SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
Commission File Number 0-23938
SAFETY COMPONENTS INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
2160 North Central Road, Fort Lee, New Jersey 07024
(Address and zip code of principal executive offices)
33-0596831
(IRS Employer Identification Number)
(201) 592-0008
(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 twelve months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to the
filing requirements for at least the past 90 days.
Yes [X] No [ ]
The number of shares outstanding of the issuer's common stock, $.01 par value
per share, as of August 20, 1997, was 5,022,383.
<PAGE>
This Form 10-Q/A, Amendment Number 1, amends and supplements the Form 10-Q
(the "Original Form 10-Q") filed by Safety Components International, Inc. on
August 14, 1997. The sole purpose of this Amendment Number 1 is to amend Part I:
Item 1 and Item 2 of the Original Form 10-Q to correct one line item in the
Consolidated Statements of Cash Flows for three months ended June 30, 1997 and
include an explanation of such change in the related discussion included in
Management's Discussion and Analysis of Financial Condition and Results of
Operations. Items 1 and 2 of Part I of the Original Form 10-Q are hereby amended
and restated to read in their entirety as follows:
SAFETY COMPONENTS INTERNATIONAL, INC.
PART I
FINANCIAL INFORMATION
The unaudited consolidated financial information at June 30, 1997 and for the
three month period ended June 30, 1997 and the audited consolidated financial
information at March 31, 1997 relate to Safety Components International, Inc.
and its subsidiaries.
ITEM 1. FINANCIAL STATEMENTS PAGE
Consolidated Balance Sheets as of June 30, 1997 and
March 31, 1997 3
Consolidated Statements of Operations for the
three months ended June 30, 1997 and 1996 4
Consolidated Statements of Cash Flows for
three months ended June 30, 1997 and 1996 5
Notes to Consolidated Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 11
2
<PAGE>
SAFETY COMPONENTS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share and per share data)
<TABLE>
<CAPTION>
June 30, March 31,
1997 1997
-------- ---------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents .................................. $ 2,772 $ 8,320
Accounts receivable, net ................................... 16,000 11,751
Inventories ................................................ 7,576 6,378
Prepaid and other .......................................... 2,790 870
------- -------
Total current assets .......................... 29,138 27,319
Property, plant and equipment, net ...................................... 34,032 28,295
Receivable from affiliate ............................................... - 4,348
Intangible assets, net ................................................. 27,602 10,991
Other assets ............................................................ 3,744 2,454
------- -------
Total assets .................................. $94,516 $73,407
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ........................................... $13,221 $ 7,792
Earnout payable ............................................ - 2,211
Accrued liabilities ........................................ 7,436 2,476
Current portion of long-term obligations ................... 5,236 3,085
------- -------
Total current liabilities ..................... 25,893 15,564
Long-term obligations ................................................... 29,135 21,296
Other long-term liabilities ............................................. 3,573 1,273
------- -------
Total liabilities ............................. 58,601 38,133
------- -------
Commitments and contingencies
Stockholders' equity:
Preferred stock: $.10 par value per share - 2,000,000 shares
authorized; no shares outstanding at
June 30, 1997 and March 31, 1997 .................... - -
Common stock: $.01 par value per share - 10,000,000 shares
authorized; 5,015,383 and 5,025,383 shares issued and
outstanding at June 30, 1997 and
March 31, 1997, respectively ........................ 50 51
Common stock warrants ...................................... 1 1
Additional paid-in-capital ................................. 43,754 30,062
Treasury stock, 1,492,692 and 113,492 shares, at June 30,
1997 and March 31, 1997 respectively, at cost ....... (15,438) (1,647)
Retained earnings .......................................... 10,828 9,183
Cumulative translation adjustment .......................... (3,280) (2,376)
------- -------
Total stockholders' equity .................... 35,915 35,274
------- -------
Total liabilities and stockholders' equity .... $94,516 $73,407
======= =======
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE>
SAFETY COMPONENTS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share and per share data)
<TABLE>
<CAPTION>
Three Months Ended
---------------------
June 30, June 30,
1997 1996
-------- --------
<S> <C> <C>
Net Sales ...................................................... $27,629 $16,172
Cost of sales, excluding depreciation .......................... 21,156 13,243
Depreciation ................................................... 805 337
------- -------
Gross profit ...................................... 5,668 2,592
Selling and marketing expenses ................................. 288 302
General and administrative expenses ............................ 2,163 844
Amortization of goodwill ....................................... 185 -
------- -------
Income from operations ............................ 3,032 1,446
Other expense (income), net .................................... 118 64
Interest expense ............................................... 523 10
------- -------
Income before income taxes ........................ 2,391 1,372
Provision for income taxes ..................................... 956 519
------- -------
Net income ..................................................... $ 1,435 $ 853
======= =======
Net income per share ........................................... $ 0.29 $ 0.17
======= =======
Weighted average number of shares outstanding .................. 5,021 5,069
======= =======
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
<PAGE>
SAFETY COMPONENTS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
-------------------
June 30, June 30,
1997 1996
-------- -------
<S> <C> <C>
Net cash provided by (used in) operating activities ............. $ 2,088 $(4,524)
-------- -------
Cash Flows From Investing Activities:
Additions to property, plant and equipment ............. (1,828) (2,047)
Additional consideration and costs for Phoenix Airbag .. (2,386) -
Acquisition costs for Valentec ......................... (342) -
Advances to Valentec prior to acquisition .............. (1,215) -
Initial acquisition costs for JPS ...................... (163) -
-------- -------
Net cash used in investing activities ............. (5,934) (2,047)
-------- -------
Cash Flows From Financing Activities:
Proceeds from KeyBank term note ........................ 15,000 -
Proceeds from Bank Austria mortgage .................... 7,500 -
Proceeds from Transamerica financing ................... 2,000 -
Repayment of Bank of America NT&SA term note ........... (16,812) -
Purchase of treasury stock ............................. - (268)
(Repayments) borrowing of debt and long-term obligations (8,252) (172)
Net borrowing on revolving credit facility ............. (3) 360
-------- -------
Net cash used in financing activities ............. (798) (80)
-------- -------
Effect of exchange rate changes on cash ......................... (904) 79
-------- -------
Change in cash and cash equivalents ............................. (5,548) (6,572)
Cash and cash equivalents, beginning of period .................. 8,320 12,033
-------- -------
Cash and cash equivalents, end of period ........................ $ 2,772 $ 5,461
======== =======
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
<PAGE>
SAFETY COMPONENTS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
The consolidated financial statements included herein have been prepared by
Safety Components International, Inc. ("SCI" or the "Company"), without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted from this report, as is permitted by such rules
and regulations; however, SCI believes that the disclosures are adequate to make
the information presented not misleading. It is suggested that these
consolidated financial statements be read in conjunction with the audited
consolidated financial statements and notes thereto included in the Company's
Form 10-K for the year ended March 31, 1997. The Company has experienced, and
expects to continue to experience, variability in net sales and net income from
quarter to quarter. Therefore, the results of the interim periods presented
herein are not necessarily indicative of the results to be expected for any
other interim period or the full year.
In the opinion of management, the information furnished reflects all
adjustments, all of which are of a normal recurring nature, necessary for a fair
presentation of the results for the reported interim periods.
On August 6, 1996, Automotive Safety Components International Inc., a
wholly-owned subsidiary of the Company, acquired 80% of the outstanding capital
stock of Phoenix Airbag GmbH ("Phoenix Airbag"). Phoenix Airbag was a
corporation organized under the laws of the Republic of Germany, and at the time
of the acquisition, was a wholly-owned subsidiary of Phoenix Aktiengesellschaft
("Phoenix AG") in Hamburg, Germany. The purchase from Phoenix AG was made in
accordance with the terms and conditions of the Agreement Concerning the Sale
and Transfer of all the Shares in Phoenix Airbag GmbH dated June 6, 1996, as
amended. The acquisition was completed on August 5, 1996. The operations of
Phoenix Airbag are included for the entire three month period ended June 30,
1997.
Effective as of May 22, 1997, the Company acquired all of the outstanding
capital stock of Valentec International Corporation ("Valentec")(see Note 4).
Valentec is a high-volume manufacturer of stamped and precision-machined
products for the automotive, commercial and defense industries. The operations
of Valentec are included in the three month period ended June 30, 1997 beginning
on May 22, 1997.
NOTE 2 COMPOSITION OF CERTAIN CONSOLIDATED BALANCE SHEET COMPONENTS
(in thousands)
<TABLE>
<CAPTION>
June 30, 1997 March 31, 1997
------------- --------------
<S> <C> <C>
Accounts receivable:
Billed receivables $ 12,882 $ 9,152
Unbilled receivables (net of unliquidated progress
payments of $10,428 and $9,846 at June 30, 1997 and
March 31, 1997, respectively) 2,140 1,834
Other 978 765
------- -------
$16,000 $11,751
======= =======
</TABLE>
6
<PAGE>
SAFETY COMPONENTS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
<TABLE>
<S> <C> <C>
Inventories:
Raw materials $ 3,332 $ 3,339
Work-in-process 2,968 2,073
Finished goods 1,276 966
------- -------
$ 7,576 $ 6,378
======= =======
Property, plant and equipment:
Land and building $ 7,379 $ 8,435
Machinery and equipment 27,863 20,842
Construction in process 3,398 2,822
------- -------
38,640 32,099
Less - accumulated depreciation and amortization (4,608) (3,804)
------- -------
$34,032 $28,295
======= =======
</TABLE>
NOTE 3 LONG-TERM OBLIGATIONS (in thousands)
Long-term obligations outstanding were as follows:
<TABLE>
<CAPTION>
June 30, 1997 March 31, 1997
------------- --------------
<S> <C> <C>
KeyBank term loan and revolving credit facility $17,928 $ -
Bank of America NT&SA term loan and revolving credit facility,
bearing interest at 2.25% and 2.0% over LIBOR (6.54% at
March 31, 1997), respectively, refinanced May 21, 1997 - 20,192
Bank Austria mortgage note 7,500 -
Valentec International Limited note payable at 7.0%, principal
and interest due in monthly installments of $39,600 2,000 -
Note payable, principal due in annual installments of
$205,000 beginning January 12, 1999 to January 12, 2002,
with interest at 7.22% in semiannual installments, secured
by assets of the Company's United Kingdom subsidiary 832 820
Capital equipment notes payable, due in monthly installments
with interest at 9.0% to 11.32% maturing at various rates
through April 2001, secured by machinery and equipment 6,111 3,369
------- -------
34,371 24,381
Less - current portion (5,236) (3,085)
------- -------
$29,135 $21,296
======= =======
</TABLE>
7
<PAGE>
SAFETY COMPONENTS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
On May 21, 1997, the Company, Phoenix Airbag and Automotive Safety
Components International Limited entered into an agreement with KeyBank National
Association, as administrative agent ("KeyBank"), and the lending institutions
named therein (the "Credit Agreement"). The proceeds of the Credit Agreement
were used to repay the Bank of America National Trust and Savings Association
("Bank of America NT&SA") term loan and revolving credit facility. The Credit
Agreement initially provided for (i) a term loan in the principle amount of
$15.0 million (the "Term Loan") and (ii) a revolving credit facility in the
aggregate principal amount of $12.0 million (including letter of credit
facilities) as of March 31, 1997. The indebtedness under the Credit Agreement is
secured by substantially all the assets of the Company and bears interest at a
rate equal to either (i) the greater of KeyBank's prime rate (ii) the sum of
LIBOR (5.72% as of June 30, 1997) plus 1.00% for term loans (and 1.25% for
revolving loans). Upon the issuance of the $90.0 million Senior Subordinated
Notes (see Note 4), all outstanding borrowings under the Credit Agreement were
repaid and the Credit Agreement was converted into a $27.0 million revolving
credit facility for a five year term, bearing interest at LIBOR plus 1.00% with
a commitment fee of 0.25% per annum for any unused portion. The Company will use
the revolving credit facility to fund working capital.
On June 4, 1997, the Company secured a $7.5 million mortgage note facility
with Bank Austria. The note is payable in semi-annual installments of $375,000
beginning September 30, 1997 through March 31, 2007 and bears an interest rate
of 7.5%. The note is secured by the assets of Company's Czech Republic facility.
In May and June 1997, the Company repaid approximately $6.5 million of the
obligations assumed in the Valentec acquisition out of the proceeds of the
KeyBank credit facility, Bank Austria mortgage note and a $2.0 million equipment
financing. The $2.0 million equipment financing bears interest at 9.38% and is
payable monthly beginning July 1, 1997 through July 1, 2002 and is secured by
certain fixed assets of Valentec.
NOTE 4 - SIGNIFICANT TRANSACTIONS
Pursuant to a definitive Stock Purchase Agreement, effective as of May 22,
1997, the Company acquired all of the outstanding common stock of Valentec in a
tax-free stock-for-stock exchange. Valentec was the Company's largest
shareholder immediately prior to the acquisition owning approximately 27%, or
1,379,200 shares of the issued and outstanding shares of the Company's common
stock. The Company issued the shareholders of Valentec 1,369,200 newly issued
shares of its common stock.
The purchase price for the Valentec acquisition was negotiated between
Valentec and a special committee consisting of independent members of the Board
of Directors of the Company. The special committee was advised by independent
legal counsel and an independent financial advisor. The Company's Board of
Directors received an opinion from the special committee's financial advisor as
to the fairness from a financial point of view of the consideration to be
received by the Company to the Company's shareholders other than Valentec.
The acquisition was accounted for as a purchase. The aggregate purchase
price amounted to approximately $14.3 million, including estimated direct
acquisition costs of approximately $600,000. No significant adjustments to
8
<PAGE>
SAFETY COMPONENTS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
assets and liabilities acquired will be recorded as their carrying value
approximates their fair value, except the common stock of the Company held by
Valentec, which common stock has been recorded as treasury stock at market value
of $13.8 million. These shares of common stock were previously accounted for
under the equity method of accounting for the investment by Valentec. Management
intends to merge Valentec during fiscal 1998. The excess of the purchase price
over the fair value of the net assets acquired of $16.8 million was allocated to
goodwill and will be amortized over 25 years.
The following unaudited pro forma information presents a summary of the
consolidated results of operations of the Company and Valentec as if the
acquisition had occurred at the beginning of the fiscal year ended March 31,
1997, with pro forma adjustments to give effect to the amortization of goodwill,
the inclusion of Phoenix Airbag for the entire fiscal year and certain other
adjustments, together with the related income tax effect.
March 31, 1997
--------------
Net sales $107,638
Income from continuing operations $ 3,065
Earnings per share $ 0.61
On June 30, 1997, the Company entered into a definitive agreement to
acquire all of the assets and assume certain liabilities of the Air Restraint
and Industrial Fabrics Division of JPS Automotive L.P. ("JPS"). JPS is a
leading, low-cost supplier of airbag fabric in North America and is also a
leading manufacturer of value-added synthetic fabrics used in a variety of niche
industrial and commercial applications. On July 24, 1997 the Company purchased
JPS for approximately $56.9 million, which included the repayment of
approximately $650,000 of capital lease obligations. The purchase price is
subject to post closing adjustments, which will ultimately affect goodwill. The
Company estimates direct acquisition costs to be approximately $600,000. The
acquisition has been accounted for as a purchase, with the excess of the
purchase price over the fair value of the net assets acquired allocated to
goodwill. Goodwill will be amortized over 40 years. The assets were acquired
through the Company's newly formed wholly- owned subsidiary, Safety Components
Fabric Technologies, Inc., which will be the operating entity on a going forward
basis.
On July 24, 1997, the Company issued (the "offering") $90.0 million of 10
1/8% Senior Subordinated Notes (the "Notes") due July 15, 2007. Interest on the
Notes will accrue from July 24, 1997 and will be payable semi-annually in
arrears on each of January 15 and July 15 of each year, commencing January 15,
1998. The Notes are general unsecured obligations of the Company and will be
subordinated in right of payment to all existing and future Senior Indebtedness
and to all existing and future indebtedness of the Company's subsidiaries that
are not Guarantors. All of the Company's direct and indirect wholly-owned
domestic subsidiaries are Guarantors. A substantial portion of the proceeds of
the Notes were used by the Company to purchase JPS, repay the term loan and
amounts outstanding under the revolving credit facility with KeyBank as of July
24, 1997 and pay certain fees and expenses associated with the acquisition of
JPS and the Notes. The balance of the proceeds will be used to purchase a
building adjacent to facility acquired in the JPS acquisition and for working
9
<PAGE>
SAFETY COMPONENTS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
capital and general corporate purposes. The Company estimates that it incurred
approximately $3.3 million of fees and expenses related to the Offering. Such
fees will be deferred and amortized over the expected term of the Notes, not to
exceed 10 years.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations:
FIRST QUARTER ENDED JUNE 30, 1997 COMPARED TO FIRST QUARTER ENDED JUNE 30, 1996
NET SALES. Net sales increased by $11.5 million or 70.8% to $27.6 million
for the first quarter of fiscal year 1998 compared to the first quarter of
fiscal year 1997. The increase was primarily attributable to increased sales
volume in Europe attributable to the acquisition of Phoenix Airbag which
contributed approximately $10.1 million. Phoenix Airbag was acquired on August
5, 1996 and included in the Company's entire first quarter of fiscal year 1998
whereas in the first quarter of fiscal year 1997 Phoenix Airbag had not yet been
acquired. The remaining increase was due to the addition of Valentec during the
first quarter of fiscal year 1998 offset by lower sales in the defense
operations due to delays in the current contract schedule for the Company's
systems contract with the U.S. Army.
GROSS PROFIT. Gross profit increased by $3.1 million or 118.7% to $5.7
million for the first quarter of fiscal year 1998 compared to the first quarter
of fiscal year 1997. The increase was primarily attributable to increased sales
volume in Europe due to the acquisition of Phoenix Airbag, which contributed
approximately $2.9 million to gross profit.
Gross profit as a percentage of sales increased to approximately 20.5% for
the first quarter of fiscal year 1998 from 16.1% for the first quarter of fiscal
year 1997. The increase as a percentage was due to the greater contribution to
gross profit by Phoenix Airbag, which has a higher gross margin percentage than
the remainder operations due to automation.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by $1.3 million or 156.3% to $2.2 million for
the first quarter of fiscal year 1998 compared to the first quarter of fiscal
year 1997. The increase was primarily attributable to the automotive operations.
With the addition of Phoenix Airbag, the new Czech Republic facility and
Valentec, costs increased approximately $660,000. The remaining increase was due
to a combination of additional costs incurred in the North American
manufacturing operations and corporate services. Selling, general and
administrative expenses as a percentage of sales increased slightly to 7.8% for
the first quarter of fiscal year 1998 from 5.2% for the first quarter of fiscal
year 1997.
OPERATING INCOME. Operating income increased by $1.6 million or 109.7% to
$3.0 million for the first quarter of fiscal year 1998 compared to the first
quarter of fiscal year 1997. Operating income from Automotive operations
increased by $1.3 million primarily attributable to the acquisition of Phoenix
Airbag and Valentec.
INTEREST EXPENSE. Interest expense increased $513,000 to $523,000 for the
first quarter of fiscal year 1998 compared to the first quarter of fiscal year
1997. This increase was a direct result of the term loan used for the
acquisition of Phoenix Airbag and borrowings under the revolving credit
facility. The increase of other expense is primarily attributable to losses on
foreign currency transactions.
11
<PAGE>
INCOME TAXES. The income tax rate applied against pre-tax income was 40.0%
for the first quarter of fiscal year 1998 compared to 37.8% for the first
quarter of fiscal year 1997. The tax rate increased as compared to prior year
due to the increasing percentage of income generated from European operations,
which have higher tax rates than U.S. operations.
NET INCOME. Net income increased to $1.4 million for the first quarter of
fiscal year 1998 compared to $853,000 for the first quarter of fiscal year 1997.
This increase is a result of the items discussed above.
LIQUIDITY AND CAPITAL RESOURCES
As the Company's business grows, its equipment and working capital
requirements will also continue to increase as a result of the anticipated
growth of the automotive operations. This growth will be funded through a
combination of cash flow from operations, equipment financing, revolving credit
borrowings and the proceeds from potential future Company public offerings.
As of May 21, 1997, the Company, Phoenix Airbag and Automotive Safety
Components International Limited ("ASCIL" and collectively, the "Borrowers")
entered into the Credit Agreement with KeyBank National Association, as
administrative agent ("KeyBank"), and the lending institutions named therein
(the "Credit Agreement"). Prior to the consummation of the offering, the Credit
Agreement provided for (i) a term loan in the principal amount of $15.0 million
(the "Term Loan") and (ii) a revolving credit facility in the aggregate
principal amount of $12.0 million (including letter of credit facilities). The
indebtedness under the Credit Agreement bore interest at a rate equal to either
(i) the greater of KeyBank's prime rate or (ii) the sum of LIBOR plus 1.00% for
term loans (and 1.25% for revolving loans, subject to reduction to 1.00% upon
consummation of the offering so long as no default or event of default shall
have occurred and be continuing). Upon the consummation of the Offering, the
Company used the proceeds thereof to repay the Term Loan and amounts then
outstanding under the Revolving Credit Facility. In connection therewith, the
Company's credit facility with KeyBank was converted into a $27.0 million
revolving credit facility, bearing interest at LIBOR plus 1.00% with a
commitment fee of 0.25% for any unused portion, with the remaining terms and
conditions being similar to the previous revolving credit facility. The Company
incurred approximately $200,000 of financing fees in connection with the KeyBank
credit facility. The indebtedness under the Credit Agreement is secured by
substantially all the assets of the Company. The Credit Agreement contains
certain restrictive covenants that impose limitations upon, among other things,
the Company's ability to change its business; merge, consolidate or dispose of
assets; incur liens; make loans and investments; incur indebtedness; pay
dividends and other distributions; engage in certain transactions with
affiliates; engage in sale and lease-back transactions; enter into lease
agreements; and make capital expenditures.
Net cash generated from operations were $2.1 million during the first
quarter of fiscal year 1998. Cash used by investing activities was $5.9 million.
Cash used for capital expenditures were $1.8 million. The Company also paid
additional costs and consideration in connection with the acquisition of Phoenix
Airbag, which was primarily the $2.2 million earn-out accrued at the end of
fiscal year 1997. In addition, the Company incurred certain costs in connection
with the acquisitions of Valentec and JPS of approximately $342,000 and
$163,000, respectively. The Company also made advances to Valentec prior to
acquisition for the purpose of funding operations. Net cash used by financing
activities in the first quarter of fiscal year 1998 was $5.5 million. Cash
proceeds from financing activities were used to repay certain liabilities of the
newly acquired Valentec and repay the term loan and revolving credit facility
with Bank of America National Trust and Savings Association. These activities
resulted in a net decrease in cash of $5.5 million in the first quarter of
fiscal year 1998.
12
<PAGE>
Capital expenditures were $1.8 million in the first quarter of fiscal year
1998. Capital expenditures in the first quarter of fiscal year 1998 were used to
construct the new facility in the Czech Republic, and the acquisition of
additional equipment to expand the Company's production capacity worldwide.
The above discussion may contain forward-looking statements that involve
risks and uncertainties, including, but not limited to, the impact of
competitive products and pricing, product demand and market condition risks,
costs associated with integration and administration of acquired operations, the
timing of introduction of new models of automobiles for which the Company
manufactures airbags, changes in consumer vehicle preferences, major labor
disputes in the automotive industry, changes in the strategic direction of
defense spending, the ability of a subcontractor of the Company to resolve its
disputes with the U.S. Army, the timing of defense procurement and specific
defense program appropriation decisions.
13
<PAGE>
SIGNATURE(S)
Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
SAFETY COMPONENTS INTERNATIONAL, INC.
(Registrant)
DATED: August 20, 1997 BY: /s/ JEFFREY J. KAPLAN
----------------------------
Jeffrey J. Kaplan
Executive Vice President and
Chief Financial Officer
14
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF INCOME FILED AS
PART OF THE QUARTERLY REPORT ON FORM 10-Q/A AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF
INCOME.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 2,772
<SECURITIES> 0
<RECEIVABLES> 16,097
<ALLOWANCES> 97
<INVENTORY> 7,576
<CURRENT-ASSETS> 29,138
<PP&E> 38,640
<DEPRECIATION> 4,608
<TOTAL-ASSETS> 94,516
<CURRENT-LIABILITIES> 25,893
<BONDS> 0
0
0
<COMMON> 50
<OTHER-SE> 35,865
<TOTAL-LIABILITY-AND-EQUITY> 94,516
<SALES> 27,629
<TOTAL-REVENUES> 27,629
<CGS> 21,961
<TOTAL-COSTS> 21,961
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 523
<INCOME-PRETAX> 2,391
<INCOME-TAX> 956
<INCOME-CONTINUING> 1,435
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,435
<EPS-PRIMARY> .29
<EPS-DILUTED> .29
</TABLE>
