-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, V4nBBv+ioVLWP/D7bnl8bcGGyUQGdG7riqXoK7K+J8MdSfwlkJcrBVtTcY0OpZVr WPFg7NdVmPbODMu21xWKOQ== 0000891531-97-000017.txt : 19970520 0000891531-97-000017.hdr.sgml : 19970520 ACCESSION NUMBER: 0000891531-97-000017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BREED TECHNOLOGIES INC CENTRAL INDEX KEY: 0000891531 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 222767118 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11474 FILM NUMBER: 97608011 BUSINESS ADDRESS: STREET 1: 5300 OLD TAMPA HWY CITY: LAKELAND STATE: FL ZIP: 33811 BUSINESS PHONE: 9416686000 MAIL ADDRESS: STREET 1: PO BOX 33050 CITY: LAKELAND STATE: FL ZIP: 33811 10-Q 1 THIRD QUARTER 10Q - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------- FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 For the quarterly period ended: March 31, 1997 or [ ] Transition Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Commission File No. 1-11474 -------------------- BREED TECHNOLOGIES, INC. (Exact name of registrant as specified in charter) Delaware 22-2767118 (State of Incorporation) I.R.S. Employer Identification No.) 5300 Old Tampa Highway Lakeland, Florida 33811 (Address of principal executive offices) (Zip Code) (941) 668-6000 (Registrant's telephone number, including area code) -------------------- 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 X No __. As of April 18, 1997, 31,659,683 shares of the registrant's common stock, par value $.01 per share, were outstanding. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- INDEX PART I. FINANCIAL INFORMATION Page Item 1. Financial Statements Consolidated Condensed Balance Sheets - March 31, 1997 (Unaudited) and June 30, 1996 .............................................1 Consolidated Condensed Statements of Earnings (Unaudited) Three and nine months ended March 31, 1997 and 1996........................2 Consolidated Condensed Statements of Cash Flows (Unaudited) Nine months ended March 31, 1997 and 1996 .................................3 Notes to Consolidated Condensed Financial Statements (Unaudited) ...............................................................4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations .......................................5 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K ......................................6 Signatures ....................................................................7
Consolidated Condensed Balance Sheets (Unaudited) March 31, 1997 and June 30, 1996 In thousands March 31, June 30, 1997 1996 -------- ------- ASSETS Current Assets Cash and cash equivalents $ 18,057 $ 95,830 Accounts receivable 227,012 110,656 Inventories 88,437 52,890 Prepaid expenses 7,119 7,247 --------- --------- Total Current Assets 340,625 266,623 Net property, plant and equipment 359,772 171,653 Intangibles 176,895 45,053 Investments and other assets 20,621 20,473 --------- --------- Total Assets $897,913 $503,802 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Short-term borrowings $288,290 $120,688 Accounts payable 119,616 33,940 Accrued expenses 47,946 21,824 --------- --------- Total Current Liabilities 455,852 176,452 Long-term debt 137,110 42,123 Other long-term liabilities 30,197 10,147 --------- --------- Total Liabilities 623,159 228,722 --------- --------- Stockholders' Equity Common stock 317 316 Additional paid-in capital 77,194 76,652 Retained earnings 207,827 201,981 Other (10,584) (3,869) ---------- -------- Total Stockholders' Equity 274,754 275,080 --------- --------- Total Liabilities and Stockholders' Equity $897,913 $503,802 ========= ========= See Notes to Consolidated Condensed Financial Statements.
Consolidated Condensed Statements of Earnings (Unaudited) Three and nine months ended March 31, 1997 and 1996 In thousands, except earnings per share Three Months Ended Nine Months Ended March 31, March 31, ------------------------ ------------------------- 1997 1996 1997 1996 Net sales $ 209,409 $ 103,927 $ 550,646 $ 302,183 Cost of sales 171,454 68,086 433,908 188,635 ----------- ---------- ---------- ---------- Gross profit 37,955 35,841 116,738 113,548 ----------- ---------- ---------- ---------- Selling, general and administrative 19,089 9,880 51,272 28,877 Research and development expenses 9,498 5,744 27,317 17,338 Amortization of intangibles 2,240 546 4,318 1,362 ----------- ---------- ---------- ---------- Total operating expenses 30,827 16,170 82,907 47,577 ----------- ---------- ---------- ---------- Operating income 7,128 19,671 33,831 65,971 Interest income (expense), net (6,076) 106 (16,192) 228 Other income (expense), net 1,449 3,815 2,958 6,536 ----------- ---------- ---------- ---------- Earnings before income taxes 2,501 23,592 20,597 72,735 Income taxes 1,000 8,700 8,100 27,400 ----------- ---------- ---------- ---------- Net earnings $ 1,501 $ 14,892 $ 12,497 $ 45,335 =========== ========== ========== ========== Earnings per share $ .05 $ .47 $ .40 $ 1.44 =========== ========== ========== ========== Average shares outstanding 31,661 31,556 31,643 31,533 =========== ========== ========== ========== See Notes to Consolidated Condensed Financial Statements.
Consolidated Condensed Statements of Cash Flows (Unaudited) Nine months ended March 31, 1997 and 1996 In thousands 1997 1996 ------------- ----------- Cash Flows from Operating Activities Net earnings $ 12,497 $ 45,335 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 34,063 13,792 Changes in working capital items 14,029 (37,211) Other (12,818) (254) ------------- ----------- Net cash provided by operating activities 47,771 21,662 ------------- ----------- Cash Flows from Investing Activities Cost of acquisition, net of cash acquired (266,997) --- Purchases of property, plant and equipment (61,396) (32,400) Sales of short-term investments, net 117 6,046 ------------- ----------- Net cash used in investing activities (328,276) (26,354) ------------- ----------- Cash Flows from Financing Activities Dividends paid (6,644) (4,729) Proceeds from (repayments of) debt, net 215,890 (1,386) Stock options exercised 542 424 ------------- ----------- Net cash provided by (used in) financing activities 209,788 (5,691) ------------- ----------- Effect of exchange rate changes on cash (7,056) (1,116) ------------- ----------- Net decrease in cash and cash equivalents (77,773) (11,499) Cash and cash equivalents at beginning of period 95,830 26,355 ------------- ----------- Cash and cash equivalents at end of period $ 18,057 $ 14,856 ============= =========== Cost of Acquisition: Working capital, net of cash acquired $ (40,738) $ --- Property, plant and equipment (162,936) --- Cost in excess of net assets acquired (121,061) --- Investments and other assets (19,119) --- Long-term debt 33,910 --- Other long-term liabilities 42,947 --- ------------- ----------- Net cost of acquisition $ (266,997) $ --- ============= =========== See Notes to Consolidated Condensed Financial Statements.
Notes to Consolidated Condensed Financial Statements Note 1 - Presentation In the opinion of management, all adjustments, which include normal recurring accruals, considered necessary for a fair presentation of the financial position, results of operations and cash flows at March 31, 1997, and all periods presented have been included in the accompanying consolidated condensed financial statements. Operating results for the nine months ended March 31, 1997, are not necessarily indicative of the results that may be expected for the year ending June 30, 1997. Certain amounts in the prior year's Consolidated Condensed Financial Statements have been reclassified to conform to the current year's presentation. Note 2 - Acquisition On July 1, 1996, the Company completed the acquisition of Gallino Plasturgia, S.r.l. and affiliates ("Gallino") from IAO Industrie Riunite S.p.A. The aggregate purchase price for all shares and assets acquired was approximately $131 million, comprised of cash of $79 million and liabilities assumed of $52 million. The acquisition, which was financed through borrowings on the Company's revolving credit agreements, will be accounted for as a purchase. Gallino manufactures steering wheels, instrument panels, bumpers and other plastic trim components used in automotive original equipment and aftermarket applications. Gallino has annual revenues of approximately $250 million. On October 25, 1996, the Company completed the acquisition of certain assets and the assumption of certain liabilities of the "North American Steering Wheels Operation" of United Technologies and 100% of the outstanding shares of United Technologies Automotive Clifford Limited. The purchase price cash consideration of approximately $153.5 million included payment of $17.4 million of Clifford intercompany financing. The funds used by the Company for the acquisition were obtained from borrowings under the Company's Revolving Credit Agreements. The acquired operations which will be called United Steering Systems, Inc. (USS) produces steering wheels, airbag covers, horn pads and related molded products. USS is located in Grabill, Indiana; Monterrey, Mexico; and Birmingham, England. USS has annual revenues of approximately $150 million. On February 25, 1997, the Company completed the acquisition of the stock of BTI Investments, Inc. ("BTI") a holding company which owns the Custom Trim group of companies. The purchase price was $70 million in cash, subject to any post closing audit adjustments. Additionally, up to $5,000,000 may be paid on September 1, 2002, contingent upon BTI attaining certain operating profit targets for each of the years subsequent to the acquisition date. The funds used by the Company to acquire BTI were obtained from borrowings under the Company's Revolving Credit Agreements. The acquired operations which will be called Custom Trim Ltd. produces leather-wrapped steering wheels, shift knobs and shift boots, injection molded levers and leather/vinyl cloth sewing of armrests, headrests and seating. Custom Trim has annual revenues of approximately $100 million and has manufacturing locations in Canada and Mexico. For all acquisitions the purchase price adjustments have not been finalized. The purchase price allocations are preliminary and subject to further adjustments. Note 3 - Inventories The components of inventory (in thousands) consist of the following: March 31, June 30, 1997 1996 Finished Goods $30,602 $19,439 Work-in-process 22,188 14,417 Raw Materials 35,647 19,034 ------------- ----------- Total $88,437 $52,890 ============= =========== Note 4 - Borrowings On April 29, 1997, the Company closed on a $450 million Revolving Credit Facility consisting of a $250 million 364-Day Credit Agreement and a $200 million Five-Year Credit Agreement. A portion of the proceeds from the facility was used to retire the Company's former line of credit, which amounted to $345 million at March 31, 1997. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Quarterly Report on Form 10-Q contains forward-looking statements that involve a number of risks and uncertainties. When used in this Quarterly Report on Form 10-Q the words "believes," "anticipated" and similar expressions are intended to identify forward-looking statements. There are a number of factors that could cause the Company's actual results to differ materially from those forecasted or projected in such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof. The Company undertakes no obligations to publicly release the result of any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Results of Operations (Third Quarter FY97) Three Months Ended March 31, 1997 (FY97) Compared to Three Months Ended March 31, 1996 (FY96) Net sales increased approximately $105 million due principally to the results of the Gallino, MOMO, United Steering Systems and Custom Trim acquisitions. Sales for these operations amounted to approximately $125 million and were comprised of steering wheels, alloy wheels, instrument panels, bumpers and other plastic and leather-wrapped trim components. Electromechanical sensor sales decreased approximately $14 million due primarily to a loss of volume as a major customer shifts to "in-house" electronic sensors. As a percent of sales, gross profit decreased from 34% to 18%. Gross profit on sales of products related to the new acquisitions are lower as a percent of sales compared to margins on the Company's sensor products. Additionally, plant consolidation costs contributed to the decrease in gross profit. Operating expenses increased primarily as a result of the acquisitions and to increased R&D spending related to new product development for non-azide/reduced sized inflators, electronic sensing (including occupant, weight and horn) and side impact technology. Net interest expense increased approximately $6 million primarily as a result of borrowings used to purchase the new acquisitions and to the existing debt of the new acquisitions. The decrease in other income (expense), net was due primarily to the decrease in royalty income. Nine Months Ended March 31, 1997 (FY97) Compared to Nine Months Ended March 31, 1996 (FY96) Net sales increased approximately $248 million due principally to the results of the Gallino, MOMO, United Steering Systems and Custom Trim acquisitions. Sales for these operations amounted to approximately $285 million and were comprised of steering wheels, alloy wheels, instrument panels, bumpers and other plastic and leather-wrapped trim components. Electro-mechanical sensor sales decreased approximately $40 million due primarily to a loss of volume as a major customer shifts to "in-house" electronic sensors. As a percent of sales, gross profit decreased from 38% to 21%. Gross profit on sales of products related to the new acquisitions are lower as a percent of sales compared to margins on the Company's sensor sales. Additionally, plant consolidation costs contributed to the decrease in gross profit. Operating expenses increased primarily as a result of the acquisitions and to increased R&D spending related to new product development for non-azide/reduced sized inflators, electronic sensing (including occupant, weight and horn) and side impact technology. Net interest expense increased approximately $16 million primarily as a result of borrowings used to purchase the new acquisitions and to the existing debt of the new acquisitions. The decrease in other income (expense), net was due primarily to the decrease in royalty income. Liquidity and Capital Resources Growth has been financed through a combination of cash provided from operations and debt financing. Cash provided from operating activities is the primary source of liquidity and amounted to $48 million for the nine months ended March 31, 1997. On April 29, 1997, the Company closed on a $450 million Revolving Credit Facility consisting of a $250 million 364-Day Credit Agreement and a $200 million Five-Year Credit Agreement. A portion of the proceeds were used to retire the amount outstanding under the Company's former Revolving Credit Facility which amounted to $345 million at March 31, 1997. The Company's Revolving Credit Facility currently has approximately $100 million of unused borrowing capacity. Management believes that the Company's current Revolving Credit Facility combined with cash expected to be generated from operations will be adequate to cover the Company's normal capital and operational needs. Internally generated funds have been used primarily to finance capital expenditures, provide working capital, support research and development activities, and pay dividends. Bank debt has been used to finance acquisitions since April 1996. In 1997, the Company plans to invest $75 million in property, plant and equipment to expand capacity and tool new products. Investments continue to be made in new equipment throughout the Company to support productivity improvements, cost reduction programs, and to add capacity for existing and new products. PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits - None (b) Reports on Form 8-K -The Company filed Form 8-K on March 5, 1997 to report that on February 25, 1997, the Company consummated the acquisition of the stock of BTI Investments, Inc., a holding company which owns the Custom Trim group of companies. 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 thereunto duly authorized. Breed Technologies, Inc. (Registrant) May 15, 1997 By: /s/ Edward H. McFadden Edward H. McFadden Executive Vice President and Chief Financial Officer By: /s/ Thomas F. Dugan Thomas F. Dugan Corporate Controller and Chief Accounting Officer EX-27 2 ART. 5 FDS FOR 3RD QUARTER 10-Q
5 1,000 9-MOS JUN-30-1997 MAR-31-1997 18,057 0 227,012 0 88,437 340,625 452,394 92,622 897,913 455,852 0 0 0 317 274,437 897,913 550,646 550,646 433,908 516,815 13,234 0 17,832 20,597 8,100 12,497 0 0 0 12,497 0.40 0
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