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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
______________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JUNE 15, 1998
Breed Technologies, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 1-11474 22-2767118
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(State of (Commission (IRS Employer
incorporation) File Number) Identification No.)
5300 Old Tampa Highway
Lakeland, Florida 33811
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(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (941) 668-6000
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
The Company hereby files the following information:
1. EARNINGS PER SHARE INFORMATION
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In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share." SFAS No.
128 replaced the previously reported primary and fully diluted earnings per
share with basic and diluted earnings per share. Unlike primary earnings per
share, basic earnings per share excludes the potential dilutive effects of
common stock equivalents such as stock options, warrants and convertible
securities. Diluted earnings per share is very similar to the previously
reported fully diluted earnings per share. The Company adopted SFAS No. 128
effective for the quarter ended December 31, 1997.
The Company has restated certain of its Selected Financial Data to reflect
the effect of SFAS No. 128 as follows:
(a) As a result of the filing of this Current Report on Form 8-K, the
information set forth below shall supersede the line item entitled "Earnings
per share" in the table entitled "Item 6. Selected Financial Data" appearing
on page 9 of the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1997:
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
Basic earnings(1).......... $0.47 $2.00 $2.30 $1.43 $0.62
Diluted earnings(1)........ $0.47 $1.99 $2.29 $1.42 $0.62
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(b) As a result of the filing of this Current Report on Form 8-K, the
information set forth below shall supersede the line item entitled "Earnings
per share" for fiscal 1995, 1996 and 1997 in Note 11 "Quarterly Financial
Information (Unaudited)" to the Company's consolidated financial statements on
page 21 of the Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1997:
FIRST SECOND THIRD FOURTH
1997 QUARTER QUARTER QUARTER QUARTER
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Basic earnings............. $0.25 $0.10 $0.05 $0.07
Diluted earnings........... $0.25 $0.10 $0.05 $0.07
FIRST SECOND THIRD FOURTH
1996 QUARTER QUARTER QUARTER QUARTER
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Basic earnings............. $0.40 $0.57 $0.47 $0.56
Diluted earnings........... $0.40 $0.56 $0.47 $0.56
FIRST SECOND THIRD FOURTH
1995 QUARTER QUARTER QUARTER QUARTER
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Basic earnings.............. $0.36 $0.58 $0.70 $0.66
Diluted earnings............ $0.36 $0.57 $0.70 $0.66
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(1) The only difference between the basic and diluted earnings per share
calculation is the dilutive impact of options that are included in
the dilutive earnings per share calculation.
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2. SELECTED HISTORICAL COMBINED FINANCIAL INFORMATION OF SRS
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The selected combined financial data set forth below as of December 31, 1995
and 1996 and September 30, 1997 and for each of the years in the three-year
period ended December 31, 1996 and for the nine months ended September 30, 1996
and 1997 are derived from the combined financial statements of the safety
restraint systems business of Allied Signal, Inc. ("SRS"), of which (i) the
combined financial statements for fiscal 1994, 1995 and 1996 were audited by
Price Waterhouse LLP and (ii) the combined financial statements for the nine
months ended September 30, 1996 and 1997 are unaudited. In the opinion of
management of the Company, the financial statements for the nine months ended
September 30, 1996 and 1997 include all adjustments, consisting only of normal
recurring adjustments, necessary to fairly present the results of operations and
financial position for such periods. The results of operations for the nine
months ended September 30, 1997 are not necessarily indicative of the results to
be expected for the full year or any future period.
NINE MONTHS
ENDED
FISCAL YEAR SEPTEMBER 30,
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1994 1995 1996 1996 1997
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(IN MILLIONS)
STATEMENT OF OPERATIONS DATA:
Sales....................... $747.3 $882.8 $951.3 $715.9 $678.3
Cost of goods sold.......... 671.9 781.9 849.8 630.9 608.3
Selling, general and
administrative expenses.... 30.8 35.8 42.1 32.4 30.6
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Income from operations...... 44.6 65.1 59.4 52.6 39.4
Other income (expense), net. (4.1) (5.6) 7.0 (1.6) (2.8)
------ ------ ------ ------ -----
Income before taxes on
income..................... 40.5 59.5 66.4 51.0 36.6
Taxes on income............. 15.6 21.3 25.4 21.0 15.0
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Net income.................. $ 24.9 $ 38.3 $ 41.0 $ 30.0 $ 21.6
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AS OF DECEMBER 31, AS OF
----------------------- SEPTEMBER 30,
1995 1996 1997
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(IN MILLIONS)
Balance Sheet Data:
Working capital........ $ 22.7 $ 29.5 $ 40.2
Total assets........... 410.8 429.7 444.7
Total debt............. -- -- --
3. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
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OPERATIONS,SRS
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The following management's discussion and analysis of the results of
operations of SRS reflects the results of operations for the periods discussed
as adjusted to exclude, for each period discussed, the results
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of operations
attributable to certain operations of SRS that were not acquired by the Company
in the October 30, 1997 acquisition by the Company of SRS (the "SRS
Acquisition.")
RESULTS OF OPERATIONS
Set forth below is certain statements of operations data for each of the years
in the three-year period ended December 31, 1996 and for the nine months ended
September 30, 1996 and 1997 which have been adjusted to exclude, for each period
presented, the Company's estimate of operations attributable to certain
operations of SRS that were not acquired by the Company in the SRS Acquisition.
See Note (d) to Notes to Unaudited Pro Forma Condensed Consolidated Statement of
Earnings for the twelve months ended June 30, 1997 and the nine months ended
March 31, 1997. The statement of operations data set forth below is based on
the Company's estimates.
NINE MONTHS ENDED
FISCAL YEAR SEPTEMBER 30,
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1994 1995 1996 1996 1997
---------------- ----------------- ----------------- ---------------- ----------------
AS AS AS AS AS
ACTUAL ADJUSTED ACTUAL ADJUSTED ACTUAL ADJUSTED ACTUAL ADJUSTED ACTUAL ADJUSTED
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(IN MILLIONS)
STATEMENT OF OPERATIONS DATA:
Sales............................ $747.3 $637.6 $882.8 $771.8 $951.3 $873.3 $715.9 $659.0 $678.3 $629.0
Cost of goods sold ............. 671.9 574.8 781.9 683.1 849.8 780.8 630.9 580.5 608.3 563.3
Selling, general and
administrative.................. 30.8 25.4 35.8 31.2 42.1 38.9 32.4 30.0 30.6 29.1
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from operations........... 44.6 37.4 65.1 57.5 59.4 53.6 52.6 48.5 39.4 36.6
Other income (expense), net...... (4.1) (2.5) (5.6) (5.8) 7.0 3.8 (1.6) (3.7) (2.8) 2.7
----- ------ ------ ------ ------ ------ ------ ------ ------ -----
Income before taxes on income.... 40.5 34.9 59.5 51.7 66.4 57.4 51.0 44.8 36.6 33.9
Taxes on income.................. 15.6 13.4 21.3 19.0 25.4 22.0 21.0 18.4 15.0 13.9
------ ------ ------ ------ ------ ------ ------ ------ ------- -------
Net Income....................... $ 24.9 $ 21.5 $ 38.3 $ 32.7 $ 41.0 $ 35.4 $ 30.0 $ 26.4 $ 21.6 $ 20.0
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NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1996
Sales. Total sales decreased 5% to $629.0 million for the nine months ended
September 30, 1997 from $659.0 million for the nine months ended September 30,
1996. Third-party sales also decreased 4% to $623.7 million for the nine months
ended September 30, 1997 from $649.0 million for the nine months ended September
30, 1996, primarily due to lower airbag sales in the small car sales market,
phase down of seat cushion sales to Morton, unfavorable foreign exchange due to
strong dollar and lower pricing due to the competitive market place.
Intercompany sales decreased 47% to $5.3 million for the nine months ended
September 30, 1997 from $10.0 million for the nine months ended September 30,
1996, primarily due to lower airbag sales to AlliedSignal Japan (which sells to
Isuzu) due to weaker market position as a result of roll-over concern and new
competition in the sport utility vehicle market.
Cost of Goods Sold. Costs of goods sold decreased 3% to $563.3 million for
the nine months ended September 30, 1997 from $580.5 million for the nine months
ended September 30, 1996. This decrease was as a result primarily of cost
reduction efforts implemented during the year, which were offset by the impact
of lower customer pricing and the unfavorable effect of foreign exchange as
noted above.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased 3% to $29.1 million for the nine months ended
September 30, 1997 from $30.0 million for the nine months ended September 30,
1996, primarily reflecting lower expenses associated with the lower sales
volume.
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Taxes on Income. The effective tax rate was 41% for both of the nine months
ended September 30, 1997 and 1996. The difference between the effective tax rate
of 41% and the federal rate of 35% is primarily due to foreign and state taxes.
FISCAL 1996 COMPARED TO FISCAL 1995
Sales. Total sales increased 13% to $873.3 million in 1996 from $771.8
million in 1995. Third-party sales increased 13% to $862.2 million in 1996 from
$761.6 million in 1995, primarily due to higher seat belt sales in the North
America truck market and a full year of airbag sales to Opel and Fiat which were
launched in September 1995. Intercompany sales increased 9% to $11.1 million in
1996 from $10.2 million in 1995, primarily due to higher production volumes.
Cost of Goods Sold. Cost of goods sold increased 14% to $780.8 million in
1996 from $683.1 million in 1995. This increase primarily reflected increased
costs associated with the increase in sales volume.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 25% to $38.9 million in 1996 from $31.2
million in 1995, primarily reflecting increased marketing efforts in Europe and
Asia and a larger allocation of corporate charges.
Taxes on Income. The higher effective tax rate of 38% in 1996 compared to
37% in 1995 was primarily due to increased earnings in foreign jurisdictions
with an overall higher effective tax rate.
FISCAL 1995 COMPARED TO FISCAL 1994
Sales. Total sales increased 21% to $771.8 million in 1995 from $637.6
million in 1994. Third-party sales increased by 19% to $761.6 million in 1995
from $637.6 million in 1994, primarily due to the growth from acquisitions of
the seatbelt division of Gilardini S.p.A. in February 1994 and General Safety
Corporation in November 1994 and the launching of airbag programs in North
America and Italy. Intercompany sales were $10.2 million in 1995 primarily
relating to sales to AlliedSignal Japan (which sells to Isuzu).
Cost of Goods Sold. Cost of goods sold increased 19% to $683.1 million in
1995 from $574.8 million in 1994. The increase primarily reflected increases in
sales volume as described above.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 32% to $31.2 million in 1995 from $25.4
million in 1994 and primarily related to the increase in sales volume.
Taxes on Income. The lower effective tax rate of 37% in 1995 compared to 39%
in 1994 was primarily due to income in lower tax jurisdictions and investment
tax credits realized in Italy.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(b) PRO FORMA FINANCIAL INFORMATION
The unaudited Pro Forma Condensed Consolidated Financial Statements of Breed
Technologies, Inc. for the year ended June 30, 1997 and the nine months ended
March 31, 1998, and the notes thereto, are included in Exhibit 99.1 and
incorporated herein by this reference.
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(C) EXHIBITS
Exhibit
No. Description
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23.1 Consent of Ernst & Young LLP.
99.1 Unaudited Pro Forma Condensed Consolidated Financial Statements
of Breed Technologies, Inc., as described in Item 7(b) of this
Current Report on Form 8-K.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: June 15, 1998
BREED TECHNOLOGIES, INC.
By: /s/ Frank J. Gnisci
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Frank J. Gnisci
Executive Vice President and Chief
Financial Officer
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INDEX TO EXHIBITS
EXHIBIT NUMBER AND DESCRIPTION PAGE
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23.1 - Consent of Ernst & Young LLP.................................
99.1 - Unaudited Pro Forma Condensed Consolidated Financial
Statements of Breed Technologies, Inc., as described in
Item 7(b) of this Curren Report on Form 8-K..................
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