____________________________________________________________________________________________________ ***_____________***





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 **)**


**OF
      THE SECURITIES EXCHANGE ACT OF 1934**





**For
      the fiscal year ended December 31, 2006**





**or**





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


**OF
      THE SECURITIES EXCHANGE ACT OF 1934**





**333-29727**


*(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 if the registrant is a well-known seasoned issuer, as defined
      in
      Rule 405 of the Securities Act. Yes [ ] No [X]





Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or Section 15(d) of the Act. Yes [X] No [ ]





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports) and (2) has been subject to such filing requirements
      for
      the past 90 days. Yes [ ] 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, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
      one):





Large
                Accelerated Filer [ ]
            Accelerated
                Filed [ ]
            Non-Accelerated
                Filer [X]





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


**Class**
            **Outstanding
                at**
              **March
                31, 2007**Common
                Stock
            1,000





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 [ ] No [X]





**Documents
      incorporated by reference: None**


__________________________________________________________________________________________________________













**VIASYSTEMS,
      INC.**


**FORM
      10-K FOR THE YEAR ENDED DECEMBER 31, 2006**


**TABLE
      OF CONTENTS**





**Page****PART
                I**Item
                1.
            Business
            4Item
                1A.
            Risk
                Factors
            11Item
                1B.
            Unresolved
                Staff Comments
            16Item
                2.
            Properties
            16Item
                3.
            Legal
                Proceedings
            17Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            17**PART
                II**Item
                5.
            Market
                for Registrant’s Common Equity, Related Stockholder Matters
              and
                Issuer Purchases of Equity Securities
            17Item
                6.
            Selected
                Financial Data
            18Item
                7.
            Management’s
                Discussion and Analysis of Financial Condition and Results
              of
                Operations
            19Item
                7A.
            Quantitative
                and Qualitative Disclosures about Market Risk
            31Item
                8.
            Financial
                Statements and Supplementary Data
            32Report
                of Ernst & Young LLP, Independent Registered Public Accounting
                Firm
            33Report
                of PricewaterhouseCoopers LLP, Independent Registered Public Accounting
                Firm
            34Consolidated
                Balance Sheets
            35Consolidated
                Statements of Operations
            36Consolidated
                Statements of Stockholder’s Equity (Deficit) and Comprehensive Income
                (Loss)
            37Consolidated
                Statements of Cash Flows
            38Notes
                to Consolidated Financial Statements
            39Item
                9.
            Changes
                in and Disagreements with Accountants on Accounting and
              Financial
                  Disclosure
            62Item
                9A.
            Controls
                and Procedures
            62Item
                9B.
            Other
                Information
            63**PART
                III**Item
                10.
            Directors,
                Executive Officers and Corporate Governance
            63Item
                11.
            Executive
                Compensation
            66Item
                12.
            Security
                Ownership of Certain Beneficial Owners and Management and
              Related
                Stockholder Matters
            82Item
                13.
            Certain
                Relationships and Related Transactions, and Director
                Independence
            85Item
                14.
            Principal
                Accountant Fees and Services
            86**PART
                IV**Item
                15.
            Exhibits
                and Financial Statement Schedules
            87**SIGNATURES**
            88**EXHIBIT
              INDEX****SUBSIDIARIES
                OF VIASYSTEMS**
            92**CERTIFICATIONS**
            93








2


**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 entitled “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,"
      "anticipates," "intends," "plans," "estimates" or other similar
      expressions.





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, 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 Annual Report on Form 10-K for the year ended December 31, 2006 for
      additional factors that could materially affect our financial
      performance.








3





**Item
                1.**
            **Business**





**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, and a variety of complex medical and
      technical instruments. We currently have seven manufacturing facilities,
      including six manufacturing sites in China and Mexico to take advantage of
      low
      cost, high quality manufacturing environments. In addition, 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 SA, Bosch Group, Delphi
      Corporation, EMC Corporation, Ericsson AB, General Electric Company, Huawei
      Technologies Co. Ltd., Lucent Technologies, Inc., Otis Elevator Company,
      Rockwell Automation, Inc., Siemens AG, Sun Microsystems, Inc., Tellabs, Inc.
      and
      Whirlpool Corporation. We have good working relationships with industry leading
      contract manufacturers such as Celestica, Inc., Jabil Circuit, Inc. and
      Solectron Corporation, 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 by Hicks, Muse, Tate & Furst Incorporated 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 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
      compliment 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 the five largest contract manufacturers
      collectively experienced a reported 138% increase in inventories during
      2000.





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, wire harnesses and electro-mechanical
      solutions, and we significantly diversified our end markets and customer base.
      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.





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 approximately $320.0 million. The net cash proceeds
      from the sale of our wire harness business of approximately $307.9 million
      was
      used to repay approximately $286.8 million of our then outstanding bank debt
      under the 2003 credit facility with the remainder held for investment in our
      ongoing business. We have classified the results of operations of our wire
      harness business as discontinued operations for all periods presented. As a
      result of the disposal of the wire harness operations, 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.




4




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 web site www.viasystems.com .
      Upon
      written request, a copy of this Annual Report on Form 10-K will be provided
      to
      any senior subordinated noteholder. In addition, copies of our filings are
      available on the Securities and Exchange Commission (SEC) website at
      www.sec.gov.





**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**





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* ****** -
      In
      order to reduce our exposure 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. We intend to continue to
      maintain our focus on a diverse mix of end markets.





*Expand
      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.
      For the year ended December 31, 2006, approximately 92.9% 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 process
      in low cost manufacturing locations. We believe our ability to leverage our
      advanced technology and manufacturing capabilities across our organization
      in
      low cost locations will enable us to grow revenues, improve profitability and
      effectively meet our customers' requirements for high quality, low cost products
      and services.





*Enhance
      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., Jabil Circuit, Inc. and Solectron
      Corporation. 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.





*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 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.





5


*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. 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.





*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) continued implementation of lean
      manufacturing techniques, including Six Sigma initiatives; (2) efficient
      investment in new equipment and technologies and the upgrading of existing
      equipment; (3) streamlining of marketing and general and administrative
      overhead; and (4) 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 principal end-user
      markets we serve:





**Year
                Ended December 31,****Markets**
            
            **2006**
            
            **2005**
            
            **2004**Automotive
            
            
            32.9
            %
            
            34.9
            %
            
            33.2
            %Telecommunications
            
            
            32.0
            
            
            27.4
            
            
            32.2Industrial
                & Instrumentation/ Medical/Consumer/Other
            
            
            22.7
            
            
            22.2
            
            
            17.6Computer/Datacommunications
            
            
            12.4
            
            
            15.5
            
            
            17.0Total
                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, 2006, 2005 and 2004, sales to our 10 largest customers
      accounted for approximately 73.7%, 71.3% and 68.1% of our net sales,
      respectively.





In
      addition, the table below highlights individual end customers that account
      for more than ten percent of the Company’s consolidated net sales.





**Customer**
            
            **2006**
            
            **2005**
            
            **2004**Alcatel
                SA/Lucent Technologies, Inc.  (a)
            
            
            20.8
            %
            
            18.5
            %
            
            22.2
            %Siemens
                AG
            
            
            13.7
            
            
            12.5
            
            
            11.4Bosch
                Group
            
            
            10.1
            
            
            11.0
            
            
            10.3Delphi
                Corporation
            
            
            (b
            )
            
            11.2
            
            
            12.4





(a)
            Alcatel
                and Lucent merged during 2006. Amount represents sales to both the
                individual companies prior to the merger and the combined companies
                after
                the merger.


(b)
            Represents
                less than ten percent of consolidated net
                sales.





6


**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.  Services are not billed
      separately, but instead 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 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 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
      assembly. 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 exploiting this
      trend through our advanced supply chain management capabilities.





*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.  Services are not billed
      separately, but instead included in the determination of the product sales
      price
      to be invoiced to the customer.




7




*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.  Services are
      not billed separately, but instead 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 procure materials. We utilize our enterprise resource planning systems
      to
      optimize inventory management.  Services are not billed separately, but
      instead 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 representatives 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, 2006, we
      employed approximately 141 sales and marketing employees, of which 51 are direct
      sales representatives strategically located throughout North America, Europe
      and
      Asia. 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
      efficiently producing commercial quantities of printed circuit boards with
      up to
      48 layers and circuit track widths as narrow as three one-thousandths of an
      inch. We have the capability to produce printed circuit boards with up to 50+
      layers and circuit track widths as narrow as three one-thousandths of an inch.
      The manufacturing 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
      manufacturing 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 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, photo-imageable 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 printed circuit boards used in backpanel assemblies
      requires specialized expertise and equipment because of the larger size and
      thickness of the backpanel relative to other printed circuit boards and the
      increased number of holes for component mounting.




8




The
      manufacturing 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 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 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
      the
      ISO 9001:2000 standard that specifies requirements that focus on the
      effectiveness of the quality management system in meeting customer requirements.
      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
      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
      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.





**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, 2006, we had six manufacturing facilities located outside the
      United States, with sales offices throughout Europe and Asia. Our international
      operations produce products in China and Mexico that account for approximately
      92.9% of our 2006 net sales. 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.




9


**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. We have facilities that 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, 2006, we had 16,144 employees. Of these employees, 14,199 were
      involved in manufacturing, 1,417 in engineering, 141 in sales and marketing,
      and
      387 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.





**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 $2.8 million, $2.3 million and $2.1 million for
      the
      years ended December 31, 2006, 2005 and 2004, 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 to protect
      our
      secrets and techniques. We own 107 **** 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 4 **** years, **** with
      no
      patents expiring within the next two 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, 2006 was
      approximately $119.5 million, compared to $122.7 million at December 31, 2005.
      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**





On
      May 1,
      2006, we completed the sale of our wire harness business, which is 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 have re-evaluated 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.




10





**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.




***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 profitability in the near future, or
      at
      all. 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 and $18.2 million in 2006. If we cannot achieve profitability,
      the value of our enterprise may decline.




***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, 2006, our total outstanding indebtedness is approximately
      $206.9 million, with an additional $76.0 million available under our revolving
      credit facility. Our net interest expense for the year ended December 31,
      2006 was approximately $30.7 million. As of December 31, 2006, our total
      consolidated stockholder’s equity was $197.9 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.




11




***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;




·
            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;




·
            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.




***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, 2006, 2005 and 2004, sales to our 10 largest
      customers accounted for approximately 73.7%, 71.3% and 68.1% 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 net sales.




***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 sales
      to
      foreign destinations represent a significant portion of our net sales. We expect
      net sales from 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;




12




·
            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 could result in increases to the corporate tax rates.
        The
        expiration of these tax holidays and new tax legislation could have an adverse
        effect on our results of operations, financial condition 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 results of operations, financial
      condition 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. 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.




***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. 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 an adverse effect on our results of operations.




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




We
      generate a significant 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 have risen substantially over the past several years. Continued
      price increases for diesel fuel would increase our cost and could have an
      adverse effect on our results of operations.




***The
      printed circuit board and electro-mechanical solutions industries are highly
      competitive, and we may not be able to compete effectively in all or any one
      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




13




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.




***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 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.




***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, this may result in delayed shipments to our
      customers and reduced or cancelled customer orders. If these defects or
      deficiencies were significant, our business reputation may also be damaged,
      which could lead to additional customer cancellations or non-renewals.




***We
      rely on the stability of the automotive industry for a significant portion
      of
      our sales.***




A
      significant portion of our sales are to customers within the automotive
      industry. For the years ending December 31, 2006, 2005 and 2004, sales to
      customers in the automotive industry represented approximately 32.9%, 34.9%
      and
      33.2% 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.





***We
      rely on the cyclical telecommunications and networking industries. 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,
      2006, 2005 and 2004, sales to customers in the telecommunications and networking
      industries represented approximately 32.0%, 27.4% and 32.2% 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 operating results.




***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




14


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.




***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 controlled by affiliates of Hicks, Muse, Tate & Furst, Incorporated,
      whose interests may be different than ours or our sole
      shareholder.*** ****





Approximately
      44.3% of the common stock of Viasystems Group, Inc. (Group), our parent company,
      is controlled 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 is comprised 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 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.





***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




15




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, or 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 us.





***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 shareholder’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 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.***





Certain
      degrading by Moody's and S&P of our debt securities could make it more
      difficult for us to obtain new financing.





**Item
                1B.**
            **Unresolved
                Staff Comments**





Not
      Applicable.





**Item
                2.**
            **Properties********





In
      addition to our executive offices in St. Louis, Missouri, as of
      December 31, 2006, 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 one to ten years. The leases
      for our Qingdao, China and Juarez, Mexico properties will expire within the
      next
      year. We anticipate that we will be able to renew those leases on terms that
      are
      not materially different than the current terms.




16


Listed
      below are the principal manufacturing facilities we operated as of
      December 31, 2006:





**Location**
            
            **Size**
              **(Appx.**
              **Sq.
                Ft.)**
            
            **Type**
              **of
                Interest**
            
            **Description
                of Primary Products****United
                States**Milwaukee,
                Wisconsin
            
            305,000
            
            Leased
            
            Custom
                metal enclosure fabrication**Mexico**Juarez,
                Mexico
            
            69,000
            
            Leased
            
            Backpanel
                assembly, printed circuit board assembly, and full system assembly
                and
                test**Asia**Guangzhou,
                China
            
            2,250,000
              106,000
            
            Owned
              Leased
            (a)
            Printed
                circuit board and backpanel fabrication
              Printed
                circuit board and backpanel fabricationZhongshan,
                China
            
            799,000
            
            Owned
            (a)
            Printed
                circuit board fabricationShanghai,
                China
            
            430,000
            
            Owned
            (a)
            Backpanel
                assembly, printed circuit board assembly, custom metal enclosure
                fabrication, and full system assembly and testShenzhen,
                China
            
            286,000
            
            Leased
            
            Printed
                circuit board assembly, custom metal enclosure fabrication and full
                system assembly and testQingdao,
                China
            
            54,000
            
            Leased
            
            Full
                system assembly and test/cable
                assembly





(a)
            Although
                these buildings are owned, we lease the land under land use rights
                from
                the Chinese government.





Listed
      below are the principal distribution facilities we operated as of
      December 31, 2006:





**Location**
            
            **Size**
              **(Appx.**
              **Sq.
                Ft.)**
            
            **Type**
              **of
                Interest**
            
            **Description
                of Primary Products****United
                States**El
                Paso, Texas
            
            22,000
            
            Leased
            
            Electro-mechanical
                solutions, backpanel assemblies, full system assemblies and printed
                circuit board assemblies**Asia**Hong
                Kong
            
            53,000
            
            Owned
            
            PCBs,
                backpanel assemblies, full system assemblies and printed circuit
                board
                assemblies





In
      addition to the facilities listed above, at December 31, 2006, 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 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
      2006.





**PART
      II**





**Item
                5.**
            **Market
                for Registrant's Common Equity, Related Stockholder Matters and
                Issuer**
              **Purchases
                of Equity Securities**




17




All
      of
      our outstanding common stock is held by Group, 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 15 in the
      accompanying notes to consolidated financial statements for further information
      on Group’s equity compensation plan.





**Item
                6.**
            **Selected
                Financial Data (US dollars in
                thousands)**





The
      selected financial and other data below for the years ended December 31,
      2006, 2005, 2004, 2003 and 2002, 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,****2006**
            
            **2005**
            
            **2004**
            
            **2003**
            
            **2002**(in
                thousands)**Statements
                of Operations Data:**Net
                sales
            
            $
            734,992
            
            $
            652,821
            
            $
            630,754
            
            $
            517,624
            
            $
            634,002Operating
                expenses:Cost
                of goods sold (1)
            
            
            601,232
            
            
            560,974
            
            
            521,393
            
            
            409,204
            
            
            511,722Selling,
                general and administrative (1)
            
            
            56,325
            
            
            66,047
            
            
            65,127
            
            
            52,939
            
            
            77,609Depreciation
            
            
            45,422
            
            
            44,234
            
            
            41,622
            
            
            58,660
            
            
            65,848Amortization
            
            
            1,325
            
            
            1,436
            
            
            1,570
            
            
            3,065
            
            
            16,344Restructuring
                and impairment (2)
            
            
            (4,915
            )
            
            27,662
            
            
            1,013
            
            
            66,199
            
            
            52,470Goodwill
                impairment (3)
            
            
            -
            
            
            -
            
            
            -
            
            
            22,697
            
            
            36,710Loss
                on dispositions of businesses and JV interests (4)
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            85,531Operating
                income (loss)
            
            
            35,603
            
            
            (47,532
            )
            
            29
            
            
            (95,140
            )
            
            (212,232
            )Other
                expense (income):Interest
                expense, net
            
            
            30,715
            
            
            40,760
            
            
            37,818
            
            
            29,740
            
            
            81,994Amortization
                of deferred financing costs
            
            
            1,678
            
            
            1,613
            
            
            1,305
            
            
            104
            
            
            4,955Loss
                on early extinguishment of debt (5)
            
            
            1,498
            
            
            -
            
            
            -
            
            
            1,517
            
            
            -Reorganization
                expenses (reversals) (6)
            
            
            -
            
            
            -
            
            
            (9,776
            )
            
            55,255
            
            
            22,537Other,
                net
            
            
            1,406
            
            
            13,110
            
            
            (1,468
            )
            
            7,647
            
            
            (450
            )Income
                (loss) before income taxes
            
            
            306
            
            
            (103,015
            )
            
            (27,850
            )
            
            (189,403
            )
            
            (321,268
            )Income
                tax provision (benefit)
            
            
            18,514
            
            
            3,953
            
            
            (6,291
            )
            
            (9,787
            )
            
            (9,829
            )Loss
                from continuing operations (7)
            
            
            (18,208
            )
            
            (106,968
            )
            
            (21,559
            )
            
            (179,616
            )
            
            (311,439
            )Income
                from discontinued operations, net (1) (7)
            
            
            9,475
            
            
            25,739
            
            
            27,307
            
            
            15,307
            
            
            15,531Gain
                on disposition of discontinued operations, net (7)
            
            
            211,170
            
            
            -
            
            
            -
            
            
            -
            
            
            -Net
                income (loss)
            
            $
            202,437
            
            $
            (81,229
            )
            $
            5,748
            
            $
            (164,309
            )
            $
            (295,908
            )**Balance
                Sheet Data (at period end):**Cash
                and cash equivalents
            
            $
            37,954
            
            $
            35,923
            
            $
            112,891
            
            $
            62,676
            
            $
            83,060Working
                capital (8)
            
            
            95,475
            
            
            91,735
            
            
            151,478
            
            
            111,573
            
            
            (383,521
            )Total
                assets
            
            
            625,890
            
            
            715,676
            
            
            750,409
            
            
            694,335
            
            
            777,530Total
                debt, including current maturities
            
            
            206,914
            
            
            462,535
            
            
            465,555
            
            
            456,243
            
            
            1,125,189Stockholder's
                equity (deficit) (9)
            
            
            197,868
            
            
            (1,728
            )
            
            56,534
            
            
            2,480
            
            
            (584,709
            )





(1)
            In
                connection with our 2003 Chapter 11 reorganization, we terminated
                our 1997
                and 2001 stock option plans and adopted our 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. As a result we recorded non-cash compensation expense
                of $1,323 for the twelve months ended December 31, 2003. Effective
                January 1, 2004, we adopted Statement of Financial Accounting
                Standards No. 123,*Accounting
                for Stock-Based Compensation*.
                On January 1, 2006, we adopted Statement of
                Financial




18


Accounting
                  Stanrdards 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, 2006, 2005 and 2004 was $1,400, $6,152 and $3,710,
                  respectively. Stock compensation expense included in income from
                  discontinued operations, net for the years ended December 31, 2006,
                  2005,
                  2004 and 2003 was $105, $641, $127 and $60,
                  respectively.


(2)
            Represents
                impairment losses related to the write-off of long-lived assets in
                accordance with Statement of Financial Accounting Standards No. 121,*Accounting
                for the Impairment of Long-Lived Assets and for Long-Lived Assets
                to be
                Disposed of,*and Statement of Financial Accounting Standards No. 144,*Accounting
                for the Impairment or Disposal of Long-Lived Assets*,
                as applicable.  In addition, due to an industry downturn,
                numerous restructuring charges were taken to downsize and close
                facilities. 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)
            The
                goodwill impairment recognized in 2002 is attributable to $13,400
                of
                goodwill impairment recognized in our North American PCB reporting
                unit,
                $10,100 goodwill impairment recognition in our Asian EMS reporting
                unit
                and a $13,200 recognition of goodwill impairment in our North American
                EMS
                reporting unit. The goodwill impairment recognized in 2003 is attributable
                to $22,700 goodwill impairment recognition in our European PCB reporting
                unit.




(4)
            During
                2002, in connection with a continued economic downturn, we sold six
                businesses and finalized the dispositions of several closed facilities
                resulting in a loss of $85,531.




(5)
            In
                2006, in connection with the termination of our 2003 credit facility,
                we
                recorded a loss on early extinguishment of debt of $1,498. In 2003,
                in
                connection with the chapter 11 reorganization, we recorded a loss
                from
                debt forgiveness of $1,517 in respect to allowed senior subordinated
                note
                claims.




(6)
            Reorganization
                expenses consisted primarily of professional and bank fees related
                to our
                chapter 11 reorganization including 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
                from
                the liquidation of Viasystems Tyneside Limited, resulting in a gain
                of
                $9,776.




(7)
            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.




(8)
            Working
                capital for the year ended December 31, 2002 includes $526,000 of
                long-term debt classified as current maturities in connection with
                the
                reorganization. Excluding this amount, working capital for the year
                ended
                December 31, 2002 would have been
                $142,500.


(9)
              During
                    the fourth quarter of 2006, the Company adopted Staff Accounting
                    Bulletin
                    No. 108 (SAB No. 108), *Considering the Effects of Prior Year
                    Misstatements when Quantifying Misstatements in Current Year
                    Financial
                    Statements*. As a result of the adoption of SAB No. 108, the Company
                    recorded an $8,628 cumulative effect adjustment to accumluated
                    deficit effective January 1,
                    2006.


**Item
                7.**
            **Management's
                Discussion and Analysis of Financial Condition and Results of Operations
                (US dollars in thousands, except per share
                amounts)**





*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.  All numbers contained in this Management Discussion
      and Analysis are in thousands.*




19




**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, major household appliances, data networking equipment,
      telecommunications switching equipment and a variety of complex medical and
      technical instruments. We currently have seven manufacturing facilities,
      including six manufacturing sites in China and 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.





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





**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 $320,000. 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, is estimated
        to
        be approximately $2,000 and is expected to be settled and paid to the acquirer
        before May 1, 2007. In addition, we are obligated to indemnify ECI for certain
        other contingent liabilities, should they materialize, pursuant to the purchase
        and sale agreement between the Company and ECI.
  In
      the
      accompanying consolidated statements of operations for the year ended December
      31, 2006, we recognized a net gain on the sale of our discontinued wire harness
      operations of $211,170. 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.





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 and the years ended December 31, 2005 and
      2004,
      operating results for the discontinued operations are as follows:


**2006**
            
            **2005**
            
            **2004**Net
                sales
            
            $
            102,358
            
            $
            295,697
            
            $
            270,609Operating
                income
            
            $
            11,322
            
            $
            37,537
            
            $
            40,456Income
                before income taxes
            
            $
            11,388
            
            $
            37,751
            
            $
            40,440Income
                tax provision
            
            
            1,913
            
            
            12,012
            
            
            13.133Net
                income
            
            $
            9,475
            
            $
            25,739
            
            $
            27,307





**Results
      of Operations**




**Year
      Ended December 31, 2006 compared to Year Ended December 31,
      2005**





**Net
      Sales.** Net
      sales for the year ended December 31, 2006 were $734,992, representing
      an $82,171, or 12.6%, increase over net sales for the year ended
      December 31, 2005.




20




Net
      sales
      by end-user market for the years ended December 31, 2006 and 2005 were
      as follows:





**End-User
                Market**
            
            **2006**
            
            **2005**Automotive
            
            $
            241,487
            
            $
            227,704Telecommunications
            
            
            234,896
            
            
            178,598Industrial
                & Instrumentation, Medical, Consumer,and
                Other
            
            
            167,487
            
            
            145,287Computer
                and Datacommunications
            
            
            91,122
            
            
            101,232Total
                net sales
            
            $
            734,992
            
            $
            652,821





Net
      sales
      of products for ultimate use in the automotive market increased on sustained
      demand by our European-based customers serving the global automotive market.
      Net
      sales of products for end use in the telecommunications market recovered from
      a
      decline experienced during 2005. Net sales of products ultimately used in the
      industrial & instrumentation, medical, consumer and other markets increased
      as a result of our continued efforts to diversify our production to serve a
      broad base of end markets. Net sales of products used by customers in the
      computer and datacommunications market declined in part as a result of closure
      of our former sites in Europe and Canada, from which we served certain customers
      in this end-user market, and in part as a choice by our Printed Circuit Boards
      segment to reallocate capacity to higher value products.





Net
      sales
      by business segment for the years ended December 31, 2006 and
      2005 were as follows:





**Segment**
            
            **2006**
            
            **2005**Printed
                Circuit Boards
            
            $
            507,191
            
            $
            419,785Assembly
            
            
            245,261
            
            
            205,071Other
            
            
            623
            
            
            38,606Eliminations
            
            
            (18,083
            )
            
            (10,641
            )Total
                net sales
            
            $
            734,992
            
            $
            652,821





Printed
      Circuit Boards segment net sales, including intersegment sales, for the year
      ended December 31, 2006 increased by $87,406, or 20.8%, to $507,191. 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
      2006 compared to 2005, the entire growth in our Printed Circuit Boards segment
      related to an improved product mix together with increased selling
      prices.




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 2006 compared to 2005, the volume of our PCB products with greater
        than 12 layers increased by more than 50%, while the volume of our single-layer
        and 2-layer PCB products decreased by approximately 15%. We estimate that
        product mix changes had a net favorable impact in 2006 compared to 2005 and
        represented approximately 84% of the growth in our Printed Circuit Boards
        segment. Factors contributing to the mix improvement were strong demand from
        existing and new customers, transfers of customer programs and intersegment
        programs from our former European and Canadian manufacturing sites for which
        net
        sales prior to closure are presented in other segment sales, and an approximate
        17% increase in inner-layer production capacity available during 2006 compared
        to 2005. The inner-layer capacity increase, which allows us to produce greater
        quantities of high-layer-count products, is due in part to investment in
        new
        equipment and in part to the transfer of equipment from our former European
        and
        Canadian sites.
 
 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. We estimate that the favorable
        impact of price increases resulted in the remaining approximate 16% of the
        overall growth in our Printed Circuit Boards segment in 2006 versus
        2005.
 
 Finished
        PCB volume, measured as total square feet of PCB surface area, however, declined
        by approximately 2% in 2006 compared to 2005, and our capacity to finish
        outer
        surfaces of products remained unchanged between years. The effects of changing
        currencies added less than 1% to sales in 2006 compared to 2005, as less
        than
        10% of our Printed Circuit Boards segment sales are denominated in currencies
        other than the U.S. dollar.
  21
  Assembly
        segment net sales grew by $40,190, or 19.6%, to $245,261 net sales for the
        year
        ended December 31, 2006. Our Assembly segment net sales consist primarily
        of sub-assembly, full integration and test service values added to a composite
        of dissimilar component materials costs, such that per unit data are not
        useful
        measures of volume changes. Component costs represent a significant portion
        of
        our final product sales values, and we use the value of the components we
        purchase (referred to as materials spend) as our primary indicator of business
        volume in this segment. Materials spend grew by approximately 16% in 2006
        over
        2005, indicating that approximately 80% of our year-over year growth resulted
        from increased production volume. Changing currencies also added approximately
        1% to our 2006 net sales compared to 2005. The remaining approximate 19%
        of our
        growth is the result of product mix change. The volume growth and favorable
        mix
        was driven by strong demand from select customers in our telecommunications
        and
        industrial & instrumentation, medical, consumer and other end
        markets.
 
 Increases
        in net sales by our Printed Circuit Boards segment and Assembly segment were
        partially offset by a $37,983 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 statements
        of
        operations for the year ended December 31, 2006, was $601,232, or 81.8% of
        net sales. This represents a 4.1 percentage point improvement from the 85.9%
        of
        consolidated net sales achieved during 2005. Approximately $50,000 of cost
        of
        goods sold during the year ended December 31, 2005 were incurred by our
        former operations in Europe and Canada, and elimination of costs in those
        operations represents the principal reason for our improved consolidated
        costs
        as a percentage of sales.
 
 In
        our
        Printed Circuit Boards segment, the cost of direct materials represents
        approximately 60% of our cost of sales. Quantities of materials and supplies
        used to support our sales mix improvement are the most significant causes
        of
        increased cost of good sold in this segment. However, materials, labor and
        overhead costs in the segment have also been impacted by adverse trends in
        market rates for global commodities and currency exchange.
 
 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 primary materials in our products, has also increased substantially
        year-over-year in line with global copper trading price increases. Diesel
        fuel,
        which we use to generate electricity for our largest PCB manufacturing site
        in
        China, is subject to global oil price trends and is further impacted by local
        government price control. Beginning in November 2006, we have reduced our
        dependence on diesel fuel by obtaining up to sixty percent of our electricity
        needs from local electricity suppliers that use coal-based systems to generate
        the electricity.
 
 In
        addition, employment cost trends in China adversely impacted our Printed
        Circuit
        Boards segment costs during the year ended December 31, 2006 compared to
        2005. These trends included minimum wage increases and social benefit cost
        increases, further impacted by an average approximate 3% strengthening of
        the
        Chinese RMB versus the US Dollar. Despite these cost increases, wages and
        local
        operating costs in China remain among the most competitive in the
        world.
 
 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, and for the year ended December 31, 2006, cost of sales
        increased proportionally as net sales grew in comparison to the same period
        last
        year.
 
 **Selling,
        General and Administrative Costs.** Selling,
        general and administrative costs were $56,325, or 7.7% of net sales for the
        year
        ended December 31, 2006 and decreased by $9,722 compared to the year ended
        December 31, 2005. The decrease resulted in part (approximately $4,900)
        from the closure of our facilities in Europe and Canada, and in part ($4,520)
        from reduced costs related to stock-based compensation. The balance of the
        reduction resulted from focused cost containment efforts. 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 based on each segment’s percentage of total net
        sales.
 
 **Depreciation.** Depreciation expense for the year ended December 31, 2006 was $45,422,
        including $39,218 related to our Printed Circuit Boards segment and $6,204
        related to our Assembly segment. Depreciation expense in our Printed Circuit
        Boards segment increased by $4,181 compared to the year ended December 31,
        2005 as a result of the transfer of equipment from closed operations in Europe
        and Canada and investment in new equipment.
  22
  Depreciation
        expense in our Assembly segment for the year ended December 31, 2006
        increased by $1,099 compared to the prior year primarily as a result of
        manufacturing capacity added to support growing demand in the segment.
        Offsetting the increases in Printed Circuit Boards and Assembly segment,
        depreciation expense decreased by approximately $4,000 related directly to
        our
        closed operations in Europe and Canada.


**Restructuring
        and Impairment.** We
        reported net restructuring and impairment income of $4,915 for the year ended
        December 31, 2006 compared to net expenses in 2005 of $(27,622). The
        primary components of restructuring and impairment income and expenses for
        the
        years ended December 31, 2006 and 2005 are as follows:


**Restructuring
                Activity**
            
            **2006**
            
            **2005**Gains
                on sales of properties held for sale
            
            $
            5,463
            
            $
            —Personnel
                and severance reversals (expenses)
            
            
            1,423
            
            
            (23,106
            )Lease
                and other contractual commitment expenses
            
            
            (1,533
            )
            
            (2,733
            )Asset
                impairments
            
            
            (438
            )
            
            (1,823
            )Total
                income (expense), net
            
            $
            4,915
            
            $
            (27,662
            )





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 our PCB fabrication facilities in the Netherlands
      and
      in Canada in June and July 2005, respectively, and those closures resulted
      in
      substantial charges during the year ended December 31, 2005 related to
      employee termination payments, cancellation of long-term contracts, and
      impairments of carrying values of long-lived assets. Some of the products
      previously manufactured in those facilities are now produced in China in our
      Printed Circuit Boards segment where we have been able to satisfy the cost
      requirements of our customers.





During
      the year ended December 31, 2006, we recognized net gains on sales of
      previously closed properties in the United States (Richmond, Virginia), in
      the
      Netherlands and in 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 (Loss).** Operating income of $35,603 for the year ended December 31, 2006 represents
      an increase of $83,135 compared to an operating loss of $(47,532) during the
      year ended December 31, 2005. The primary sources of operating income or
      loss for the years ended December 31, 2006 and 2005 are as
      follows:





**Source**
            
            **2006**
            
            **2005**Printed
                Circuit Boards segment
            
            $
            23,439
            
            $
            1,401Assembly
                segment
            
            
            6,876
            
            
            (185
            )Europe
                and Canada operations
            
            
            373
            
            
            (21,086
            )Restructuring
                activities
            
            
            4,915
            
            
            (27,662
            )Operating
                income (loss)
            
            $
            35,603
            
            $
            (47,532
            )





Operating
      income of our Printed Circuit Boards segment increased by $22,038 to $23,439
      for
      the year ended December 31, 2006 compared to $1,401 operating income for
      the year ended December 31, 2005. The improvement is primarily the result
      of improved product mix and volume growth, combined with reduced administrative
      costs. However, the improvements were partially offset by increased materials,
      labor, depreciation and currency costs.





Operating
      income of our Assembly segment increased by $7,061 to $6,876 for the year ended
      December 31, 2006 compared to an operating loss of $(185) in 2005. The
      improvement is primarily the result of volume growth combined with reduced
      administrative costs, offset by increased labor, depreciation and currency
      costs.





Operating
      results in 2006 related to closed operations in Europe and Canada
      and restructuring activities are not expected to recur. These results
      combined to improve operating income for the year ended December 31, 2006
      by $54,036 over 2005.




23




**Interest.** Interest
        expense, net of interest income, for the year ended December 31, 2006, was
        $30,715, compared to $40,760 in 2005. Interest earned in both periods was
        immaterial. Interest expense related to our 10.5% Senior Subordinated Notes
        due
        in 2001 was $21,000 in 2006 and 2005, as the $200,000 principal and the 10.5%
        interest rate remain unchanged since the notes were issued in 2003. Interest
        expense incurred on term loan and revolver borrowings under our 2003 Credit
        Agreement and on revolver borrowings under our 2006 Credit Agreement vary
        from
        period to period based on the outstanding principal balances and floating
        interest rates. We extinguished our term loan facility of approximately $262,000
        under the 2003 Credit Agreement in May 2006 by applying the proceeds from
        the
        sale of our wire harness business. Interest expense on capital leases increased
        to approximately $500 for the year ended December 31, 2006 due to the
        addition of a capital lease of equipment initiated in January 2006 in our
        Printed Circuit Boards segment.
 
 **Loss
        on Early Extinguishment of Debt.** Fees
        paid at the inception of the 2003 Credit Agreement were deferred and had
        been
        amortized during the life of the facility. Our $1,498 loss on early
        extinguishment of debt during the year ended December 31, 2006 represents
        the write-off of unamortized deferred financing costs together with bank
        fees
        and professional fees incurred in connection with termination of the 2003
        Credit
        Agreement.
 
 **Other
        Expense.** Other
        expenses for the year ended December 31, 2005 included a non-recurring
        charge of $10,932 as a result of reversal of cumulative translation adjustments
        required in connection with our liquidation of foreign investments in Canada
        and
        Europe.
 
 **Income
        Taxes.** Income
        tax expense of $18,514 and $3,953, respectively, for the years ended December
        31, 2006 and 2005 exclude i) income taxes related to our discontinued wire
        harness operations, and ii) income taxes on the gain on sale of our wire
        harness operations. Our income tax provision relates primarily to our profitable
        operations in China and Hong Kong. Because of the substantial net operating
        loss
        carryforwards previously existing in our U.S. and other tax jurisdictions,
        we
        did not recognize income tax benefits related to our substantial interest
        expense, among other expenses.
 
 **Year
        Ended December 31, 2005 Compared to Year Ended December 31,
        2004**
 
 **Net
        Sales.** Net
        sales
        for the year ended December 31, 2005 were $652,821, representing a $22,067,
        or 3.5%, increase over net sales for the year ended December 31,
        2004.
 
 Net
        sales
        by end-user market for the years ended December 31, 2005 and 2004 were as
        follows:


**End-User
                Market**
            
            **2005**
            
            **2004**Automotive
            
            $
            227,704
            
            $
            209,471Telecommunications
            
            
            178,598
            
            
            202,959Industrial
                & Instrumentation, Medical, Consumer,and
                Other
            
            
            145,287
            
            
            111,168Computer
                and Datacommunications
            
            
            101,232
            
            
            107,156Total
                net sales
            
            $
            652,821
            
            $
            630,754





Net
      sales
      of products for end use in the automotive market grew during the year ended
      December 31, 2005 compared to 2004 based on sustained demand by global
      automotive producers. Net sales of products ultimately used in the
      telecommunications market declined from 2004 to 2005 as a result of global
      delays of new generation mobile telephone technology implementation. Net sales
      of products used in the industrial & instrumentation, medical, consumer and
      other markets increased as a result of our continued efforts to diversify our
      production to serve a broad base of end markets. Net sales of products for
      end
      use by customers in the computer and datacommunications market declined
      primarily as a result of our mid-year 2005 closure of our former sites in Europe
      and Canada, from which we served certain customers in this end-user
      market.




24




Net
      sales
      by business segment for the years ended December 31, 2005 and
      2004 were as follows:





**Segment**
            
            **2005**
            
            **2004**Printed
                Circuit Boards
            
            $
            419,785
            
            $
            344,694Assembly
            
            
            205,071
            
            
            210,379Other
            
            
            38,606
            
            
            87,378Eliminations
            
            
            (10,641
            )
            
            (11,697
            )Total
                net sales
            
            $
            652,821
            
            $
            630,754





Printed
      Circuit Boards segment net sales, including intersegment sales, for the year
      ended December 31, 2005 increased by $75,091, or 21.8%, to $419,785. The
      increase resulted from increased demand from certain existing customers, our
      migration of business from western world manufacturing sites and the
      installation of additional capacity. An approximate 10% increase in volume
      of
      finished product complemented a favorable mix of product sales to account for
      the increase from 2004 to 2005.





Assembly
      segment net sales declined by $(5,308), or 2.5%, to $205,071 for the year
      ended December 31, 2005 due to reduced volume requirements of certain
      customers, predominantly in the telecommunications end-user market. An increase
      in sales by our Printed Circuit Boards segment was further partially offset
      by a
      $(48,772) decrease in net sales from former manufacturing facilities in Europe
      and Canada in which operations have ceased. Final product shipments from closed
      sites were made early in the third quarter of 2005.





**Cost
      of Goods Sold.** Cost
      of
      goods sold for the year ended December 31, 2005 was $560,974, or 85.9% of
      net sales, compared to $521,393, or 82.7% of net sales for the year ended
      December 31, 2004. Approximately $50,000 and $95,000 cost of goods sold
      during 2005 and 2004, respectively, related to sales from our former operations
      in Europe and Canada, which are reported as other segment sales. As a percent
      of
      net sales, direct and indirect labor costs decreased by approximately 0.8%
      for
      the year ended December 31, 2005, compared to 2004, in large part as a
      result of our transfer of production from western world sites to our lower
      cost
      sites in China. However, our labor cost savings were more than offset by net
      increases in direct and indirect materials costs as a percentage of net sales
      of
      approximately 3.0% for the year ended December 31, 2005 compared to 2004.
      The change in materials costs as a percent of net sales related primarily
      (approximately 2.4%) to commodity costs for petroleum products and metals used
      in our manufacturing processes, and in part (approximately 0.6%) to increased
      scrap experience and materials losses resulting from our site closures and
      production transfers during 2005.





**Selling,
      General and Administrative Expenses.** Selling,
      general and administrative expenses for the year ended December 31, 2005
      increased by $920 from $65,127 for the year ended December 31, 2004, to
      $66,047. As a percent of sales, these costs decreased by 0.2%. The dollar
      increase was primarily due to inflation, Sarbanes-Oxley Section 404 preparation
      costs and other costs.





**Depreciation.** Depreciation
      for the year ended December 31, 2005 was $44,234, including $35,035 related
      to our Printed Circuit Boards segment and $5,104 related to our Assembly
      segment. Depreciation expense in our Printed Circuit Boards segment increased
      by
      $7,403 compared to 2004 as a result of additional capital investment in
      property, plant and equipment in our facilities over recent periods.
      Depreciation expense in our Assembly segment increased by $311, reflecting
      the
      limited need for investment on lower sales volume. Depreciation expense in
      our
      former facilities in Europe and Canada decreased by approximately $5,000 from
      2004 to 2005, primarily as a result of closure of the sites in
      mid-2005.





**Restructuring
      and Impairment.** Restructuring
      and impairment expenses totaled $27,662 for the year ended December 31,
      2005 as a result of the closure of former PCB manufacturing facilities in Europe
      and Canada. For a more detailed analysis of these activities, see Note 12
      in the accompanying notes to the consolidated financial statements.




25




**Operating
      Income (Loss).** Our
      operating loss of $(47,532) for the year ended December 31, 2005 represents
      a substantial decline from the operating income of $29 during the year ended
      December 31, 2004. The primary sources of operating income or (loss) for
      the years ended December 31, 2005 and 2004 are as
      follows:





**Source**
            
            **2005**
            
            **2004**Printed
                Circuit Boards segment
            
            $
            1,401
            
            $
            21,766Assembly
                segment
            
            
            (185
            )
            
            4,380Europe
                and Canada operations
            
            
            (21,086
            )
            
            (25,104
            )Restructuring
                activities
            
            
            (27,662
            )
            
            (1,013
            )Operating
                income (loss)
            
            $
            (47,532
            )
            $
            29





Operating
      income of our Printed Circuit Boards segment was $1,401 for the year ended
      December 31, 2005 compared to $21,766 operating income for the year ended
      December 31, 2004. The decline is primarily the result of aincreased
      materials costs together with interruption of the operations introduced by
      higher technology requirements of multiple customer product programs transferred
      from other segment sites closed during the year.





Operating
      loss of our Assembly segment was $(185) for the year ended December 31,
      2005 compared to operating income of $4,380 in 2004. The decline is primarily
      the result of a loss of volume related to reduced demand from certain
      telecommunications customers.





Operating
      results in 2005 related to closed operations in Europe and Canada and to
      restructuring activities are not expected to recur. The substantial
      restructuring activities undertaken in 2005 combined with the operating results
      in these high-cost regions served to deteriorate the operating income for the
      year ended December 31, 2005 by $22,631 compared to 2004.





**Interest.** Interest
      expense increased $2,942, from $37,818 for the year ended December 31,
      2004, to $40,760 for the year ended December 31, 2005. The increase is due
      to the full year effect of the additional debt associated with the third
      amendment to the 2003 Credit Agreement and increased interest rates over the
      year ended December 31, 2004.





**Other
      Expense.** Other
      expense for the year ended December 31, 2005 includes $10,932 of a
      non-recurring net translation adjustment transferred as a result of the reversal
      of cumulative translation adjustments required in connection with the
      liquidation of foreign investments (from the closure of the Montreal, Canada
      and
      Echt, the Netherlands printed circuit board operations) together with other
      recurring foreign currency effects and other non-operating expenses and
      income.





**Income
      Taxes.** Income
      tax expense of $3,953 and $(6,291), respectively for the years ended
      December 31, 2005 and 2004 exclude income taxes related to our discontinued
      wire harness operations. Our income tax provision relates primarily to
      profitable operations in China and Hong Kong, for which tax incentive periods
      have begun to expire. Because of the substantial net operating loss
      carryforwards previously existing in our U.S. and other taxing jurisdictions,
      we
      have not recognized income tax benefits related to our substantial interest
      expense, among other expenses.





**Cash
      Flow**





Net
      cash
      used in operating activities was $(1,838) for the year ended December 31,
      2006, compared to net cash provided by operating activities of $11,646 for
      the
      year ended December 31, 2005 and $65,917 for the year ended
      December 31, 2004. The change in operating cash flow from 2005 to 2006 was
      primarily a result of working capital required to support the growth in our
      Printed Circuit Boards and Assembly segments. The change in operating cash
      flows
      from 2004 to 2005 was primarily due to the increase in restructuring and
      impairment charges from the closure of our Canadian and European printed
      circuit board operations and the increases in material costs, energy costs
      and
      shipping costs. All periods include the results of operating cash flows of
      our
      former wire harness business through the time of disposal of that business
      on
      May 1, 2006.




Net
        cash
        provided by investing activities was $273,818 for the year ended
        December 31, 2006, compared to net cash used in investing activities of
        $(85,022) for the year ended December 31, 2005 and $(71,933) for the year
        ended December 31, 2004. The 2006 increase was due to the cash inflows from
        disposals of i) our former wire harness business for net proceeds of
        $307,927, and ii) properties held for sale following previous site closures
        for net proceeds of $21,809 (see Note 5 in the accompanying consolidated
        financial statements).
  26
  Capital
        expenditures in the results of investing cash flows include $47,632, $78,731
        and
        $49,495, related to our Printed Circuit Boards segment during the years ended
        December 31, 2006, 2005 and 2004, respectively. Continued growth our
        Printed Circuit Boards segment and advances in technological requirements
        to
        meet customer needs are the primary drivers of our investments in property
        and
        equipment in that segment. Capital expenditures related to our Assembly segment
        in each of 2006, 2005 and 2004 were $5,567, $6,883 and $3,035, respectively.
        We
        have no plans that would materially change the trends of capital expenditures
        in
        the Printed Circuit Boards and Assembly segments. Non-recurring cash outflows
        of
        investing activities during the years ended December 31, 2006, 2005 and
        2004 also include capital expenditures related to i) our former operations
        in Europe and Canada of $0, $(8,274) (i.e., net transfers of equipment to
        other
        segments) and $10,509, respectively, and ii) our former wire harness
        business of $3,039, $7,124 and $8,234, respectively.
 
 Net
        cash
        used by financing activities was $(270,546) for the year ended December 31,
        2006, including the extinguishment of $(262,350) 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 include $(3,331)
        of
        costs incurred in connection with the establishment of our 2006 Credit
        Agreement, plus scheduled principal payments on capital lease obligations.
        Net
        cash used by financing activities was $(3,245) for the year ended
        December 31, 2005 which includes $(2,971) for scheduled maturities of our
        2003 Credit Agreement together with fees paid in connection with a 2005
        amendment to that agreement. Net cash provided by financing activities of
        $56,404 for the year ended December 31, 2004 related principally to equity
        proceeds from the sale of additional shares of Group’s common stock that was
        contributed to us and additional proceeds from amending the 2003 Credit
        Agreement.
 
 **Financing
        Arrangements**
 
 In
        August
        2006, we entered into a credit facility with UBS AG Hong Kong Branch and
        UBS AG,
        Singapore Branch (together, UBS) binding UBS to provide us a minimum of $80,000
        and up to $125,000 in revolving and term loans under a four-year, senior
        secured
        credit facility (the 2006 Credit Agreement). UBS as administrative agent
        of the
        facility has syndicated the minimum $80,000 to date, and the entire facility
        is
        structured as a revolving credit facility through February 2008, at which
        time
        $20,000 of the facility converts 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 the new facility. We had no borrowings
        under the 2006 Credit Agreement at December 31, 2006, and we have made no
        borrowings under that facility to date in 2007, though $4,050 letters of
        credit
        remain outstanding, reducing total available for revolving loans.
 
 In
        December 2003, we completed an offering of $200,000 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, 2006.
 In
        October 2004, we amended our 2003 Credit Agreement to provide for a new
        $265,000 term loan facility, the proceeds of which were used to extinguish
        the
        net remaining balance then outstanding under the original term. Group acted
        as
        guarantor for the new term loan facility. On April 22, 2005, we executed a
        fourth amendment of our 2003 Credit Agreement. This amendment, among other
        items, amended certain covenant limitations on restructuring activities.
        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.





In
      October 2004, Group completed a Rights Offering whereby Group sold
      5,555,555 shares of common stock at $9.00 per share to then current holders
      of
      Group’s common stock. The net share issuance proceeds of $47,069, (together with
      an additional $1,847 cash from other holding company activities of Group),
      were
      contributed as an increase to our paid-in capital. We used the proceeds from
      this contribution for general working capital purposes and in the expansion
      of
      our Printed Circuit Boards segment operations.




27




In
        conjunction with the Company’s plan of reorganization approved by the Bankruptcy
        Court, a £12 million (approximately $18,000) loan guaranteed by the Company
        was cancelled and in exchange the Department of Trade and Industry (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 $9,789.
 
 **Liquidity**
 
 We
        had
        cash and cash equivalents at December 31, 2006 and 2005 of $37,954 and
        $35,923, respectively. At December 31, 2006, we had open letters of credit
        issued in the amount of $4,050, and $0 outstanding borrowings under our $80,000
        revolving credit facility of our 2006 Credit Agreement, resulting in available
        credit of $75,950.
 
 We
        anticipate making capital expenditures of approximately $66,500 during 2007.
        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 our semi-annual $10,500 interest payments on our senior
        subordinated notes.
 
 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, 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 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.
 
 **Off
        Balance Sheet Arrangements**
 
 None
 
 **Backlog**





We
      estimate that our backlog of unfilled orders as of December 31, 2006 was
      approximately $119,500, compared to $122,700 at December 31, 2005. 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.





**Related
      Party Transactions**





***Monitoring
      and Oversight Agreement***




We
        entered into a ten-year monitoring and oversight agreement with an affiliate
        of
        HMTF, effective as of January 31, 2003. Under the monitoring and oversight
        agreement, we are required to pay HMTF an annual fee, payable quarterly,
        for
        oversight and monitoring services equal to the lesser of (i) 2% of our
        consolidated adjusted EBITDA for such year and (ii) $1,500. 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




28




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 $1,500, $1,500 and
      $1,500 for the years ended December 31, 2006, 2005 and 2004, respectively,
      related to the monitoring and oversight agreement.





**Critical
      Accounting Policies and Estimates**





The
      preparation of financial statements in conformity with 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 historical
      experience and past due status of the entire accounts receivable balance. 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. 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 an 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.




29


***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.





***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. A significant portion
      of
      our expenses and some of our sales 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 of operations. There can be no assurance that our hedging operations
      will eliminate or substantially reduce risks associated with fluctuating
      currencies.





***Recently
      Issued Accounting Pronouncements***




On
        July
        13, 2006, the Financial Accounting Standards Board (FASB) issued Interpretation
        No. 48, *Accounting
        for Uncertainty in Income Taxes - An Interpretation of FASB Statement No.
        109* (FIN
        48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized
        in an enterprise’s financial statements in accordance with FASB Statement No.
        109, *Accounting
        for Income Taxes* .
        FIN 48
        also prescribes a recognition threshold and measurement attribute for the
        financial statement recognition and measurement of a tax position taken or
        expected to be taken in a tax return. The new FASB standard also provides
        guidance on derecognition, classification, interest and penalties, accounting
        in
        interim periods, disclosure and transition. The provisions of FIN 48 are
        effective for fiscal years beginning after December 15, 2006. We are currently
        evaluating the impact of adoption of this standard.
 
 In
        September 2006, the Securities and Exchange Commission (SEC) released Staff
        Accounting Bulletin No. 108 (SAB No. 108), *“Considering
        the Effects of Prior Year Misstatements when Quantifying Misstatements in
        Current Year Financial Statements.”* 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.


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. 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,
      we identified certain errors in previously reported financial statements, which
      were evaluated under the criteria of SAB No. 108. The following describes the
      nature and amount of the errors:





·
            The
                liability related to an office lease that was abandoned in connection
                with
                a 2002 restructuring was understated by $4,139 due to an error in
                determining the noncancelable lease
                term.


·
            Certain
                fixed assets that were transferred to a manufacturing plant in China
                in
                connection with the 2001 and 2005 restructurings in the United States,
                Canada and Europe were impaired at the date of the restructuring. The
                total amount of the write-off as of January 1, 2006, was
                $2,205.


·
            We,
                through an accounting oversight, had not previously recognized a
                liability
                for certain lifetime medical benefits that were granted in prior
                years to
                certain current and former employees. The actuarially determined
                liability
                as of January 1, 2006, that has built up over the previous five years,
                was
                $1,124.






30




·
            We,
                through an accounting oversight, had not previously recognized a
                liability
                for vacation earned but not taken by certain employees. As of January
                1,
                2006, the liability equated to $1,160 (net of a tax benefit of $112),
                which has accumulated since our inception in
                1997.





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
            
            AmountLease
                termination
            
            $
            4,139Impaired
                long-lived assets
            
            
            2,205Lifetime
                medical benefits
            
            
            1,124Accrued
                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, we have 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).
 
 During
        the second quarter of 2006, we recorded an adjustment of $1,308 to establish
        a
        liability for the lifetime medical and a portion of the vacation benefits.
        Subsequently, SAB No. 108 was issued in September 2006 and adopted in the
        fourth
        quarter of 2006 with retroactive impact to January 1, 2006. Consequently,
        the
        results of operations for the second quarter were adjusted to reflect the
        adoption of SAB No. 108 and the reversal of these items, as we consider these
        misstatements immaterial to the interim financial results. The impact on
        the
        results of operations for the second quarter was an increase to net income
        of
        $1,308.




**Contractual
      Obligations**





The
      following table provides a summary of future payments due under contractual
      obligations and commitments as of December 31, 2006:





**Contractual
                Obligations**
            
            **Less
                Than**
              **1
                year**
            
            **1
                - 3**
              **years**
            
            **4
                - 5**
              **years**
            
            **More**
              **Than**
              **5
                years**
            
            **Total**Senior
                subordinated notes
            
            $
            -
            
            $
            -
            
            $
            200,000
            
            $
            -
            
            $
            200,000Interest
                on senior subordinated notes
            
            
            21,000
            
            
            42,000
            
            
            31,500
            
            
            -
            
            
            94,500Capital
                lease payments
            
            
            1,413
            
            
            4,602
            
            
            2,403
            
            
            920
            
            
            9,338Operating
                leases
            
            
            4,489
            
            
            5,906
            
            
            2,929
            
            
            2,041
            
            
            15,365Restructuring
                payments
            
            
            1,274
            
            
            1,816
            
            
            1,787
            
            
            3,907
            
            
            8,784Management
                fees (a)
            
            
            1,766
            
            
            540
            
            
            541
            
            
            11,641
            
            
            14,488Disposition
                agreements
            
            
            3,703
            
            
            -
            
            
            -
            
            
            547
            
            
            4,250Deferred
                compensation
            
            
            66
            
            
            137
            
            
            141
            
            
            2,088
            
            
            2,432Capital
                expenditures
            
            
            2,982
            
            
            -
            
            
            -
            
            
            -
            
            
            2,982Purchase
                orders
            
            
            39,828
            
            
            -
            
            
            -
            
            
            -
            
            
            39,828Total
            
            $
            76,521
            
            $
            55,001
            
            $
            239,301
            
            $
            21,144
            
            $
            391,967





(a)  Includes
        a management fee of $1,500 owed to HMTF in 2007 in connection with the
        monitoring and oversight agreement. The agreement requires an annual fee
        equal
        to the lesser of $1,500 or 2% of consolidated adjusted EBITDA, which has
        been
        excluded for all periods subsequent to 2007. The agreement expires January
        2013.




**Item
                7A.**
            **Quantitative
                and Qualitative Disclosures about Market Risk**




*Interest
      Rate Risk*




At
        December 31, 2006, none of our long-term debt bore interest at variable
        rates. However, we may have variable rate long-term debt in the future.
        Accordingly, our earnings and cash flow could be affected by changes in interest
        rates in the future.
  31
  *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, 2006 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 $15.5
        million
        per year.
 
 *Commodity
        Price Risk*
 
 We
        purchase several tons of oil to generate our 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.
        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 risen substantially over
        the
        past several years. Continued 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. and Subsidiaries**Report
                  of Ernst & Young LLP, Independent Registered Public Accounting
                  Firm
              33Report
                  of PricewaterhouseCoopers LLP,  Independent Registered Public
                  Accounting Firm
              34Consolidated
                  Balance Sheets as of December 31, 2006 and 2005
              35Consolidated
                  Statements of Operations for the years ended
              36December
                  31, 2006, 2005 and 2004Consolidated
                  Statements of Stockholder’s Equity (Deficit) and
                  ComprehensiveIncome
                  (Loss) for the years ended
              37December
                  31, 2006, 2005 and 2004Consolidated
                  Statements of Cash Flows for the years ended
              38December
                  31, 2006, 2005 and 2004Notes
                  to Consolidated Financial Statements
              39




32


Report
      of Independent RegisteredPublic Accounting
      Firm





The
      Board
      of Directors and Stockholder


Viasystems,
      Inc.




We
        have
        audited the accompanying consolidated balance sheet of Viasystems, Inc. and
        subsidiaries (the Company) as of December 31, 2006, and the related consolidated
        statements of operations, stockholder’s equity (deficit) and comprehensive
        income (loss), and cash flows for the year then ended. 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 audit.


We
      conducted our audit 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 audit
      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
      audit provides 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 at December 31, 2006, and the consolidated results of their
      operations and their cash flows for the year then ended, in conformity with
      U.S.
      generally accepted accounting principles.





As
      discussed in Note 1 to the consolidated financial statements, on January 1,
      2006, the Company adopted the provisions of Statement of Financial Accounting
      Standards No. 123(R), Share-Based Payment, which requires the Company to
      recognize expense related to the fair value of share-based compensation awards.
      Also, as discussed in Note 1 to the consolidated financial statements, in the
      fourth quarter of 2006 the Company adopted the provisions of Securities and
      Exchange Commission Staff Accounting Bulletin No. 108, Considering the Effects
      of Prior Year Misstatements when Quantifying Misstatements in Current Year
      Financial Statements, pursuant to which the Company recorded a cumulative effect
      adjustment to opening accumulated deficit effective January 1, 2006, for
      the correction of prior period errors in recording lease termination expense,
      asset impairment expense, vacation expense, and lifetime medical benefit
      expense.











/s/
      Ernst
& Young LLP


St.
      Louis, Missouri


March
      30,
      2007


33


*Report
      Of Independent RegisteredPublic 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 at December 31, 2005, and the results of their
        operations and their cash flows for each of the two years in the period ended
        December 31, 2005 in conformity with accounting principles generally
        accepted in the United States of America. 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 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.
 
 
 
 /s/
        PricewaterhouseCoopers LLP
 Dallas,
        Texas
 March
        29,
        2006, except for the effect
 of
        discontinued operations discussed in
 Note
        2, as to which the date is March 30, 2007


34


**VIASYSTEMS,
      INC. AND SUBSIDIARIES**


**CONSOLIDATED
      BALANCE SHEETS**


**(in
      thousands, except share data)**







**December 31,****2006**
              
              **2005**ASSETSCurrent
                  assets:Cash
                  and cash equivalents
              
              $
              37,954
              
              $
              35,923Restricted
                  cash
              
              
              1,000
              
              
              -Accounts
                  receivable, net
              
              
              131,495
              
              
              113,082Inventories
              
              
              85,185
              
              
              74,579Prepaid
                  expenses and other
              
              
              15,805
              
              
              15,835Property
                  held for sale
              
              
              -
              
              
              16,583Current
                  assets of discontinued operations
              
              
              -
              
              
              68,766Total
                  current assets
              
              
              271,439
              
              
              324,768Property,
                  plant and equipment, net
              
              
              257,652
              
              
              234,377Goodwill
              
              
              79,485
              
              
              79,689Intangible
                  assets, net
              
              
              7,918
              
              
              8,836Deferred
                  financing costs, net
              
              
              8,044
              
              
              7,699Other
                  assets
              
              
              1,352
              
              
              8,481Non-current
                  assets of discontinued operations
              
              
              -
              
              
              51,826Total
                  assets
              
              $
              625,890
              
              $
              715,676LIABILITIES
                  AND STOCKHOLDER’S EQUITY (DEFICIT)Current
                  liabilities:Current
                  maturities of long-term debt
              
              $
              722
              
              $
              2,828Accounts
                  payable
              
              
              115,110
              
              
              128,361Accrued
                  and other liabilities
              
              
              56,985
              
              
              56,115Income
                  taxes payable
              
              
              3,147
              
              
              254Deferred
                  income taxes
              
              
              -
              
              
              4,311Current
                  liabilities of discontinued operations
              
              
              -
              
              
              41,164Total
                  current liabilities
              
              
              175,964
              
              
              233,033Long-term
                  debt, less current maturities
              
              
              206,192
              
              
              459,707Deferred
                  taxes
              
              
              5,532
              
              
              7,416Other
                  non-current liabilities
              
              
              40,334
              
              
              16,011Non-current
                  liabilities of discontinued operations
              
              
              -
              
              
              1,237Total
                  liabilities
              
              
              428,022
              
              
              717,404Commitments
                  and contingenciesStockholder’s
                  equity (deficit)Common
                  stock, $0.01 par value, 1,000 shares authorized, issued and
                  outstanding
              
              
              -
              
              
              -Paid-in
                  capital
              
              
              2,435,092
              
              
              2,433,587Accumulated
                  deficit
              
              
              (2,243,846
              )
              
              (2,437,655
              )Accumulated
                  other comprehensive income
              
              
              6,622
              
              
              2,340Total
                  stockholder’s equity (deficit)
              
              
              197,868
              
              
              (1,728
              )Total
                  liabilities and stockholder’s equity (deficit)
              
              $
              625,890
              
              $
              715,676


See
      accompanying notes to consolidated financial statements.


35


**VIASYSTEMS,
      INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF
      OPERATIONS**


**(in
      thousands)**








**Year
                Ended December 31,****2006**
            
            **2005**
            
            **2004**Net
                sales
            
            $
            734,992
            
            $
            652,821
            
            $
            630,754Operating
                expenses:Cost
                of goods sold, exclusive of items shown separately below
            
            
            601,232
            
            
            560,974
            
            
            521,393Selling,
                general and administrative
            
            
            56,325
            
            
            66,047
            
            
            65,127Depreciation
            
            
            45,422
            
            
            44,234
            
            
            41,622Amortization
            
            
            1,325
            
            
            1,436
            
            
            1,570Restructuring
                and impairment
            
            
            (4,915
            )
            
            27,662
            
            
            1,013Operating
                income (loss)
            
            
            35,603
            
            
            (47,532
            )
            
            29Other
                expense (income):Interest
                expense, net
            
            
            30,715
            
            
            40,760
            
            
            37,818Amortization
                of deferred financing costs
            
            
            1,678
            
            
            1,613
            
            
            1,305Loss
                on early extinguishment of debt
            
            
            1,498
            
            
            -
            
            
            -Reorganization
                reversals
            
            
            -
            
            
            -
            
            
            (9,776
            )Other,
                net
            
            
            1,406
            
            
            13,110
            
            
            (1,468
            )Income
                (loss) before income taxes
            
            
            306
            
            
            (103,015
            )
            
            (27,850
            )Income
                tax provision (benefit)
            
            
            18,514
            
            
            3,953
            
            
            (6,291
            )Loss
                from continuing operations
            
            
            (18,208
            )
            
            (106,968
            )
            
            (21,559
            )Income
                from discontinued operations, net
            
            
            9,475
            
            
            25,739
            
            
            27,307Gain
                on disposition of discontinued operations, net
            
            
            211,170
            
            
            -
            
            
            -Net
                income (loss)
            
            $
            202,437
            
            $
            (81,229
            )
            $
            5,748





See
      accompanying notes to consolidated financial statements.


36


**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**
              **Comprehensive**
              **Income
                (Loss)**
            
            **Total**Balance
                at December 31, 2003
            
            $
            -
            
            $
            2,374,041
            
            $
            (2,362,174
            )
            $
            (9,387
            )
            $
            2,480Comprehensive
                income:Net
                income
            
            
            -
            
            
            -
            
            
            5,748
            
            
            -
            
            
            5,748Foreign
                currency translation, net oftaxes
                of $0
            
            
            -
            
            
            -
            
            
            -
            
            
            (4,447
            )
            
            (4,447
            )Total
                comprehensive income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1,301Capital
                contribution by Group
            
            
            -
            
            
            48,916
            
            
            -
            
            
            -
            
            
            48,916Stock
                compensation expense
            
            
            -
            
            
            3,837
            
            
            -
            
            
            -
            
            
            3,837Balance
                at December 31, 2004
            
            
            -
            
            
            2,426,794
            
            
            (2,356,426
            )
            
            (13,834
            )
            
            56,534Comprehensive
                income:Net
                loss
            
            
            -
            
            
            -
            
            
            (81,229
            )
            
            -
            
            
            (81,229
            )Change
                in fair value ofderivatives,
                net of taxes of $0
            
            
            -
            
            
            -
            
            
            -
            
            
            75
            
            
            75Foreign
                currency translation, net oftaxes
                of $0
            
            
            -
            
            
            -
            
            
            -
            
            
            16,099
            
            
            16,099Total
                comprehensive loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (65,055
            )Stock
                compensation expense
            
            
            -
            
            
            6,793
            
            
            -
            
            
            -
            
            
            6,793Balance
                at December 31, 2005
            
            
            -
            
            
            2,433,587
            
            
            (2,437,655
            )
            
            2,340
            
            
            (1,728
            )Cumulative
                effect of adoption ofSAB
                108, net of taxes of $112
            
            
            -
            
            
            -
            
            
            (8,628
            )
            
            -
            
            
            (8,628
            )Comprehensive
                income:Net
                income
            
            
            -
            
            
            -
            
            
            202,437
            
            
            -
            
            
            202,437Change
                in fair value ofderivatives,
                net of taxes of $0
            
            
            -
            
            
            -
            
            
            -
            
            
            34
            
            
            34Foreign
                currency translation,net
                of taxes of $0
            
            
            -
            
            
            -
            
            
            -
            
            
            4,248
            
            
            4,248Total
                comprehensive income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            206,719Stock
                compensation expense
            
            
            -
            
            
            1,505
            
            
            -
            
            
            -
            
            
            1,505Balance
                at December 31, 2006
            
            $
            -
            
            $
            2,435,092
            
            $
            (2,243,846
            )
            $
            6,622
            
            $
            197,868





Accumulated
      other comprehensive income at December 31, 2006 and 2005 includes the
      following:





**2006**
            
            **2005**Foreign
                currency translation
            
            $
            6,513
            
            $
            2,265Unrecognized
                gain on derivatives
            
            
            109
            
            
            75$
            6,622
            
            $
            2,340





See
      accompanying notes to consolidated financial statements.





37


**VIASYSTEMS,
      INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF CASH
      FLOWS**


**(in
      thousands)**





**Year
                Ended December 31,****2006**
            
            **2005**
            
            **2004**Cash
                flows from operating activities:Net
                income (loss)
            
            $
            202,437
            
            $
            (81,229
            )
            $
            5,748Adjustments
                to reconcile net income (loss) tonet
                cash (used in) provided by operating activities:Gain
                on sale of discontinued operations, net of tax
            
            
            (211,170
            )
            
            -
            
            
            -Depreciation
                and amortization
            
            
            49,229
            
            
            53,022
            
            
            49,802Translation
                adjustment, net
            
            
            -
            
            
            10,923Non-cash
                stock option compensation charge
            
            
            1,505
            
            
            6,793
            
            
            3,837Non-cash
                portion of loss on early extinguishment of debt
            
            
            1,313
            
            
            -
            
            
            -Deferred
                taxes
            
            
            (403
            )
            
            3,739
            
            
            4,565Impairment
                of assets
            
            
            438
            
            
            1,823
            
            
            4,564Amortization
                of deferred financing costs
            
            
            1,678
            
            
            1,613
            
            
            1,305(Gain)
                loss on sale of property, plant and equipment
            
            
            (5,200
            )
            
            711
            
            
            466Gain
                from sale of North Tyneside facility
            
            
            -
            
            
            -
            
            
            (9,789
            )Change
                in assets and liabilities:Accounts
                receivable
            
            
            (18,401
            )
            
            (1,568
            )
            
            (4,665
            )Inventories
            
            
            (6,664
            )
            
            (1,230
            )
            
            (15,221
            )Prepaid
                expenses and other
            
            
            (6,756
            )
            
            (3,139
            )
            
            20,070Intercompany
                receivable with Viasystems Group, Inc
            
            
            2,903
            
            
            (143
            )
            
            (6,087
            )Accounts
                payable and accrued and other liabilities
            
            
            (15,179
            )
            
            10,854
            
            
            13,660Income
                taxes payable
            
            
            2,432
            
            
            9,477
            
            
            (2,338
            )Net
                cash (used in) provided by operating activities
            
            
            (1,838
            )
            
            11,646
            
            
            65,917Cash
                flows from investing activities:Net
                proceeds from disposal of business
            
            
            307,927
            
            
            -
            
            
            -Capital
                expenditures
            
            
            (55,940
            )
            
            (85,032
            )
            
            (72,006
            )Proceeds
                from disposals of property, plant and equipment
            
            
            21,831
            
            
            10
            
            
            73Net
                cash provided by (used in) investing activities
            
            
            273,818
            
            
            (85,022
            )
            
            (71,933
            )Cash
                flows from financing activities:Repayment
                of amounts due under credit facilities
            
            
            (262,350
            )
            
            (2,650
            )
            
            (243,260
            )Proceeds
                from issuance under credit facilities
            
            
            -
            
            
            -
            
            
            265,000Financing
                and other fees
            
            
            (3,331
            )
            
            (321
            )
            
            (1,430
            )Repayment
                of other long-term and capital lease obligations
            
            
            (4,865
            )
            
            (274
            )
            
            (273
            )Capital
                contributed by Group
            
            
            -
            
            
            -
            
            
            48,916Repayment
                of amounts due under note due to theDepartment
                of Trade and Industry
            
            
            -
            
            
            -
            
            
            (12,549
            )Net
                cash (used in) provided by financing activities
            
            
            (270,546
            )
            
            (3,245
            )
            
            56,404Effect
                of exchange rate changes on cash and cashequivalents
            
            
            597
            
            
            (347
            )
            
            (173
            )Net
                change in cash and cash equivalents
            
            
            2,031
            
            
            (76,968
            )
            
            50,215Cash
                and cash equivalents, beginning of year
            
            
            35,923
            
            
            112,891
            
            
            62,676Cash
                and cash equivalents, end of year
            
            $
            37,954
            
            $
            35,923
            
            $
            112,891Supplemental
                cash flow information:Interest
                paid
            
            $
            36,393
            
            $
            39,703
            
            $
            26,315Income
                taxes paid, net
            
            $
            7,696
            
            $
            2,357
            
            $
            5,437Significant
                non-cash investing and financing activities:Capital
                lease
            
            $
            11,594
            
            $
            -
            
            $
            -


See
      accompanying notes to consolidated financial statements.


38


**VIASYSTEMS,
      INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL
      STATEMENTS**


**(In
      thousands)**





**1.**
            **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. Our 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.





On
      May 1,
      2006, the Company sold its wire harness business, and the wire harness business
      results of operations have been classified as discontinued operations for all
      periods presented. In connection with the divestiture of our wire harness
      business, the Company re-evaluated its segment reporting and now has two
      reportable segments, (i) Printed Circuit Boards and (ii) Assembly.





***Principles
      of Consolidation***





The
      accompanying consolidated financial statements include the accounts of
      Viasystems. All intercompany accounts and transactions have been eliminated
      in
      consolidation. The results of operations of our 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 consolidated financial
      statements are presented on a continuing operations basis, except where
      otherwise indicated.




***Adoption
        of Staff Accounting Bulletin No. 108***
 
 In
        September 2006, the Securities and Exchange Commission (SEC) released Staff
        Accounting Bulletin No. 108 (SAB No. 108), *Considering
        the Effects of Prior Year Misstatements when Quantifying Misstatements in
        Current Year Financial Statements.* 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 describes the nature and amount of the errors:
 ·
              The
                  liability related to an office lease that was abandoned in connection
                  with
                  a 2002 restructuring was understated by $4,139 due to an error
                  in
                  determining the noncancelable lease term. ·
              Certain
                  fixed assets that were transferred to a manufacturing plant in
                  China in
                  connection with the 2001 and 2005 restructurings in the United
                  States,
                  Canada and Europe were impaired at the date of the restructuring. The
                  total amount of the write-off as of January 1, 2006, was
                  $2,205.
 39
 
 ·
              The
                  Company, through an accounting oversight, has not previously recognized
                  a
                  liability for certain lifetime medical benefits that were granted
                  in prior
                  years to certain current and former employees. The actuarially
                  determined
                  liability as of January 1, 2006 that has built up over the previous
                  five
                  years, was $1,124. ·
              The
                  Company, through an accounting oversight, has not previously recognized
                  a
                  liability for vacation earned but not taken by certain employees.
                  As of
                  January 1, 2006, the liability equated to $1,160 (net of a tax
                  benefit of
                  $112), which has accumulated since its inception in
                  1997. 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
              
              AmountLease
                  termination
              
              $
              4,139Impaired
                  long-lived assets
              
              
              2,205Lifetime
                  medical benefits
              
              
              1,124Accrued
                  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).
 
 During
        the second quarter of 2006, the Company recorded an adjustment of $1,308
        to
        establish a liability for the lifetime medical and a portion of the vacation
        benefits. Subsequently, SAB No. 108 was issued in September 2006 and adopted
        in
        the fourth quarter of 2006 with retroactive impact to January 1, 2006.
        Consequently, the results of operations for the second quarter were adjusted
        to
        reflect the adoption of SAB No. 108 and the reversal of these items, as the
        Company considers these misstatements immaterial to the interim financial
        results. The impact on the results of operations for the second quarter was
        an
        increase to net income of $1,308.
  ***Use
        of Estimates***










The
      preparation of financial statements in conformity with U.S. generally accepted
      accounting principles 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 and allowances;


·
            fair
                value of derivative instruments and related hedged
                items;


·
            useful
                lives of property, equipment and intangible
                assets;


·
            long-lived
                and intangible asset impairments;


·
            restructuring
                charges;


·
            warranty
                and product returns allowances;


·
            deferred
                compensation agreements;


·
            tax
                related items;


·
            contingencies;
                and


·
            fair
                value of options granted under our stock-based compensation
                plans.





Actual
      results may differ from previously estimated amounts, and such differences
      may
      be material to our 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.




40




***Cash
      and Cash Equivalents***





The
      Company considers 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,
      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.




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.




***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.




***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:




Building
            20-50
                yearsLeasehold
                improvements
            3-15
                yearsMachinery,
                equipment, systems and other
            3-10
                years





***Impairment
      of Long-Lived Assets***





The
      Company reviews long-lived assets and other intangibles with a finite life
      if
      facts and circumstances exist that indicate that the asset 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 when discounted expected
      future cash flows are less than the carrying value of the asset. 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* ,
      goodwill and other indefinite-lived intangible




41




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. Goodwill impairment is determined using a two-step process.
      The
      first step of the impairment test is used to identify potential impairment
      by
      comparing the fair value of a reporting unit to the book value, including
      goodwill. If the fair value of a reporting unit exceeds its book value, goodwill
      of the reporting unit is not considered impaired, and the second step of the
      impairment test is not required. If the book value of a reporting unit exceeds
      its fair value, the second step of the impairment test is performed to measure
      the amount of the impairment loss, if any. The second step of the impairment
      test compares the implied fair value of the reporting unit’s goodwill with the
      book value of that goodwill. If the book value of the reporting unit’s goodwill
      exceeds the implied fair value of that goodwill, an impairment loss is
      recognized in an amount equal to that excess. The implied fair value of goodwill
      is determined in the same manner as the amount of goodwill recognized in a
      business combination. The annual impairment testing is performed in the fourth
      quarter.




***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
                balancePatents
                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***





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.




***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.




***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 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***





The
      assets and liabilities of foreign subsidiaries using the local currency as
      their
      functional currency are translated to U.S. dollars based on current exchange
      rates, and any resulting translation adjustments are included in accumulated
      other comprehensive income. The accumulated other comprehensive income
      amount also reflects foreign currency exchange rate changes related to certain
      qualifying assets and liabilities (deemed long-term in nature) denominated
      in
      currencies other than an entity’s functional currency. The net translation
      adjustment for the year ended December 31, 2005 was $16,099 (net of tax of
      $0). An adjustment of $10,923 reflects amounts transferred to other expense
      as a
      result of the reversal of cumulative translation adjustments required in
      connection with the liquidation of foreign investments (from the closure of
      the
      Montreal, Canada and Echt, the Netherlands printed circuit board operations).
      The remaining $5,176 was the result of currency rate changes during the
      year.




42




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 re-measuring assets and liabilities of foreign subsidiaries using
      U.S.
      dollars as their functional currency, and the results of our foreign currency
      hedging activities (for additional discussion of hedging activities see Note
      14).




***Fair
      Value of Financial Instruments***





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





**December 31,****2006**
            
            **2005**Senior
                Subordinated Notes due 2011
            
            $
            200,000
            
            $
            191,750Credit
                Agreement
            
            $
            -
            
            $
            262,350





The
      Company determined the 2006 and 2005 fair values of the Senior Subordinated
      Notes due 2011 using published market values from third party sources. The
      Company determined the 2005 fair value of the credit agreement using the credit
      agreement trading values from a third party source.




***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 our customers are included
      in
      cost of goods sold on the consolidated statements of operations.





***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.




***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.
 43
  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, 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). Effective January 1, 2004, the Company adopted the fair value
        recognition provisions of SFAS No. 123 using the modified prospective transition
        method. As a result, the adoption of SFAS No. 123(R) did not have a
        material impact on our financial position, results of operations or cash
        flows. Results for prior periods have not been restated.




***Discontinued
      Operations***





Discontinued
      operations is reported in accordance with the guidance of SFAS No. 144, *Accounting
      for the Impairment or Disposal of Long-Lived Assets* .
      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 begin marketing the business or asset group, and when
      the sale of the business or asset group is deemed probable within the next
      12
      months.





***Reclassifications***




The
      accompanying consolidated financial statements contain certain reclassifications
      to conform to the presentation used in the current period.




In
      2006,
      the Company reclassified certain transportation costs from selling, general
      and
      administrative expenses to cost of goods sold. Prior periods have been
      reclassified to conform to the current year presentation. This reclassification
      has no effect on previously reported net income (loss).




***Recently
      Issued Accounting Pronouncements***




On
        July
        13, 2006, the Financial Accounting Shareholders Board (FASB) issued
        Interpretation No. 48, *Accounting
        for Uncertainty in Income Taxes - An Interpretation of FASB Statement No.
        109* (FIN
        48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized
        in an enterprise’s financial statements in accordance with FASB Statement No.
        109, *Accounting
        for Income Taxes* .
        FIN 48
        also prescribes a recognition threshold and measurement attribute for the
        financial statement recognition and measurement of a tax position taken or
        expected to be taken in a tax return. The new FASB standard also provides
        guidance on derecognition, classification, interest and penalties, accounting
        in
        interim periods, disclosure, and transition. The provisions of FIN 48 are
        effective for fiscal years beginning after December 15, 2006. The Company
        is
        currently evaluating the impact of adoption of this standard.




**2.**
            **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, is
      estimated to be approximately $2,000 and is expected to be settled and paid
      to
      the acquirer before May 1, 2007.





In
      the
      accompanying consolidated statements of operations for the year ended December
      31, 2006, we recognized a net gain on the sale of our discontinued wire harness
      operations of $211,170. 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.




44




For
      the
      four months ended April 30, 2006 and the years ended December 31, 2005 and
      2004,
      operating results for the discontinued operations are as follows:







**2006**
            
            **2005**
            
            **2004**Net
                sales
            
            $
            102,358
            
            $
            295,697
            
            $
            270,609Operating
                income
            
            $
            11,322
            
            $
            37,537
            
            $
            40,456Income
                before income taxes
            
            $
            11,388
            
            $
            37,751
            
            $
            40,440Income
                tax provision
            
            
            1,913
            
            
            12,012
            
            
            13,133Net
                income
            
            $
            9,475
            
            $
            25,739
            
            $
            27,307





Summarized
      assets and liabilities for the discontinued operations at December 31, 2005
      are
      as follows:





**December
                31, 2005**Accounts
                receivable, net
            
            $
            30,540Inventories,
                net
            
            
            31,374Prepaid
                expenses and other
            
            
            6,852Current
                assets of discontinued operations
            
            $
            68,766Property
            
            $
            21,277Goodwill
            
            
            30,549Non-current
                assets of discontinued products
            
            $
            51,826Accounts
                payable
            
            $
            30,908Accrued
                and other liabilities
            
            
            9,795Income
                taxes payable
            
            
            461Current
                liabilities of discontinued operations
            
            $
            41,164Deferred
                taxes
            
            $
            1,237Non-current
                liabilities of discontinued operations
            
            $
            1,237





**3.**
            **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:




**2006**
            
            **2005**
            
            **2004**Balance,
                beginning of year
            
            $
            3,678
            
            $
            4,893
            
            $
            6,198Provision
            
            
            1,039
            
            
            281
            
            
            98Write-offs
            
            
            (1,384
            )
            
            (1,496
            )
            
            (1,403
            )Balance,
                end of year
            
            $
            3,333
            
            $
            3,678
            
            $
            4,893






45


For
      the
      years ended December 31, 2006, 2005 and 2004, sales to our ten largest customers
      accounted for approximately 73.7%, 71.3% and 68.1% of our net sales,
      respectively. The table below highlights individual end customers accounting
      for
      more than ten percent of the Company’s consolidated net sales.




**Customer**
            
            **2006**
            
            **2005**
            
            **2004**Alcatel
                SA/Lucent Technologies, Inc. (a)
            
            
            20.8
            %
            
            18.5
            %
            
            22.2
            %Siemens
                AG
            
            
            13.7
            
            
            12.5
            
            
            11.4Bosch
                Group
            
            
            10.1
            
            
            11.0
            
            
            10.3Delphi
                Corporation
            
            
            (b)
            
            
            11.2
            
            
            12.4





(a)
            Alcatel
                and Lucent merged during 2006. Amount represents sales to both the
                individual companies prior to the merger and the combined companies
                after
                the merger.


(b)
            Represents
                less than ten percent of consolidated net
                sales.





Sales
      to
      Alcatel/Lucent, Siemens and Delphi occurred in both the Printed Circuit Boards
      and Assembly segment. Sales to Bosch occurred in the Printed Circuit
      Boards segment.





**4.**
            **Inventories**





The
      composition of inventories at December 31, 2006 and 2005 is as
      follows:




**2006**
            
            **2005**Raw
                materials
            
            $
            28,819
            
            $
            26,036Work
                in process
            
            
            21,339
            
            
            19,727Finished
                goods
            
            
            35,027
            
            
            28,816Total
            
            $
            85,185
            
            $
            74,579





**5.**
            **Property
                Held for Sale**





**United**
                **States**
              
              **Canada**
              
              **The**
                **Netherlands**
              
              **Total**Balance
                  December 31, 2005
              
              $
              7,099
              
              $
              7,766
              
              $
              1,718
              
              $
              16,583Impairment
                  charge
              
              
              -
              
              
              (438
              )
              
              -
              
              
              (438
              )Effect
                  of currency revaluation
              
              
              -
              
              
              72
              
              
              129
              
              
              201Gains
                  on sales of property
              
              
              591
              
              
              392
              
              
              4,480
              
              
              5,463Net
                  cash proceeds on disposals
              
              
              (7,690
              )
              
              (7,792
              )
              
              (6,327
              )
              
              (21,809
              )Balance
                  December 31, 2006
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -




In
      March
      2006, the Company sold its previously closed facility in Mishawaka, Indiana,
      for
      net cash proceeds of approximately $630, resulting in a $31 gain. In August
      2006, the Company sold its previously closed Richmond, Virginia facility for
      $7,060 net cash proceeds, resulting in a $560 gain. In connection with the
      sale
      of the Richmond facility, the Company is required to relocate a maintenance
      structure on the property. An additional $1,000 received from the sale of our
      Richmond facility has been placed in an account to secure a letter of credit
      for
      the benefit of the purchaser of the land to secure our obligation to relocate
      the maintenance structure on the property. After we satisfy this obligation
      to
      fund the relocation of the maintenance structure on the property, the letter
      of
      credit will be cancelled and the funds on deposit will be released to the
      Company. The cost of relocating the maintenance structure is estimated to be
      approximately $1,000. The additional $1,000 proceeds is included in restricted
      cash and the related $1,000 liability is included in accrued and other
      liabilities on the accompanying consolidated balance sheet at December 31,
      2006.


In
        July
        2006, the Company sold one of its two previously closed facilities in Montreal,
        Canada for net cash proceeds of approximately $3,823, resulting in a loss
        of $10
        in the quarter ended September 30, 2006, after giving effect to a $438 valuation
        impairment charge recorded in the quarter ended June 30, 2006. In July 2006,
        the
        Company sold its previously closed facility in Granby, Canada for net cash
        proceeds of approximately $678, resulting in a $239 gain. In October, 2006,
        the
        Company sold its final closed facility in Montreal, Canada for net cash proceeds
        of $3,291, resulting in a gain of $163. The Company has no continuing interests
        in any of these properties.
  46
  In
        November 2006, the Company sold its final piece of property in the Netherlands
        for net cash proceeds of $6,327, resulting in a gain of $4,480.


The
      gains
      on sales of property held for sale are included in restructuring and impairment
      on the consolidated statements of operations.





**6.**
            **Property,
                Plant and Equipment**





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





**2006**
            
            **2005**Land
                and buildings
            
            $
            53,145
            
            $
            46,996Machinery,
                equipment and systems
            
            
            369,269
            
            
            306,399Construction
                in progress
            
            
            4,676
            
            
            10,724Leasehold
                improvements
            
            
            34,411
            
            
            26,156461,501
            
            
            390,275Less:
                Accumulated depreciation
            
            
            (203,849
            )
            
            (155,898
            )Total
            
            $
            257,652
            
            $
            234,377





**7.**
            **Goodwill
                and Other Intangible
                Assets**


The
      goodwill balance relates entirely to our Printed Circuit Boards segment.
      Included in assets disposed with the wire harness business was approximately
      $30,549 of goodwill. Goodwill balances and changes therein since the beginning
      of 2004 are as follows:




**Total**Goodwill
                at December 31, 2003
            
            $
            79,578Effect
                of foreign exchange rates
            
            
            (147
            )Goodwill
                at December 31, 2004
            
            
            79,431Effect
                of foreign exchange rates
            
            
            258Goodwill
                at December 31, 2005
            
            
            79,689Effect
                of foreign exchange rates
            
            
            (204
            )Goodwill
                at December 31, 2006
            
            $
            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.
      No impairments were recorded for the years ended December 31, 2006, 2005
      and 2004.





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




**December 31,
                2006**
            
            **December 31,
                2005****Gross**
              **Carrying**
              **Amount**
            
            **Accumulated**
              **Amortization**
            
            **Net**
              **Book**
              **Value**
            
            **Gross**
              **Carrying**
              **Amount**
            
            **Accumulated**
              **Amortization**
            
            **Net**
              **Book**
              **Value**Developed
                technologies
            
            $
            20,371
            
            $
            (13,306
            )
            $
            7,065
            
            $
            20,423
            
            $
            (12,248
            )
            $
            8,175Other
            
            
            2,010
            
            
            (1,157
            )
            
            853
            
            
            1,581
            
            
            (920
            )
            
            661Total
            
            $
            22,381
            
            $
            (14,463
            )
            $
            7,918
            
            $
            22,004
            
            $
            (13,168
            )
            $
            8,836





The
      Company paid $429 and $262 for acquisitions of patents during the years ended
      December 31, 2006 and 2005, respectively. The expected future annual
      amortization expense of definite-lived intangible assets for the next five
      fiscal years is as follows:




2007
            
            $
            1,2402008
            
            
            1,1822009
            
            
            1,1072010
            
            
            1,0262011
            
            
            971Thereafter
            
            
            2,392Total
            
            $
            7,918






47




**8.**
            **Accrued
                and Other Liabilities**





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




**2006**
            
            **2005**Accrued
                payroll and related costs
            
            $
            17,461
            
            $
            13,487Accrued
                interest
            
            
            9,680
            
            
            15,461Accrued
                other
            
            
            29,844
            
            
            27,167Total
            
            $
            56,985
            
            $
            56,115





**9.**
            **Long-Term
                Debt**





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




**2006**
            
            **2005**Senior
                Subordinated Notes due 2011
            
            $
            200,000
            
            $
            200,0002006
                Credit Agreement:Term
                Loan
            
            
            -
            
            
            -Revolving
                credit loans
            
            
            -
            
            
            -2003
                Credit Agreement:Revolver
            
            
            -
            
            
            -Term
                Facility
            
            
            -
            
            
            262,350Capital
                Leases
            
            
            6,914
            
            
            185206,914
            
            
            462,535Less:
                current maturities
            
            
            (722
            )
            
            (2,828
            )$
            206,192
            
            $
            459,707





***Senior
      Subordinated Notes due 2011***




In
        December 2003, we 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, 2008 at the redemption
        price, inclusive of a “make-whole” premium (as defined) ranging from 105.25% to
        110%. In the event of a Change in Control (as defined), we are required to
        make
        an offer to purchase the 2011 Notes at a redemption price of 101%, plus accrued
        and unpaid interest.
  The
        2011
        Notes are guaranteed by certain subsidiaries. In connection with the disposal
        of
        the wire harness business, the trustee for the 2011 Notes released the wire
        harness subsidiaries from the guarantee of the 2011 Notes. The consolidating
        financial information of guarantor subsidiaries has been adjusted to present
        separately as discontinued operations the assets, liabilities and operating
        results of the wire harness business (see Note 16).


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.




***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 is comprised of two facilities,
      as follows:





Facility
      A - Revolver/Term Loan   US$
      20,000


Facility
      B - Revolver/Letters of Credit  US$
      60,000




48




For
      18
      months following the inception of the agreement, the Company may borrow against
      Facility A as a revolving credit facility. In February 2008, any outstanding
      borrowings under Facility A will convert to a term loan, with quarterly
      principal payments due through August 2010. Throughout the term of the
      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 plus
      2.0%, 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 our foreign assets together with
      pledges of the equity ownership of substantially all of our subsidiaries in
      Hong
      Kong and Peoples’ Republic of China. Customary business covenants set limits on
      our 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, a minimum EBITDA-to-Net Interest Expense ratio, and a
      maximum annual limit on capital expenditures.





Fees
      and
      expenses incurred in connection with origination of our 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, 2006, there were no borrowings outstanding under the 2006 Credit
      Agreement, and we secured issuance of letters of credit totaling $4,050 under
      Facility B. As of December 31, 2006, approximately $75,950 of the facilities
      was
      unused and available. The weighted average interest rate on outstanding
      borrowings during the year ended December 31, 2006 was 7.3%.





***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 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 incurred $1,498 in losses on
      early
      extinguishment of debt to recognize 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 our 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 our 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 and 2005, the weighted average interest rates
      on
      outstanding borrowings under the 2003 Credit Agreement were 9.2% and 7.7%,
      respectively.





***Capital
      Leases***




The
      Company leases certain of its machinery and equipment under capital lease.
      During 2006, we entered into a capital lease obligation of $11,594 for certain
      new equipment.





***Department
      of Trade and Industry Notes***





In
      conjunction with the Company’s plan of reorganization approved by the Bankruptcy
      Court, a £12,000 (approximately $18,000) 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 £9,000 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




49




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 $9,789.




The
      schedule of principal payments for long-term debt at December 31, 2006, is
      as follows:




2007
            
            $
            7222008
            
            
            1,6822009
            
            
            1,8502010
            
            
            2,0352011
            
            
            200,040Thereafter
            
            
            585Total
            
            $
            206,914





**10.**
            **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, 2006 and 2005, were $13,000 and $1,050, respectively, of cost
      basis and $1,010 and $894, respectively, of accumulated depreciation related
      to
      equipment held under capital leases. Total rental expense under operating leases
      was $5,823, $5,412 and $4,925 for the years ended December 31, 2006, 2005
      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 at December 31, 2006, are as follows:





**Capital**
            
            **Operating**2007
            
            $
            1,413
            
            $
            4,4892008
            
            
            2,301
            
            
            3,5412009
            
            
            2,301
            
            
            2,3652010
            
            
            2,301
            
            
            2,2422011
            
            
            102
            
            
            687Thereafter
            
            
            920
            
            
            2,041Total
            
            
            9,338
            
            $
            15,365Less:
                Amounts representing interest
            
            
            (2,424
            )Capital
                lease obligations
            
            $
            6,914








**11.**
            **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, such indemnification obligations
      are
      immaterial.




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.




Viasystems
      has fully and unconditionally guaranteed the operating lease payments of i)
      the
      Milwaukee, Wisconsin facility through the year 2010, and ii) office space in
      London, England through the year 2014. The total maximum payments from these
      guarantees are $5,808 and $6,162, respectively. As of January 1, 2006, a
      liability related to unused office space in London, England has been established
      (see Note 1).




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.




50




**12.**
            **Restructuring
                and Impairment**





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 2005. The following tables summarize the restructuring and
      impairment charges taken during the years ended December 31, 2006, 2005 and
      2004:





**Year
                Ended December 31, 2006****Cash****12/31/05**
            
            **Charges**
            
            **Reversals**
            
            **Total**
            
            **Payments**
            
            **Adjustments**
            
            
            
            **12/31/06**Restructuring
                Activities:Personnel
                and severance
            
            $
            4,634
            
            $
            -
            
            $
            (1,423
            )
            $
            (1,423
            )
            $
            (2,615
            )
            $
            -
            
            
            
            
            $
            596Lease
                and other contractual commitments
            
            
            1,308
            
            
            1,533
            
            
            -
            
            
            1,533
            
            
            (2,340
            )
            
            4,970
            
            
            (a)
            
            
            5,471Asset
                impairments
            
            
            -
            
            
            438
            
            
            (5,463
            )
            
            (5,025
            )
            
            -
            
            
            5,025
            
            
            
            
            
            -Total
                restructuring and impairment charges
            
            $
            5,942
            
            $
            1,971
            
            $
            (6,886
            )
            $
            (4,915
            )
            $
            (4,955
            )
            $
            9,995
            
            
            
            
            $
            6,067





(a)
            
            Represents
                $4,139 of lease termination costs and $831 of lifetime medical
                benefits for former employees that were recorded as a direct charge
                to
                accumulated deficit in connection with the adoption of SAB No. 108
                (see Note 1).





**Year
                Ended December 31, 2005****Cash****12/31/04**
            
            **Charges**
            
            **Reversals**
            
            **Total**
            
            **Payments**
            
            **Adjustments**
            
            **12/31/05**Restructuring
                Activities:Personnel
                and severance
            
            $
            3,209
            
            $
            23,106
            
            $
            -
            
            $
            23,106
            
            $
            (21,681
            )
            $
            -
            
            $
            4,634Lease
                and other contractual commitments
            
            
            1,647
            
            
            2,733
            
            
            -
            
            
            2,733
            
            
            (3,072
            )
            
            -
            
            
            1,308Asset
                impairments
            
            
            -
            
            
            1,823
            
            
            -
            
            
            1,823
            
            
            -
            
            
            (1,823
            )
            
            -Total
                restructuring and impairment charges
            
            $
            4,856
            
            $
            27,662
            
            $
            -
            
            $
            27,662
            
            $
            (24,753
            )
            $
            (1,823
            )
            $
            5,942








**Year
                Ended December 31, 2004****Cash****12/31/03**
            
            **Charges**
            
            **Reversals**
            
            **Total**
            
            **Payments**
            
            **Adjustments**
            
            **12/31/04**Restructuring
                Activities:Personnel
                and severance
            
            $
            4,076
            
            $
            2,142
            
            $
            (85
            )
            $
            2,057
            
            $
            (2,924
            )
            $
            -
            
            $
            3,209Lease
                and other contractual commitments
            
            
            9,560
            
            
            208
            
            
            (6,069
            )
            
            (5,861
            )
            
            (2,052
            )
            
            -
            
            
            1,647Other
            
            
            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**2007
            
            $
            1,2742008
            
            
            9212009
            
            
            8952010
            
            
            8992011
            
            
            888Thereafter
            
            
            3,907Total
            
            
            8,784Less:
                Amounts representing interest
            
            
            (2,717
            )Restructuring
                liability
            
            $
            6,067






51




***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 our Netherlands facility.
          In addition, the Company recorded an impairment charge of $438 related
          to the
          write down of one of the properties held for sale in Canada, which was
          written
          down to the contracted selling price, less the cost to sell. All gains
          realized
          ($5,463) in connection with the property held for sale are included in
          restructuring and impairment on the consolidated statements of operations
          (See
          Note 5).
 
 ***2005
          Restructuring and Impairments***
  On
          February 25, 2005, the Company announced the intention to close the printed
          circuit board manufacturing facilities located in Echt, the Netherlands
          and
          Montreal, Canada. At the time of announcement of the closures, the Company
          estimated that total closure costs would approximate $50,000, with $23,000
          being
          related to headcount reduction costs and the remainder being related to
          asset
          impairments and other contractual commitments. The Company now estimates
          that
          total closure costs will approximate $28,000, with $22,000 being related
          to
          headcount reduction costs and the remainder being related to other contractual
          commitments and closure costs.
  For
          the
          year ended December 31, 2005, the Company recorded personnel and
          restructuring charges of $10,309 and $12,797 related to the closure of
          the
          facilities in Echt, the Netherlands and Montreal, Canada, respectively.
          In
          addition, for the year ended December 31, 2005, the Company recorded a
          restructuring charge of $1,823 related to the impairment of specific pieces
          of
          manufacturing equipment and buildings, and $2,733 for costs incurred with
          the
          early termination of outstanding contracts related to the closure of the
          two
          facilities in Montreal, Canada.  As
          discussed in Note 1, upon adoption of SAB No. 108, the Company
          recorded an additional write-off related to assets transferred from facilities
          closed in 2005. Including the SAB No. 108 adjustment with 2005 impairments,
          the total asset impairment write-offs for 2005 would have been
          $2,655.
  The
          restructuring actions in 2005 reduced employees by 702 in Montreal, Canada
          and
          461 in Echt, the Netherlands.


For
      the
      year ended December 31, 2005, the Company has written off a total of $3,495
      of inventory to costs of goods sold related to the plant closures. The Company
      disposed of the inventory in conjunction with the write-off.




***2004
      Restructuring and Impairment***





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, Canada. 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, Canada 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, Canada printed circuit board
      fabrication facility in 2002. 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, Canada 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.




52




**13.**
            **Income
                Taxes**





The
      Company accounts for income taxes in accordance with the provisions of SFAS
      No.
      109, *Accounting
      for Income Taxes* .
      The
      provision for income taxes from continuing operations for the years ended
      December 31, 2006, 2005 and 2004, consists of the following:




**2006**
            
            **2005**
            
            **2004**Current:Federal
            
            $
            (49
            )
            $
            (9,312
            )
            $
            (19,679
            )State
            
            
            -
            
            
            -
            
            
            -Foreign
            
            
            18,966
            
            
            10,763
            
            
            8,66018,917
            
            
            1,451
            
            
            (11,019
            )Deferred:Federal
            
            
            -
            
            
            -
            
            
            -State
            
            
            -
            
            
            -
            
            
            -Foreign
            
            
            (403
            )
            
            2,502
            
            
            4,728(403
            )
            
            2,502
            
            
            4,728Total
            
            $
            18,514
            
            $
            3,953
            
            $
            (6,291
            )





A
      reconciliation between the total income tax provision at the federal statutory
      income tax rate and at the effective tax rate for the years ended
      December 31, 2006, 2005 and 2004 is summarized below:





**2006**
            
            **2005**
            
            **2004**U.S.
                Federal statutory rate
            
            $
            107
            
            $
            (36,055
            )
            $
            (9,748
            )State
                taxes, net of Federal benefit
            
            
            (78
            )
            
            (4,324
            )
            
            (3,085
            )Foreign
                taxes in excess of U.S. statutory rate
            
            
            11,444
            
            
            12,600
            
            
            (7,698
            )Amortization
                of intangibles
            
            
            381
            
            
            (861
            )
            
            1,599Gain/(loss)
                on investment in subsidiaries
            
            
            -
            
            
            (33,799
            )
            
            178,830Change
                in the valuation allowance for deferred taxassets
            
            
            11,563
            
            
            67,156
            
            
            (308,339
            )Capital
                losses
            
            
            -
            
            
            (20,917
            )
            
            129,250Foreign
                tax credit carry forward
            
            
            -
            
            
            (1,224
            )
            
            (3,678
            )Non-deductible
                items
            
            
            1,521
            
            
            9,987
            
            
            7,032Deemed
                dividend inclusions in US income
            
            
            -
            
            
            -
            
            
            16,111Branch
                and partnership loss
            
            
            (4,313
            )
            
            8,135
            
            
            (3,937
            )Other
            
            
            (2,111
            )
            
            3,255
            
            
            (2,628
            )$
            18,514
            
            $
            3,953
            
            $
            (6,291
            )








The
      tax
      effects of significant temporary differences representing deferred tax assets
      and liabilities at December 31, 2006 and 2005 are as
      follows:




**2006**
              
              **2005**Deferred
                  tax assets:Accrued
                  liabilities not yet deductible
              
              $
              7,088
              
              $
              18,460Net
                  operating loss carryforwards
              
              
              394,526
              
              
              388,433AMT
                  credit carryforwards
              
              
              4,568
              
              
              -Property,
                  plant and equipment
              
              
              1,120
              
              
              1,120Capital
                  loss carryforwards
              
              
              120,431
              
              
              58,163Foreign
                  tax credit carry forward
              
              
              4,931
              
              
              4,902Other
              
              
              2,621
              
              
              3,278535,285
              
              
              474,356Valuation
                  allowance
              
              
              (531,644
              )
              
              (466,106
              )3,641
              
              
              8,250Deferred
                  tax liabilities:Intangibles
              
              
              (283
              )
              
              (283
              )Property,
                  plant and equipment
              
              
              (2,099
              )
              
              (2,467
              )Inventory
              
              
              -
              
              
              (4,301
              )Other
              
              
              (5,279
              )
              
              (5,738
              )(7,661
              )
              
              (12,789
              )Net
                  deferred tax assets (liabilities)
              
              $
              (4,020
              )
              $
              (4,539
              )






53


At
      December 31, 2006, current deferred tax assets of $1,512 are included in prepaid
      expenses and other on the consolidated balance sheet. At December 31, 2005,
      current deferred tax assets of $2,877 are included in prepaid expenses and
      other
      and $4,311 of long-term deferred taxes are included in other assets on the
      consolidated balance sheet. In addition, at December 31, 2006 and 2005, other
      non-current liabilities include $34,635 and $14,289 of long-term accrued taxes,
      respectively.




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




**Year
                Ended December 31,****2006**
            
            **2005**
            
            **2004**Domestic
            
            
            9,348
            
            $
            (122,250
            )
            $
            (16,732
            )Foreign
            
            
            (9,042
            )
            
            19,235
            
            
            (11,118
            )306
            
            $
            (103,015
            )
            $
            (27,850
            )




As
      of
      December 31, 2006, the Company had the following net operating loss (NOL)
      carryforwards: $578,498 in the U.S., $582 in China, $433,780 in Luxembourg,
      $57,356 in Canada, $25,505 in Hong Kong, $25,166 in the U.K., and $47,320 in
      the
      Netherlands. The U.S. NOLs expire in 2019 through 2026 and the Canada NOLs
      expire in 2007 through 2013. All other NOLs carry forward indefinitely. Canada
      has a capital loss of $376,349 that will carry forward indefinitely. The
      Company has not recognized and does not anticipate recognizing a deferred tax
      liability for approximately $478 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 $19,700 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, in 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 $696, $5,587
        and
        $3,674 of additional income tax expense for December 31, 2006, 2005 and
        2004, respectively, based on the applicable rates ranging from 12% to
        27%.
  **14.
        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 our future use of foreign currencies, the desired foreign exchange
        rate sensitivity and exchange rate levels. Prior to entering into a hedge
        transaction, we formally document 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, 2006 relate only to
        Chinese RMB exchange rates, and because that currency is not freely traded
        outside of the People’s Republic of China, our 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
        year ended December 31, 2006, $582 loss was recorded in cost of goods
        sold.
  54
  Prior
        to
        i) the closure of the Company’s operations in Canada and ii) the disposal of the
        wire harness business, the Company used forward agreements to pay U.S. dollars
        and receive notional amounts of Canadian dollars and Mexican pesos,
        respectively, on a periodic basis. Amounts paid or received under forward
        agreements for those currencies were accounted for on a cash basis and
        recognized in cost of goods sold and selling, general, and administrative
        when
        the contracts were settled.
 
 Cash
        flow
        hedges 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, net of taxes. The ineffective portion of the change
        in the
        cash flow hedge’s gain or loss is recorded in earnings at each quarterly
        measurement date.
 
 At
        December 31, 2006 and 2005, deferred gains of $109 (net of tax of $0) and
        $75
        (net of tax of $0), respectively, related to cash flow hedges were recorded
        in
        prepaid expenses and other and other comprehensive income on the consolidated
        balance sheets. All cash flow hedges were effective, and therefore, no gain
        or
        loss was recorded in earnings.
 
 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 our derivative instrument activity at December 31,
      2006:





**Weighted
                Avg.****Remaining**
            
            **Average****Notional**
            
            **Maturity
                in**
            
            **Exchange****Amount**
            
            **Months**
            
            **Rate**Cash
                flow hedges:Chinese
                RMB
            
            $
            300,000
            
            
            3.0
            
            
            7.733Deferred
                gain, net of tax
            
            $
            109







**15.**
            **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 our employees. Stock options may be granted
      to
      employees in the form of nonqualified stock options at market value, and our
      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, on-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, 2006, 209,378 of these shares were available for future
      grants.





Stock
      compensation expense is recorded in the consolidated statements of operations
      as
      follows:





**2006**
            
            **2005**
            
            **2004**Cost
                of goods sold
            
            $
            22
            
            $
            254
            
            $
            133Selling,
                general and administrative
            
            
            1,378
            
            
            5,898
            
            
            3,577$
            1,400
            
            $
            6,152
            
            $
            3,710





At
      December 31, 2006, unrecognized compensation expense allocated to Viasystems
      from Group totaled approximately $1,060 and will be recognized over a weighted
      average period of approximately 11 months.




55




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:





**2006**
            
            **2005**
            
            **2004**Expected
                life of options
            
            5
                years
            
            5
                years
            
            5
                yearsRisk-free
                interest rate
            
            4.66%
                to 5.13%
            
            4.00%
                to 4.57%
            
            3.5%Expected
                volatility of stock
            
            50%
            
            50%
            
            50%Expected
                dividend yield
            
            None
            
            None
            
            None


The
      weighted-average grant date fair value of options granted was $6.24 for 2006,
      $6.16 for 2005 and $3.49 for 2004. Presented below is a summary of stock option
      plans’ activity for the years and as of the dates shown:





**2006**
            
            **2005**
            
            **2004****Exercise**
            
            
            
            **Exercise**
            
            
            
            **Exercise****Options**
            
            **Price****(1)**
            
            **Options**
            
            **Price****(1)**
            
            **Options**
            
            **Price****(1)**Beginning
                Balance
            
            
            2,698,800
            
            $
            12.63
            
            
            2,641,600
            
            $
            12.63
            
            
            2,331,000
            
            $
            12.63Granted
            
            
            81,600
            
            
            12.63
            
            
            159,400
            
            
            12.63
            
            
            375,400
            
            
            12.63Exercised
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Forfeited
                or expired
            
            
            (212,000
            )
            
            12.63
            
            
            (102,200
            )
            
            12.63
            
            
            (64,800
            )
            
            12.63Ending
                Balance
            
            
            2,568,400
            
            $
            12.63
            
            
            2,698,800
            
            $
            12.63
            
            
            2,641,600
            
            $
            12.63Exercisable
                atYear-end
            
            
            2,294,053
            
            $
            12.63
            
            
            1,621,169
            
            $
            12.63
            
            
            880,451
            
            $
            12.63







(1)
      Weighted average.




**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 our 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, 2006**
              
              **Viasystems,
                  Inc.**
              
              **Total**
                **Guarantors**
              
              **Total
                  Non-**
                **Guarantors**
              
              **Eliminations**
              
              **Viasystems,
                  Inc.**
                **Consolidated****ASSETS**Cash
                  and cash equivalents
              
              $
              701
              
              $
              13,244
              
              $
              24,009
              
              $
              -
              
              $
              37,954Restricted
                  cash
              
              
              -
              
              
              1,000
              
              
              -
              
              
              -
              
              
              1,000Accounts
                  receivable, net
              
              
              -
              
              
              22,229
              
              
              109,266
              
              
              -
              
              
              131,495Inventories
              
              
              -
              
              
              11,964
              
              
              73,221
              
              
              -
              
              
              85,185Other
                  current assets
              
              
              -
              
              
              2,325
              
              
              13,480
              
              
              -
              
              
              15,805Total
                  current assets
              
              
              701
              
              
              50,762
              
              
              219,976
              
              
              -
              
              
              271,439Property,
                  plant and equipment, net
              
              
              95
              
              
              7,640
              
              
              249,917
              
              
              -
              
              
              257,652Investment
                  in subsidiaries
              
              
              960,991
              
              
              351,926
              
              
              -
              
              
              (1,312,917
              )
              
              -Other
                  assets
              
              
              6,682
              
              
              136
              
              
              89,981
              
              
              -
              
              
              96,799Total
                  assets
              
              $
              968,469
              
              $
              410,464
              
              $
              559,874
              
              $
              (1,312,917
              )
              $
              625,890**LIABILITIES
                  AND STOCKHOLDER’S EQUITY (DEFICIT)**Current
                  maturities of long-term debt
              
              $
              -
              
              $
              7
              
              $
              715
              
              $
              -
              
              $
              722Accounts
                  payable
              
              
              -
              
              
              10,141
              
              
              104,969
              
              
              -
              
              
              115,110Accrued
                  and other liabilities
              
              
              9,625
              
              
              17,034
              
              
              33,473
              
              
              -
              
              
              60,132Total
                  current liabilities
              
              
              9,625
              
              
              27,182
              
              
              139,157
              
              
              -
              
              
              175,964Long-term
                  debt, less current maturities
              
              
              200,000
              
              
              -
              
              
              6,192
              
              
              -
              
              
              206,192Other
                  non-current liabilities
              
              
              547
              
              
              9,191
              
              
              36,128
              
              
              -
              
              
              45,866Intercompany
                  (receivable) payable
              
              
              566,453
              
              
              (587,026
              )
              
              20,573
              
              
              -
              
              
              -Total
                  liabilities
              
              
              776,625
              
              
              (550,653
              )
              
              202,050
              
              
              -
              
              
              428,022Total
                paid-in equity and accumulated deficit
              
              
              191,246
              
              
              960,991
              
              
              351,926
              
              
              (1,312,917
              )
              
              191,246Accumulated
                  other comprehensive income
              
              
              598
              
              
              126
              
              
              5,898
              
              
              -
              
              
              6,622Total
                  liabilities and stockholder’s equity (deficit)
              
              $
              968,469
              
              $
              410,464
              
              $
              559,874
              
              $
              (1,312,917
              )
              $
              625,890








56


**Balance
                  Sheet as of December 31, 2005**
              
              **Viasystems,
                  Inc.**
              
              **Total**
                **Guarantors**
              
              **Total
                  Non-**
                **Guarantors**
              
              **Eliminations**
              
              **Viasystems,
                  Inc.**
                **Consolidated****ASSETS**Cash
                  and cash equivalents
              
              $
              432
              
              $
              12,420
              
              $
              23,071
              
              $
              -
              
              $
              35,923Accounts
                  receivable, net
              
              
              -
              
              
              21,493
              
              
              91,589
              
              
              -
              
              
              113,082Inventories
              
              
              -
              
              
              11,914
              
              
              62,665
              
              
              -
              
              
              74,579Other
                  current assets
              
              
              (4,329
              )
              
              10,057
              
              
              10,107
              
              
              -
              
              
              15,835Property
                  held for sale
              
              
              -
              
              
              7,099
              
              
              9,484
              
              
              -
              
              
              16,583Current
                  assets of discontinued operations
              
              
              -
              
              
              65,576
              
              
              3,190
              
              
              -
              
              
              68,766Total
                  current assets
              
              
              (3,897
              )
              
              128,559
              
              
              200,106
              
              
              -
              
              
              324,768Property,
                  plant and equipment, net
              
              
              177
              
              
              6,188
              
              
              228,012
              
              
              -
              
              
              234,377Investment
                  in subsidiaries
              
              
              756,922
              
              
              373,416
              
              
              -
              
              
              (1,130,338
              )
              
              -Other
                  assets
              
              
              (11,499
              )
              
              55,539
              
              
              60,665
              
              
              -
              
              
              104,705Non-current
                  assets of discontinued operations
              
              
              -
              
              
              (166
              )
              
              51,992
              
              
              -
              
              
              51,826Total
                  assets
              
              $
              741,703
              
              $
              563,536
              
              $
              540,775
              
              $
              (1,130,338
              )
              $
              715,676**LIABILITIES
                  AND STOCKHOLDER’S EQUITY (DEFICIT)**Current
                  maturities of long-term debt
              
              
              2,650
              
              
              178
              
              
              -
              
              
              -
              
              
              2,828Accounts
                  payable
              
              $
              -
              
              $
              12,558
              
              $
              115,803
              
              $
              -
              
              $
              128,361Accrued
                  and other liabilities
              
              
              (7,049
              )
              
              17,596
              
              
              50,133
              
              
              -
              
              
              60,680Current
                  liabilities of discontinued operations
              
              
              -
              
              
              36,734
              
              
              4,430
              
              
              -
              
              
              41,164Total
                  current liabilities
              
              
              (4,399
              )
              
              67,066
              
              
              170,366
              
              
              -
              
              
              233,033Long-term
                  debt, less current maturities
              
              
              459,699
              
              
              8
              
              
              -
              
              
              -
              
              
              459,707Other
                  non-current liabilities
              
              
              (7,380
              )
              
              8,971
              
              
              21,836
              
              
              -
              
              
              23,427Non-current
                  liabilities of discontinued operations
              
              
              -
              
              
              (1,237
              )
              
              2,474
              
              
              -
              
              
              1,237Intercompany
                  (receivable) payable
              
              
              297,248
              
              
              (268,243
              )
              
              (29,005
              )
              
              -
              
              
              -Total
                  liabilities
              
              
              745,168
              
              
              (193,435
              )
              
              165,671
              
              
              -
              
              
              717,404Total paid-in capital and accumulated deficit
              
              
              (4,068
              )
              
              756,922
              
              
              373,416
              
              
              (1,130,338
              )
              
              (4,068
              )Accumulated
                  other comprehensive income
              
              
              603
              
              
              49
              
              
              1,688
              
              
              -
              
              
              2,340Total
                  liabilities and stockholder’s equity (deficit)
              
              $
              741,703
              
              $
              563,536
              
              $
              540,775
              
              $
              (1,130,338
              )
              $
              715,676





**Income
                Statement as of December 31, 2006**
            
            **Viasystems,
                Inc.**
            
            **Total**
              **Guarantors**
            
            **Total
                Non-**
              **Guarantors**
            
            **Eliminations**
            
            **Viasystems,
                Inc.**
              **Consolidated**Net
                sales
            
            $
            -
            
            $
            183,041
            
            $
            612,396
            
            $
            (60,445
            )
            $
            734,992Operating
                expenses:Cost
                of goods sold
            
            
            22
            
            
            158,852
            
            
            502,803
            
            
            (60,445
            )
            
            601,232Selling,
                general and administrative
            
            
            1,851
            
            
            26,282
            
            
            28,192
            
            
            -
            
            
            56,325Depreciation
            
            
            84
            
            
            2,398
            
            
            42,940
            
            
            -
            
            
            45,422Amortization
            
            
            238
            
            
            -
            
            
            1,087
            
            
            -
            
            
            1,325Restructuring
                and impairment
            
            
            -
            
            
            (391
            )
            
            (4,524
            )
            
            -
            
            
            (4,915
            )Operating
                income (loss)
            
            
            (2,195
            )
            
            (4,100
            )
            
            41,898
            
            
            -
            
            
            35,603Other
                expense (income):Interest
                expense, net
            
            
            16,131
            
            
            (24,494
            )
            
            39,078
            
            
            -
            
            
            30,715Amortization
                of deferred financing costs
            
            
            1,367
            
            
            -
            
            
            311
            
            
            -
            
            
            1,678Loss
                on early extinguishment of debt
            
            
            1,410
            
            
            88
            
            
            -
            
            
            -
            
            
            1,498Other,
                net
            
            
            -
            
            
            (10,399
            )
            
            11,805
            
            
            -
            
            
            1,406Equity
                in (loss) earnings in subsidiaries
            
            
            212,697
            
            
            (16,531
            )
            
            -
            
            
            (196,166
            )
            
            -Income
                (loss) before income taxes
            
            
            191,594
            
            
            14,174
            
            
            (9,296
            )
            
            (196,166
            )
            
            306Income
                tax provision (benefit)
            
            
            (10,948
            )
            
            18,833
            
            
            10,629
            
            
            -
            
            
            18,514Income
                (loss) from continuing operations
            
            
            202,542
            
            
            (4,659
            )
            
            (19,925
            )
            
            (196,166
            )
            
            (18,208
            )Income
                (loss) from discontinued operations, net
            
            
            (105
            )
            
            6,186
            
            
            3,394
            
            
            -
            
            
            9,475Gain
                on disposition of discontinued operations, net
            
            
            -
            
            
            211,170
            
            
            -
            
            
            -
            
            
            211,170Net
                income (loss)
            
            $
            202,437
            
            $
            212,697
            
            $
            (16,531
            )
            $
            (196,166
            )
            $
            202,437







57






**Income
                Statement as of December 31, 2005**
            
            **Viasystems,
                Inc.**
            
            **Total**
              **Guarantors**
            
            **Total
                Non-**
              **Guarantors**
            
            **Eliminations**
            
            **Viasystems,
                Inc.**
              **Consolidated**Net
                sales
            
            $
            -
            
            $
            129,601
            
            $
            564,238
            
            $
            (41,018
            )
            $
            652,821Operating
                expenses:Cost
                of goods sold
            
            
            254
            
            
            144,160
            
            
            457,578
            
            
            (41,018
            )
            
            560,974Selling,
                general and administrative
            
            
            6,399
            
            
            18,425
            
            
            41,223
            
            
            -
            
            
            66,047Depreciation
            
            
            70
            
            
            (4,717
            )
            
            48,881
            
            
            -
            
            
            44,234Amortization
            
            
            182
            
            
            -
            
            
            1,254
            
            
            -
            
            
            1,436Restructuring
                and impairment
            
            
            -
            
            
            10,034
            
            
            17,628
            
            
            -
            
            
            27,662Operating
                (loss) income
            
            
            (6,905
            )
            
            (38,301
            )
            
            (2,326
            )
            
            -
            
            
            (47,532
            )Other
                expense (income):Interest
                expense, net
            
            
            30,292
            
            
            (26,219
            )
            
            36,687
            
            
            -
            
            
            40,760Amortization
                of deferred financing costs
            
            
            1,613
            
            
            -
            
            
            -
            
            
            -
            
            
            1,613Other,
                net
            
            
            578,432
            
            
            110,634
            
            
            (675,956
            )
            
            -
            
            
            13,110Equity
                earnings (loss) in subsidiaries
            
            
            536,588
            
            
            646,472
            
            
            -
            
            
            (1,183,060
            )
            
            -Income
                (loss) before income taxes
            
            
            (80,654
            )
            
            523,756
            
            
            636,943
            
            
            (1,183,060
            )
            
            (103,015
            )Income
                tax provision (benefit)
            
            
            575
            
            
            888
            
            
            2,490
            
            
            -
            
            
            3,953(Loss)
                income from continuing operations
            
            
            (81,229
            )
            
            522,868
            
            
            634,453
            
            
            (1,183,060
            )
            
            (106,968
            )Income
                from discontinued operations, net
            
            
            -
            
            
            13,720
            
            
            12,019
            
            
            -
            
            
            25,739Gain
                on disposition of discontinued operations, net
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Net
                income (loss)
            
            $
            (81,229
            )
            $
            536,588
            
            $
            646,472
            
            $
            (1,183,060
            )
            $
            (81,229
            )






**Income
                Statement as of December 31, 2004**
            
            **Viasystems,
                Inc.**
            
            **Total**
              **Guarantors**
            
            **Total
                Non-**
              **Guarantors**
            
            **Eliminations**
            
            **Viasystems,
                Inc.**
              **Consolidated**Net
                sales
            
            $
            -
            
            $
            136,942
            
            $
            599,020
            
            $
            (105,208
            )
            $
            630,754Operating
                expenses:Cost
                of goods sold
            
            
            133
            
            
            143,549
            
            
            482,919
            
            
            (105,208
            )
            
            521,393Selling,
                general and administrative
            
            
            4,019
            
            
            22,642
            
            
            38,466
            
            
            -
            
            
            65,127Depreciation
            
            
            -
            
            
            (5,022
            )
            
            46,644
            
            
            -
            
            
            41,622Amortization
            
            
            124
            
            
            -
            
            
            1,446
            
            
            -
            
            
            1,570Restructuring
                and impairment charges
            
            
            1,374
            
            
            1,273
            
            
            (1,634
            )
            
            -
            
            
            1,013Operating
                (loss) income
            
            
            (5,650
            )
            
            (25,500
            )
            
            31,179
            
            
            -
            
            
            29Other
                expense (income):Interest
                expense, net
            
            
            30,225
            
            
            (31,014
            )
            
            38,607
            
            
            -
            
            
            37,818Amortization
                of deferred financing costs
            
            
            1,305
            
            
            -
            
            
            -
            
            
            -
            
            
            1,305Reorganization
                reversals
            
            
            (9,776
            )
            
            -
            
            
            -
            
            
            -
            
            
            (9,776
            )Other,
                net
            
            
            1,570
            
            
            79,816
            
            
            (82,854
            )
            
            -
            
            
            (1,468
            )Equity
                earnings (loss) in subsidiaries
            
            
            (10,494
            )
            
            45,749
            
            
            -
            
            
            (35,255
            )
            
            -Income
                (loss) before income taxes
            
            
            (39,468
            )
            
            (28,553
            )
            
            75,426
            
            
            (35,255
            )
            
            (27,850
            )Income
                tax provision (benefit)
            
            
            (45,216
            )
            
            982
            
            
            37,943
            
            
            -
            
            
            (6,291
            )Income
                (loss) from continuing operations
            
            
            5,748
            
            
            (29,535
            )
            
            37,483
            
            
            (35,255
            )
            
            (21,559
            )Income
                from discontinued operations, net
            
            
            -
            
            
            19,041
            
            
            8,266
            
            
            -
            
            
            27,307Gain
                on disposition of discontinued operations, net
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Net
                income (loss)
            
            $
            5,748
            
            $
            (10,494
            )
            $
            45,749
            
            $
            (35,255
            )
            $
            5,748







**Statement
                of Cash Flows as of December 31, 2006**
            
            **Viasystems,
                Inc.**
            
            **Total**
              **Guarantors**
            
            **Total
                Non-**
              **Guarantors**
            
            **Eliminations**
            
            **Viasystems,
                Inc.**
              **Consolidated**Net
                cash provided by (used in) operating activities
            
            $
            269
            
            $
            (45,486
            )
            $
            43,379
            
            
            -
            
            $$
            (1,838
            )Net
                cash provided by (used in) investing activities
            
            
            -
            
            
            308,660
            
            
            (34,842
            )
            
            -
            
            
            273,818Net
                cash provided by (used in) financing activities
            
            
            -
            
            
            (262,350
            )
            
            (8,196
            )
            
            -
            
            
            (270,546
            )Effect
                of exchange rate changes on cash and cash equivalents
            
            
            -
            
            
            -
            
            
            597
            
            
            -
            
            
            597Net
                change in cash and cash equivalents
            
            
            269
            
            
            824
            
            
            938
            
            
            -
            
            
            2,031Cash
                and cash equivalents, beginning of year
            
            
            432
            
            
            12,420
            
            
            23,071
            
            
            -
            
            
            35,923Cash
                and cash equivalents, end of year
            
            $
            701
            
            $
            13,244
            
            $
            24,009
            
            
            -
            
            $
            $37,954






58





**Statement
                of Cash Flows as of December 31, 2005**
            
            **Viasystems,
                Inc.**
            
            **Total**
              **Guarantors**
            
            **Total
                Non-**
              **Guarantors**
            
            **Eliminations**
            
            **Viasystems,
                Inc.**
              **Consolidated**Net
                cash provided by (used in) operating activities
            
            $
            3,372
            
            $
            (65,754
            )
            $
            74,028
            
            $
            -
            
            $
            11,646Net
                cash provided by (used in) investing activities
            
            
            -
            
            
            (1,787
            )
            
            (83,235
            )
            
            -
            
            
            (85,022
            )Net
                cash provided by (used in) financing activities
            
            
            (2,950
            )
            
            (295
            )
            
            -
            
            
            -
            
            
            (3,245
            )Effect
                of exchange rate changes on cash and cash equivalents
            
            
            -
            
            
            -
            
            
            (347
            )
            
            -
            
            
            (347
            )Net
                change in cash and cash equivalents
            
            
            422
            
            
            (67,836
            )
            
            (9,554
            )
            
            -
            
            
            (76,968
            )Cash
                and cash equivalents, beginning of year
            
            
            10
            
            
            80,256
            
            
            32,625
            
            
            -
            
            
            112,891Cash
                and cash equivalents, end of year
            
            $
            432
            
            $
            12,420
            
            $
            23,071
            
            $
            -
            
            $
            35,923







**Statement
                of Cash Flows as of December 31, 2004**
            
            **Viasystems,
                Inc.**
            
            **Total**
              **Guarantors**
            
            **Total
                Non-**
              **Guarantors**
            
            **Eliminations**
            
            **Viasystems,
                Inc.**
              **Consolidated**Net
                cash provided by (used in) operating activities
            
            $
            (983
            )
            $
            (13,366
            )
            $
            80,266
            
            $
            -
            
            $
            65,917Net
                cash provided by (used in) investing activities
            
            
            -
            
            
            (1,050
            )
            
            (70,883
            )
            
            -
            
            
            (71,933
            )Net
                cash provided by (used in) financing activities
            
            
            -
            
            
            56,436
            
            
            (32
            )
            
            -
            
            
            56,404Effect
                of exchange rate changes on cash and cash equivalents
            
            
            -
            
            
            -
            
            
            (173
            )
            
            -
            
            
            (173
            )Net
                change in cash and cash equivalents
            
            
            (983
            )
            
            42,020
            
            
            9,178
            
            
            -
            
            
            50,215Cash
                and cash equivalents, beginning of year
            
            
            993
            
            
            38,236
            
            
            23,447
            
            
            -
            
            
            62,676Cash
                and cash equivalents, end of year
            
            $
            10
            
            $
            80,256
            
            $
            32,625
            
            $
            -
            
            $
            112,891








**17.**
            **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 is required to be accounted for as a discontinued operation in accordance
        with SFAS No. 144. In connection with the disposal of the wire harness
        business, we have re-evaluated our operating segments based on the application
        of SFAS No. 131, and the Company identified two segments: (i) Printed
        Circuit Boards and (ii) Assembly.
 
 The
        Company’s results for the years ended December 31, 2005 and 2004 are
        reclassified to compare to the two continuing segments, and the results of
        the
        closed printed circuit board operations have been reflected as “other” segment
        results. Assets and liabilities of the Company’s corporate headquarters, along
        with those of its closed printed circuit board operations, have not been
        allocated and remain in other for purpose of segment disclosures. Operating
        expenses of the Company’s corporate headquarters are allocated to each segment
        based on sales. Inter-segment sales are eliminated in consolidation. The
        accounting policies of the segments are the same as those described in Note
        1.


The
      Printed Circuit Boards segment consists of our 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.




59





Total
      assets by segment are as follows:





**December
                31,****2006**
            
            **2005**Total
                assets:Printed
                Circuit Boards
            
            $
            494,735
            
            $
            442,500Assembly
            
            
            107,130
            
            
            121,648Other
            
            
            24,025
            
            
            30,936Continuing
                operations
            
            
            625,890
            
            
            595,084Discontinued
                operations
            
            
            -
            
            
            120,592Total
                assets
            
            $
            625,890
            
            $
            715,676





Net
      sales
      and operating income (loss) by segment are as follows:





**2006**
            
            **2005**
            
            **2004**Net
                sales to external customers:Printed
                Circuit Boards
            
            $
            489,108
            
            $
            409,144
            
            $
            332,997Assembly
            
            
            245,261
            
            
            205,071
            
            
            210,379Other
            
            
            623
            
            
            38,606
            
            
            87,378Total
                from continuing operations
            
            $
            734,992
            
            $
            652,821
            
            $
            630,754Intersegment
                sales:Printed
                Circuit Boards
            
            $
            18,083
            
            $
            10,641
            
            $
            11,697Assembly
            
            
            -
            
            
            -
            
            
            -Other
            
            
            -
            
            
            -
            
            
            -Total
                from continuing operations
            
            $
            18,083
            
            $
            10,641
            
            $
            11,697Operating
                income (loss):Printed
                Circuit Boards
            
            
            23,439
            
            
            1,401
            
            
            21,766Assembly
            
            
            6,876
            
            
            (185
            )
            
            4,380Other
            
            
            5,288
            
            
            (48,748
            )
            
            (26,117
            )Total
                operating income (loss)
            
            
            35,603
            
            
            (47,532
            )
            
            29Interest
                expense, net
            
            
            30,715
            
            
            40,760
            
            
            37,818Amortization
                of deferred financing costs
            
            
            1,678
            
            
            1,613
            
            
            1,305Loss
                on early extinguishment of debt
            
            
            1,498
            
            
            -
            
            
            -Reorganization
                expenses (reversals)
            
            
            -
            
            
            -
            
            
            (9,776
            )Other,
                net
            
            
            1,406
            
            
            13,110
            
            
            (1,468
            )Income
                (loss) before income taxes
            
            $
            306
            
            $
            (103,015
            )
            $
            (27,850
            )





Capital
      expenditures and depreciation expense by segment are as follows:





**2006**
            
            **2005**
            
            **2004**Capital
                expenditures:Printed
                Circuit Boards (a)
            
            $
            47,012
            
            $
            78,731
            
            $
            49,495Assembly
            
            
            5,567
            
            
            6,833
            
            
            3,053Other
                (a)
            
            
            322
            
            
            (7,656
            )
            
            11,224Continuing
                operations
            
            
            52,901
            
            
            77,908
            
            
            63,772Discontinued
                Operations
            
            
            3,039
            
            
            7,124
            
            
            8,234Total
                capital expenditures
            
            $
            55,940
            
            $
            85,032
            
            $
            72,006Depreciation
                expense:Printed
                Circuit Boards
            
            $
            39,219
            
            $
            35,035
            
            $
            27,632Assembly
            
            
            6,203
            
            
            5,104
            
            
            4,793Other
            
            
            -
            
            
            4,095
            
            
            9,197Total
                depreciation expense
            
            $
            45,422
            
            $
            44,234
            
            $
            41,622





(a)
            Capital
                expenditures in 2005 includes the transfer of $12,854 of property
                from the
                closed printed circuit board operations to the printed circuit boards
                segment.





60


Net
      sales
      by country of destination are as follows:





**Year
                Ended December 31,****2006**
            
            **2005**
            
            **2004**United
                States
            
            $
            272,695
            
            $
            204,273
            
            $
            191,772China
            
            
            114,358
            
            
            104,594
            
            
            120,253Germany
            
            
            63,265
            
            
            59,215
            
            
            84,779France
            
            
            42,733
            
            
            43,935
            
            
            22,321Hong
                Kong
            
            
            36,959
            
            
            22,628
            
            
            8,750Malaysia
            
            
            34,561
            
            
            14,921
            
            
            26,474Belgium
            
            
            31,043
            
            
            26,157
            
            
            16,009Thailand
            
            
            26,408
            
            
            20,291
            
            
            -Mexico
            
            
            17,280
            
            
            59,078
            
            
            58,363Hungary
            
            
            12,249
            
            
            6,963
            
            
            -Czech
            
            
            11,937
            
            
            6,479
            
            
            -South
                Korea
            
            
            9,970
            
            
            13,919
            
            
            -United
                Kingdom
            
            
            9,291
            
            
            7,507
            
            
            12,832Italy
            
            
            8,930
            
            
            8,405
            
            
            1,181Singapore
            
            
            8,203
            
            
            8,458
            
            
            9,390Spain
            
            
            5,295
            
            
            6,424
            
            
            3,932Canada
            
            
            5,063
            
            
            10,546
            
            
            21,846Other
            
            
            24,752
            
            
            29,028
            
            
            52,852Total
            
            $
            734,992
            
            $
            652,821
            
            $
            630,754





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





December
                31,2006
            
            2005China
            
            $
            249,917
            
            $
            228,052Mexico
            
            
            2,298
            
            
            1,912United
                States
            
            
            5,437
            
            
            4,413$
            257,652
            
            $
            234,377





**18.**
            **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 $440, $763 and $807 for the
      years ended December 31, 2006, 2005 and 2004, respectively.




**19.**
            **Research
                and Development**





Research,
      development and engineering expenditures for the creation and application of
      new
      products and processes were approximately $2,791, $2,332 and $2,050 for the
      years ended December 31, 2006, 2005 and 2004, respectively. Research and
      Development is included in the selling, general and administrative line item
      on
      the consolidated statements of operations.




**20.**
            **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,
   61
  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 expenses of $1,500, $1,500
        and
        $1,500 for the years ended December 31, 2006, 2005 and 2004, respectively.
        During 2005, the company made a cash payment of $3,625 to HMTF related to
        these
        expenses. At December 31, 2006, $1,500 is included in accrued and other
        liabilities for amounts due under this agreement. HMTF and its affiliates
        had a
        commitment of $5,000 of debt under the 2003 Credit Agreement as of
        December 31, 2005.
  ***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. In 2003, Group granted 55,000
        stock options with an exercise price of $12.63 per share, 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. In addition,
        in 2004, Mr. Steffen received 50,000 options with an exercise price of $12.63
        per share, which vest over a period of 3 years for his service as Chairman
        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 (together with an additional
        $1,847
        cash from other holding company activities of group), were contributed to
        the
        Company. 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.


***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.




***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 had a commitment in the amount of $5,000
      of debt under the 2003 Credit Agreement as of December 31,
      2005.




The
      Company has a receivable of $804 as of December 31, 2006 and $3,707 as of
      December 31, 2005 from Group relative 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**





As
      required by Rule 13a-15 under the Securities Exchange Act of 1934, management,
      under the supervision and with the participation of our Chief Executive Officer
      and Chief Financial Officer, carried out an evaluation of the effectiveness
      of
      the design and operation of our disclosure controls and procedures. There are
      inherent limitations to the effectiveness of any system of disclosure controls
      and procedures, including the possibility of human error and the circumvention
      or overriding of the controls and procedures. Accordingly, even effective
      disclosure controls and procedures can only provide reasonable assurance of
      achieving their control objectives. Based upon such evaluation,




62




management,
      including our Chief Executive Officer and
      our Chief Financial Officer, concluded that as of December 31, 2006, our
      disclosure controls and procedures were effective to provide reasonable
      assurance that information required to be disclosed by us in the reports that
      we
      file or submit under the Securities Exchange Act of 1934, as amended, is (a)
      recorded, processed, summarized and reported, within the time periods specified
      in the Securities and Exchange Commission’s rules and forms, and (b) is
      accumulated and communicated to our management, including our principal
      executive officer and principal financial officer, as appropriate to allow
      timely decisions regarding required disclosure.




There
      has
      been no change in our internal control over financial reporting during the
      quarter ended December 31, 2006 that has materially affected, or is
      reasonably likely to materially affect, our internal control over financial
      reporting.




**Item
                9B.**
            **Other
                Information**





None.





**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 and Group, 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 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 Item 13 "Certain Relationships and Related Transactions and
      Director Independence - Stockholders’ Agreement."




**Name**
            **Age**
            **Position***Non-Employee**Directors*Christopher
                J. Steffen (1) (2)*
            65
            ChairmanJack
                D. Furst
            48
            DirectorEdward
                Herring (1)
            36
            DirectorRobert
                F. Cummings Jr. (2)
            57
            DirectorDiane
                H. Gulyas (2)
            50
            DirectorRobert
                A. Hamwee (1)
            36
            DirectorRichard
                A. McGinn (1) (2)
            60
            DirectorRichard
                W. Vieser (2)
            79
            Director*Executive
                Officers*David
                M. Sindelar
            49
            Chief
                Executive Officer and DirectorTimothy
                L. Conlon
            55
            President,
                Chief Operating Officer and DirectorGerald
                G. Sax
            46
            Senior
                Vice President and Chief Financial OfficerJoseph
                S. Catanzaro
            54
            Senior
                Vice President and Chief Compliance OfficerStephen
                Wong
            55
            Vice
                President of Operations-Asia
                Pacific





(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.





63




***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 Partner of HMTF since 1989, the year in which it was formed. Mr. Furst has
      approximately 20 years experience in leveraged acquisitions and private
      investments. Mr. Furst is involved in all aspects of HMTF’s business and has
      been actively involved in originating, structuring and monitoring its
      investments. Prior to joining HMTF, Mr. Furst served as a Vice President and
      subsequently 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, Mr. Furst
      was
      a Financial Consultant at PricewaterhouseCoopers. Mr. Furst serves on the Boards
      of Directors of Home Interiors & Gifts, Inc. and Activant Solutions
      Inc.




***Edward
      Herring*** was
      elected as a director in August of 2006. Mr. Herring is a Principal of HMTF.
      Mr.
      Herring joined HMTF in 1998 and has been involved in a variety of investment
      transactions spanning multiple industry sectors. Mr. Herring is also a director
      of Regency Gas Services LLC, BlackBrush Oil & Gas, Inc. and Swift &
Company. Prior to joining HMTF, Mr. Herring was an investment banker with
      Goldman, Sachs & Co.




***Robert
      F. Cummings, Jr*** *.* **** has
      been
      a director since January 2003. Mr. Cummings joined GSC in 2002 as Senior
      Managing Director and is Chairman of the GSC Risk Committee and a former member
      of the GSC Advisory Board. 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. Mr. Cummings is a director of ATSI Holdings, GSC Capital Corp.,
      Precision Partners, Inc. and RR Donnelley & Sons Company.




***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.




***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 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 of APW Ltd. and ATSI Holdings. Mr. Hamwee also currently
      serves as a director of the following companies: Burke Industries, Inc., Dukes
      Place Holdings, L.P., International Wire Group, Inc., Precision Partners, Inc.,
      Seaton Insurance Company and Stonewall Insurance Company.




***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.




64




***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. 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.




***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. 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.




***Gerald
      G. Sax*** has been
      Senior Vice President and Chief Financial Officer since August 2005. Mr. Sax
      served as Senior Vice President — Supply
      Chain from February 2003 to August 2005. 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. 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.




***Joseph
      S. Catanzaro*** has been
      the Senior Vice President and Chief Compliance Officer since August 2005. Prior
      to August 2005 Mr. Catanzaro was 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. Prior to joining us, Mr. Catanzaro was Vice
      President of Finance of Berg Electronics Corp. from April 1993 to
      October 1998.




***Stephen
      Wong*** has
      been
      the Vice President/General Manager, Operations of Viasystems Asia Pacific
      Company Limited, a subsidiary of Viasystems Group, Inc., since 2001. From
      1999-2001, Mr. Wong was the Vice President, Operations of Viasystems Asia
      Pacific Company Limited. From 1997 to 1999, Mr. Wong served as the Vice
      President, Operations of Kalex Circuit Board Limited. From 1992 to 1997, Mr.
      Wong was the Vice President of Manufacturing of AST Research (Far East) Limited,
      a subsidiary of AST Corporation, USA).





**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 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,
      2005.




65




**Item
                11.**
            **Executive
                Compensation**





**Compensation
      Discussion and Analysis**





The
      Compensation Committee of our Board of Directors administers our executive
      compensation program. The role of the Compensation Committee is to oversee
      our
      compensation and benefit plans and policies, administer our stock plans 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 senior executives and other employees to maximize
      stakeholder value, which in turn effects 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.





To
      achieve these objectives, 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 such as achieving year-over-year growth in the business as
      quantitatively measured by calculating the Company’s earnings before interest,
      taxes, depreciation and amortization (EBITDA), gross margins on sales, aggregate
      capital expenditures and other quantifiable goals (collectively, the
“Performance Metrics”). 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 our relative
      performance and our own strategic goals. In order to benchmark the compensation
      paid to our senior executives, in 2006 the Compensation Committee asked Wachovia
      Employer Solutions Group to conduct a survey of similarly situated companies
      and
      provide an analysis of our pier group’s executive compensation. After having
      reviewed the Wachovia survey, the Compensation Committee determined that while
      our cash based compensation (salary and incentive compensation) is slightly
      above the median range, our long term incentive awards granted to our senior
      executives are below the median range. The Compensation Committee is considering
      adjustments in the compensation structure in the future to increase our long
      term incentive awards granted to our senior executives over time.





The
      total
      compensation of our executive officers may be comprised of (i) base salaries,
      (ii) cash based incentive compensation under our annual incentive compensation
      plan, (iii) discretionary cash bonus awards, and (iv) and long-term equity-based
      incentives in the form of stock options of Viasystems Group, Inc (“Group”). In
      determining specific components of compensation, the Compensation Committee
      considers individual performance, the Company’s overall performance, the level
      of responsibility of the executive, the skills and experience of the executive
      and other performance based measures. The Compensation Committee reviews and
      approves all elements of compensation for each of Messrs. Sindelar, Conlon,
      Sax,
      Catanzaro and Wong (collectively, the “Named Executive Officers”) taking into
      consideration recommendations initiated by our chief executive officer as well
      as information regarding compensation levels for senior executives at similarly
      situated companies. Our chief executive officer also makes recommendations
      to
      the Compensation Committee regarding the compensation of the other Named
      Executive Officers, and gathers information, including industry resources,
      benchmark data and other peer compensation information, in responses to requests
      from the Compensation Committee. Notwithstanding this input and these
      recommendations, the Compensation Committee 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.





The
      Compensation Committee designs the annual incentive compensation plan taking
      into account our strategic goals and certain Performance Metrics. In addition,
      our Compensation Committee annually performs a review of all of our compensation
      policies, including policies and strategy relating to executive compensation,
      as
      well as the appropriate mix of base salary, cash-based incentive compensation
      and long-term incentive compensation. The Compensation Committee also reviews
      and approves all annual incentive compensation, stock option awards and
      discretionary cash bonus awards.




66




Our
      chief
      executive officer, chief operating officer and president, chief financial
      officer, and vice president of human resources set salaries and incentive
      compensation opportunities for employees below the Named Executive Officer
      level. Our chief executive officer submits recommendations with respect to
      option awards for our employees at all levels to the Compensation Committee.
      Our
      Named Executive Officers also make recommendations with respect to salary,
      incentive compensation and discretionary cash bonus awards for our vice
      presidents and other members of our management.





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 incentive to the chief executive officer to lead the business in a
      direction that will maximize the value of the enterprise. The Compensation
      Committee has determined that a significant portion of our chief executive
      officer’s compensation should be provided in the form of a non-equity incentive
      opportunity conditioned upon the achievement of (i) certain defined Performance
      Metrics and (ii) certain defined management incentive compensation objectives.





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 non-cash compensation,
      or
      among different forms of compensation. This is due to the Compensation
      Committee’s desire to have the flexibility to tailor each executive’s
      compensation and to attract and retain top flight executives.





**Elements
      of Compensation**





Executive
      compensation consists of the following elements:





***Base
      Salary.*** ** Base
      salaries for our executives are generally established based on the scope of
      their responsibilities, level of experience and individual performance, taking
      into account both external competitiveness and internal equity considerations.
      The goal for the base salary component is to compensate employees at a level
      that approximates the median salaries of individuals in comparable positions
      at
      similarly situated companies. 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 an annual incentive compensation
      plan to promote the achievement of our financial performance objectives that
      is
      based on the Performance Metrics and is designed to motivate our executives
      toward the achievement of individual and business unit performance objectives.





In
      2006,
      the Compensation Committee used the Company’s total aggregate adjusted EBITDA to
      measure our performance when determining management’s incentive compensation
      because adjusted EBITDA facilitates performance comparisons from period to
      period and company to company by backing out potential differences caused by
      variations in capital structures (affecting relative interest expense, including
      the impact of write-offs of deferred financing costs when companies refinance
      their indebtedness), the book amortization of intangibles (affecting relative
      amortization expense), the age and book value of facilities and equipment
      (affecting relative depreciation expense) and certain non-cash or non-operating
      changes in the Company’s performance. Target incentive compensation
      opportunities for each participant in the annual incentive compensation plan
      are
      established as a percentage of base salary, using survey data for individuals
      in
      comparable positions and markets as well as internal comparisons. Incentive
      compensation amounts are intended to provide total cash compensation at the
      median for individuals in comparable positions and markets when target
      performance is achieved. For our Named Executive Officers, the Compensation
      Committee sets collective goals or management bonus objectives that will drive
      the Company’s business on a strategic path while also driving the financial
      performance of the Company. The Compensation Committee sets management bonus
      objectives each year. In order to achieve 100% of their incentive compensation
      opportunity, our Named Executive Officers, as a group, must meet such management
      bonus objectives. In 2006, 15% of each Named Executive Officer’s cash-based
      incentive compensation opportunity was awarded based on reaching the established
      management bonus objectives and 85% was awarded based on the Company’s adjusted
      EBITDA performance.





67




Each
      employee that participates in the annual incentive compensation plan is assigned
      a cash-based incentive compensation opportunity that is a percentage of such
      employee’s base salary for the subject year. At the beginning of 2006, the
      Compensation Committee established an adjusted EBITDA target for the Company
      of
      $78,000,000, and set the management bonus objectives for the Named Executive
      Officers. The Compensation Committee then created a formula for a graduated
      scale of the projected incentive payments that would be made pursuant to the
      plan based on the Company’s 2006 adjusted EBITDA performance. The graduated
      scale was a mathematical equation that calculated the incentive compensation
      that was to be paid out as a function of adjusted EBITDA. Pursuant to the plan
      established by the Compensation Committee for 2006, each participant was to
      receive 50% of their incentive compensation opportunity if the Company achieved
      90% of the target adjusted EBITDA, 100% of their incentive compensation
      opportunity if the Company achieved adjusted EBITDA of 100% of the target
      adjusted EBITDA, and up to 200% of each individual’s incentive compensation
      opportunity if the Company achieved 120% of the target adjusted EBITDA. Each
      individual’s incentive compensation is capped at 200% of such individual’s
      incentive compensation opportunity. The adjusted EBITDA targets was set by
      the
      Compensation Committee at a level in line with our internal budget and require
      growth well in excess of average growth in our industry. The Compensation
      Committee is considering alternatives to our 2007 annual incentive compensation
      plan to include Performance Metrics other than adjusted EBITDA that must be
      achieved by the Company for employees to achieve potential incentive
      compensation opportunities.





In
      addition to the incentive awards that may be granted pursuant to our performance
      as measured against the Performance Metrics set by the Compensation Committee,
      pursuant to the terms of our annual incentive compensation plan, the
      Compensation Committee has the authority to grant discretionary based awards
      to
      one or more employees for exceptional achievement during the year.




***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 an employee’s commencement of employment and, occasionally, following
      a significant change in job responsibilities or to meet other special 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 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 full 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.





We
      expect
      to continue to use 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 annual incentive compensation plan
                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.





68




**Other
      Benefits.**





***General
      Benefits.*** Our
      executives are eligible to participate in all of our employee benefit plans,
      such as medical, dental, vision, long and short-term disability and life
      insurance, in each case on the same basis as our other employees. We also offer
      to senior management, including our Named Executive Officers, additional
      benefits, such as paid transportation and parking costs. Each of the employment
      contracts with Messrs. Sindelar, Conlon, Sax and Catanzaro 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.




***401(k)
      Defined Contribution Plan*** .
      All
      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. We make matching contributions to the 401(k)
      Plan
      equal to 50% of each participating employee’s contribution, up to $6,600. In
      2006, all of our Named Executives Officers participated in the
      Plan.





69


**2006
      Executive Base Salary and Incentive Compensation
      Determinations**





***David
      M. Sindelar***


Mr.
      Sindelar’s employment agreement with the Company 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
      2006, the Compensation Committee considered the Company’s financial performance
      in Fiscal 2004 and 2005, the total compensation package and value of incentive
      awards to chief executive officer’s at similarly situated companies, and Mr.
      Sindelar’s performance during his tenure with the Company.





In
      2006
      Mr. Sindelar received a base salary of $954,000 (which included a car allowance)
      and received an annual incentive compensation plan award of $1,058,000. Mr.
      Sindelar’s salary did not increase in 2006. Under our annual incentive
      compensation plan, Mr. Sindelar’s cash based incentive award opportunity was set
      at 100% of his base salary if the Company reached 100% of its targeted adjusted
      EBITDA and the Named Executive Officers meet all of the management bonus
      objectives set by the Compensation Committee. Because the Company achieved
      adjusted EBITDA above the target level set by the Compensation Committee for
      2006, and based on the determination by the Compensation Committee that Mr.
      Sindelar lead the Named Executive Officers and the Company to accomplish all
      of
      the management bonus objectives set by the Compensation Committee for 2006,
      Mr.
      Sindelar received more than 100% of his salary as a cash based incentive award
      for 2006. The Compensation Committee had previously granted Mr. Sindelar 420,000
      stock options and therefore determined that no additional stock options should
      be granted to Mr. Sindelar in 2006.





***Timothy
      L. Conlon***


Mr.
      Conlon’s employment agreement with the Company provides that his base salary is
      not to be less than $550,000. 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 2006.
      Under our annual incentive compensation plan, Mr. Conlon’s cash-based incentive
      award opportunity was set at 100% of his base salary if the Company reached
      100%
      of its targeted adjusted EBITDA and the Named Executive Officers meet all of
      the
      management bonus objectives set by the Compensation Committee. In 2006, Mr.
      Conlon received a salary of $573,000 (which included a car allowance) and earned
      incentive compensation of $632,500. Mr. Conlon’s base salary did not increase in
      2006. Mr. Conlon’s incentive compensation was granted due to the Company’s 2006
      financial performance above target adjusted EBITDA and the determination by
      the
      Compensation Committee that Mr. Conlon assisted in leading the Company’s senior
      executive team to achieve all of the management bonus objectives set at the
      beginning of 2006. The Compensation Committee had previously granted Mr. Conlon
      400,000 stock options and therefore determined that no additional stock options
      should be granted to Mr. Conlon in 2006.




***Gerald
      G. Sax***


Mr.
      Sax’s
      employment agreement with the Company provides that his base salary in not
      to be
      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. Under our annual incentive compensation plan,
      Mr. Sax’s cash based incentive award opportunity was set at 65% of his base
      salary if the Company reached 100% of its targeted adjusted EBITDA and the
      Named
      Executive Officers meet all of the management bonus objectives set by the
      Compensation Committee. In 2006, Mr. Sax received a salary of $387,000 (which
      included a car allowance and gross-ups for medical claims). Mr. Sax earned
      incentive compensation of $289,100 because the Company exceeded its target
      adjusted EBITDA and because the Company’s Named Executive Officers helped lead
      the Company to achieve all of the management bonus objectives set at the
      beginning of 2006. Mr. Sax’s salary did not increase in 2006. The Compensation
      Committee had previously granted Mr. Sax 200,000 stock options and therefore
      determined that no additional stock options should be granted to Mr. Sax in
      2006.




***Joseph
      S. Catanzaro***


Mr.
      Catanzaro’s employment agreement with the Company provides that his base salary
      is not to be less than $257,000. The Compensation Committee reviewed the
      compensation data for chief compliance officers for similarly situated companies
      to determine Mr. Catanzaro’s compensation package for 2006. Under our
      annual incentive compensation plan, Mr. Catanzaro’s cash based incentive award
      opportunity was set at 65% of his base salary if the Company reached 100% of
      its
      targeted adjusted EBITDA and the Named Executive Officers meet all of the
      management bonus objectives set by the Compensation Committee. In 2006, Mr.
      Catanzaro received a salary of $285,000(which included a car allowance and
      gross-ups for medical claims). Mr. Catanzaro earned incentive compensation
      of
      $201,805 for 2006 because the Company’s 2006 financial performance was above
      target adjusted EBITDA and the Company’s Named Executive Officers helped lead
      the Company to achieve all of the management




70




bonus
      objectives set at the beginning of 2006. The
      Compensation Committee had previously granted Mr. Catanzaro 160,000 stock
      options and therefore determined that no additional stock options should be
      granted to Mr. Catanzaro in 2006. Mr. Catanzaro’s base salary did not increase
      in 2006.




***Steven
      Wong***


The
      Compensation Committee reviewed the compensation data for chief operating
      officers in and around the Asia Pacific region to determine Mr. Wong’s
      compensation package for 2006. Under our annual incentive compensation
      plan, Mr. Wong’s cash based incentive award opportunity was set at 35% of his
      base salary if the Company reached 100% of its targeted adjusted EBITDA and
      the
      Named Executive Officers meet all of the management bonus objectives set by
      the
      Compensation Committee. In 2006 Mr. Wong received a base salary of $408,162
      and
      received incentive compensation of $171,943. Mr. Wong’s base salary did not
      increase in 2006. Mr. Wong’s incentive compensation was granted due to the
      Company’s 2006 financial performance above target adjusted EBITDA and the
      determination that the Company’s Named Executive Officers helped lead the
      Company to achieve all of the management bonus objectives set at the beginning
      of 2006. The Compensation Committee has previously granted Mr. Wong 30,000
      stock
      options and therefore determined that no additional stock options should be
      granted to Mr. Wong in 2006.


71





**Summary
      Compensation**





The
      following table shows information regarding the compensation earned during
      the
      fiscal year ended December 31, 2006 by our Chief Executive Officer, Chief
      Financial Officer and our five other most highly compensated executive officers
      for such fiscal year.




SUMMARY
                  COMPENSATION TABLEName
                  of Participant, Position
              Fiscal
                  Year
              Salary
              Bonus
              Stock
                  Awards
              Option
                Awards(7)
              Non-Equity
                  Incentive Plan Compensation(8)
              Change
                  in Pension Value and Non-Qualified Deferred Compensation
                  Earnings
              All
                  other Compensation
              TotalDavid
                  M. Sindelar, Chief Executive Officer
              2006
              $953,994(3)
              -
              -
              $167,875
              $1,058,000
              $6,600
              $46,364(9)(11)
              $2,232,833Timothy
                  L. Conlon, President and Chief Operating Officer
              2006
              $572,663(3)
              -
              -
              $164,221
              $632,500
              $6,600
              $33,480(9)(10)(11)
              $1,410,500Gerald
                  G. Sax, Chief Financial Officer
              2006
              $379,810(3)(4)
              $20,000(5)
              -
              $169,325
              $269,100
              $6,600
              $15,534(9)
              $860,369Stephen
                  Wong, Vice President of Operations Asia Pacific
              2006
              $408,162
              -
              -
              $4,908
              $171,473
              -
              $34,022(12)(13)
              $618,565Joseph
                  S. Catanzaro, Chief Compliance Officer
              2006
              $285,094(3)(4)
              -
              -
              $42,249
              $201,825
              $5,754
              -
              $534,922David
                  J. Webster(1)
              2006
              $162,333(3)
              $995,987(6)
              -
              $106,895
              -
              $6,600
              $18,418(9)
              $1,290,233Steven
                  Tang (2)
              2006
              $433,822
              -
              -
              $131,348
              $216,256
              -
              $118,147(9)(14)(15)
              $899,573(1)Mr.
                  Webster’s employment with the Company terminated on May 1,
                  2006.
                (2)Mr.
                  Tang’s employment with the Company terminated in January 20,
                  2007.
                (3)Includes
                  a car allowance.
                (4)Includes
                  gross up for medical claims.
                (5)Bonus
                  paid to Mr. Sax in connection with the sale of our wire harness
                  business.
                (6)One
                  time payment pursuant to letter agreement dated June 15,
                  2005.
                (7)Amount
                  reflects the compensation cost for the year ended December 31,
                  2006 of the
                  Named Executive Officer’s options, calculated in accordance
                  with
                SFAS 123(R) and using a Black-Scholes valuation method.
                (8)Includes
                  bonus paid in 2007 for incentive compensation earned in 2006 under
                  the
                  Company’s annual incentive compensation plan.
                (9)Includes
                  club dues, financial consulting services, medical and dental
                  claims/provisions, supplemental life insurance.
                (10)Includes
                  tickets to sporting events and spouse tag along travel.
                (11)Includes
                  designation of charitable donations by the Company.
                (12)Includes
                  life insurance premiums.
                (13)Includes
                  retirement matching under Hong Kong retirement plan of
                  $30,612.
                (14)Includes
                  retirement matching under the Hong Kong retirement plan of
                  $32,537.
                (15)Includes
                  expenses for a car, driver and parking in Hong Kong of
                  $70,965.






72




**Grants
      of Plan-Based Awards**





The
      following table sets forth certain information with respect to grants of
      plan-based awards for the year ended December 31, 2006 to our chief executive
      officer, chief financial officer and our other named executive officers for
      such fiscal year.




Grants
                  of Plan-Based AwardsEstimated
                  Future Payouts Under Non-Equity Incentive Plan Awards
              Estimated
                  Future Payouts Under Equity Incentive Plan Awards
              Grant
                  Date
              All
                  other stock awards: Number of shares of stock or units (#)
              All
                  other option awards: Number of Securities Underlying Options
              Exercise
                  or Base Price of Option awards ($/sh)
              Grant
                  Date Fair Value of Stock and Option Awards ($)Name
              Grant
                  Date
              Threshold
                  ($)(1)
              Target
                  ($)(2)
              Maximum
                  ($)(3)
              Threshold
                  ($)
              Target
                  ($)
              Maximum
                  ($)David
                  M. Sindelar
              -
              460,000
              920,000
              1,840,000
              -
              -
              -
              -
              -
              -
              -
              -Timothy
                  L. Conlon
              -
              275,000
              550,000
              1,100,000
              -
              -
              -
              -
              -
              -
              -
              -Gerald
                  G. Sax
              -
              117,000
              234,000
              486,000
              -
              -
              -
              -
              -
              -
              -
              -Stephen
                  Wong
              -
              71,500
              143,000
              286,000
              -
              -
              -
              -
              -
              -
              -
              -Joseph
                  Catanzaro
              -
              87,750
              175,500
              351,000
              -
              -
              -
              -
              -
              -
              -
              -(1)Pursuant
                  to our 2006 incentive compensation plan if the Company achieve
                  90% of its
                  target goal of adjusted EBITDA.
                (2)Pursuant
                  to our 2006 incentive compensation plan if the Company achieve
                  100% of its
                  target goal of adjusted EBITDA.
                (3)Pursuant
                  to our 2006 incentive compensation plan if the Company achieve
                  120% of its
                  target goal of adjusted
                  EBITDA.








73


**Discussion
      of Summary Compensation and Plan-Based Awards Tables**





***David
      M. Sindelar***


Mr.
      Sindelar entered into an amended and restated executive employment agreement
      with Group and certain of its subsidiaries as of October 13, 2003, as amended.
      Pursuant to his employment agreement, Mr. Sindelar will serve as Chief Executive
      Officer of Group through January 31, 2008, 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, subject to upward
      adjustment, and additional compensation that may be used by Mr. Sindelar to
      own
      and maintain an automobile, as well as those other benefits customarily accorded
      the executives of Group as long as the executive employment agreement is in
      force. In addition, Mr. Sindelar is eligible to receive a bonus, in an amount
      determined in accordance with our annual incentive compensation plan.




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***


Mr.
      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, 2008, 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, and additional compensation that may be used by Mr. Conlon to own
      and maintain an automobile, as well as those other benefits customarily accorded
      the executives of Group as long as the executive employment agreement is in
      force. In addition, Mr. Conlon is eligible to receive a bonus, in an amount
      determined in accordance with our annual incentive compensation plan.




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.




As
      of
      March 1, 2007, the Company assigned Mr. Conlon to an assignment to live and
      work
      in the Company’s Hong Kong office. The Company has agreed to pay for Mr.
      Conlon’s expatriate expenses including tax gross ups and equalization, expenses
      for living quarters and other related expenses.




***Gerald
      G. Sax***


Mr.
      Sax
      entered into an amended and restated executive employment agreement with Group
      and certain of its subsidiaries as of August 15, 2005. Pursuant to his
      employment agreement Mr. Sax will serve as Senior Vice President and Chief
      Financial Officer of Group until his termination pursuant to the terms of his
      employment agreement. Mr. Sax is required to devote the amount of time
      reasonably necessary to faithfully and adequately supervise the overall
      financial management of Group.




74




The
      compensation provided to Mr. Sax under his executive employment agreement
      includes an annual base salary of not less that $360,000, and additional
      compensation that may be used by Mr. Sax to own and maintain an automobile,
      as
      well as those other benefits customarily accorded the executives of Group as
      long as the executive employment agreement is in force. In addition, Mr. Sax
      is
      eligible to receive a bonus, in an amount determined in accordance with our
      annual incentive compensation plan.




Mr.
      Sax’s
      employment agreement also provides that if Mr. Sax’s employment is terminated
      without cause, Mr. Sax will continue to receive his then current salary, which
      shall not be less than $360,000 for a period of eighteen months following such
      termination and a payment of 65% of his annual salary in lieu of annual
      incentive compensation. The executive employment agreement terminates upon
      Mr.
      Sax’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***


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 served as Chief Administrative Officer
      of
      Group through April 30, 2006. As of April 30, 2006, Mr. Webster resigned his
      position with Group. Pursuant to the terms of his separation from the Company,
      Mr. Webster received a transaction bonus of $995,987 upon consummation of the
      sale of our wire harness business, and Mr. Webster and Group agreed to release
      each other from all rights and obligations under his employment agreement,
      except that Group and its subsidiaries remain bound to provide medical benefits
      to Mr. Webster and his spouse for his and his spouse’s lifetime. Currently, Mr.
      Webster and his spouse enjoy medical benefits for the remainder of his lifetime
      and his spouse’s lifetime from FCI Corporation, and therefore Mr. Webster does
      not utilize the medical benefits available to him from the Company. Mr. Webster
      also retained the Group stock options granted to him. The compensation provided
      to Mr. Webster under his executive employment agreement during 2006 consisted
      of
      four months of his annual base salary and other benefits of approximately
      $162,000.




***Joseph
      S. Catanzaro***


Mr.
      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 Chief Compliance Officer
      of
      Group until his termination pursuant to the terms of his employment agreement.
      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 that $257,000, and additional
      compensation that may be used by Mr. Catanzaro to own and maintain an
      automobile, as well as those other benefits customarily accorded the executives
      of Group as long as the executive employment agreement is in force. In addition,
      Mr. Catanazaro is eligible to receive a bonus, in an amount determined in
      accordance with our annual incentive compensation plan. Mr. Catanzaro’s
      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.


75


***Steven
      Tang***


In
      2006
      Mr. Tang received a salary of $433,822 and received incentive compensation
      of
      $216,256. Mr. Tang’s 2006 incentive compensation was granted due to the
      Company’s 2006 financial performance above target adjusted EBITDA and the
      determination that the Company’s Named Executive Officers achieved all of the
      management bonus objectives set at the beginning of 2006. In addition, pursuant
      to Hong Kong law, the Company contributed $32,537 as matching pension savings
      for Mr. Tang and the Company incurred expenses of $70,965 for the services
      of a
      car and driver, parking in Hong Kong for Mr. Tang.




On
      January 20, 2007 Mr. Tang resigned from his position as President, Asia Pacific.
      The Company and Mr. Tang have agreed that each have satisfied all obligations
      owed to one another and separated on amicable terms.




***Steven
      Wong***


Mr.
      Wong
      has an employment arrangement with the Company that provides for 3 months pay
      of
      his current salary in the event of termination of his employment for any reason.
      In addition, Mr. Wong is eligible to receive incentive compensation, in an
      amount determined in accordance with our annual incentive compensation plan.





76


**Outstanding
      Equity Awards**




The
      following table sets forth certain information with respect to outstanding
      equity awards at December 31, 2006 with respect to our chief executive officer,
      chief financial officer and our five other most highly compensated executive
      officers for such fiscal year.




**Outstanding
                Equity Awards at Fiscal Year-End Table****Option
                Awards****Name**
            **Number
                of Securities Underlying Unexercised Options (#) Exercisable
                (1)**
            **Number
                of Securities Underlying Unexercised Options (#) Unexercisable
                (1)**
            **Equity
                Incentive Plan Awards: Number of Securities Underlying Unexercised
                Unearned Options (#)**
            **Option
                Exercise Price ($)**
            **Option
                Expiration Date**David
                Sindelar
            350,000
            -
            -
            12.63
            1/31/201346,666
            23,334
            
            12.63
            8/17/2014Timothy
                Conlon
            330,000
            -
            -
            12.63
            1/31/201346,666
            23,334
            
            12.63
            8/17/2014Gerald
                Sax
            60,000
            -
            -
            12.63
            1/31/201310,000
            5,000
            
            12.63
            8/17/201441,666
            83,334
            
            12.63
            8/8/2015Joseph
                S. Catanzaro
            150,000
            -
            -
            12.63
            1/31/20136,666
            3,334
            
            12.63
            8/17/2014David
                J. Webster(2)
            260,000
            -
            -
            12.63
            1/31/201326,666
            13,334
            -
            12.63
            8/17/2014Stephen
                Wong
            30,000
            -
            -
            12.63
            1/31/2013Steven
                Tang(3)
            150,000
            -
            -
            12.63
            1/31/200746,666
            23,334
            -
            12.63
            8/17/2007(1)All
                options have a vesting schedule of (i) 33% on the date of grant;
                (ii) 33%
                2 years following the date of grant; and (iii) 33% 3 years after
                the date
                of grant.
              
              (2)Mr.
                Webster’s employment terminated on May 1, 2006, but Mr. Webster retained
                his options after the termination of his employment.
              
              (3)Mr.
                Tang resigned and forfeited all of his rights under his options in
                January
                2007.







77




**Options
      Exercised and Stock Vested**





None
      of
      our Named Executive Officers or former executive officers exercised any stock
      options or similar awards during the fiscal year 2006. The following table
      sets
      forth certain information with respect to stock option vesting during the fiscal
      year ended December 31, 2006 with respect to our chief executive officer, chief
      financial officer and our five other most highly compensated executive officers
      for such fiscal year.





**Option
                Exercises and Stock Vested****Name**
            **Number
                of Shares**
              **Acquired
                in Exercise**
              **of
                Options**
            **Number
                of Options**
              **Vested
                during 2006**
            **Total
                Number of**
              **Options
                Vested**David
                M. Sindelar
            -
            139,999
            396,666Timothy
                L. Conlon
            -
            133,333
            376,666Gerald
                G. Sax
            -
            25,000
            111,666Steven
                Tang(1)
            -
            -
            -David
                J. Webster
            -
            99,999
            286,666Joseph
                S. Catanzaro
            -
            53,333
            156,666Stephen
                Wong
            -
            10,000
            30,000(1)
                Mr. Tang resigned in January of 2007 and forfeited all of his
                options.








**Pension
      Benefits**





None
      of
      our Named Executive Officers or former executive officers are covered by a
      pension plan or other similar benefit plan that provides for payments or other
      benefits.





**Nonqualified
      Deferred Compensation**





We
      do not
      have any non-qualified deferred compensation plans.





**Potential
      Payments Upon Termination or Change in Control**





Our
      Company has entered into employment agreements with Messrs. Sindelar, Conlon,
      Sax and Catanzaro. Specific provisions regarding payments on termination are
      provided below. Dollar amounts are estimates based on salary as of December
      31,
      2006 and benefits paid to the Named Executive Officer in fiscal year
      2006.





**David
      M. Sindelar**





*Voluntary
      Termination by the Executive or Termination for Cause:*





Mr.
      Sindelar and his spouse are entitled to continue to receive life and medical
      benefits upon voluntary termination or termination for cause. All other benefits
      and remuneration cease upon the voluntary termination by Mr. Sindelar or
      termination for cause.





*Termination
      by the Company without Cause or upon death or disability:*





If
      Mr.
      Sindelar is terminated by the Company without cause (as defined in Mr.
      Sindelar’s Employment Agreement) or upon Mr. Sindelar’s death or disability, Mr.
      Sindelar will continue to receive the following benefits for a period of
      eighteen months: (i) his then current salary, which shall not be less than
      $920,000, (ii) his annual bonus amount, (iii) fringe benefits customarily
      afforded to executives of the Company; (iv) reimbursement of the expense to
      own
      and maintain an automobile; and (v) lifetime medical benefits for himself and
      his spouse.





*Termination
      Following a Change in Control* :





There
      is
      no provision in Mr. Sindelar’s contract that specifically allows for any payment
      to Mr. Sindelar in the event of a change in control.




78




**Timothy
      Conlon**





*Voluntary
      Termination by the Executive or Termination for Cause:*





Mr.
      Conlon and his spouse are entitled to continue to receive life and medical
      benefits upon voluntary termination or termination for cause. All other benefits
      and remuneration cease upon the voluntary termination by Mr. Conlon or
      termination for cause.





*Termination
      by the Company without Cause or upon death or disability:*





If
      Mr.
      Conlon is terminated by the Company without cause (as defined in Mr. Conlon’s
      Employment Agreement) or upon Mr. Conlon’s death or disability, he is entitled
      to the following benefits for eithteen months: (i) his annual salary, which
      is
      not to be less than $550,000; (ii) fringe benefits customarily afforded to
      executives of the Company; (iii) reimbursement of the expense to own and
      maintain an automobile; and (iv) lifetime medical benefits for himself and
      his
      spouse.





*Termination
      Following a Change in Control* :





There
      is
      no provision in Mr. Conlon’s contract that specifically allows for any payment
      to Mr. Conlon in the event of a change in control.





**Gerald
      G. Sax**





*Voluntary
      Termination by the Executive or Termination for Cause:*





Mr.
      Sax
      and his spouse are entitled to continue to receive life and medical benefits
      upon voluntary termination or termination for cause. All other benefits and
      remuneration cease upon the voluntary termination by Mr. Sax or termination
      for
      cause.





*Termination
      by the Company without Cause or upon death or disability:*





If
      Mr.
      Sax is terminated by the Company without cause (as defined in Mr. Sax’s
      Employment Agreement) or upon Mr. Sax’s death or disability, he is entitled to
      the following benefits: (i) no less than $360,000 in annual salary for a period
      of eighteen (18) months (or $540,000); (ii) a one time payment of $234,000;
      (iii) fringe benefits customarily afforded to executives of the Company for
      eighteen (18) months; (iv) reimbursement of the expense to own and maintain
      an
      automobile for a period of eighteen (18) months; and (v) lifetime medical
      benefits for himself and his spouse.





*Termination
      Following a Change in Control* :





There
      is
      no provision in Mr. Sax’s contract that specifically allows for any payment to
      Mr. Sax in the event of a change in control.





**Joseph
      Catanzaro**





*Voluntary
      Termination by the Executive or Termination for Cause:*





All
      benefits and remuneration cease upon the voluntary termination by Mr. Catanzaro
      or termination for cause.





*Termination
      by the Company without Cause or upon death or disability:*




79




If
      Mr.
      Catanzaro is terminated by the Company without cause (as defined in Mr.
      Catanzaro’s Employment Agreement) or upon Mr. Catanzaro’s death or disability,
      he is entitled to the following benefits: (i) no less than $257,000 in annual
      salary for a period of eighteen (18) months; (ii) fringe benefits customarily
      afforded to executives of the Company for eighteen (18) months; and (iii)
      reimbursement of the expense to own and maintain an automobile for a period
      of
      eighteen (18) months. In addition, in the event that Mr. Catanzaro’s termination
      without cause takes place after a change of control, Mr. Catanzaro will receive
      lifetime medical benefits for himself and his spouse.





*Termination
      Following a Change in Control* :





There
      is
      no provision in Mr. Catanzaro’s contract that specifically allows for any
      payment to Mr. Catanzaro in the event of a change of control, except that in
      the
      event that Mr. Catanzaro’s employment is terminated without cause after a change
      of control, Mr. Catanzaro and his wife will receive lifetime medical
      benefits.





**Compensation
      of Directors**





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 Audit Committee and Compensation Committee member
      receives an annual fee of $10,000 and the Chairman of each of the Audit
      Committee and Compensation 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 the Company’s business. The Company also has
      granted 55,000 stock options with an exercise price of $12.63 per share, 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. In addition, Mr. Steffen received 50,000 options with an exercise price
      of $12.63 per share, which vest over a period of 3 years for his service as
      Chairman of the Board.





80


**DIRECTOR
      COMPENSATION**





Name
            Fees
                Earned or Paid in Cash
            Stock
                Awards($)
            Option
                Awards ($)
            Total
                ($)Christopher
                Steffen
            140,000
            -
            164,260
            304,260Jack
                Furst
            30,000
                (1)
            -
            -
            30,000Edward
                Herring
            30,000
                (1)
            -
            -
            30,000Robert
                Hamwee
            40,000(2)
            -
            -
            40,000Robert
                Cummings
            40,000(2)
            -
            -
            40,000Diane
                Gulyas
            40,000
            -
            12,454
            52,454Richard
                Vieser
            45,000
            -
            12,454
            57,454Richard
                McGinn
            55,000
            -
            12,454
            67,454David
                Sindelar(3)
            -
            -
            167,875
            167,875Timothy
                Conlon(4)
            -
            -
            164,221
            164,221(1)
                Compensation paid directly from the Company to HMTF.
              (2)
                Compensation paid directly from the Company to GSC.
              (3)
                Mr. Sindelar’s compensation outlined in this table is also included in the
                total compensation column of the Summary Compensation table.
              (4)
                Mr. Conlon’s compensation outlined in this table is also included in the
                total compensation column of the Summary Compensation
                table.





**Compensation
      Committee Interlocks and Insider Participation**





None.





81




**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, 2006.





Respectfully
      submitted,





THE
      COMPENSATION COMMITTEE OF THE BOARD


OF
      VIASYSTEMS, INC.





Richard
      McGinn


*Chairman
      of the Compensation Committee*





Christopher
      Steffen


*Member
      of the Compensation Committee*





Robert
      Hamwee


*Member
      of the Compensation Committee*





Edward
      Herring


*Member
      of the Compensation Committee*





**Item
                12.**
            **Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters.**





Group
      owns 100% of our capital stock. The following table sets forth, as of
      December 31, 2006, 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.


82





**Amount
                and****Nature
                of**
            
            **Percent
                of****Beneficial**
            
            **Common****Ownership
                (1)**
            
            **Stock***5%
                Stockholders:*HMTF
                Parties (2)
            
            
            17,157,579
            
            
            53.7
            %c/o
                HM Capital Partners
              200
                Crescent Court, Suite 1600
              Dallas,
                Texas 75201GSC
                Parties (3)
            
            
            10,459,626
            
            
            33.8
            %c/o
                GSC Partners
              500
                Campus Drive, Suite 220
              Florham
                Park, New Jersey 07932Fidelity
                Parties(4)
            
            
            2,053,390
            
            
            7.1
            %82
                Devonshire Street
              Boston,
                Massachusetts 02109*Officers
                and Directors:*Jack
                D. Furst (5)
            
            
            17,157,579
            
            
            53.7
            %Edward
                Herring
            
            
            -
            
            
            -Richard
                W. Vieser (6)
            
            
            55,000
            
            
            *Robert
                F. Cummings
            
            
            -
            
            
            -Diane
                H. Gulyas (6)
            
            
            55,000
            
            
            *Robert
                A. Hamwee (3)
            
            
            10,459,626
            
            
            33.8
            %Richard
                A. McGinn (6)
            
            
            55,000
            
            
            *Christopher
                J. Steffen (6)
            
            
            88,333
            
            
            *David
                M. Sindelar (6)
            
            
            396,666
            
            
            1.4
            %Timothy
                L. Conlon (6)
            
            
            376,666
            
            
            1.3
            %Gerald
                G. Sax (6)
            
            
            111,666
            
            
            *Joseph
                S. Catanzaro (6)
            
            
            156,666
            
            
            *Stephen
                Wong (6)
            
            
            30,000
            
            
            *All
                executive officers and directors as a group (13 persons)
            
            
            28,942,202
            
            
            81.8
            %





*
      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, 2006, 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
                HMTF.


·
            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 HMTF.


·
            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
                HMTF.


·
            32,014
                shares of common stock held of record by Hicks, Muse PG- IV (1999),
                C.V.,
                of which the ultimate general partner is HM Fund IV Cayman, LLC,
                an
                affiliate of HMTF.


·
            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
                HMTF.




·
              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
                  HMTF.




83






·
            4,259
                shares of common stock held of record by HMTF Private 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
                HMTF.


·
            9,873,369
                shares of common stock and 2,177,356 shares of class B senior convertible
                preferred stock (currently convertible into 3,074,196 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 HMTF.




(3)
            These
                figures include:





GSC
      Recovery II, L.P. (Recovery II) owns 4,277,483 shares of common stock (which
      includes 2,893,887 shares of common stock and 1,383,596 shares of common stock
      issuable upon conversion of 979,957 shares of Class B Senior Convertible
      Preferred Stock); GSC Recovery IIA, L.P. (Recovery IIA) owns 5,067,934 shares
      of
      common stock (which includes 4,357,448 shares of common stock and 710,486 shares
      of common stock issuable upon conversion of 503,215 shares of Class B Senior
      Convertible Preferred Stock); GSC Partners CDO Fund, Limited (CDO) owns 654,801
      shares of the Company’s common stock; and GSC Partners CDO Fund II, Limited (CDO
      II) owns 459,408 shares of the Company’s common stock. By virtue of his
      relationship (described below) with Recovery II, Recovery IIA, CDO, and CDO
      II,
      Mr. Hamwee may be deemed to have shared voting and investment power over, and
      be
      the indirect beneficial owner of, the shares of common stock of the Company
      owned by Recovery II, Recovery IIA, CDO, and CDO II. Mr. Hamwee disclaims
      beneficial ownership of the Company’s common stock except to the extent of his
      pecuniary interest in such stock.





Recovery
      II is a Delaware limited partnership. GSC Recovery II GP, L.P. is the general
      partner of Recovery II. 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 Recovery II. GSCP (NJ), Inc. is the general partner
      of GSCP (NJ), L.P. and GSCP (NJ) Holdings, L.P.




Recovery
      IIA is a Delaware limited partnership. GSC Recovery IIA GP, L.P. is the general
      partner of Recovery IIA. GSC RIIA, LLC is the general partner of GSC Recovery
      IIA GP, L.P. GSCP (NJ) Holdings, L.P. is the managing member of GSC RIIA, LLC.
      GSCP (NJ), L.P. is the manager of Recovery IIA. GSCP (NJ), Inc. is the general
      partner of GSCP (NJ), L.P. and GSCP (NJ) Holdings, L.P.





CDO
      and
      CDO II are Cayman Islands corporations. GSCP (NJ), L.P. is the collateral
      manager of CDO and CDO II; GSCP (NJ), Inc. is the general partner of GSCP (NJ),
      L.P.





Each
      of
      Keith W. Abell, Alfred C. Eckert III, Robert A. Hamwee, Richard M. Hayden,
      Frederick H. Horton, Thomas V. Inglesby, Matthew C. Kaufman, Christine K. Vanden
      Beukel, and Andrew J. 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 Recovery II,
      Recovery IIA, CDO and CDO II, each may be deemed to have shared voting and
      investment power over, and be the indirect beneficial owner of, the shares
      of
      common stock of the Company owned by Recovery II, Recovery IIA, CDO and CDO
      II.
      Each of the above entities and individuals disclaims beneficial ownership of
      the
      Company’s common stock except to the extent of each entity’s and individual’s
      pecuniary interest in such common stock.




(4)
            These
                figures include:




The
      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 Co.). 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.




84




(5)
            Mr.
                Furst is a partner, stockholder and member of the management committee
                of
                HMTF and, accordingly, may be deemed to beneficially own all or a
                portion
                of the shares of Holding Common Stock beneficially owned by the HMTF
                Parties described above. Mr. Furst disclaims beneficial ownership
                of
                shares of Group’s Common Stock not owned of record by
                him.




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




**Item
                13.**
            **Certain
                Relationships and Related Transactions, and Director
                Independence**




**Review
        and Approval of Transactions with Related Persons**
 
 Viasystems
        has a Code of Business Conduct which governs, in part, review and approval
        of
        transactions between Viasystems and an affiliated party. All affiliated
        transactions must be disclosed to the Company’s General Counsel and, if such
        transaction is material under the relevant SEC codes, such proposed transaction
        will be submitted to Viasystems’ Audit Committee for
        approval.




**Stockholders
      Agreement**





On
      January 31, 2003, we entered into a Stockholders Agreement (the Stockholders
      Agreement) with certain persons acquiring shares of Group capital stock in
      connection with our Chapter 11 reorganization, including HMTF, 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 HMTF; and three members designated
      for
      election by affiliates of GSC and the other non-HMTF stockholder parties to
      the
      Stockholders Agreements other than HMTF. In addition, affiliates of HMTF, on
      the
      one hand, and affiliates of GSC and the other non-HMTF stockholder parties
      to
      the Stockholders Agreement other than HMTF, on the other hand, have the right
      to
      jointly designate additional members to our Board of Directors. The five
      directors designated by affiliates of HMTF are Mr. Furst, Mr. Rosen, Mr. McGinn,
      Mr. Vieser and Mr. Conlon. The three directors designated by affiliates of
      GSC
      and other non-HMTF 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 HMTF board designees and one member designated
      by
      the GSC and non-HMTF stockholders’ board designees, so long as such individuals
      are qualified to serve in such capacity.




To
      the
      extent that the affiliates of HMTF or the affiliates of GSC and the other
      non-HMTF 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 HMTF**
            
            **Number
                of**
              **Designated**
              **Directors**
            
            **Number
                of**
              **Compensation**
              **Committee**
              **Members**More
                than 20% but equal to or less than 40%
            
            4
            
            2More
                than 40% but equal to or less than 60%
            
            3
            
            2More
                than 60% but equal to or less than 80%
            
            2
            
            1More
                than 80% but equal to or less than 90%
            
            1
            
            1More
                than
                90%.....................................................
            
            0
            
            0





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




85


**Monitoring
      and Oversight Agreement**





Viasystems
      entered into a ten-year monitoring and oversight agreement with an affiliate
      of
      HMTF, effective as of January 31, 2003. Under the monitoring and oversight
      agreement, Viasystems is required to pay HMTF 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 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 Viasystems’ financial and strategic acquisition plans. HMTF
      monitors the viability and implementation of Viasystems’ 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, Viasystems has 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.




**Director
      Independence**




Our
      board
      of directors is elected in accordance with the Stockholders’ Agreement.  We
      do not, therefore, have a designated Nominating Committee of the board of
      directors.  Our board of directors has, however, separately designated both
      a Compensation Committee and an Audit Committee.  The Compensation
      Committee is comprised of the following members of the board of directors: 
Christopher J. Steffen, Edward Herring, Robert A. Hamwee and Richard A.
      McGinn.  The Audit Committee is comprised of:  Mr. Steffen, Robert F.
      Cummings, Jr., Diane H. Gulyas, Mr. McGinn and Richard W. Vieser.




We
      are
      not listed on a national securities exchange or an automated inter-dealer
      quotation system of a national securities association, and we are not subject
      to
      either the listing standards of the New York Stock Exchange (the NYSE), The
      NASDAQ Stock Market LLC (NASDAQ) or the rules of the National Association of
      Securities Dealers’ (the NASD) listing standards.  Accordingly, aside from
      Mr. Steffens, who would be deemed independent under the standards of each of
      the
      NYSE, NASDAQ or NASD and within the meaning of Rule 10A-3 under the Securities
      Exchange Act of 1934, as amended, and is an audit committee financial expert
      as
      such term is defined in Item 407(d)(5)(ii) of Regulation S-K adopted by the
      Securities and Exchange Commission, our board of directors has not made a
      determination whether the members of the board of directors and the Compensation
      Committee and Audit Committee are independent.





**Item
                14.**
            **Principal
                Accountant Fees and Services**




The
        Audit
        Committee has a policy related to the review and approval of services provided
        by the independent registered public accounting firm. The policy requires
        advance approval of all audit, audit-related, tax and other services, including
        specifically defined permitted non-audit services, to be performed by the
        Company’s independent auditor. Unless the specific service has been previously
        pre-approved, the Audit Committee must approve the service before the Company’s
        independent registered public accounting firm is engaged to perform
        it.
  During
        2006, the Company changed from PricewaterhouseCoopers LLP to Ernst & Young
        LLP, as their independent registered public accounting firm.
  86
  All
        fees
        billed by Ernst & Young LLP (2006) and PricewaterhouseCoopers LLP (2005 and
        2006) for all services rendered during the years ended December 31, 2006
        and
        2005, are summarized in the following table:
  **Year
                  ended December 31,****2006**
              
              **2005**Audit
                  fees
              
              $
              2,249,298
              
              $
              1,332,307Audit
                  related fees
              
              
              37,075
              
              
              135,200Tax
                  fees
              
              
              -
              
              
              -All
                  other fees
              
              
              -
              
              
              -Total
                  fees
              
              $
              2,286,373
              
              $
              1,467,507
  Audit
        fees billed by Ernst & Young LLP ($2,110,998) and PricewaterhouseCoopers LLP
        ($138,300) in 2006 relate to the audit of the consolidated financial statements
        of Viasystems, the quarterly reviews of Viasystems’ consolidated financial
        statements and foreign statutory audits.
  Audit-related
          fees include miscellaneous consulting and advisory services in connection
          with
          Sarbanes-Oxley in 2006 (performed by Ernst & Young LLP) and professional
          services rendered in connection with due diligence and audit services for
          divestitures in 2005.
 During
        fiscal 2006, the Audit Committee reviewed and approved all services provided
        by
        the independent registered public accounting firms. Additionally, the Audit
        Committee considered and concluded that all the services provided by the
        independent registered public accounting firms were compatible with maintaining
        the auditor’s independence.


**PART
      IV**





**Item
                15.**
            **Exhibits
                and Financial Statement
                Schedules**





*1.*  *Financial
      Statements*





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





*2.*  *Financial
      Statement Schedules*





None.




*3. 
Exhibits*




See
      Exhibit Index.




87


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 2nd day of April, 2007.





Viasystems,
      Inc.




/s/
                  David M. Sindelar
              
              /s/
                Gerald G. SaxDavid
                  M. Sindelar
              
              Senior
                Vice President and Chief Financial Officer*Chief
                  Executive Officer*
              
              *Principal
                Accounting Officer*
  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
      2nd day of April, 2007.








/s/
                Christopher J. SteffenChristopher
                J. Steffen
            
            *Chairman
                of the Board of Directors*/s/
                Jack D. FurstJack
                D. Furst
            
            *Director*/s/
                Edward HerringEdward
                Herring
            
            *Director*Robert
                F. Cummings, Jr.
            
            *Director*/s/
                Diane H. GulyasDiane
                H. Gulyas
            
            *Director*/s/
                Robert A. HamweeRobert
                A. Hamwee
            
            *Director*/s/
                Richard A. McGinnRichard
                A. McGinn
            
            *Director*/s/
                Richard W. VieserRichard
                W. Vieser
            
            *Director*/s/
                David M. SindelarDavid
                M. Sindelar
            
            *Chief
                Executive Officer and Director*
              *(Principal
                Executive Officer)*/s/
                Timothy L. ConlonTimothy
                L. Conlon
            
            *President,
                Chief Operating Officer and Director*/s/
                Gerald G. Sax
            
            *Senior
                Vice President and Chief Financial Officer*Gerald
                G. Sax
            
            *(Principal
                Financial Officer and Principal Accounting
                Officer)*








88




EXHIBIT
      INDEX


The
      following exhibits are filed as part of this Form 10-K or incorporated by
      reference herein:




**Exhibit
                No**.
            **Exhibit
                Description**2.1
            (1)
            Prepackaged
                Joint Plan of Reorganization of Viasystems Group, Inc. (“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,
                2003.2.1(b)
            (6)
            Stock
                Purchase Agreement between Electrical Components International Holdings
                Company, Viasystems Group, Inc., Wire Harness Holding Company, Inc.
                and
                Wire Harness Industries, Inc. dated March 21, 2006.3.1
            (3)
            Amended
                and Restated Certificate of Incorporation of Group, Inc.3.2
            (3)
            Amended
                and Restated Bylaws of Group, Inc.3.3
            (2)
            Amended
                and Restated Certificate of Incorporation of Viasystems, Inc.3.4
            (2)
            Amended
                and Restated Bylaws of Viasystems, Inc.4.1
            (2)
            Indenture,
                dated as of December 17, 2003, among Viasystems, Inc., the Guarantors
                party thereto, and The Bank of New York, as Trustee.4.2
            (2)
            Form
                of 101⁄2% Senior Subordinated Note (included as Exhibit A to the Indenture
                filed as Exhibit 4.1 hereto).10.1
            (8)
            Credit
                Agreement dated as of August 17, 2006, among Viasystems Kalex Printed
                Circuit Board Limited, Viasystems Asia Pacific Company Limited, Kalex
                Circuit Board (China) Limited and UBS AG Hong Kong Branch, UBS AG
                Singapore Branch, as Facility Agent.10.2
            (1)
            Group,
                Inc. 2003 Stock Option Plan.10.3
            (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.10.4
            (1)
            Amended
                and Restated Executive Employment Agreement, dated January 31, 2003,
                among Group, Inc., Viasystems, Inc., Viasystems Technologies Corp.
                LLC,
                and Timothy L. Conlon.10.5
            (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.10.6
            (5)
            Amended
                and Restated Executive Employment Agreement made and entered into
                effective as of August 15, 2005, among Group, Viasystems, Inc., Viasystems
                Technologies Corp., LLC and Gerald G. Sax.10.7
            (1)
            Amended
                and Restated Executive Employment Agreement dated January 31, 2003,
                among
                Group, Inc., Viasystems, Inc. Viasystems Technologies Corp., LLC
                and
                Joseph Catanzaro.10.8
            (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.10.9
            (7)
            Letter
                Agreement dated June 15, 2005 between Group and David J.
                Webster10.10
            (3)
            Stockholders
              Agreement.






89






**Exhibit
              No.**
            
            **Exhibit
              Description**10.11
            (3)
            Amendment
                to Stockholders Agreement.10.12
            (3)
            Annual
                Incentive Compensation Plan for Group, Inc.10.13
            (3)
            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.10.13(a)
            (3)
            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.10.13(b)
            (3)
            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.10.13(c)
            (4)
            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.10.13.(d)
            (4)
            Fourth
                Amendment, dated as of March 17, 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.10.14
            (3)
            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.14.1
            (4)
            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
            (9)
            Subsidiaries
                of the Registrant.31.1
            (9)
            Chief
                Executives Officer’s Certification required by Rule
                13(a)-14(a).31.2
            (9)
            Chief
                Financial Officer’s Certification required by Rule
                13(a)-14(a).32
            (9)
            Chief
                Executive Officer and 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/A
                of
                Viasystems Group, Inc. filed on April 28,
                2004.





(2)
            Incorporated
                by reference to Registration Statement No. 333-114467 on Form S-4/A
                filed
                on April 14, 2004.





(3)
            Incorporated
                by reference to Registration Statement No. 333-114467 on form S-4/A
                filed
                on June 22, 2004





(4)
            Incorporated
                by reference to 2004 Annual Report on Form 10-K of Viasystems, Inc.
                filed
                on March 30, 2005.





(5)
            Incorporated
                by reference to the Quarterly Report on Form 10-Q of Viasystems,
                Inc.
                filed on November 14, 2005.





(6)
            Incorporated
                by reference to the Form 8-K of Viasystems, Inc. filed on March 22,
                2006.






90






(7)
            Incorporated
                by reference to 2005 Annual Report on Form 10-K of Viasystems, Inc.
                filed
                on March  31, 2006.





(8)
            Incorporated
                by reference to the Form 8-K of Viasystems, Inc. filed on August  23,
                2006.


(9)
            Filed
                herewith.    91