Fitch Lowers Yazaki International Corp.'s Short-Term Rating

    CHICAGO--Nov. 30, 2001--Fitch lowers the short- term rating of Yazaki International Corp. (YIC), a subsidiary of Japan-based Yazaki Corp., to `F3' from `F2'.
    The rating action reflects YIC's reduced profitability stemming from volume cyclicality and pricing weakness in its core business of supplying automotive wiring harnesses to North American automotive original equipment manufacturers. Due in part to its large exposures to Ford and DaimlerChrysler, which experienced comparatively weaker production levels, YIC's consolidated sales for its fiscal year (FY) ended March 31, 2001, decreased 8.8% to $2.3 billion. A slight decrease in costs and expenses had not kept up with the much lower revenue base, significantly lowering operating income. Also contributing to the poor performance of YIC in fiscal year 2001 were operating losses at one of its operating subsidiaries engaged in the manufacture of electronic automotive components as well as currency fluctuations. Fitch does not anticipate a full restoration of YIC's historical profitability levels for at least the next year or two as current North American OE production levels continue soft and volatile and the pricing environment for automotive suppliers remain difficult. Additionally, requirements to maintain and win OE business with engineering and sales support will likely hamper YIC's efforts to get the cost and expense structure more in line with revenues in the near term. Beyond the next few years, however, with YIC's plan to gradually source more from Yazaki group's lower cost Southeast Asian production locations, away from relatively higher cost Mexican locations, the cost structure should improve.
    Total debt for YIC, much of which is in the form of short- term borrowings from US branches of Japanese banks, increased 19% to $345 million at March 31, 2001. The debt increase reflects lowered profitability and increases in working capital levels, mainly inventories. The debt funding is used to support YIC's sizable working capital requirements. Fitch expects the debt level will remain at the higher level through FY2002.
    Yazaki International Corp. serves as the holding company for the Yazaki group's marketing, engineering, distribution and certain manufacturing operations in the Americas. Parent Yazaki Corp. is privately held, predominantly by employees (via a stock ownership plan), along with the founder's family and its major Japanese banks. The Yazaki group with global sales of more than $6 billion, is principally engaged in the business of supplying automotive wiring harnesses to OEM's globally and enjoys a leading 30% plus market share of the industry.