-----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, QmUVH1rJhGRWqSELjnqRxQLxr5viSUviqciekVtN44LNmqzFlGSAUEM0DGHPt+8R QHAJ360LS279dkSNGF3e1w== 0000891531-96-000002.txt : 19961209 0000891531-96-000002.hdr.sgml : 19961209 ACCESSION NUMBER: 0000891531-96-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961113 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BREED TECHNOLOGIES INC CENTRAL INDEX KEY: 0000891531 STANDARD INDUSTRIAL CLASSIFICATION: 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: 96662300 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 10-Q - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- 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: September 30, 1996 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 November 1, 1996, 31,627,965 shares of the registrant's common stock, par value $.01 per share, were outstanding. - - -------------------------------------------------------------------------------- -------------------------------------------------------------- INDEX PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Condensed Balance Sheets (Unaudited)- September 30, 1996 and June 30, 1996........................1 Consolidated Condensed Statements of Earnings (Unaudited)- Three months ended September 30, 1996 and 1995 .............2 Consolidated Condensed Statements of Cash Flows (Unaudited)- Three months ended September 30, 1996 and 1995..............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 ..........................................................6 Consolidated Condensed Balance Sheets (Unaudited) September 30, 1996 and June 30, 1996 In thousands September 30,1996 June 30, 1996 ASSETS Current Assets Cash and cash equivalents $ 11,636 $ 95,830 Accounts receivable 171,097 110,656 Inventories 83,831 52,890 Prepaid expenses 22,424 7,247 ----------- ------------ Total Current Assets 288,988 266,623 Net property, plant and equipment 303,577 171,653 Intangibles 44,739 45,053 Investments and other assets 13,964 20,473 ----------- ------------ Total Assets $ 651,268 $ 503,802 =========== ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Short-term borrowings $ 112,121 $ 120,688 Accounts payable 107,631 33,940 Accrued expenses 36,811 21,824 ----------- ------------ Total Current Liabilities 256,563 176,452 Long-term debt 82,318 42,123 Other long-term liabilities 31,524 10,147 ----------- ------------ Total Liabilities 370,405 228,722 ----------- ------------ Stockholders' Equity Common stock 316 316 Additional paid-in capital 76,668 76,652 Retained earnings 207,613 201,981 Other (3,734) (3,869) ----------- ------------ Total Stockholders' Equity 280,863 275,080 ------------ ------------ Total Liabilities and Stockholders' Equity $ 651,268 $ 503,802 =========== ============ See Notes to Consolidated Financial Statements. Consolidated Condensed Statements of Earnings (Unaudited) Three months ended September 30, 1996 and 1995 In thousands, except earnings per share 1996 1995 ----- ----- Net sales $ 158,671 $ 92,601 Cost of sales 117,023 57,737 ------------ ----------- Gross profit 41,648 34,864 ------------ ----------- Selling, general and administrative expenses 15,465 9,360 Research and development expenses 7,973 5,651 ----------- ----------- Total Operating Expenses 23,438 15,011 ------------ ----------- Operating income 18,210 19,853 Other income (expense), net (5,064) 748 ------------ ----------- Earnings before income taxes 13,146 20,601 Income taxes 5,300 8,000 ------------ ----------- Net earnings $ 7,846 $ 12,601 ============ =========== Earnings per share $ .25 $ .40 ============ =========== Average shares outstanding 31,628 31,514 ============ =========== See Notes to Consolidated Financial Statements. Consolidated Condensed Statements of Cash Flows (Unaudited) Three months ended September 30, 1996 and 1995 In thousands 1996 1995 ----------- ---------- Cash Flows from Operating Activities Net earnings $ 7,846 $ 12,601 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 10,283 3,958 Changes in working capital items 11,707 (9,659) Change in other assets and other long-term liabilities 1,158 337 ----------- ---------- Net cash provided by operating activities 30,994 7,237 ----------- ---------- Cash Flows from Investing Activities Cost of acquisition, net of cash acquired (77,142) --- Purchases of property, plant and equipment (22,480) (12,965) Sales of short-term investments, net --- 1,269 ----------- ---------- Net cash used in investing activities (99,622) (11,696) ----------- ---------- Cash Flows from Financing Activities Dividends paid (2,214) (1,576) (Repayments) proceeds of debt, net (13,382) 303 Stock options exercised 16 75 ----------- ---------- Net cash used in financing activities (15,580) (1,198) ----------- ---------- Effect of exchange rate changes on cash 14 (824) ----------- ---------- Net decrease in cash and cash equivalents (84,194) (6,481) Cash and cash equivalents at beginning of period 95,830 26,355 ----------- ---------- Cash and cash equivalents at end of period $ 11,636 $ 19,874 =========== ========== Cost of Acquisition: Working capital, net of cash acquired $ (18,085) $ --- Property, plant and equipment (117,230) --- Other assets (930) --- Long-term debt 33,910 --- Other long-term liabilities 25,193 --- ----------- ---------- Net cost of acquisition $ (77,142) $ --- =========== ==========
See Notes to Consolidated 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 September 30, 1996, and all periods presented have been included in the accompanying consolidated financial statements. Operating results for the three months ended September 30, 1996, 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. Note 3 - Inventories The components of inventory (in thousands) consist of the following: September 30, June 30, 1996 1996 ------------------- ------------- Finished Goods $ 32,049 $ 19,439 Work-in-process 19,997 14,417 Raw Materials 31,785 19,034 ------------- ------------- Total $ 83,831 $ 52,890 ============= ============= MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Three Months Ended September 30, 1996 (FY97) Compared to Three Months Ended September 30, 1995(FY96) The increase in sales was due to the results of the recently acquired operations in Italy, specifically Gallino Plasturgia S.r.l. and affiliates, a manufacturer of steering wheels, instrument panels, bumpers and other plastic trim components; MOMO S.p.A., a manufacturer of luxury steering wheels and alloy wheels; and Italtest S.r.l., a manufacturer of printed circuit boards. Additionally, the increase in sales of complete airbag systems was offset by a decrease in sales of sensors. The increase in gross profit was due to the increased sales. However, as a percent of sales gross profit decreased from 37.6% to 26.2%. The decrease was due principally to lower margins realized by the acquired companies, the start up of new manufacturing facilities, costs associated with consolidation efforts and to a lesser extent by the lower margins realized on complete airbag systems compared to sensor products. Operating expenses increased primarily as a result of the acquisitions and to increased R&D spending. The Company's significant R&D activities include non-azide/reduced sized inflator development, electronic sensing (including occupant, weight and horn) and side impact technology. Other income (expense), net decreased primarily as a result of acquisition related interest and amortization costs. Interest from borrowings used to fund acquisitions and goodwill amortization related to the new acquisitions amounted to $2,500,000. Additionally, royalty income decreased by $1,300,000. The effective income tax rate increased from 38.8% to 40.3% primarily due to the higher tax rates in foreign operations. Liquidity and Capital Resources The Company's financial position continues to be solid. 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 $31 million for the three months ended September 30, 1996. The Company has relationships with domestic commercial banks that have provided $200 million under a credit agreement, expiring through December 1998, to finance fluctuations in working capital and acquisitions. As of September 30, 1996, $85 million was available for borrowing under the facilities. The Company intends to restructure its worldwide credit facilities prior to December 31, 1996. Such restructuring will most likely result in the refinancing of domestic and international debt with a combination of short-term revolving credit lines and longer-term debt agreements. 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. On October 25, 1996 the Company acquired the steering wheel systems operations of United Technologies Automotive, Inc. for approximately $140 million in cash. In order to finance the acquisition the Company obtained an increase in its line of credit from $200 million to $260 million. In 1997, the Company plans to invest $85 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. Management is not aware of any adverse trends that would materially affect the Company's financial position. Should suitable investment opportunities or working capital needs arise that would require additional financing, management believes that the Company's strong balance sheet and history of exceptional earnings provide a solid base for obtaining additional financial resources. 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 July 16, 1996, to report that on July 1, 1996, the Company consummated the acquisition of certain assets and the assumption of certain liabilities from Gallino Componenti Plastici S.p.A., a stock company organized under the laws of Italy; 100% of the outstanding shares of capital stock of FAS, S.p.A. and Iron Sud S.p.A., stock companies organized under the laws of Italy; 51% of the capital shares of ARAS S.r.l., and 100% of the capital shares of AG International S.r.l., AutoAvio S.r.l, and Advanced Plastic Company S.r.l., limited liability companies organized under the laws of Italy, and certain real property (collectively, "GCP") pursuant to a Master Agreement dated July 1, 1996, between IAO Industrie Riunite S.p.A., Gallino Componenti Plastici S.p.A., Carifin S.p.A., Macchi Arturo S.r.l., Gruppo Plastico Industriale S.r.l., Emilio Cazzaniga, and the Company. The aggregate purchase price for all shares and assets acquired in the purchase was approximately $131,000,000, comprised of cash of $79,000,000 and liabilities assumed of $52,000,000. 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) November 10, 1996 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 FDS
5 1,000 3-MOS JUN-30-1997 SEP-30-1996 11,636 0 171,097 0 83,831 288,988 303,577 8,962 651,268 256,563 0 0 0 316 280,547 651,268 158,671 158,671 117,023 117,023 23,438 0 4,447 13,146 5,300 7,846 0 0 0 7,846 0.25 0
-----END PRIVACY-ENHANCED MESSAGE-----