-----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, I62SYs9J1Fd2rvntCM9dH8lqvph9swEQFxBa0ZlGLrqEzOz9+DqbqCl38lPSjR05 nuJbMQ95nkY7tzYd/gaz/g== 0000891531-97-000004.txt : 19970222 0000891531-97-000004.hdr.sgml : 19970222 ACCESSION NUMBER: 0000891531-97-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970214 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: 97531960 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 2ND QUARTER 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: December 31, 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 January 24, 1997, 31,661,714 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 - December 31, 1996 (Unaudited)and June 30, 1996 ........................... 1 Consolidated Condensed Statements of Earnings (Unaudited) Three and six months ended December 31, 1996 and 1995 .. 2 Consolidated Condensed Statements of Cash Flows (Unaudited) Six months ended December 31, 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 4. Submission of Matters to a Vote of Security Holders............ 6 Item 6. Exhibits and Reports on Form 8-K .............................. 6 Signatures ............................................................ 7 Consolidated Condensed Balance Sheets (Unaudited) December 31, 1996 and June 30, 1996 In thousands December 31, June 30, 1996 1996 ASSETS Current Assets Cash and cash equivalents $ 30,169 $ 95,830 Accounts receivable 171,327 110,656 Inventories 87,294 52,890 Prepaid expenses 19,848 7,247 --------- --------- Total Current Assets 308,638 266,623 Net property, plant and equipment 349,901 171,653 Intangibles 131,997 45,053 Investments and other assets 12,450 20,473 --------- --------- Total Assets $802,986 $503,802 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Short-term borrowings $195,339 $120,688 Accounts payable 106,526 33,940 Accrued expenses 57,660 21,824 --------- --------- Total Current Liabilities 359,525 176,452 Long-term debt 131,433 42,123 Other long-term liabilities 30,010 10,147 --------- --------- Total Liabilities 520,968 228,722 --------- --------- Stockholders' Equity Common stock 316 316 Additional paid-in capital 77,303 76,652 Retained earnings 208,547 201,981 Other (4,148) (3,869) --------- ----------- Total Stockholders' Equity 282,018 275,080 --------- --------- Total Liabilities and Stockholders' Equity $802,986 $503,802 ========= ========= See Notes to Consolidated Condensed Financial Statements. Consolidated Condensed Statements of Earnings (Unaudited) Three and six months ended December 31, 1996 and 1995 In thousands, except earnings per share Three Months Ended Six Months Ended December 31, December 31, ------------------------ ------------------------- 1996 1995 1996 1995 Net sales $ 182,567 $ 105,655 $ 341,238 $ 198,256 Cost of sales 145,877 62,811 262,454 120,548 ----------- ---------- ---------- ---------- Gross profit 36,690 42,844 78,784 77,708 ----------- ---------- ---------- ---------- Operating expenses Selling, general and administrative expenses 16,718 9,638 32,183 18,998 Research and development expenses 9,846 5,942 17,819 11,594 Amortization of intangibles 796 410 2,078 816 ----------- ---------- ---------- ---------- Total operating expenses 27,360 15,990 52,080 31,408 ----------- ---------- ---------- ---------- Operating income 9,330 26,854 26,704 46,300 Other income (expense), net (4,380) 1,688 (8,608) 2,843 ----------- ---------- ---------- ---------- Earnings before income taxes 4,950 28,542 18,096 49,143 Income taxes 1,800 10,700 7,100 18,700 ----------- ---------- ---------- ---------- Net earnings $ 3,150 $ 17,842 $ 10,996 $ 30,443 =========== ========== ========== ========== Earnings per share $ .10 $ .57 $ .35 $ .97 =========== ========== ========== ========== Average shares outstanding 31,640 31,531 31,634 31,522 =========== ========== ========== ==========
See Notes to Consolidated Condensed Financial Statements.
Consolidated Condensed Statements of Cash Flows (Unaudited) Six months ended December 31, 1996 and 1995 In thousands 1996 1995 ------------ ----------- Cash Flows from Operating Activities Net earnings $ 10,996 $ 30,443 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 21,532 9,197 Changes in working capital items 56,290 (26,103) Other (16,466) (567) ------------- ----------- Net cash provided by operating activities 72,352 12,970 ------------- ----------- Cash Flows from Investing Activities Cost of acquisition, net of cash acquired (211,033) --- Purchases of property, plant and equipment (41,679) (19,879) Sales of short-term investments, net --- 5,554 ------------- ----------- Net cash used in investing activities (252,712) (14,325) ------------- ----------- Cash Flows from Financing Activities Dividends paid (4,430) (3,152) Proceeds from (repayments of) debt, net 118,951 (2,366) Stock options exercised 651 408 ------------- ----------- Net cash provided by (used in) financing activities 115,172 (5,110) ------------- ----------- Effect of exchange rate changes on cash (473) (822) ------------- ----------- Net decrease in cash and cash equivalents (65,661) (7,287) Cash and cash equivalents at beginning of period 95,830 26,355 ------------- ----------- Cash and cash equivalents at end of period $ 30,169 $ 19,068 ============= =========== Cost of Acquisition: Working capital, net of cash acquired $ (44,239) $ --- Property, plant and equipment (151,234) --- Cost in excess of net assets acquired (72,914) --- Investments and other assets (18,994) --- Long-term debt 33,910 --- Other long-term liabilities 42,438 --- ------------- ----------- Net cost of acquisition $ (211,033) $ --- ============= ===========
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 December 31, 1996, and all periods presented have been included in the accompanying consolidated condensed financial statements. Operating results for the six months ended December 31, 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. 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 and a $13 million post-closing purchase price adjustment to be paid in February. 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. For both 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: December 31, June 30, 1996 1996 ------------------ --------- Finished Goods $35,792 $19,439 Work-in-process 21,130 14,417 Raw Materials 30,372 19,034 ------------- ----------- Total $87,294 $52,890 ============= =========== Note 4 - Borrowings On October 25, 1996, the Company increased its line of credit from $200 million to $260 million in order to finance the acquisition of USS (see Note 2). MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations (Second Quarter FY97) Three Months Ended December 31, 1996 (FY97) Compared to Three Months Ended December 31, 1995 (FY96) Net sales increased approximately $77 million due principally to the results of the Gallino, MOMO and United Steering Systems acquisitions. Sales for these operations amounted to approximately $100 million and were comprised of steering wheels, alloy wheels, instrument panels, bumpers and other plastic trim components. Electromechanical sensor sales decreased approximately $18 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 41% to 20%. Gross profit on sales of products related to the new acquisitions are significantly lower as a percent of sales compared to margins on the Company's sensor products. Additionally, plant consolidation costs and costs associated with the start-up of certain new inflator products 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. Other income (expense), net decreased primarily due to an increase in net interest expense of $6 million. Approximately $4 million was incurred as a result of borrowings used to purchase the new acquisitions. The remaining interest expense is primarily related to the existing debt of the new acquisitions. Additionally, royalty income decreased by $1,000,000. Six Months Ended December 31, 1996 (FY97) Compared to Six Months Ended December 31, 1995 (FY96) Net sales increased approximately $143 million due principally to the results of the Gallino, MOMO and United Steering Systems acquisitions. Sales for these operations amounted to approximately $163 million and were comprised of steering wheels, alloy wheels, instrument panels, bumpers and other plastic trim components. Electro- mechanical sensor sales decreased approximately $25 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 39% to 23%. Gross profit on sales of products related to the new acquisitions are significantly 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. Other income (expense), net decreased primarily due to an increase in net interest expense of $10.2 million. Approximately $6 million was incurred as a result of borrowings used to purchase the new acquisitions. The remaining interest expense is primarily related to the existing debt of the new acquisitions. Additionally, royalty income decreased by $2 million. 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 $72 million for the six months ended December 31, 1996. The Company has relationships with domestic commercial banks that have provided $260 million under a credit agreement, expiring through December 1998, to finance fluctuations in working capital and acquisitions. As of December 31, 1996, $12 million was available for borrowing under the facilities. The Company intends to restructure its worldwide credit facilities prior to March 31, 1997. 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. In January the Company announced its intent to acquire Custom Trim Group of Companies. Custom Trim is the industry's primary supplier of leather-wrapped steering wheels. In order to finance the acquisition the Company will obtain an increase in its line of credit. 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. 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 4. Submission of Matters to a Vote of Security Holders At the Company's Annual Meeting of Stockholders held on November 20, 1996, the following proposal was adopted by the votes specified below: Broker Proposal For Against Withheld Abstain Nonvotes (1) --- ------- -------- ------- -------- Election of Directors: Allen K. Breed 29,222,966 -- 109,057 -- -- Johnnie Breed 29,222,981 -- 109,042 -- -- Peter A. Lewis 29,225,183 -- 106,840 -- -- Larry W. McCurdy 30,226,348 -- 105,675 -- -- Daniel M. Edelman 29,224,631 -- 107,392 -- -- An increase in the number of shares of Common Stock available for issuance underthe 1992 Director Stock Option Plan from 50,000 to 100,000 shares 28,876,586 373,022 -- 82,415 -- - ------------------ (1) Votes counted for determining whether a quorum existed at the meeting, as to which the broker or other nominee holder was not authorized by the beneficial owner to cast a vote on this particular proposal but was authorized to cast (and did cast) a vote on at least one other proposal.
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 November 9, 1996 to report that on October 25, 1996, the Company consummated 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 capital stock of United Technologies Automotive Clifford Limited, an English company. 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) February 14, 1997 By: /s/ Edward H. McFadden Edward H. McFadden Executive Vice President and Chief Financial Officer EX-27 2 ART. 5 FDS FOR 2ND QUARTER 10-Q
5 1,000 6-MOS JUN-30-1997 DEC-31-1996 30,169 0 171,327 0 87,294 308,638 349,901 19,454 802,986 359,525 0 0 0 316 281,702 802,986 341,238 341,238 262,454 262,454 52,080 0 11,106 18,096 7,100 10,996 0 0 0 10,996 0.35 0
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