-----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, B31xsuCP51AHVT31+90+HCuvMHaaUzr1O7Wl8Avri6Mw4bRoGIKgMz7qA3k0N1D6 hLJmjjt5sHZ8inSRNfbgLA== 0000940180-98-000677.txt : 19980616 0000940180-98-000677.hdr.sgml : 19980616 ACCESSION NUMBER: 0000940180-98-000677 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980615 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980615 SROS: NONE 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: 8-K SEC ACT: SEC FILE NUMBER: 001-11474 FILM NUMBER: 98648651 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 8-K 1 CURRENT REPORT - ------------------------------------------------------------------------------ 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. ----------------------------------------- (Exact name of registrant as specified in its charter) Delaware 1-11474 22-2767118 ------------- ------- ---------- (State of (Commission (IRS Employer incorporation) File Number) Identification No.)
5300 Old Tampa Highway Lakeland, Florida 33811 ---------------------- ----- (Address of principal (Zip Code) executive offices)
Registrant's telephone number, including area code: (941) 668-6000 ------------------------------------------------------------- (Former name or former address, if changed since last report) - ------------------------------------------------------------------------------- ITEM 5. OTHER EVENTS. The Company hereby files the following information: 1. EARNINGS PER SHARE INFORMATION ------------------------------ 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
- ------------------ (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 - ----------------------------------------------------------------------------- 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 - ------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------- Basic earnings.............. $0.36 $0.58 $0.70 $0.66 Diluted earnings............ $0.36 $0.57 $0.70 $0.66
- ------------- (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. -2- 2. SELECTED HISTORICAL COMBINED FINANCIAL INFORMATION OF SRS --------------------------------------------------------- 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, ------------------ --------------- 1994 1995 1996 1996 1997 ------ ------ ------ ------ ------ (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 ------ ------ ------ ------ ------ 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 ------ ----- ------ ----- ------ Net income.................. $ 24.9 $ 38.3 $ 41.0 $ 30.0 $ 21.6 ====== ====== ====== ====== ======
AS OF DECEMBER 31, AS OF ----------------------- SEPTEMBER 30, 1995 1996 1997 ----- ------ -------------- (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 -------------------------------------------------------------------------- OPERATIONS,SRS --------------- 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 -3- 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, -------------------------------------------------------- ------------------------------------- 1994 1995 1996 1996 1997 ---------------- ----------------- ----------------- ---------------- ---------------- AS AS AS AS AS ACTUAL ADJUSTED ACTUAL ADJUSTED ACTUAL ADJUSTED ACTUAL ADJUSTED ACTUAL ADJUSTED ----- ------- ------ -------- ------ -------- ------ -------- ------ -------- (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 ====== ====== ====== ====== ====== ====== ====== ====== ====== =======
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. -4- 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. -5- (C) EXHIBITS Exhibit No. Description -------- ----------- 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. -6- 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 -------------------- Frank J. Gnisci Executive Vice President and Chief Financial Officer -7- INDEX TO EXHIBITS EXHIBIT NUMBER AND DESCRIPTION PAGE - ------------------------------ ---- 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.................. -8- EX-99.1 2 UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FIN EXHIBIT 99.1 ------------ UNAUDITED PRO FORMA FINANCIAL DATA The following unaudited pro forma financial statements are based on the historical financial statements of (i) the Company, (ii) the business acquired in the 1997 Acquisitions (as defined below) and (iii) the safety restraints systems businesses of AlliedSignal Inc. ("SRS"), which the Company acquired on October 30, 1997 (the "SRS Acquisition"). The unaudited pro forma condensed consolidated statement of earnings for the twelve months ended June 30,1997 gives effect to the SRS Transactions (as defined below), the 1997 Acquisitions and the Refinancing of the Bridge Credit Facility (as defined below) as if they had occurred on July 1, 1996. The unaudited pro forma condensed consolidated statement of earnings for the nine months ended March 31, 1998 gives effect to the SRS Transactions and the Refinancing of the Bridge Credit Facility as if they had occurred on July 1, 1997. The 1997 Acquisitions consist of the following: (i) the Company's acquisition of certain assets and liabilities of the North American steering wheel operations ("USS") of United Technologies, which was completed on October 25, 1996; and (ii) the Company's acquisition of the Custom Trim group of companies ("Custom Trim"), which was completed on February 25, 1997. All acquisitions, including the SRS Acquisition, have been accounted for using the purchase method of accounting. On October 30, 1997, the Company consummated the SRS Acquisition. The Company financed the SRS Acquisition with (i) borrowings under a $900.0 million bridge credit facility (the "Bridge Credit Facility"), (ii) the proceeds received in connection with the issuance and sale of $115.0 million of Series A Preference Shares to Siemens Aktiengeselellschaft ("Siemens") (the "Siemens Investment") and (iii) the proceeds from the issuance and sale of $200.0 million of Series B Convertible Preferred Stock of the Company (the "PSCC Financing"), which was subsequently redeemed with the proceeds received in connection with the issuance and sale of $257.7 million of the Company's 6.50% Convertible Subordinated Debentures due 2027 to BTI Capital Trust which, concurrently therewith, sold $250 million aggregate liquidation amount of its 6.50% Convertible Trust Preferred Securities (which are guaranteed by the Company) (the "Preferred Securities") in a private transaction under Rule 144A under the Securities Act of 1933 (the "Preferred Securities Offering"). The SRS Acquisition, the initial borrowings under the Bridge Credit Facility, the Siemens Investment, the Preferred Securities Offering and the application of the proceeds therefrom are referred to herein collectively as the "SRS Transactions." On April 28, 1998, the Company consummated the issuance and sale of $330.0 million of its 9 1/4% Senior Subordinated Notes due 2008 (the "Notes") in a private transaction under Rule 144A under the Securities Act of 1933 (the "Offering"). Concurrently therewith, the Company entered into a new $675.0 million revolving credit facility with certain lenders (the "New Credit Facility"). The Company used the net proceeds from the Offering, together with borrowings under the New Credit Facility, to, among other things, repay all amounts outstanding under the Bridge Credit Facility (the "Refinancing of the Bridge Credit Facility"). The unaudited pro forma financial statements have been prepared using the purchase method of accounting, whereby the total cost of the SRS Acquisition and the 1997 Acquisitions has been allocated to the tangible and intangible assets acquired and liabilities assumed based upon their respective fair values at the effective date of such acquisitions. The allocations with respect to the SRS Acquisition are based on studies and valuations that have not yet been completed. Accordingly, such allocations are preliminary and subject to revisions. As part of the purchase price allocation for the SRS Acquisition, the Company evaluated the in-process research and development of SRS. Under generally accepted accounting principles, if the technological feasibility of the acquired technology has not been established and the technology has no future alternative uses, such in-process research and development must be written-off. Accordingly, the Company wrote off $77.5 million of acquired technology that has not been established as technologically feasible during the three months ended December 31, 1997 (the "R&D Write-Off"). During the three months ended December 31, 1997, the Company formulated a repositioning program designed to reduce operating costs and increase productivity (the "Repositioning Program"). The Repositioning Program consists primarily of a 25% planned reduction in the Company's global workforce (or approximately 4,900 employees) through the elimination of redundant and overlapping positions resulting from recent acquisitions, the consolidation of the Company's manufacturing, sales and engineering facilities primarily in North America and Europe through the closing of approximately 50% (or 32) of its manufacturing facilities and 33% (or 10) of its sales and engineering facilities and the disposal of certain non-core assets. In connection with the Repositioning Program, the Company incurred a $244.0 million repositioning charge during the three months ended December 31, 1997 (the "Repositioning Charge"). In addition, during the three months ended December 31, 1997, the Company incurred a $28.4 million charge against cost of sales for inventory and long-term customer contracts relating to manufacturing processes that will be exited (the "COS Charge"). The following unaudited pro forma financial statements do not purport to represent what the Company's results of operations or financial condition would have been had the SRS Transactions, the 1997 Acquisitions and the Refinancing of the Bridge Credit Facility occurred on the dates indicated or to predict the Company's results of operations or financial condition in the future. The unaudited pro forma financial statements give effect only to the adjustments set forth in the accompanying notes and do not reflect any other benefits anticipated by management as a result of the SRS Acquisition and the 1997 Acquisition and the implementation of its business strategy. 2 UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS FOR THE TWELVE MONTHS ENDED JUNE 30, 1997
CUSTOM PRO FORMA BREED USS(a) TRIM(b) SRS(c) ADJUSTMENTS PRO FORMA ------- ----- ------- ----- ----------- --------- (dollars in millions, except per share data) Net sales.......................... $ 794.9 $50.8 $68.1 $910.8 $ (70.8)(d) $ 1,753.8 Cost of sales...................... 631.3 44.8 54.2 765.3 (61.4)(d) 1,434.2 ----------- ----- ----- ------ ------- ---------- Gross profit....................... 163.6 6.0 13.9 145.5 (9.4) 319.6 Selling, general and administrative expenses.......................... 70.6 1.4 2.0 36.7 (2.2)(d) 108.5 Research, development and engineering expenses.......................... 36.1 1.5 __ 50.6 (1.8)(d) 86.4 Amortization of intangibles........ 6.3 __ 1.0 3.2 16.0 (e) 26.5 ----------- ----- ----- ------ ------- ---------- Operating income (loss)............ 50.6 3.1 10.9 55.0 (21.4) 98.2 Other income (expense), net........ 3.5 (0.6) 3.7 7.2 (1.6)(d) 12.2 Interest expense, net.............. 24.5 __ 2.7 __ 3.4 (f) 85.7 55.1 (g) ----------- ----- ----- ------ ------- ---------- Earnings (loss) before income taxes, distributions on Preferred Securities and extraordinary item............ 29.6 2.5 11.9 62.2 (81.5) 24.7 Income taxes (benefit)............. 14.8 1.3 4.6 23.3 (2.6)(d) 4.1 (37.3)(h) Distributions on Preferred Securities........................ __ __ __ __ 16.3 (i) 16.3 ----------- ----- ----- ------ ------- ---------- Earnings (loss) before extraordinary loss(j)........................... $14.8 $ 1.2 $ 7.3 $ 38.9 $(57.9) $ 4.3 =========== ===== ===== ====== ======= ========== EARNINGS PER SHARE(k): Basic............................. $ 0.47 $ 0.14 =========== =========== Diluted........................... $ 0.47 $ 0.12 =========== ========== Basic weighted average number of common shares outstanding...... 31,648,249 31,648,249 =========== ========== Diluted weighted average number of common shares outstanding...... 31,867,366 4,883,226 (l) 36,750,592 ========== ========= ========== OTHER DATA: Depreciation and amortization...... $91.8 Ratio of earnings to combined fixed charges and preferred stock dividends(m)........ 1.1x
3 UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS FOR THE NINE MONTHS ENDED MARCH 31, 1998 PRO FORMA BREED(n) SRS(o) ADJUSTMENTS PRO FORMA ------- ------- ------- --------- (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) Net sales ......................................... $ 968.0 $297.4 19.9)(d) $1245.5 Cost of sales ..................................... 837.4 266.5 (17.7)(d) 1086.2 ------- ------ ------- ------- Gross profit ...................................... 130.6 30.9 (2.2) 159.3 Selling, general and administrative expenses ...... 59.7 11.8 (0.6)(d) 70.9 Research, development and engineering expenses .... 49.9 19.9 __ 69.8 Repositioning Charge .............................. 244.0 __ __ 244.0 R&D Write-Off ..................................... 77.5 __ __ 77.5 Amortization of intangibles ....................... 13.0 1.0 5.3(e) 19.3 ------- ------ ------- ------- Operating income (loss) ........................... (313.5) (1.8) (6.9) (322.2) Other income (expense), net ....................... 1.2 (3.9) 0.4 (d) (2.3) Interest expense, net ............................. 62.1 -- (13.5)(f) 59.2 10.6 (g) ------- ------ ------- ------- Earnings (loss) before income taxes, distributions on Preferred Securities and extraordinary item ....... (374.4) (5.7) (3.6) (383.7) Income taxes (benefit) ............................. (54.3) (1.7) (0.4)(d) (59.4) (3.0)(h) Distributions on Preferred Securities .............. 5.7 -- 6.5 (i) 12.2 ------- ------ ------- ------- Earnings (loss) before extraordinary loss(j) ....... $(325.8) $ (4.0) $(6.7) $(336.5) ======= ====== ======= ======= EARNINGS PER SHARE(k): Basic and diluted loss ............................. $ (9.92) $ (10.22) ======== ======= Basic and diluted weighted average number of common shares outstanding .......................... 32,922,510 32,922,510 ========== ========== OTHER DATA: Depreciation and amortization ..................... $59.9 Ratio of earnings to combined fixed charges and preferred stock dividends(m) ................ __
4 NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (a) Represents USS's results of operations for the four months ended October 25, 1996, the date of acquisition. (b) Represents Custom Trim's results of operations for the eight months ended February 22, 1997, the date of acquisition. (c) Represents SRS's results of operations for the twelve months ended June 30, 1997. (d) Represents the exclusion of the results of operations attributable to certain operations of SRS that were not acquired by the Company in the SRS Acquisition, estimated by the Company as follows:
TWELVE NINE MONTHS MONTHS ENDED ENDED JUNE 30, 1997 MARCH 31, 1998 ------------ --------------- Net sales................................ $70.8 $19.9 Cost of sales............................ 61.4 17.7 Selling, general and administrative...... 2.2 0.6 Engineering, research and development.... 1.8 -- Other income (expense), net.............. 1.6 (0.4) Income taxes............................. 2.6 0.4
The reduction in income taxes was estimated using the effective tax rate of SRS for the twelve months ended June 30, 1997. (e) Estimated goodwill and preliminary allocation of purchase price to identifiable intangible assets acquired in the SRS Acquisition are as follows (in millions): Purchase price..................................................... $710.0 Less: Estimated fair market value of SRS (net assets acquired less assumed liabilities).......................................... $122.8 Adjustment for planned closings of facilities................... (45.0) Adjustment for estimated costs of planned employee termination.. (16.7) (61.1) ------ ----- 648.9 Estimated costs related to SRS Acquisition............................ 15.0 Other................................................................. 19.4 Less estimated in-process research and development.................... (77.5) Excess of purchase price over net assets acquired........................ $605.8 ======
5 NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (CONTINUED)
AMORTIZATION VALUE OF PERIOD IN INTANGIBLES YEARS ----------- ---- (IN MILLIONS) Trained workforce........ $ 10.3 10 Developed technology..... 158.1 22 Goodwill................. 437.4 40 ------ $605.8 ======
The allocations with respect to the SRS Acquisition are based on studies and valuations that have not yet been completed. Accordingly, such allocations are preliminary and subject to revision. The amortization expense of intangibles incurred as a result of the SRS Acquisition is as follows:
TWELVE NINE MONTHS MONTHS ENDED ENDED JUNE 30, 1997 MARCH 31, 1998 ------------- -------------- (IN MILLIONS) Goodwill amortization related to SRS Acquisition.......................... $19.2 $14.4 Amortization of intangible assets previously recorded by SRS................ (3.2) (1.0) Amortization of intangible assets recorded by SRS post-acquisition................... (8.1) ----- Net increase in goodwill amortization....... $16.0 $ 5.3 ====== ======
6 Notes to Unaudited Pro Forma Condensed Consolidated Statement of Earnings (continued) (f) Reflects various financing and advisory fees relating to the New Credit Facility and the Offering, which aggregate $23.9 million and will be paid in cash. Fees of $12.3 million relating to the New Credit Facility are being amortized over the weighted average life of the facility of 5.5 years and fees of $11.6 million relating to the Offering are being amortized over the ten- year life of the Notes. These fees would have affected the amortization of deferred financing costs as follows:
TWELVE MONTHS NINE MONTHS ENDED ENDED JUNE 30, 1997 MARCH 31, 1998 ------------------- ---------------- (in millions) Amortization of fees relating to New Credit Facility...................................... $2.2 $ 1.7 Amortization of fees relating to the Offering. 1.2 0.9 Less amortization of fees on Bridge Credit Facility............................... __ (15.9) Less amortization of fees on previous credit facility replaced by Bridge Credit Facility.... __ (0.2) ------ ------ $3.4 $(13.5) ======= ======
(g) Represents the additional interest expense that would have been incurred if the Notes and borrowings under the New Credit Facility incurred in connection with the Refinancing of the Bridge Credit Facility had been outstanding for the entire period.
TWELVE MONTHS NINE MONTHS ENDED ENDED JUNE 30, 1997 MARCH 31, 1998 -------------- ---------------- (IN MILLIONS) Interest expense on the New Credit Facility. $ 41.6 $ 31.2 Interest expense on the Notes............... 30.5 22.9 Interest expense under the Bridge Credit Facility and credit facility replaced by Bridge Credit Facility................... (17.0) (41.9) Interest expense attributable to PSCC Financing........................... __ (1.6) ------ ------ Net increase in interest expense............ $ 55.1 $ 10.6 ====== ======
The interest rate for the New Credit Facility is based on base interest rates selected by the Company plus applicable margins. 7 NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (CONTINUED) (h) The income tax expense (benefit) is calculated using the historical effective income tax rates as follows:
TWELVE MONTHS NINE MONTHS ENDED ENDED JUNE 30, 1997 MARCH 31, 1998 --------------- ----------------- Earnings (loss) before income taxes, distributions on Preferred Securities and extraordinary item................. $ 24.7 $(383.7) Distributions on Preferred Securities.... 16.3 12.2 ------ ------- 8.4 (395.9) Historical effective tax rate............ 49% 15% ------ ------- Pro forma income tax expense (benefit)... 4.1 (59.4) Previously recorded income taxes expense (benefit).............................. 41.4 (56.4) ------ ------- Pro forma adjustment..................... $(37.3) $ (3.0) ====== =======
(i) Represents distributions at the annual rate of 6.50% that would have been recorded if the Preferred Securities had been outstanding for the entire period.
TWELVE MONTHS NINE MONTHS ENDED ENDED JUNE 30, 1997 MARCH 31, 1998 -------------- ---------------- (IN MILLIONS) Distributions on the Preferred $16.3 $12.2 Securities......................... Distributions previously recorded... __ (5.7) ----- ------ $16.3 $ 6.5 ===== =====
8 (j) Assuming that the SRS Transactions and the Refinancing of the Bridge Credit Facility had occurred as of the first day of the respective periods, unamortized fees relating to the Bridge Credit Facility and the credit facility that it replaced would have been recorded as an extraordinary loss, net of tax benefit. In July 1996, the Company acquired Gallino Plasturgia, S.r.1. ("Gallino"), a manufacturer of steering wheels and plastic interior and exterior parts based in Italy, for $74 million in cash and the assumption of $52 million of liabilities. During the three months ended June 30, 1997, the Company committed to a plan to dispose of the plastic interior and exterior parts business (the "Gallino Disposition") and is currently in negotiations with a third party relating to the sale of this business. The following table sets forth the adjustments necessary to exclude the results of operations attributable to the assets being disposed of in connection with the Gallino Disposition:
TWELVE MONTHS ENDED NINE MONTHS ENDED JUNE 30, 1997 DECEMBER 31, 1997 --------------------------------- ------------------------------ PRO FORMA PRO FORMA GALLINO EXCLUDING PRO GALLINO EXCLUDING PRO FORMA ADJUSTMENTS GALLINO FORMA ADJUSTMENTS GALLINO --------- ----------- --------- -------- ----------- --------- (in millions) Net sales..................... $1,753.8 $(182.2) $1,571.6 $1,245.5 $(125.7) $1,119.8 Cost of sales................. 1,434.2 (168.4) 1,265.8 1,086.2 (117.9) 968.3 -------- ------- -------- -------- ------- -------- Gross profit.................. 319.6 (13.8) 305.8 159.3 (7.8) 151.5 Selling, general and administrative expenses..................... 108.5 (9.9) 98.6 70.9 (6.5) 64.4 Research, development and engineering expenses..................... 86.4 (2.5) 83.9 69.8 (3.1) 66.7 Repositioning Charge.......... -- -- -- 244.0 -- 244.0 R&D Write-Off................. -- -- -- 77.5 -- 77.5 Amortization of intangibles.................. 26.5 -- 26.5 19.3 -- 19.3 -------- ------- -------- -------- ------- -------- Operating income (loss)....................... 98.2 (1.4) 96.8 (322.2) 1.8 (320.4) Other income (expense), net.......................... 12.2 (1.0) 11.2 (2.3) (1.7) (4.0) Interest expense, net......... 85.7 (3.8) 81.9 59.2 (2.8) 56.4 -------- ------- -------- -------- ------- -------- Earnings (loss) before income taxes, distributions on Preferred Securities and extraordinary item......................... 24.7 1.4 26.1 (383.7) 2.9 (380.8) Income taxes (benefit)........ 4.1 0.7 4.8 (59.4) 0.4 (59.0) Distribution on Preferred Securities................... 16.3 -- 16.3 12.2 -- 12.2 -------- ------- -------- -------- ------- -------- Earnings (loss) before extraordinary loss........... $ 4.3 $ 0.7 $ 5.0 (336.5) 2.5 (334.0) ======== ======= ======== ======== ======= ========
9 Notes To Unaudited Pro Forma Condensed CONSOLIDATED STATEMENT OF EARNINGS (CONTINUED) (k) Earnings per share have been adjusted to conform to the provisions of SFAS No. 128. (l) The pro forma basic weighted average number of common shares outstanding does not include the impact of the conversion by Siemens of 4,883,226 of its Series A Preference Shares into an equal number of shares of Common Stock, which occurred on January 20, 1998. The pro forma diluted weighted average number of common shares outstanding includes the impact of converting such Series A Preference Shares into Common Stock as of the beginning of the period for the twelve months ended June 30, 1997, but are not included in the nine months ended March 31, 1998 because they are anti-dilutive. (m) For purposes of computing the ratio of earnings to combined fixed charges and preferred stock dividends, earnings consist of earnings before income taxes and extraordinary items plus combined fixed charges and preferred stock dividends. Combined fixed charges and preferred stock dividends consist of interest expense, whether expensed or capitalized, amortization of debt issuance costs, an estimated portion of rental expense that is representative of the interest factor in such rentals and distributions on the Preferred Securities (which are calculated on the basis of the amount of pre-tax income required to pay such distributions). Earnings were insufficient to cover combined fixed charges and preferred stock dividends by $396.0 million for the nine months ended March 31, 1998. The ratio of earnings to combined fixed charges and preferred stock dividends for the nine months ended March 31, 1998 reflects the Repositioning Charge, the R&D Write-Off and the COS Charge. (n) The BREED statement of earnings for the nine months ended March 31, 1998 includes the results of operations for the 1997 Acquisitions for the entire period. (o) Represents SRS's results of operations for the four months ended October 30, 1997, the date of acquisition. 10 -----END PRIVACY-ENHANCED MESSAGE-----