Key Automotive Group Unveils Restructuring of Breed Technologies

Detroit, Michigan – Breed Technologies, Inc., a member of the Key Automotive Group family of companies, announced a restructuring and new strategic direction for the company after a week-long meeting of the leadership of Breed and new Chairman and Chief Executive Officer B. Edward Ewing. The changes include a renewed focus on financial discipline, a comprehensive cost reduction program, and a reorganization to align business units closely with customers.

Mr. Ewing said: “We have just completed a week-long strategic and operational review with more than 175 leaders of Breed Technologies. This review included the most senior managers from every function and every facility in North America, Europe and Asia. We reviewed the historical financial performance of Breed, current capabilities and technologies, and major relationships with customers. At this meeting we also discussed and agreed on expectations for performance.”

“It is our vision to have employees, customers and shareholders say we are a great management team,” Ewing added. “To that end, it was unanimously agreed that we must achieve significantly higher levels of customer satisfaction, quality, delivery and restore financial strength. We will initiate a program of self-help to right the company. Teams have been formed and leaders have been assigned to address issues of cost, quality, delivery and customer satisfaction. We will take a number of significant, immediate actions in order to put Breed on the path toward financial stability and to achieve our broader vision.”

At the meeting, the management of Breed agreed on the following actions:

• Breed will undertake an immediate and comprehensive effort to strengthen the financial performance of the company. Since emerging from bankruptcy, Breed has consistently used approximately $50 million more per year cash than it produced. This performance cannot and will not continue,” Ewing said. “We will seek to reduce cost by $200 million. Every line item of cost must be improved for Breed to be financially strong,” Ewing added. Between now and the end of 2004, Breed will reduce 3500 personnel around the world, cut overhead expenses significantly, and work with suppliers to reduce overall material costs.
  
  “Breed Technologies has historically and currently used more cash than it has generated. Its costs are simply too high.” Ewing said. “In order to effectively serve our customers we must get to a solid financial structure. The management team agreed that we must reduce costs significantly, immediately and continuously in order to serve our customers effectively. The actions announced today will put us on a path to stronger financial performance.”

• Breed will reorganize along regional and product lines in order to align the activities of the company with its core customers and to provide greater accountability for profit and loss. Effective today, the company will include four major business units responsible for profit and loss reporting to the CEO:


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  • North America, led by Douglas G. Nyhoff, President and COO
  
  
  
  
  • Europe, led by Giulio Zambeletti, President and COO
  
  
  
  
  • Asia, led by Jason Luo, President and COO
  
  
  
  
  • Hamlin, Inc., led by Phil James, President and COO
  
  
  Also reporting to the CEO are:
  
  
  
  
  
  • Larry Schwentor, Senior Vice President and Chief Financial Officer, responsible for global financial controls
  
  
  
  
  • Craig White, Senior Vice President and Chief Technical Officer, responsible for systems integration across all product lines and for driving new technological developments
  
  
  
  
  • Rick Blough, Senior Vice President of Human Resources, responsible for global human resource policies
  
  
  
  
  • Stuart Boyd, Senior Vice President, Legal

• Breed will reduce the size of the corporate office from 290 to less than 60 and relocate from Lakeland, Florida to the Detroit metropolitan area. “We will put our resources close to the customer and our operations,” Ewing said. “Our management team was of a single mind that the corporate function under the old Breed was too large and cumbersome, and that it should be leaner. Cost improvement must start at the corporate office.”

• Breed will change its name and is evaluating several alternatives to denote the important position of Breed within the Key Automotive Group family of companies and the safety systems business. “The name change symbolizes the beginning of the transformation of Breed Technologies into a new company – one committed to achieving superior financial performance, improving customer responsiveness, driving technological innovation, and delivering high-quality parts on time,” Ewing said.

Ewing concluded: “We have a great opportunity to take Breed’s assets – its excellent people, its strong technologies, and its solid customer relationships – and build a premier automotive company. These changes are required to strengthen Breed’s financial performance and position it for long-term success in the automotive industry. Our entire management team is very excited about our new direction and is committed to this vision.”

Breed Technologies is a member of the Key Automotive Group family of companies and is principally owned by Carlyle Management Group. CMG is based in Dallas, Texas and Ed Ewing is the Chief Executive Officer of CMG. CMG is the turnaround and special situation investment affiliate of The Carlyle Group, a global investment firm with over $15.8 billion of committed capital under management. The companies making up the Key Automotive Group of companies have more than $1.7 billion in sales and 18,000 employees, with operations in 15 countries in North America, Europe and Asia and in ten states in the U.S.

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