<PAGE>
- --------------------------------------------------------------------------------
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): MAY 12, 1998
BREED Technologies, Inc.
------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
Georgia 1-11474 22-2767118
- ------------------------ ------------------------ ---------------------------------
<S> <C> <C>
(State of incorporation) (Commission File Number) (IRS Employer Identification No.)
</TABLE>
5300 Old Tampa Highway
Lakeland, Florida 33811
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (941) 668-6000
------------------------------------------------------------------
(Former name or former address, if changed since last report)
- --------------------------------------------------------------------------------
<PAGE>
ITEM 5. OTHER EVENTS.
Breed Technologies, Inc. (the "Company"), or its executive officers and
directors on behalf of the Company, may from time to time make "forward looking
statements" within the meaning of the Securities Act of 1933 and the Securities
Exchange Act of 1934 (collectively, the "Acts"). The Company is filing this
Current Report on Form 8-K to avail itself of the safe harbor provided in the
Acts with respect to any such (a) forward looking statements that may be
contained in the company's reports and other documents filed with the Securities
and Exchange Commission under Section 13 or 15(d) of the Securities Exchange Act
of 1934 and (b) oral forward looking statements made by the Company's executive
officers and directors on behalf of the Company to the press, potential
investors, securities analysts and others. Such forward looking statements
could involve, among other things, statements regarding the Company's intent,
belief or expectation with respect to (i) the Company's results of operations
and financial condition, (ii) the consummation of acquisitions and financing
transactions and the effect thereof on the Company's business, (iii) the
Company's plans and objectives for future operations and expansion, and (iv)
non-recurring and other special charges and cost savings estimated by the
Company. Any such forward looking statements would be subject to risks and
uncertainties that could cause actual results of operations, financial
condition, acquisitions, financing transactions, operations, expansion, actual
amounts of write-offs or charges and other events to differ materially from
those expressed or implied in such forward looking statements. Any such forward
looking statements would be subject to a number of assumptions regarding, among
other things, future economic, competitive and market conditions generally.
Such assumptions would be based on facts and conditions as they exist at the
time such statements are made as well as predictions as to future facts and
conditions, the accurate prediction of which may be difficult and involve the
assessment of events beyond the Company's control. Further, the Company's
business is subject to a number of risks that would affect any such forward
looking statements. Such risks include, among others, the following:
. SUBSTANTIAL LEVERAGE. The Company is highly leveraged. The degree
to which the Company is leveraged could have important consequences
for the holders of the Company's securities including, but not
limited to, the following: (i) a substantial portion of the Company's
cash flow from operations must be dedicated to the payment of
principal and interest on its indebtedness and will not be available
for other purposes; (ii) the Company's ability to obtain additional
financing in the future for working capital, capital expenditures,
acquisitions or other purposes may be impaired; (iii) the Company's
leverage may increase its vulnerability to economic downturns and
limit its ability to withstand competitive pressures; and (iv) the
Company's ability to capitalize on significant business opportunities
may be limited.
. INTEGRATION AND MANAGEMENT OF ACQUIRED BUSINESSES. Since August
1994, the Company has completed ten acquisitions. There can be no
assurance that the Company will be able to successfully integrate the
operations of the recently acquired businesses into the Company's
operations. In particular, the Company may experience (i) difficulty
in assimilating the operations and personnel of the acquired
companies, (ii) disruption of the Company's ongoing business, (iii)
the inability of management to maximize the financial and strategic
position of the Company by the successful incorporation of acquired
products or technologies into the Company's offerings, (iv) difficulty
in the maintenance of uniform standards, controls, procedures and
policies and (v) the impairment of relationships with employees and
customers. Any failure on the part of the Company to successfully
integrate and manage the operations of the recently acquired
businesses could have a material adverse effect on the Company's
financial condition and results of operations.
. RISK ASSOCIATED WITH SIEMENS JOINT VENTURE. In December 1997 the
Company and Siemens Aktiengesellschaft ("Siemens") agreed to form a
joint venture (the "Siemens Joint Venture"). When fully operational
over the next several years, the Siemens Joint Venture is expected to
assume the sales and marketing, as well as the research, development
and engineering, functions for the Company's integrated occupant
protection systems and components. As a result, because the Siemens
Joint Venture will employ the personnel responsible for such
functions, the Company expects to substantially reduce its sales and
marketing and research, development and engineering staff. In the
event that the Siemens Joint Venture is terminated, there can be no
assurance that the Company will be able to rehire a sufficient number
of such personnel and any inability to do so could have a material
adverse effect on the Company. Further, all significant operating
decisions regarding the joint venture must be approved by Siemens and
the Company. In the event of a deadlock regarding material
-2-
<PAGE>
operating decisions, either party may sell their interest in the
Siemens Joint Venture to the other or the Siemens Joint Venture may be
terminated. If the Company sells its interest in the Siemens Joint
Venture or the Siemens Joint Venture is otherwise terminated, the
Company will likely no longer have access to Siemens' expertise in
sensors and electronics, which may materially adversely affect the
Company's ability to develop next generation, intelligent, integrated
occupant protection systems. Any failure to develop such systems would
adversely affect the Company's competitive position and could have a
material adverse effect on the Company's financial condition and
results of operations.
. DEPENDENCE ON THE DEVELOPMENT OF NEW PRODUCTS. In recent years,
automotive occupant protection systems have changed significantly,
based on changes in government regulations, the demand by automobile
manufacturers ("OEMs") and consumers for improved systems and rapid
advances in the technology underlying these systems. The Company
believes that occupant protection systems will continue to change
rapidly, with industry participants seeking to develop and introduce
intelligent occupant protection systems that will be able to react
differently to individual crash situations and to make improvements in
other components of occupant protection systems. The Company believes
that its future success will depend in part on its ability to enhance
its existing products and to develop new products that meet changing
government regulatory requirements and satisfy OEM and consumer
requirements, particularly requirements for intelligent occupant
protection systems. There can be no assurance that the Company will
meet these objectives and any failure to do so could have a material
adverse effect on the Company's financial condition and results of
operations.
. RELIANCE ON MAJOR CUSTOMERS. The Company has certain key customers
and a significant decline in sales of the Company's products to these
customers would have a material adverse effect on the Company's
financial condition and results of operations. These customers are
not committed to purchase any specified quantities of products from
the Company and there can be no assurance that these customers will
continue to purchase products from the Company at levels consistent
with previous purchases.
. EFFECTS OF LIKELY PRICE DECREASES. The Company anticipates that the
prices of automotive occupant protection systems and components such
as those sold by the Company will continue to decline over the next
several years as a result of competitive pressures and OEM
requirements. The Company's future profitability, therefore, will
depend, among other things, on its ability to continue to reduce its
per-unit costs and maintain a cost structure, internally and with its
suppliers, that will enable it to offer competitive prices. There can
be no assurance that the Company will be successful in doing so.
. DEPENDENCE ON THE AUTOMOTIVE INDUSTRY. Sales of products to the
automotive industry have accounted for substantially all of the
Company's net sales. The automobile market is cyclical and dependent
on general economic conditions. Future declines in car production in
the United States or in markets outside the United States could have
an adverse effect on the Company's financial condition and results of
operations. In addition, most of the Company's customers are
unionized and may, from time to time, experience labor disruptions.
Any disruption in production by the Company's customers could have an
adverse effect on the Company's financial condition and results of
operations.
. GOVERNMENT REGULATION. The North American market for automotive
occupant protection systems has been significantly affected by federal
safety regulations and the Company believes that such regulations will
continue to have a significant effect on this market. Specifically,
the rapid installation of driver-side and passenger-side airbags was
initially caused in the United States by federal safety regulations.
Recently, there has been negative publicity concerning airbag
performance, particularly the performance of passenger-side airbags,
and it is possible that federal safety regulations will be revised in
response to the concerns raised. It is difficult to predict the
nature of any such regulatory changes or the impact of such changes on
the Company's financial condition and results of operations.
. PRODUCT LIABILITY. The sale of sensors, electronics and related
software, airbags and inflators, seatbelt systems, steering wheels and
related components entails an inherent risk of product liability
claims. Although the Company maintains product liability insurance
covering certain types of claims, the Company's policies are subject
to substantial deductibles and there can be no assurance that the
-3-
<PAGE>
coverage limits of the Company's insurance policies will be adequate
or that any particular loss will be covered. Such insurance can be
expensive and in the future may not be available on acceptable terms,
if at all. A successful claim brought against the Company not covered
by the Company's insurance or resulting in a recovery in excess of its
insurance coverage could have a material adverse effect on the
Company's financial condition and results of operations.
. WARRANTY AND RECALL EXPOSURE. The Company warrants to its OEM
customers that its products are free from defects and that they meet
certain OEM designated specifications. The OEMs in turn offer product
warranties to the purchasers of vehicles. In some instances of common
complaint, the automobile manufacturer will institute a vehicle recall
or will be required by a governmental agency to conduct a recall. As
a result, from time to time, the Company has received claims against
it and requests for payment from its OEM customers to remedy
complaints made by the purchasers of vehicles. There can be no
assurance that the Company will not incur substantial warranty or
recall expense in the future. Such complaints and the related
expenses could have a material adverse effect on the Company's
relationship with its OEM customers and its financial condition and
results of operations.
. POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS. The Company's quarterly
operating results may vary significantly depending on factors such as
the timing of significant orders, the level of sales by automobile
manufacturers, disruptions caused by labor disputes and the seasonal
patterns of its customers, especially those located in Europe. A
large portion of the Company's expenses are fixed and cannot be
adjusted in response to a shortfall in quarterly revenues. There can
be no assurance that the Company will operate profitably in any
quarter.
. LONG LEAD TIMES FOR SALES. The Company typically competes for new
business at the beginning of the development of new vehicle models and
upon the redesign of existing models by its customers. New model
development generally begins three to five years prior to the
marketing of such models to the public. As a result of the relatively
long lead times required for sales of automotive occupant protection
systems and components, it may be difficult for the Company to obtain
new sales to replace any unexpected decline in sales to existing
customers. The failure of the Company to obtain new business for new
models or to retain or increase business on redesigned existing models
could adversely affect the Company's financial condition and results
of operations.
. COMPETITION. The markets for automotive occupant protection systems
and components are highly competitive. Increased competition could
result in price reductions and loss of market share, which would
adversely affect the Company's financial condition and results of
operations. Many of the Company's current and potential competitors
have greater financial and other resources than the Company. There
can be no assurance that the Company will be able to continue to
compete successfully with its existing competitors or will be able to
compete successfully with new competitors.
. RISKS ASSOCIATED WITH INTERNATIONAL SALES. International sales have
accounted for, and the Company expects that international sales will
continue to account for, a significant portion of the Company's
business in the future. The Company's ability to compete effectively
outside the United States will depend on its ability to develop the
relationships and, if demand requires, additional facilities necessary
to service international customers. In addition, the Company's
financial results attributable to international sales may be affected
by fluctuations in currency exchange rates, increases in duty rates,
difficulties in obtaining export licenses, trade and tariff
regulations, political instability, difficulties or delays in
collecting accounts receivable and difficulties in staffing and
managing international operations. In recent months, certain Asian
currencies have been devalued significantly in relation to the U.S.
dollar and financial markets in Asia have experienced significant
turmoil. There can be no assurance that the Company's sales in Asia
will not be materially adversely affected by such developments.
. DEPENDENCE ON SUPPLIERS. Certain key components used in the
Company's products, such as restraints control modules and certain
hybrid inflators, are currently purchased from single sources. In
addition, the Company subcontracts the manufacture of certain of its
subassemblies to third parties. The inability to obtain sufficient
sources of components or subassemblies as required, or to obtain or
-4-
<PAGE>
develop alternative sources at competitive prices and quality if and
as required in the future, could result in delays in product shipments
or increase the Company's supply costs, either of which would
adversely affect the Company's financial condition and results of
operations.
. PATENTS AND PROPRIETARY TECHNOLOGY. The Company relies on a number
of patents, trade secrets and non-disclosure agreements to protect its
technology. There can be no assurance that any patents now or
hereafter owned by the Company will afford protection against
competitors which develop similar technology. In addition, upon
expiration of such patents, competitors may develop and sell products
based on technologies similar or equivalent to those currently covered
by the Company's patents. In addition, the laws of some foreign
countries do not protect the Company's patents and other proprietary
rights to the same extent as do the laws of the United States. There
can be no assurance that the steps taken by the Company to protect its
proprietary rights will be adequate to prevent imitation of its
products or technology, that the Company's proprietary information
will not become known to competitors, that the Company can effectively
protect its rights to unpatented proprietary information or that the
Company's competitors will not independently develop products or
technologies that are superior to the Company's products or
technologies without infringing on the Company's intellectual property
rights. Although the Company believes that its products and
technology do not infringe on the proprietary rights of others, there
can be no assurance that third parties will not assert infringement
claims in the future.
. SAFETY AND ENVIRONMENTAL CONSIDERATIONS. Sodium azide, which is used
in the propellant for certain of the Company's inflators, is flammable
and has exhibited toxicity in laboratory animal tests. In addition,
the manufacture of propellant containing sodium azide, as well as
primers used in certain of the Company's products, entails certain
hazards. The Company's method of production limits the quantity of
these energetic materials in process at any one time and utilizes
certain safety measures. Notwithstanding these precautions, the
Company has on occasion experienced fires and explosions at its
manufacturing facilities. Although the Company's facilities and
processes are designed in a manner intended to minimize risks
associated with the use of energetic materials such as sodium azide
and primers, there can be no assurance that the Company will not
encounter additional incidents or safety issues relating to the use
and manufacture of these energetic materials. The Company uses
various hazardous and toxic substances in its manufacturing processes,
including certain solvents, lubricants, sodium azide and other
pyrotechnic materials. The inadvertent release of any of these
materials into the environment could subject the Company to
significant liability for clean-up costs or fines, which could have a
material adverse effect on the Company's financial condition and
results of operations. Additionally, the Company may be required to
make significant expenditures to ensure that the Company's facilities
and operations continue to satisfy environmental regulations and these
regulations may change significantly in the future.
In light of the significant uncertainties inherent in any forward looking
statements, undue reliance should not be placed on any such statements.
* * *
-5-
<PAGE>
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: May 12, 1998
BREED TECHNOLOGIES, INC.
By: /s/ Frank J. Gnisci
-----------------------------------
Frank J. Gnisci
Executive Vice President and Chief
Financial Officer
-6-
