than those historically experienced or projected by us, additional inventory write-downs may be required.

Valuation of Goodwill and other Intangible Assets

We assess the impairment of goodwill and other identifiable intangible assets annually, or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors we consider important that could trigger an impairment review include, but are not limited to, the following:

• significant underperformance relative to historical or projected future operating results;

• significant changes in the manner of our use of the acquired assets or the strategy for our overall business; and

• significant negative industry or economic trends.

When we determine that the carrying value of goodwill and other intangible assets may not be recoverable based upon the existence of one or more of the above indicators of impairment, we measure any impairment bases on a projected discounted cash flow method using a discount rate determined by us to be commensurate with the risk inherent in our current business model.

In 2002, SFAS No. 142, "Goodwill and Other Intangible Assets," became effective, and as a result, we have ceased to amortize goodwill. In lieu of amortization, we are required to perform an annual impairment review of our goodwill. Goodwill is tested annually during the fourth quarter of each fiscal year and when events or circumstances occur indicating possible impairment.

For the year ended 2002, the evaluation resulted in our recognition of impairment in the North America EMS, North America PCB and Asian EMS reporting units of $13.2, 13.4 and 10.1 million, respectively. For the year ended 2003, we recognized impairment in our European Printed Circuit Boards reporting unit of $22.7 million.

Income Taxes

We record a valuation allowance to reduce our deferred tax assets to the amount that we believe is more likely than not to be realized. While we have considered future taxable income and ongoing prudent, feasible tax planning strategies in assessing the need for the valuation allowance, in the event we were to determine that we would not be able to realize all or part of our net deferred tax assets in the future, an adjustment to the net deferred tax assets would be charged to income in the period such determination was made. Likewise, should we determine that we would be able to realize our deferred tax assets in the future in excess of its net recorded amount, an adjustment to the net deferred tax asset would increase income in the period such determination was made.

Foreign Currency Translation

Local currencies have been designated as the functional currency for Viasystems' foreign subsidiaries. Accordingly, assets and liabilities of most foreign subsidiaries are translated at the rates of exchange in effect at the balance sheet date. Income and expense items of these subsidiaries are translated at average monthly rates of exchange. The resultant translation gains and losses are reported in other comprehensive income. Exchange gains and losses arising from transactions denominated in a currency other than the functional currency of the entity involved are included in other expense (income) in the consolidated statement of operations. To date, the effect of such amounts on net income has not been material.

~~Restructuring,~~Item ~~Impairment Charges and Loss (Gain) on the Dispositions of Businesses~~2.

In 2002, we either closed or disposed of 14 facilities (Milford, Massachusetts; San Jose, California; Seattle, Washington; Ballynahinch, United Kingdom; Columbus, Ohio; Sao Paulo, Brazil; Granby, Quebec; Boldon, United Kingdom; Portland, Oregon; Rouen, France; Terni, Italy; and the Plastics division of NC&S located in Coventry, United Kingdom) and took a restructuring charge $37.5 million. Additionally, in 2002 we either downsized or incurred impairment charges in respect of five facilities (Juarez, Mexico; Milwaukee, Wisconsin; Coventry, United Kingdom; Richmond, Virginia; and St. Louis, Missouri) at a cost of $15.2 million. Also during 2002, we began marketing for sale our Portland, Oregon facility, and as a result, the net assets related to the facility were written down to their expected fair value of $1.5 million resulting in an impairment charge of $21.4 million. Properties

In 2003, our facility in Portland, Oregon was sold and three facilities were either downsized or incurred impairment charges (Montreal, Quebec; Echt, the Netherlands; and Richmond, Virginia) at a cost of $7.8 million.19

InItem ~~2004,we downsized two facilities (Montreal, Quebec and Echt, the Netherlands) resulting in restructuring and impairment charges of $6~~3.4 million. In addition, in February of 2005, we announced our intention to close all of our facilities located in Montreal, Quebec and Echt, the Netherlands. We estimate that restructuring charges related to the closures will total approximately $50.0 million of which $26.0 million will result in future cash expenditures. We expect that $23.0 million of such restructuring charge will be related to the reduction of headcount and $27.0 million will be related to asset write downs and impairments and other exit costs.

~~Below is~~Legal a table summarizing restructuring and impairment charges and loss (gain) on the dispositions of businesses for the years ended December 31, 2002, 2003 and 2004. A detailed discussion of these restructuring and impairment charges and loss (gain) on the dispositions of businesses is set forth in our consolidated financial statements and the notes thereto included elsewhere in this document.Proceedings

	Year Ended
	December 31,
		2002		2003		2004
	(in thousands)
Restructuring and impairment charges
Personnel and service	$	11,458	$	827	$	2,057
Lease and other collateral commitments (reversals)		7,701		—		(5,861	)
Other		1,347		—		253
Asset impairments		32,191		65,372		4,564
Total	$	52,697	$	66,199	$	1,013
Loss (gain) on dispositions of businesses	$	85,531	$	1,226	$	(465	)

Results of Operations

The following table sets forth statement of operations data expressed as a percentage of net sales for the periods indicated:

	Year Ended December 31,
		Restated		Restated
		2002		2003		2004
Net sales		100.0	%	100.0	%	100.0	%
Operating expenses:
Cost of goods sold		80.8		79.5		80.8
Selling, general and administrative expenses		10.2		8.5		8.7
Stock compensation expense		0.0		0.2		0.4
Depreciation		8.6		8.8		5.4
Amortization of intangible assets		1.9		0.4		0.2
Restructuring and impairment charges		6.1		8.8		0.1
Goodwill Impairment		4.2		3.0		0.0
Loss (gain) on dispositions of assets, net		9.9		0.2		(0.1	)
Operating (loss) income		(21.7	)	(9.4	)	4.5
Other expenses:
Interest expense, net		9.5		4.0		4.2
Amortization of deferred financing costs		0.6		0.0		0.1
Reorganization expenses		2.6		7.4		(1.1	)
Gain from debt forgiveness		0.0		0.2		0.0
Other expense (income), net		(0.1	)	0.9		(0.1	)
Income (loss) before income taxes		(34.3	)	(21.9	)	1.4
Income taxes		0.0		0.0		0.8
Net (loss) income		(34.3	)%	(21.9	)%	0.6	%

Year Ended December 31, 2003 Compared to Year Ended December 31, 2004

Net sales for the year ended December 31, 2004 were $901.4 million, representing a $149.9 million, or 19.9% increase, from the same period in 2003. The increase was primarily a result of the overall market recovery and increased market share with select customers. Sales of China printed circuit boards increased $55.9 million, or 19.4%, as a result of greater product demand and the installation of additional capacity. Sales of western world printed circuit boards decreased $7.2 million, or 6.8% due to reduced market demand in the western world PCB market primarily as a result of migration of manufacturing to China. Sales in our assembly segment increased $90.0 million, or 29.3% due to greater product demand and additional product wins. The future mix of business is dependent upon available capacity, demand for our customer’s end products and individual program wins across all customers.

Cost of goods sold for the year ended December 31, 2004 was $728.2 million, or 80.8% of net sales, compared to $597.5 million, or 79.5% of net sales, for the year ended December 31, 2003. Cost of goods sold as a percent of net sales increased primarily as a result of higher PCB material costs, higher scrap rates in our western world PCB fabrication facilities and the negative effect of the strengthening of the Canadian Dollar and Euro.

Selling, general and administrative expenses for the year ended December 31, 2004 increased by $13.9 million, from $64.1 million for the year ended December 31, 2003, to $78.0 million for the same period of 2004. These costs increased due to the overall growth of the Company.

Depreciation and amortization decreased $19.3 million, from $69.1 million for the year ended December 31, 2003, to $49.8 million for the same period of 2004. This decrease was primarily due to the fixed asset impairments we recognized during 2003 from the application of SFAS No. 144.

Interest expense increased $8.1 million, from $29.7 million for the year ended December 31, 2003, to $37.8 million for the same period of 2004. This increase in interest expense was primarily due to our increased indebtedness with the issuance of the senior subordinated notes due 2011 in late 2003 and partially offset by our ability to negotiate lower interest rates on our senior credit facility.

~~Amortization~~Item ~~of deferred financing costs increased $1~~4.2 million for the year ended December 31, 2004, compared to the same period in 2003. This increase was due to the amortization of deferred financing fees incurred with the issuance of the senior subordinated notes due 2011.

~~Year~~Submission ~~Ended~~of ~~December~~Matters ~~31, 2003 Compared~~ to ~~Year~~a ~~Ended~~Vote ~~December~~of ~~31, 2002~~Security Holders

Net sales for the year ended December 31, 2003 were $751.5 million, representing a $112.5 million or 13.0% decrease from the same period in 2002. The decrease was primarily a result of the facilities we closed or disposed of during 2002. In 2002, such closed or disposed of facilities accounted for net sales of $153.2 million. Had we excluded the operations that were closed or disposed of in 2002, net sales for the year ended December 31, 2002 would have been $710.8 million. Excluding such closed or disposed of facilities, our net sales increased for the year ended December 31, 2003 by $40.7 million, or 5.7%.21

~~Cost~~PART of goods sold for the year ended December 31, 2003 was $597.5 million, or 79.5% of net sales, compared to $697.8 million, or 80.8% of net sales, for the year ended December 31, 2002. Cost of goods sold as a percent of net sales decreased primarily as a result of increased printed circuit board sales, which carry a higher gross margin than our other products, as a percent of total sales and cost reduction actions implemented during 2002, partially offset by the negative effect of the strengthening of the Canadian dollar and Euro.II

~~Selling,~~Item ~~general and administrative expenses for the year ended December 31, 2003 decreased by $24~~5.1 million, from $88.2 million for the year ended December 31, 2002, to $64.1 million for the same period of 2003. These costs decreased primarily due to the elimination of these expenses in connection with the Plant Rationalizations and additional cost reduction activities implemented during 2002 and 2003. Included in the selling, general and administrative expenses for the year ended December 31, 2003 is $1.4 million relating to stock option compensation expense.

~~Depreciation~~Market ~~and amortization decreased $21.5 million, from $90.6 million~~ for ~~the~~Registrant’s ~~year~~Common ~~ended December 31~~Equity, ~~2002,~~Related toStockholder ~~$69.1~~Matters ~~million for the same period of 2003, primarily due to the intangibles and fixed assets disposed of or written off in connection with the Plant Rationalizations.~~

~~Interest~~and ~~expense~~Issuer ~~decreased~~Purchases ~~$52.2 million, from $81.9 million for the year ended December 31, 2002, to $29.7 million for the same period~~ of ~~2003,~~Equity ~~due to lower overall debt balances as a result of the effects of the Reorganization.~~Securities

Amortization of deferred financing costs decreased $4.9 million for the year ended December 31, 2003, compared to the same period in 2002. On January 31, 2003, in connection with the consummation of the Reorganization, we wrote off the deferred financing fees related to debt which was cancelled or exchanged.21

~~Other~~Item ~~expense (income) changed by $7.8 million, from income of $0.9 million for the year ended December 31, 2002, to expense of $~~6.9 million for the same period in 2003. The change was primarily due to a $7.7 million expense incurred in connection with a contract settlement with one of our customers related to one of the facilities we closed as part of the Plant Rationalizations.

~~Cash~~Selected ~~Flow~~Financial Data

Net cash provided by operating activities was $65.9 million for the year ended December 31, 2004, compared to net cash provided by operating activities of $48.4 million for the same period in 2003. Changes in cash flow were principally the result of increased net income. Timing of receipts from certain customers, inventory management and payment to vendors also influenced the cash balances.21

~~Net cash~~Item ~~used in investing activities was $71~~7.9 million for the year ended December 31, 2004, compared to $47.0 million for the same period in 2003. Such increase is attributable to the Company’s capital expansion program in China. Specifically, cash used for capital expenditures during the year ended December 31, 2004 was $72.0 million compared to $47.5 million for the same period in 2003.

22Management’s Discussion and Analysis of Financial Condition and Results of Operations

Net cash provided by financing activities was $56.4 million for the year ended December 31, 2004, compared to net cash used in financing activities of $15.0 million for the same period in 2003. The net cash provided by financing activities for the year ended December 31, 2004 related to additional borrowings of $21.7 million incurred in connection with our new $265.0 million term loan facility. Net cash proceeds of $47.1 million related to the sale of common stock and the repayment of $12.5 to discharge the Department of Trade and Industry (the “DTI”) note.

The net cash used in financing activities for the year ended December 31, 2003 related principally to payments of term loans under our secured credit facility offset by proceeds from issuance of long-term debt under senior subordinated notes. In December 2003, we completed an offering of $200.0 million of Senior Subordinated Notes. The proceeds from this offering were used to repay in full approximately $69.4 million outstanding under the Tranche A term loan facility and to repay approximately $136.1 million of the Tranche B term loan facility. Total payments under the credit agreement were $205.5 million.

Financing Arrangements

Concurrently with the consummation of the Reorganization, we entered into a credit agreement among JPMorgan Chase Bank (the “2003 Credit Agreement”), as administrative agent, and the several banks and financial institutions party thereto, which provides for a senior credit facility consisting of a $69.4 million three-and-one-half year amortizing Tranche A term loan facility, a $378.5 million five-and-one-half year amortizing Tranche B Term Loan facility and a five year revolving credit facility in an amount of $51.3 million (including, as a sub-facility of the revolving credit facility, a $15 million letter of credit facility).

The 2003 Credit Agreement requires Viasystems to maintain certain conditions, affirmative covenants and negative covenants (including financial covenants), including the following financial covenants: (1) minimum interest coverage, (2) maximum total leverage and (3) maximum capital expenditures.

In December 2003, we completed an offering of $200.0 million of 10½% Senior Subordinated Notes due 2011. The proceeds from this offering were used to repay in full approximately $69.4 million outstanding under the Tranche A term loan facility and to repay approximately $136.1 million of the Tranche B Term Loan facility. In connection with the consummation of the debt offering, we were able to amend the terms of the 2003 credit agreement. We believe the results of operations will be sufficient to satisfy the terms and conditions of our financing arrangements.

In conjunction with the Company’s plan of reorganization approved by the Bankruptcy Court, a £12 million (approximately $18 million) loan guaranteed by the Company was cancelled and in exchange the DTI received a note (the “DTI Note”) in an amount equal to £9 million with interest payable semi-annually in cash on a current basis at an annual interest rate of three percent for periods up to September 30, 2008 and at an annual interest rate equal to the Bank of England Base Rate plus two percent for periods thereafter and principal payments from December 31, 2008 through December 31, 2010. In May 2004, the DTI Note was discharged in full as a result of proceeds received by the DTI from the liquidation of Viasystems Tyneside Limited, resulting in a gain of $9.8 million.

On October 7, 2004, Group, as guarantor, and Viasystems, as borrower, amended the 2003 Credit Agreement to provide for a new $265 million term loan facility (the “Replacement Tranche B Term Loan”). The proceeds from the New Tranche B Term Loan were used to extinguish the original Tranche B Term Loan.

On October 7, 2004, Group completed a rights offering whereby it sold 5,555,555 shares of common stock at $9.00 per share to its current stockholders. The proceeds, net of issuance costs, of $47.1 million, werecontributed to the Company.

Liquidity

We have cash and cash equivalents at December 31, 2003 and December 31, 2004 of $62.7 million and $112.9 million, respectively. We had letters of credit outstanding of $13.7 million and $13.8 million at December 31, 2003 and December 31, 2004, respectively.

WeItem ~~anticipate making capital expenditures of approximately $75 to $80 million in 2005~~7A. We believe that cash flow from operations and available cash on hand will be sufficient to fund our capital expenditures and other currently anticipated cash needs for the next two years. Our ability to meet those needs from cash provided by operating activities will depend on the demand for our products, as well as general economic, financial, competitive and other factors, many of which are beyond our control. We cannot assure you, however, that our business will generate sufficient cash flow from operations, that currently anticipated cost savings and operating improvements will be realized on schedule or that future borrowings will be available to us under the 2003 credit agreement in an amount sufficient to enable us to pay our indebtedness, including these notes, or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness.

~~The~~Quantitative ~~following table provides our material debt, capital lease~~ and ~~operating~~Qualitative ~~lease payments~~Disclosures asAbout ofMarket ~~December 31, 2004:~~Risk

Contractual Obligation		Total		Less Than 1 year		2 — 3 years		4 — 5 years		More Than 5 years
	(in millions)
Senior credit facility	$	265.0	$	2.7	$	5.3	$	257.0	$	—
Interest on senior credit facility		79.9		17.1		33.8		29.0		—
Senior subordinated notes		200.0		—		—		—		200.0
Interest on senior subordinated notes		126.9		21.0		42.0		42.0		21.9
Capital lease		0.6		0.3		0.3		—		—
Operating leases		22.3		6.0		8.7		5.1		2.5
Total contractual obligations	$	694.7	$	47.1	$	90.1	$	333.1	$	224.4

Net Operating Losses

For United States federal income tax purposes we had net operating loss carryforwards, or NOLs, amounting to approximately $693.6 million as of December 31, 2004. These NOLs expire in 2019 through 2024 if not utilized before then to offset taxable income. Section 382 of the Internal Revenue Code of 1986, as amended, and regulations issued thereunder impose limitations on the ability of corporations to use NOLs if the corporation experiences more that a 50% change in ownership during certain periods. We believe an ownership change occurred in January 2003 in connection with the Reorganization. As a consequence, the utilization of our NOLs is limited pursuant to Section 382 to approximately $19.7 million per year, with any unused portion carried over to succeeding years. Further changes in ownership in future periods could substantially restrict our ability to utilize our tax net operating loss carryforwards. In addition, as of December 31, 2004 we had NOLs of $8.8 million in Hong Kong, $5.4 million in China, $14.6 million in the United Kingdom, $88.4 million in Luxembourg, $74.3 million in Canada and $14.5 million in the Netherlands. These NOLs carry forward indefinitely, except for the Canadian NOLs which expire in 2007 through 2011.

Recently Adopted Accounting Pronouncements

In January 2003, the FASB issued FIN No. 46, Consolidation of Variable Interest Entities. This interpretation addresses the consolidation of business enterprises (variable interest entities) to which the usual condition of consolidation does not apply. This interpretation focuses on financial interests that indicate control. It concludes that in the absence of clear control through voting interests, a company’s exposure (variable interest) to the economic risks and potential rewards from the variable interest entity’s (VIE) assets and activities are the best evidence of control. Variable interests are rights and obligations that convey economic gains or losses from changes in the values of the VIE’s assets and liabilities. Variable interests may arise from financial instruments, service contracts, nonvoting ownership interests and other arrangements. If an enterprise holds a majority of the variable interests of an entity, it would be considered the primary beneficiary. The primary beneficiary would be required to include assets, liabilities and the results of operations of the VIE in its financial statements. This interpretation applies immediately to VIEs that are created, or for which control is obtained after, January 31, 2003.

In December 2003, the FASB published a revision to FIN No. 46 to clarify some of the provisions and to exempt certain entities from its requirements. Under the new guidance, special effective date provisions apply to enterprises that have fully or partially applied FIN No. 46 prior to issuance of the revised interpretation. Otherwise, application of FIN No. 46R is required in financial statements of public entities that have interests in structures that are commonly referred to as special-purpose entities (SPEs) for periods ending after December 15, 2003. Application by public entities, other than business issuers, for all other types of VIEs other than SPEs is required in financial statements for periods ending after March 15, 2004. The Company does not have interests in structures commonly

referred to as SPEs. Adoption of FIN No. 46R did not have an impact on the Company’s consolidated financial position, results of operations or cash flows.

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. This statement amends SFAS No. 133 by requiring that contracts with comparable characteristics be accounted for similarly and clarifies when a derivative contains a financing component that warrants special reporting in the statement of cash flows. SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003 and must be applied prospectively. Adoption of SFAS No. 149 did not have a material impact on its financial position or results of operations.

In May 2004, the EITF released Issue No. 03-06, Participating Securities and the Two-Class Method under FASB Statement No. 128. EITF No. 03-06 provides guidance on the calculation and disclosure of earnings per share. Specifically, EITF No. 03-06 requires that “earnings available to common shareholders” be calculated including participating securities (e.g. preferred stock with certain characteristics). The adoption of EITF No. 03-06 is required for all financial periods beginning after March 31, 2004. Adoption of EITF No. 03-06 resulted in no change to earnings per share as Viasystems, Inc. does not report earnings per share.

Recently Issued Accounting Pronouncements

In November 2004 (revised in December 2004), the FASB issued SFAS No. 151, Inventory Costs -- an amendment of ARB No. 43, Chapter 4 to be effective for inventory costs incurred during fiscal years beginning after June 15, 2005, with early adoption permitted. SFAS No. 151 amends the guidance in ARB No. 43, Chapter 4, “Inventory Pricing,” to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter 4, previously stated that “. . . under some circumstances, items such as idle facility expense, excessive spoilage, double freight, and rehandling costs may be so abnormal as to require treatment as current period charges. . . .” SFAS No. 151 requires those items be recognized as current-period charges regardless of whether they meet the criterion of “so abnormal.” In addition, FAS No. 151 requires the allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. The Company does not expect the adoption of SFAS No. 151 to have a material impact on its financial position or results of operations.

In December 2004, the FASB issued SFAS No. 123(R), Share-Based Payment (revised 2004), to be effective as of the beginning of the first interim or annual reporting period that begins after June 30, 2005. SFAS No. 123 (R) establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. SFAS No. 123(R) focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. SFAS No. 123(R) does not change the accounting guidance for share-based payment transactions with parties other than employees provided in Statement 123 as originally issued and EITF Issue No. 96-18, “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services.” SFAS No. 123(R) does not address the accounting for employee share ownership plans, which are subject to AICPA Statement of Position 93-6, Employers’ Accounting for Employee Stock Ownership Plans. The Company adopted the provisions of SFAS No. 123 on January 1, 2004. The Company does not expect the adoption of SFAS No. 123(R) to have a material impact on its financial position or results of operations.

In December 2004, the FASB issued FASB staff position (“FSP”) 109-1, Application of FASB No. 109, Accounting for Income Taxes, to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004. In addition, at the same time, the FASB issued FSP No. 109-2, Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004. The American Jobs Creation Act of 2004. The American Jobs Creation Act, which includes numerous provisions that may affect business practices and accounting for income taxes, was signed in to law in Ocotber of 2004. As of December 31, 2004, the Company is evaluating all newly issued guidance to make a determination what, if any, effect these issuances may have on the Company.

In December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets, an amendment to APB Opinion No. 29, to be for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The guidance in APB Opinion No. 29, Accounting for Nonmonetary Transactions, is based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. The guidance in that Opinion, however, included certain exceptions to that principle. SFAS No. 153 amends Opinion 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. The Company does not expect the adoption of SFAS No. 153 to have a material impact on its financial position or results of operations.

ITEM 7A. Quantitative And Qualitative Disclosures About Market Risk

Interest Rate Risk

At December 31, 2003 and 2004, approximately $242.4 million and $265.0 million, respectively, of our long-term debt, 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 year ended December 31, 2003 and 2004, would have increased by approximately $4.8 and $5.3 million, respectively. 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 8. Financial Statements and Supplementary Data

Index To Financial Statements And Schedule

Viasystems, Inc. & Subsidiaries Report of Independent Registered Public Accounting Firm	29
Consolidated Balance Sheets as of
December 31, 2003 and 2004	30
Consolidated Statements of Operations for the years ended
December 31, 2002, 2003 and 2004	31
Consolidated Statements of Stockholder’s Equity (Deficit) for the years ended
December 31, 2002, 2003 and 2004	32
Consolidated Statements of Cash Flows for the years ended
December 31, 2002, 2003 and 2004	33
Notes to Consolidated Financial Statements	34
Schedule II -- Valuation and Qualifying Accounts	79

Report Of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholder of Viasystems, Inc.:

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Viasystems, Inc. and its subsidiaries as of December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2004 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As indicated in Note 2 to the consolidated financial statements, the Company has restated its consolidated financial statements for the years ended December 31, 2002 and 2003.

/s/ PricewaterhouseCoopers LLP

Dallas, Texas

March 24, 2005

Viasystems, Inc. & Subsidiaries

Consolidated Balance Sheets

	Year Ended December 31,
		Restated
		2003			2004
ASSETS
	(In thousands)
Current assets:
Cash and cash equivalents	$	62,676		$	112,891
Accounts receivable, net of allowance for doubtful accounts of $10,028 and $13,827, respectively		135,378			140,618
Inventories		87,744			103,904
Prepaid expenses and other		38,004			14,807
Total current assets		323,802			372,220
Property, plant and equipment, net		213,172			233,764
Deferred financing costs, net		8,806			8,931
Goodwill		110,127			109,980
Intangible assets, net		11,129			9,985
Other assets		27,299			15,529
Total assets	$	694,335		$	750,409
LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Accounts payable	$	141,542		$	151,247
Accrued and other liabilities		69,155			68,542
Income taxes payable		589			4,937
Current maturities of long-term debt		943			2,929
Total current liabilities		212,229			227,655
Deferred taxes		18,650			2,321
Long-term debt, less current maturities		455,300			462,626
Other non-current liabilities		5,676			1,273
Total liabilities		691,855			693,875
Commitment and contingencies Stockholder’s equity
Common Stock, 1,000 shares authorized, issued and outstanding		―			―
Paid-in capital		2,374,041			2,426,794
Accumulated deficit		(2,362,174	)		(2,356,426	)
Accumulated other comprehensive loss		(9,387	)		(13,834	)
Total stockholder’s equity		2,480			56,534
Total liabilities and stockholder’s equity	$	694,335		$	750,409

The accompanying notes are an integral part of the consolidated financial statements.

Viasystems, Inc. & Subsidiaries

Consolidated Statements of Operations

	Year Ended December 31,
		Restated			Restated
		2002			2003			2004
	(In thousands)
Net sales	$	864,047		$	751,483		$	901,363
Operating expenses:
Cost of goods sold, exclusive of items shown separately below		697,802			597,546			728,249
Selling, general and administrative		88,160			64,119			77,977
Stock compensation expense		—			1,383			3,837
Depreciation		74,221			66,070			48,232
Amortization		16,344			3,065			1,570
Restructuring and impairment charges		52,697			66,199			1,013
Goodwill impairment		36,710			22,697			—
Loss (gain) on dispositions of businesses, net		85,531			1,226			(465	)
Operating (loss) income		(187,418	)		(70,822	)		40,950
Other expenses (income):
Interest expense, net		81,898			29,729			37,818
Amortization of deferred financing costs		4,955			104			1,305
Reorganization items:
Reorganization expenses (reversals)		22,537			55,255			(9,776	)
Loss from debt forgiveness		—			1,517			—
Other (income) expense, net		(900	)		6,882			(987	)
(Loss) income before income taxes		(295,908	)		(164,309	)		12,590
Income taxes		—			—			6,842
Net (loss) income	$	(295,908	)	$	(164,309	)	$	5,748

The accompanying notes are an integral part of the consolidated financial statements.

Viasystems, Inc. & Subsidiaries

Consolidated Statements of Stockholder’s Equity (Deficit) and Comprehensive Income (Loss)

		Common Stock		Paid in Capital		Accumulated Deficit			Accumulated and Other Comprehensive Income (Loss	)		Total
	(In thousands)
Balance at December 31, 2001	$	—	$	1,634,512	$	(1,901,957	)	$	(42,879	)	$	(310,324	)
Comprehensive loss:
Net loss (restated)		—		—		(295,908	)		—			(295,908	)
Foreign currency translation adjustments, net of taxes of $0 (restated)		—		—		—			21,523			21,523
Total comprehensive loss (restated)												(274,385	)
Balance at December 31, 2002 (restated)		—		1,634,512		(2,197,865	)		(21,356	)		(584,709	)
Comprehensive loss:
Net loss (restated)		—		—		(164,309	)		—			(164,309	)
Foreign currency translation adjustments, net of taxes of $0 (restated)		—		—		—			11,969			11,969
Total comprehensive loss (restated)												(152,340	)
Capital contribution by Group		—		738,146		—			—			738,146
Stock compensation expense		—		1,383		—			—			1,383
Balance at December 31, 2003 (restated)		—		2,374,041		(2,362,174	)		(9,387	)		2,480
Comprehensive income:
Net income		—		—		5,748			—			5,748
Foreign currency translation adjustments, net of taxes of $0		—		—		—			(4,447	)		(4,447	)
Total comprehensive income												1,301
Capital contribution by Group		—		48,916		—			—			48,916
Stock compensation expense		—		3,837		—			—			3,837
Balance at December 31, 2004	$	—	$	2,426,794	$	(2,356,426	)	$	(13,834	)	$	56,534

The accompanying notes are an integral part of the consolidated financial statements.

Viasystems, Inc. & Subsidiaries

Consolidated Statements of Cash Flows

Year Ended December 31, Restated Restated 2002 2003 2004 (In thousands) Cash flows from operating activities: Net (loss) income $ (295,908 ) $ (164,309 ) $ 5,748 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Impairment of assets 30,890 65,372 4,564 Goodwill impairment 36,710 22,697 — Loss from debt forgiveness — 1,517 — Write-off of deferred financing fees, premium and discount related to debt forgiveness — 53,203 — Gain on early extinguishment of capital leases (656 ) — — Loss (gain) on dispositions of businesses 89,718 1,226 (465 ) Loss on sale of property, plant and equipment 134 31 931 Gain on sale of joint venture interest (4,187 ) — — Depreciation and amortization 90,565 69,135 49,802 Amortization of deferred financing costs 4,955 104 1,305 Non-cash stock option compensation charge — 1,383 3,837 Accreted interest on senior unsecured notes 16,407 — — Joint venture income (298 ) — — Gain from sale of North Tyneside facility — — (9,789 ) Deferred taxes (1,382 ) 1,725 4,565 Change in assets and liabilities, net of acquisitions: Accounts receivable 8,697 (14,058 ) (4,665 ) Inventories 10,220 (10,150 ) (15,221 ) Prepaid expenses and other 341 (10,912 ) 20,070 Intercompany receivable with Group, Inc. (212 ) 4,551 (6,087 ) Accounts payable and accrued and other liabilities 24,788 33,136 13,660 Income taxes payable (2,007 ) (6,241 ) (2,338 ) Net cash provided by operating activities 8,775 48,410 65,917 Cash flows from investing activities: Sale of businesses and joint venture interest 5,900 (138 ) — Sale of property, plant and equipment — 620 73 Capital expenditures (29,688 ) (47,506 ) (72,006 ) Net cash used in investing activities (23,788 ) (47,024 ) (71,933 ) Cash flows from financing activities: Proceeds from issuance of long-term debt under credit facilities — — 265,000 Proceeds from issuance of long-term debt under senior subordinated notes — 200,000 — Net borrowings on revolvers 77,870 — — Repayment of amounts due under credit facilities (1,000 ) (205,500 ) (243,260 ) Repayment of amounts due under note due to the Department of Trade and Industry — (3,127 ) (12,549 ) Capital contributed by Group — 102 48,916 Repayment of other long-term and capital lease obligations (6,755 ) (144 ) (273 ) Financing fees and other (3,206 ) (6,334 ) (1,430 ) Net cash provided by (used in) financing activities 66,909 (15,003 ) 56,404 Effect of exchange rate changes on cash and cash equivalents (3,038 ) (6,767 ) (173 ) Net change in cash and cash equivalents 48,858 (20,384 ) 50,215 Cash and cash equivalents at beginning of year 34,202 83,060 62,676 Cash and cash equivalents at end of year $ 83,060 $ 62,676 $ 112,891 The accompanying notes are an integral part of the consolidated financial statements.

Viasystems, Inc. & Subsidiaries

Notes to Consolidated Financial Statements

(In thousands)

1. Basis of Presentation and Summary of Significant Accounting Policies

Viasystems, Inc. (“Viasystems”), a wholly owned subsidiary of Viasystems Group, Inc., (“Group”), was formed on April 2, 1997. On April 10, 1997, Group contributed to Viasystems all of the capital of its then existing subsidiaries. Prior to the contribution of capital by Group, Viasystems had no operations of its own. The consolidated financial statements included herein present the results of operations of Viasystems and its subsidiaries. As used herein, the “Company” refers to Viasystems and its subsidiaries subsequent to the capital contribution by Group and to Group and its subsidiaries prior to such capital contribution.

Nature of Business

The Company is a leading worldwide provider of complex multi-layer printed circuit boards, wire harnesses and electro-mechanical solutions. The Company conducts its operations in two primary segments, (i) printed circuit board manufacturing and (ii) assembly. Its products are used in a wide range of applications, including automotive dash panels and control modules, major household appliances, data networking equipment, telecommunications switching equipment and complex medical and technical instruments.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company. All intercompany balances and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

The Company considers investments purchased with an original maturity of three months or less to be cash equivalents.

Foreign Currency Translation

Local currencies have been designated as the functional currency for the Company’s foreign subsidiaries. Accordingly, assets and liabilities of the foreign subsidiaries are translated at the rates of exchange in effect at the balance sheet date. Income and expense items of these subsidiaries are translated at the weighted average monthly rates of exchange. The resultant translation gains and losses are reported in other comprehensive income (loss). Exchange gains and losses arising from transactions denominated in a currency other than the functional currency of the entity involved are included in other expense (income) in the consolidated statement of operations.

Derivative Financial Instruments

From time to time, the Company enters into foreign exchange forward contracts to minimize the short-term impact of foreign currency fluctuations. Such transactions are not material, and gains and losses from such activities are not significant. However, there can be no assurance that these activities will eliminate or reduce foreign currency risk. Gains/losses on derivative contracts are reclassified from accumulated other comprehensive income (loss) to current period earnings in the line item in which the hedged item is recorded at the time the contracts are settled.

Accounts Receivable

results or financial position, a specific allowance for doubtful accounts is recorded to reduce the related receivable to the amount that is believed reasonably collectible. The Company also records an allowance for doubtful accounts for all other customers based on a variety of factors including the length of time the receivables are past due, the financial health of the customer and historical experiences. If circumstances related to specific customers change, estimates of the recoverability of receivables could be further adjusted.

Inventories

Inventories are stated at the lower of cost (valued using the first-in, first-out (FIFO) or last-in, first-out (LIFO) method) or market. Cost includes raw materials, labor and manufacturing overhead. LIFO is utilized for wire harness and cable assembly inventories located in the United States. Prior to Viasystems’ acquisition of Wire Harness Industries, Inc. in March 2000, LIFO was adopted to balance the anticipated material inflation associated with copper prices and was carried over by the Company as the method used to value wire harness and cable assembly inventory.

Inventories would have decreased by approximately $5,269 and $5,424 at December 31, 2003 and 2004, respectively, had the FIFO method been used to determine purchased inventory cost. For the years ended December 31, 2003 and 2004, the percentage of inventory valued at LIFO was 27% and 32%, respectively.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Repairs and maintenance, which do not extend the useful life of an asset, are charged to expense as incurred. The useful lives of leasehold improvements are the lesser of the remaining lease term or the useful life of the improvement. When assets are retired or otherwise disposed of, their costs and related accumulated depreciation are removed from the accounts and any resulting gains or losses are included in the operations for the period. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets as follows:

Building	39-50 years
Leasehold improvements	10-12 years
Machinery, equipment, systems and other	3-10 years

Deferred Financing Costs

Deferred financing costs, consisting of fees and other expenses associated with debt financing, are amortized over the term of the related debt using the straight-line method, which approximates the effective interest method.

Income Taxes

The Company accounts for certain items of income and expense in different periods for financial reporting and income tax purposes. Provisions for deferred income taxes are made in recognition of such temporary differences, where applicable. A valuation allowance is established against deferred tax assets unless the Company believes it is more likely than not that the benefit will be realized.

Start-Up Costs

Start-up costs consist of salaries, personnel training and other expenses of opening new facilities and are expensed as incurred.

Intangible Assets

Intangible assets consist primarily of identifiable intangibles acquired and goodwill arising from the excess of cost over the fair value of net assets acquired. Amortization of identifiable intangible assets acquired is computed using systematic methods over the estimated useful lives of the related assets as follows:

	Life	Method
Developed technologies	15 years	Double-declining balance

Impairment of Long-Lived Assets

Pursuant to SFAS No. 142, all goodwill effective January 1, 2002 is not being amortized, but is subject to at least annual impairment reviews. Other intangible assets and long-lived assets are reviewed for impairment in accordance with SFAS No. 144, effective January 1, 2002.

In reviewing goodwill for impairment under SFAS No. 142, potential impairment is identified by comparing the fair value of a reporting unit with its carrying amount, and if the fair value is less than the carrying amount, an impairment loss is recorded as the excess of the carrying amount of the goodwill over the implied fair value. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit to all of its assets and liabilities, with any excess of fair value of the reporting unit over the amounts allocated representing the implied fair value of that unit's goodwill. This review is performed at the Company's reporting unit's level. Reporting units are either an operating segment as defined in SFAS No.131 or one level below the operating segment.

The Company reviews the carrying amounts of long-lived assets other than goodwill for potential impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In evaluating the recoverability of assets, long-lived assets are grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets, then management compares the carrying amounts of such each asset groups with the its estimated undiscounted future operating cash flows. In the event an impairment exists, an impairment charge would be measured as the amount by which the carrying amount of the long-lived asset group exceeds its fair value. In addition, the remaining useful life of an impaired asset group would be reassessed and revised if necessary.

Product Warranties

Provisions for estimated expenses related to product warranties are made at the time products are sold. These estimates are established using historical information on the nature, frequency and average cost of warranty claims.

Revenue Recognition

The Company recognizes revenue when all of the following criteria are satisfied: persuasive evidence of an arrangement exists; risk of loss and title transfer to the customer; the price is fixed and determinable; and collectibility is reasonably assured. Sales and related costs of goods sold are included in income when goods are shipped to the customer in accordance with the delivery terms, except in the case of vendor managed inventory arrangements, whereby sales and the related costs of goods sold are included in income when goods are taken into production by the customer. All services are performed prior to invoicing customers for any products manufactured by the Company. Reserves for product returns are recorded based on historical trend rates at the time of sale.

Environmental Costs

Accruals for environmental matters are recorded in operating expenses when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. Accrued liabilities do not include claims against third parties and are not discounted. Costs related to environmental remediation are charged to expense. Other environmental costs are also charged to expense unless they increase the value of the property and/or mitigate or prevent contamination from future operations, in which event they are capitalized.

Use of Estimates

The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments

The fair market values of the Company’s long-term obligations are as follows:

	December 31,
		2003		2004
Senior Subordinated Notes due 2011	$	213,250	$	196,000
Credit Agreement	$	246,644	$	267,995

The Company determined the 2003 and 2004 fair values of the Senior Subordinated Notes due 2011 using published market values from third party sources. The Company determined the 2003 and 2004 fair values of the credit agreement using the credit agreement trading values from a third party source. In addition, there are various other insignificant long-term obligations held by the Company. Each of the fair values of these obligations are estimated by management to be equal to the carrying value.

Employee Stock-Based Compensation

SFAS No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure, an Amendment of FASB Statement No. 123, was issued to provide alternative methods of transition of an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation. It also amends the disclosure provisions of SFAS No. 123, Accounting for Stock-Based Compensation, to require prominent disclosure about the effects on reported net income of an entity’s accounting policy decisions with respect to the stock-based employee compensation and it amends Accounting Principles Board Opinion (“APB”) No. 28, Interim Financial Reporting, to require disclosure about those effects in interim financial information.

Group, the holding company parent of Viasystems, maintains a stock option plan. The Company records expenses attributable to Group’s stock option plan. In connection with the Company’s plan of reorganization pursuant to Chapter 11 of the United States Bankruptcy Code (the “Reorganization”), the Company terminated its 1997 and 2001 stock option plans and adopted the 2003 stock option plan. The options issued under the 2003 stock option plan have a fixed exercise price of $12.63 per share and vest one-third at the grant date, one-third on the 24-month anniversary of the grant date and one-third on the 36-month anniversary of the grant date. As a result of the termination of the 1997 and 2001 stock option plans and the adoption of the 2003 stock option plan, under provisions of Financial Interpretation Number (“FIN”) No. 44, Accounting for Certain Transactions Involving Stock Compensation an Interpretation of APB Opinion No. 25, certain options issued under the 2003 stock option plan were treated as “variable” options. As a result the Company recorded non-cash compensation expense of $1,383 and $3,837 for the years ended December 31, 2003 and 2004.

Effective January 1, 2004, the Company adopted the fair value recognition provisions of SFAS No. 123. Under the modified prospective transition method selected by the Company as described in SFAS No. 148, compensation cost recognized for the year ended December 31, 2004 is the same as that which would have been recognized had the fair value method of SFAS No. 123 been applied from its original effective date. As required under SFAS No. 123, the proforma effects of stock-based compensation on net (loss) income are as follows:

		Restated			Restated
		2002			2003			2004
Net (loss) income, as reported	$	(295,908	)	$	(164,309	)	$	5,748
Plus: Stock-based employee compensation expense included in reported net (loss) income, net of related tax effects		—			1,383			3,837
Less: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		(6,011	)		(15,932	)		(3,837	)
Pro forma net (loss) income	$	(301,919	)	$	(178,858	)	$	5,748

	2002	2003	2004
Expected life of options	5 years	5 years	5 years
Risk-free interest rate	4.61%	4.01%	3.50%
Expected volatility of stock	50%	50%	50%
Expected dividend yield	None	None	None

Recently Adopted Accounting Pronouncements

In January 2003, the Financial Accounting Standard Board (“FASB”) issued FIN No. 46, Consolidation of Variable Interest Entities. This interpretation addresses the consolidation of business enterprises (variable interest entities) to which the usual condition of consolidation does not apply. This interpretation focuses on financial interests that indicate control. It concludes that in the absence of clear control through voting interests, a company’s exposure (variable interest) to the economic risks and potential rewards from the variable interest entity’s (“VIE”) assets and activities are the best evidence of control. Variable interests are rights and obligations that convey economic gains or losses from changes in the values of the VIE’s assets and liabilities. Variable interests may arise from financial instruments, service contracts, nonvoting ownership interests and other arrangements. If an enterprise holds a majority of the variable interests of an entity, it would be considered the primary beneficiary. The primary beneficiary would be required to include assets, liabilities and the results of operations of the VIE in its financial statements. This interpretation applies immediately to VIEs that are created, or for which control is obtained after, January 31, 2003.

In May 2004, the Emerging Issues Task Force (“EITF”) released Issue No. 03-06, Participating Securities and the Two-Class Method under FASB Statement No. 128. EITF No. 03-06 provides guidance on the calculation and

disclosure of earnings per share. Specifically, EITF No. 03-06 requires that “earnings available to common shareholders” be calculated including participating securities (e.g. preferred stock with certain characteristics). The adoption of EITF No. 03-06 is required for all financial periods beginning after March 31, 2004. Adoption of EITF No. 03-06 resulted in no change to earnings per share as Viasystems, Inc. does not report earnings per share.

Recently Issued Accounting Pronouncements

In November 2004 (revised in December 2004), the FASB issued SFAS No. 151, Inventory Costs -- an amendment of ARB No. 43, Chapter 4 to be effective for inventory costs incurred during fiscal years beginning after June 15, 2005, with early adoption permitted. SFAS No. 151 amends the guidance in Accounting Research Bulleting (“ARB”) No. 43, Chapter 4, “Inventory Pricing,” to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter 4, previously stated that “. . . under some circumstances, items such as idle facility expense, excessive spoilage, double freight, and rehandling costs may be so abnormal as to require treatment as current period charges. . . .” SFAS No. 151 requires those items be recognized as current period charges regardless of whether they meet the criterion of “so abnormal.” In addition, FAS No. 151 requires the allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. The Company does not expect the adoption of SFAS No. 151 to have a material impact on its financial position or results of operations.

2.Item ~~Restatement~~8.

~~The~~Financial ~~Company~~Statements ~~has restated its previously issued financial statements for 2002~~ and ~~2003.~~ ~~The~~Supplementary restatement arises primarily from errors made in the application of the accounting principles set forth by SFAS No. 142, Goodwill and Other Intangible Assets, and SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information. Specifically, the Company did not properly identify its reportable segments, operating segments and reporting units and did not properly identify goodwill impaired under SFAS No. 142 in 2002 and 2003. In addition, the Company restated the 2003 restructuring and impairment charges for an error identified during the recording of the SFAS No. 142 impairment adjustments. This error was attributable to the currency effects of the SFAS No. 144 impairment recognized on property, plant and equipment at the Company’s Echt, the Netherlands, facility. The following is a summary of the impact of the restatement on previously issued statements of operations and balance sheets:Data

	Year Ended December 31,
		As Originally Reported			As Restated			As Originally Reported			As Restated
Statement of Operations		2002			2002			2003			2003
Restructuring and impairment charges (1)	$	52,697		$	52,697		$	67,054		$	66,199
Goodwill impairment (2)		—			36,710			155			22,697
Operating (loss)		(150,708	)		(187,418	)		(49,135	)		(70,822	)
Loss before income taxes		(259,198	)		(295,908	)		(142,622	)		(164,309	)
Net loss	$	(259,198	)	$	(295,908	)	$	(142,622	)	$	(164,309	)
	Year Ended December 31,
		As Originally Reported			As Restated			As Originally Reported			As Restated
Balance Sheet (as of end of period)(3):		2002			2002			2003			2003
Goodwill	$	166,619		$	129,701		$	173,350		$	110,127
Total assets		814,448			777,530			757,558			694,335
Accumulated other comprehensive loss		(21,148	)		(21,356	)		(4,561	)		(9,387	)
Total stockholder's (deficit) equity		(547,791	)		(584,709	)		65,703			2,480

(1) The adjustment to restructuring and impairment loss in 2003 is attributable to the adjustment of currency effects of fixed assets located at our facility in Echt, the Netherlands that were impaired under the provisions of SFAS No. 144.

(2) The $36,710 goodwill impairment recognized in 2002 is attributable to $13,417 of goodwill impairment recognized in the Company’s North American PCB reporting unit, $10,079 of goodwill impairment recognized in the Asian EMS reporting unit and $13,214 of goodwill impairment recognized in the North American EMS reporting unit. The 2002 goodwill impairment resulted in a $36,710 increase in operating loss and net loss. The goodwill impairment recognized in 2003 is attributable to $22,697 goodwill impairment recognized in the European Printed Circuit Boards reporting unit. The 2003 goodwill impairment resulted in a $22,542 increase in operating loss and net loss.

(3) The adjustment to the goodwill, total assets, accumulated other comprehensive loss and stockholder's equity is attributable to the goodwill impairment adjustments in 2002 and 2003 and the currency effect adjustment in 2003.

3. Supplemental Cash Flow Disclosure

Cash paid for interest for the years ended December 31, 2002, 2003 and 2004 was $30,801, $31,497 and $26,315 respectively. For the years ended December 31, 2002, 2003 and 2004, net cash paid for income taxes was $3,389, $4,894 and $5,437, respectively.

4.Report ~~Inventories~~of Independent Registered Public Accounting Firm

The composition of inventories at December 31 is as follows:

		2003		2004
Raw materials	$	33,222	$	40,803
Work in process		21,182		20,767
Finished goods		33,340		42,334
Total	$	87,744	$	103,904

5. Goodwill and Other Intangible Assets (Restated)

Effective January 1, 2002, the Company implemented SFAS No. 142, Goodwill and Other Intangible Assets, and as a result, ceased amortizing goodwill and other indefinite lived intangible assets. The implementation of SFAS No. 142 did not result in the recognition of goodwill impairment.

As required by the provisions of SFAS No. 142, the Company performs an annual impairment evaluation of goodwill and other indefinite lived intangible assets. As discussed in Note 2, during 2002 and 2003, the Company did not properly calculate the impairment of goodwill under SFAS No. 142. For the year ended December 31, 2002, the corrected evaluation resulted in the recognition of impairment in the Company’s North American EMS, North American PCB and Asian EMS reporting units of $13,214, $13,417 and $10,079, respectively. For the year ended December 31, 2003 the corrected evaluation resulted in the additional recognition of impairment in the Company’s European Printed Circuit Boards reporting unit of $22,697.

The table included below describes the Company’s goodwill activity as restated for the inclusion of SFAS No. 142 impairments recognized from the previous years:

		Asia Printed Circuit Board			North American Printed Circuit Board			European Printed Circuit Board			Assembly			Other			As Restated
Goodwill at December 31, 2001	$	79,250		$	13,229		$	17,214		$	40,628		$	60,563		$	210,884
Write-off related to disposed assets		—			—			—			—			(47,349	)		(47,349	)
Impairment under SFAS No. 142		—			(13,417	)		—			(10,079	)		(13,214	)		(36,710	)
Effect of foreign exchange rates		(18	)		188			2,706			―			―			2,876
Goodwill at December 31, 2002		79,232			—			19,920			30,549			—			129,701
Impairment under SFAS No. 142		—			—			(22,697	)		—			—			(22,697	)
Effect of foreign exchange rates		346			―			2,777			―			―			3,123
Goodwill at December 31, 2003		79,578			―			―			30,549			―			110,127
Effect of foreign exchange rates		(147	)		―			―			―			―			(147	)
Goodwill at December 31, 2004	$	79,431		$	―	$	$	―		$	30,549		$	―		$	109,980

The components of intangible assets subject to amortization were as follows:

	December 31, 2003					December 31, 2004
		Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Developed technologies	$	20,397	$	(9,529	)	$	20,397	$	(11,237	)
Other		913		(652	)		1,352		(527	)
Total	$	21,310	$	(10,181	)	$	21,749	$	(11,764	)

The Company paid $209 and $439 for acquisitions of patents during the years ended December 31, 2003 and 2004, respectively. In addition, the Company impaired $7,850 in developed technologies and $1,374 in trademarks at December 31, 2003 (see Note 11).

Expected future annual amortiation expense for the next five fiscal years is as follows:
2005	$	1,415
2006		1,253
2007		1,125
2008		1,066
2009		984

6.Consolidated ~~Property,~~Balance ~~Plant and Equipment~~Sheets

The composition of property, plant and equipment at December 31 is as follows:

		2003			2004
Land and buildings	$	92,910		$	100,327
Machinery, equipment and systems		455,739			549,793
Construction in progress		17,377			17,074
Leasehold improvements		21,227			22,699
		587,253			689,893
Less: Accumulated depreciation		(374,081	)		(456,129	)
Total	$	213,172		$	233,764

7. Accrued and Other Liabilities

The composition of accrued and other liabilities at December 31 is as follows:

		2003		2004
Accrued payroll and related costs	$	23,768	$	26,726
Accrued restructuring		13,650		4,856
Accrued interest		1,944		13,447
Deferred taxes		7,894		4,311
Product warranties		3,938		2,018
Accrued other		17,961		17,184
Total	$	69,155	$	68,542

8. Long-Term Debt

The composition of long-term debt at December 31 is as follows:

		2003			2004
Credit Agreement:
Term Facilities	$	242,401		$	265,000
Revolver		—			—
Senior Subordinated Notes due 2011		200,000			200,000
Department of Trade and Industry Note		12,525			—
Capital lease obligations		545			555
Other		772			—
		456,243			465,555
Less: Current maturities		(943	)		(2,929	)
Total	$	455,300		$	462,626

The schedule of principal payments for long-term debt at December 31, 2004, is as follows:

2005	$	2,929
2006		2,919
2007		2,657
2008		2,650
2009		254,400
Thereafter		200,000
Total	$	465,555

Credit Agreement

On January 31, 2003, Group, as guarantor, and Viasystems, as borrower, entered into a senior credit facility (the “2003 Credit Agreement”). The 2003 Credit Agreement provided for:

(a) a $69,433 term loan facility (the “Tranche A Term Loan”);

(b) a $378,468 term loan facility (the “Original Tranche B Term Loan”); and

~~(c)~~Consolidated Statements ~~a $51,289 revolving credit facility (the “2003 Revolving Loans” or “Revolver”), which includes a $15,000 letter~~ of ~~credit commitment.~~Operations

In December 2003, the Company completed an offering of $200,000 of 10.5% Senior Subordinated Notes due 2011. The Company used the proceeds from the Senior Subordinated Notes due 2011 to extinguish the Tranche A Term Loan and to pay down the Original Tranche B Term Loan to $242,401.

On October 7, 2004, Group, as guarantor, and Viasystems as borrower, amended the 2003 Credit Agreement to provide for a new $265,000 term loan facility (the “Replacement Tranche B Term Loan” or “term loan facility”). The Company used the proceeds from the Replacement Tranche B Term Loan to extinguish the Original Tranche B Term Loan. The Replacement Tranche B Term Loan matures on September 30, 2009.

Borrowings under the Original Tranche B Term Loan bore interest at floating rates, which varied according to the interest option selected by the Company. Borrowings under the Replacement Tranche B Term Loan bear interest at floating rates, which vary according to the interest option selected by the Company. Base rate terms are described below:

	Original Tranche B Term Loan	Replacement Tranche B Term Loan
The then effective base rate, plus	4.25%	3.25%
The then effective euro currency base rate, plus	5.25%	4.25%

Revolving credit loans bear interest, at the Company’s option, at the then effective base rate plus 3.50% or the then effective eurocurrency base rate plus 4.50%. The Company pays a commitment fee equal to 0.5% on the undrawn portion of the commitments in respect of the 2003 Revolving Loans. The availability of borrowings under the Revolver at December 31 is as follows:

		2003		2004
Total available Revolver borrowing capacity	$	49,984	$	50,084
Balance of total available for Letters of Credit	$	13,695	$	13,795

The Company may optionally prepay the term loans from time to time in whole or in part, without premium or penalty. At the Company’s option, the 2003 Revolving Loans may be prepaid, and revolving credit commitments may be permanently reduced, in whole or in part, at any time.

Viasystems’ obligations under the 2003 Credit Agreement are unconditionally and irrevocably guaranteed by Group and each existing and future domestic subsidiary of Viasystems. In addition, the 2003 Credit Agreement is secured by a perfected first priority security interest in all of the capital stock of Viasystems and each of its direct and indirect domestic subsidiaries and 65% of each first tier foreign subsidiary of Viasystems and its domestic subsidiaries.

The 2003 Credit Agreement also contains a number of covenants that, among other things, generally restrict the ability of Group and its subsidiaries to: (a) incur additional indebtedness; (b) create liens on assets; (c) incur guarantee obligations; (d) enter into mergers, consolidations or amalgamations or liquidate, wind up or dissolve; (e) dispose of assets; (f) pay dividends, make payment on account of, or set apart assets for, a sinking or analogous fund or purchase, redeem, defease or retire capital stock; (g) make capital expenditures; (h) make optional repurchases of subordinated debt or modify terms of preferred stock; (i) make advances, loans, extensions of credit, capital contributions to, or purchases of any stock, bonds, notes, debentures or other securities; (j) engage in certain transactions with affiliates; and (k) enter into certain sale and leaseback transactions.

~~The 2003~~Consolidated ~~Credit~~Statements ~~Agreement contains customary events~~ of ~~default~~Stockholder’s ~~including:~~Equity (aDeficit) failure to pay principal on any loan when due or any interest or other amount that becomes due within five days after the due date thereof; (b) any representation or warranty made or deemed made is incorrect in any material respect on or as of the date made or deemed made; (c) the default in the performance of negative covenants; (d) a default in the performance of other covenants or agreements for a period of thirty days; (e) default in other indebtedness or guarantee obligations with a principal amount in excess of $20,000 beyond the period of grace; (f) events of insolvency; (g) ERISA events; and ~~(h)~~Comprehensive ~~other customary events of default for facilities similar to the 2003 Credit Agreement.~~

~~Viasystems~~Income ~~must prepay the term loan facility and reduce the commitments under the revolving credit facility by the following amounts~~ (~~subject to certain exceptions~~Loss):

· an amount equal to 100% of the net proceeds of any incurrence of indebtedness by Viasystems or any of its subsidiaries;

· an amount equal to 75% of the net proceeds of any equity issuances (other than (1) equity of the Company issued in connection with incentive plans and (2) common equity infusions from certain existing equity holders and their respective affiliates) by the Company or any of its subsidiaries;

· an amount equal to 100% of the net proceeds of any sale or other disposition by Viasystems or any of its subsidiaries of any material assets, except for (1) the sale of inventory or obsolete or worn-out property in the ordinary course of business, (2) the proceeds of certain specified asset sales, (3) transfers resulting from casualty or condemnation and (4) other customary exceptions; and

· if Viasystems’ cash and cash equivalents on hand as of December 31 of each year (commencing with December 31, 2003) exceeds certain amounts, an amount equal to the lesser of (1) 50% of excess cash flow and (2) the amount of cash and cash equivalents on hand as of such date in excess of $87.5 million.

The lenders under the 2003 Credit Agreement will apply each mandatory prepayment to any outstanding borrowings under the term loan facility. Once Viasystems pays all outstanding borrowings under the term loan facility, it must cash collateralize the letters of credit and permanently reduce the commitments in respect of the revolving credit facility.

On March 19, 2003, the Company executed a first amendment to the 2003 Credit Agreement. The primary purpose of this amendment was to get clearer definitions on specific items.

On December 3, 2003, the Company executed a second amendment to the 2003 Credit Agreement. Among other provisions, the amendment defined uses of the $200,000 Senior Subordinated Notes due 2011 and amended certain financial condition covenants.

Borrowings under credit agreements bear interest at floating rates, which vary according to the interest option the Company selected. The weighted average interest rate on outstanding borrowings under the 2003 Credit Agreement was 6.6% for both years ended December 31, 2003 and 2004.

On March 21, 2005, Group as guarantor, and Viasystems, as borrower, amended the 2003 Credit Agreement to amend certain covenants under the credit agreement. The amendment modifies the definition of earnings before interest, taxes, depreciation and amortization to exclude the operating losses and cash restructuring cost up to $26,100 related to the closure of the Company’s western world PCB fabrication facilities. The amendment further allows the Company to fund the cash costs of the closures.

Senior Subordinated Notes due 2011

In December 2003, Viasystems completed an offering of $200,000 of 10 1/2% Senior Subordinated Notes due 2011 (the 2011 Notes).

Interest on the 2011 Notes is due semiannually. The 2011 Notes may be redeemed at any time prior to January 15, 2008 at the redemption price of 100% plus a “make-whole” premium (as defined). In the event of an Initial Public Offering (as defined), 35% of the 2011 Notes may be redeemed at any time prior to January 15, 2007 at the

~~redemption price of 110.5%, plus accrued and unpaid~~Consolidated ~~interest,~~Statements ~~if any, to the redemption date. In the event~~ of aCash ~~Change in Control (as defined), the 2011 Notes may be redeemed at a redemption price of 101%, plus accrued and unpaid interest.~~Flows

The indenture governing the 2011 Notes contains restrictive covenants which, among other things, limit the ability (subject to exceptions) of Viasystems and its Guarantors (as defined) to: (a) incur additional debt; (b) pay dividends or distributions on, or redeem or repurchase, its capital stock; (c) create certain liens without securing the notes; (d) make investments; (e) engage in transactions with affiliates; (f) transfer or sell assets; (g) guarantee debt; (h) restrict dividends or other payments to the Company or any Restricted Subsidiaries (as defined); (i) consolidate, merge or transfer all or substantially all of its assets and the assets of its subsidiaries; and (j) engage in unrelated businesses.

Department of Trade and Industry Notes

In conjunction with the Company’s plan of reorganization approved by the Bankruptcy Court, a £12 million (approximately $18 million) loan guaranteed by the Company was cancelled and in exchange the Department of Trade and Industry (the DTI) received a note in an amount equal to £9.0 million with interest payable semi-annually in cash on a current basis at an annual interest rate of three percent for periods up to September 30, 2008 and at an annual interest rate equal to the Bank of England Base Rate plus two percent for periods thereafter and principal payable from December 31, 2008 through December 31, 2010. In May 2004, the DTI Note was discharged in full as a result of proceeds received by the noteholder in connection with the liquidation of Viasystems Tyneside Limited, resulting in a reorganization expense reversal of $9,798.

9. Guarantor Subsidiaries

The following condensed consolidating financial statements of the Company include the accounts of the Company, the combined accounts of the guarantor subsidiaries and the combined accounts of the non-guarantor subsidiaries. Given the size of the non-guarantor subsidiaries relative to the Company on a consolidated basis, separate financial statements of the respective guarantor subsidiaries are not presented because management has determined that such information is not material in assessing the guarantor subsidiaries.

~~Balance~~Notes ~~Sheet~~to asConsolidated ofFinancial ~~December 31, 2003 (Restated)~~Statements

		Viasystems, Inc.			Total Guarantor			Total Non- Guarantor			Eliminations		Viasystems, Inc. Consolidated
ASSETS Cash and cash equivalents	$	993		$	38,236		$	23,447		$	—	$	62,676
Accounts receivable, net allowance for doubtful accounts		—			55,267			80,111			—		135,378
Inventories		—			27,279			60,465			—		87,744
Other current assets		446			12,174			25,384			—		38,004
Total current assets		1,439			132,956			189,407			—		323,802
Property, plant and equipment, net		—			5,765			207,407			—		213,172
Investment in subsidiaries		230,060			(297,325	)		—			67,265		—
Other assets		(41,988	)		83,943			115,406			—		157,361
Total assets	$	189,511		$	(74,661	)	$	512,220		$	67,265	$	694,335
LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIT)
Current maturities of long-term debt	$	—		$	172		$	771		$	—	$	943
Accounts payable		—			33,085			108,457			—		141,542
Accrued and other liabilities		5,320			42,869			21,555			—		69,744
Total current liabilities		5,320			76,126			130,783			—		212,229
Long-term debt, less current maturities		454,927			373			—			—		455,300
Other non-current liabilities		(4,215	)		6,374			22,167			—		24,326
Intercompany (receivable)/payable		(264,180	)		(393,719	)		657,899			—		—
Total liabilities		191,852			(310,846	)		810,849			—		691,855
Stockholder’s equity (deficit)		11,867			230,060			(297,325	)		67,265		11,867
Accumulated other comprehensive income (loss)		(14,208	)		6,125			(1,304	)		—		(9,387	)
Total liabilities and stockholder’s equity (deficit)	$	189,511		$	(74,661	)	$	512,220		$	67,265	$	694,335

Balance Sheet as of December 31, 2004

		Viasystems, Inc.			Total Guarantor			Total Non- Guarantor			Eliminations		Viasystems, Inc. Consolidated
ASSETS Cash and cash equivalents	$	10		$	80,256		$	32,625		$	—	$	112,891
Accounts receivable, net of allowance for doubtful accounts		—			45,110			95,508			—		140,618
Inventories		—			42,548			61,356			—		103,904
Other current assets		(7,764	)		11,866			10,705			—		14,807
Total current assets		(7,754	)		179,780			200,194			—		372,220
Property, plant and equipment, net		245			5,681			227,838			—		233,764
Investment in subsidiaries		219,693			(260,414	)		—			40,721		—
Other assets		(21,797	)		72,845			93,377			—		144,425
Total assets	$	190,387		$	(2,108	)	$	521,409		$	40,721	$	750,409
LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIT)
Current maturities of long-term debt	$	2,650		$	188			91		$	—	$	2,929
Accounts payable		—			35,617			115,630			—		151,247
Accrued and other liabilities		9,842			30,412			33,225			—		73,479
Total current liabilities		12,492			66,217			148,946			—		227,655
Long-term debt, less current maturities		462,350			185			91			—		462,626
Other non-current liabilities		(22,880	)		7,061			19,413			—		3,594
Intercompany (receivable)/ payable		(316,496	)		(319,023	)		635,519			—		—
Total liabilities		135,466			(245,560	)		803,969			—		693,875
Stockholder’s equity (deficit)		70,368			219,693			(260,414	)		40,721		70,368
Accumulated other comprehensive income (loss)		(15,447	)		23,759			(22,146	)		—		(13,834	)
Total liabilities and stockholder’s equity (deficit)	$	190,387		$	(2,108	)	$	521,409		$	40,721	$	750,409

~~Income~~Item ~~Statement as of December 31, 2002 (Restated)~~9.

		Viasystems, Inc.			Total Guarantor			Total Non- Guarantor			Eliminations			Viasystems, Inc. Consolidated
Net sales	$	—		$	427,833		$	483,932		$	(47,718	)	$	864,047
Operating expenses:		—
Cost of goods sold		—			386,265			359,255			(47,718	)		697,802
Selling, general and administrative		11,179			23,297			53,684			—			88,160
Depreciation		281			8,512			65,428			—			74,221
Amortization		213			350			15,781			—			16,344
Restructuring and impairment charges		639,059			(96,316	)		(490,046	)		—			52,697
Goodwill impairment		—			13,214			23,496			—			36,710
Loss on dispositions of businesses, net		—			41,776			43,755			—			85,531
Operating (loss) income		(650,732	)		50,735			412,579			—			(187,418	)
Other expenses (income):
Interest income expense		71,164			(31,059	)		41,793			—			81,898
Amortization of deferred financing costs		4,930			—			25			—			4,955
Reorganization expenses		22,537			—			—			—			22,537
Other expense (income), net		(10,920	)		—			10,020			—			(900	)
Equity earnings (loss) in subsidiaries		452,590			367,637			—			(820,227	)		—
Income (loss) before income taxes		(285,853	)		449,431			360,741			(820,227	)		(295,908	)
Income taxes (benefit)		10,055			(3,159	)		(6,896	)		—			—
Net (loss) income	$	(295,908	)	$	452,590		$	367,637		$	(820,227	)	$	(295,908	)

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Income Statement as of December 31, 2003 (Restated)

		Viasystems, Inc.			Total Guarantor			Total Non- Guarantor			Eliminations			Viasystems, Inc. Consolidated
Net sales	$	—		$	328,641		$	488,632		$	(65,790	)	$	751,483
Operating expenses:
Cost of goods sold		—			293,892			369,444			(65,790	)		597,546
Selling, general and administrative		267			30,085			33,767			—			64,119
Stock compensation expense		1,383			—			—			—			1,383
Depreciation		—			3,406			62,664			—			66,070
Amortization		195			—			2,870			—			3,065
Restructuring and impairment charges		2,089			15,201			48,909			—			66,199
Goodwill impairment		—			(155	)		22,852			—			22,697
Loss (gain) on dispositions of businesses, net		—			114			1,112			—			1,226
Operating loss		(3,934	)		(13,902	)		(52,986	)		—			(70,822	)
Other expenses (income):
Interest income expense net		22,621			(31,115	)		38,223			—			29,729
Amortization of deferred financing costs		104			—			—			—			104
Reorganization expenses		55,255			—			—			—			55,255
Loss from debt forgiveness		1,517			—			—			—			1,517
Other expense (income), net		16,627			28,850			(38,595	)		—			6,882
Equity earnings (loss) in subsidiaries		(49,517	)		(47,046	)		—			96,563			—
Income (loss) before income taxes		(149,575	)		(58,683	)		(52,614	)		96,563			(164,309	)
Income taxes (benefit)		14,734			(9,166	)		(5,568	)		—			—
Net (loss) income	$	(164,309	)	$	(49,517	)	$	(47,046	)	$	96,563		$	(164,309	)

Income Statement as of December 31, 2004

		Viasystems, Inc.			Total Guarantor			Total Non- Guarantor			Eliminations			Viasystems, Inc. Consolidated
Net sales	$	—		$	407,551		$	599,020		$	(105,208	)	$	901,363
Operating expenses:
Cost of goods sold		—			357,043			476,414			(105,208	)		728,249
Selling, general and administrative		442			32,564			44,971			—			77,977
Stock compensation expense		3,837			—			—			—			3,837
Depreciation		—			1,588			46,644			—			48,232
Amortization		124			—			1,446			—			1,570
Restructuring and impairment charges		1,374			508			(869	)		—			1,013
Goodwill impairment		—			—			—			—			—
Loss (gain) on dispositions of businesses, net		—			300			(765	)		—			(465	)
Operating loss		(5,777	)		15,548			31,179			—			40,950
Other expenses (income):
Interest income expense net		30,225			(31,014	)		38,607			—			37,818
Amortization of deferred financing costs		1,305			—			—			—			1,305
Reorganization expenses (reversals)		(9,776	)		—			—			—			(9,776	)
Other expense (income), net		1,570			80,297			(82,854	)		—			(987	)
Equity earnings (loss) in subsidiaries		(10,367	)		36,911			—			(26,544	)		—
Income (loss) before income taxes		(39,468	)		3,176			75,426			(26,544	)		12,590
Income taxes (benefit)		(45,216	)		13,543			38,515			—			6,842
Net (loss) income	$	5,748		$	(10,367	)	$	36,911		$	(26,544	)	$	5,748

Statement of Cash Flows as of December 31, 2002 (Restated)

		Viasystems, Inc.			Total Guarantor			Total Non- Guarantor			Eliminations		Viasystems, Inc. Consolidated
Net cash provided by (used in) operating activities	$	(16,200	)	$	6,565		$	18,410		$	—	$	8,775
Net cash provided by (used in) investing activities		—			(1,570	)		(22,218	)		—		(23,788	)
Net cash provided by (used in) financing activities		73,664			(6,724	)		(31	)		—		66,909
Effect of exchange rate changes on cash and cash equivalents		—			—			(3,038	)		—		(3,038	)
Net change in cash and cash equivalent	$	57,464		$	(1,729	)	$	(6,877	)	$	—	$	48,858

Statement of Cash Flows as of December 31, 2003 (Restated)

		Viasystems, Inc.			Total Guarantor			Total Non- Guarantor			Eliminations		Viasystems, Inc. Consolidated
Net cash provided by (used in) operating activities	$	(46,735	)	$	60,661		$	34,484		$	—	$	48,410
Net cash provided by (used in) investing activities		—			(23,075	)		(23,949	)		—		(47,024	)
Net cash provided by (used in) financing activities		(15,082	)		(142	)		221			—		(15,003	)
Effect of exchange rate changes on cash and cash equivalents		—			—			(6,767	)		—		(6,767	)
Net change in cash and cash equivalents	$	(61,817	)	$	37,444		$	3,989		$	—	$	(20,384	)

Statement of Cash Flows as of December 31, 2004

		Viasystems, Inc.			Total Guarantor			Total Non- Guarantor			Eliminations		Viasystems, Inc. Consolidated
Net cash provided by (used in) operating activities	$	(983	)	$	(13,366	)	$	80,266		$	—	$	65,917
Net cash provided by (used in) investing activities		—			(1,050	)		(70,883	)		—		(71,933	)
Net cash provided by (used in) financing activities		—			56,436			(32	)		—		56,404
Effect of exchange rate changes on cash and cash equivalents		—			—			(173	)		—		(173	)
Net change in cash and cash equivalents	$	(983	)	$	42,020		$	9,178		$	—	$	50,215

10. Prepackaged Plan of Reorganization

Summary of the Plan

On October 1, 2002, Group and Viasystems filed a joint prepackaged plan of reorganization, as modified on January 2, 2003 (the Plan), pursuant to a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code (the Bankruptcy Code) in the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court). Other than Viasystems, none of Group’s subsidiaries filed for protection under the Bankruptcy Code.

On January 14, 2003, the Bankruptcy Court entered an order approving and confirming the Plan. Subsequently, on January 31, 2003, the Plan became effective and in accordance with the terms and conditions of the Plan:

· Viasystems’ outstanding Credit Agreement debt was reduced by $77.4 million from proceeds of the Rights Offering and Exchange described below and was restructured to provide for an aggregate term loan facility of $447.9 million and a revolving facility of $51.3 million with a letter of credit subfacility of $15.0 million (the Exit Facility);

· Viasystems’ Senior Unsecured Notes were cancelled, and in exchange the holders thereof received (a) approximately 1.2 million shares of New Junior Preferred Stock (as defined below) having a liquidation preference of $120.1 million and (b) approximately 1.6 million shares of New Common Stock (as defined below);

· Claims held by the Department of Trade and Industry of the United Kingdom (the DTI), pursuant to a guaranty made by Viasystems with respect to a £12.0 million loan made by the DTI to Viasystems Tyneside Limited (VTL), were cancelled, and in exchange the DTI received a note (the DTI Note) in an amount equal

to £9.0 million with interest payable semi-annually in cash on a current basis at an annual interest rate of three percent for periods up to September 30, 2008 and at an annual interest rate equal to the Bank of England Base Rate plus two percent for periods thereafter and principal payable from December 31, 2008 through December 31, 2010 (provided all amounts due and owing under the Exit Facility are not paid in full prior to October 1, 2008); provided, however, proceeds received by the DTI pursuant to the liquidation of VTL were used to reduce the outstanding principal under the DTI Note;

· Viasystems’ Subordinated Notes in the principal amount of $500.0 million were cancelled, and in exchange the holders thereof received 17.2 million shares of the New Common Stock;

· Claims held by the general unsecured creditors of Group were cancelled, and in exchange such holders were given the right to receive the lesser of (a) its pro rata share of 55,540 shares of the New Common Stock and (b) shares of the New Common Stock having a value equal to the amount of such holder’s claim;

· Claims held by the general unsecured creditors of Viasystems were 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 at an annual interest rate of three percent for periods up to September 30, 2008 and at an annual interest rate equal to the prime commercial lending rate per annum published in The Wall Street Journal, New York City edition, for periods thereafter and principal payable from December 31, 2008 through December 31, 2010;

· The Series B Preferred Stock of Group was cancelled, and in exchange the holders thereof received warrants (the New Warrants) to purchase approximately 1.4 million shares of the New Common Stock at a purchase price of $25.51 per share;

· The existing common stock, options and warrants of Group were cancelled, and the holders thereof did not receive any distribution under the Plan; and

· Group adopted an incentive option plan authorizing the issuance of stock options to purchase up to approximately 2.8 million shares of New Common Stock to employees of Group and its subsidiaries, and, on the effective date of the reorganization, issued options to acquire approximately 2.2 million of such shares to employees at an exercise price of $12.63 per share. The value of these shares was determined by a third party, on the basis of total enterprise value of approximately $828 million.

In addition, under the terms of the plan of reorganization, (1) Group issued rights to purchase approximately 4.3 million shares of Group class B senior convertible preferred stock at an aggregate purchase price of $53.7 million to HMTF, certain affiliates of GSCP (NJ), Inc. (GSC), TCW Share Opportunity Fund III, L.P., and other holders of the Subordinated Notes (the Rights Offering) and (2) $23.7 million of bank debt outstanding under the 2002 Credit Agreement held by HMTF was exchanged for approximately 1.9 million shares of New Common Stock. Affiliates of HMTF, certain affiliates of GSC, and TCW Share Opportunity Fund III, L.P. severally committed to purchase all of the Group class B senior convertible preferred stock offered in the Rights Offering. In consideration for their commitment, the parties received an aggregate fee of approximately $1.0 million. All proceeds of the Rights Offering were applied to reduce the outstanding indebtedness under the 2003 Credit Agreement.

The reorganization did not qualify for “Fresh-Start” accounting as the holders of existing voting shares immediately before confirmation received more than 50% of the voting shares of the emerged entity due to the exchange of debt securities held by such holders and their participation in the Rights Offering described above.

On January 31, 2003, in accordance with the terms and conditions of the Plan, Group issued approximately 20.7 million shares of common stock of Group (the New Common Stock), approximately 4.3 million shares of senior convertible preferred stock of Group (the New Senior Convertible Preferred Stock), approximately 1.2 million shares of junior preferred stock of Group (the New Junior Preferred Stock), New Warrants to purchase approximately 1.4 million shares of New Common Stock of Group, and options under the Incentive Option Plan to purchase approximately 2.2 million shares of New Common Stock. All the agreements and other documents evidencing the previously outstanding rights of any holder of an equity interest in Group, including options and warrants to purchase equity interest, were cancelled. Additionally, all of the agreements and other documents

evidencing the rights of any holder of a claim against Viasystems or Group in respect to the Senior Notes and the Subordinated Notes of Viasystems were cancelled.

Liabilities Subject to Compromise

The Company incurred reorganization expenses as follows:

	December 31,
		2002		2003
Professional and bank fees	$	22,537	$	4,391
Insurance of a promissory note to the DTI, net*		—		7,735
Write-off of deferred financing fees, discount and premium related to debt forgiveness*		—		42,593
Other reorganization expenses*		—		536
Total	$	22,537	$	55,255

______________

* Non-cash item.

11. Restructuring and Impairment Charges

In light of the economic downturn that began in 2000 and continued into early 2003 related to many of the Company’s key telecommunication and networking customers, and the shift of production demand from high cost countries to low cost countries, the Company initiated restructuring activities during 2001 to adjust its cost position compared to anticipated levels of business. The Company also reviewed the carrying value of the related assets. These actions resulted in plant shutdowns and downsizings as well as asset impairments. These actions continued through 2004. The following table summarizes the restructuring and impairment charges taken during the years ended December 31:

	Charges (Reversals)
		2002		2003		2004
Personnel and severance	$	11,458	$	827	$	2,057
Lease and other contractual commitments		7,701		—		(5,861	)
Other		1,347		—		253
Asset impairments		32,191		65,372		4,564
Total	$	52,697	$	66,199	$	1,013

2002 Restructuring and Impairment Charges

During the year ended December 31, 2002, the Company completed the following restructuring activities:

· Closure of its remaining San Jose, California printed circuit board assembly facility;

· Closure of its Granby, Quebec printed circuit board fabrication facility;

· Closure of its regional headquarters facilities in Richmond, Virginia and London, England; and

· Other small workforce reductions at other European and North American EMS facilities.

During 2002, the Company also reversed restructuring charges totaling $6,194 primarily related to accruals no longer needed due to the sales of certain businesses as well as true-ups to previously estimated amounts.

In addition to and in connection with the above 2002 restructuring activity, 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 and San Jose, California facilities were impaired as the carrying amount of these assets exceeded the undiscounted cash flows expected to be generated by these assets. Accordingly, the Company had these assets appraised based on prices for similar assets in use, resulting in an impairment charge totaling $9,024.

In connection with the closure of the Company’s Granby, Quebec printed circuit board fabrication facility, during the fourth quarter of 2002, the Company engaged a broker to sell the related building. As such, the Company recorded an impairment charge of $1,735 to write down the building to its expected fair value.

Also during the fourth quarter of 2002, the Company began marketing for sale its Portland, Oregon printed circuit board assembly facility. As a result, the Company wrote down the net assets to their expected fair value of $1,500 resulting in an impairment charge of $21,432. Subsequent to December 31, 2002, the Company sold its entire equity interest of Viasystems Portland, Inc. for a consideration of $1,370, consisting of $370 in cash and a $1,000 secured promissory note resulting in a loss on disposition of assets of $1,226 in 2003.

To summarize, in 2002, the Company either closed or disposed of fourteen facilities (Milford, Massachusetts; San Jose, California; Seattle, Washington; Ballynahinch, United Kingdom; Columbus, Ohio; Sao Paulo, Brazil; Granby, Quebec; Boldon, United Kingdom; Portland, Oregon; Rouen, France; Terni, Italy; Spartanburg, South Carolina; Skive, Denmark; and the Plastics division of NC&S located in Coventry, United Kingdom) and took a restructuring charge of $37,529. Additionally, in 2002 the Company either downsized or incurred impairment charges in respect of five facilities (Juarez, Mexico; Milwaukee, Wisconsin; Coventry, United Kingdom; Richmond, Virginia; and St. Louis, Missouri) at a cost of $15,168.

In connection with the closure of the Granby, Quebec facility and sale of the Portland, Oregon facility, the Company scrapped inventory of $1,357 and sold inventory written off in 2001 for a gain of $118, resulting in a net charge to cost of goods sold of $1,239 in 2002.

2003 Restructuring and Impairment Charges

During the quarter ended September 30, 2003, the Company recorded a personnel and severance restructuring charge of $827 related to the downsizing of the Montreal, Quebec printed circuit board fabrication facilities.

Over the past several years, beginning in 2001, the telecommunications and computer markets have experienced a significant economic downturn. Due to this downturn the Company has closed and restructured numerous plants under the belief that this downturn was temporary and the cost structure had to be reduced in light of the market’s decreased demands. To compound the negative impact of such downturn, the U.S. dollar (“USD”) weakened during the second half of 2003. This weakening caused the cost of certain local currencies (primarily the Canadian dollar and the Euro) to increase. As the Company’s costs are primarily in local currencies and their sales are primarily in USD, its cash flows have been negatively impacted.

During the quarter ended June 30, 2003, an impairment charge of $6,588 was recorded to write down the assets held for sale related to the Richmond, Virginia printed circuit board fabrication facility, to an offer price received by the Company for the property by a third party. This transaction ultimately failed to close. The Company continues to actively market this property. As of December 31, 2004, this facility is recorded as an other asset in the Company’s consolidated balance sheet.

During the quarter ended September 30, 2003, in connection with the closure of the Granby, Quebec printed circuit board fabrication facility in 2002, the Company also recorded an asset impairment charge of $358 to write down to fair value the assets being held for sale related to the operation. The Company is actively marketing this property.

During the Company’s 2004 budgeting process conducted in the quarter ended December 31, 2003, the Company concluded that the cash flows at Echt, the Netherlands and Montreal, Quebec would be impacted beyond the near term. In addition, due to business conditions at the Company’s Milwaukee, Wisconsin facility, the Company expected the facility to fail to generate meaningful, if any, cash flow in the foreseeable future.

Based on the Company’s future cash flow analysis prepared under SFAS No. 144, it was determined that the fixed asset groupings at Echt, Montreal, and Milwaukee were impaired. The Company utilized recent auction prices or appraisals for similar equipment and buildings as a basis for the fair value of the individual pieces of equipment and buildings. Accordingly, the fixed asset grouping at Echt, Montreal, and Milwaukee were written down by $28,285, $12,305 and $8,612, respectively.

2004 Restructuring and Impairment Charges

During the quarter ended June 30, 2004, the Company reversed an $85 personnel accrual and a $10 miscellaneous accrual for previous restructuring at its printed circuit board fabrication facility located in Granby, Quebec. In addition, the Company reversed a $6,069 restructuring accrual based on its release from an operating lease contract of a closed business.

During the quarter ended December 31, 2004, the Company completed the following restructuring activities:

· Downsizing of the Montreal, Quebec printed circuit board fabrication facilities requiring the recognition of a personnel and severance charge of $81.

· Downsizing of the corporate offices requiring the recognition of a personnel and severance charge of $508.

· Downsizing of the Echt, the Netherlands printed circuit board fabrication facilities requiring the recognition of a personnel and severance charge of $1,553.

Throughout the year ended December 31, 2004, the Company recognized $263 in restructuring expense in connection with the upkeep of assets being held for sale related to the closure of the Granby, Quebec printed circuit board fabrication facility in 2002. The Company is actively marketing this property. As of December 31, 2004, this facility is recorded as an other asset in the Company’s consolidated balance sheet. Additionally, the Company recognized $208 in restructuring expense in connection with satisfying contractual commitments of the previously closed Coventry, England manufacturing facility.

During the Company’s 2005 budgeting process conducted in the quarter ended December 31, 2004, the Company concluded that the cash flows at Echt, the Netherlands and Montreal, Quebec would be impacted beyond the near term. The expected future cash flows of the facilities were reviewed under the provisions of SFAS No. 144 resulting in an impairment charge of $3,121 and $1,443 for Echt and Montreal, respectively.

Below are tables summarizing restructuring and impairment accruals and the related activity as of and for the year ended December 31, 2002, 2003 and 2004:

			Year Ended							Cumulative
		Balance	December 31, 2002							Drawdowns							Balance
		at									Cash			Non-Cash			at
		12/31/01		Charges		Reversals			Total		Payments			Charges			12/31/02
Restructuring Activities:
Personnel and severance	$	7,570	$	12,751	$	(1,293	)	$	11,458	$	(8,568	)	$	—		$	10,460
Lease and other contractual commitments		7,343		11,588		(3,887	)		7,701		(3,276	)		—			11,768
Other		155		2,361		(1,014	)		1,347		(1,021	)		—			481
Asset impairments		—		32,191		—			32,191		—			(32,191	)		—
Total restructuring and impairment charges	$	15,068	$	58,891	$	(6,194	)	$	52,697	$	(12,865	)	$	(32,191	)	$	22,709

			Year Ended						Cumulative
			December 31, 2003						Drawdowns
		Balance											Restated			Balance
		at		Restated				Restated		Cash			Non-Cash			at
		12/31/02		Charges		Reversals		Total		Payments			Charges			12/31/03
Restructuring Activities:
Personnel and severance	$	10,460	$	827	$	—	$	827	$	(7,211	)	$	—		$	4,076
Lease and other contractual commitments		11,768		—		—		—		(2,208	)		—			9,560
Other		481		—		—		—		(467	)		—			14
Asset impairments		—		65,372		—		65,372		—			(65,372	)		—
Total restructuring and impairment charges	$	22,709	$	66,199	$	—	$	66,199	$	(9,886	)	$	(65,372	)	$	13,650

			Year Ended								Cumulative
		Balance	December 31, 2004								Drawdowns							Balance
		at										Cash			Non-Cash			at
		12/31/03		Charges		Reversals			Total			Payments			Charges			12/31/04
Restructuring Activities:
Personnel and severance	$	4,076	$	2,142	$	(85	)	$	2,057		$	(2,924	)	$	—		$	3,209
Lease and other contractual commitments		9,560		208		(6,069	)		(5,861	)		(2,052	)		—			1,647
Other		14		263		(10	)		253			(267	)		—			—
Asset impairments		—		4,564		—			4,564			—			(4,564	)		—
Total restructuring and impairment charges	$	13,650	$	7,177	$	(6,164	)	$	1,013		$	(5,243	)	$	(4,564	)	$	4,856

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. Expected cash payout of the accrued expenses is as follows:

Year Ended December 31,		Cash Payments
2005	$	3,664
2006		936
2007		256
Total	$	4,856

Identifiable Intangibles Impairment

In connection with the Company’s 2003 annual impairment testing required by SFAS No. 142, impairment was recognized on the Company’s intangible assets. When the Company acquired Echt and Montreal, the excess purchase price was allocated to goodwill, developed technologies and assembled workforce. Due to rapid technological changes as well as strategic decisions to migrate from western world manufacturing facilities to China-based manufacturing facilities, it became apparent that the remaining developed technologies balances, of $4,430 for Montreal and $3,420 for Echt, were impaired and should be written off.

As part of acquiring numerous printed circuit board assembly facilities, the Company was required to buy a license from the Lemelson Medical, Education & Research Foundation, Limited Partnership which is required in the inspection process of this product. This license was capitalized as an intangible and was being amortized over its life. On January 26, 2004, a U.S. District Court in Las Vegas ruled the 14 patents asserted by the Lemelson Partnership were invalid and unenforceable. Therefore as part of this analysis, the Company wrote off $1,374 related to this license in 2003.

No identifiable intangibles were deemed to be impaired during the annual impairment testing required by SFAS No. 142.

12. Dispositions of Businesses

In connection with the continued economic downturn that led to the Company’s restructuring and impairment activities, the Company evaluated alternatives to plant closures and workforce reductions. As a result, the Company sold six businesses, including its joint venture interest, during 2002. Also, during the fourth quarter of 2002, the Company finalized the dispositions of assets at several closed facilities. These actions resulted in net losses on dispositions of assets totaling $85,531.

The Company finalized the sale of the Portland, Oregon facility during December 2003. Upon completion of the transaction, the disposition resulted in a net loss of $1,226.

Below are tables summarizing the net loss on dispositions of businesses for the years ended December 31, 2002, 2003 and 2004:

Net Proceeds from					Net Proceeds from
Disposition					Disposition
Entity dispositions in 2002	Disposition Transaction		Loss (Gain) On Disposition			Net Cash*			Notes		Total
Viasystems Milford, Inc.	Sale	$	28,580		$	(1,460	)	$	500	$	(960	)
Viasystems Puerto Rico, Inc..	Sale		(152	)		1,996			300		2,296
Plastics Division of Viasystems EMS UK Ltd.	Sale		(107	)		91			—		91
Ballynahinch facility of Viasystems EMS UK Ltd.	Sale		(351	)		(1,000	)		—		(1,000	)
Viasystems EMS — Italian Srl	Sale		(822	)		(1,819	)		—		(1,819	)
JV equity interest in Raintherm Limited	Sale		(4,187	)		14,500			—		14,500
	Administrative
Viasystems EMS — France SARL	Receivership		24,245			(6,314	)		—		(6,314	)
Viasystems San Jose, Inc.	Closure		11,981			(94	)		—		(94	)
Columbus, Ohio facility of Viasystems Technologies Corp., LLC.	Closure		1,215			—			—		—
Chips Acquisition Limited/PCB Investments Ltd.	Waiving Of Notes		25,129			—			—		—
Total		$	85,531		$	5,900		$	800	$	6,700

				Net Proceeds from
				Disposition
Entity dispositions in 2003	Disposition Transaction		Loss On Disposition		Net Cash*		Notes		Total
Viasystems Portland, Inc.	Sale	$	1,226	$	370	$	—	$	370
Total		$	1,226	$	370	$	—	$	370

					Net Proceeds from
			Loss (Gain)		Disposition
Entity dispositions in 2004	Disposition Transaction		On Disposition			Net Cash*		Notes		Total
Telecom Division of Viasystems EMS UK Ltd..	Closure	$	(765	)	$	111	$	—	$	111
Viasystems Puerto Rico, Inc.	Waiving Of Notes	$	300		$	—	$	300	$	300
Total		$	(465	)	$	111	$	300	$	411

__________

* Cash proceeds from sale, net of cash in the entity upon disposition and fees paid related to transactions.

13. Commitments

The Company leases certain building and transportation and other equipment under capital and operating leases. Included in property, plant and equipment as of December 31, 2003 and 2004, were $932 and $1,671, respectively, of cost basis and $217 and $1,030, respectively, of accumulated depreciation related to equipment held under capital leases. Total rental expense under operating leases was $7,608, $6,870 and $8,022 for the years ended December 31, 2002, 2003 and 2004, respectively. Future minimum lease payments under capital leases and operating leases that have initial or remaining noncancelable lease terms in excess of one year are as follows:

Year Ended December 31,		Capital		Operating
2005	$	305	$	6,017
2006		277		4,643
2007		7		4,009
2008		—		2,810
2009		—		2,262
Thereafter		—		2,506
Total	$	589	$	22,247
Less: Amounts representing interest		34
Capital lease obligations	$	555

14. Contingencies

The Company provides that none of the directors and officers of the Company bear the risk of personal liability for monetary damages for breach of fiduciary duty as a director except in cases where the action involves a breach of the duty of loyalty, acts in bad faith or intentional misconduct, the unlawful paying of dividends or repurchasing of capital stock, or transactions from which the director derived improper personal benefits.

The Company has fully and unconditionally guaranteed the operating lease payments of the Milwaukee, Wisconsin facility through the year 2010. The total maximum payments from this guarantee is $8,558. As of December 31, 2004, no liability related to this guarantee has been established.

The Company is subject to various lawsuits and claims with respect to such matters as product liability, product development and other actions arising in the normal course of business. In the opinion of the Company’s management, the ultimate liabilities resulting from such lawsuits and claims will not have a material adverse effect on the Company’s financial condition and results of operations and cash flows.

The Company believes it is in material compliance with applicable environmental laws and regulations and that its environmental controls are adequate to address existing regulatory requirements.

15. Income Taxes

The Company accounts for income taxes in accordance with the provisions of SFAS No. 109, Accounting for Income Taxes. The benefit for income taxes for the years ended December 31, 2002, 2003 and 2004, consists of the following:

		2002			2003			2004
Current:
Federal	$	(6,592	)	$	(3,784	)	$	(7,553	)
State.		1,038			—			—
Foreign		4,579			4,989			9,669
		(975	)		1,205			2,116
Deferred:
Federal		—			—			—
State		—			—			—
Foreign		975			(1,205	)		4,726
		975			(1,205	)		4,726
	$	—		$	—			6,842

Reconciliation between the statutory income tax rate and effective tax rate is summarized below:

		2002			2003			2004
U.S. Federal statutory rate	$	(103,566	)	$	(57,508	)	$	4,406
State taxes, net of Federal benefit		(661	)		(4,561	)		(1,866	)
Foreign taxes in excess of U.S. statutory rate		(7,273	)		(2,611	)		(9,936	)
Amortization of intangibles		18,356			(1,317	)		1,599
Gain/(Loss) on investment in subsidiaries		38,052			(30,501	)		178,830
Change in the valuation allowance for deferred tax assets.		50,235			130,637			(308,339	)
Cancellation of indebtedness income		—			8,649			—
Capital losses		—			(39,325	)		129,250
Foreign tax credit carry forward		—			—			(3,678	)
Non-deductible items		—			—			7,032
Deemed dividend inclusions in US income		19,900			—			16,111
Branch and partnership loss		(15,384	)		—			(3,937	)
Other		341			(3,463	)		(2,630	)
	$	—		$	—		$	6,842

The tax effects of significant temporary differences representing deferred tax assets and liabilities at December 31 are as follows:

		2002			2003			2004
Deferred tax assets:
Accrued liabilities not yet deductible	$	16,763		$	18,779		$	11,129
Net operating loss carryforwards		410,015			485,164			320,086
AMT credit carryforwards		802			802			—
Property, plant and equipment		35,554			52,923			30,983
Capital loss carryforwards		126,391			165,716			37,246
Foreign tax credit carry forward		—			—			3,678
Other		12,163			14,702			412
		601,688			738,086			403,534
Valuation allowance		(576,652	)		(707,289	)		(398,950	)
		25,036			30,797			4,584
Deferred tax liabilities:
Intangibles		(5,825	)		(5,825	)		(283	)
Property, plant and equipment		(9,798	)		(12,827	)		(2,033	)
LIFO		(7,900	)		(7,894	)		(4,305	)
		(23,523	)		(26,546	)		(6,621	)
Net deferred tax assets (liabilities)	$	1,513		$	4,251		$	(2,037	)

The current deferred tax assets are included in prepaid expenses and other and the long-term deferred tax assets, consisting of net operating loss carryforwards, are in other assets in the consolidated balance sheets. The current deferred tax liabilities are included in accrued and other liabilities in the consolidated balance sheets.

Approximate domestic and foreign income (loss) before income tax provision are as follows:

	Year Ended December 31,
		2002			2003			2004
Domestic	$	(657,173	)	$	(86,788	)	$	14,433
Foreign		361,265			(77,521	)		(1,843	)
	$	(295,908	)	$	(164,309	)	$	12,590

As of December 31, 2004, the Company had the following net operating loss (NOL) carryforwards: $693,430 in the U.S., $5,365 in China, $88,425 in Luxembourg, $74,281 in Canada, $8,835 in Hong Kong, $14,579 in the U.K., and $14,455 in the Netherlands. The U.S. NOLs expire in 2019 through 2024 and the Canada NOLs expire in 2007 through 2011. All other NOLs carry forward indefinitely. The U.S. also has a capital loss carryforward of $26,000, which will expire in 2009. Approximately $361,117 of the Company’s U.S. capital loss expired unused in 2004. Canada has an investment tax credit carryforward of $1,191 that will expire in 2010 and a capital loss of $123,717 that will carry forward indefinitely. The Company has not recognized and does not anticipate recognizing a deferred tax liability for approximately $11,407 on undistributed earnings of its foreign subsidiaries because the Company intends to indefinitely reinvest the earnings.

In connection with the Reorganization completed on January 31, 2003, the Company believes more than a 50% change in ownership occurred under Section 382 of the Internal Revenue Code of 1986, as amended, and regulations issued thereunder. As a consequence, the utilization of the U.S. NOLs is limited annually to approximately $19.7 million per year (except to the extent the Company recognizes certain gains built in at the time of the ownership change), with any unused portion carried over to succeeding years. Any NOLs not utilized in a year can be carried over to succeeding years.

The Company has a tax holiday in China that allows a two-year tax exemption and three-year 50% reduction in the tax rate. The tax holiday began in 2001. If not for such tax holiday, the Company would have had $3,787 and $3,674 of additional income tax expense for December 31, 2003 and 2004, respectively, based on the applicable rates ranging from 15% to 27%.

On October 22, 2004, President Bush signed the American Jobs Creation Act (the “Act”), which includes numerous provisions that may affect business practices and accounting for income taxes. As of December 31, 2004 management is evaluating the Act to make a determination what, if any, effect the Act may have on the Company.

16. Derivative Financial Instruments

The Company accounts for derivative financial instruments under the provisions of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS No. 137 and SFAS No. 138 (collectively, the Statement). The Statement requires all derivatives to be recognized in the statement of financial position at fair value, with changes in the fair value of derivative instruments to be recorded in current earnings or deferred in accumulated other comprehensive loss, depending on whether a derivative is designated as and is effective as a hedge and on the type of hedging transaction.

The Company uses derivative instruments, primarily foreign exchange forward contracts, to manage certain of its foreign exchange rate risks. The Company’s objective is to limit potential losses in earnings or cash flows from adverse foreign currency exchange rate movements. The Company’s foreign currency exposures arise from transactions denominated in a currency other than an entity’s functional currency, primarily anticipated sales of finished product and the settlement of payables.

Generally, the Company applies hedge accounting as allowed by the Statement. For hedged forecasted transactions, hedge accounting is discontinued if the forecasted transaction is no longer intended to occur, and any previously deferred hedging gains or losses would be recorded to earnings immediately. Earnings impacts for all designated hedges are recorded in the consolidated statement of operations generally on the same line item as the gain or loss on the item being hedged. The Company records all derivatives at fair value as assets or liabilities in the consolidated balance sheet, with classification as current or long-term depending on the duration of the instrument.

At December 31, 2004, the net deferred hedging gain in accumulated other comprehensive loss was $0 as the contracts entered into during 2004 had expired. There was no hedge ineffectiveness during the years ended December 31, 2003 and 2004; and no derivative financial instruments were entered into during the year ended December 31, 2002. In addition, there were no hedging instruments outstanding at December 31, 2003 or 2004.

17. Business Segment Information

SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, establishes standards for reporting information about operating segments in annual financial statements and requires selected information about operating segments in financial reports issued to stockholders. It also establishes standards for related disclosures about products and services, geographic areas and major customers. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker or decision making group in deciding how to allocate resources and in assessing performance.

Prior to 2004, the Company reported its financial results in one reportable segment. The Company has reevaluated and restated its operating segments based on the application of SFAS No. 131, and determined that there are four reportable segments: (i) China Printed Circuit Boards, (ii) North America Printed Circuit Boards, (iii) European Printed Circuit Boards and (iv) Assembly. The other operating segments consists of the remaining operating segments, which include certain North American EMS operations. Following the planned closure of the North American and European Printed Circuit Board operations in 2005, the Company expects to have two remaining reportable segments - China Printed Circuit Boards and Assembly. Segment disclosures for 2003 and 2002 and have been restated to reflect the 2004 reportable segments.

China printed circuit boards, consists of the Company's printed circuit board fabrication manufacturing facilities located within China. These facilities provide comprehensive front-end engineering services, including, circuit board layout and related design services leading to manufacturing of multi-layer printed circuit boards and backpanels.

The Company's western world printed circuit board fabrication manufacturing facilities - North American Printed Circuit Board located in Montreal, Canada and European Printed Circuit Boards located in Echt, the

Netherlands provide comprehensive front-end engineering services, including, circuit board layout and related design services leading to manufacturing of multi-layer printed circuit boards and backpanels. On February 25, 2005 the Company announced its plan for the closure of the facilities located in Echt, the Netherlands and Montreal, Canada. See further discussion of the closures in Note 22.

The Assembly segment is composed of the assembly operations for three operating segments, which have been aggregated under SFAS No. 131, including wire harnesses and cable assemblies, backpanel assembly, printed circuit board assembly, custom enclosures and full system assembly and test. These assembly operations are conducted in facilities located in China and Mexico.

Following is the Company’s reportable segment information for the years ended December 31, 2002, 2003 and 2004, with the 2002 and 2003 amounts restated for the 2004 reportable segments. Intersegment sales are fully eliminated in consolidation. General corporate operating expenses are allocated to each operating segment based on sales. The accounting policies of the segments are the same as those described in Note 1. Segment data includes intersegment revenues and is eliminated in consolidation.

		China Printed Circuit Boards		North American Printed Circuit Boards(1)			European Printed Circuit Boards(1)			Assembly		Other			Eliminations			Total
Net Sales:
Year ended December 31, 2002	$	244,929	$	96,686		$	52,068		$	283,345	$	209,708		$	(22,689	)	$	864,047
Year ended December 31, 2003		288,018		55,650			50,673			306,978		76,502			(26,338	)		751,483
Year ended December 31, 2004		343,880		56,163			41,993			397,094		96,772			(34,539	)		901,363
Operating Income (Loss):
Year ended December 31, 2002		25,223		(39,736	)		(1,300	)		10,504		(182,109	)		—			(187,418	)
Year ended December 31, 2003		36,409		(59,793	)		(45,867	)		24,334		(25,905	)		—			(70,822	)
Year ended December 31, 2004		32,689		(14,386	)		(21,908	)		58,887		(14,332	)		—			40,950
Total Assets:
Year ended December 31, 2002		304,197		132,409			84,465			148,410		108,050			—			777,531
Year ended December 31, 2003		310,926		48,126			63,486			179,093		92,704			—			694,335
Year ended December 31, 2004		356,168		43,918			26,584			171,960		151,779			—			750,409
Total Capital Expenditures:
Year ended December 31, 2002		11,979		4,957			7,637			14,265		(9,150	)		—			29,688
Year ended December 31, 2003		26,883		(4,428	)		(5,258	)		10,147		790			—			47,506
Year ended December 31, 2004		49,495		5,714			4,650			10,928		1,219			—			72,006
Total Depreciation:
Year ended December 31, 2002		21,894		19,740			9,928			10,706		11,953			—			74,221
Year ended December 31, 2003		24,019		15,589			11,007			9,767		5,688			—			66,070
Year ended December 31, 2004		27,252		4,112			5,086			9,199		2,583			—			48,232
Total Amortization:
Year ended December 31, 2002		14,697		657			450			350		190			—			16,344
Year ended December 31, 2003		1,666		632			469			—		298			—			3,065
Year ended December 31, 2004		1,444		2			—			—		124			—			1,570

(1) On February 25, 2005 the Company announced the closure of the facilities located in Echt, the Netherlands and Montreal, Quebec. See further discussion of the closures in Note 22.

Net sales by country of destination are as follows:

	Year Ended December 31,
		2002		2003		2004
United States	$	461,283	$	384,786	$	416,457
United Kingdom		36,416		16,020		12,210
Canada		62,243		25,841		31,682
France		28,711		18,375		22,326
Malaysia		40,000		37,673		26,474
China		75,798		101,890		120,902
Germany		72,851		80,395		84,530
Other		86,745		86,503		186,782
Total	$	864,047	$	751,483	$	901,363

Net sales by product offering are as follows:

	Year Ended December 31,
		2002		2003		2004
Printed circuit boards	$	359,482	$	373,260	$	420,512
Wire harnesses and electro-mechanical solutions		504,565		378,223		480,851
Total.	$	864,047	$	751,483	$	901,363

Property, plant and equipment, net by country are as follows:

	Year Ended December 31,
		2003		2004
United States	$	3,171	$	5,704
China		160,305		181,394
Canada		13,319		14,652
Mexico		20,466		20,048
Other		15,911		11,966
Total	$	213,172	$	233,764

18. Concentration Of Business

During the years ended December 31, 2002, 2003 and 2004, sales to General Electric were 11.7%, 12.1% and 11.3%, respectively of net sales. No sales to any other customers represented over 10.0% of net sales for the years ended December 2002, 2003 and 2004.

The Company holds cash amounts in excess of federally insured amounts in certain bank accounts.

19. Retirement Plans

The Company has a defined contribution retirement savings plan (the Retirement Plan) covering substantially all domestic employees who meet certain eligibility requirements as to age and length of service. The Retirement Plan incorporates the salary deferral provision of Section 401(k) of the Internal Revenue Code and employees may defer up to 30% of compensation or the annual maximum limit prescribed by the Internal Revenue Code. The Company may contribute 1% of employees’ salaries to the Retirement Plan and matches a percentage of the employees’ deferrals. The Company may also elect to contribute an additional profit-sharing contribution to the Retirement Plan at the end of each year. The Company’s contributions to the Retirement Plan were $2,510, $503 and $506 for the years ended December 31, 2002, 2003 and 2004, respectively.

20. Research And Development

Research, development and engineering expenditures for the creation and application of new products and processes were approximately $10,405, $2,882 and $3,320 for the years ended December 31, 2002, 2003 and 2004, respectively. Research and Development is included in the selling, general and administrative line item on the statement of operations.

21. Related Party Transactions

Monitoring and Oversight Agreement

The Company entered into a ten-year monitoring and oversight agreement with an affiliate of Hicks, Muse, Tate and Furst (“HMTF”), effective as of January 31, 2003. The monitoring and oversight agreement obligates the Company to indemnify HMTF, its affiliates, and their respective directors, officers, controlling persons, agents and employees from and against all claims, liabilities, losses, damages, expenses and fees and disbursements of counsel related to or arising out of or in connection with the services rendered under the monitoring and oversight agreement and not resulting primarily from the bad faith, gross negligence, or willful misconduct of HMTF. The Company has accrued a fee of $1,375 and $2,875 at December 31, 2003 and 2004, respectively.

Consulting Arrangement

In connection with the Company’s restructuring activities, commencing December 2001, the Company engaged Katia Advisors LLC to provide sales and marketing consulting services related to strategic marketing opportunities. Such services were provided on a month-by-month basis and effective December 1, 2004 the Company discontinued using these services. As of December 1, 2004, the Company had paid Katia Advisors an aggregate of $520. These services were provided by Richard McGinn, a partner of Katia and a member of the board of directors of the Company.

Compensation of Directors

The chairman of the board receives an annual fee of $120 and directors (other than the Chairman) who are not executive officers receive an annual fee of $30. In addition, each audit committee member receives an annual fee of $10 and the Chairman of the audit committee receives an additional fee of $5. Directors are reimbursed for out-of-pocket expenses incurred in connection with attending meetings of the board and its committees and receive a per diem fee of $1 for additional time spent on the Company’s business. The Company also has granted 55,000 stock options with an exercise price of $12.63, which vest over a period of three years, to each of Mr. Steffen, Mr. McGinn, Mr. Vieser and Ms. Gulyas as compensation for their services as members of the board.

Rights Offering

On October 7, 2004, Group completed a Rights Offering whereby they sold 5,555,555 shares of common stock at $9.00 per share to current holders of stock. The proceeds, net of issuance costs, of $47,069, were contributed to the Company. In connection with such Rights Offering, Group paid certain affiliates of GSC a commitment fee of $1,000. The proceeds from such offering are being used for general working capital purposes and in the expansion of our printed circuit board operations in China.

Other

Certain affiliates of GSC are stockholders of Group and have the right together with certain other stockholders of Group to designate certain members of Group’s board of directors. An affiliate of GSC held an aggregate face amount of $640 and $5,000 of debt under the 2003 Credit Agreement as of December 31, 2003 and 2004, respectively.

In 2000, the Company acquired all of the outstanding shares of Wirekraft Industries, Inc., a wholly owned subsidiary of International Wire Group, Inc. ("IWG"), an affiliate of HMTF. IWG continued as an affiliate of HMTF until all interests were terminated in November of 2004. Mr. Hamwee and Mr. Cummings, both members of the Company's board of directors, are affiliates of GSC. GSC owns 16.8% of International Wire Group, Inc. and Mr. Hamwee is Chairman of the Board of International Wire Group, Inc. As of November 2004, Hicks Muse was no longer affiliated with International Wire Group, Inc.

The Company’s wire harness operations, in accordance with negotiated contract terms, purchased an aggregate of $35,628, $34,077 and $37,730 of product from International Wire Group, Inc. in 2002, 2003 and 2004 respectively. Viasystems had amounts due to International Wire Group, Inc. of $10,816 and $6,510 at December 31, 2003 and 2004, respectively.

22. Subsequent Events

On February 25, 2005, Group announced plans for the continued expansion of its facilities in China to meet the demands of its global customers. The Company also announced the closure of the three western world printed circuit board facilities located in Canada and the Netherlands. The Company estimates that the restructuring charges related to the closures will total approximately $50,000 of which $26,000 will result in future cash expenditures. It is expected that $23,000 of such restructuring charge will be related to the reduction of headcount and $27,000 will be related to asset write downs and impairments and other exit costs. The restructuring activities pursuant to these closures are expected to be substantially completed by the end of 2005 with cash expenditures expected through 2007.

ITEM 9. Changes in and Disagreements with Accountants on Auditing and Financial Disclosure

None.

ITEM 9A. Controls and Procedures

The Company carried out an evaluation, under the supervision and with the participation of the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(d) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act) as of December 31, 2004. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported on a timely basis and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure

A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. As of December 31, 2004, the company did not maintain effective controls over the accounting for goodwill. Specifically, goodwill impairments were not properly identified and calculated for 2002 through 2004. Further, it resulted in the restatement of the company’s consolidated financial statements for 2002 and 2003 and of the company’s interim financial statements for the second and third quarters of 2004. This control deficiency resulted in more than a remote likelihood that a material misstatement of annual or interim financial statements would not be prevented or detected. Accordingly, management determined that this control deficiency constituted a material weakness. Because of the material weakness, we have concluded that our disclosure controls and procedures were ineffective as of December 31, 2004.

To address this material weakness, subsequent to December 31, 2004, our Chief Executive Officer and Chief Financial Officer, in consultation with management, have taken action to address this control deficiency in the manner described below:

1. Performed an extensive evaluation of its goodwill accounts for each of its reporting units.

2. During the evaluation, the Company identified adjustments to the goodwill accounts that relate to prior periods.

3. Assessed the materiality of these adjustments with the Chief Executive Officer and the Chief Financial Officer and the Audit Committee and concluded that the historical consolidated financial statements indicated above should be restated.

4. Implemented detailed procedures to be followed in future periods to ensure that the annual goodwill impairment analysis is performed in a manner consistent with generally accepted accounting principles.

As a result of these actions, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.

PART III

ITEM 10. Directors And Executive Officers Of The Registrant

The following table sets forth the names and ages of each of the directors and the executive officers of Group and Viasystems, followed by a description of their business experience during the past five years. The positions held by the directors and executive officers are with Group and Viasystems, unless indicated otherwise. All executive officers are appointed by the board of directors of Group and Viasystems and serve at its pleasure. There are no family relationships among any of the executive officers. Unless indicated otherwise, each of the directors and executive officers is a U.S. citizen and the business address of each individual is 101 South Hanley Road, Suite 400, St. Louis, Missouri 63105.

Pursuant to the terms of the Stockholders’ Agreement, the board of directors of Group will consist of at least nine members, including the chief executive officer of the company and five designees of affiliates of Hicks, Muse, Tate & Furst Incorporated. See "Certain Relationships and Related Party Transactions — Stockholders Agreement."

Name	Age	Position
Non-Employee Directors
Christopher J. Steffen (1) (2)*	63	Chairman
Jack D. Furst	46	Director
Andrew S. Rosen (1)	36	Director
Robert F. Cummings Jr. (2)	55	Director
Diane H. Gulyas (2)	48	Director
Robert A. Hamwee (1)	34	Director
Richard A. McGinn (1) (2)	58	Director
Richard W. Vieser (2)	77	Director
Executive Officers
David M. Sindelar	47	Chief Executive Officer and Director
Timothy L. Conlon	53	President, Chief Operating Officer and Director
David J. Webster	42	Chief Administrative Officer
Joseph S. Catanzaro	52	Senior Vice President and Chief Financial Officer
Steven S.L. Tang	49	President — Asia Pacific Group
Gerald G. Sax	44	Senior Vice President — Supply Chain

(1) Member of the Group compensation committee.

(2) Member of the Group audit committee.

* Denoted financial expert of the audit committee and independent director.

Christopher J. Steffen has been Chairman of the board of directors since December 2003 and a director since October 2003. Mr. Steffen has been an advisor to Wall Street Management and Capital, Inc. since 2002. From 1993 to 1996, Mr. Steffen served as the Vice Chairman and Director of Citicorp and its principal subsidiary, Citibank, N.A. In 1993, Mr. Steffen served as Senior Vice President and Chief Financial Officer of Eastman Kodak. From 1989 to 1993, Mr. Steffen served as Executive Vice President and Chief Financial and Administrative Officer and Director of Honeywell, Inc. Mr. Steffen serves as director of Accelrys, Inc. He formerly served as Chairman of the board of directors of Veltri Metal Products, director and Chairman of the audit committee of Seminis, Inc. and as director and Chairman of the audit committee of UCMS Pty.

Jack D. Furst has been a director since February 2005 and was previously a director from the inception of Viasystems until 2002. Mr. Furst is a Partner of Hicks, Muse, Tate & Furst Incorporated and has held this position since 1989. Prior to joining Hicks Muse, Mr. Furst was a Vice President and subsequently a Partner of Hicks & Haas Incorporated from 1987 to 1989. From 1984 to 1986, Mr. Furst was a Merger and Acquisitions/Corporate Finance Specialist for The First Boston Corporation. Before joining First Boston, Mr. Furst was a Financial Consultant with Price Waterhouse, LLP. Mr. Furst serves on the board of directors of Home Interiors & Gifts, Inc. and Activant Solutions, Inc.

Andrew S. Rosen has been a director since November 2004 and is a Partner of Hicks Muse. Mr. Rosen has been with Hicks Muse since 1993 and has over 13 years of private equity experience. Prior to joining Hicks Muse, Mr. Rosen served as an Associate with the Carlyle Group, a Washington, DC-based private investment firm, where he was employed for three years.

Robert F. Cummings, Jr. has been a director since January 2003. In January 2005, he became a managing Director of GSC. Mr. Cummings served as Senior Advisor to GSC (a private asset management firm) in 2002. He is a member of GSC’s Board of Advisors and is the chairman of the GSC Risk Committee. For the prior 28 years, Mr. Cummings was with Goldman, Sachs & Co., where he was a member of the Corporate Finance Department, advising corporate clients on financing, mergers and acquisitions and strategic financial issues. Mr. Cummings was named a Partner of Goldman Sachs in 1986. He retired in 1998 and was retained as an Advisory Director by Goldman, Sachs & Co. to work with certain clients on a variety of banking matters through 2001. Mr. Cummings is a director of RR Donnelley & Sons Company, Axiohm Transaction Solutions, Inc. and Precision Partners, Inc. and is a member of the Board of Trustees of Union College.

Diane H. Gulyas has been a director since January 2003. Ms. Gulyas is Chief Marketing & Sales Officer of E.I. du Pont de Nemours and Company and has held such position since April 2004. Before being appointed Chief Marketing & Sales Officer, she was Group Vice President of DuPont Electronics and Communication Technologies, a position she had held since February 2002. Prior to that appointment, Ms. Gulyas served as Vice President and General Manager of the DuPont Advanced Fibers Businesses. Since 1978, Ms. Gulyas has held various positions with DuPont including Executive Assistant to the Chairman of the board and Global Business Director.

Robert A. Hamwee has been a director since January 2003. Mr. Hamwee joined GSC at its inception in 1994 and became a Managing Director in 2000. He currently manages the day-to-day activities of the controlled distressed debt securities group. Mr. Hamwee was previously with The Blackstone Group (a private investment and advisory firm), from 1992 to 1994 where he worked in the Merchant Banking Division. In addition, he worked on a wide range of assignments in the Mergers and Acquisitions and Restructuring Departments. Mr. Hamwee is Chairman of the board for Axiohm Transaction Solutions, Inc., Envirosource, Inc. and International Wire Group, Inc., and a director of RAM Holdings Limited, Scovill Fasteners, Inc., APW Ltd., Precision Partners, Inc. and Wright Line, LLC.

Richard A. McGinn has been a director since January 2003. Mr. McGinn has been a General Partner at RRE Ventures (a private company that invests in entrepreneurial information technology companies) since August 2001. From 1997 to October 2000, Mr. McGinn served as Chief Executive Officer of Lucent Technologies, Inc. From 1996 to 1997, Mr. McGinn served as President of Lucent Technologies, Inc. Mr. McGinn is a director of American Express Company.

Richard W. Vieser has been a director since 1997. Mr. Vieser is the retired Chairman of the board of Varian Medical Systems where he served from April 1999 to February 2003. From June 1985 to December 1989, Mr. Vieser served as Chairman of the board and Chief Executive Officer of FL Industries, Inc. (a manufacturer of electrical components). From September 1986 to December 1989, Mr. Vieser served as Chairman of the board and Chief Executive Officer of FL Aerospace (a manufacturer and developer of aviation lighting). From March 1987 to December 1989, Mr. Vieser served as Chairman, President and Chief Executive Officer of Lear Siegler, Inc. (a diversified manufacturing company). From April 1984 through June 1985, he served as President and Chief Operating Officer of McGraw-Edison Company. Mr. Vieser is Chairman Emeritus of Varian Medical Systems and is a director of Fisher Scientific.

David M. Sindelar has been a director since August 2001 and Chief Executive Officer since July 2001. Mr. Sindelar served as a director and executive officer when we filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code and throughout the bankruptcy proceedings described in “Our Bankruptcy and Reorganization.” He is the managing partner of Hanley Partners, Inc. (a firm that specializes in the acquisition and operation of commercial and industrial manufacturing companies). He also served as Senior Vice President from January 1997 through June 2001 and Chief Financial Officer since our inception through June 2001. Mr. Sindelar was Chief Executive Officer of International Wire Group, Inc. (a designer, manufacturer and marketer of bare and tin-plated copper wire and insulated copper wire) from July 2001 to September 2003, which filed for protection under Chapter 11 of the United States Bankruptcy Code on March 24, 2004. He was Chief Executive Officer of LLS Corp. from August 1999 to November 2002, which filed for protection under Chapter 11 of the United States

Bankruptcy Code on January 16, 2002. Mr. Sindelar was Senior Vice President and Chief Financial Officer of Berg Electronics Corp. from March 1993 through October 1998 and of Crain Industries, Inc. and Crain Holdings Corp. (a manufacturer, fabricator and distributor of polyurethane foam and foam products) from August 1995 through December 1997 and of Jackson Holding Company from February 1993 through August 1995.

Timothy L. Conlon has been a director, President and Chief Operating Officer since October 1998. Mr. Conlon served as a director and executive officer when we filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code and throughout the bankruptcy proceedings described in “Our Bankruptcy and Reorganization.” He is a partner of Hanley Partners, Inc. Prior to joining us, Mr. Conlon was employed as President and Chief Operating Officer of Berg Electronics Corp. from January 1997 through October 1998. Mr. Conlon also served as Executive Vice President and Chief Operating Officer of Berg Electronics Group, Inc., a wholly-owned subsidiary of Berg Electronics Corp., from October 1993 through January 1997. Prior to joining Berg Electronics Group, Inc., Mr. Conlon was employed as President of the Cutting and Welding Division of Thermadyne Industries, Inc. from April 1993 through October 1993. Prior to joining Thermadyne Industries, Inc., Mr. Conlon spent nine years in the electronic connector industry including serving as General Manager of the Information Technologies and Spectra strip divisions of Amphenol Corporation from 1990 through July 1992 and President of Cambridge Products (a manufacturer of electronic and communications connector products) from 1988 through 1989.

David J. Webster has been Chief Administrative Officer since May 2004. Mr. Webster served as an executive officer when we filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code and throughout the bankruptcy proceedings described in “Our Bankruptcy and Reorganization.” He also served as Senior Vice President from 1997 through May 2004. From 1997 to 2004, Mr. Webster was an executive officer of International Wire Group, Inc., which filed for protection under Chapter 11 of the United States Bankruptcy Code on March 24, 2004. Mr. Webster has been a partner of Hanley Partners, Inc. since its inception in 2001. From August 1999 through November 2002, Mr. Webster was Senior Vice President and a member of the board of directors of LLS Corp., which filed for protection under Chapter 11 of the United States Bankruptcy Code on January 16, 2002. From 1997 through 2001, Mr. Webster was a partner of Mills & Partners, Inc., and from 1997 through 1998 served as Senior Vice President of Berg Electronics Corp. During 1997, Mr. Webster served as Senior Vice President of Crain Industries, Inc. Prior to 1997, Mr. Webster was a partner in the law firm of Weil, Gotshal & Manges LLP.

Joseph S. Catanzaro has been Senior Vice President and Chief Financial Officer since September 2001. He also served as Senior Vice President — Finance of Group from June 1999 to September 2001. Mr. Catanzaro joined us in October 1998 in the position of Vice President of Business Services. Mr. Catanzaro served as an executive officer when we filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code and throughout the bankruptcy proceedings described in “Our Bankruptcy and Reorganization.” Prior to joining us, Mr. Catanzaro was Vice President of Finance of Berg Electronics Corp. from April 1993 to October 1998.

Steven S.L. Tang has been President — Asia Pacific since June 1999 and is responsible for the overall operations of our facilities on the continent of Asia. Mr. Tang served as an executive officer when we filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code and throughout the bankruptcy proceedings described in “Our Bankruptcy and Reorganization.” Prior to joining us, Mr. Tang served as a Managing Director for the Asian division of Utilux Asia Limited, an Australian connector manufacturing company, from January 1995 to July 1999. Prior to 1995, Mr. Tang held various positions, all in Asia, with companies such as Amphenol, Pace Inc., National Semiconductor and Honeywell. Mr. Tang is a director of Wanji Pharmaceutical Holdings Limited.

Gerald G. Sax has been Senior Vice President — Supply Chain since February 2003. He also served as Senior Vice President — Europe from July 1999 to January 2003. Mr. Sax served as an executive officer when we filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code and throughout the bankruptcy proceedings described in “Our Bankruptcy and Reorganization.” Mr. Sax joined us in November 1998 in the position of Vice President — Corporate Controller. Prior to joining us, Mr. Sax was Vice President — Corporate Controller for Berg Electronics Corp. from September 1995 to October 1998.

Code of Ethics and Business Conduct

The Company has recently adopted a Code of Ethics applicable to its Chief Executive Officer and senior financial officers. A copy of the Code of Ethics has been filed with the SEC as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004.

ITEM 11. Executive Compensation

Compensation of Directors and Executive Officers

The Chairman of the Board receives an annual fee of $120,000 and directors (other than the Chairman) who are not executive officers receive an annual fee of $30,000. In addition, each compensation and audit Committee Member receives an annual fee of $10,000 and the Chairman of the compensation and audit Committee receives an additional fee of $5,000. Directors are reimbursed for out-of-pocket expenses incurred in connection with attending meetings of the board and its committees and receive a per diem fee of $1,000 for additional time spent on our business beyond six regular meeting’s during a calendar year. We also have granted 55,000 stock options with an exercise price of $12.63, which vest over a period of three years, to each of our non-employee directors as compensation for their services as members of our board. In addition, the chairman of the Board received an additional 50,000 options with an exercise price of $12.63, which vest over a period of three years.

The following table sets forth the cash and non-cash compensation earned during the years ended December 31, 2002, 2003 and 2004 by our Chief Executive Officer and our four other most highly compensated executive officers.

Summary Compensation Table

							Long-Term
		Annual					Compensation
		Compensation					Awards
							Securities		All Other
							Underlying
Name and Principal Position	Year		Salary		Bonus (1	)	Options (2	)	Compensation (3	)
David M. Sindelar	2004	$	645,833	$	1,076,400		70,000		—
Chief Executive Officer	2003		550,000		598,000		350,000		—
	2002		550,000		275,000		—		—
Timothy L. Conlon	2004		550,000		643,500		70,000		—
President and Chief	2003		550,000		357,500		330,000		—
Operating Officer	2002		550,000		275,000		—		—
David J. Webster	2004		335,417		357,435		40,000		—
Chief Administrative Officer	2003		300,000		126,750		260,000		—
	2002		300,000		97,500		—		—
Joseph S. Catanzaro	2004		270,500		205,335		10,000		—
Senior Vice President and	2003		263,500		111,786		150,000		—
Chief Financial Officer	2002		257,000		83,525		—		—
Steven S. L. Tang	2004		430,324		251,740		70,000		—
President — Asia Pacific	2003		423,903		137,769		150,000		—
	2002		398,726		99,681		—		—

(1) The bonus amounts listed for 2002, 2003 and 2004 were paid in 2003, 2004 and 2005, respectively.

(2) Reflects options granted under our 2003 Stock Option Plan.

(3) We provide perquisites and other personal benefits to certain executives. The aggregate incremental costs of these benefits to us do not exceed the lesser of either $50,000 or 10% of the total of annual salary and bonus reported for each executive officer.

Aggregated Option Exercises in 2004 and Year End Option Values

The following table summarizes the number of options exercised during the year ended December 31, 2004 for the above named executive officers and the value of unexercised options as of December 31, 2004.

	Shares Acquired on Exercise(#)	Value Realized($)	Number of Securities Underlying Unexercised Options at Year End(#) Exercisable/Unexercisable	Value of Unexercised In-the-money Options at Year End (1) Exercisable/Unexercisable
David M. Sindelar	—	—	256,667 / 163,333	$0 / $0
Timothy L. Conlon	—	—	243,333 / 156,667	$0 / $0
David J. Webster	—	—	186,667 / 113,333	$0 / $0
Joseph S. Catanzaro	—	—	103,333 / 56,667	$0 / $0
Steven S. L. Tang	—	—	123,333 / 96,667	$0 / $0

(1) Based on a fair market value of $9.00, which was determined to be a reasonable estimate of Group's stock price as of October 1, 2004, the date of rights offering. For more information on the rights offering, see Note 21 of the consolidated financial statements. As of December 31, 2004, none of the options held by the named executive officers were in-the-money.

Benefit Plans

2003 Stock Option Plan

The Group 2003 Stock Option Plan provides for the award of incentive stock options, or ISOs, and non-qualified stock options, or NSOs. Subject to adjustment in the event of certain corporate transactions or events, a maximum of 2,777,778 shares of common stock is issuable under the 2003 Stock Option Plan. As of December 31, 2004, options to purchase an aggregate of 2,647,800 shares of common stock were outstanding. The exercise price of all outstanding options is $12.63 per share. Options issued under the plan that expire, are forfeited or otherwise terminate will again be available for grant under the 2003 Stock Option Plan. The plan is administered by the compensation committee of the board of directors of Group.

Generally, each option granted under the 2003 Stock Option Plan is required to expire on or before the tenth anniversary of the date of grant. The exercise price of each ISO is required to be not less than 100% of the fair market value of the underlying stock subject to the option on the date of grant. This minimum exercise price provision is increased, and other conditions and restrictions apply, with respect to awards granted to persons who own or are deemed to own more than 10% of the total combined voting power of all classes of stock of Group.

The 2003 Stock Option Plan provides for payment of the exercise price of options in the form of cash or, subject to the discretion of the compensation committee of the board of directors of Group, by delivery of shares of Group common stock.

The 2003 Stock Option Plan provides for the grant of ISOs only to employees of Group and its affiliates. NSOs may be granted to employees, or other persons providing services for Group or its affiliates.

Incentive Compensation Plan

Officers and other key employees designated by our chief executive officer are eligible to participate in our annual incentive compensation plan. The plan is administered by the compensation committee of our board of directors and participants under the plan may receive cash awards based on annual performance targets set by the compensation committee. The compensation committee may also make discretionary awards under the plan. The plan remains effective until terminated by the compensation committee.

Option Grants to Certain Non-Employee Directors

During 2003, certain non-employee members of our board of directors, consisting of Mr. Steffen, Ms. Gulyas, Mr. McGinn and Mr. Vieser, were granted an option to purchase 55,000 shares of our common stock at an exercise price of $12.63 per share.

During 2004, Mr. Steffen was granted an additional option to purchase 50,000 shares of our common stock at an exercise price of $12.63 per share.

Employment Agreements

David M. Sindelar Executive Employment Agreement

Mr. David M. Sindelar entered into an amended and restated executive employment agreement with Group and certain of its subsidiaries as of January 31, 2003, as amended. Pursuant to his employment agreement, Mr. Sindelar will serve as Chief Executive Officer of Group through January 31, 2006, unless terminated earlier by Group or Mr. Sindelar. Mr. Sindelar is required to devote the amount of time reasonably necessary to faithfully and adequately supervise the overall management of Group and its subsidiaries. Subject to the foregoing limitation on his activities, Mr. Sindelar is free to participate in other business endeavors.

The compensation provided to Mr. Sindelar under his executive employment agreement includes an annual base salary of not less than $920,000 (reduced by any amount of salary actually received by Mr. Sindelar in respect of his severance arrangement with International Wire Group, Inc. from October 16, 2003 to April 15, 2005), subject to upward adjustment at the sole discretion of the chairman of the board of directors of Group, as well as those benefits customarily accorded the executives of Group as long as the executive employment agreement is in force. In addition, Mr. Sindelar is entitled to an annual bonus in an amount determined in accordance with our incentive compensation plan for senior executives and reimbursement for expenses to own and maintain an automobile.

Mr. Sindelar's executive employment agreement also provides that if Mr. Sindelar's employment is terminated without cause, Mr. Sindelar will continue to receive his then current salary, which shall not be less than $920,000, together with his annual bonus amount, for a period of eighteen months following such termination. The executive employment agreement terminates upon Mr. Sindelar's death or his inability to perform his duties due to mental or physical incapacity for six consecutive months or any one hundred working days out of a twelve month period, and no further compensation shall be payable except that he or his estate, heirs or beneficiaries, as applicable, shall receive his then current salary, together with his annual bonus amount, for a period of 18 months, in addition to benefits otherwise specifically provided for. The agreement also provides medical benefits for his and his spouse's lifetime.

Timothy L. Conlon Executive Employment Agreement

Mr. Timothy L. Conlon entered into an amended and restated executive employment agreement with Group and certain of its subsidiaries as of January 31, 2003. Pursuant to his employment agreement, Mr. Conlon will serve as President and Chief Operating Officer of Group through January 31, 2006, unless terminated earlier by Group or Mr. Conlon. Mr. Conlon is required to devote the amount of time reasonably necessary to faithfully and adequately supervise the overall financial management of Group.

The compensation provided to Mr. Conlon under his executive employment agreement includes an annual base salary of not less than $550,000, subject to upward adjustment at the sole discretion of the Chief Executive Officer of Group, as well as those benefits customarily accorded the executives of Group as long as the executive employment agreement is in force. In addition, Mr. Conlon is entitled to an annual bonus in an amount determined in accordance with our incentive compensation plan for senior executives and reimbursement for expenses to own and maintain an automobile.

Mr. Conlon's executive employment agreement also provides that if Mr. Conlon's employment is terminated without cause, Mr. Conlon will continue to receive his then current salary, which shall not be less than $550,000, together with his annual bonus amount, for a period of eighteen months following such termination. The executive employment agreement terminates upon Mr. Conlon's death or his inability to perform his duties due to mental or physical incapacity for six consecutive months or any one hundred working days out of a twelve month period, and no further compensation shall be payable except that he or his estate, heirs or beneficiaries, as applicable, shall receive his then current salary for a period of eighteen months, in addition to benefits otherwise specifically provided for. The agreement also provides medical benefits for his and his spouse's lifetime.

David J. Webster Executive Employment Agreement

Mr. David J. Webster entered into an amended and restated executive employment agreement with Group and certain of its subsidiaries as of January 31, 2003. Pursuant to his employment agreement, Mr. Webster will serves as Chief Administrative Officer of Group through January 31, 2006, unless terminated earlier by Group or Mr. Webster. Mr. Webster is required to devote the amount of time reasonably necessary to faithfully and adequately supervise the overall management of Group and its subsidiaries. Subject to the foregoing limitation on his activities, Mr. Webster is free to participate in other business endeavors.

The compensation provided to Mr. Webster under his executive employment agreement includes an annual base salary of not less than $470,000 subject to upward adjustment at the sole discretion of the Chief Executive Officer of Group, as well as those benefits customarily accorded the executives of Group as long as the executive employment agreement is in force. In addition, Mr. Webster is entitled to an annual bonus in an amount determined in accordance with our incentive compensation plan for senior executives and reimbursement for expenses to own and maintain an automobile.

Mr. Webster's executive employment agreement also provides that if Mr. Webster's employment is terminated without cause, Mr. Webster will continue to receive his then current salary, which shall not be less than $470,000, together with his annual bonus amount, for a period of eighteen months following such termination. The executive employment agreement terminates upon Mr. Webster's death or his inability to perform his duties due to mental or physical incapacity for six consecutive months or any one hundred working days out of a twelve month period, and no further compensation shall be payable except that he or his estate, heirs or beneficiaries, as applicable, shall receive his then current salary, together with his annual bonus amount, for a period of 18 months, in addition to benefits otherwise specifically provided for. The agreement also provides medical benefits for his and his spouse's lifetime.

Joseph S. Catanzaro Executive Employment Agreement

Mr. Joseph S. Catanzaro entered into an amended and restated executive employment agreement with Group and certain of its subsidiaries as of January 31, 2003. Pursuant to his employment agreement, Mr. Catanzaro will serve as Senior Vice President and Chief Financial Officer of Group through January 31, 2006, unless terminated earlier by Group or Mr. Catanzaro. Mr. Catanzaro is required to devote the amount of time reasonably necessary to faithfully and adequately supervise the overall financial management of Group.

The compensation provided to Mr. Catanzaro under his executive employment agreement includes an annual base salary of not less than $257,000, subject to upward adjustment at the sole discretion of the Chief Executive Officer of Group, as well as those benefits customarily accorded the executives of Group as long as the executive employment agreement is in force. In addition, Mr. Catanzaro is entitled to an annual bonus in an amount determined in accordance with our incentive compensation plan for senior executives and reimbursement for expenses to own and maintain an automobile.

Mr. Catanzaro's executive employment agreement also provides that if Mr. Catanzaro's employment is terminated without cause, Mr. Catanzaro will continue to receive his then current salary, which shall not be less than $257,000 for a period of eighteen months following such termination. The executive employment agreement terminates upon Mr. Catanzaro's death or his inability to perform his duties due to mental or physical incapacity for six consecutive months or any one hundred working days out of a twelve month period, and no further compensation shall be payable except that he or his estate, heirs or beneficiaries, as applicable, shall receive his then current salary for a period of eighteen months, in addition to benefits otherwise specifically provided for. The agreement also provides medical benefits for his and his spouse's lifetime.

ITEM 12. Security Ownership Of Certain Beneficial Owners And Management

Group owns 100% of our capital stock. The following table sets forth, as of December 31, 2004, information regarding the beneficial ownership of Group's common stock by each person who beneficially owned more than 5% of any class of Group's voting securities and by its directors and named executive officers, individually, and by its directors and executive officers as a group.

	Amount and
	Nature of
	Beneficial	Percent of
	Ownership (1)	Common Stock
5% Stockholders:
Hicks Muse Parties (2)	18,838,641	59.9	%
c/o Hicks, Muse, Tate & Furst Incorporated 200 Crescent Court, Suite 1600 Dallas, Texas 75201 GSC Parties (3)	8,741,808	28.5	%
c/o GSC Partners 500 Campus Drive, Suite 220 Florham Park, New Jersey 07932
Fidelity Parties (5) c/o Fidelity Management & Research Company	1,803,390	6.2	%
82 Evanshire Street
Boston, Massachusetts 02109
Officers and Directors:
Jack D. Furst (4)	18,838,641	59.9	%
Andrew S. Rosen	—	—
Richard W. Vieser (6)	36,667	*
Robert F. Cummings	—	—
Diane H. Gulyas (6)	36,667	*
Robert A. Hamwee (3)	8,741,808	28.5	%
Richard A. McGinn (6)	36,667	*
Christopher J. Steffen (6)	53,333	*
David M. Sindelar (6)	256,667	*
Timothy L. Conlon (6)	243,333	*
David J. Webster (6)	186,667	*
Joseph S. Catanzaro (6)	103,333	*
Steven S. L. Tang (6)	123,333	*
Gerald G. Sax (6)	45,000	*
All executive officers and directors as a group (14 persons)	28,702,116	83.6	%

__________

* Represents less than 1%

(1) Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock and options, warrants or other convertible securities (such as the class B senior convertible preferred stock) that are currently exercisable or exercisable within 60 days of December 31, 2004 are deemed to be outstanding and to be beneficially owned by the person holding those options, warrants or other convertible securities for the purpose of computing the percentage ownership of that person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

(2) These figures include:

· 3,454,094 shares of common stock held of record by Hicks, Muse, Tate & Furst Equity Fund III, L.P., a limited partnership, of which the ultimate general partner is Hicks, Muse Fund III Incorporated, an affiliate of Hicks, Muse, Tate & Furst Incorporated.

· 93,681 shares of common stock held of record by HM3 Coinvestors, L.P., a limited partnership of which the ultimate general partner is Hicks, Muse Fund III Incorporated, an affiliate of Hicks, Muse, Tate & Furst Incorporated.

· 601,355 shares of common stock held of record by HMTF Equity Fund IV (1999), L.P., a limited partnership of which the ultimate general partner is Hicks, Muse (1999) Fund IV, LLC, an affiliate of Hicks, Muse, Tate & Furst Incorporated.

~~· 32,014 shares of common stock held of record by Hicks, Muse PG- IV (1999), C~~Item 9A.~~V., of which the ultimate general partner is HM Fund IV Cayman, LLC, an affiliate of Hicks, Muse, Tate & Furst Incorporated.~~

·Controls and 14,785 shares of common stock held of record by HM 4-SBS (1999) Coinvestors, L.P. a limited partnership of which the ultimate general partner is Hicks, Muse (1999) Fund IV, LLC, an affiliate of Hicks, Muse, Tate & Furst Incorporated.Procedures

· 9,826 shares of common stock held of record by HM 4-EQ (1999) Coinvestors, L.P., a limited partnership of which the ultimate general partner is Hicks, Muse (1999) Fund IV, LLC, an affiliate of Hicks, Muse, Tate & Furst Incorporated.73

~~· 4,259 shares of common stock held of record by HMTF Private Equity Fund IV (1999), L~~Item 9B.~~P., a limited partnership of which the ultimate general partner is Hicks, Muse (1999) Fund IV, LLC, an affiliate of Hicks, Muse, Tate & Furst Incorporated.~~

· 9,873,369 shares of common stock and 2,177,356 shares of class B senior convertible preferred stock (currently convertible into 2,577,902 shares of common stock) held of record by Pearl Street II, L.P., a limited partnership of which the ultimate general partner is Hicks, Muse Fund III Incorporated, an affiliate of Hicks, Muse, Tate & Furst Incorporated.Other Information

(3) These figures include:

· 654,801 shares of common stock held of record by GSC Partners CDO Fund, Limited, a Cayman Islands corporation, for which GSCP (NJ), L.P. is the collateral manager. GSCP (NJ), Inc. is the general partner of GSCP (NJ), L.P.

· 459,408 shares of common stock held of record by GSC Partners CDO Fund II, Limited, a Cayman Islands corporation, for which GSCP (NJ), L.P. is the collateral manager. GSCP (NJ), Inc. is the general partner of GSCP (NJ), L.P.

· 2,893,887 shares of common stock and 979,957 shares of class B senior convertible preferred stock (currently convertible into 1,160,230 shares of common stock) held of record by GSC Recovery II, L.P., a Delaware limited partnership. GSC Recovery II GP, L.P. is the general partner of GSC Recovery II, L.P.; GSC RII, LLC is the general partner of GSC Recovery II GP, L.P.; GSCP (NJ) Holdings, L.P. is the managing member of GSC RII, LLC; GSCP (NJ), L.P. is the manager of GSC Recovery II, L.P.; and GSCP (NJ), Inc. is the general partner of GSCP (NJ), L.P. and GSCP (NJ) Holdings, L.P.

· 4,357,448 shares of common stock and 503,215 shares of class B senior convertible preferred stock (currently convertible into 595,786 shares of common stock) held of record by GSC Recovery IIA, L.P., a Delaware limited partnership. GSC Recovery IIA GP, L.P. is the general partner of GSC Recovery IIA, L.P.; GSC RIIA, LLC is the general partner of GSC Recovery IIA GP, L.P.; GSCP (NJ) Holdings, L.P. is the sole member of GSC RIIA, LLC; GSCP (NJ), L.P. is the manager of GSC Recovery IIA, L.P.; and GSCP (NJ), Inc. is the general partner of GSCP (NJ), L.P. and GSCP (NJ) Holdings, L.P.

Each of Keith W. Abell, Alfred C. Eckert III, Robert A. Hamwee (a director of Viasystems), Richard M. Hayden, Thomas V. Inglesby, Matthew C. Kaufman, Christine K. Vanden Beukel, and Andrew Wagner are the executive officers and stockholders of GSCP(NJ), Inc. and the limited partners of GSCP (NJ), L.P. and GSCP (NJ) Holdings, L.P. By virtue of each of the above entities’ and individuals’ relationship with GSC Recovery II, L.P., GSC Recovery IIA, L.P., GSC Partners CDO Fund, Limited and GSC Partners CDO Fund II, Limited, each may be deemed to have shared voting and investment power over, and be the indirect beneficial owner of, the shares of common stock owned by GSC Recovery II, L.P., GSC Recovery IIA, L.P., GSC Partners CDO Fund, Limited and GSC Partners CDO Fund II, Limited. Each of the above entities and individuals disclaims beneficial ownership of the common stock except to the extent of each entity’s and individual’s pecuniary interest in such common stock.

(4) Mr. Furst is a partner, stockholder and member of the management committee of Hicks Muse and, accordingly, may be deemed to beneficially own all or a portion of the shares of Holding Common Stock beneficially owned by the Hicks Muse Parties described above. Mr. Furst disclaims beneficial ownership of shares of Group’s Common Stock not owned of record by him.

~~(5)~~PART ~~These figures include:~~III

~~· 1,026,780 shares of common stock held by Fidelity Advisor Series II: Fidelity Advisor High Income Advantage Fund~~Item 10.

~~· 55~~Directors,~~430~~ Executive ~~shares~~Officers ofand ~~common~~Corporate ~~stock held by Fidelity Advisor Series I: Fidelity Advisor Leveraged Company Stock Fund.~~Governance

~~· 721,180 shares of common stock held by Fidelity Securities Fund: Leveraged Company Stock Fund.~~74

~~The~~Item Fidelity entities identified above are either an investment company or a portfolio of an investment company registered under Section 8 of the Investment Company Act of 1940, as amended, or a private investment account advised by Fidelity Management & Research Company (“FMR Co11.”). FMR Co. is a Massachusetts corporation and an investment advisor registered under Section 203 of the Investment Advisers Act of 1940, as amended, and provides investment advisory services to each of such Fidelity entities identified above, and to other registered investment companies and to certain other funds which are generally offered to a limited group of investors. FMR Co. is a wholly-owned subsidiary of FMR Corp., a Delaware corporation.

~~(6) Represents shares of common stock issuable upon the exercise of options that are exercisable within 60 days.~~Executive Compensation

ITEM 13. Certain Relationships And Related Transactions

Purchases from International Wire Group, Inc.

In March 2000, Viasystems, Inc. acquired the wire harness business of International Wire Group, Inc., which at the time was an affiliate of Hicks Muse. Our wire harness operations, in accordance with a supply agreement entered into in connection with our acquisition of the wire harness business, purchased an aggregate of $37.7 million of insulated wire products from International Wire Group, Inc. in the year ended December 31, 2004. The terms of the supply agreement are consistent with terms prevailing in an arms length transaction. The negotiated terms of the supply agreement include the pricing, purchase commitment, payment, quality and liability terms.

Mr. Hamwee and Mr. Cummings, both members of our board of directors, are affiliates of GSC. GSC owns 16.8% of International Wire Group, Inc. and Mr. Hamwee is Chairman of the Board of International Wire Group, Inc. As of November 2004, Hicks Muse was no longer affiliated with International Wire Group, Inc.

Under the terms of the purchase agreement, International Wire Group, Inc. agreed to indemnify Viasystems. for various matters associated with the pre-acquisition operations of the wire harness business, including product liability claims related to hose assemblies manufactured by one of the acquired companies through 1997. Certain claims have been asserted against International Wire Group, Inc. by insurers as subrogees of their insured homeowners with respect to property damages arising from the failure of allegedly defective washing machine hose assemblies manufactured by one of the acquired companies. International Wire and its insurers have to date have defended and/or settled all such claims consistent with their indemnity obligations. International Wire filed for protection under Chapter 11 of the Bankruptcy Code on March 24, 2004. On August 5, 2004, International Wire’s plan of reorganization was confirmed and on October 20, 2004, International Wire emerged from bankruptcy. Under the terms of International Wire’s plan of reorganization, it assumed the obligations under its indemnity to us. While International Wire has advised us that it believes that it will be financially capable of honoring any further claims, there can be no assurance of the foregoing, in which case insurers could potentially assert claims directly against one of the acquired companies.

Stockholders Agreement

On January 31, 2003, we entered into a Stockholders Agreement with certain persons acquiring shares of Group capital stock in connection with the Reorganization, including Hicks Muse, which controls a majority of the voting stock of Group, and certain affiliates of GSC.

The Stockholders Agreement provides that our board of directors will be comprised of at least nine members as follows: our chief executive officer; five members designated for election by affiliates of Hicks Muse; and three members designated for election by affiliates of GSC and the other stockholder parties to the Stockholders Agreement other than Hicks Muse. In addition, affiliates of Hicks Muse, on the one hand, and affiliates of GSC and the other stockholder parties to the Stockholders Agreement other than Hicks Muse, on the other hand, have the right to jointly designate additional members to our board of directors. The five directors designated by affiliates of Hicks Muse are Mr. Furst, Mr. Rosen, Mr. McGinn, Mr. Vieser and Mr. Conlon. The three directors designated by affiliates of GSC and other non-Hicks Muse stockholders are Mr. Cummings, Mr. Hamwee and Ms. Gulyas. Mr. Steffen is a jointly nominated director and Mr. Sindelar holds the remaining seat as our chief executive officer. The Stockholders Agreement also provides that the compensation committee of our board of directors will be comprised of two members designated by the Hicks Muse board designees and one member designated by the GSC and non-Hicks Muse stockholders’ board designees, so long as such individuals are qualified to serve in such capacity.

To the extent that the affiliates of Hicks Muse or the affiliates of GSC and the other non-Hicks Muse stockholders dispose of shares of common stock held by them, such constituency’s right to designate directors for election (and to appoint compensation committee members) shall be reduced as follows:

Percentage of Common Stock Disposed of by Affiliates of Hicks Muse	Number of Designated Directors	Number of Compensation Committee Members
More than 20% but equal to or less than 40%	4	2
More than 40% but equal to or less than 60%	3	2
More than 60% but equal to or less than 80%	2	1
More than 80% but equal to or less than 90%	1	1
More than 90%	0	0

Percentage of Common Stock Disposed of by Affiliates of GSC and Other Non-Hicks Muse Stockholders	Number of Designated Directors	Number of Compensation Committee Members
More than 30% but equal to or less than 60%	2	1
More than 60% but equal to or less than 90%	1	1
More than 90%	0	0

Rights Offering

On October 7, 2004, Group completed a Rights Offering whereby they sold 5,555,555 shares of common stock at $9.00 per share to current holders of stock. The proceeds, net of issuance costs, of $47.1 million, was contributed to Viasystems. In connection with such Rights Offering, Group paid certain affiliates of GSC a commitment fee of $1.0 million. The proceeds from this offering are being used for general working capital purposes and in the expansion of our printed circuit board operations in China.

Monitoring and Oversight Agreement

Viasystems entered into a ten-year monitoring and oversight agreement with an affiliate of Hicks Muse, effective as of January 31, 2003. Under the monitoring and oversight agreement, Viasystems is required to pay Hicks Muse an annual fee, payable quarterly, for oversight and monitoring services equal to the lesser of (1) 2% of its consolidated EBITDA for such year and (2) $1.5 million. The fee is payable for the preceding year following the completion of the audited financial statements for the preceding year, provided that Hicks Muse may elect to defer the payment of their fees, in which case these amounts will become due and payable at such time as Hicks Muse elects to require the payment of these obligations. The monitoring and oversight agreement makes available the resources of Hicks Muse concerning a variety of financial and operational matters. Historically, these services have been provided not only by Mr. Furst and Mr. Rosen, outside the scope of their duties as our directors, but also from numerous other principals and employees of Hicks Muse. Mr. Furst and Mr. Rosen are each principals of Hicks Muse. Hicks Muse has performed various monitoring and oversight services, including providing input in management’s establishment of Viasystems’ financial and strategic acquisition plans. Hicks Muse monitors the viability and implementation of Viasystems’ strategic plan through actions such as review of monthly financial data, management briefings and facility visits. Hicks Muse is also entitled to reimbursement for any expenses incurred by it in connection with rendering services under the monitoring and oversight agreement. In addition, Viasystems, Inc. has agreed to indemnify Hicks Muse, its affiliates, and their respective directors, officers, controlling persons, agents and employees from and against all claims, liabilities, losses, damages, expenses and fees and disbursements of counsel related to or arising out of or in connection with the services rendered by Hicks Muse under the monitoring and oversight agreement and not resulting primarily from the bad faith, gross negligence, or willful misconduct of Hicks Muse.

Consulting Arrangement

In connection with our restructuring activities, commencing December 2001, Viasystems, Inc. engaged Katia Advisors LLC to provide sales and marketing consulting services related to strategic marketing opportunities. Such services were provided on a month-by-month basis and effective December 1, 2003, Viasystems, Inc. discontinued using these services. As of December 31, 2004, Viasystems had paid Katia Advisors an aggregate of $520,000. These services were provided by Richard McGinn, a partner of Katia and a member of our board of directors.

~~ITEM~~Item 1412. ~~Principal Accountant Fees and Services~~

~~The Audit~~Security ~~Committee~~Ownership ~~has considered whether the provision by PricewaterhouseCoopers LLP~~ of ~~the~~ ~~services~~Certain ~~covered~~Beneficial byOwners ~~the audit fees is compatible with maintaining the firm’s independence~~ and ~~concluded~~Management ~~that it is compatible.~~

~~The Audit Committee is responsible for pre-approving all auditing services~~ and ~~permitted~~ ~~non-auditing~~Related ~~services~~Stockholder to be performed by the Company’s independent auditors. The Chairman of the Audit Committee has authority to approve in advance all audit or non-audit services to be provided by the independent auditors if presented to the full Audit Committee at the next regularly scheduled meeting.Matters

~~Principal Accounting Fees~~ 95

~~The~~Item ~~following table sets forth fees billed to the Company for the years ended December 31, 2004 and 2003 by the Company’s principal accounting firm PricewaterhouseCoopers LLP:~~13.

	Year Ended December 31,
		2003		2004
Audit fees (1)	$	599,000	$	622,300
Audit related fees (2)		101,000		726,800
Tax fees (3)		19,943		64,181
All other fees		—		—
Total	$	719,943	$	1,413,281

Certain Relationships and Related Transactions, and Director Independence

(1) Includes professional services rendered for the audit of the Company’s consolidated annual financial statements and review of financial statements in the Company’s reports on Form 10-Q and services normally provided in connection with various accounting matters.97

~~(2) Includes professional services rendered for procedures performed in connection with statutory filings and review of various registration statements filed with the SEC~~Item 14.

~~(3)~~Principal Accountant ~~Includes~~Fees ~~professional services rendered for preparation of tax returns~~ and ~~consultation with the Company on various tax matters~~Services

~~Financial Information Systems Design and Implementation Fees~~99

PricewaterhouseCoopers LLP did not perform any services and therefore billed no fees relating to operating or supervising the operation of the Company’s information systems or local area network or for designing or implementing the Company’s financial information management systems during 2004.

PART IV

~~ITEM~~Item 15. ~~Exhibits, Financial Statement Schedules, and Reports on Form 8-K~~

~~(a) 1.~~Exhibits and Financial ~~Statements~~Statement Schedules

~~The information required by this item is included in Item 8 of Part II of this Form 10-K.~~99

2. Financial Statement Schedule

Schedule II — Valuation and Qualifying Accounts

For the Year Ended December 31

(In thousands)

Allowance for doubtful accounts		Beginning Balance		Acquisitions/ (Distributions)			Charges to Cost		Accounts written off			Translation Adjustments		Balance at End of Period
2002	$	15,654	$	(3,251	)	$	3,063	$	(5,091	)	$	518	$	10,893
2003	$	10,893	$	(942	)	$	6,259	$	(7,228	)	$	1,046	$	10,028
2004	$	10,028	$	(296	)	$	7,699	$	(3,932	)	$	328	$	13,827

Valuation Allowance for deferred tax assets		Beginning Balance		Acquisitions/ (Distributions	)		Charges to Cost			Extraordinary Items		Translation Adjustments		Balance at End of Period
2002	$	526,417	$	0		$	50,235		$	0	$	0	$	576,652
2003	$	576,652	$	0		$	130,635		$	0	$	0	$	707,287
2004	$	707,287	$	0		$	(308,339	)	$	0	$	0	$	398,948

3. Exhibits

The following exhibits are filed as part of this Registration Statement or incorporated by reference herein:

Exhibit No.		Exhibit Description
2.1	(1)	Prepackaged Joint Plan of Reorganization of Group, Inc. and Viasystems, Inc. under Chapter 11 of the Bankruptcy Code, dated August 30, 2002.
2.1(a)	(1)	Amended Motion of Debtors for Order Approving Modification to the Debtors’ Prepackaged Joint Plan of Reorganization, dated January 2, 2003.
3.1	(1)	Third Amended and Restated Certificate of Incorporation of Group, Inc.
3.2	(1)	Amended and Restated Bylaws of Group, Inc.
3.3	(2)	Amended and Restated Certificate of Incorporation of Viasystems, Inc.
3.4	(1)	Amended and Restated Bylaws of Viasystems, Inc.
4.1	(1)	Indenture, dated as of December 17, 2003, among Viasystems, Inc., the Guarantors party thereto, and The Bank of New York, as Trustee.
4.2	(1)	Form of 10.50% Senior Subordinated Note (included as Exhibit A to the Indenture filed as Exhibit 4.1 hereto)

Exhibit No.		Exhibit Description
10.1	(1)	Credit Agreement, dated as of January 31, 2003, among Group, Inc., Viasystems, Inc., the several banks and other financial institutions party thereto, and JPMorgan Chase Bank, as Administrative Agent.
10.1(a)	(1)	First Amendment, dated as of March 19, 2003, to the Credit Agreement, dated as of January 31, 2003, among Group, Inc., Viasystems, Inc., the several banks and other financial institutions party thereto, and JPMorgan Chase Bank, as Administrative Agent.
10.1(b)	(1)	Second Amendment, dated as of December 3, 2003, to the Credit Agreement, dated as of January 31, 2003, among Group, Inc., Viasystems, Inc., the several banks and other financial institutions party thereto, and JPMorgan Chase Bank, as Administrative Agent.
10.1(c)	(3)	Third Amendment, dated as of October 7, 2004, to the Credit Agreement, dated as of January 31, 2003, among Group, Inc., Viasystems, Inc., the several banks and other financial institutions party thereto, and JPMorgan Chase Bank, as Administrative Agent
10.1(d)	(3)	Fourth Amendment, dated as of March 18, 2005, to the Credit Agreement, dated as of January 31, 2003, among Group, Inc., Viasystems, Inc., the several banks and other financial institutions party thereto, and JPMorgan Chase Bank, as Administrative Agent
10.2	(1)	Guarantee and Collateral Agreement, dated as of January 31, 2003, among Group, Inc., Viasystems, Inc., the subsidiaries party thereto, and JPMorgan Chase Bank, as Collateral Agent.
10.3	(1)	Group, Inc. 2003 Stock Option Plan.
10.4	(1)	Amended and Restated Executive Employment Agreement, dated October 16, 2003, among Group, Inc., Viasystems, Inc., Viasystems Technologies Corp. LLC, the other subsidiaries party thereto, and David M. Sindelar.
10.5	(1)	Amended and Restated Executive Employment Agreement, dated January 31, 2003, among Group, Inc., Viasystems, Inc., Viasystems Technologies Corp. LLC, and Timothy L. Conlon.
10.6	(1)	Amended and Restated Executive Employment Agreement, dated January 31, 2003, among Group, Inc., Viasystems, Inc., Viasystems Technologies Corp. LLC, the other subsidiaries party thereto, and David J. Webster.
10.7	(1)	Amended and Restated Executive Employment Agreement, dated January 31, 2003, among Group, Inc., Viasystems, Inc., Viasystems Technologies Corp. LLC, and Joseph S. Catanzaro.
10.9	(1)	Monitoring and Oversight Agreement, made and entered into effective as of January 31, 2003, among Group, Inc., Viasystems, Inc., the subsidiaries party thereto, and Hicks, Muse & Co. Partners, L.P.
10.10	(1)	Registration Rights Agreement, dated as of December 17, 2003, among Viasystems International, Inc., Viasystems Milwaukee, Inc., Viasystems Technologies Corp. LLC, Wire Harness Industries, Inc., Wirekraft Industries, LLC, Goldman, Sachs & Co., J.P. Morgan Securities Inc. and Lehman Brothers Inc.
14.1	(3)	Code of Ethics for the Principal Executive Officer and Senior Financial Officers filed on Exhibit to Registrant’s Report on Form 10-K for the year ended December 31, 2004.
21.1	(2)	Subsidiaries of the Co-Registrants.

Exhibit No.		Exhibit Description
24.1	(2)	Powers of Attorney (included in the signature pages of this registration statement).
31.1	(3)	Chief Executive Officer’s Certification required by Rule 13(a)-14(a).
31.2	(3)	Chief Financial Officer’s Certification required by Rule 13(a)-14(a).
32.1	(3)	Chief Executive Officer Certification pursuant to 18 U.S.C. 1350, as adopted to section 906 of the Sarbanes-Oxley Act of 2002
32.2	(3)	Chief Financial Officer Certification pursuant to 18 U.S.C. 1350, as adopted to section 906 of the Sarbanes-Oxley Act of 2002

_________________

(1) Incorporated by reference to Registration Statement No. 333-113664 on Form S-1 of Group, Inc. filed on April 28, 2004.

(2) Incorporated reference to Registration Statement No. 333-114467 on Form S-4 of Viasystems, Inc. filed on July 12, 2004.

(3) Filed herewith.

Reports on Form 8-K

Filed February 14, 2005 as required by item 5.02. We announced the retirement of Mr. Thomas Hicks from our board of directors and the addition of Mr. Jack Furst.

Filed February 25, 2005 as required by items 2.05 and 9.01. We announced our continued expansion in China and the closure of the three printed circuit board facilities located in Echt, the Netherlands and Montreal, Quebec.

Filed March 24, 2005 as required by items 1.01, 2.05, 4.02 and 9.01. We announced the amendment to our credit agreement, management’s cost estimate to close the three western world printed circuit board facilities and the restatement of our previously issued financial statements as of and for the three and six months ended June 30, 2004 and the three and nine months ended September 30, 2004.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Clayton, State of Missouri, on the 29th day of March, 2005.100

~~Viasystems, Inc. /s/ David M. Sindelar /s/ Joseph S. Catanzaro David M. Sindelar Joseph S. Catanzaro Chief Executive Officer Senior Vice President and Chief Financial Officer~~EXHIBIT INDEX

~~Pursuant to the requirements of the Securities Act of 1934, this Report on Form 10-K has been signed by the following persons in the capacities indicated on the 29th day of March, 2005.~~ 101

~~/s/~~SUBSIDIARIES OF Christopher J. Steffen Christopher J. Steffen Chairman of the Board of Directors /s/ Jack D. Furst Jack D. Furst Director /s/ Andrew S. Rosen Andrew S. Rosen Director /s/ Robert F. Cummings, Jr. Robert F. Cummings, Jr. Director /s/ Diane H. Gulyas Diane H. Gulyas Director /s/ Robert A. Hamwee Robert A. Hamwee Director /s/ Richard A. McGinn Richard A. McGinn Director /s/ Richard W. Vieser Richard W. Vieser Director /s/ David M. Sindelar David M. Sindelar Chief Executive Officer and Director /s/ Timothy L. Conlon Timothy L. Conlon President, Chief Operating Officer and DirectorVIASYSTEMS

82 103

CERTIFICATIONS

104

PART I

CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING STATEMENTS

Statements made in this Annual Report on Form 10-K (“Report”) include the use of the terms “we” and “our” which unless specified otherwise refers collectively to Viasystems, Inc. (“Viasystems”) and its subsidiaries. Additionally, reference to “Group” refers to Viasystems’ holding company parent, Viasystems Group, Inc.

We have made certain “forward-looking” statements in this Report under the protection of the safe harbor of forward-looking statements within the meaning of the Private Securities Litigation Act. Such forward-looking statements include those statements made in the sections titled “Risk Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operations,” that are based on our management's beliefs and assumptions and on information currently available to our management. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, potential growth opportunities and 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,” “may,” “anticipates,” “intends,” “plans,” “estimates” or the negative thereof or other similar expressions or comparable terminology.

Forward-looking statements involve risks, uncertainties and assumptions and are not guarantees of future events and results. Actual results may differ materially from anticipated results expressed or implied 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 Report.

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, global economic conditions, fluctuations in our operating results and customer orders, 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 substantial indebtedness and our ability to comply with the terms thereof and control by our sole stockholder. Please refer to the “Risk Factors” section of this Report for the year ended December 31, 2008, for additional factors that could materially affect our financial performance.

Item 1.

Business

General

As of December 31, 2008, we have six manufacturing facilities located outside the United States to take advantage of low cost, high quality manufacturing environments, including five manufacturing sites in The People’s Republic of China (“China”) and one in Mexico. In addition, as of December 31, 2008, we had one manufacturing facility in Milwaukee, Wisconsin. In November 2008, we announced the planned closure of the Milwaukee, Wisconsin facility and its satellite final-assembly and distribution facility in Newberry, South Carolina, which we anticipate will cease operations in May 2009 and March 2009, respectively. In addition to our manufacturing facilities, in order to support our customers’ local needs, we maintain engineering and customer service centers in Hong Kong, China, the Netherlands, England, Canada, Mexico and the United States.

We are a supplier to over 125 manufacturers of original equipment in numerous end markets, including industry leaders Alcatel-Lucent SA, Bosch Group, Continental AG, Delphi Corporation, EMC Corporation, Ericsson AB, General Electric Company, Hewlett-Packard Company, Huawei Technologies Co. Ltd., Rockwell Automation, Inc., Siemens AG, Sun Microsystems, Inc., Tellabs, Inc. and TRW Automotive Holdings Corp. We have good working relationships with industry-leading contract manufacturers such as Celestica, Inc. and Jabil Circuit, Inc., and we supply PCBs and EMS products to these customers as well.

Our History

We are a direct, wholly owned subsidiary of Viasystems Group, Inc. (“Group”). Group was formed in 1996 under the name Circo Craft Holding Company. Circo Craft Holding Company had no operations prior to its first acquisition in October 1996, when it changed its name to Circo Technologies, Inc. In January 1997, Circo Technologies, Inc. changed its name to Viasystems Group, Inc.

We were formed on April 2, 1997, and are incorporated in Delaware. On April 10, 1997, Group contributed all of the capital stock of its then existing subsidiaries to us. From 1997 through 2001, we expanded rapidly through the acquisitions of several businesses throughout Europe, North America and China. During that time, we expanded our business model to include full systems assemblies, wire harnesses and cable assemblies to complement our original PCB and backpanel offerings.

From 1999 to 2001, our business was heavily reliant on the telecommunications and networking markets, as the majority of our customers were telecommunication and networking original equipment manufacturers. In early 2001, the telecommunications and networking industries began a significant business downturn caused by the decline in capital spending related to those industries. The decline in capital spending in the telecommunications and networking industries was exacerbated by excess inventories for those industries within the contract manufacturing supply chain. As a result of these and other factors, in January 2003, we reorganized under prepackaged Chapter 11 proceedings.

From April 2001 through 2005, we substantially restructured our operations and closed or sold 24 under-performing or non-strategic facilities. During that time, we streamlined our business to focus on PCBs, electro-mechanical solutions and wire harnesses, and we significantly diversified our end markets and customer base. In order to support our customers’ local needs, we elected to maintain engineering and customer service centers in Hong Kong, China, the Netherlands, England, Canada, Mexico and the United States.

During 2006, we sold our wire harness business. As a result of the disposal of the wire harness operations and our restructuring activities early in this decade, we are well positioned as a PCB and EMS manufacturer, principally in low cost areas of the world, with the ability to serve our global customer base. Our PCB and EMS products are supplied from our Printed Circuit Boards and Assembly segments, respectively.

In November 2008, in light of global economic conditions and our ongoing efforts to align capacity, overhead costs and operating expenses with market demand, we announced a planned 2009 closure of our manufacturing facility in Milwaukee, Wisconsin, and its satellite final-assembly and distribution facility in Newberry, South Carolina; as well as a planned work force reduction across our global operations, which began in November 2008 and is expected to be completed during the first half of 2009. Depending upon the length and severity of the current global economic turndown, further actions may be required to adjust our capacity and cost structure.

We are headquartered in St. Louis, Missouri. The mailing address for our headquarters is 101 South Hanley Road, Suite 400, St. Louis, Missouri 63105, and our telephone number at that location is (314) 727-2087. We can also be reached at our website, www.viasy stems.com.

Our Products

Printed Circuit Boards – PCBs serve as the foundation of almost all electronic equipment, providing the circuitry and mounting surfaces necessary to interconnect discrete electronic components, such as integrated circuits, capacitors and resistors. PCBs consist of a pattern of electrical circuitry etched from copper and laminated to a board made of insulating material, thereby providing electrical interconnection between the components mounted onto them.

Electro-Mechanical Solutions – Electro-mechanical solutions include a wide variety of products and services, primarily including assembly of backplanes, custom and standard metal enclosures, cabinets, racks and sub-racks, systems integration and assembly, final product testing and fulfillment.

Our Business Strategy

Our strategy is based on the following key goals and business drivers:

Maintenance of Diverse End Market and End Customer Mix – In order to reduce our exposure to, and reliance on, unpredictable end markets and to provide alternative growth paths, we have diversified our product offerings into the automotive, telecommunications, industrial/instrumentation, medical and consumer, and computer/datacommunications markets. Further, we have pursued new substantial customers in each market. We intend to continue to maintain our focus on a diverse mix of customers and end markets.

Enhancement of Our Strong Customer Relationships – We are focused on expanding our business with existing customers by leveraging our history of producing quality products with a high level of customer service and operational excellence, which provides us with the opportunity to bid for additional programs from the strong position of a preferred supplier. In addition, we have good working relationships with industry leading contract manufacturers such as Celestica, Inc. and Jabil Circuit, Inc. These relationships provide us access to additional PCB and EMS opportunities and enable our partners to offer a fully integrated product solution to their customers. Our management team has created a culture that is focused on providing our customers with high-quality service and technical support, which is reflected in our continuing ability to obtain new business and expand our current customer relationships.

Expansion of Our Relationships with Existing Customers Through Cross-Selling – Building on our broad product offering, we pursue cross-selling opportunities with our existing base of customers. We leverage our PCB capabilities to provide our customers with an integrated manufacturing solution that can range from fabrication of bare PCBs to final system assembly and testing. We intend to continue to leverage our customer relationships to expand sales to our existing customers.

Expansion of Our Manufacturing Capabilities in Low Cost Locations – To meet our customers' demands for high quality, low cost products and services, we have and will continue to, as market conditions allow, invest in facilities and equipment in low cost locations. For the year ended December 31, 2008, approximately 93.7% of our net sales were generated from products produced in our operations in China and Mexico. We will continue to develop our best-in-class technology and manufacturing processes in low cost manufacturing locations. We believe our ability to leverage our advanced technology and manufacturing capabilities in low cost locations will enable us to grow our revenues, improve our profitability and effectively meet our customers' requirements for high quality, low cost products and services.

Concentration on High Value-Added Products and Services – We focus on providing electro-mechanical manufacturing services to leading designers and sellers of advanced electronics products that generally require custom designed, more complex products and short lead-time manufacturing services. These products are typically lower volume, higher margin products. We differentiate ourselves from many of our global competitors by not focusing on programs for high volume, low margin products such as cell phone handsets, personal computers or peripherals and low-end consumer electronics.

A Focus on “Green” Technologies and Practices – We are focused on incorporating “green” technologies and practices into our operations to reduce costs, mitigate potential liabilities, ensure a safe and healthy workplace for our employees, and to maintain our reputation as an environmentally responsible neighbor to the communities where we operate. We are also focused on supporting our customers’ demands for “green” technology related products, and to that end have developed an expertise in the fabrication and assembly of wind power related technologies; and developed an expertise in our PCB manufacturing process for “heavy copper” applications, which are necessary to support hybrid automotive technologies.

A Focus on Our Operational Excellence – We continuously implement strategic initiatives designed to improve product quality while reducing manufacturing costs. We continue to focus on opportunities to improve operating income, including: (1) continued implementation of advanced manufacturing techniques, including Lean and Six Sigma initiatives; (2) efficient investment in new equipment and technologies and the upgrading of existing equipment; and (3) continued improvement of our internal control over and centralization of certain aspects of our accounting and finance functions. Our management team is focused on maximizing our current asset base to improve our operational efficiency while also adapting to the needs of our customers and the market.

Markets and Customers

We provide products and services to more than 125 manufacturers of original equipment. We believe our position as a strategic supplier of printed circuit boards and electro-mechanical solutions fosters close relationships with our customers. These relationships have resulted in additional growth opportunities as we have expanded our capabilities and capacity to meet our customers' wide range of needs.

The following table shows our net sales as a percentage by the principal end-user markets we serve:


	Year Ended December 31,
Markets	2008	2007	2006
Automotive	37.4%	36.2%	32.9%
Industrial & Instrumentation/Medical/Consumer/Other	26.6	22.3	22.7
Telecommunications	25.9	31.0	32.0
Computer/Datacommunications	10.1	10.5	12.4
Total Net Sales	100.0%	100.0%	100.0%

Although we seek to diversify our customer base, a small number of customers are responsible for a significant portion of our net sales. For the years ended December 31, 2008, 2007 and 2006, sales to our 10 largest customers accounted for approximately 73.3%, 76.2% and 73.7% of our net sales, respectively.

Further, the table below highlights individual end customers that directly and indirectly account for more than ten percent of our consolidated net sales.


Customer	2008	2007	2006
Alcatel-Lucent SA (a)	16.3%	20.2%	20.8%
Continental AG (b)	13.4	(c)	(c)
Siemens AG (b)	(c)	12.4	13.7
Bosch Group	11.2	10.7	10.1
General Electric Company	10.2	(c)	(c)

(a)

Alcatel SA and Lucent Technologies, Inc. merged during 2006. Amounts represent sales to both the individual companies prior to the merger and the combined companies after the merger.

(b)

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 and 2006 are included in the table for Siemens AG. Through its other business units, Siemens AG remains a customer.

(c)

Represents less than ten percent of consolidated net sales.

Our PCB and EMS products are supplied from our Printed Circuit Boards and Assembly segments, respectively (see Note 14 to our Consolidated Financial Statements). Sales to Alcatel-Lucent SA, Siemens AG and General Electric Company occurred in both the Printed Circuit Boards and Assembly segments. Sales to Continental AG and Bosch Group occurred in the Printed Circuit Boards segment.

Manufacturing Services

Our offering of manufacturing services includes the following:

Design and Prototyping Services – We provide comprehensive front-end engineering services, including custom enclosure design, circuit board layout and related design services leading to efficient manufacturing and delivery. We offer quick-turn prototyping, which is the rapid production of a new product sample. Our quick-turn prototype service allows us to provide small test quantities to our customers' product development groups. Our participation in product design and prototyping allows us to reduce our customers' manufacturing costs and their time-to-market and time-to-volume. These services enable us to strengthen our relationships with customers that require advanced engineering services. In addition, by working closely with customers throughout the development and manufacturing process, we often gain insight into their future product requirements. These services are not billed separately, but instead are included in the determination of the product sales price to be invoiced to the customer.

Printed Circuit Board and Backpanel Fabrication – Printed circuit boards are platforms that connect semiconductors and other electronic components. Backpanels connect printed circuit boards. We manufacture multi-layer printed circuit boards and backpanels on a low-volume, quick-turn basis, as well as on a high-volume production basis. In recent years, the trend in the electronics industry has been to increase the speed and performance of components while reducing their size. Semiconductor designs are currently so complex that they often require printed circuit boards with many layers of narrow, tightly spaced wiring. These advancements in component technologies have driven the change in printed circuit board design to higher density printed circuits.

Backpanel Assembly – We provide backpanel assemblies, which are manufactured by mounting interconnect devices, integrated circuits and other electronic components on a bare backpanel. This process differs from that used to provide printed circuit board assemblies primarily because of the larger size of the backpanel and the more complex placement techniques that must be used with higher layer count printed circuit boards. We also perform functional and in-circuit testing on assembled backpanels.

Printed Circuit Board Assembly – As a complement to our electro-mechanical solutions offering, we have the capability to manufacture printed circuit board assemblies. Generally, we do not produce printed circuit board assemblies separately, but rather we integrate them with other components as part of a full electro-mechanical solution. In addition, we offer testing of assembled printed circuit boards and testing of all of the functions of the completed product, and we work with our customers to develop product-specific test strategies. Our test capabilities include manufacturing defect analysis, in-circuit tests, functional tests and environmental stress tests of board or system assemblies.

Custom Metal Enclosure Fabrication – We specialize in the manufacture of custom-designed chassis and enclosures primarily used in the telecommunications, industrial, medical and computer/datacommunications industries. As a fully integrated supply chain partner with expertise in design, rapid prototyping, manufacturing, packaging and logistics, we provide our customers with reduced manufacturing costs and shortened time-to-market throughout a product's life cycle.

Full System Assembly and Test – We provide full system assembly services to customers from our facilities in China and Mexico. These services require sophisticated logistics capabilities and supply chain management capabilities to procure components rapidly, assemble products, perform complex testing and deliver products to end users around the world. Our full system assembly services involve combining custom metal enclosures and a wide range of subassemblies, including printed circuit board assemblies. We also employ advanced test techniques to various subassemblies and final end products. Increasingly, customers require custom, build-to-order system solutions with very short lead times. We are focused on supporting this trend by providing supply chain solutions designed to meet their individual needs.

Packaging and Global Distribution – We offer our customers flexible, just-in-time and build-to-order delivery programs, allowing product shipments to be closely coordinated with our customers' inventory requirements. Increasingly, we ship products directly into customers' distribution channels or directly to the end-user. These services are not billed separately, but instead are included in the determination of the product sales price to be invoiced to the customer.

After-Sales Support – We offer a wide range of after-sales support services. These support services can be tailored to meet customer requirements, including field failure analysis, product upgrades, repair and engineering change management. These services are not billed separately, but instead are included in the determination of the product sales price to be invoiced to the customer.

Supply Chain Management – Effective management of the supply chain is critical to the success of customers as it directly impacts the time required to deliver product to market and the capital requirements associated with carrying inventory. Our global supply chain organization works with customers and suppliers to meet production requirements and to procure materials. We utilize our enterprise resource planning systems to optimize inventory management. These services are not billed separately, but instead are included in the determination of the product sales price to be invoiced to the customer.

Sales and Marketing

We focus on developing close relationships with our customers at the earliest development and design phases of products, and we continue to develop our relationship with our customers throughout all stages of production. We identify, develop and market new technologies that benefit our customers and position us as a preferred product or service provider.

We market our products through our own sales and marketing organization and through relationships with independent sales agents around the world. This global sales organization is structured to ensure global account coverage by industry-specific teams of account managers. As of December 31, 2008, we employed approximately 194 sales and marketing employees, of which 68 are account managers strategically located throughout North America, Europe and Asia. In addition, we contract with independent sales agents strategically around the world. Each industry marketing team shares support staff of sales engineers, program managers, technical service personnel and customer service organizations to ensure high-quality, customer-focused service. The global marketing organization further supports the sales organization through market research, market development and communications.

Manufacturing and Engineering

We produce highly complex, technologically advanced multi-layer and standard technology printed circuit boards, backpanel assemblies, printed circuit board assemblies, custom enclosures and full systems that meet increasingly narrow tolerances and specifications demanded by our customers. Multi-layering, which involves placing multiple layers of electronic circuitry on a single printed circuit board or backpanel, expands the number of circuits and components that can be contained on the interconnect product and increases the operating speed of the system by reducing the distance that electrical signals must travel. Increasing the density of the circuitry in each layer is accomplished by reducing the width of the circuit tracks and placing them closer together on the printed circuit board or backpanel. Interconnect products having narrow, closely spaced circuit tracks are known as fine line products. Today, we are capable of producing commercial quantities of printed circuit boards with 48+ layers and

circuit track widths as narrow as three one-thousandths of an inch. We also have the capability to produce large format backpanels of up to 50 inches in length and as thin as four tenths of an inch. We have developed heavy copper capabilities, up to 12 ounces per square foot, to support high-power applications. In addition, we have developed microwave and heatsink technology to support radio frequency (“RF”) applications. The manufacturing of complex multi-layer interconnect products often requires the use of sophisticated circuit interconnections between layers, called blind or buried vias, and the ability to control the electrical properties of our products very closely (i.e., electrical impedance), which is key to transmission of high speed signals. These technologies require very tight lamination and etching tolerances and are especially critical for printed circuit boards with ten or more layers. Our PCB operation is an industry leader in performing extensive testing of various PCB designs, materials and surface finishes for restriction of hazardous substances (“RoHS”) compliance and compatibility.

The manufacturing of printed circuit boards involves several steps: etching the circuit image on copper-clad epoxy laminate and pressing the laminates together to form a panel; drilling holes and depositing copper or other conductive material to form the interlayer electrical connections; and cutting the panels to shape. Our advanced interconnect products require critical process steps, such as dry film imaging, optical aligned registration, photoimageable soldermask, computer controlled drilling and routing, automated plating, and various surface finishes. Tight process controls are required throughout the manufacturing process to achieve critical electrical properties, such as controlled impedance. The manufacturing of PCBs used in backpanel assemblies requires specialized expertise and equipment because of the larger size and thickness of the backpanel relative to other PCBs and the increased number of holes for component mounting.

The manufacturing of PCB assemblies involves the attachment of various electronic components, such as integrated circuits, capacitors, microprocessors and resistors to PCBs. The manufacturing of backpanel assemblies involves attachment of electronic components, including printed circuit boards, integrated circuits and other components, to the backpanel, which is a large PCB. We use surface mount, pin-through hole and press fit technologies in backpanel assembly. We also assemble higher-level sub-systems and full systems incorporating printed circuit boards and complex electro-mechanical components.

We also provide computer-aided testing of printed circuit boards, sub-systems and full systems, which contributes significantly to our ability to consistently deliver high quality products. We test boards and system level assemblies to verify that all components have been properly inserted and that the electrical circuits are complete. Further functional tests determine if the board or system assembly is performing to customer specifications.

Quality Standards

Our quality management systems are defect prevention based, customer focused and compliant to international standards. All of our facilities are compliant or certified to the ISO 9001:2000 - a globally accepted quality management standard. In addition to ISO 9001:2000, we have facilities that are certified to QS 9000, TL 9000 and TS 16949 standards based on customer segment requirements. Our facility in Guangzhou is among the first PCB factories in China to have achieved ISO 17025 certification.

Our facilities and products are also compliant to industry and regulatory requirements, including Bellcore and Underwriters Laboratories. These requirements include quality, manufacturing process controls, manufacturing documentation and supplier certification of raw materials.

Supplier Relationships

We order raw materials and components based on purchase orders, forecasts and demand patterns of our customers and seek to minimize our inventory of materials or components that are not identified for use in filling specific orders or specific customer contracts. We continue to work with our suppliers to develop just-in-time supply systems that reduce inventory carrying costs and contract globally, where appropriate, to leverage our purchasing volumes. We also select our suppliers and potential suppliers on the basis of quality, on-time delivery, costs, technical capability, and potential technical advancement. While some of our customer agreements may require certain components be sourced from specific vendors, the raw materials and component parts we use to manufacture our products, including copper and laminate, are generally available from multiple suppliers.

Competition

Our industry is highly competitive, and we believe our markets are highly fragmented. We face competition from numerous local, regional and a number of large international providers of PCBs and electro-mechanical solutions. Our primary direct competitors are Compeq Manufacturing Co. Ltd., Flextronics Corporation, Gold Circuit Electronics Ltd., Kingboard Chemical Holdings Ltd., LG Corp., Merix Corporation, Nanya Technology Corp., Sanmina-SCI Corp. and TTM Technologies, Inc. Some of our primary competitors may be less highly-leveraged, may have greater access to financial or other resources or may have lower cost operations, allowing them to be better able to withstand adverse market conditions. We believe that competition in the markets we serve is based on product quality, responsive customer service and support, and price, in part, because the cost of many of the products manufactured by us is usually low relative to the total cost of the equipment and because product reliability and prompt delivery are of greater importance to our customers.

International Operations

As of December 31, 2008, we had six manufacturing facilities located outside the United States, with sales offices in Canada, Mexico, Asia, and throughout Europe. Our international operations produce products in China and Mexico that account for approximately 86.7% and 7.0% of our 2008 net sales, respectively, with the remaining 6.3% of net sales from products produced in the United States. After the planned closure of our manufacturing facility in Milwaukee, Wisconsin and our final-assembly and distribution facility in Newberry, South Carolina during 2009, we expect 100% of our net sales will be from products produced outside the United States. Approximately 66.1% and 20.6% of our 2008 net sales were from products produced in China by our Printed Circuit Boards and Assembly business segments, respectively. We believe that our global presence is important as it allows us to provide consistent, quality products on a cost effective and timely basis to our multinational customers worldwide. We rely heavily on our international operations and are subject to risks generally associated with operating in foreign countries, including price and exchange controls, fluctuations in currency exchange rates and other restrictive actions that could have a material affect on our results of operations, financial condition and cash flows. See Note 14 to the consolidated financial statements for further information regarding revenues from external customers attributed to our international operations, and long lived assets located outside the United States.

Environmental

Some of our operations are subject to federal, state, local and foreign environmental laws and regulations, which govern, among other things, the discharge of pollutants into the air, ground and water, as well as the handling, storage, manufacturing and disposal of, or exposure to, solid and hazardous wastes, and occupational safety and health. We believe that we are in material compliance with applicable environmental laws, and the costs of compliance with such current or proposed environmental laws and regulations will not have a material adverse effect on us. All of our manufacturing sites in China and the United States are certified to ISO 14001 standards for environmental quality compliance. Further, we are not a party to any current claim or proceeding, and we are not aware of any threatened claim or proceeding under environmental laws that could, if adversely decided, reasonably be expected to have a material adverse effect on us. Accordingly, we do not believe that any of these matters are reasonably likely to have a material adverse effect on our business, results of operations, financial condition, prospects and ability to service debt. However, there can be no assurance that any material environmental liability will not arise in the future such as due to a change in the law or the discovery of currently unknown conditions.

Employees

As of December 31, 2008, we had 11,608 employees. Of these employees, 10,072 were involved in manufacturing, 1,031 in engineering, 194 in sales and marketing, and 311 in accounting and administrative capacities. No employees were represented by a union pursuant to a collective bargaining agreement. We have not experienced any labor problems resulting in a work stoppage or work slowdown, and we believe we have good relations with our employees. In November 2008, we announced a planned work force reduction across our global organization which began in November 2008 and is expected to be completed during the first half of 2009. After the full implementation of the work force reductions, we expect our number of employees will approximate 10,000.

Intellectual Property

We have developed expertise and techniques that we use in the manufacturing of printed circuit boards and electro-mechanical solutions. Research, development and engineering expenditures for the creation and application of new products and processes were approximately $2.2 million, $3.4 million and $2.8 million for the years ended December 31, 2008, 2007 and 2006, respectively. We believe many of our processes related to the manufacturing of printed circuit boards are proprietary, including our ability to manufacture large perimeter, thick, high-layer count backpanels. Generally, we rely on common law trade secret protection and on confidentiality agreements with our employees and customers to protect our secrets and techniques. We own 55 patents (including pending patents) but believe that patents have not historically constituted a significant form of intellectual property rights in our industry. Our patents begin to expire in 10 years. The expiration of any of these patents is not expected to have a material adverse effect on our ability to operate.

Backlog

We estimate that our backlog of unfilled orders as of December 31, 2008, was approximately $78.0 million, compared to $159.6 million at December 31, 2007. Because some unfilled orders may be cancelled prior to delivery, the backlog outstanding at any point in time is not necessarily indicative of the level of business to be expected in the ensuing periods. The decline in backlog as of December 31, 2008, when compared to December 31, 2007, is due primarily to weaker customer demand resulting from global economic conditions.

Segments

On May 1, 2006, we completed the sale of our wire harness business, which was required to be accounted for as a discontinued operation in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. We have classified the results of operations of our wire harness business as discontinued operations for all periods presented. In connection with the disposal of the wire harness business, we reevaluated our operating segments based on the application of SFAS No. 131, Disclosure About Segments of an Enterprise and Related Information, and we identified two segments: (i) Printed

Circuit Boards and (ii) Assembly. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our notes to consolidated financial statements for further information regarding our segments.

Available Information

We file annual, quarterly and current reports and other information with the Securities and Exchange Commission (“SEC”) as required under our senior subordinated notes. These reports, proxy statements and other information contain additional information about us. You may read and copy these materials at the SEC’s Public Reference Room at 100 F. Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more information about the operation of the Public Reference Room. The SEC also maintains a website that contains reports, proxy and information statements, and other information about issuers who file electronically with the SEC. The Internet address of the site is .

Upon written request, a copy of this Annual Report on Form 10-K will be provided to any senior subordinated noteholder. To obtain such a copy, please write to Secretary, Viasystems, Inc., 101 South Hanley Road, Suite 400, St. Louis, Missouri 63105.

Item 1A.

Risk Factors

Our business, financial condition, operating results and cash flows can be impacted by a number of risks and uncertainties, including but not limited to those set forth below, any one of which could cause our actual results to vary materially from recent results or from our anticipated future results. Although the risks described below are the risks that we believe are material, there also may be risks of which we are currently unaware, or that we currently regard as immaterial based on the information available to us that later may prove to be material. You should be aware that the occurrence of the events described in these risk factors and elsewhere in this Report and in our other filings with the SEC could have a material adverse effect on our business, operating results and financial condition. Actual results, therefore, may materially differ from anticipated results described in these forward-looking statements.

Uncertainty and adverse changes in the economy and financial markets could have an adverse impact on our business and operating results.

Uncertainty or adverse changes in the economy could lead to a significant decline in demand for the end products manufactured by our customers, which, in turn, could result in a decline in the demand for our products and pressure to reduce our prices. As a result of the recent global economic downturn, many businesses appear to be experiencing weaker demand for their products and services and, as a result, are taking a more conservative stance in ordering component inventory. Any decrease in demand for our products could have an adverse impact on our financial condition, operating results and cash flows. Uncertainty and adverse changes in the economy could also increase the cost and decrease the availability of potential sources of financing and increase our exposure to losses from bad debts, either of which could have a material adverse effect on our financial condition, operating results and cash flows.

Recent instability in the financial markets has led to the consolidation, restructuring and closure of certain financial institutions. Should any of the financial institutions who maintain our cash deposits or who are a party to our credit agreement become unable to repay our deposits or honor their commitments under our revolving credit facility, it could have a material adverse effect on our financial condition, operating results and cash flows.

Our restructuring plans may be ineffective in responding to the global economic downturn, and we may not be able to effectively execute our restructuring plans within expected costs, which could adversely affect our operating results.

In our Form 8-K filed on November 24, 2008, we announced restructuring plans that are designed to align capacity, overhead costs and operating expenses with market demand. Effectively executing these plans within expected costs and realizing expected benefits will depend upon a number of factors, including the length and severity of the economic downturn, the time required to complete planned actions, the absence of material issues associated with

workforce reductions, avoidance of unexpected disruptions in production, retention of key employees involved in implementing the restructuring plans and our ability to sell permanently idled equipment. If we cannot effectively execute our restructuring plans, we may need to take further actions to restructure our company, which could have a material adverse effect on our financial condition, operating results and cash flows by increasing our costs relative to our sales volume.

We have a substantial amount of debt and may be unable to service or refinance this debt, which could have negative consequences on our business in the future.

As of December 31, 2008, our total outstanding indebtedness is approximately $220.7 million, with an additional $57.3 million available under our revolving credit facility. Our net interest expense for the year ended December 31, 2008, was approximately $21.8 million. As of December 31, 2008, our total consolidated stockholder’s equity was $199.3 million.

This high level of debt could have negative consequences to us. For example, it could:

result in our inability to comply with the financial and other restrictive covenants in our credit facility, which, among other things, require us to maintain specified financial ratios and limit our ability to incur debt and sell assets, which could in turn result in an event of default that, if not cured or waived, could have a material adverse effect on our operations;

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 our industry; and

place us at a competitive disadvantage relative to our less leveraged competitors.

We may experience fluctuations in our operating results, and because many of our operating costs are fixed, even small revenue shortfalls can have a disproportionate effect on our operating results.

Our operating results may vary significantly for a variety of reasons, including:

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.

Our historical results of operations may not be indicative of the results to be expected for any future period as a result of unanticipated revenue shortfalls.

We have a history of losses and may not be profitable in the future.

We emerged from bankruptcy on January 31, 2003, and have a history of losses and cannot assure you that we will achieve sustained profitability in the near future. We emerged from our Chapter 11 bankruptcy reorganization on January 31, 2003, approximately four months after filing a voluntary petition for bankruptcy reorganization. Prior to our reorganization, we incurred net losses of $295.9 million in 2002, $587.0 million in 2001 and $136.0 million in 2000. After we emerged from bankruptcy, we incurred net losses from continuing operations of $179.6 million in 2003, $21.6 million in 2004, $107.0 million in 2005, $18.2 million in 2006 and $5.7 million in 2008. In 2007, we had net income from continuing operations of $17.3 million. If we cannot maintain and improve profitability, the value of our enterprise may decline.

A significant portion of our net sales is based on transactions with our largest customers; if we lose any of these customers, our sales could decline significantly.

For the years ended December 31, 2008, 2007 and 2006, sales to our 10 largest customers accounted for approximately 73.3%, 76.2% and 73.7% of our net sales, respectively.

Although we cannot assure you that our principal customers will continue to purchase products from us at past levels, we expect a significant portion of our net sales will continue to be concentrated within a small number of customers. The loss of, or significant curtailment of purchases by, any of our principal customers could have a material adverse effect on our financial condition, operating results and cash flows.

A significant portion of our business is conducted in foreign countries, exposing us to additional risks that may not exist in the United States.

International manufacturing operations represent the majority of our business and, we expect, will represent 100% of our business after the planned closure of our manufacturing facility in Milwaukee, Wisconsin and our final-assembly and distribution facility in Newberry, South Carolina during 2009. Sales to foreign destinations represent a significant portion of our net sales and we expect net sales to foreign markets to continue to represent a significant portion of our total net sales. Outside the Unites States, we operate manufacturing facilities in Mexico and China.

Our international manufacturing operations are subject to a number of potential risks in addition to the risks of our domestic operations. Such risks include, among others:

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.

These factors may have an adverse effect on our international operations, or on the ability of our international operations to repatriate earnings to us, in the future.

A significant portion of our business is conducted in foreign countries that have different and changing tax laws.

Certain of our Chinese subsidiaries have operated under tax holidays during the past years. These holidays allow a two-year tax exemption and a three-year 50% reduction in the tax rate. In addition, the Chinese government introduced new tax legislation that went into effect January 1, 2008, resulting in increases to the corporate tax rates. The expiration of these tax holidays and new tax legislation could have a material adverse effect on our financial condition, operating results and cash flows.

We are subject to currency fluctuations, which may affect our cost of goods sold and operating margins.

A significant portion of our costs, including payroll and rent, are denominated in foreign currencies, particularly the Chinese Renminbi (“RMB”). Changes in exchange rates between other currencies and the U.S. dollar will affect our cost of goods sold and operating margins and could have a material adverse effect on our financial condition, operating results and cash flows.

We lease land for all of our owned and leased Chinese manufacturing facilities from the Chinese government under land use rights agreements that may be terminated by the Chinese government.

We lease from the Chinese government, through land use rights agreements, the land where our Chinese manufacturing facilities are located. Although we believe our relationship with the Chinese government is sound, if the Chinese government decided to terminate our land use rights agreements, our assets could become impaired, and our ability to meet our customers’ orders could be impacted. This could have a material adverse effect on our financial condition, operating results and cash flows.

There may be shortages of, or price fluctuations with respect to, raw materials, which would cause us to curtail our manufacturing or incur higher than expected costs.

We purchase the raw materials we use in producing our products and providing our services, and we may be required to bear the risk of raw material price fluctuations. In addition, shortages of raw materials such as laminates, a principal raw material used in our PCB operations, have occurred in the past and may occur in the future. Raw material or component shortages or price fluctuations such as these could have an adverse effect on our results of operations, financial condition and cash flows. In addition, if we experience a shortage of materials or components, we may not be able to produce our products for our customers in a timely fashion.

Oil prices may fluctuate, which would increase our cost to manufacture goods.

We generate a portion of our own energy in certain of our manufacturing facilities using diesel generators, and we will be required to bear the increased cost of generating energy if the cost of oil increases. Prices for diesel fuel rose substantially in several recent years. Future price increases for diesel fuel would increase our cost and could have a material adverse effect on our financial condition, operating results and cash flows.

The printed circuit board and electro-mechanical solutions industries are highly competitive, and we may not be able to compete effectively in one or both of them.

The printed circuit board industry is highly competitive, with multiple global competitors and hundreds of regional and local manufacturers. The electro-mechanical solutions industry is also highly competitive, with competitors on the global, regional and local levels and relatively low barriers to entry. In both of these industries, we could experience increased future competition resulting in price reductions, reduced margins or loss of market share. Any of these could have an adverse effect on our operating results or financial condition. In addition, some of our principal competitors may be less highly-leveraged, may have greater access to financial or other resources, may have lower cost operations and may be better able to withstand adverse market conditions.

Our products and the manufacturing processes we use to produce them are often highly complex and therefore may at times contain manufacturing defects.

If we were to manufacture and deliver products to our customers that contain defects, whether caused by a design, manufacturing or component failure, or deficiencies in our manufacturing processes, it may result in delayed shipments to our customers and reduced or cancelled customer orders. If these defects or deficiencies were significant and were a result of a manufacturing defect caused by us, we may experience large product liability claims, and our business reputation may also be damaged, which could lead to additional customer cancellations or non-renewals.

The electronics manufacturing services industry is subject to rapid technological change; our failure to respond timely or adequately to such changes may render our existing technology less competitive or obsolete, and our operating results may suffer.

The market for our products and services is characterized by rapidly changing product platforms based on technology and continuing process development. The success of our business will depend in large part upon our ability to maintain and enhance our technological capabilities, develop and market products and services that meet changing customer needs, and successfully anticipate or respond to technological product platforms changes on a cost-effective and timely basis. There can be no assurance that we will effectively respond to the technological product requirements of the changing market, including having sufficient cash flow to make additional capital expenditures that may be required as a result of those changes. To the extent we are unable to respond to such technological product requirements, our operating results may suffer.

We generally do not obtain long-term volume purchase commitments from customers, and, therefore, cancellations, reductions in production quantities and delays in production by our customers could adversely affect our operating results.

For many of our customers, we do not have firm long-term purchase commitments, but rather conduct business on a purchase order basis. Customers may cancel their orders, reduce production quantities or delay production at any time for a number of reasons. Many of our customers have over the past several years experienced significant decreases in demand for their products and services. The uncertain economic conditions in the global economy and in several of the markets in which our customers operate have prompted some of our customers to cancel orders, delay the delivery of some of the products that we manufacture or place purchase orders for fewer products than we previously anticipated. Even when our customers are contractually obligated to purchase products from us, we may be unable or, for other business reasons, choose not to enforce our contractual rights. Cancellations, reductions or delays of orders by customers could:

adversely affect our operating results by reducing the volumes 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.

We rely on the stability of the automotive industry for a significant portion of our sales. Accordingly, the economic downturn in this industry has had, and may continue to have, a material adverse affect on our ability to forecast demand and production to meet desired sales levels.

The economic downturn in the automotive industry has had, and may continue to have, a material adverse effect on our ability to forecast demand and production and to meet desired sales levels. A significant portion of our sales are to customers within the automotive industry. For the years ending December 31, 2008, 2007 and 2006, sales to customers in the automotive industry represented approximately 37.0%, 36.0% and 33.0% of our net sales, respectively. If there was a destabilization of the automotive industry or a market shift away from our automotive customers, it may have an adverse effect on our results of operations, financial condition and cash flows.

We rely on the telecommunications and networking industries for a significant portion of our sales. Accordingly, the economic downturn in these industries has had, and may continue to have, a material adverse effect on our ability to forecast demand and production and to meet desired sales levels.

A large percentage of our business is conducted with customers who are in the telecommunications and networking industries. For the years ending December 31, 2008, 2007 and 2006, sales to customers in the telecommunications and networking industries represented approximately 26.0%, 31.0% and 32.0% of our net sales, respectively. These industries are characterized by intense competition, relatively short product life cycles and significant fluctuations in product demand. These industries are heavily dependent on the end markets they serve and therefore can be affected by the demand patterns of those markets. If there were to be a weakness in these industries, it would likely have a material adverse effect on our financial condition, operating results and cash flows.

Our credit facility and the indenture for our senior subordinated notes impose restrictions that may restrict our ability to operate our business.

Our credit facility and the indenture for our senior subordinated notes contain covenants that restrict our ability to, among other things, incur additional debt, pay dividends, make investments, enter into transactions with affiliates, merge or consolidate with other entities or sell all or substantially all of our assets. Additionally, we are required by our credit facility to maintain certain financial ratios. A breach of any of these covenants could result in a default under the credit facility or the indenture, which could allow the lenders or the noteholders to declare all amounts outstanding under the credit facility or the indenture immediately due and payable. If we are unable to repay outstanding borrowings when due, the lenders will have the right to proceed against the collateral granted to them under the credit facility, including our capital stock. We may also be prevented from taking advantage of business opportunities that arise because of the limitations imposed on us by the restrictive covenants under the credit facility and the indenture.

We are significantly influenced by affiliates of Hicks, Muse, Tate & Furst, Incorporated, whose interests may be different than ours or our sole shareholder’s.

Approximately 54.5% of the common stock of Group, our parent company, is owned by affiliates of Hicks, Muse, Tate & Furst, Incorporated (“HMTF”). In addition, a stockholders’ agreement among Viasystems Group, Inc., affiliates of HMTF and other existing holders of Group’s common stock provides that Group and those stockholders have agreed to take all actions necessary, including voting the shares held by those stockholders, to elect five designees of HMTF to Group’s Board of Directors. Our Board of Directors consists of the same members as Group’s Board of Directors. Accordingly, HMTF effectively controls the election of a majority of our Board of Directors and the approval or disapproval of certain other matters requiring stockholder approval and, as a result, has significant influence over the direction of our management and policies. Using this influence, HMTF may take actions or make decisions that are not in the same interests of Group’s other stockholders. In addition, HMTF is in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us or otherwise have business objectives that are not aligned with our business objectives.

We are a holding company with no operations of our own and depend on our subsidiaries for cash.

Although our operations are conducted through our subsidiaries, none of our subsidiaries are obligated to make funds available to us for payment on our indebtedness or to pay dividends on our capital stock. Accordingly, our ability to service our indebtedness or to distribute dividends to our sole stockholder, Group, is dependent on the earnings and the distribution of funds from our subsidiaries. The terms of our credit facility and the indenture governing our senior subordinated notes significantly restrict our subsidiaries from paying dividends and otherwise transferring assets to us or Group.

We are subject to environmental laws and regulations that expose us to potential financial liability.

Our operations are regulated under a number of federal, state, local and foreign environmental laws and regulations that govern, among other things, the discharge of hazardous materials into the air, ground and water as well as the handling, storage and disposal of, or exposure to, hazardous materials and occupational health and safety. Violations of these laws can lead to material liability, fines or penalties. Compliance with these environmental laws is a major consideration in the fabrication of printed circuit boards because metals and other hazardous materials are used in the manufacturing process. In addition, it is possible that in the future new or more stringent requirements could be imposed. Various federal, state, local and foreign laws and regulations impose liability on current or previous real property owners or operators for the cost of investigating, cleaning up or removing contamination caused by hazardous or toxic substances at the property. In addition, because we are a generator of hazardous wastes, we, along with any other person who arranges for the disposal of those wastes, may be subject to potential financial exposure for costs associated with the investigation and remediation of sites at which such hazardous waste has been disposed, if those sites become contaminated. Liability may be imposed without regard to legality of the original actions and without regard to whether we knew of, or were responsible for, the presence of such hazardous or toxic substances, and we could be responsible for payment of the full amount of the liability, whether or not any other responsible party is also liable.

As a U.S. corporation with international operations, we are subject to the Foreign Corrupt Practices Act. A determination that we violated this act may affect our business and operations adversely.

As a U.S. corporation, we and our subsidiaries are subject to the regulations imposed by the Foreign Corrupt Practices Act (the “FCPA”), which generally prohibits U.S. companies and their intermediaries from making improper payments to foreign officials for the purpose of obtaining or keeping business. Any determination that we or any of our subsidiaries have violated the FCPA could have a material adverse effect on our financial position, operating results and cash flows.

We may be required to recognize additional impairment charges.

Pursuant to generally accepted accounting principles in the United States (“U.S. GAAP”), we are required to make periodic assessments of our goodwill, intangibles and other long-lived assets to determine if they are impaired. Disruptions to our business, end-market conditions and protracted economic weakness, unexpected significant declines in operating results of reporting units, divestitures and market capitalization declines may result in additional charges for goodwill and other asset impairments. Future impairment charges could substantially affect our reported earnings in the periods of such charges. In addition, such charges would reduce our consolidated net worth and our stockholder’s equity, increasing our debt-to-total-capitalization ratio.

We could be subject to litigation in the course of our operations that could adversely affect our operating results.

If we became the subject of legal proceedings, our results may be affected by the outcome of such proceedings and other contingencies that cannot be predicted with certainty. When appropriate and as required by U.S. GAAP, we estimate material loss contingencies and establish reserves based on our assessment of contingencies where liability is deemed probable and reasonably estimable in light of the facts and circumstances known to us at a particular point in time. Subsequent developments in legal proceedings may affect our assessment and estimates of the loss contingency recorded as a liability or as a reserve against assets in our consolidated financial statements and could result in an adverse effect on our results of operations in the period in which a liability would be recognized or cash

flows for the period in which damages would be paid. Although claims have been rare in the past, because we are a manufacturer, we are subject to claims by our customers or end users of our products that we may have been negligent in our production or have infringed on intellectual property of another.

Degrading of our debt ratings would adversely affect us.

Any degrading by Moody's and S&P of our debt securities could make it more difficult for us to obtain new financing if we had an immediate need to increase our liquidity.

Item 1B.

Unresolved Staff Comments

Not Applicable.

Item 2.

Properties

In addition to our executive offices in St. Louis, Missouri, as of December 31, 2008, we operate seven principal manufacturing and two principal distribution facilities, located in three different countries with a total area of approximately 4.4 million square feet. All of our foreign owned properties are pledged to secure our indebtedness under our credit facility. Our leased properties are leased for terms ranging from two to 10 years. In November 2008, we announced plans to close our manufacturing facility in Milwaukee, Wisconsin and our final assembly and distribution facility in Newberry, South Carolina. These facilities are expected to cease operations during the first half of 2009; however, our leases for these facilities expire in 2010 and 2011, respectively.

Listed below are the principal manufacturing facilities we operated as of December 31, 2008:


Location	Size (Appx. Sq. Ft.)	Type of Interest		Description of Primary Products
United States Milwaukee, Wisconsin	305,000	Leased	(a)	Custom metal enclosure fabrication

Mexico Juarez, Mexico	89,000	Leased		Backpanel assembly, printed circuit board assembly, custom metal enclosure fabrication, and full system assembly and test
Asia Guangzhou, China	2,250,000 106,000	Owned Leased	(b)	Printed circuit board and backpanel fabrication
Zhongshan, China	799,000	Owned	(b)	Printed circuit board fabrication
Shanghai, China	430,000	Owned	(b)	Custom metal enclosure fabrication, backpanel assembly, printed circuit board assembly, and full system assembly and test
Shenzhen, China	286,000	Leased		Custom metal enclosure fabrication, printed circuit board assembly, and full system assembly and test
Qingdao, China	93,000	Leased		Full system assembly and test/cable assembly

(a)

This facility is expected to cease operations by the end of the second quarter of 2009.

(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.

Listed below are the principal distribution facilities we operated as of December 31, 2008:


Location	Size (Appx. Sq. Ft.)	Type of Interest		Description of Primary Products
United States El Paso, Texas	28,000	Leased		Warehousing and distribution of EMS, backpanel assemblies, full system assemblies and printed circuit board assemblies
Newberry, South Carolina	22,000	Leased	(a)	Final-assembly and distribution of fabricated metal enclosures
Asia Hong Kong	53,000	Owned		Warehousing and distribution of PCBs, backpanel assemblies, full system assemblies and printed circuit board assemblies

(a) This facility is expected to cease operations by the end of the first quarter of 2009.

In addition to the facilities listed above, at December 31, 2008, we maintained several engineering, customer service, sales and marketing and other offices throughout North America, Europe and Asia, all of which are leased.

Item 3.

Legal Proceedings

We are presently involved in various legal proceedings arising in the ordinary course of our business operations, including employment matters and contract claims. We believe that any liability with respect to these proceedings will not be material in the aggregate to our consolidated financial position, results of operations or cash flows.

Item 4.

Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of security holders in the fourth quarter of 2008.

PART II

All of our outstanding common stock has been held by Group since 1997, and accordingly, there is no established public trading market for our common stock. We have paid no dividends since inception, and our ability to pay dividends is limited by the terms of certain agreements related to our indebtedness. Although we do not maintain our own equity compensation plan, Group maintains an equity compensation plan for the benefit of our employees. See Note 13 in the accompanying notes to consolidated financial statements for further information on Group’s equity compensation plan.

Item 6.

Selected Financial Data (U.S. dollars in thousands)

The selected financial and other data below for the years ended December 31, 2008, 2007, 2006, 2005 and 2004, present consolidated financial information of Viasystems and its subsidiaries and have been derived from our audited consolidated financial statements.

You should read the selected historical consolidated financial data set forth below in conjunction with “Management's Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the notes thereto included elsewhere in this document.


	Year Ended December 31,
	2008	2007	2006	2005	2004
	(in thousands)
Statements of Operations Data:
Net sales	$ 712,830	$ 714,343	$ 734,992	$ 652,821	$ 630,754

Operating expenses:
Cost of goods sold (1)	568,356	570,384	601,232	560,974	521,393
Selling, general and administrative (1)	52,475	58,215	56,325	66,047	65,127
Depreciation	53,285	49,704	45,422	44,234	41,622
Amortization	1,243	1,269	1,325	1,436	1,570
Restructuring and impairment (2)	15,069	278	(4,915)	27,662	1,013
Operating income (loss)	22,402	34,493	35,603	(47,532)	29

Other expense (income):
Interest expense, net	21,815	21,687	30,715	40,760	37,818
Amortization of deferred financing costs	2,063	2,065	1,678	1,613	1,305
Loss on early extinguishment of debt (3)	-	-	1,498	-	-
Reorganization expenses (reversals) (4)	-	-	-	-	(9,776)
Other, net	(711)	277	1,406	13,110	(1,468)
(Loss) income before income taxes	(765)	10,464	306	(103,015)	(27,850)

Income tax provision	4,938	(6,853)	18,514	3,953	(6,291)

(Loss) income from continuing operations (5)	(5,703)	17,317	(18,208)	(106,968)	(21,559)

Income from discontinued operations, net (1) (5)	-	-	9,475	25,739	27,307
Gain on disposition of discontinued operations, net (5)	-	-	211,170	-	-

Net (loss) income	$ (5,703)	$ 17,317	$ 202,437	$ (81,229)	$ 5,748

Balance Sheet Data (at period end):
Cash and cash equivalents	$ 83,053	$ 64,002	$ 37,954	$ 35,923	$ 112,891
Working capital	119,118	110,460	95,475	91,735	151,478
Total assets	586,042	629,233	625,890	715,676	750,409
Total debt, including current maturities	220,663	206,613	206,914	462,535	465,555
Stockholder's equity (deficit) (6)	199,294	207,254	197,868	(1,728)	56,534

(1)

Effective January 1, 2004, we adopted Statement of Financial Accounting Standards (“SFAS”) No. 123, Accounting for Stock-Based Compensation (“SFAS No. 123”). On January 1, 2006, we adopted SFAS No. 123 (revised 2004), Share-Based Payments (“SFAS No. 123(R)”). Stock compensation expense included in cost of goods sold and selling, general and administrative expenses for the years ended December 31, 2008, 2007, 2006, 2005 and 2004 was $615, $2,085, $1,400, $6,152 and $3,170, respectively. Stock compensation expense included in income from discontinued operations, net for the years ended December 31, 2008, 2007, 2006, 2005 and 2004 was $0, $0, $105, $641 and $127, 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.

(3)

In 2006, in connection with the termination of our 2003 credit facility, we recorded a loss on early extinguishment of debt of $1,498.

(4)

In May 2004, a promissory note to the Secretary of State for Trade and Industry of the United Kingdom was discharged in full as a result of proceeds they received from the liquidation of a disposed subsidiary of ours, thus resulting in a gain of $9,776.

(5)

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.

(6)

On January 1, 2007, we adopted Financial Accounting Standard Board (“FASB”) Interpretation No. 48, Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109 (“FIN 48”). As a result of the adoption of FIN 48, we recorded a $10,213 increase in the net liability for unrecognized tax positions, which was recorded as a cumulative effect adjustment to the opening balance of accumulated deficit on January 1, 2007. During the fourth quarter of 2006, we adopted Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (“SAB No. 108”). As a result of the adoption of SAB No. 108, we recorded an $8,628 cumulative effect adjustment to accumulated deficit on January 1, 2006.

Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion of our financial condition and results of operations with “Selected Financial Data” and our consolidated financial statements and related notes included elsewhere in this document. This discussion contains forward-looking statements about our markets, the demand for our products and services and our future results. We based these statements on assumptions that we consider reasonable. Actual results may differ materially from those suggested by our forward-looking statements for various reasons including those discussed in Part 1A – “Risk Factors” and disclosure in this Annual Report on Form 10-K and our other filings made with the Securities and Exchange Commission.

General

We are a leading worldwide provider of complex multi-layer printed circuit boards (“PCBs”) and electro-mechanical solutions (“EMS”). The products we manufacture include, or can be found in, a wide array of products including automotive dash panels and control modules, telecommunications switching equipment, data networking equipment, major household appliances, wind energy applications, and a variety of complex medical and technical instruments. As of December 31, 2008, we have seven manufacturing facilities, including five manufacturing sites in China and one in Mexico to take advantage of low cost, high quality manufacturing environments. In addition, in order to support our customers’ local needs, we have maintained engineering and customer service centers in Hong Kong, China, the Netherlands, England, Canada, Mexico and the United States (“U.S.”). In November 2008 we announced the planned closure of our manufacturing facility in Milwaukee, Wisconsin, and its satellite final-assembly and distribution facility in Newberry, South Carolina, which we anticipate will cease operations in May 2009 and March 2009, respectively.

We are a supplier to over 125 manufacturers of original equipment in numerous end markets, including industry leaders Alcatel-Lucent SA, Bosch Group, Continental AG, Delphi Corporation, EMC Corporation, Ericsson AB, General Electric Company, Hewlett-Packard Company, Huawei Technologies Co. Ltd., Rockwell Automation, Inc., Siemens AG, Sun Microsystems, Inc., Tellabs, Inc. and TRW Automotive Holdings Corp. We have good working relationships with industry leading contract manufacturers such as Celestica, Inc. and Jabil Circuit, Inc. and we supply PCBs and EMS products to these customers as well.

Results of Operations

Year Ended December 31, 2008, Compared to Year Ended December 31, 2007

Net Sales. Net sales for the year ended December 31, 2008, were $712.8 million, representing a $1.5 million, or 0.2%, decrease from net sales for the year ended December 31, 2007.

Net sales by end-user market for the years ended December 31, 2008 and 2007, were as follows:


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

Our net sales of products for end use in the automotive market grew by approximately 3.0% during the year ended December 31, 2008, based on strong demand early in the year and new program wins with European and Asian automotive producers, partially offset by weak demand in North America throughout the year, and in all regions towards the end of the year. The increase in the automotive market was negatively impacted by an approximately 17.0% year-over-year decline in fourth quarter 2008 net sales as a result of reduced global demand from our automotive customers. In the industrial & instrumentation, medical, consumer and other market, new wind power related programs with an existing customer was the primary driver of our 19.1% increase in net sales to this end use market, in which a broad base of other customers remained stable. Net sales of products ultimately used in the telecommunications market declined by approximately 16.7% from the year ended December 31, 2007, to the year ended December 31, 2008, primarily as a result of weak demand from our customers on select product offerings. An approximate 3.6% decrease in net sales for the year ended December 31, 2008, of our products for use in the computer and data communications markets is largely the result of an approximately 49.6% year-over-year decline in fourth quarter 2008 net sales as a result of reduced global demand from our computer and data communication customers, which was partially offset by sales to a new customer and increased demand from existing customers through the first nine months of the year.

Net sales by business segment for the years ended December 31, 2008 and 2007, were as follows:


Segment (dollars in millions)	2008	2007
Printed Circuit Boards	$ 489.8	$ 489.8
Assembly	241.4	243.1
Eliminations	(18.4)	(18.6)
Total net sales	$ 712.8	$ 714.3

Printed Circuit Boards segment net sales, including intersegment sales, were flat for the year ended December 31, 2008, as compared to the prior year, as an approximately 9.2% year-over-year growth in sales through the third quarter of 2008 was offset by falling demand during the fourth quarter of 2008. Four principal factors, including volume, selling price, product mix and currency changes, can affect PCB sales growth or decline from one period to the next. In 2008 compared to 2007, there was a decrease in sales volume which was offset by selling price increases introduced towards the end of the third quarter 2008.

Finished PCB volume, measured as total square feet of PCB surface area, decreased by approximately 3.6% in 2008 compared to 2007, while our capacity remained unchanged.

Like most electronic components, Printed Circuit Boards segment product prices historically have declined in sequential periods as a result of competitive pressures and manufacturing cost efficiencies. However, in September and October of 2008 we implemented limited PCB product price increases to compensate for unusually high increases in the costs of our commodity materials, including petroleum, copper and other precious metals that occurred during the first nine months of 2008. To the extent we experience decreases in the cost of certain commodity materials, we would expect to adjust our selling prices accordingly, and our ability to pass on future material cost increases is uncertain.

results in a higher selling price for an equivalent finished product outer surface square footage. In 2008, the volume mixture of different layer count PCB products was consistent with 2007. As a result, we estimate that product mix changes did not significantly impact 2008 sales as compared to 2007.

The effects of changing currency rates added less than 1.0% to sales in 2008 compared to 2007, as approximately 10% of our Printed Circuit Boards segment sales are denominated in currencies other than the U.S. dollar.

Assembly segment net sales decreased by $1.7 million, or 0.7%, to $241.4 million for the year ended December 31, 2008. The decrease was the result of reduced demand from select customers in our telecommunications end market partially offset by new wind power related programs with an existing customer in our industrial & instrumentation end market.

Cost of Goods Sold. Cost of goods sold, exclusive of items shown separately in the consolidated statement of operations for the year ended December 31, 2008, was $568.4 million, or 79.7% of consolidated net sales. This represents a 0.1 percentage point improvement from the 79.8% of consolidated net sales achieved during 2007. The improvement is a result of successful implementation of cost improvement initiatives, partially offset by adverse trends in global commodities and currency exchange rates, and cost trends in China.

In our Printed Circuit Boards segment, the cost of direct materials represents approximately 60% of our cost of sales. The quantities of materials and supplies used for production are responsible for the most significant costs in our Printed Circuit Boards segment. Materials, labor and overhead costs in the segment have been impacted by adverse trends in global commodities and currency exchange rates and minimum wage increases. Copper is used in our circuit plating processes, and by our suppliers in the form of high-quality foil to make laminate materials that are the basic building blocks in our products. Despite steep global copper price declines during the fourth quarter of 2008, the average cost of copper was higher during most of 2008, when compared to 2007.

Other cost trends in China also adversely impacted our costs, including increases in electricity and diesel fuel prices which began in July 2008. In addition, the Chinese Renminbi (“RMB”) strengthened versus the U.S. dollar by more than 5.0% during 2008. Despite these cost increases, wages and local operating costs there remain among the most competitive in the world. Finally, cost of goods sold was favorably impacted by the elimination of professional fees associated with initiatives to reduce production costs. In addition to the $7.6 million improvement related to professional fees, 2008 reflects cost improvements associated with these initiatives.

Cost of goods sold in our Assembly segment relates primarily to component materials costs. As a result, trends in net sales for the segment drive similar trends in cost of goods sold. However, in 2008 our costs were negatively impacted by startup costs for production of new products related to new customers and new programs with existing customers. In addition, costs of materials, labor and overhead incurred in Chinese RMB were negatively impacted due to the appreciation of that currency.

Selling, General and Administrative Costs. Selling, general and administrative costs were $52.5 million, or 7.4% of net sales for the year ended December 31, 2008, and decreased by $5.7 million compared to the year ended December 31, 2007. The decrease is primarily due to reduced professional fees and other cost savings initiatives, as well as lower bonus and stock-based compensation. Approximately one-half of our costs are incurred to support our global operations and are not specific to any segment. These common costs are allocated to our Printed Circuit Boards segment and Assembly segment.

Depreciation. Depreciation expense for the year ended December 31, 2008, was $53.3 million, including $46.3 million related to our Printed Circuit Boards segment and $7.0 million related to our Assembly segment. Depreciation expense in our Printed Circuit Boards segment and Assembly segment increased by approximately $2.6 million and $1.0 million, respectively, compared to the year ended December 31, 2007, as a result of investment in new equipment.

Restructuring and Impairment. In light of the global economic downturn which began towards the end of 2008, and as part of our ongoing efforts to align capacity, overhead costs and operating expenses with market demand, we initiated restructuring activities during the fourth quarter of 2008. These activities are expected to be concluded

during the first half of 2009, and include the shutdown of our metal fabrication facility in Milwaukee, Wisconsin and its satellite final-assembly and distribution facility in Newberry, South Carolina; as well as workforce reductions across our global operations. At the time of these announcements, we estimated the related total cash charges would approximate $12.0 million to $14.0 million, with $6.0 million to $8.0 million being related to headcount reduction costs, and $6.0 million related to lease termination and other costs. At the time of these announcements, we were not able to estimate the amount of any related non-cash charge for asset impairments. We now estimate the cost of these activities will approximate $22.0 million, including approximately $16.0 million of cash charges and approximately $6.0 million of non-cash asset impairment charges. The estimated cash charges include approximately $10.0 million related to headcount reductions with the balance related to lease termination and other closure costs.

For the year ended December 31, 2008, we recorded restructuring charges of approximately $15.1 million, which included approximately $9.5 million related to headcount reductions and approximately $5.6 million of non-cash asset impairment charges. The total $15.1 million charge is attributable to our Printed Circuit Boards and Assembly Segments in the amount totaling approximately $10.0 million and $5.1 million, respectively. We expect we will incur additional restructuring charges totaling approximately $6.9 million in 2009 and 2010 primarily related to lease terminations and other closure costs as we complete our restructuring plan.

Previously, dating back to 2000, we have incurred substantial costs to downsize and/or close facilities in Europe and North America in response to market pressures for low cost products. We reported net restructuring and impairment losses of $0.3 million for the year ended December 31, 2007, related to closed facilities sold late in 2006.

The primary components of restructuring and impairment expense for the years ended December 31, 2008 and 2007, are as follows:


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

Operating Income. Operating income of $22.4 million for the year ended December 31, 2008, represents a decrease of $12.1 million compared to operating income of $34.5 million during the year ended December 31, 2007. The primary sources of operating income for the years ended December 31, 2008 and 2007, are as follows:


Source (dollars in millions)	2008	2007
Printed Circuit Boards segment (a)	$ 24.2	$ 27.6
Assembly segment (a)	(1.8)	7.2
Other	-	(0.3)
Operating income	$ 22.4	$ 34.5

(a) During the first quarter of 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.

Operating income of our Printed Circuit Boards segment decreased by $3.4 million to $24.2 million for the year ended December 31, 2008, compared to $27.6 million for the year ended December 31, 2007. The decrease is primarily the result of $7.8 million of severance costs related to restructuring activities, non-cash fixed asset impairment charges of $1.7 million, sales declines during the fourth quarter, currency exchange rates and increased depreciation expense, partially offset by net cost improvements and a reduction in professional fees associated with our continuing initiatives to reduce production costs.

Operating income of our Assembly segment decreased by $9.0 million to an operating loss of $1.8 million for the year ended December 31, 2008, compared to operating income of $7.2 million in 2007. The decline is primarily the result of non-cash fixed asset impairment charges of $3.9 million stemming from the planned closure of our Milwaukee, Wisconsin manufacturing facility, severance costs related to restructuring activities in other facilities, start-up costs associated with new product introductions, currency exchange rates and increased depreciation expense, partially offset by sales related to new programs with existing customers.

Adjusted EBITDA. We measure our performance primarily through our operating income. In addition to our consolidated financial statements presented in accordance with U.S. GAAP, management uses certain non-GAAP financial measures, including “adjusted EBITDA” to evaluate financial performance. Adjusted EBITDA is not a recognized financial measure under U.S. GAAP, and does not purport to be an alternative to operating income or an indicator of operating performance. Adjusted EBITDA is presented to enhance an understanding of our operating results and is not intended to represent cash flow or results of operations. Our owners, lenders and management use adjusted EBITDA as an additional measure of operating performance for matters including covenant compliance, executive compensation, and competitor comparisons. The Compensation Committee of our Board of Directors uses adjusted EBITDA as its primary measure of performance for awarding incentive compensation under our Annual Incentive Compensation Plan. The use of this non-GAAP measure provides an indication of our ability to service debt, and we consider it an appropriate measure to use because of our highly leveraged position.

Adjusted EBITDA has certain material limitations, primarily due to the exclusion of certain amounts that are material to our consolidated results of operations, such as interest expense, income tax expense and depreciation and amortization. In addition, adjusted EBITDA may differ from the adjusted EBITDA calculations of other companies in our industry, limiting its usefulness as a comparative measure.

We use adjusted EBITDA to provide meaningful supplemental information regarding our operating performance and profitability by excluding from EBITDA certain items that we believe are not indicative of our ongoing operating results or will not impact our future operating cash flows as follows:

Restructuring charges – which consist primarily of facility closures and other headcount reductions. A portion of these restructuring charges are non-cash charges related to the write-down of impaired property, plant and equipment to fair value. We exclude restructuring 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 a comparable year-over-year cash operating performance.

Reconciliations of operating income to adjusted EBITDA for years ended December 31, 2008 and 2007, were as follows:


	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
Non-cash stock compensation expense.	0.6	2.1
Adjusted EBITDA	$ 92.6	$ 87.9

Adjusted EBITDA increased by $4.7 million, or 5.3%, primarily as a result of an approximate 9.9% decrease in selling, general and administrative expense and reduced cost of goods sold relative to our sales.

Interest Expense, net. Interest expense, net of interest income, for the year ended December 31, 2008, was $21.8 million, compared with $21.7 million for the year ended December 31, 2007. Interest expense related to our

2011 Senior Subordinated 10.5% Notes is $21.0 million in each year, as the $200.0 million principal and the 10.5% interest rate remain unchanged since the notes were issued in 2003.

Interest expense was $1.3 million for year ended December 31, 2008, under our 2006 Credit Agreement, and this expense varies from period to period based on the outstanding principal balances and letters of credit, both of which bear interest at floating rates. Interest expense on capital leases declined by approximately $0.1 million to approximately $0.6 million during the year ended December 31, 2008 as compared to the prior year.

Interest income increased $0.3 million to $1.4 million for the year ended December 31, 2008, as compared to the year ended December 31, 2007, on higher cash deposits in interest bearing accounts.

Income Taxes. Income tax expense of $4.9 million for the year ended December 31, 2008, compares to an income tax benefit of $6.9 million for the year ended December 31, 2007. For the year ended December 31, 2007, we recorded a $10.4 million benefit related to the settlement of prior uncertain tax positions and a $3.2 million benefit related to certain tax benefits received in China related to additional investments made. In addition, we revalued certain foreign deferred tax assets and liabilities as a result of a March 2007 tax law change in China. The income tax provision for the year ended December 31, 2007, includes approximately $1.7 million of deferred tax expense related to this revaluation.

Excluding these items, our income tax provision in both 2008 and 2007 relates primarily to our profitable operations in China and Hong Kong. Because of the substantial net operating loss carry forwards previously existing in our U.S. and other tax jurisdictions; we have not fully recognized income tax benefits related to our substantial interest expense, among other expenses.

Year Ended December 31, 2007, Compared to Year Ended December 31, 2006

Net Sales. Net sales for the year ended December 31, 2007, were $714.3 million, representing a $20.7 million, or 2.8%, decrease from net sales for the year ended December 31, 2006.

Net sales by end-user market for the years ended December 31, 2007 and 2006, were as follows:


End-User Market (dollars in millions)	2007	2006
Automotive	$ 258.8	$ 241.5
Telecommunications	221.2	234.9
Industrial & Instrumentation, Medical, Consumer, and Other	159.3	167.5
Computer and Datacommunications	75.0	91.1
Total net sales	$ 714.3	$ 735.0

Our net sales of products for end use in the automotive market grew by approximately 7.2% during the year ended December 31, 2007, compared to 2006 based on sustained strong demand by global automotive producers. Net sales of products ultimately used in the telecommunications market declined by approximately 5.8% from the year ended December 31, 2006, to the year ended December 31, 2007, primarily as a result of weak demand, which included weak demand from two of our larger customers who merged in December 2006. In the industrial & instrumentation, medical, consumer and other market, cessation of a customer program for photo booths was the primary driver of our 4.9% decline of net sales to this end-user market, in which a broad base of other customers remained stable. An approximate 17.7% decline in net sales for the year ended December 31, 2007, of our products for use in the computer and data communications markets is largely the result of an existing customer executing a new strategy to broaden its supplier base.

Net sales by business segment for the years ended December 31, 2007 and 2006, were as follows:


Segment (dollars in millions)	2007	2006
Printed Circuit Boards	$ 489.8	$ 507.2
Assembly	243.1	245.3
Other	-	0.6
Eliminations	(18.6)	(18.1)
Total net sales	$ 714.3	$ 735.0

Printed Circuit Boards segment net sales, including intersegment sales, for the year ended December 31, 2007, declined by $17.4 million, or 3.4%, to $489.8 million. Four principal factors, including volume, selling price, product mix and currency changes, can affect PCB sales growth or decline from one period to the next. In 2007 compared to 2006, the decline in our Printed Circuit Boards segment primarily is the result of decreased sales volume resulting from weak demand experienced in our telecommunications, and computer and data communications end markets, partially offset by increased demand in our automotive end market and price increases.

Finished PCB volume, measured as total square feet of PCB surface area, declined by approximately 10% in 2007 compared to 2006, while our capacity to finish outer surfaces of products remained unchanged between years.

Like most electronic components, Printed Circuit Boards segment product prices historically have declined in sequential periods as a result of competitive pressures and manufacturing cost efficiencies. However, during 2006 we were successful in implementing broad-based PCB product price increases to compensate for unusually high increases in the costs of our commodity materials, including petroleum, copper and other precious metals. Approximately one-half of our sales during the year ended December 31, 2007, were derived from identical parts sold during the prior year. The price increases on identical parts averaged nearly 5%. We estimate that the favorable impact of price increases offset the overall sales decline in our Printed Circuit Boards segment in 2007 versus 2006 by 2.2%.

Printed Circuit Boards segment sales mix is affected by several factors, including layer count, hole density, line and space density, materials content, order size and other factors. For example, incremental layer content generally results in a higher selling price for an equivalent finished product outer surface square footage. In 2007, the volume mixture of different layer count PCB products was consistent as compared to 2006. As a result, we estimate that product mix changes did not significantly impact 2007 sales as compared to 2006.

The effects of changing currency rates added less than 1% to sales in 2007 compared to 2006, as less than 10% of our Printed Circuit Boards segment sales are denominated in currencies other than the U.S. dollar.

Assembly segment net sales declined by $2.2 million, or 0.9%, to $243.1 million for the year ended December 31, 2007. The decline was the result of reduced demand from select customers in our telecommunications and industrial & instrumentation end markets, partially offset by price premiums on certain fabricated metal products.

In addition to declines in net sales by our Printed Circuit Boards segment and Assembly segment, there was a $0.6 million decrease in sales from former manufacturing facilities in Europe and Canada in which operations have ceased.

Cost of Goods Sold. Cost of goods sold, exclusive of items shown separately in the consolidated statement of operations for the year ended December 31, 2007, was $570.4 million, or 79.8% of consolidated net sales. This represents a 2.0 percentage point improvement from the 81.8% of consolidated net sales achieved during 2006. The improvement is a result of cost improvement initiatives, partially offset by adverse trends in global commodities and currency exchange rates and cost trends in China.

In our Printed Circuit Boards segment, the cost of direct materials represents approximately 60% of our cost of sales. The quantities of materials and supplies used for production are responsible for the most significant costs in our Printed Circuit Boards segment. Materials, labor and overhead costs in the segment have been impacted by adverse trends in global commodities and currency exchange rates. Copper, which is used in our circuit plating processes, and which is used by our suppliers in the form of high-quality foil to make laminate materials that are the basic building blocks in our products, has increased in price substantially year-over-year in line with global copper trading price increases.

To a lesser degree, cost trends in China also adversely impacted our cost, including minimum wage increases, social benefit cost increases, and a strengthening of the Chinese Renminbi (“RMB”) versus the U.S. dollar by more than 6% during 2007. Despite these cost increases, wages and local operating costs there remain among the most competitive in the world. Finally, additional professional fees associated with cost improvement initiatives negatively impacted cost of goods sold by approximately $7.6 million for the year ended December 31, 2007.

Selling, General and Administrative Costs. Selling, general and administrative costs were $58.2 million, or 8.1% of net sales for the year ended December 31, 2007, and increased by $1.9 million compared to the year ended December 31, 2006. The increase is primarily due to general inflation across numerous costs and stock-based compensation (approximately $0.5 million). Approximately one-half of our costs are incurred to support our global operations and are not specific to any segment. These common costs are allocated to our Printed Circuit Boards segment and Assembly segment.

Depreciation. Depreciation expense for the year ended December 31, 2007, was $49.7 million, including $43.7 million related to our Printed Circuit Boards segment and $6.0 related to our Assembly segment. Depreciation expense in our Printed Circuit Boards segment increased by $4.5 million compared to the year ended December 31, 2006, as a result of investment in new equipment. Depreciation expense in our Assembly segment for the year ended December 31, 2007, was comparable to the prior year.

Restructuring and Impairment. Dating back to 2000, we have incurred substantial costs to downsize and/or close facilities in Europe and North America in response to market pressures for low cost products. We closed facilities in the United States, the Netherlands and Canada in prior years, and we continued to incur costs to maintain and to insure certain of the sites while we marketed those properties for sale. The primary components of restructuring and impairment (expense) income for the years ended December 31, 2007 and 2006, are as follows:


Restructuring Activity (dollars in millions)	2007	2006
Gains on sales of properties held for sale	$ -	$ 5.4
Personnel and severance reversals	-	1.4
Lease and other contractual commitment expenses	(0.3)	(1.5)
Asset impairments	-	(0.4)
Total (expense) income, net	$ (0.3)	$ 4.9

We incurred $0.3 million in restructuring and impairment charges for the year ended December 31, 2007, related to closed facilities sold late in 2006. We reported net restructuring and impairment gains of $4.9 million for the year ended December 31, 2006.

During the year ended December 31, 2006, we recognized net gains on sales of previously closed properties in the U.S., the Netherlands and Canada, and we reported the net gains as a reduction of restructuring and impairment expenses. In addition, we negotiated early payment of certain employment obligations in exchange for a discount of the total obligation, resulting in reversal of previously recognized severance expenses. Lease and other contractual commitment expenses during the year ended December 31, 2006, represent expenses incurred to maintain and insure the properties prior to disposal.

Operating Income. Operating income of $34.5 million for the year ended December 31, 2007, represents a decrease of $1.1 million compared to operating income of $35.6 million during the year ended December 31, 2006. The primary sources of operating income for the years ended December 31, 2007 and 2006, are as follows:


Source (dollars in millions)	2007	2006
Printed Circuit Boards segment (a)	$ 27.6	$ 23.6
Assembly segment (a)	7.2	6.7
Europe and Canada operations	-	0.4
Restructuring activities	(0.3)	4.9
Operating income	$ 34.5	$ 35.6

(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 years ended December 31, 2007 and 2006, operating income has been restated to conform to the presentation in the current period.

Operating income of our Printed Circuit Boards segment increased by $4.0 million to $27.6 million for the year ended December 31, 2007, compared to $23.6 million for the year ended December 31, 2006. The increase is primarily the result of cost reductions which drove a nearly 3% improvement in our PCB segment gross margin percentage, partially offset by increased depreciation expense, the decline in sales volume and additional professional fees associated with cost improvement and business growth initiatives.

Operating income of our Assembly segment increased by $0.5 million to $7.2 million for the year ended December 31, 2007, compared to operating income of $6.7 million in 2006. The improvement is primarily the result of improved product mix and price premiums on certain fabricated metal products.

Adjusted EBITDA. Reconciliations of operating income to adjusted EBITDA for years ended December 31, 2007 and 2006, were as follows:


	December 31,
Source (dollars in millions)	2007	2006
Operating income	$ 34.5	$ 35.6
Add-back
Depreciation and amortization	51.0	46.7
Restructuring and impairment	0.3	(4.9)
Non-cash stock compensation expense.	2.1	1.4
Adjusted EBITDA	$ 87.9	$ 78.8

Adjusted EBITDA increased by $9.1 million, or 11.5%, despite the 2.8% decline in net sales, primarily as a result of cost reduction initiatives and improved product mix.

Interest Expense, net. Interest expense, net of interest income, for the year ended December 31, 2007, was $21.7 million, compared with $30.7 million for the year ended December 31, 2006. Interest income earned in both years was immaterial. Interest expense related to our 2011 Senior Subordinated 10.5% Notes is approximately $21.0 million in each year as the $200.0 million principal and the 10.5% interest rate remain unchanged since the notes were issued in 2003.

Interest expense was $0.7 million for year ended December 31, 2007, under our 2006 Credit Agreement, and this expense varies from period to period based on the outstanding principal balances and letters of credit, both of which bear interest at floating rates. Interest expense on capital leases was approximately $0.7 million during the year ended December 31, 2007.

The significant reduction of net interest expense for the year ended December 31, 2007, compared to 2006 is primarily the result of the extinguishment of our 2003 Credit Agreement. Interest expense totaling approximately $9.3 million during the year ended December 31, 2006, was incurred on an average $165.6 million of term loan and

revolver loan borrowings under our then outstanding 2003 Credit Agreement at an average rate of 9.1%. We extinguished the remaining balance of our 2003 Credit Agreement in May 2006 by applying the proceeds from the sale of our wire harness business. Interest expense totaling approximately $0.5 million during the year ended December 31, 2006, was incurred on an average $19.6 million of revolver loan borrowings under the 2006 Credit Agreement which began in August 2006. Interest expense on capital leases was approximately $0.5 million during the year ended December 31, 2006.

Income Taxes. Income tax benefit of $6.9 million for the year ended December 31, 2007, compares to income tax expense of $18.5 million for the year ended December 31, 2006. Certain events unrelated to pre-tax income and expenses generated in 2007 impacted the 2007 income tax provision. For the year ended December 31, 2007, we recorded a $10.4 million benefit related to the settlement of prior uncertain tax positions and a $3.2 million benefit related to certain tax benefits received in China related to additional investments made. In addition, we revalued certain foreign deferred tax assets and liabilities as a result of a March 2007 tax law change in China. The income tax benefit for the year ended December 31, 2007, includes approximately $1.7 million of deferred tax expense related to this revaluation.

Excluding these items, our income tax provision in both 2007 and 2006 relates primarily to our profitable operations in China and Hong Kong. Because of the substantial net operating loss carry forwards previously existing in our U.S. and other tax jurisdictions; we have not fully recognized income tax benefits related to our substantial interest expense, among other expenses.

Discontinued Operations

On May 1, 2006, we sold our wire harness business to Electrical Components International Holdings Company (“ECI”), a newly-formed affiliate of Francisco Partners, L.P., a private equity firm, for gross cash proceeds of $320.0 million. Net cash proceeds reported in the accompanying consolidated statement of cash flows for the year ended December 31, 2006, of $307.9 million reflect reductions of the gross proceeds for i) cash of $3.0 million on deposit in bank accounts of the disposed business on the date of the transaction, ii) a $2.4 million contractual purchase price adjustment agreed and paid to the acquirer in June 2006, and iii) transaction costs of $6.7 million paid in 2006 related to the disposal. One further contractual purchase price adjustment, which was accrued at the time of the disposal, was settled at the estimated amount of approximately $2.0 million during the quarter ended June 30, 2007.

In the accompanying consolidated statement of operations for the year ended December 31, 2006, we recognized a net gain on the sale of our discontinued wire harness operations of $211.2 million. The gain is net of i) the carrying value of net assets disposed, ii) professional fees and other costs related to the disposal transaction, iii) actual and estimated purchase price adjustments, and iv) taxes of approximately $12.4 million.

We have classified the results of operations of our wire harness business as discontinued operations for all periods presented.

For the four months ended April 30, 2006, operating results for the discontinued operations are as follows (dollars in millions):


Net sales		$ 102.4

Operating income		$ 11.3

Income before income taxes		$ 11.4
Income tax provision		1.9
Net income		$ 9.5

Functional Currency

On January 1, 2007, we changed the functional currency for certain of our foreign subsidiaries from the local currency to the U.S. dollar due to a change in the way these businesses are financed, resulting in the U.S. dollar becoming the currency of the primary economic environment in which the subsidiaries operate. As a result, all foreign subsidiaries use the U.S. dollar as the functional currency effective January 1, 2007.

Prior to 2007, adjustments resulting from translating the foreign currency financial statements of these subsidiaries into the U.S. dollar have been included as a separate component of accumulated other comprehensive income (loss). Upon the change of the functional currency, these subsidiaries no longer generate such translation adjustments, and such translation adjustments from prior periods will continue to remain a component of accumulated other comprehensive income (loss).

Cash Flow

Net cash provided by operating activities was $53.7 million for the year ended December 31, 2008, compared to $63.8 million for the year ended December 31, 2007, and net cash used in operating activities of $1.8 million for the year ended December 31, 2006. The decrease in net cash provided by operating activities from 2007 to 2008 was primarily due to lower net income, partially offset by positive changes in working capital. The change in operating cash flows from 2006 to 2007 was primarily due to increased net income from continuing operations and positive changes in working capital.

Net cash used in investing activities was $48.3 million for the year ended December 31, 2008, compared to net cash used in investing activities of $37.0 million for the year ended December 31, 2007, and net cash provided by investing activities of $273.8 million for the year ended December 31, 2006. The increase from 2007 to 2008 was due primarily to higher capital expenditures. The 2007 decrease from 2006 was due to the 2006 one time cash inflows from disposals of i) our former wire harness business for net proceeds of $307.9 million, and ii) properties held for sale for net proceeds of $21.8 million.

Investing cash flows include capital expenditures of $42.9 million, $29.5 million and $47.0 million, related to our Printed Circuit Boards segment during the years ended December 31, 2008, 2007 and 2006, respectively. Continued growth in our Printed Circuit Boards segment and advances in technological requirements to meet customer needs were the primary drivers of our investments in property and equipment in that segment. Capital expenditures related to our Assembly segment in each of 2008, 2007 and 2006 were $5.8 million, $7.4 million and $5.6 million, respectively. Non-recurring cash outflows of investing activities during the year ended December 31, 2006, also include capital expenditures related to our former wire harness business of $3.0 million.

Net cash provided by financing activities of $13.6 million for the year ended December 31, 2008, related to net borrowings under our 2006 Credit Agreement term loan facility of $15.5 million, offset by the payment of capital lease obligations of $1.9 million. Net cash used in financing activities of $0.8 million for the year ended December 31, 2007, related entirely to the payment of capital lease obligations. Net cash used in financing activities was $270.5 million for the year ended December 31, 2006, including the extinguishment of $262.4 million of our 2003 Credit Agreement paid primarily from the net proceeds of the disposal of our wire harness business. Cash used by financing activities in 2006 also includes $3.3 million of costs incurred in connection with the establishment of our 2006 Credit Agreement, plus scheduled principal payments on capital lease obligations of $4.9 million.

Financing Arrangements

In August 2006, we entered into a credit facility with UBS AG Hong Kong Branch and UBS AG, Singapore Branch (together “UBS”) which provided us with $80.0 million in revolving and term loans under a four-year, senior secured credit facility (the “2006 Credit Agreement”). The facility was structured entirely as a revolving credit facility until February 2008, at which time $20.0 million of the facility converted to a term loan with principal amortization scheduled over the remaining life of the facility. Substantially all of our non-U.S. assets serve as security for this facility. In January 2008, we borrowed $20.0 million under the 2006 Credit Agreement revolving

loan facility, which as of February 19, 2008, was converted to a term loan (the “Term Loan”) as required by the original terms of the 2006 Credit Agreement. During the year ended December 31, 2008, we made scheduled principal payments of $4.5 million. The Term Loan is payable in quarterly installments through July 2010, with remaining maturities of $7.5 million and $8.0 million in 2009 and 2010, respectively. Approximately $2.8 million of letters of credit were outstanding under our 2006 Credit Agreement as of December 31, 2008, which reduced the total available for revolving loans.

In December 2003, we completed an offering of $200.0 million of 10.5% Senior Subordinated Notes due 2011. The proceeds from this offering were used to repay a portion of original term loan borrowings under our then existing senior credit facility (the “2003 Credit Agreement”). The entire original principal balance of the notes remained outstanding at December 31, 2008.

In May 2006, we extinguished the remaining term loan balance under the 2003 Credit Agreement using the net proceeds from the sale of our wire harness business, and in August 2006, we terminated the remaining revolving credit portion of the 2003 Credit Agreement with cash available from continuing operations.

During 2008 and 2007, we did not enter into any new capital leases obligations; however, in 2006 we entered into a capital lease obligation of $11.6 million for certain new equipment.

Liquidity

We had cash and cash equivalents at December 31, 2008 and 2007, of $83.1 million and $64.0 million, respectively. At December 31, 2008, we had open letters of credit issued in the amount of $2.8 million, and no outstanding borrowings under the $60.0 million Facility B revolving credit facility of our 2006 Credit Agreement, resulting in available credit of $57.3 million.

Given the uncertainty about global economic conditions, management has and will continue to focus on managing capital expenditures to respond to changing economic conditions. Subject to changes in customer demand and other market conditions, we anticipate making capital expenditures of approximately $40.0 million during 2009. We believe that cash flow from operations, available cash on hand and the cash available from the revolving credit facility of our 2006 Credit Agreement will be sufficient to fund our capital expenditures and other currently anticipated cash needs, including, i) our semi-annual $10.5 million interest payments on our senior subordinated notes, payable in January and July each year, ii) working capital needs, iii) scheduled capital lease payments for equipment leased by our Printed Circuit Boards segment, and iv) debt service requirements in connection with the 2006 Credit Agreement.

Our ability to meet our cash needs through cash generated by our operating activities will depend on the demand for our products, as well as general economic, financial, competitive and other factors, many of which are beyond our control. We cannot assure you that our business will generate sufficient cash flow from operations, that currently anticipated cost savings and operating improvements will be realized on schedule or that future borrowings will be available to us under our credit facility and our ability to raise third party financing in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness.

Recent instability in the financial markets has lead to the consolidation, restructuring and closure of certain financial institutions. Should any of the financial institutions who maintain our cash deposits or who are party to our 2006 Credit Agreement become unable to repay our deposits or honor their commitments under our 2006 Credit Agreement, it could have a material adverse effect on our liquidity. As of December 31, 2008, approximately 20% of our cash balances were on deposit with Citibank (China), which is a subsidiary of Citigroup Inc. As of February 27, 2009, the United States government has taken certain actions to stabilize Citigroup Inc. in an effort to remove uncertainty and restore confidence in that company. Management has been monitoring, and will continue to monitor, the stability of Citigroup, Inc. and the appropriateness of our depository relationship with Citibank (China).

We continue to explore certain alternatives that may impact our liquidity, including but not limited to acquisitions, debt refinancing, debt retirement and equity offerings. We can give no assurance of our ability to execute any of these alternatives.

Off Balance Sheet Arrangements

None.

Backlog

We estimate that our backlog of unfilled orders as of December 31, 2008, was approximately $78.0 million, which includes $54.1 million and $23.9 million from our PCB and Assembly segments, respectively. This compares to our backlog of unfilled orders of $159.6 million at December 31, 2007, which included $101.3 million and $58.3 million from our PCB and Assembly segments, respectively. Because unfilled orders may be cancelled prior to delivery, the backlog outstanding at any point in time is not necessarily indicative of the level of business to be expected in the ensuing period. The decline in backlog as of December 31, 2008, when compared to December 31, 2007, is due primarily to weaker customer demand resulting from global economic conditions.

Related Party Transactions

Monitoring and Oversight Agreement

We entered into a ten-year monitoring and oversight agreement with an affiliate of Hicks, Muse, Tate & Furst, Incorporated (“HMTF”), effective as of January 31, 2003. Under the monitoring and oversight agreement, we are required to pay HMTF an annual fee for oversight and monitoring services equal to the lesser of (i) 2% of our consolidated adjusted EBITDA for such year or (ii) $1.5 million. The fee is payable for the preceding year following the completion of the audited financial statements for the preceding year, provided that HMTF may elect to defer the payment of their fees, in which case these amounts will become due and payable at such time as HMTF elects to require the payment of these obligations. The monitoring and oversight agreement makes available the resources of HMTF concerning a variety of financial and operational matters. These services have been provided not only by Mr. Furst and Mr. Herring, outside the scope of their duties as our directors, but also from numerous other principals and employees of HMTF. Mr. Furst and Mr. Herring are each principals of HMTF. HMTF has performed various monitoring and oversight services, including providing input in management’s establishment of our financial and strategic acquisition plans. HMTF monitors the viability and implementation of our strategic plan through actions such as review of monthly financial data, management briefings and facility visits. HMTF is also entitled to reimbursement for any expenses incurred by it in connection with rendering services under the monitoring and oversight agreement. In addition, we have agreed to indemnify HMTF, its affiliates, and their respective directors, officers, controlling persons, agents and employees from and against all claims, liabilities, losses, damages, expenses and fees and disbursements of counsel related to or arising out of or in connection with the services rendered by HMTF under the monitoring and oversight agreement and not resulting primarily from the bad faith, gross negligence, or willful misconduct of HMTF. The consolidated statements of operations include expenses of $1.5 million for each of the years ended December 31, 2008, 2007 and 2006, related to the monitoring and oversight agreement.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires that management make certain estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates and assumptions and the differences may be material. Significant accounting policies, estimates and judgments that management believes are the most critical to aid in fully understanding and evaluating the reported financial results are discussed below.

Revenue Recognition

We recognize revenue when all of the following criteria are satisfied: persuasive evidence of an arrangement exists; risk of loss and title transfer to the customer; the price is fixed and determinable; and collectibility is reasonably assured. Sales and related costs of goods sold are included in income when goods are shipped to the customer in accordance with the delivery terms and the above criteria are satisfied. All services are performed prior to invoicing customers for any products manufactured by us. We monitor and track product returns, which have historically been within our expectations and the provisions established. Reserves for product returns are recorded based on historical trend rates at the time of sale. Despite our efforts to improve our quality and service to customers, we cannot guarantee that we will continue to experience the same or better return rates than we have in the past. Any significant increase in returns could have a material negative impact on our operating results.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable balances represent customer trade receivables generated from our operations. We evaluate collectibility of accounts receivable based on a specific case-by-case analysis of larger accounts; and based on an overall analysis of historical experience, past due status of the entire accounts receivable balance, and the current economic environment. Based on this evaluation, we make adjustments to the allowance for doubtful accounts for expected losses. We also perform credit evaluations and adjust credit limits based upon each customer’s payment history and credit worthiness. While credit losses have historically been within our expectations and the provisions established, actual bad debt write-offs may differ from our estimates, resulting in higher or lower charges in the future for our allowance for doubtful accounts.

Inventories

Inventories are stated at the lower of cost (valued using the first-in, first-out (FIFO) method) or market. Cost includes raw materials, labor and manufacturing overhead.

We apply judgment in valuing our inventories by assessing the net realizable value of our inventories based on current expected selling prices, as well as factors such as obsolescence and excess stock and providing valuation allowances as necessary. Should we not achieve our expectations of the net realizable value of our inventory, future losses may occur.

Long-Lived Assets, Including Goodwill

We conduct impairment reviews of long-lived assets, including goodwill. Such reviews require us to make estimates of future cash flows and fair values. We utilize discounted and non-discounted cash flow models in our reviews, and our cash flow projections include significant assumptions about economic conditions, demand and pricing for our product, and costs. In addition, our determination of whether or not impairment exists requires us to make certain assumptions and estimates in determining fair value of the reporting unit. While significant judgment is required, we believe that our assumptions and estimates are reasonable. However, should our assumptions change in the future, our fair value models could result in lower fair values for long-lived assets and goodwill, which could materially affect the value of property, plant and equipment and goodwill and results of operations. In addition to performing the annual impairment tests for 2008 and 2007, we reviewed the goodwill balance for impairment upon the announcement of our restructuring plans on November 24, 2008. No adjustments were recorded to the balance of goodwill as a result of these reviews. In connection with the restructuring plans announced in November 2008, we also reviewed the balance of certain items of property, plant and equipment for impairment. As a result of this review we recorded a non-cash impairment charge of $5.6 million during the fourth quarter of 2008.

Income Taxes

We record a valuation allowance to reduce our deferred tax assets to the amount that we believe will more likely than not be realized. While we have considered future taxable income and ongoing prudent, feasible tax planning strategies in assessing the need for the valuation allowance, in the event we were to determine that we would not be able to realize all or part of our net deferred tax assets in the future, an adjustment to the net deferred tax assets would be charged to income in the period such determination was made. Similarly, should we determine that we would be able to realize our deferred tax assets in the future in excess of its net recorded amount, an adjustment to the net deferred tax asset would increase income in the period such determination was made.

Effective January 1, 2007, we adopted the provisions of Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - An Interpretation of FASB Statement No. 109 (“FIN 48”). FIN 48 addresses the determination of how tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under FIN 48, we must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Upon adoption, we increased our existing reserves for uncertain tax positions by $10.2 million. This increase was recorded as a cumulative effect adjustment to the opening balance of accumulated deficit on January 1, 2007.

Derivative Financial Instruments and Fair Value Measurements

We conduct our business in various regions of the world, and export and import products to and from several countries. As a result, a significant portion of our expenses and some of our sales are frequently denominated in local currencies. From time to time, we enter into foreign exchange forward contracts to minimize the short-term impact of foreign currency fluctuations. However, there can be no assurance that these activities will eliminate or reduce foreign currency risk. We do not engage in hedging transactions for speculative investment reasons.

The foreign exchange forward contracts are designated as cash flow hedges and are accounted for at fair value. As of January 1, 2008, we adopted SFAS No. 157, Fair Value Measurements (“SFAS No. 157”) for financial assets and liabilities. SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. We record deferred gains and losses related to cash flow hedges based on their fair value using a market approach. The effective portion of the change in each cash flow hedge’s gain or loss is reported as a component of other comprehensive income, net of taxes. The ineffective portion of the change in the cash flow hedge’s gain or loss is recorded in earnings at each measurement date. Gains and losses on derivative contracts are reclassified from accumulated other comprehensive income (loss) to current period earnings in the line item in which the hedged item is recorded at the time the contracts are settled. 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 of operations. At December 31, 2008 we have foreign exchange contracts outstanding which hedge a notional amount of 840 million Chinese RMB at an average exchange rate of 6.797 with a weighted average remaining maturity of six months.

Recently Adopted Accounting Pronouncements

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (“SFAS No. 159”). SFAS No. 159 provides companies with an option to report selected financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings at each subsequent reporting date. SFAS No. 159 was effective as of the beginning of 2008, and we have not elected the fair value option for any financial instruments.

In September 2006, the SEC released Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (“SAB No. 108”). SAB No. 108 addresses how the effects of prior-year uncorrected misstatements should be considered when quantifying misstatements in current year financial statements. SAB No. 108 requires an entity to quantify

misstatements using a balance sheet and income statement approach and to evaluate whether either approach results in quantifying an error that is material in light of relevant quantitative and qualitative factors. We adopted SAB No. 108 in the fourth quarter of 2006.

In 2006, we identified certain errors in previously reported financial statements, which were evaluated under the criteria of SAB No. 108. The following table summarizes the items and amounts, net of tax where applicable, of the cumulative effect adjustment resulting in the increase to accumulated deficit.


Nature of Adjustment (dollars in millions)		Amount
Lease termination		$ 4.1
Impaired long-lived assets		2.2
Lifetime medical benefits		1.1
Accrued vacation		1.2
		$ 8.6

These amounts were evaluated on a qualitative and quantitative basis, both individually and in the aggregate, and were not deemed material to any prior years under the income statement approach. However, in connection with the adoption of SAB No. 108, we have corrected these errors because these amounts have been deemed material using the balance sheet approach.

The transition provisions of SAB No. 108 permit us to adjust for the cumulative effect on retained earnings of immaterial errors relating to prior years. Accordingly, we recognized a cumulative effect adjustment to increase accumulated deficit as of January 1, 2006, totaling $8.6 million (net of a tax benefit of $0.1 million). SAB No. 108 also requires the adjustment of any prior quarterly financial statement within the fiscal year of adoption for the effects of such errors on the quarters when the information is next presented. Such adjustments do not require previously filed reports with the SEC to be amended.

Recently Issued Accounting Pronouncements

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (“SFAS No. 141(R)”). SFAS No. 141(R) changes the accounting for business combinations in a number of areas including the treatment of contingent consideration, pre-acquisition contingencies, transaction costs, in-process research and development and restructuring costs. In addition, under SFAS No. 141(R), changes in an acquired entity’s deferred tax assets and uncertain tax positions after the measurement period will impact income tax expense. SFAS No. 141(R) is effective beginning in fiscal year 2009. This standard will change our accounting treatment for business combinations on a prospective basis, when adopted.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133 (“SFAS No. 161”). SFAS No. 161 requires enhanced disclosures about an entity’s derivative and hedging activities. Entities will be required to provide enhanced disclosures about: (a) how and why an entity uses derivative instruments; (b) how derivative instruments and related hedge items are accounted for under SFAS No. 133 and its related interpretations; and (c) how derivative instruments and related hedge items affect an entity’s financial position, financial performance and cash flows. We are required to adopt SFAS No. 161 beginning in fiscal year 2009, and while it will impact our disclosures, it will not affect our results of operations or financial condition.

Contractual Obligations

The following table provides a summary of future payments due under contractual obligations and commitments as of December 31, 2008:


Contractual Obligations (dollars in millions)	Less Than 1 year	1 – 3 years	3 – 5 years	More Than 5 years	Total

Senior subordinated notes	$ -	$ 200.0	$ -	$ -	$ 200.0
Interest on senior subordinated notes	21.0	31.5	-	-	52.5
2006 Credit Agreement	7.5	8.0	-	-	15.5
Capital lease payments	2.6	2.8	0.2	0.8	6.4
Operating leases	5.3	6.6	0.9	1.4	14.2
Restructuring payments	9.3	1.3	1.3	1.5	13.4
Management fees (a)	1.8	0.6	0.6	12.7	15.7
Unrecognized tax benefits (b)	1.6	-	-	-	1.6
Disposition agreements	0.2	-	-	-	0.2
Deferred compensation	0.1	0.2	0.2	1.9	2.4
Purchase orders	42.6	-	-	-	42.6
Total	$ 92.0	$ 251.0	$ 3.2	$ 18.3	$ 364.5

(a)

Includes a management fee of $1.5 million owed to HMTF in 2008 in connection with the monitoring and oversight agreement. The agreement requires an annual fee equal to the lesser of $1.5 million or 2% of consolidated adjusted EBITDA, which has been excluded for all periods subsequent to 2008 as the amounts are indeterminable. The agreement expires January 2013.

(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, 2008. The liability for unrecognized tax benefits of $16.2 million included in other non-current liabilities at December 31, 2008, has been excluded from the above table as we cannot make a reasonably reliable estimate of the timing of future payments.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

As of December 31, 2008, we had a $15.5 million outstanding long-term loan with a variable interest rate, and we may have additional variable rate long-term debt in the future. Accordingly, our earnings and cash flows could be affected by changes in interest rates in the future. As of December 31, 2008, our variable rate debt bears interest at the London Inter-Bank Offer Rate (“LIBOR”) plus 1.625% per annum. Based on the December 31, 2008, LIBOR rate, we do not believe a 10% movement in LIBOR would have a material effect on our financial condition, operating results or cash flows.

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, principally the Chinese RMB, Hong Kong dollar, Canadian dollar and Euro. A significant portion of our expenses and some of our sales are in local currencies, and our 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 in Chinese RMB. We do not engage in hedging transactions for speculative investment reasons. Our hedging transactions historically have not been material, and gains or losses from these transactions 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. Based on December 31, 2008, exchange rates, an increase or decrease in foreign exchange rates of 10% (ignoring the effects of hedging) would result in an increase or decrease, respectively, in our operating expenses of approximately $22.0 million per year.

Commodity Price Risk

We purchase diesel fuel to generate portions of our energy in certain of our manufacturing facilities using generators, and we will be required to bear the increased cost of generating energy if the cost of oil increases. In addition, the materials we purchase to manufacture printed circuit boards contain copper, gold, silver and tin. To the extent the prices for such metals increase, our cost to manufacture printed circuit boards will increase. Prices for copper, gold, silver, tin and oil have a history of substantial increases in recent years. Future price increases for such commodities would increase our cost and could have an adverse effect on our results of operations.

Item 8.

Financial Statements and Supplementary Data

Index To Financial Statements


Viasystems, Inc. & Subsidiaries
Report of Independent Registered Public Accounting Firm	41
Consolidated Balance Sheets as of December 31, 2008 and 2007	42
Consolidated Statements of Operations for the years ended December 31, 2008, 2007 and 2006	43
Consolidated Statements of Stockholder’s Equity (Deficit) and Comprehensive Income (Loss) for the years ended December 31, 2008, 2007 and 2006	44
Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006	45
Notes to Consolidated Financial Statements	46

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholder

Viasystems, Inc.

We have audited the accompanying consolidated balance sheets of Viasystems, Inc. and subsidiaries (the Company) as of December 31, 2008 and 2007, and the related consolidated statements of operations, stockholder’s equity (deficit) and comprehensive income (loss), and cash flows for each of the three years in the period ended December 31, 2008. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Viasystems, Inc. and subsidiaries as of December 31, 2008 and 2007, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2008, in conformity with U.S. generally accepted accounting principles.

As discussed in Note 1 to the consolidated financial statements, on January 1, 2007, the Company changed its method for accounting for uncertain tax positions, and on January 1, 2006, the Company changed its method of quantifying misstatements in current year financial statements.

/s/ Ernst & Young LLP

St. Louis, Missouri

March 30, 2009

VIASYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)


	December 31,
	2008	2007
ASSETS
Current assets:
Cash and cash equivalents	$ 83,053	$ 64,002
Restricted cash	303	303
Accounts receivable, net	96,564	135,326
Inventories	70,419	81,058
Prepaid expenses and other	11,599	11,049
Total current assets	261,938	291,738

Property, plant and equipment, net	232,741	243,973
Goodwill	79,485	79,485
Intangible assets, net	5,780	6,904
Deferred financing costs, net	3,917	5,980
Other assets	2,181	1,153
Total assets	$ 586,042	$ 629,233

LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Current maturities of long-term debt	$ 9,617	$ 1,796
Accounts payable	74,668	112,765
Accrued and other liabilities	50,832	59,913
Income taxes payable	7,224	4,517
Deferred taxes	479	2,287
Total current liabilities	142,820	181,278

Long-term debt, less current maturities	211,046	204,817
Deferred taxes	-	411
Other non-current liabilities	32,882	35,473
Total liabilities	386,748	421,979

Commitments and contingencies

Stockholder’s equity:
Common stock; $0.01 par value, 1,000 shares authorized, issued and outstanding	-	-
Paid-in capital	2,437,792	2,437,177
Accumulated deficit	(2,242,445)	(2,236,742)
Accumulated other comprehensive income	3,947	6,819
Total stockholder’s equity	199,294	207,254
Total liabilities and stockholder’s equity	$ 586,042	$ 629,233

See accompanying notes to consolidated financial statements.

VIASYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)


	Year Ended December 31,
	2008	2007	2006

Net sales	$ 712,830	$ 714,343	$ 734,992
Operating expenses:
Cost of goods sold, exclusive of items shown separately	568,356	570,384	601,232
Selling, general and administrative	52,475	58,215	56,325
Depreciation	53,285	49,704	45,422
Amortization	1,243	1,269	1,325
Restructuring and impairment	15,069	278	(4,915)
Operating income	22,402	34,493	35,603

Other expense (income):
Interest expense, net	21,815	21,687	30,715
Amortization of deferred financing costs	2,063	2,065	1,678
Loss on early extinguishment of debt	-	-	1,498
Other, net	(711)	277	1,406
(Loss) income before income taxes	(765)	10,464	306

Income tax provision	4,938	(6,853)	18,514

(Loss) income from continuing operations	(5,703)	17,317	(18,208)

Income from discontinued operations, net of tax	-	-	9,475
Gain on disposition of discontinued operations, net of tax	-	-	211,170

Net (loss) income	$ (5,703)	$ 17,317	$ 202,437

See accompanying notes to consolidated financial statements.

VIASYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY (DEFICIT) AND COMPREHENSIVE INCOME (LOSS)

(in thousands)


	Common Stock	Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehen-sive Income (Loss)	Total

Balance at December 31, 2005	$ -	$ 2,433,587	$ (2,437,655)	$ 2,340	$ (1,728)

Cumulative effect of adoption of SAB No. 108, net of taxes of $112	-	-	(8,628)	-	(8,628)
Comprehensive income:
Net income	-	-	202,437	-	202,437
Change in fair value of derivatives, net of taxes of $0	-	-	-	34	34
Foreign currency translation, net of taxes of $0	-	-	-	4,248	4,248
Total comprehensive income					206,719
Stock compensation expense, net of taxes of $0	-	1,505	-	-	1,505
Balance at December 31, 2006	-	2,435,092	(2,243,846)	6,622	197,868

Cumulative effect of adoption of FIN 48	-	-	(10,213)	-	(10,213)
Comprehensive income:
Net income	-	-	17,317	-	17,317
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					17,514
Stock compensation expense, net of taxes of $0	-	2,085	-	-	2,085
Balance at December 31, 2007	-	2,437,177	(2,236,742)	6,819	207,254


Comprehensive income (loss):
Net loss	-	-	(5,703)	-	(5,703)
Change in fair value of derivatives, net of taxes of $0	-	-	-	(2,872)	(2,872)
Total comprehensive loss					(8,575)
Stock compensation expense, net of taxes of $0	-	615	-	-	615
Balance at December 31, 2008	$ -	$ 2,437,792	$ (2,242,445)	$ 3,947	$ 199,294

Accumulated other comprehensive income at December 31, 2008 and 2007, includes the following:


	2008	2007
Foreign currency translation	$ 6,469	$ 6,469
Unrecognized (loss) gain on derivatives	(2,522)	350
	$ 3,947	$ 6,819

See accompanying notes to consolidated financial statements.

VIASYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


	Year Ended December 31,
	2008	2007	2006
Cash flows from operating activities:
Net (loss) income	$ (5,703)	$ 17,317	$ 202,437
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization	54,528	50,973	49,229
Impairment of assets	5,558	-	438
Amortization of deferred financing costs	2,063	2,065	1,678
Non-cash stock compensation expense	615	2,085	1,505
Non-cash impact of exchange rate changes	(631)	595	-
Loss (gain) on sale of property, plant and equipment	671	967	(5,200)
Deferred taxes	(2,822)	(1,120)	(403)
Gain on sale of discontinued operations, net of tax	-	-	(211,170)
Non-cash portion of loss on early extinguishment of debt	-	-	1,313

Change in assets and liabilities:
Accounts receivable	38,762	(3,831)	(18,401)
Inventories	10,639	4,127	(6,664)
Prepaid expenses and other	(1,456)	4,114	(6,756)
Intercompany receivable with Viasystems Group, Inc	-	-	2,903
Accounts payable	(38,097)	(2,345)	(13,251)
Accrued and other liabilities	(13,096)	(12,523)	(1,928)
Income taxes payable	2,707	1,370	2,432
Net cash provided by (used in) operating activities	53,738	63,794	(1,838)

Cash flows from investing activities:
Capital expenditures	(48,925)	(37,197)	(55,940)
Proceeds from disposals of property, plant and equipment	663	205	21,831
Net proceeds from disposal of business	-	-	307,927
Net cash (used in) provided by investing activities	(48,262)	(36,992)	273,818

Cash flows from financing activities:
Proceeds from borrowing under credit facilities	20,000	-	-
Repayment of amounts due under credit facilities	(4,500)	-	(262,350)
Repayment of other long-term and capital lease obligations	(1,925)	(754)	(4,865)
Financing and other fees	-	-	(3,331)
Net cash provided by (used in) financing activities	13,575	(754)	(270,546)

Effect of exchange rate changes on cash and cash equivalents	-	-	597
Net change in cash and cash equivalents	19,051	26,048	2,031
Cash and cash equivalents, beginning of year	64,002	37,954	35,923
Cash and cash equivalents, end of year	$ 83,053	$ 64,002	$ 37,954

Supplemental cash flow information: Interest paid	$ 22,152	$ 21,585	$ 36,393
Income taxes paid, net	$ 6,400	$ 7,804	$ 7,696
Significant non-cash investing and financing activities:
Capital lease	$ -	$ -	$ 11,594

See accompanying notes to consolidated financial statements.

VIASYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data)

Summary of Significant Accounting Policies

Viasystems, Inc. and subsidiaries (“Viasystems” or the “Company”), a wholly owned subsidiary of Viasystems Group, Inc. (“Group”), was formed on April 2, 1997. On April 10, 1997, Group contributed to Viasystems all of the capital of its then existing subsidiaries. Prior to the contribution of capital by Group, Viasystems had no operations of its own. The consolidated financial statements included herein present the results of operations of Viasystems, Inc. and its subsidiaries.

Nature of Business

Viasystems is a leading worldwide provider of complex multi-layer printed circuit boards and electro-mechanical solutions. The Company’s products are used in a wide range of applications, including automotive dash panels and control modules, data networking equipment, telecommunications switching equipment, and complex medical and technical instruments.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Viasystems. All intercompany accounts and transactions have been eliminated in consolidation. On May 1, 2006, the Company sold its wire harness business. The results of operations of the disposed wire harness business are classified as discontinued operations for all periods presented. The consolidated statements of cash flows include the cash flows of the wire harness business for all periods presented. These notes to the consolidated financial statements are presented on a continuing operations basis, except where otherwise indicated.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States (“U.S.”) requires management to make estimates and assumptions that affect i) the reported amounts of assets and liabilities, ii) the disclosure of contingent assets and liabilities at the date of the financial statements and iii) the reported amounts of revenues and expenses during the reporting period.

Estimates and assumptions are used in accounting for the following significant matters, among others:

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 the Company’s stock-based compensation plan.

Actual results may differ from previously estimated amounts, and such differences may be material to the Company’s consolidated financial statements. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period in which the revision is made. The Company does not consider as material any revisions made to estimates or assumptions during the periods presented in the accompanying consolidated financial statements.

Cash and Cash Equivalents

The Company considers short-term highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Accounts Receivable and Concentration of Credit Risk

Accounts receivable balances represent customer trade receivables generated from the Company’s operations. To reduce the potential for credit risk, the Company evaluates the collectibility of customer balances based on a combination of factors but does not generally require significant collateral. The Company regularly analyzes significant customer balances, and when it becomes evident a specific customer will be unable to meet its financial obligations to the Company for reasons including, but not limited to, bankruptcy filings or deterioration in the customer’s operating results or financial position, a specific allowance for doubtful accounts is recorded to reduce the related receivable to the amount that is believed reasonably collectible. The Company also records an allowance for doubtful accounts for all other customers based on a variety of factors, including the length of time the receivables are past due, historical experience and current economic conditions. If circumstances related to specific customers change, estimates of the recoverability of receivables could be further adjusted.

The provision for bad debts is included in selling, general and administrative expense. Account balances are charged off against the allowance when the Company believes it is probable the receivable will not be recovered.

Inventories

Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method. Cost includes raw materials, labor and manufacturing overhead.

Property, Plant and Equipment

Property, plant and equipment are stated at cost. Repairs and maintenance that do not extend the useful life of an asset are charged to expense as incurred. The useful lives of leasehold improvements are the lesser of the remaining lease term or the useful life of the improvement. When assets are retired or otherwise disposed of, their costs and related accumulated depreciation are removed from the accounts and any resulting gains or losses are included in the operations for the period. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets as follows:


Buildings	20-50 years
Leasehold improvements	3-15 years
Machinery, equipment, systems and other	3-10 years

Impairment of Long-Lived Assets

The Company reviews intangibles assets with a finite life and other long-lived assets for impairment if facts and circumstances exist that indicate that the asset’s useful life is shorter than previously estimated or the carrying amount may not be recoverable from future operations based on undiscounted expected future cash flows. Impairment losses are recognized in operating results for the amount by which the carrying value of the asset exceeds its fair value. In addition, the remaining useful life of an impaired asset group would be reassessed and revised, if necessary.

Goodwill

Goodwill is recorded when the consideration paid for an acquisition exceeds the fair value of identifiable net tangible and identifiable intangible assets acquired. In accordance with the Statement of Financial Accounting Standards (“SFAS”) No. 142, Goodwill and Other Intangible Assets (“SFAS No. 142”), goodwill and other

indefinite-lived intangible assets are no longer amortized but are reviewed for impairment at least annually and, if a triggering event were to occur in an interim period.

Intangible Assets

Intangible assets consist primarily of identifiable intangibles acquired. Amortization of identifiable intangible assets acquired is computed using systematic methods over the estimated useful lives of the related assets as follows:


	Life	Method
Developed technologies	15 years	Double-declining balance
Patents and trademarks	5 years	Straight-line

Impairment testing of these assets would occur if and when an indicator of impairment is identified.

Deferred Financing Costs

Product Warranties

Environmental Costs

Derivative Financial Instruments

From time to time, the Company enters into foreign exchange forward contracts to minimize the short-term impact of foreign currency fluctuations. However, there can be no assurance that these activities will eliminate or reduce foreign currency risk. The foreign exchange forward contracts are designated as cash flow hedges and are accounted for at fair value. The effective portion of the change in each cash flow hedge’s gain or loss is reported as a component of other comprehensive income (loss), net of taxes. The ineffective portion of the change in the cash flow hedge’s gain or loss is recorded in earnings at each measurement date. Gains and losses on derivative contracts are reclassified from accumulated other comprehensive income (loss) to current period earnings in the line item in which the hedged item is recorded at the time the contracts are settled.

Foreign Currency Translation

On January 1, 2007, the Company changed the functional currency for certain foreign subsidiaries from the local currency to the U.S. dollar due to a change in the way these businesses are financed, resulting in the U.S. dollar becoming the currency of the primary economic environment in which the subsidiaries operate. As a result, all foreign subsidiaries use the U.S. dollar as the functional currency effective January 1, 2007. Prior to 2007, adjustments resulting from translating the foreign currency financial statements of these subsidiaries into the U.S. dollar have been included as a separate component of accumulated other comprehensive income (loss). Upon the change of the functional currency, these subsidiaries no longer generate such translation adjustments, and such translation adjustments from prior periods will continue to remain a component of accumulated other comprehensive income (loss).

There was no translation adjustment recorded for the year ended December 31, 2008, and the net translation adjustment for the years ended December 31, 2007 and 2006, were losses of $44 (net of tax of $0) and gains of $4,248 (net of tax of $0), respectively. The 2007 amount represents an adjustment as a result of the reversal of cumulative translation adjustments required in connection with the liquidation of foreign investments. The 2006 amount was the result of currency rate changes during the year.

Also included in net income are the gains and losses arising from transactions denominated in a currency other than the functional currency of a location, the impact of remeasuring assets and liabilities of foreign subsidiaries using U.S. dollars as their functional currency, and the realized results of the Company’s foreign currency hedging activities.

Fair Value of Financial Instruments

As of January 1, 2008, the Company adopted the provisions of SFAS No. 157, Fair Value Measurements (“SFAS No. 157”) for financial assets and liabilities. SFAS No. 157 defines fair value, establishes a framework for measuring fair value, expands disclosures about fair value measurements, and established a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows: Level 1 - observable inputs such as quoted prices in active markets; Level 2 - inputs, other than quoted market prices in active markets, which are observable, either directly or indirectly; and Level 3 - valuations derived from valuation techniques in which one or more significant inputs are unobservable. In addition, SFAS No. 157 discusses valuation techniques which may be used, including the market approach, using comparable market prices; the income approach, using present value of future income or cash flow; and the cost approach, using the replacement cost of assets. Under the provisions of FASB Staff Position No. FAS 157-2, Effective Date of FASB Statement No. 157, the Company elected to defer the adoption of SFAS No. 157 until 2009 for nonfinancial assets and liabilities.

The Company records deferred gains and losses related to cash flow hedges based on the fair value of active derivative contracts on the reporting date, as determined using a market approach (see Note 12). As quoted prices in active markets are not available for identical contracts, Level 2 inputs are used to determine fair value. These inputs include quotes for similar but not identical derivative contracts and market interest rates which are corroborated with publicly available market information. Upon adoption of SFAS No. 157, Level 3 inputs were used to determine the opening fair value of the Company’s active derivative contracts. Subsequently, the Company was able to corroborate the fair value using Level 2 inputs. As a result, the Company has reclassified all of its derivative contracts which were active as of January 1, 2008, to Level 2.

The Company’s financial instruments consist of cash equivalents, accounts receivable, notes receivable, long-term debt, and other long-term obligations. For cash equivalents, accounts receivable, notes receivable and other long-term obligations, the carrying amounts approximate fair value. The estimated fair market values of the Company’s long-term debt instruments and cash flow hedges are as follows:


	December 31,
	2008	2007
Senior subordinated Notes due 2011	$150,000	$194,250
2006 Credit Agreement	15,500	-
Cash flow hedges	(2,522)	350

The Company determined the 2008 and 2007 fair value of the Senior Subordinated Notes due 2011 (“Senior Notes”) using quoted market prices for the Senior Notes. As the balance owed on the 2006 Credit Agreement bears interest at a variable rate, the carrying value of 2006 Credit Agreement approximates its fair value. There was no balance outstanding on the Company’s 2006 Credit Agreement at December 31, 2007.

Revenue Recognition

Revenue is recognized when all of the following criteria are satisfied: persuasive evidence of an arrangement exists; risk of loss and title transfer to the customer; the price is fixed and determinable; and collectibility is reasonably assured. Sales and related costs of goods sold are included in income when goods are shipped to the customer in accordance with the delivery terms, except in the case of vendor managed inventory arrangements, whereby sales and the related costs of goods sold are included in income when possession of goods is taken by the customer. Generally, there are no formal customer acceptance requirements or further obligations related to manufacturing services. If such requirements or obligations exist, then revenue is recognized at the time when such requirements are completed and the obligations are fulfilled. Services provided as part of the manufacturing process represent less than 10% of sales. Reserves for product returns are recorded based on historical trend rates at the time of sale.

Shipping Costs

Costs incurred by the Company to ship finished goods to its customers are included in cost of goods sold on the consolidated statements of operations.

Income Taxes

The Company adopted Financial Accounting Standard Board (“FASB”) Interpretation No. 48, Accounting for Uncertainty in Income Taxes an Interpretation of FASB Statement No. 109 (“FIN 48”) as of the beginning of its 2007 fiscal year. This interpretation clarifies what criteria must be met prior to recognition of the financial statement benefit, in accordance with SFAS No. 109, Accounting for Income Taxes, of a position taken in a tax return.

Prior to adopting FIN 48, the Company’s policy was to establish reserves that reflected the probable outcome of known tax contingencies. Favorable resolution was recognized as a reduction to the effective income tax rate in the period of resolution. As compared to a contingency approach, FIN 48 is based on a benefit recognition model. Provided that the tax position is deemed more likely than not of being sustained, FIN 48 permits a company to recognize the largest amount of tax benefit that is more than 50 percent likely of being ultimately realized upon settlement. The tax position must be derecognized when it is no longer more likely than not of being sustained.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. This policy did not change as a result of the adoption of FIN 48.

Earnings Per Share

Viasystems is exempt from the computation, presentation and disclosure requirements of SFAS No. 128, Earnings per Share, as the Company has no publicly held common stock or potential common stock.

Employee Stock-Based Compensation

Group, our sole-shareholder holding company, maintains a stock option plan (the “2003 Stock Option Plan”). All of the employees granted stock options under the 2003 Stock Option Plan are employees of Viasystems, and therefore 100% of the stock option expense recognized at Group is allocated to Viasystems.

On January 1, 2006, the Company adopted SFAS No. 123 (revised 2004), Share-Based Payment, (“SFAS No. 123(R)”), which requires the recognition of compensation expense for share-based awards, including stock options, based on their grant date fair values. The Company adopted SFAS No. 123(R), using the modified-prospective method. Under that method, compensation cost includes: (a) compensation expense for all share-based awards

granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS No. 123, Accounting for Stock-Based Compensation, and (b) compensation cost for all share-based awards granted subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123(R).

Discontinued Operations

Discontinued operations are reported in accordance with the guidance of SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“SFAS No. 144”). Accordingly, businesses or asset groups are reported as discontinued operations when, among other things, the Company commits to a plan to divest the business or asset group, actively begins marketing the business or asset group, and when the sale of the business or asset group is deemed probable within the next twelve months.

Reclassifications

The accompanying consolidated financial statements for prior years contain certain reclassifications to conform to the presentation used in the current period.

Adoption of Staff Accounting Bulletin No. 108

In September 2006, the Securities and Exchange Commission (“SEC”) released Staff Accounting Bulletin No. 108 Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (“SAB No. 108”). SAB No. 108 addresses how the effects of prior-year uncorrected misstatements should be considered when quantifying misstatements in current year financial statements. SAB No. 108 requires an entity to quantify misstatements using a balance sheet and income statement approach and to evaluate whether either approach results in quantifying an error that is material in light of relevant quantitative and qualitative factors. The Company adopted SAB No. 108 in the fourth quarter of 2006.

The transition provisions of SAB No. 108 permit the Company to adjust for the cumulative effect on retained earnings of immaterial errors relating to prior years. SAB No. 108 also requires the adjustment of any prior quarterly financial statement within the fiscal year of adoption for the effects of such errors on the quarters when the information is next presented. Such adjustments do not require previously filed reports with the SEC to be amended.

In 2006, the Company identified certain errors in previously reported financial statements, which were evaluated under the criteria of SAB No. 108. The following table summarizes the items and amounts, net of tax where applicable, of the cumulative effect adjustment resulting in the increase to accumulated deficit.


Nature of Adjustment		Amount
Lease termination		$ 4,139
Impaired long-lived assets		2,205
Lifetime medical benefits		1,124
Accrued vacation		1,160
		$ 8,628

These amounts have been evaluated on a qualitative and quantitative basis, both individually and in the aggregate, and were not deemed material to any prior years under the income statement approach. However, in connection with the adoption of SAB No. 108, the Company has corrected these errors because these amounts have been deemed material using the balance sheet approach. Accordingly, the Company recognized a cumulative effect adjustment to accumulated deficit as of January 1, 2006, totaling $8,628 (net of a tax benefit of $112).

Recently Issued Accounting Pronouncements

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (“SFAS No. 141(R)”). SFAS No. 141(R) changes the accounting for business combinations in a number of areas including the treatment of contingent consideration, pre-acquisition contingencies, transaction costs, in-process research and development and restructuring costs. In addition, under SFAS No. 141(R), changes in an acquired entity’s deferred tax assets and uncertain tax positions after the measurement period will impact income tax expense. SFAS No. 141(R) is effective beginning in fiscal year 2009. This standard will change the Company’s accounting treatment for business combinations on a prospective basis, when adopted.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133 (“SFAS No. 161”). SFAS No. 161 requires enhanced disclosures about an entity’s derivative and hedging activities. Entities will be required to provide enhanced disclosures about: (a) how and why an entity uses derivative instruments; (b) how derivative instruments and related hedge items are accounted for under SFAS No. 133 and its related interpretations; and (c) how derivative instruments and related hedge items affect an entity’s financial position, financial performance and cash flows. The Company is required to adopt SFAS No. 161 beginning in fiscal year 2009, and while it will impact our disclosures, it will not affect our results of operations or financial condition.

Accounts Receivable and Concentration of Credit Risk

The allowance for doubtful accounts is included in accounts receivable, net in the accompanying consolidated balance sheets.

The activity in the allowance for doubtful accounts is summarized as follows:


	2008	2007	2006
Balance, beginning of year	$ 2,104	$ 3,333	$ 3,678
Provision	2,341	1,269	1,039
Write-offs, credits and adjustments	(1,251)	(2,498)	(1,384)
Balance, end of year	$ 3,194	$ 2,104	$ 3,333

For the years ended December 31, 2008, 2007 and 2006, sales to the Company’s ten largest customers accounted for approximately 73.3%, 76.2% and 73.7% of the Company’s net sales, respectively. The table below highlights individual end customers accounting for more than ten percent of the Company’s consolidated net sales.


Customer	2008	2007	2006
Alcatel-Lucent SA (a)	16.3%	20.2%	20.8%
Continental AG (b)	13.4	(c)	(c)
Siemens AG (b)	(c)	12.4	13.7
Bosch Group	11.2	10.7	10.1
General Electric Company	10.2	(c)	(c)

(a) Alcatel SA and Lucent Technologies, Inc. merged during 2006. Amounts represent sales to both the individual

companies prior to the merger and the combined companies after the merger.

(b)

(c)

Represents less than ten percent of consolidated net sales.

Sales to Alcatel-Lucent SA, Siemens AG and General Electric Company occurred in both the Printed Circuit Boards and Assembly segments. Sales to Continental AG and Bosch Group occurred in the Printed Circuit Boards segment.

3. Inventories

The composition of inventories at December 31, is as follows:


	2008	2007
Raw materials	$ 26,388	$ 28,359
Work in process	18,488	22,588
Finished goods	25,543	30,111
Total	$ 70,419	$ 81,058

Property, Plant and Equipment

The composition of property, plant and equipment at December 31, is as follows:


	2008	2007
Land and buildings	$ 54,885	$ 54,016
Machinery, equipment and systems	422,489	399,599
Leasehold improvements	40,355	38,466
Construction in progress	1,537	4,195
	519,266	496,276
Less: Accumulated depreciation	(286,525)	(252,303)
Total	$ 232,741	$ 243,973

During the year ended December 31, 2008, as a result of restructuring activities (see Note 6), the Company recorded a charge for the impairment of certain property plant and equipment of $5,558, and reduced the gross book value and accumulated depreciation of related assets by $19,593 and $14,035, respectively.

Goodwill and Other Intangible Assets

The goodwill balance relates entirely to the Company’s Printed Circuit Boards segment. The balance of goodwill as of December 31, 2008 and 2007, was $79,485.

As required by the provisions of SFAS No. 142, the Company performs an annual impairment evaluation of goodwill and other indefinite lived intangible assets. In addition to performing the annual impairment tests for 2008, 2007 and 2006, the Company reviewed the goodwill balance for impairment upon the announcement of its restructuring plans (see Note 6) on November 24, 2008. No adjustments were recorded to goodwill as a result of these reviews.

The components of intangible assets subject to amortization were as follows:


	December 31, 2008			December 31, 2007
	Gross Carrying Amount	Accumu-lated Amortiza-tion	Net Book Value	Gross Carrying Amount	Accumu-lated Amortiza-tion	Net Book Value
Developed technologies	$ 20,371	$ (15,200)	$ 5,171	$ 20,371	$ (14,274)	$ 6,097
Other	2,385	(1,776)	609	2,266	(1,459)	807
Total	$ 22,756	$ (16,976)	$ 5,780	$ 22,637	$ (15,733)	$ 6,904

The Company paid $119 and $256 for capitalizable patent costs during the years ended December 31, 2008 and 2007, respectively. The expected future annual amortization expense of definite-lived intangible assets for the next five fiscal years is as follows:


2009		$ 1,182
2010		1,101
2011		1,045
2012		971
2013		939
Thereafter		542
Total		$ 5,780

Restructuring and Impairment

In light of the global economic downturn which began towards the end of 2008, and as part of the Company’s ongoing efforts to align capacity, overhead costs and operating expenses with market demand, the Company initiated restructuring activities during the fourth quarter of 2008. These activities are expected to be concluded during the first half of 2009, and include the shutdown of the Company’s metal fabrication facility in Milwaukee, Wisconsin, and its satellite final-assembly and distribution facility in Newberry, South Carolina; as well as workforce reductions across the Company’s global operations.

The reserve for restructuring activities at December 31, 2007, was related to restructuring activities initiated during 2001 to adjust the Company’s cost position relative to anticipated levels of business. These restructuring activities were a result of the economic downturn that began in 2000 and continued into early 2003 related to many of the Company’s key telecommunication and networking customers, and the shift of production demand from high cost countries to low cost countries. These actions resulted in plant shutdowns and downsizings as well as asset impairments, which continued through 2005.

The following tables summarize changes in the reserve for the restructuring and impairment charges for the years ended December 31, 2008, 2007 and 2006:


		Year Ended December 31, 2008
	12/31/07	Charges	Reversals	Total	Cash 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
	12/31/06	Charges	Reversals	Total	Cash 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	(b)	4,818
Total restructuring and impairment charges	$ 6,067	$ 278	$ -	$ 278	$ (1,517)	$ 339		$ 5,167

(b)

Represents accretion of interest on discounted restructuring liabilities.


					Year Ended December 31, 2006
		12/31/05			Charges			Reversals			Total			Cash Payments			Adjustments				12/31/06
	Restructuring activities:
	Personnel and severance			$ 4,634			$ -			$ (1,423)			$ (1,423)			$ (2,615)			$ -				$ 596
Lease and other contractual commitments			1,308			1,533			-			1,533			(2,340)			4,970		(c)		5,471
Asset impairments			-			438			(5,463)			(5,025)			-			5,025		(d)		-
	Total restructuring and impairment charges			$ 5,942			$ 1,971			$ (6,886)			$ (4,915)			$ (4,955)			$ 9,995				$ 6,067

(c)

Represents $4,139 of lease termination costs and $831 of lifetime medical benefits for former employees which were recorded as a direct charge to accumulated deficit in connection with the adoption of SAB No. 108 (see Note 1).

(d)

Represents a $5,463 gain on disposal of fixed assets, net of $438 of non-cash activity associated with asset impairment.

The restructuring and impairment charges were determined based on formal plans approved by the Company’s management using the best information available at the time. The amounts the Company ultimately incurs may change as the balance of the plans are executed. Expected cash payout of the accrued expenses is as follows:


Year Ended December 31,		Cash Payments
2009		$ 9,310
2010		670
2011		666
2012		661
2013		655
Thereafter		1,430
Total		13,392
Less: Amounts representing interest		(1,270)
Restructuring liability		$ 12,122

2008 Restructuring and Impairment

In the Company’s Form 8-K filed on November 24, 2008, the Company announced plans to close its manufacturing facility in Milwaukee, Wisconsin and its final assembly and distribution facility in Newberry, South Carolina. In addition, the Company announced other workforce reductions across its global operations. The Company estimates the total cost of these activities, including asset impairments, will approximate $22,000, with approximately $10,000 related to headcount reduction costs, $6,000 related to non-cash asset impairments, and the remainder related to lease termination and other costs. The Company expects the $22,000 of costs and charges will be incurred in the Printed Circuit Boards segment and Assembly segment in the amounts of $10,000 and $12,000, respectively.

For the year ended December 31, 2008, the Company recorded restructuring charges of $15,069 which included $9,511 related to headcount reductions and $5,558 of non-cash asset impairment charges. For the purpose of calculating the asset impairment charge, the Company determined the fair value of the related assets using the sales comparison approach. The Company expects it will incur additional restructuring charges in 2009 and 2010 totaling approximately $6,900 related primarily to lease terminations and other closure costs as it completes its restructuring plans.

2007 Restructuring and Impairment

The Company incurred $278 in restructuring and impairment charges for the year ended December 31, 2007, related to closed facilities sold late in 2006.

2006 Restructuring and Impairment

During 2006, the Company reversed $1,423 of severance accrual primarily due to early payment buyouts on employee severance obligations in the Company’s former manufacturing facility in the Netherlands. In addition,

the Company recorded an impairment charge of $438 related to the write down of one of the former manufacturing properties held for sale in Canada, which was written down to the contracted selling price, less the cost to sell.

In 2006, the Company sold its previously closed facilities in the U.S., Canada and the Netherlands for net cash proceeds of approximately $21,809, resulting in a net gain of $5,463 which is included in restructuring and impairment on the consolidated statements of operations. The Company has no continuing interest in any of these properties except in connection with one U.S. facility, where the Company was required to relocate a maintenance structure on the property. At December 31, 2008, the Company has placed $303 in escrow, which is included in restricted cash, pending the final resolution of the related obligations.

Accrued and Other Liabilities

The composition of accrued and other liabilities at December 31, is as follows:


	2008	2007
Accrued payroll and related costs	$ 12,130	$ 17,910
Accrued interest	9,919	9,698
Accrued restructuring costs - current	9,310	990
Accrued other	19,473	31,315
Total	$ 50,832	$ 59,913

Long-Term Debt

The composition of long-term debt at December 31, is as follows:


	2008	2007
Senior Subordinated Notes due 2011	$ 200,000	$ 200,000
2006 Credit Agreement:
Term loan	15,500	-
Revolving credit loans	-	-
Capital leases	5,163	6,613
	220,663	206,613
Less: Current maturities	(9,617)	(1,796)
	$ 211,046	$ 204,817

The schedule of principal payments for long-term debt at December 31, 2008, is as follows:


2009		$ 9,617
2010		10,329
2011		200,045
2012		50
2013		55
Thereafter		567
Total		$ 220,663

Senior Subordinated Notes due 2011

In December 2003, the Company completed an offering of $200,000 of 10.5% Senior Subordinated Notes due 2011 (the “2011 Notes”).

Interest on the 2011 Notes is due semiannually on January 15 and July 15. The Company may redeem the 2011 Notes at any time prior to January 15, 2010, at the redemption price of 102.625%, which is inclusive of a “make-whole” premium. Subsequent to January 15, 2010, the Company may redeem the 2011 Notes at the redemption price of 100%. In the event of a Change in Control (as defined), the Company is required to make an offer to purchase the 2011 Notes at a redemption price of 101%, plus accrued and unpaid interest.

2006 Credit Agreement

On August 17, 2006, the Company entered into a credit facility (the “2006 Credit Agreement”) with UBS AG Hong Kong Branch and UBS AG, Singapore Branch (together “UBS”). The 2006 Credit Agreement matures in August 2010 and consists of two facilities, as follows:


Facility A – Revolver/Term Loan	U.S. $ 20,000
Facility B – Revolver/Letters of Credit	U.S. $ 60,000

In January 2008, the Company borrowed $20,000 under Facility A, which in accordance with the original terms of the 2006 Credit Agreement was converted to a term loan, that is payable in quarterly installments through July 2010. Throughout the entire term of the 2006 Credit Agreement, the Company may borrow against Facility B as a revolving credit facility, of which up to $15 million may be used to issue letters of credit.

Borrowings under both facilities bear interest at the London Inter-Bank Offer Rate (“LIBOR”) plus 1.625% per annum. The Company is required to pay fees on issued and outstanding letters of credit at a rate of 2.0% per annum. In addition, the Company is required to pay a commitment fee of 0.67% per annum on unused revolving credit capacity on both Facility A and Facility B.

Collateral for the facilities is substantially all of the Company’s foreign assets together with pledges of the equity ownership of substantially all of the Company’s subsidiaries in Hong Kong and the Peoples’ Republic of China. Customary business covenants set limits on the Company’s ability to pay dividends, to acquire companies, to invest in joint ventures, to dispose of assets and to incur additional debt, among other customary limitations. Customary financial covenants also define a maximum Net Debt-to-EBITDA ratio (as defined), a minimum EBITDA-to-Net Interest Expense ratio (as defined) and a maximum annual limit on capital expenditures.

Fees and expenses incurred in connection with origination of the Company’s 2006 Credit Agreement were approximately $3,300, which have been deferred and are being amortized over the term of the agreement.

As of December 31, 2008, there was $15,500 outstanding under Facility A, with remaining maturities of $7,500 and $8,000 in 2009 and 2010, respectively. There was no balance outstanding under Facility A at December 31, 2007. As of December 31, 2008 and 2007, there were no borrowings outstanding under the Facility B revolving credit facility; however, the Company secured issuance of letters of credit totaling $2,750 and $5,400 under the Facility B as of December 31, 2008 and 2007, respectively. As of December 31, 2008, approximately $57,250 of the facilities was unused and available. The weighted average interest rate on outstanding borrowings during the years ended December 31, 2008 and 2007, were 4.6% and 0.0%, respectively.

2003 Credit Agreement

On August 10, 2006, the Company terminated the then existing credit facility (the “2003 Credit Agreement”). In connection with the disposal of the wire harness business in May 2006, the term loan portion of the 2003 Credit Agreement was extinguished. In connection with the termination of the 2003 Credit Agreement, the remaining $9,902 balance outstanding under the revolver portion of the 2003 Credit Agreement was extinguished, and all security, including a guarantee by Group, was released by the lender group.

During the year ended December 31, 2006, the Company recognized a loss on early extinguishment of debt of $1,498 related to i) the write-off of $1,313 unamortized deferred financing costs related to the 2003 Credit Agreement and ii) fees of $185 incurred in the facility termination.

Prior to extinguishment, the term loan bore interest, at the Company’s option, at the then effective base rate plus 3.25% or the then effective Eurocurrency rate plus 4.25%, and the revolving credit loans bore interest, at the Company’s option, at the then effective base rate plus 3.5% or the then effective Eurocurrency rate plus 4.5%. In addition, the Company paid a commitment fee equal to 0.5% on the undrawn portion of the commitments in respect of the revolving credit facility.

For the year ended December 31, 2006, the weighted average interest rate on outstanding borrowings under the 2003 Credit Agreement was 9.2%.

Capital Leases

The Company leases certain of its machinery and equipment under capital lease agreements. During 2008 and 2007, the Company entered into no new capital leases. During 2006, the Company entered into a capital lease obligation of $11,594 for certain new equipment.

Commitments

The Company leases certain buildings, transportation and other equipment under capital and operating leases. As of December 31, 2008 and 2007, there was equipment held under capital leases with a cost basis of $12,007 included in property, plant and equipment. The Company recorded accumulated depreciation related to this equipment of $2,285 and $1,201 as of December 31, 2008 and 2007, respectively. Total rental expense under operating leases was $5,285, $5,115, and $5,823 for the years ended December 31, 2008, 2007 and 2006, respectively. Future minimum lease payments under capital leases and operating leases that have initial or remaining non-cancelable lease terms in excess of one year at December 31, 2008, are as follows:


	Capital	Operating
2009	$ 2,634	$ 5,280
2010	2,634	4,379
2011	117	2,185
2012	117	559
2013	117	372
Thereafter	819	1,415
Total	6,438	$ 14,190
Less: Amounts representing interest	1,275
Capital lease obligations	$ 5,163

10.

Contingencies

The Company is a party to contracts with third party consultants, independent contractors and other service providers in which the Company has agreed to indemnify such parties against certain liabilities in connection with their performance. Based on historical experience and the likelihood that such parties will ever make a claim against the Company, in the opinion of the Company’s management, the ultimate liabilities resulting from such indemnification obligations will not have a material adverse effect on its financial condition and results of operations and cash flows.

The Company is a party to contracts and agreements with other third parties in which the Company has agreed to indemnify such parties against certain liabilities in connection with claims by unrelated parties. At December 31, 2008 and 2007, other non-current liabilities include $13,486, and $13,412 of accruals for potential claims in connection with such indemnities.

The Company’s charter provides that none of the Directors and officers of the Company bear the risk of personal liability for monetary damages for breach of fiduciary duty as a Director or officer except in cases where the action involves a breach of the duty of loyalty, acts in bad faith or intentional misconduct, the unlawful paying of dividends or repurchasing of capital stock, or transactions from which the Director or officer derived improper personal benefits.

11.

Income Taxes

The Company accounts for income taxes in accordance with the provisions of SFAS No. 109, Accounting for Income Taxes. The income tax provision for the years ended December 31, 2008, 2007 and 2006, consists of the following:


	2008	2007	2006
Current:
Federal	$ 17	$ (316)	$ (49)
State	27	22	-
Foreign	7,716	(5,237)	18,966
	7,760	(5,531)	18,917
Deferred:
Federal	-	-	-
State	-	-	-
Foreign	(2,822)	(1,322)	(403)
	(2,822)	(1,322)	(403)
Total	$ 4,938	$ (6,853)	$ 18,514

A reconciliation between the income tax provision at the federal statutory income tax rate and at the effective tax rate, for the years ended December 31, 2008, 2007 and 2006, is summarized below:


	2008	2007	2006
U.S. Federal statutory rate	$ (268)	$ 3,662	$ 107
State taxes, net of federal benefit	27	2	(78)
Non-deductible items	10,140	6,629	1,521
Foreign tax rate differences	(3,043)	(3,125)	11,444
AMT rate difference	1,880	(1,073)	-
Change in the valuation allowance for deferred tax assets, net	(3,539)	(2,797)	7,250
Tax reserve adjustments	(900)	(8,763)	-
Foreign dividend reinvestment tax credit	-	(3,223)	-
Foreign tax law changes	(2,280)	1,674	-
Other	2,921	161	(1,730)
	$ 4,938	$ (6,853)	$ 18,514

The tax effects of significant temporary differences representing deferred tax assets and liabilities at December 31, 2008 and 2007, are as follows:


	2008	2007
Deferred tax assets:
Net operating loss carryforwards	$ 290,091	$ 285,034
Capital loss carryforwards	98,793	123,133
AMT credit carryforwards	1,508	4,423
Foreign tax credit carryforward	-	3,057
Accrued liabilities not yet deductible	11,765	14,355
Property, plant and equipment	3,290	2,651
Other	4,658	2,709
	410,105	435,362
Valuation allowance	(403,563)	(431,143)
	6,542	4,219
Deferred tax liabilities:
Intangibles	(283)	(283)
Other	(6,135)	(6,634)
	(6,418)	(6,917)
Net deferred tax assets (liabilities)	$ 124	$ (2,698)

The domestic and foreign (loss) income before income tax provision are as follows:

		Year Ended December 31,
	2008		2007	2006
Domestic	$ (9,100)		$ (282)	$ 9,348
Foreign	8,335		10,746	(9,042)
	$ (765)		$ 10,464	$ 306

As of December 31, 2008, the Company had the following net operating loss (“NOL”) carryforwards: $610,643 in the U.S., $7,053 in China, $123,963 in Luxembourg, $27,783 in Canada, $5,552 in Hong Kong, $1,525 in the U.K., and $36,740 in the Netherlands. The U.S. NOLs expire in 2021 through 2028 and the Canada NOLs expire in 2009 through 2013. All other NOLs carry forward indefinitely. Canada has a capital loss of $323,917 that will carry forward indefinitely.

In connection with the Company’s reorganization under Chapter 11 completed on January 31, 2003, the Company believes more than a 50% change in ownership occurred under Section 382 of the Internal Revenue Code of 1986, as amended, and regulations issued thereunder. As a consequence, the utilization of the U.S. NOLs is limited to approximately $19,700 per year (except to the extent the Company recognizes certain gains built in at the time of the ownership change), with any unused portion carried over to succeeding years. Any NOLs not utilized in a year can be carried over to succeeding years.

The Company has a tax holiday in China, covering certain of the Company’s subsidiaries, that allows a two-year tax exemption and three-year 50% reduction in the tax rate. If not for such tax holiday, the Company would have had $1,935, $338 and $696 of additional income tax expense for December 31, 2008, 2007 and 2006, respectively, based on the applicable tax rates ranging from 12% to 27%.

Uncertain Tax Positions

The Company adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48, Accounting for Uncertainty in Income Taxes - An Interpretation of FASB Statement No. 109 (“FIN 48”), on January 1, 2007. As a result of the adoption of FIN 48, the Company 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 on January 1, 2007. The total amount of unrecognized tax benefits included in the consolidated balance sheets at December 31, 2008 and 2007, were $17,753 and $19,399, respectively. The liability for unrecognized tax benefits decreased by $1,646 from December 31, 2007, to December 31, 2008. The decrease was due to the settlement of prior uncertain tax positions partially offset by additional provisions related to tax positions taken in the current period, and interest and penalties related to positions taken in prior periods. The settlement of prior uncertain tax positions resulted in a $1,421 payment and a $4,331 reversal in the liability for uncertain tax positions. Included in the December 31, 2008, balance was $17,753 of unrecognized tax positions that, if recognized, would affect the effective tax rate. The Company is in discussions with various taxing authorities on several open tax positions, and it is possible that the amount of the liability for unrecognized tax benefits could change during the next year. The Company currently estimates approximately $1,600 of the liability for uncertain tax positions could be settled in the next twelve months and has classified this as current.

The current portion of the Company’s unrecognized tax benefits is presented in the consolidated balance sheets within accrued income taxes payable, and the amount expected to be settled after one year is recorded in other non-current liabilities. At December 31, 2008 and 2007, other non-current liabilities include $16,153 and $17,409 of long-term accrued taxes, respectively, related to the liability for unrecognized tax benefits.

The Company classifies income tax-related interest and penalties as a component of income tax expense. At December 31, 2008, the total unrecognized tax benefit in the consolidated balance sheet included a liability of $4,109 related to accrued interest and penalties on unrecognized tax benefits. For the year ended December 31, 2008, the income tax provision included in the Company’s consolidated statement of operations included a net $180 benefit related to interest and penalties on unrecognized tax benefits which included a $1,521 reversal of the liability related to a prior uncertain tax position.

As of December 31, 2008, the Company is subject to U.S. federal income tax examinations for all tax years from 1996 forward, and to non-U.S. income tax examinations generally for the tax year’s 2000 through 2007. In addition, the Company is subject to state and local income tax examinations generally for the tax year’s 2000 through 2007.

Following is a reconciliation of the Company’s total gross unrecognized tax benefits, excluding related interest and penalties, for the year ended December 31, 2008.


Balance at December 31, 2007	$ 14,717
Tax positions related to current year:
Additions	2,470
Reductions	-
Tax positions related to prior years:
Additions	-
Reductions	(2,500)
Settlements	(1,043)
Lapses in statutes of limitations	-
Balance at December 31, 2008	$ 13,644

12.

Derivative Financial Instruments

The Company accounts for derivatives under SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities (“SFAS No. 149”), and SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (“SFAS No. 133”). These standards require recognition of all derivatives as either assets or liabilities in the balance sheet and require measurement of those instruments at fair value through adjustments to other comprehensive income, current earnings, or both, as appropriate.

The Company uses derivative instruments, primarily foreign exchange forward contracts, to manage certain of its foreign exchange rate risks. The Company’s objective is to limit potential losses in earnings or cash flows from adverse foreign currency exchange rate movements. The Company’s foreign currency exposure arises from the transacting of business in a currency that is different from the currency that the Company incurs the majority of its costs.

The Company’s decision to enter into forward purchase contracts is made after considering future use of foreign currencies, the desired foreign exchange rate sensitivity and exchange rate levels. Prior to entering into a hedge transaction, the Company formally documents the relationship between hedging instruments and hedged items, as well as the risk management objective for undertaking the various hedge transactions.

The Company’s currency forward contracts as of December 31, 2008, relate only to Chinese Renminbi (“RMB”) exchange rates, and because that currency is not freely traded outside of the People’s Republic of China, the Company’s contracts are settled in U.S. dollars by reference to changes in the value of notional quantities of RMB through the contract settlement date. Amounts received or paid at the contract settlement date are recorded in cost of goods sold at the time of settlement. For the years ended December 31, 2008 and 2007, gains of $1,197 and $77 respectively, were recorded in cost of goods sold related to settled currency forward contracts.

At December 31, 2008, deferred losses of $2,522 (net of tax of $0) related to cash flow hedges were recorded in accrued and other liabilities and other accumulated comprehensive income on the consolidated balance sheet. At December 31, 2007, deferred gains of $350 (net of tax of $0) related to cash flow hedges were recorded in prepaid expenses and other and accumulated other comprehensive income on the consolidated balance sheet. The deferred losses and gains were measured using Level 2 inputs (see Note 1). There was no ineffectiveness recorded in earnings as of December 31, 2008.

The maximum term over which the Company hedges exposure to the exchange rate variability of future cash flows is less than one year.

The following table summarizes the Company’s derivative instrument activity at December 31, 2008:


	Notional Amount	Weighted Average Remaining Maturity in Months	Average Exchange Rate

Cash flow hedges:
Chinese RMB	840,000	6.0	6.797

Deferred loss, net of tax	$ 2,522

13.

Stock-Based Compensation

Under the 2003 Stock Option Plan, options to purchase a total of 2,777,778 of Group’s common stock may be granted to the Company’s employees. Stock options may be granted to employees in the form of nonqualified stock options at market value, and the Company’s practice has been to grant options at the greater of a fixed exercise

price of $12.63 or market value. Options granted expire 10 years after the grant date and vest one-third at the grant date, one-third on the 24-month anniversary of the grant date and one-third on the 36 month anniversary of the grant date. At December 31, 2008, 169,378 of these shares were available for future grants.

Stock compensation expense is recognized over the requisite service period for each award, and recorded in the consolidated statements of operations as follows:


	2008	2007	2006

Cost of goods sold	$ 91	$ 217	$ 22
Selling, general and administrative	524	1,868	1,378
	$ 615	$ 2,085	$ 1,400

At December 31, 2008, unrecognized compensation expense totaled approximately $1,198 and will be recognized over a weighted average period of approximately 9 months.

The fair value of each option grant is estimated on the date of the grant using the Black-Scholes option-pricing model using the following assumptions:


	2008	2007	2006
Expected life of options	5 years	5 years	5 years
Risk-free interest rate	2.71%	4.02% to 4.76%	4.66% to 5.13%
Expected volatility of stock	52%	54% to 64%	50%
Expected dividend yield	None	None	None

The weighted average grant date fair value of options granted was $6.13 for 2008, $6.44 for 2007 and $6.24 for 2006.

Presented below is a summary of stock option plan’s activity for the years and as of the dates shown:


	2008		2007		2006
	Options	Exercise Price ⁽¹⁾	Options	Exercise Price ⁽¹⁾	Options	Exercise Price ⁽¹⁾
Beginning balance	2,765,600	$ 12.63	2,568,400	$ 12.63	2,698,800	$ 12.63
Granted	12,000	12.63	475,000	12.63	81,600	12.63
Exercised	-	-	-	-	-	-
Forfeited	(169,200)	12.63	(277,800)	12.63	(212,000)	12.63
Ending balance	2,608,400	$ 12.63	2,765,600	$ 12.63	2,568,400	$ 12.63

Exercisable at year end	2,313,185	$ 12.63	2,349,713	$ 12.63	2,294,053	$ 12.63

(1) Weighted average.

As of December 31, 2008, the weighted average remaining contractual life of outstanding options was 5.2 years, and the weighted average remaining contractual life of exercisable options was 4.8 years.

14.

Business Segment Information

SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information (“SFAS No. 131”), establishes standards for reporting information about operating segments in annual financial statements and requires selected information about operating segments in financial reports issued to stockholders. It also establishes standards for related disclosures about products and services, geographic areas and major customers. Operating segments are defined as components of an enterprise for which separate financial information is available that is

evaluated regularly by the chief operating decision maker or decision making group in deciding how to allocate resources and in assessing performance.

On May 1, 2006, the Company completed the sale of its wire harness business, which was accounted for as a discontinued operation in accordance with SFAS No. 144. In connection with the disposal of the wire harness business, the Company reevaluated its operating segments based on the application of SFAS No. 131, and identified two segments: (i) Printed Circuit Boards and (ii) Assembly.

The Printed Circuit Boards segment consists of the Company’s printed circuit board manufacturing facilities located in China. These facilities manufacture double-sided and multi-layer printed circuit boards and backpanels. The Assembly segment consists of assembly operations including backpanel assembly, printed circuit board assembly, cable assembly, custom enclosures, and full system assembly and testing. The assembly operations are conducted in manufacturing facilities in China, Mexico and the United States. The individual facilities have been aggregated into two segments – Printed Circuit Boards and Assembly – which represent the Company’s reportable segments.

Operating expenses of the Company’s corporate headquarters are allocated to each of the Company’s segments; while the assets and liabilities of the Company’s corporate headquarters have not been allocated and remain in Other for purpose of segment disclosures. During 2008, the Company refined its methodology for allocating operating expenses of the Company’s corporate headquarters to its 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 years ended December 31, 2007 and 2006, operating income has been restated to conform to the presentation in the current period. Inter-segment sales are eliminated in consolidation. The accounting policies of the segments are the same as those described in Note 1.

Total assets by segment are as follows:

	December 31,
		2008	2007
Total assets:
Printed Circuit Boards		$ 435,664	$ 478,690
Assembly		113,392	113,092
Other		36,986	37,451
Total assets		$ 586,042	$ 629,233

Net sales and operating income (loss) by segment are as follows:


	2008	2007	2006
Net sales to external customers:
Printed Circuit Boards	$ 471,386	$ 471,211	$ 489,108
Assembly	241,444	243,132	245,261
Other	-	-	623
Total from continuing operations	$ 712,830	$ 714,343	$ 734,992
Intersegment sales:
Printed Circuit Boards	$ 18,398	$ 18,616	$ 18,083
Assembly	-	-	-
Other	-	-	-
Total from continuing operations	$ 18,398	$ 18,616	$ 18,083

Operating income (loss):
Printed Circuit Boards	$ 24,217	$ 27,613	$ 23,577
Assembly	(1,815)	7,156	6,738
Other	-	(276)	5,288
Total operating income (loss)	22,402	34,493	35,603

Interest expense, net	21,815	21,687	30,715
Amortization of deferred financing costs	2,063	2,065	1,678
Loss on early extinguishment of debt	-	-	1,498
Other, net	(711)	277	1,406
(Loss) income before income taxes	$ (765)	$ 10,464	$ 306

For the year ended December 31, 2008, the Company recorded restructuring charges of $9,935 and $5,134 in the Printed Circuit Boards and Assembly segments, respectively. Of these charges, $1,690 and $3,868 were non-cash asset impairment charges in the Printed Circuit Boards and Assembly segments, respectively. No restructuring charges were incurred in the Printed Circuit Boards and Assembly segments in 2007 and 2006.

Capital expenditures and depreciation expense by segment are as follows:


	2008	2007	2006
Capital expenditures:
Printed Circuit Boards	$ 42,920	$ 29,549	$ 47,012
Assembly	5,758	7,372	5,567
Other	247	276	322
Continuing operations	48,925	37,197	52,901
Discontinued operations	-	-	3,039
Total capital expenditures	$ 48,925	$ 37,197	$ 55,940

Depreciation expense:
Printed Circuit Boards	$ 46,244	$ 43,686	$ 39,219
Assembly	7,041	6,018	6,203
Other	-	-	-
Total depreciation expense	$ 53,285	$ 49,704	$ 45,422

Net sales by country of destination are as follows:


	Year Ended December 31,
	2008	2007	2006

United States	$ 264,490	$ 263,680	$ 272,695
People’s Republic of China	147,638	170,579	151,317
Germany	56,951	50,167	63,265
France	29,827	40,425	42,733
Malaysia	19,844	26,121	34,561
Hungary	18,734	20,788	12,249
Mexico	18,570	12,743	17,280
Belgium	17,372	31,999	31,043
Czech Republic	16,009	15,945	11,937
Canada	14,115	9,824	5,063
United Kingdom	10,309	9,277	9,291
Singapore	9,922	6,893	8,203
Portugal	8,688	7,414	4,858
Italy	7,418	8,791	8,930
Poland	7,271	2,357	-
Spain	6,872	6,839	5,295
India	6,520	1,344	1,867
Norway	6,194	4,338	-
Japan	6,191	1,813	757
Other	39,895	23,006	53,648
Total	$ 712,830	$ 714,343	$ 734,992

Property, plant and equipment, net by country are as follows:


	December 31,
	2008	2007
People’s Republic of China	$ 225,222	$ 233,150
Mexico	3,571	3,722
United States	3,948	7,101
	$ 232,741	$ 243,973

15.

Discontinued Operations

On May 1, 2006, the wire harness business was sold to Electrical Components International Holdings Company, a newly formed affiliate of Francisco Partners, L.P., a private equity firm, for gross cash proceeds of $320,000. Net cash proceeds reported in the accompanying consolidated statement of cash flows for the year ended December 31, 2006, of $307,927 reflect reductions of the gross proceeds for i) cash of $2,999 on deposit in bank accounts of the disposed business on the date of the transaction, ii) a $2,419 contractual purchase price adjustment agreed and paid to the acquirer in June 2006, and iii) transaction costs of $6,655 paid in 2006 related to the disposal. One further contractual purchase price adjustment, which was accrued at the time of the disposal, was settled at approximately $2,000 during 2007.

In the accompanying consolidated statement of operations for the year ended December 31, 2006, the Company recognized a net gain on the sale of the Company’s discontinued wire harness operations of $211,170. The gain is net of i) the carrying value of net assets disposed, ii) professional fees and other costs related to the disposal transaction, iii) actual and estimated purchase price adjustments, and iv) taxes of approximately $12,377.

For the four months ended April 30, 2006, operating results for the discontinued operations were as follows:



Net sales		$ 102,358

Operating income		$ 11,322

Income before income taxes		$ 11,388
Income tax provision		1,913
Net income		$ 9,475

16.

Guarantor Subsidiaries

The 2011 Notes are fully and unconditionally (as well as jointly and severally) guaranteed on an unsecured, senior subordinated basis by each subsidiary of Viasystems other than its foreign subsidiaries. Each of the guarantor subsidiaries and non-guarantor subsidiaries is wholly-owned by the Company. In connection with the disposal of the Company’s wire harness business, the trustee under the 2011 Notes released the wire harness guarantor subsidiaries of the guarantee of the 2011 Notes.

The following condensed consolidating financial statements include the accounts of Viasystems, Inc., the combined accounts of the guarantor subsidiaries and the combined accounts of the non-guarantor subsidiaries. Assets, liabilities and operating results of discontinued operations are separately identified except in the statements of cash flows, in accordance with SFAS No. 144.

Balance Sheet as of December 31, 2008


	Viasystems, Inc.	Total Guarantors	Total Non- Guarantors	Eliminations	Viasystems, Inc. Consolidated
ASSETS Cash and cash equivalents	$ 391	$ 29,468	$ 53,194	$ -	$ 83,053
Restricted cash	-	303	-	-	303
Accounts receivable, net	-	16,530	80,034	-	96,564
Inventories	-	11,705	58,714	-	70,419
Other current assets	-	1,494	10,105	-	11,599
Total current assets	391	59,500	202,047	-	261,938
Property, plant and equipment, net	-	7,519	225,222	-	232,741
Investment in subsidiaries	665,674	348,167	-	(1,013,841)	-
Other assets	3,976	115	87,272	-	91,363
Total assets	$ 670,041	$ 415,301	$ 514,541	$ (1,013,841)	$ 586,042
LIABILITIES AND STOCKHOLDER’S EQUITY
Current maturities of long-term debt	$ -	$ -	$ 9,617	$ -	$ 9,617
Accounts payable	-	6,917	67,751	-	74,668
Accrued and other liabilities	9,904	12,830	35,801	-	58,535
Total current liabilities	9,904	19,747	113,169	-	142,820
Long-term debt, less current maturities	200,000	-	11,046	-	211,046
Other non-current liabilities	-	10,635	22,247	-	32,882
Intercompany payable (receivable)	264,427	(278,251)	13,824	-	-
Total liabilities	474,331	(247,869)	160,286	-	386,748
Total paid-in capital and accumulated deficit	195,347	665,674	348,167	(1,013,841)	195,347
Accumulated other comprehensive income	363	(2,504)	6,088	-	3,947
Total liabilities and stockholder’s equity	$ 670,041	$ 415,301	$ 514,541	$ (1,013,841)	$ 586,042

Balance Sheet as of December 31, 2007


	Viasystems, Inc.	Total Guarantors	Total Non- Guarantors	Eliminations	Viasystems, Inc. Consolidated
ASSETS Cash and cash equivalents	$ 653	$ 28,464	$ 34,885	$ -	$ 64,002
Restricted cash	-	303	-	-	303
Accounts receivable, net	-	24,334	110,992	-	135,326
Inventories	-	11,687	69,371	-	81,058
Other current assets	-	2,668	8,381	-	11,049
Total current assets	653	67,456	223,629	-	291,738
Property, plant and equipment, net	-	10,823	233,150	-	243,973
Investment in subsidiaries	657,945	349,785	-	(1,007,730)	-
Other assets	5,405	114	88,003	-	93,522
Total assets	$ 664,003	$ 428,178	$ 544,782	$ (1,007,730)	$ 629,233
LIABILITIES AND STOCKHOLDER’S EQUITY
Current maturities of long-term debt	$ -	$ -	$ 1,796	$ -	$ 1,796
Accounts payable	-	9,138	103,627	-	112,765
Accrued and other liabilities	9,625	15,402	41,690	-	66,717
Total current liabilities	9,625	24,540	147,113	-	181,278
Long-term debt, less current maturities	200,000	-	4,817	-	204,817
Other non-current liabilities	-	10,385	25,499	-	35,884
Intercompany payable (receivable)	252,832	(265,060)	12,228	-	-
Total liabilities	462,457	(230,135)	189,657	-	421,979
Total paid-in capital and accumulated deficit	200,435	657,945	349,785	(1,007,730)	200,435
Accumulated other comprehensive income	1,111	368	5,340	-	6,819
Total liabilities and stockholder’s equity	$ 664,003	$ 428,178	$ 544,782	$ (1,007,730)	$ 629,233

Statement of Operations for the year ending December 31, 2008


	Viasystems, Inc.	Total Guarantors	Total Non- Guarantors	Eliminations	Viasystems, Inc. Consolidated
Net sales	$ -	$ 157,400	$ 621,707	$ (66,277)	$ 712,830
Operating expenses:
Cost of goods sold	91	146,350	488,192	(66,277)	568,356
Selling, general and administrative	524	15,210	36,741	-	52,475
Depreciation	-	3,539	49,746	-	53,285
Amortization	317	-	926	-	1,243
Restructuring and impairment	-	4,606	10,463	-	15,069
Operating (loss) income	(932)	(12,305)	35,639	-	22,402

Other expense (income):
Interest expense, net	11,295	(23,488)	34,008		21,815
Amortization of deferred financing costs	1,231	-	832	-	2,063
Other, net	(26)	729	(1,414)	-	(711)
Equity in (earnings) loss in subsidiaries	(7,729)	1,618	-	6,111	-
Income (loss) before income taxes	(5,703)	8,836	2,213	(6,111)	(765)
Income tax provision	-	1,107	3,831	-	4,938
Net (loss) income	$ (5,703)	$ 7,729	$ (1,618)	$ (6,111)	$ (5,703)

Statement of Operations for the year ending December 31, 2007


	Viasystems, Inc.	Total Guarantors	Total Non- Guarantors	Eliminations	Viasystems, Inc. Consolidated
Net sales	$ -	$ 171,441	$ 611,015	$ (68,113)	$ 714,343
Operating expenses:
Cost of goods sold	217	151,429	486,851	(68,113)	570,384
Selling, general and administrative	1,868	29,449	26,898	-	58,215
Depreciation	94	2,548	47,062	-	49,704
Amortization	302	-	967	-	1,269
Restructuring and impairment	-	(236)	514	-	278
Operating (loss) income	(2,481)	(11,749)	48,723	-	34,493

Other expense (income):
Interest expense, net	6,679	(23,539)	38,547	-	21,687
Amortization of deferred financing costs	1,236	-	829	-	2,065
Other, net	945,796	(835,986)	(109,533)	-	277
Equity in (earnings) loss in subsidiaries	(973,509)	(126,167)	-	1,099,676	-
Income (loss) before income taxes	17,317	973,943	118,880	(1,099,676)	10,464
Income tax provision	-	434	(7,287)	-	(6,853)
Net income (loss)	$ 17,317	$ 973,509	$ 126,167	$(1,099,676)	$ 17,317

Statement of Operations for the year ending December 31, 2006


	Viasystems, Inc.	Total Guarantors	Total Non- Guarantors	Eliminations	Viasystems, Inc. Consolidated
Net sales	$ -	$ 183,041	$ 612,396	$ (60,445)	$ 734,992
Operating expenses:
Cost of goods sold	22	158,852	502,803	(60,445)	601,232
Selling, general and administrative	1,851	26,282	28,192	-	56,325
Depreciation	84	2,398	42,940	-	45,422
Amortization	238	-	1,087	-	1,325
Restructuring and impairment	-	(391)	(4,524)	-	(4,915)
Operating (loss) income	(2,195)	(4,100)	41,898	-	35,603

Other expense (income):
Interest expense, net	16,131	(24,494)	39,078	-	30,715
Amortization of deferred financing costs	1,367	-	311	-	1,678
Loss on early extinguishment of debt	1,410	88	-	-	1,498
Other, net	-	(10,399)	11,805	-	1,406
Equity (earnings) loss in subsidiaries	(212,697)	16,531	-	196,166	-
Income (loss) before income taxes	191,594	14,174	(9,296)	(196,166)	306
Income tax provision	(10,948)	18,833	10,629	-	18,514
Income (loss) from continuing operations	202,542	(4,659)	(19,925)	(196,166)	(18,208)

(Loss) income from discontinued operations, net	(105)	6,186	3,394	-	9,475
Gain on disposition of discontinued operations, net	-	211,170	-	-	211,170
Net income (loss)	$ 202,437	$ 212,697	$ (16,531)	$ (196,166)	$ 202,437

Statement of Cash Flows for the year ending December 31, 2008


	Viasystems, Inc.	Total Guarantors	Total Non- Guarantors	Eliminations	Viasystems, Inc. Consolidated
Net cash (used in) provided by operating activities	$ (262)	$ 5,120	$ 48,880	$ -	$ 53,738
Net cash (used in) provided by investing activities	-	(4,116)	(44,146)	-	(48,262)
Net cash (used in) provided by financing activities	-	-	13,575	-	13,575
Net change in cash and cash equivalents	(262)	1,004	18,309	-	19,051
Cash and cash equivalents, beginning of year	653	28,464	34,885	-	64,002
Cash and cash equivalents, end of year	$ 391	$ 29,468	$ 53,194	$ -	$ 83,053

Statement of Cash Flows for the year ending December 31, 2007


	Viasystems, Inc.	Total Guarantors	Total Non- Guarantors	Eliminations	Viasystems, Inc. Consolidated
Net cash (used in) provided by operating activities	$ (48)	$ 21,768	$ 42,074	$ -	$ 63,794
Net cash (used in) provided by investing activities	-	(5,794)	(31,198)	-	(36,992)
Net cash (used in) provided by financing activities	-	(754)	-	-	(754)
Net change in cash and cash equivalents	(48)	15,220	10,876	-	26,048
Cash and cash equivalents, beginning of year	701	13,244	24,009	-	37,954
Cash and cash equivalents, end of year	$ 653	$ 28,464	$ 34,885	$ -	$ 64,002

Statement of Cash Flows for the year ending December 31, 2006


	Viasystems, Inc.	Total Guarantors	Total Non- Guarantors	Eliminations	Viasystems, Inc. Consolidated
Net cash (used in) provided by operating activities	$ 269	$ (45,486)	$ 43,379	$	$ (1,838)
Net cash (used in) provided by investing activities	-	308,660	(34,842)	-	273,818
Net cash (used in) provided by financing activities	-	(262,350)	(8,196)	-	(270,546)
Effect of exchange rate changes on cash and cash equivalents	-	-	597	-	597
Net change in cash and cash equivalents	269	824	938	-	2,031
Cash and cash equivalents, beginning of year	432	12,420	23,071	-	35,923
Cash and cash equivalents, end of year	$ 701	$ 13,244	$ 24,009	$ -	$ 37,954

17.

Retirement Plans

The Company has a defined contribution retirement savings plan (the “Retirement Plan”) covering substantially all domestic employees who meet certain eligibility requirements as to age and length of service. The Retirement Plan incorporates the salary deferral provision of Section 401(k) of the Internal Revenue Code and employees may defer up to 30% of their compensation or the annual maximum limit prescribed by the Internal Revenue Code. The Company matches a percentage of the employees’ deferrals and may contribute an additional 1% of employees’ salaries to the Retirement Plan regardless of employee deferrals. The Company may also elect to contribute an additional profit-sharing contribution to the Retirement Plan at the end of each year. The Company’s contributions to the Retirement Plan were $465, $474 and $440 for the years ended December 31, 2008, 2007 and 2006, respectively.

18.

Research and Development

Research, development and engineering expenditures for the creation and application of new products and processes were approximately $2,157, $3,397 and $2,791 for the years ended December 31, 2008, 2007 and 2006, respectively. Research and development is included in the selling, general and administrative line item on the consolidated statements of operations.

19.

Related Party Transactions

Monitoring and Oversight Agreement

The Company entered into a ten-year monitoring and oversight agreement with an affiliate of Hicks, Muse, Tate & Furst, Incorporated (“HMTF”), which controls a majority of the voting stock of Group, effective as of January 31, 2003. The monitoring and oversight agreement obligates the Company to indemnify HMTF, its affiliates, and their respective directors, officers, controlling persons, agents and employees from and against all claims, liabilities, losses, damages, expenses and fees and disbursements of counsel related to or arising out of or in connection with the services rendered under the monitoring and oversight agreement and not resulting primarily from the bad faith, gross negligence or willful misconduct of HMTF. The consolidated statements of operations include expense of $1,500 for each of the years ended December 31, 2008, 2007 and 2006. The Company made cash payments of $1,500, $1,500, and $750 to HMTF related to these expenses during the years ended December 31, 2008, 2007 and 2006, respectively. At December 31, 2008, $1,500 is included in accrued and other liabilities for amounts due under this agreement.

Compensation of Directors

For the years 2008 and 2007 the Chairman of the Board received an annual fee of $130 and $120, respectively. Directors (other than the Chairman) who are not executive officers received an annual fee of $35 and $30 in 2008 and 2007, respectively. In addition, each Audit Committee and Compensation Committee member received an annual fee of $12 and $10 in 2008 and 2007, respectively; and the Chairman of the Audit Committee and Compensation Committee each received an additional fee of $7 and $5 in 2008 and 2007, respectively. In addition, Directors are reimbursed for out-of-pocket expenses incurred in connection with attending meetings of the Board and its committees and receive a per diem fee of $1 for additional time spent on the Company’s business.

Other

The Company has a receivable of $804 as of December 31, 2008 and 2007, from Group related to certain expenses paid by the Company for the benefit of Group.

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A.

Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of Viasystems’ management, including Viasystems’ Chief Executive Officer and Chief Financial Officer, Viasystems has evaluated the effectiveness of Viasystems’ disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of December 31, 2008. Based on that evaluation, Viasystems’ Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2008, such disclosure controls and procedures were effective in ensuring information required to be disclosed by Viasystems in reports that it files or submits under the Securities Exchange Act of 1934, as amended, is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance the objectives of the control system are met. Further, the design of a control system must reflect the fact there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to errors or fraud may occur and not be detected. Our disclosure controls and procedures are designed to provide a reasonable level of assurance that their objectives are achieved.

(c) Management’s Annual Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended. As of December 31, 2008, under the supervision and with the participation of management, including Viasystems’ Chief Executive Officer and Chief Financial Officer, an evaluation was conducted of the effectiveness of Viasystems’ internal control over financial reporting based on the framework contained in the report titled “Internal Control — Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Based on that evaluation, management concluded that Viasystems’ internal control over financial reporting was effective to provide reasonable assurance that the desired control objectives were achieved as of December 31, 2008.

This annual report does not include an attestation report of Ernst & Young LLP, Viasystems’ independent registered public accounting firm, regarding internal control over financial reporting. Management’s report was not

subject to attestation by Viasystems’ independent registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit Viasystems to provide only management’s report in this annual report.

(d) Changes in Internal Control Over Financial Reporting

There were no changes in Viasystems’ internal control over financial reporting that occurred during the quarter ended December 31, 2008, that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

Date: March 30, 2009

/s/ David M. Sindelar

David M. Sindelar

Chief Executive Officer

Date: March 30, 2009

/s/ Gerald G. Sax

Gerald G. Sax

Chief Financial Officer

Item 9B.

Other Information

(a)

On March 27, 2009, pursuant to the terms of the Stockholders’ Agreement among Group, Hicks, Muse, Tate and Furst Incorporated, GSCP (NJ), Inc. (“GSC”) and certain other stockholders of Viasystems Group, Inc., GSC appointed Mr. Philip Raygorodetsky to replace Mr. Peter Frank as one of GSC’s representatives on the Board. On March 27, 2009, Mr. Frank retired from his position as a member of the Board of Group and Viasystems (the “Board”) at the discretion of GSC. Mr. Frank previously served on the Audit Committee of the Board, and the vacancy left by his retirement on such Committee will be filled by Mr. Raygorodetsky.

Mr. Raygorodetsky is a Senior Managing Director of GSC Group. He has been at GSC Group since 1999. Mr. Raygorodetsky is a director of Dukes Place Holdings Limited, Seaton Insurance Company, Stonewall Insurance Company and Wrightline, LLC. Mr. Raygorodetsky was previously with Greenwich Street Capital Partners from 1997 to 1999. Prior to that Mr. Raygorodetsky was with Salomon Smith Barney Inc. in the Investment Banking Division’s health care group. Prior to that, Mr. Raygorodetsky worked at Andersen Consulting.

(b)

There are currently no material changes to the procedures by which security holders may recommend nominees to the Board.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The following table sets forth the names and ages of each of the Directors and executive officers of Viasystems Group, Inc. (“Group”) and Viasystems, Inc. (“Viasystems,” and together with Group, the “Company”), followed by a description of their business experience during at least the past five years. The positions held by the Directors and executive officers are with Group and Viasystems, unless indicated otherwise. All executive officers are appointed by the Board of Directors of Group and Viasystems and serve at their pleasure. There are no family relationships among any of the executive officers or Directors. Unless indicated otherwise, each of the Directors and executive officers is a U.S. citizen and the business address of each individual is 101 South Hanley Road, Suite 400, St. Louis, Missouri 63105.

Pursuant to the terms of that certain Stockholders Agreement dated January 31, 2003, the Board of Directors of Group and Viasystems will consist of at least nine members, including the Chief Executive Officer of the Company, five designees of affiliates of Hicks, Muse, Tate & Furst Incorporated (“HMTF”) and three designees of affiliates of GSCP (NJ), Inc. (“GSC”) and other non-HMTF stockholders of Group. See “Stockholders Agreement” in Item 13, “Certain Relationships and Related Transactions, and Director Independence.” Each Director is elected annually by the shareholders of Group and Viasystems. Each Officer is appointed annually and serves pursuant to the terms of their respective employment agreements (see “Discussion of Summary Compensation and Grants of Plan-Based Awards Tables” on page 87).


Name	Age	Position
Non-Employee Directors Christopher J. Steffen (1) (2)*	67	Chairman
Jack D. Furst	50	Director
Edward Herring (1)	38	Director
Robert F. Cummings Jr. (1)	59	Director
Diane H. Gulyas (2)	52	Director
Richard A. McGinn (1) (2)	62	Director
Philip Raygorodetsky (2)	35	Director
Richard W. Vieser (2)	81	Director
Executive Officers David M. Sindelar	51	Chief Executive Officer and Director
Timothy L. Conlon	57	President, Chief Operating Officer and Director
Gerald G. Sax	48	Senior Vice President and Chief Financial Officer
Brian W. Barber	53	Senior Vice President Operations-Printed Circuit Board & Supply Chain Management
Richard B. Kampf	53	Senior Vice President Sales and Marketing

(1)

Member of the Group and Viasystems Compensation Committee.

(2)

Member of the Group and Viasystems Audit Committee.

* Denoted financial expert of the Audit Committee and independent Director.

Christopher J. Steffen has been Chairman of the Board of Directors since December 2003 and a Director since October 2003. Mr. Steffen acts as the financial expert on our Audit Committee and holds such position as an independent Director of the Company. Mr. Steffen is an advisor to Wall Street Management and Capital, Inc. since 2002. Mr. Steffen currently serves as a Director of W.R. Grace and Co. and Accelrys, Inc. From 1993 to 1996, Mr. Steffen served as the Vice Chairman and Director of Citicorp and its principal subsidiary, Citibank, N.A. In 1993, Mr. Steffen served as Senior Vice President and Chief Financial Officer of Eastman Kodak. From 1989 to 1993, Mr. Steffen served as Executive Vice President and Chief Financial and Administrative Officer and Director of Honeywell, Inc.

Jack D. Furst was a Director of the Company from 1996 to February 2003 and resumed his position as a Director of the Company in February 2005. Mr. Furst currently serves on the Boards of Directors of Arena Brands Holding Co., Kent Distributors, Conley Lott Nichols of Texas, Inc. and Stratford Capital Corporation. Mr. Furst was affiliated with HM Capital Partners, LLC (“HMC”) (formerly HMTF) since 1989, the year in which it was formed, through the end of 2008. Mr. Furst has over 20 years of experience in leveraged acquisitions and private investments. Mr. Furst is involved in all aspects of HMC’s business and has been actively involved in originating, structuring and monitoring HMC’s investments. Prior to joining HMC, Mr. Furst served as a Vice President and subsequently as a Partner of Hicks & Haas from 1987 to 1989. From 1984 to 1986, Mr. Furst was a merger and acquisitions/corporate finance specialist for the First Boston Corporation in New York. Before joining First Boston Corporation, Mr. Furst was a Financial Consultant at PricewaterhouseCoopers LLC.

Edward Herring was elected as a Director in August of 2006. Mr. Herring currently serves as a Director of BlackBrush Energy, Capital for Kids and Swett and Crawford, TexStar II and TriDimension Energy. Mr. Herring is a Partner of HMC. From 1996 to 1998, Mr. Herring attended Harvard Business School and earned a Masters in Business Administration degree. From 1993 to 1996 Mr. Herring was an investment banker with Goldman, Sachs & Co.

Robert F. Cummings, Jr. has been a Director since January 2003. Mr. Cummings currently serves as Director of Corning, Inc., GSC Capital Corp., GSC Investment Corp., Precision Partners, Inc. and RR Donnelley & Sons Company. Mr. Cummings joined GSC in 2002. Mr. Cummings is a Senior Managing Director and Chairman of the GSC Risk & Conflicts and Valuation Committees. For the prior 28 years, Mr. Cummings was with Goldman, Sachs & Co., where he was a member of the Corporate Finance Department, advising corporate clients on financing, mergers and acquisitions and strategic financial issues. Mr. Cummings was named a Partner of Goldman, Sachs & Co. in 1986. He retired from Goldman, Sachs and Co. in 1998 and was retained as an Advisory Director by Goldman, Sachs & Co. to work with certain clients on a variety of banking matters.

Diane H. Gulyas has been a Director since January 2003. Ms. Gulyas is Group Vice President – DuPont Performance Materials and has held such position since April 2006. Prior to being appointed Group Vice President – DuPont Performance Materials, Ms. Gulyas was the Chief Marketing & Sales Officer of E.I. du Pont de Nemours and Company from April 2004 to April 2006. Before being appointed Chief Marketing & Sales Officer, she was Group Vice President of DuPont Electronics and Communication Technologies, a position she had held from February 2002 until April 2004. Prior to that appointment, Ms. Gulyas served as Vice President and General Manager of the DuPont Advanced Fibers Businesses. Since 1978, Ms. Gulyas has held various positions with DuPont including Executive Assistant to the Chairman of the Board and Global Business Director.

Richard A. McGinn has been a Director since January 2003. Mr. McGinn is currently a Director of American Express Company. Mr. McGinn has been a General Partner at RRE Ventures (a private company that invests in entrepreneurial information technology companies) since August 2001. From 1997 to October 2000, Mr. McGinn served as Chief Executive Officer of Lucent Technologies, Inc. From 1996 to 1997, Mr. McGinn served as President of Lucent Technologies, Inc.

Philip Raygorodetsky joined our Board of Directors on March 27, 2009. He is a Senior Managing Director of GSC Group, which he joined in 1999. Mr. Raygorodetsky is a director of Dukes Place Holdings Limited, Seaton Insurance Company, Stonewall Insurance Company and Wrightline, LLC. Mr. Raygorodetsky was previously with Greenwich Street Capital Partners from 1997 to 1999. Prior to that Mr. Raygorodetsky was with Salomon Smith Barney Inc. in the Investment Banking Division’s health care group. Previously, Mr. Raygorodetsky worked at Andersen Consulting.

Richard W. Vieser has been a Director since 1997. Mr. Vieser currently serves as Chairman Emeritus of Varian Medical Systems. Mr. Vieser is the retired Chairman of the Board of Varian Medical Systems where he served from April 1999 to February 2003. From June 1985 to December 1989, Mr. Vieser served as Chairman of the Board and Chief Executive Officer of FL Industries, Inc. From September 1986 to December 1989, Mr. Vieser served as Chairman of the Board and Chief Executive Officer of FL Aerospace. From March 1987 to December 1989, Mr. Vieser served as Chairman, President and Chief Executive Officer of Lear Siegler, Inc. From April 1984 through June 1985, he served as President and Chief Operating Officer of McGraw-Edison Company.

David M. Sindelar has been a Director since August 2001 and Chief Executive Officer of the Company since July 2001. He also served as our Senior Vice President and Chief Financial Officer from January 1997 through June 2001. Previously, Mr. Sindelar served as Chief Executive Officer of International Wire Group, Inc. and LLS Corp. He also served as Senior Vice President and Chief Financial Officer of Berg Electronics, Corp. Mr. Sindelar is a member of the Board of Trustees of Saint Louis University and is Chairman of the Board of St. Anthony’s Medical Center.

Timothy L. Conlon has been a Director, President and Chief Operating Officer of the Company since October 1998. Prior to joining the Company, Mr. Conlon was President and Chief Operating Officer of Berg Electronics Corp. from January 1997 through October 1998. Mr. Conlon also served as Executive Vice President and Chief Operating Officer of Berg Electronics Group, Inc., a wholly-owned subsidiary of Berg Electronics Corp., from October 1993 through January 1997. Mr. Conlon is a member of the Board of Directors of Maryville University.

Gerald G. Sax has been the Senior Vice President and Chief Financial Officer of the Company since August 2005. Mr. Sax served as Senior Vice President-Supply Chain from February 2003 to August 2005. He also served as our

Senior Vice President-Europe from July 1999 to January 2003. Mr. Sax joined us in November 1998 in the position of Vice President-Corporate Controller. Prior to joining us, Mr. Sax was Vice President-Corporate Controller for Berg Electronics Corp. from September 1995 to October 1998.

Brian W. Barber has been the Senior Vice President Operations Printed Circuit Board & Supply Chain Management of Viasystems since December 2007. From November 2000 to December 2007, Mr. Barber was Vice President Operations Printed Circuit Board/Electro-mechanical Americas and from January 2000 to October 2000 Mr. Barber was Vice President Printed Circuit Board Operations. Prior to joining Viasystems in 2000, Mr. Barber had been employed by Hadco Corporation since 1982 serving as Vice President and Business Unit Manager of their high technology operation.

Richard B. Kampf has been the Senior Vice President of Sales & Marketing since December 2007. From November 2002 to December 2007 Mr. Kampf was Vice President of Sales & Marketing and from March 2000 to October 2002 Mr. Kampf was Vice President of Sales & Marketing for Viasystems Printed Circuit Board, Americas. Mr. Kampf joined us in April 1999, as Director of Sales for the Americas with over 18 years experience in the electronics industry with companies such as Marshall Industries where he was Vice President of Sales and Thomas & Betts Corporation where he was Vice President of Sales & Marketing.

Code of Ethics and Business Conduct

The Company has adopted a Code of Ethics applicable to its Chief Executive Officer, Chief Financial Officer and other senior financial and accounting employees, management and procurement personnel. A copy of the Code of Ethics has been filed with the SEC as an exhibit to the Viasystems’ Annual Report on Form 10-K for the fiscal year ended December 31, 2004, and is available on our website, www.viasystems.com.

Item 11. Executive Compensation

Compensation Discussion and Analysis

The Compensation Committee of the Board of Directors of Viasystems Group, Inc. (“Group”) and Viasystems, Inc. (“Viasystems” and together with Group, the “Company”) administers our executive compensation program. The role of the Compensation Committee is to oversee our compensation and benefit plans and policies, administer our equity-based plan, and review and approve annually all compensation decisions relating to our senior executive officers.

The compensation programs are designed to remunerate our executives and are intended to provide incentive to our executives and other employees to maximize stakeholder value, which in turn affects the overall compensation earned by our management.

The Compensation Committee has adopted compensation programs designed to:

(i)

Attract, motivate and retain superior talent;

(ii)

Encourage high performance and promote accountability;

(iii)

Ensure that compensation is commensurate with our annual performance; and

(iv)

Provide performance awards for the achievement of financial and operational targets and strategic objectives that are critical to our long-term growth.

Presently, the total compensation of our executive officers is comprised of any or all of the following: (i) base salary, (ii) cash-based incentive compensation under our Annual Incentive Compensation Plan (“AICP”), (iii) cash bonus awards given at the discretion of the Compensation Committee and (iv) long-term equity-based incentives in the form of stock options of Group. In determining specific components of compensation, the Compensation Committee considers each executive’s historical individual performance, the Company’s overall performance, the level of responsibility managed by each executive, the skills and experience of each executive, and other performance-based measures. The Compensation Committee reviews and approves all elements of compensation for each of Messrs. Sindelar, Conlon, Sax, Barber, and Kampf (collectively, the “Named Executive Officers”),

taking into consideration the Company’s performance, the performance of each respective internal organization for which the executive is responsible, as well as information regarding compensation levels for senior executives at similarly situated companies described below. Our Chief Executive Officer also makes compensation recommendations to the Compensation Committee on all Named Executive Officers (other than himself, as his performance is reviewed by the Compensation Committee) based on information he gathers including industry resources, benchmark data and other peer compensation information gathered in response to requests from the Compensation Committee. The Compensation Committee has the ability to engage the services of an outside consultant if and when it believes it would be effective to do so. Notwithstanding the input from our Chief Executive Officer and his recommendations, the Compensation Committee ultimately determines the compensation of our Chief Executive Officer, President and Chief Operating Officer, Chief Financial Officer and the other Named Executive Officers during their meetings in executive session without any members of the Company’s management present.

The Compensation Committee has implemented and intends to maintain compensation plans that tie a substantial portion of the executives’ overall compensation (in the form of incentive compensation) to key financial and operational goals. The Compensation Committee measures the Company’s performance primarily through our operating income. The Compensation Committee also uses the non-GAAP financial measurement of “adjusted EBITDA” as an important quantitative measurement of the Company’s performance. The Compensation Committee establishes individual executive compensation at levels the Compensation Committee believes are comparable with executives in other companies of similar size and stage of development, operating in similar markets, taking into account the Company’s performance and strategic goals. In order to benchmark the compensation paid to our Named Executive Officers, in February 2008, the Compensation Committee reviewed a compensation study for senior executives of similarly situated companies prepared by Lockton Companies, LLC (“Lockton”) as of January 21, 2008, which included an analysis of our peer group companies’ senior executive compensation (the “Comparison Group”). After having reviewed the Lockton survey, the Compensation Committee determined at that time that the overall compensation paid to each of our Named Executive Officers was adequate and within the median range of the senior executives of companies in the Comparison Group. Since then, the Compensation Committee has not changed any of the elements of compensation for any of the Named Executive Officers or other employees. In addition, while the Compensation Committee determined the overall senior executive compensation packages are adequate as compared with the Company’s peers, the Committee recognized that the long-term incentive awards granted to all of our Named Executive Officers is below the median range. With these and other data points, the Compensation Committee will continue to periodically review all of our compensation policies, including policies and strategy relating to executive recruitment, retention and compensation, as well as the appropriate mix of base salary, cash-based incentive compensation and long-term incentive compensation for our senior executives.

Below is a list of the Companies that were in the Comparison Group.


A O Smith Corp	MEMC Electronic Materials, Inc.
Altera Corp	Merix Corp.
Amphenol Corp	Molex, Inc.
Axcelis Technologies, Inc.	National Semiconductor Corp.
Benchmark Electronics, Inc.	Network Appliance, Inc.
Brady Corp.	ON Semiconductor Corp.
Celestica, Inc.	Plexus Corp.
Cypress Semiconductor Corp	Sandisk Corp.
DDI Corp.	Sanmina-SCI Corp.
Flextronics International, Ltd.	TTM Technologies, Inc.
Gentek, Inc.	Utstarcom, Inc.
International Rectifier Corp.	Varian Medical Systems, Inc.
Jabil Circuit, Inc.	Vishay Intertechnology, Inc.
LSI Logic Corp.	Xilinx, Inc.

The Compensation Committee anticipates that it will continue to make adjustments in the compensation structure for our Named Executive Officers and other senior executives in the future to adjust as necessary with the ever-changing global economy. In that regard, in the fourth quarter of 2008, the Compensation Committee approved management’s decision to institute a salary freeze for employees and other cost cutting measures until the global economy shows signs of recovery from the current economic climate.

The Compensation Committee regards compensation of the Chief Executive Officer to be among its most important responsibilities. The Compensation Committee believes that the Chief Executive Officer should be properly incentivized and properly rewarded for the performance of his duties. The Compensation Committee provides incentives in the form of cash-based bonus opportunities as well as long term compensation in the form of stock options to the Chief Executive Officer to lead the business in a direction that will maximize the value of the enterprise. In order to properly incentivize the Company’s Chief Executive Officer to drive the Company to reach its financial goals, the Compensation Committee has determined that the incentives provided to him should be heavily weighted in the form of nonequity, cash-based incentive opportunities conditioned upon the achievement of the Company’s financial performance goals as measured by adjusted EBITDA, and certain other defined “management by objective” goals.

Based on the policies and strategies set by the Compensation Committee, our Chief Executive Officer, President and Chief Operating Officer, Chief Financial Officer and Vice President of Human Resources set salaries and incentive compensation opportunities for the respective employees who report to them. Our Chief Executive Officer submits recommendations to the Compensation Committee with respect to stock option awards for all of our employees at all levels of the Company.

Except as described below, our Compensation Committee has not adopted any formal or informal policies or guidelines for allocating compensation between long-term and currently paid-out compensation, between cash and noncash compensation, or among different forms of compensation. This is due to the Compensation Committee’s desire to maintain flexibility to tailor executive compensation and to attract and retain top-flight executives.

Elements of Compensation

Our executive compensation consists of the following elements:

Base Salary. Base salaries for our executives are generally established after consideration of the following criteria: (i) the scope of their responsibilities, (ii) level of experience and individual performance, (iii) external competitiveness, and (iv) internal fairness considerations. The goal for the base salary component of our executives is to compensate them at a level that approximates the median salaries of individuals in comparable positions at companies in the Comparison Group. Base salaries of our Named Executive Officers are reviewed annually by the Compensation Committee and may be adjusted from time to time at the Compensation Committee’s discretion.

Annual Incentive Compensation Plan. Each year the Compensation Committee establishes measurement criteria for our AICP to promote the achievement of our financial performance objectives. The AICP is designed to motivate our executives and other employees who are able to participate toward the achievement of individual and business unit performance objectives. The Compensation Committee primarily uses the Company’s total aggregate adjusted EBITDA to measure the Company’s performance when determining management’s incentive compensation because, in the view of the Compensation Committee, adjusted EBITDA facilitates performance comparisons from period to period and company to company by backing out certain nonrecurring expenses and other potential differences caused by variations in capital structures, the book amortization of intangibles, taxes, the age and book value of facilities and equipment, and certain noncash or nonoperating changes in the Company’s performance. Adjusted EBITDA, measured by the Compensation Committee, is not a recognized financial measure under U.S. GAAP and does not purport to be an alternative to operating income or an indicator of operating performance. Adjusted EBITDA is used by the Compensation Committee as a tool to enhance its understanding of our operating results and is not intended to represent cash flow or results of operations. The Compensation Committee recognizes that adjusted EBITDA has certain material limitations, primarily due to the exclusion of certain amounts that are material to our consolidated results of operations. In addition, the Compensation

Committee recognizes that adjusted EBITDA, as measured by the Compensation Committee, may differ from the adjusted EBITDA calculation of other companies in our industry, limiting its usefulness as a comparative measure.

Target incentive compensation opportunities for each participant (“Management”) in the AICP are established as a percentage of each individual’s base salary. Incentive compensation amounts are intended to provide total cash compensation that approximates the median for individuals in comparable positions at companies in the Comparison Group when assuming that the Company’s target performance is achieved. In addition, at the beginning of each year, the Compensation Committee carefully chooses, at its discretion, the leaders of Management of the Company (the “Company Leaders”) who are eligible for bonuses in excess of 100% of their target incentive compensation opportunity, up to a maximum of 200% of each individual’s target incentive compensation opportunity. Historically such group of less than 40 Company Leaders has included those individuals who the Compensation Committee believes can affect the overall performance of the Company as functional, manufacturing facility or regional leaders within the Company. The Company Leaders have also historically included the Named Executive Officers.

In addition, the Compensation Committee also sets definitive nonquantitative “management by objective” (“MBO”) goals for a group of less than 10 of our most senior Company Leaders selected by the Compensation Committee, at its discretion, which group has historically included the Named Executive Officers (collectively the “Executive Team”). In order to achieve 100% of their respective incentive compensation opportunity, each member of our Executive Team must produce results for the Company that meet or exceed the adjusted EBITDA target set by the Compensation Committee, and in the opinion of the Compensation Committee, meet the respective nonquantitative MBO goals assigned to each member of the Executive Team by the Compensation Committee. Historically, to the extent any bonus is paid under our AICP, 15% of each member of the Executive Team’s cash-based incentive compensation opportunity has been awarded based on the determination of the Compensation Committee that each member of the Executive Team achieved their established MBO goals, and 85% was awarded based on the Company’s financial performance as compared to the adjusted EBITDA target set by the Compensation Committee.

At the beginning of 2008, the Compensation Committee established the quantitative measurement of the Company’s performance would be based on an adjusted EBITDA target of $120.0 million, after assuming a 100% payout of each individual’s incentive compensation opportunity. In addition, in accordance with past practice, in early 2008, the Compensation Committee set other nonquantitative definitive MBO goals for the Executive Team. The Compensation Committee created a formula for a graduated scale of projected incentive payments that would be made to the AICP participants based on the adjusted EBITDA target that was achieved. The graduated scale, as set out below, developed by the Compensation Committee, is a mathematical equation that allows the Compensation Committee to calculate the incentive compensation that is to be paid pursuant to the Company’s AICP as a function of adjusted EBITDA. The adjusted EBITDA targets in 2008 were set by the Compensation Committee at an aggressive growth level but a level in line with our annual plan.

The following table provides in tabular format the various facets of the Company’s AICP and the individuals or groups of individuals who are eligible to receive each respective bonus opportunity by category, and demonstrates the potential percentage of the incentive compensation opportunity that each member of each respective group would have been paid at certain adjusted EBITDA levels if achieved by the Company as provided for in the Company’s 2008 AICP.


Adjusted EBITDA Performance ($ in millions)	% of Adjusted EBITDA Target Achieved	Management Bonus	Company Leaders Bonus	Executive Team Bonus Based on Adjusted EBITDA	Executive Team Bonus Based on MBO Goals
Below $108	Below 90%	0%	0%	0.00%	0.00%
108	90	50	50	42.50	7.50
114	95	75	75	63.75	11.25
120	100	100	100	85.00	15.00
126	105	100	125	106.25	18.75
132	110	100	150	127.50	22.50
138	115	100	175	148.75	26.25
144	120	100	200	170.00	30.00

During its February 2009 meeting, the Compensation Committee determined that each member of the Executive Team had successfully achieved the nonquantitative MBO goals presented to them at the beginning of the year 2008. However, the Company was not able to reach the stated target of $120.0 million of adjusted EBITDA. Due to a dramatically weak fourth quarter, the Company’s 2008 adjusted EBITDA was also below the minimum threshold of $108 million. By applying the incentive compensation formula to determine the incentive compensation to be paid out in 2008, based solely on the Company’s adjusted EBITDA performance for the full year 2008, the bonus payable to each participant in the AICP was determined to be 0%.

Discretionary Bonus. Pursuant to the terms of our AICP, the Compensation Committee also has the authority to grant discretionary-based awards or adjust the bonus set forth above downward for one or a group of employees based on criteria set at the Compensation Committee’s discretion.

Based on the overall performance of the Company during 2008 in a down market and the actions that management took to allow the Company to sustain its financial strength, the Compensation Committee unanimously voted to use its discretion as allowed under the Company’s compensation plan and awarded certain of the key employees of the Company, including all the Named Executive Officers, a discretionary bonus. Each discretionary bonus was based on each individual’s contributions to the Company’s performance.

Stock Options. Our Compensation Committee oversees the administration of Group’s 2003 Stock Option Plan. Historically, our Board and Compensation Committee have made stock option grants at a qualifying employee’s commencement of employment and, occasionally, following a significant change in job responsibilities or to meet other special recruiting or retention objectives. Although the Compensation Committee has the authority to grant restricted stock and stock appreciation rights under our 2003 Stock Option Plan, to date the Compensation Committee has elected only to grant awards of stock options to our employees. In making awards of stock options, the Compensation Committee has historically considered the recommendations of the Company’s Chief Executive Officer.

Most of the stock options issued to our Named Executive Officers were issued at the time the 2003 Stock Option Plan was adopted by our Board of Directors, when the Company emerged from bankruptcy on January 31, 2003. As of January 31, 2003, Group’s common stock was valued at $12.63 per share. Since 2003, because there is no active market in our common stock, all subsequent issuances of options under the 2003 Stock Option Plan have been issued at the exercise price of $12.63, which the Company and the Compensation Committee believe is above the price that the common stock of Group has been privately traded since January 2003.

The Compensation Committee uses stock options as our primary long-term incentive vehicle because:

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 the enterprise value of Group; and

stock options help to provide a balance to the overall executive compensation program as base salary and our AICP focus on short-term compensation, while stock options reward executives for increases in the overall enterprise value of Group.

In determining the number of stock options to be granted to executives, the Compensation Committee takes into account the individual’s position, scope of responsibility, ability to affect profits and stockholder value, and the value of the stock options in relation to other elements of the individual executives’ total compensation.

Stock option holders recognize taxable income from stock option awards when a vested option is exercised. Group would generally receive a corresponding tax deduction for compensation expense in the year of exercise. The amount included in the employee’s wages and the amount Group may deduct is equal to the common stock price when the stock options are exercised less the exercise price multiplied by the number of stock options exercised. Group does not pay or reimburse any employee for any taxes due upon exercise of a stock option. Presently, only 169,378 stock options of the total original pool of 2,777,778 remain available for grant under Group’s 2003 Stock Option Plan have been granted. The Compensation Committee may consider amending Group’s 2003 Stock Option Plan in the future to allow for additional grants as such may become necessary.

Other Benefits

General Benefits. All of our executives are eligible to participate in all of our applicable local employee benefit plans offered by the Company in each respective region, such as medical, dental, vision, long-term and short-term disability, and life insurance, in each case on the same basis as our other employees. We also offer to Management, including our Named Executive Officers, additional perquisites and benefits, such as club dues, paid transportation and parking costs reflected in the All Other Compensation column of the Summary Compensation Table for our Named Executive Officers on page 85. Each of the employment contracts with Messrs. Sindelar, Conlon, and Sax contain provisions that require the Company to pay all medical expenses for them for the remainder of their lifetime and the lifetime of their spouse under certain conditions contained in their respective contracts. The Compensation Committee believes these benefits and perquisites are reasonable and consistent with our overall compensation program to better enable our Company to attract and retain executive talent to key positions.

401(k) Defined Contribution Plan. All domestic employees may participate in our 401(k) Retirement Savings Plan, or 401(k) Plan. All eligible full-time and part-time employees who meet certain age and service requirements may participate. For the year 2008, the Company made matching contributions to the 401(k) Plan equal to 50% of the first 6% each participating employee’s contribution, up to the lesser of 3% of each participants’ annual eligible compensation or, for 2008, $6,900. In 2008, all of our Named Executives Officers participated in the Company’s 401(k) Plan.

2008 Executive Base Salary and Incentive Compensation Determinations

David M. Sindelar

Mr. Sindelar’s employment agreement with the Company was agreed in January, 2003 and provides for a base salary of not lower than $920,000 and certain other benefits and incentive opportunities. In structuring and reviewing the Chief Executive Officer’s compensation for 2008, the Compensation Committee considered the Company’s financial performance in fiscal years 2006 and 2007, the total compensation package and value of incentive awards to Chief Executive Officers at similarly situated companies, and Mr. Sindelar’s performance during his tenure with the Company. Mr. Sindelar’s base salary did not increase in 2008.

For calendar year 2008, Mr. Sindelar received a base salary of $953,994 (which included a car allowance). Under our AICP, Mr. Sindelar’s cash-based incentive award opportunity was set at 100% of his base salary. As discussed above, no payment was made pursuant to the AICP for 2008. However, based on the determination by the Compensation Committee that Mr. Sindelar lead the Executive Team and the Company to implement the actions which allowed the Company to maintain financial strength in a difficult overall market and to accomplish all of the nonquantitative MBO goals set by the Compensation Committee for 2008, and based on the discretion and judgment of the Compensation Committee, Mr. Sindelar, was also awarded a discretionary bonus payment for the year 2008 of $506,000 in the first quarter of 2009. The Compensation Committee had previously granted

Mr. Sindelar 420,000 stock options and determined that no additional stock options should be granted to Mr. Sindelar in 2008.

Timothy L. Conlon

Mr. Conlon’s employment agreement with the Company was agreed in January, 2003 and provides for a base salary of not lower than $550,000 and certain other benefits and incentive opportunities. The Compensation Committee reviewed the compensation data for Presidents and Chief Operating Officers of similarly situated companies to determine Mr. Conlon’s compensation package for 2008. In 2008, Mr. Conlon received a salary of $572,663 (which included a car allowance). In the spring of 2007, Mr. Conlon relocated his residence to Hong Kong as an expatriate of the United States, to assist in leading the Company’s China operations, sales and finance teams. Because Mr. Conlon moved his residence to Hong Kong, the perquisites granted to Mr. Conlon increased and, therefore, his total compensation increased in 2007 and 2008 to account for the additional expenses necessary for Mr. Conlon and his wife to take residence in Hong Kong. Except for the payment of expenses related to his expatriate status, Mr. Conlon’s base compensation did not increase in 2008. Under our AICP, Mr. Conlon’s cash-based incentive compensation opportunity was set at 100% of his base salary. As discussed above, no payment was made pursuant to the AICP for 2008. However, Mr. Conlon received a discretionary bonus award of $302,500 from the Compensation Committee based on the discretion and judgment of the Compensation Committee that the Executive Team achieved all of the nonquantitative MBO goals set at the beginning of 2008 and based on the Company’s overall performance in a difficult market. The Compensation Committee had previously granted Mr. Conlon 400,000 stock options and determined that no additional stock options should be granted to Mr. Conlon in 2008.

Gerald G. Sax

Mr. Sax’s employment agreement with the Company provides for a base salary of not less than $360,000. The Compensation Committee reviewed compensation data for Chief Financial Officers of similarly situated companies to determine Mr. Sax’s base compensation package for 2008. Mr. Sax’s base salary did not increase in 2008. In 2008, Mr. Sax received a salary of $387,733 (which included a car allowance and gross-ups for medical claims). Under our AICP, Mr. Sax’s cash-based incentive compensation opportunity was set at 65% of his base salary. As discussed above, no payment was made pursuant to the AICP for 2008. However, Mr. Sax received a discretionary bonus award of $128,200 from the Compensation Committee based on the discretion and judgment of the Compensation Committee that the Executive Team achieved all of the nonquantitative MBO goals set at the beginning of 2008 and based on the Company’s performance in a difficult market. The Compensation Committee had previously granted Mr. Sax 200,000 stock options and determined that no additional stock options should be granted to Mr. Sax in 2008.

Brian W. Barber

The Compensation Committee reviewed the compensation data for Senior Vice Presidents Operations Printed Circuit Board & Supply Chain Management for similarly situated companies to determine Mr. Barber’s compensation package for 2008. Mr. Barber’s base salary did not increase in 2008. For calendar year 2008, Mr. Barber received a base salary of $319,558 (including a car allowance). Under our AICP, Mr. Barber’s cash-based incentive award opportunity was set at 65% of his base salary. As discussed above, no payment was made pursuant to the AICP for 2008. However, Mr. Barber received a discretionary bonus award of $110,003 from the Compensation Committee based on the discretion and judgment of the Compensation Committee that the Executive Team achieved all of the nonquantitative MBO goals set at the beginning of 2008 and based on the Company’s performance in a difficult market for the fiscal year 2008.

Richard B. Kampf

The Compensation Committee reviewed the compensation data for Senior Vice Presidents of Sales and Marketing for similarly situated companies to determine Mr. Kampf’s compensation package for 2008. Mr. Kampf’s base salary did not increase in 2008. For calendar year 2008, Mr. Kampf received a base salary of $318,440 (including a car allowance). Under our AICP, Mr. Kampf’s cash-based incentive award opportunity was set at 65% of his base salary. As discussed above, no payment was made pursuant to the AICP for 2008. However, Mr. Kampf received a discretionary bonus award of $109,967 from the Compensation Committee based on the discretion and judgment of the Compensation Committee that the Executive Team achieved all of the nonquantitative MBO goals set at the beginning of 2008 and based on the Company’s performance in a difficult market for the fiscal year 2008.

COMPENSATION COMMITTEE REPORT

We have reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on our review and discussion with management, we have recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Viasystems, Inc. Annual Report on Form 10-K for the year ended December 31, 2008.

Respectfully submitted,

THE COMPENSATION COMMITTEE OF THE BOARD OF VIASYSTEMS, INC.

/s/ Richard A. McGinn

Richard A. McGinn

Chairman of the Compensation Committee

/s/ Christopher J. Steffen

Christopher J. Steffen

Member of the Compensation Committee

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