EX-99.3 3 d392281dex993.htm UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS Unaudited Pro Forma Condensed Combined Statements

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

The following unaudited pro forma condensed combined balance sheet as of March 31, 2012, and the unaudited pro forma condensed combined statements of operations for the three months ended March 31, 2012 and the year ended December 31, 2011 (together, the “Pro Forma Financial Data”), are based upon the historical consolidated financial statements of Viasystems Group, Inc. (“Viasystems”) and DDi Corp. (“DDi”) after giving effect to the acquisition of DDi by Viasystems and related financing transactions (the “DDi Merger), and after applying the assumptions, reclassifications and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial data. The unaudited pro forma condensed combined statements of operations are presented as if the DDi Merger occurred on January 1, 2011.

The Pro Forma Financial Data is presented for informational purposes only, and does not purport to represent what Viasystems’ and DDi’s actual consolidated results of operations or consolidated financial condition would have been had the DDi Merger actually occurred on the date indicated, nor are they necessarily indicative of future consolidated results of operations or consolidated financial condition. The Pro Forma Financial Data should be reviewed in conjunction with Viasystems’ and DDi’s filings with the Securities and Exchange Commission.

The historical consolidated financial information has been adjusted in the Pro Forma Financial Data to give effect to pro forma events that are, based upon available information and certain assumptions, (i) directly attributable to the DDi Merger, (ii) factually supportable and reasonable under the circumstances, and (iii) with respect to the unaudited pro forma condensed combined statements of operations, expected to have a continuing impact on the combined results.

The DDi Merger will be accounted for using the acquisition method of accounting. Viasystems is the acquirer for accounting purposes, and thus Viasystems will acquire all the assets, including identifiable intangible assets, and assume all of the liabilities of DDi (the “Net Assets”). For purposes of the Pro Forma Financial Data, the Net Assets have been valued based on preliminary estimates of their fair values, which will be revised as additional information becomes available. The actual adjustments to Viasystems’ consolidated financial statements as of the closing of the DDi Merger will depend on a number of factors, including additional information available and the actual balance of the Net Assets. Therefore, the actual adjustments will differ from the pro forma adjustments, and the differences may be material.

The Pro Forma Financial Data does not reflect costs to integrate the operations of Viasystems and DDi or any cost savings, operating synergies or revenue enhancements that the combined companies may achieve as a result of the DDi Merger.


Viasystems Group, Inc.

Unaudited Pro Forma Condensed Combined Balance Sheet

As of March 31, 2012

(dollars in thousands)

 

     Historical     (See Notes 5 and 6)
Adjustments for
the DDi Merger
   Pro Forma for
the DDi Merger
 
     Viasystems Group, Inc.     DDi Corp.       

ASSETS

           

Current assets:

           

Cash and cash equivalents

   $ 57,846      $ 29,177      $ (11,519   A,I,Q    $ 75,504   

Accounts receivable, net

     184,738        43,122        —             227,860   

Inventories

     112,962        25,029        4,423      J      142,414   

Prepaid expenses and other

     42,877        2,294        —             45,171   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total current assets

     398,423        99,622        (7,096        490,949   

Property, plant and equipment, net

     312,288        54,114        41,752      N      408,154   

Goodwill and intangible assets, net

     104,608        3,664        139,889      K      248,161   

Deferred financing costs, net

     5,359        —          12,136      B      17,495   

Other assets

     3,248        749        (125   F      3,872   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total assets

   $ 823,926      $ 158,149      $ 186,556         $ 1,168,631   
  

 

 

   

 

 

   

 

 

      

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

           

Current liabilities:

           

Current maturities of long-term debt

   $ 10,054      $ 1,271      $ —           $ 11,325   

Accounts payable

     186,674        21,738        —             208,412   

Accrued and other liabilities

     71,160        12,429        (1,264   A, P      82,325   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total current liabilities

     267,888        35,438        (1,264        302,062   

Long-term debt, less current maturities

     217,116        13,785        334,454      A      565,355   

Other non-current liabilities

     47,475        559        —             48,034   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total liabilities

     532,479        49,782        333,190           915,451   

Stockholders’ equity:

           

Combined companies stockholders’ equity:

           

Common Stock

     206        23        (23   M      206   

Paid-in capital

     2,386,429        236,756        (236,756   M      2,386,429   

Treasury stock

     —          (16,323     16,323      M      —     

Accumulated deficit

     (2,107,404     (113,138     74,871      A,B,M,Q      (2,145,671

Accumulated other comprehensive income

     9,046        1,049        (1,049   M      9,046   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total combined companies stockholders’ equity

     288,277        108,367        (146,634        250,010   

Noncontrolling interest

     3,170        —          —             3,170   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total stockholders’ equity

     291,447        108,367        (146,634        253,180   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total liabilities and stockholders’ equity

   $ 823,926      $ 158,149      $ 186,556         $ 1,168,631   
  

 

 

   

 

 

   

 

 

      

 

 

 

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


Viasystems Group, Inc.

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Three Months Ended March 31, 2012

(dollars in thousands, except per share data)

 

     Historical      (See Notes 5 and 6)
Adjustments for
the DDi Merger
   Pro Forma
for the DDi
Merger
 
     Viasystems Group, Inc.     DDi Corp.        

Net Sales

   $ 262,089      $ 68,913       $ —           $ 331,002   

Operating expenses:

            

Cost of goods sold, exclusive of items shown separately below

     211,057        53,579         (2,824   G,H      261,812   

Selling, general and administrative

     21,492        8,482         322      G,H      30,296   

Depreciation

     17,006        —           3,570      G,N      20,576   

Amortization

     388        —           1,317      L      1,705   

Restructuring and impairment

     6,987        68         —             7,055   
  

 

 

   

 

 

    

 

 

      

 

 

 

Operating income

     5,159        6,784         (2,385        9,558   

Other expense:

            

Interest expense, net

     7,352        196         3,769      D,F      11,317   

Amortization of deferred financing costs

     504        —           219      C      723   

Other, net

     224        213         —             437   
  

 

 

   

 

 

    

 

 

      

 

 

 

(Loss) income before taxes

     (2,921     6,375         (6,373        (2,919

Income taxes

     2,216        46         —        E,O      2,262   
  

 

 

   

 

 

    

 

 

      

 

 

 

Net (loss) income

     (5,137     6,329         (6,373        (5,181

Less: Net loss attributable to noncontrolling interests

     (495     —           —             (495
  

 

 

   

 

 

    

 

 

      

 

 

 

Net (loss) income attributable to common shareholders

   $ (4,642   $ 6,329       $ (6,373      $ (4,686
  

 

 

   

 

 

    

 

 

      

 

 

 

Basic (loss) earnings per share

   $ (0.23   $ 0.31            $ (0.23
  

 

 

   

 

 

         

 

 

 

Diluted (loss) earnings per share

   $ (0.23   $ 0.30            $ (0.23
  

 

 

   

 

 

         

 

 

 

Basic weighted average shares outstanding

     19,984,414        20,499,000         (20,499,000   M      19,984,414   
  

 

 

   

 

 

    

 

 

      

 

 

 

Diluted weighted average shares outstanding

     19,984,414        21,242,000         (21,242,000   M      19,984,414   
  

 

 

   

 

 

    

 

 

      

 

 

 

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


Viasystems Group, Inc.

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Year Ended December 31, 2011

(dollars in thousands, except per share data)

 

     Historical     (See Notes 5 and 6)
Adjustments for
the DDi Merger
   Pro Forma
for the DDi
Merger
 
     Viasystems Group, Inc.      DDi Corp.       

Net Sales

   $ 1,057,317       $ 263,392      $ —           $ 1,320,709   

Operating expenses:

            

Cost of goods sold, exclusive of items shown separately below

     837,686         206,132        (10,619   G,H      1,033,199   

Selling, general and administrative

     80,300         32,593        1,208      G,H      114,101   

Depreciation

     65,938         —          14,280      G,N      80,218   

Amortization

     1,710         614        4,653      L      6,977   

Restructuring and impairment

     812         964        —             1,776   
  

 

 

    

 

 

   

 

 

      

 

 

 

Operating income

     70,871         23,089        (9,522        84,438   

Other expense:

            

Interest expense, net

     28,906         1,323        15,072      D,F      45,301   

Amortization of deferred financing costs

     2,015         —          874      C      2,889   

Other, net

     1,202         (261     —             941   
  

 

 

    

 

 

   

 

 

      

 

 

 

Income before taxes

     38,748         22,027        (25,468        35,307   

Income taxes

     8,464         182        —        E,O      8,646   
  

 

 

    

 

 

   

 

 

      

 

 

 

Net income

     30,284         21,845        (25,468        26,661   

Less: Net income attributable to noncontrolling interests

     1,791         —          —             1,791   
  

 

 

    

 

 

   

 

 

      

 

 

 

Net income attributable to common shareholders

   $ 28,493       $ 21,845      $ (25,468      $ 24,870   
  

 

 

    

 

 

   

 

 

      

 

 

 

Basic earnings per share

   $ 1.43       $ 1.08           $ 1.24   
  

 

 

    

 

 

        

 

 

 

Diluted earnings per share

   $ 1.42       $ 1.04           $ 1.24   
  

 

 

    

 

 

        

 

 

 

Basic weighted average shares outstanding

     19,981,022         20,315,000        (20,315,000   M      19,981,022   
  

 

 

    

 

 

   

 

 

      

 

 

 

Diluted weighted average shares outstanding

     20,129,787         20,984,000        (20,984,000   M      20,129,787   
  

 

 

    

 

 

   

 

 

      

 

 

 

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


Viasystems Group, Inc.

Notes to Unaudited Pro Forma Condensed Combined Financial Data

(in thousands, except per share amounts)

1. Basis of Presentation

General

On May 31, 2012, Viasystems Group, Inc. (“Viasystems”) acquired 100% of the outstanding capital stock of “DDi Corp. (“DDi”) in an all cash transaction which was funded from the proceeds of debt issued by Viasystems (the “DDi Merger”). The unaudited pro forma condensed combined financial data was prepared using the acquisition method of accounting and was based on the historical financial statements of Viasystems and DDi. The historical consolidated financial information has been adjusted in the Pro Forma Financial Data to give effect to pro forma events that are, based upon available information and certain assumptions, (i) directly attributable to the DDi Merger, (ii) factually supportable and reasonable under the circumstances, and (iii) with respect to the unaudited pro forma condensed combined statements of operations, expected to have a continuing impact on the combined results.

Acquisition Accounting

The DDi Merger will be accounted for using the acquisition method of accounting. For the purposes of the Pro Forma Financial Data, Viasystems has been treated as the acquirer in the DDi Merger and will account for the transaction by using its historical accounting information and accounting policies and adding the assets acquired, including identifiable intangible assets and liabilities assumed from DDi (the “Net Assets”) as of the date of the DDi Merger at their respective fair values. The process for estimating the fair values of the Net Assets requires the use of significant estimates and assumptions. The amount by which the acquisition date fair value of the purchase price (consideration transferred) exceeds the fair value of net identifiable assets acquired (see Note 4) will be recognized as goodwill. The purchase price allocation is subject to finalization of Viasystems’ analysis of the fair value of the Net Assets as of the date of the DDi Merger. Accordingly, the purchase price allocation reflected in this Pro Forma Financial Data is preliminary and will be adjusted upon the completion of the final valuation. Such adjustments could be material. The final valuation is expected to be completed as soon as practicable but no later than one year after the consummation of the DDi Merger.

Reclassifications

Certain reclassifications have been made to the historical financial statements of DDi to conform to Viasystems’ presentation. These adjustments primarily relate to (i) reclassifying depreciation expense included by DDi in cost of goods sold and selling, general and administration expense to the depreciation caption and (ii) reclassifying information technology related expenses included by DDi in cost of goods sold to selling, general and administration expense.

2. 2019 Notes

In connection with the DDi Merger, on April 30, 2012, Viasystems issued $550,000 in aggregate principal amount of 7.875% senior secured notes due 2019 (the “2019 Notes”). The net proceeds of the 2019 Notes were used (i) to redeem Viasystems’ $220,000 in aggregate principal amount of 12.000% senior secured notes due 2015 (the “2015 Notes”) and to fund the DDi Merger. For the purpose of the unaudited pro forma condensed combined statements of operations, (ii) the amounts presented as pro forma for the DDi Merger assume the 2019 Notes were issued on January 1, 2011.

Viasystems redeemed the 2015 Notes on May 30, 2012, and was required to pay a premium of $16,500 under the terms of the indenture governing the 2015 Notes. For the purpose of the unaudited pro forma condensed combined balance sheet, the 2015 Notes are assumed to have been redeemed on March 31, 2012, when the premium would have been $20,900.

3. The DDi Merger

On April 3, 2012, Viasystems and DDi entered into a merger agreement, pursuant to which on May 31, 2012, DDi became an indirect wholly-owned subsidiary of Viasystems. Under the terms of the DDi Merger, Viasystems acquired all of the outstanding capital stock of DDi for cash consideration equal to $13.00 per share of DDi common stock outstanding on the DDi Merger date, including shares issued from the exercise of stock options on the DDi Merger date. The consideration transferred in the DDi Merger was $281,968.


4. Preliminary Allocation of Consideration Transferred to Net Assets Acquired

The acquisition method of accounting requires that the purchase price (consideration transferred) in a business combination be allocated to the Net Assets acquired based on their estimated fair value. For the purpose of the Pro Forma Financial Data, Viasystems has made a preliminary allocation of the purchase price to the Net Assets acquired as follows:

 

Tangible assets and liabilities:

  

Cash and cash equivalents

   $ 21,075   

Accounts receivable, net

     43,122   

Inventories

     29,452   

Property, plant and equipment, net

     95,866   

Other assets

     2,918   

Accounts payable

     (21,738

Long term debt

     (15,056

Accrued and other liabilities assumed

     (17,224

Intangible assets:

  

Trade name, customer lists and manufacturer sales representative network

     99,932   

Goodwill

     43,621   
  

 

 

 

Total preliminary purchase price allocation

   $ 281,968   
  

 

 

 

The following table reconciles the historical value of the Net Assets as of March 31, 2012 to the fair value of the Net Assets:

 

Historical value of Net Assets at March 31, 2012

   $  108,367   

Cash payment of DDi’s acquisition related fees and expenses (See Note 6, Item Q)

     (8,102

Elimination of the historical value of goodwill (See Note 6, Item K)

     (3,664

Elimination of deferred financing costs (See Note 6, Item F)

     (125

Recognition of intangible assets acquired:

  

Amortizable intangible assets (See Note 6, Item K)

     99,932   

Goodwill (See Note 6, Item K)

     43,621   

Adjustments to the historical carrying value of assets and liabilities based on Viasystems’ preliminary estimates of fair value:

  

Inventories (See Note 6, Item J)

     4,423   

Property, plant and equipment (See Note 6, Item N)

     41,752   

Other accrued liabilities (See Note 6, Item P)

     (4,236
  

 

 

 

Fair value of Net Assets

   $ 281,968   
  

 

 

 

5. Pro Forma Adjustments for Financing Transactions related to the DDi Merger

Adjustments included in the column under the heading “Adjustments for the DDi Merger” which relate to the issuance of the 2019 Notes represent the following:

 

  A. Reflects the receipt of the net proceeds, after debt issuance costs, of $533,874 from the $550,000 2019 Notes and the use of those proceeds to redeem all of Viasystems’ $220,000 2015 Notes, including accrued interest of $5,500, a premium of $20,900 and related fees of $650. As of March 31, 2012, the carrying value of the 2015 Notes was $215,546, which reflected an unamortized original issue discount of $4,454.

 

  B. Reflects the write-off of $3,990 of deferred financing costs associated with the 2015 Notes and the capitalization of $16,006 of debt issuance costs from the 2019 Notes. Because the write-off of the deferred financing costs will not have a continuing impact, it is not reflected in the unaudited pro forma condensed combined statements of operations.

 

  C. Reflects adjustments to amortization of deferred financing costs for the estimated net increase in amortization of deferred financing costs of $219 and $874 for the three months ended March 31, 2012 and for the year ended December 31, 2011, respectively, due to the differences in the capitalized debt issuance costs and the original tenor between the 2019 Notes and the 2015 Notes.

 

  D. Reflects additional interest expense of $3,829 and $15,316 for the three months ended March 31, 2012 and the year ended December 31, 2011, respectively, due to the differences in the aggregate principal amount, coupon rate and original issue discount between the 2019 Notes and the 2015 Notes.

 

  E. As a result of Viasystems’ existing tax loss carry-forwards in the United States, for which substantially full valuation allowances have been provided, no deferred taxes have been recorded, and no income tax has been provided related to the pro forma adjustments for financing transactions related to the DDi Merger.


6. Pro Forma Reclassifications and Adjustments for the DDi Merger

Adjustments in the column under the heading “Adjustments for the DDi Merger” which are necessary to reflect the DDi Merger and related acquisition accounting include the following:

 

  F. Reflects the elimination of DDi’s $125 of capitalized deferred financing costs from other assets and the elimination of the related amortization of $60 and $244 for the three months ended March 31, 2012 and the year ended December 31, 2011, respectively, from interest expense.

 

  G. Reflects the reclassification of DDi’s depreciation expense to the depreciation caption from the cost of goods sold and selling, general and administrative expense captions in the amount of $2,359 and $143, respectively, for the three months ended March 31, 2012 and in the amount of $8,803 and $608, respectively, for the year ended December 31, 2011.

 

  H. Reflects the reclassification of certain information technology related costs from DDi’s cost of goods sold caption to the selling, general and administrative expense caption in the amount of $465 and $1,816 for the three months ended March 31, 2012 and the year ended December 31, 2011, respectively.

 

  I. Reflects cash consideration paid in the DDi Merger of $281,968.

 

  J. Reflects an adjustment of $4,423 necessary to reflect Viasystems’ preliminary estimate of the fair value of inventories acquired, which, as required by acquisition accounting, was estimated to be equal to its selling price less an estimated profit from the selling effort. As there is no continuing impact of the acquired inventory adjustment on the combined operating results, no adjustment has been made to cost of goods sold in the unaudited pro forma condensed combined statements of operations to reflect the inventory adjustment.

 

  K. Reflects the elimination of DDi’s historical goodwill of $3,664 in accordance with acquisition accounting, and the establishment of intangible assets of $99,932 for DDi’s trade name, customer lists and manufacturer sales representative network, and $43,621 for goodwill resulting from the DDi Merger.

 

  L. Reflects the elimination of DDi’s historical intangible asset amortization expense of $614 for the year ended December 31, 2011, and the recognition of amortization expense of $1,317 and $5,267 for the three months ended March 31, 2012 and the year ended December 31, 2011, respectively, related to intangible assets established (see item K, above) assuming weighted average useful lives of 20 years. As of December 31, 2011, DDi’s historical intangible assets had been fully amortized.

 

  M. Reflects the elimination of the historical equity of DDi in accordance with acquisition accounting.

 

  N. Reflects an adjustment of $41,752 necessary to reflect Viasystems’ preliminary estimate of the fair value of property, plant and equipment acquired, the elimination of DDi’s historical depreciation expense of $2,502 and $9,411 for the three months ended March 31, 2012 and the year ended December 31, 2011, respectively, and the recognition of depreciation expense based on the fair value of property, plant and equipment acquired of $3,570 and $14,280 for the three months ended March 31, 2012 and the year ended December 31, 2011, respectively.

 

  O. As a result of Viasystems’ and DDi’s existing income tax loss carry-forwards in the United States, for which substantially full valuation allowances have been provided, no deferred income taxes have been recorded, and no income tax has been provided related to the pro forma adjustments for the DDi Merger.

 

  P. Reflects a liability of $4,236 incurred for certain DDi employee benefit related amounts that became payable as a result of the DDi Merger pursuant to terms of existing contractual agreements.

 

  Q. Reflects the cash payment of estimated acquisition related fees and expenses by Viasystems of $8,273 incurred subsequent to March 31, 2012, with a corresponding decrease in retained earnings as of December 31, 2011 and the cash payment of estimated acquisition related fees, expenses and other costs by DDi of $8,102 incurred subsequent to March 31, 2012, with a corresponding decrease to the value of the Net Assets acquired (see Note 4).