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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

|/x/                                           | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
|--------------------------------------------- | -------------------------------------------------------------------------------------------
|For the quarterly period ended: July 29, 2001
|OR                                           
|/ /                                           | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934   

For the transition period from  to

Commission file number: 0-19330

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SPECIAL DEVICES, INCORPORATED(Exact name of Registrant as specified in its charter)

Delaware(State or other jurisdiction of
incorporation or organization)

95-3008754(I.R.S. Employer Identification No.)


| | 14370 White Sage Road, Moorpark, California 93021(Address of principal executive offices) |  | 
| | ----------------------------------------------------------------------------------------- |  | 
| | (805) 553-1200(Registrant's telephone number, including area code)                        |  | 

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Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.  Yes /x/  No / /

At
September 11, 2001, the total number of outstanding shares of the Registrant's common stock was 3,712,764.

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SPECIAL DEVICES, INCORPORATED  INDEX TO QUARTERLY REPORT ON FORM 10-Q

|                             |  |                                                                                       |  |                                                                                                            |  | PAGE
|---------------------------- |  | ------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------- |  | ----
|PART IFINANCIAL INFORMATION |  |                                                                                      
|ITEM 1.                      |  | Financial Statements                                                                  |  |                                                                                                           
|                             |  | (a)                                                                                   |  | Consolidated Balance Sheets: July 29, 2001 and October 31, 2000                                            |  | 3   
|                             |  | (b)                                                                                   |  | Consolidated Statements of Operations: For the three and nine months ended July 29, 2001 and July 30, 2000 |  | 4   
|                             |  | (c)                                                                                   |  | Consolidated Statements of Cash Flows: For the nine months ended July 29, 2001 and July 30, 2000           |  | 5   
|                             |  | (d)                                                                                   |  | Notes to the Consolidated Financial Statements                                                             |  | 6   
|ITEM 2.                      |  | Management's Discussion and Analysis of Financial Condition and Results of Operations |  | 11                                                                                                        
|ITEM 3.                      |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 14                                                                                                        
|PART IIOTHER INFORMATION    |  |                                                                                      
|ITEM 1.                      |  | Legal Proceedings                                                                     |  | 14                                                                                                        
|ITEM 6.                      |  | Exhibits and Reports on Form 8-K                                                      |  | 15                                                                                                        
|Signatures                   |  | 19                                                                                   

2

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SPECIAL DEVICES, INCORPORATED AND SUBSIDIARY  CONSOLIDATED BALANCE SHEETS  (Dollars in thousands)(Unaudited)

|                                                     |                                                                                                                                                             | July 29,
2001                                  |        | October 31,
2000 |        
|---------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------- | ------ | ---------------- | -------
|ASSETS                                               |                                                                                                                                                            
|Current assets:                                      |                                                                                                                                                             |                                                |        |                  |        
|                                                     | Cash                                                                                                                                                        |                                                | $      | 11,713           |        
|                                                     | Accounts receivable, net of allowances of $1,008 at July 29, 2001 and $393 at October 31, 2000                                                              |                                                |        | 12,261           |        
|                                                     | Inventories                                                                                                                                                 |                                                |        | 9,333            |        
|                                                     | Deferred tax assets                                                                                                                                         |                                                |        | 3,011            |        
|                                                     | Prepaid expenses and other current assets                                                                                                                   |                                                |        | 7,534            |        
|                                                     |                                                                                                                                                             |                                                |        |                  |        
|                                                     |                                                                                                                                                             | Total current assets                           |        |                  | 43,852 
|                                                     |                                                                                                                                                             |                                                |        |                  |        
|Property, plant and equipment, at cost               |                                                                                                                                                             |                                                |        |                  |        
|                                                     | Land                                                                                                                                                        |                                                |        |                 |        
|                                                     | Building and improvements                                                                                                                                   |                                                |        |                 |        
|                                                     | Other                                                                                                                                                       |                                                |        | 88,082           |        
|                                                     |                                                                                                                                                             |                                                |        |                  |        
|                                                     |                                                                                                                                                             | Gross property, plant and equipment            |        |                  | 88,082 
|                                                     |                                                                                                                                                             | Less accumulated depreciation and amortization |        |                  | (51,518
|                                                     |                                                                                                                                                             |                                                |        |                  |        
|                                                     |                                                                                                                                                             | Net property, plant and equipment              |        |                  | 36,564 
|                                                     |                                                                                                                                                             |                                                |        |                  |        
|Other assets, net of accumulated amortization        |                                                                                                                                                             |                                                | 6,820  |                  |        
|Notes receivable                                     |                                                                                                                                                             |                                                | 4,513  |                  |        
|Net assets of discontinued operations                |                                                                                                                                                             |                                                |       |                  |        
|                                                     |                                                                                                                                                             |                                                |        |                  |        
|Total assets                                         |                                                                                                                                                             | $                                              | 91,749 |                  | $      
|                                                     |                                                                                                                                                             |                                                |        |                  |        
|LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)       |                                                                                                                                                            
|Current liabilities:                                 |                                                                                                                                                             |                                                |        |                  |        
|                                                     | Accounts payable                                                                                                                                            |                                                | $      | 10,610           |        
|                                                     | Other current liabilities                                                                                                                                   |                                                |        | 17,736           |        
|                                                     | Revolving line of credit                                                                                                                                    |                                                |        |                 |        
|                                                     | Current portion of long-term debt                                                                                                                           |                                                |        | 750              |        
|                                                     |                                                                                                                                                             |                                                |        |                  |        
|                                                     |                                                                                                                                                             | Total current liabilities                      |        |                  | 29,096 
|                                                     |                                                                                                                                                             |                                                |        |                  |        
|Deferred income taxes                                |                                                                                                                                                             |                                                | 5,232  |                  |        
|Long-term debt, net of current portion               |                                                                                                                                                             |                                                | 89,680 |                  |        
|                                                     |                                                                                                                                                             |                                                |        |                  |        
|                                                     |                                                                                                                                                             | Total liabilities                              |        |                  | 124,008
|                                                     |                                                                                                                                                             |                                                |        |                  |        
|Commitments and contingencies (Note 9)               |                                                                                                                                                             |                                                |        |                  |        
|Redeemable preferred stock                           |                                                                                                                                                             |                                                | 4,000  |                  |        
|Redeemable common stock                              |                                                                                                                                                             |                                                | 32,875 |                  |        
|Stockholders' equity (deficit):                      |                                                                                                                                                             |                                                |        |                  |        
|                                                     | Preferred stock, $.01 par value; 2,000,000 shares authorized; 4,000 and 0 shares issued and outstanding at July 29, 2001 and October 31, 2000, respectively |                                                |        |                 |        
|                                                     | Common stock, $.01 par value; 20,000,000 shares authorized; 3,712,764 shares issued and outstanding at July 29, 2001 and October 31, 2000                   |                                                |        | 30               |        
|                                                     | Additional paid-in capital                                                                                                                                  |                                                |        | 67,852           |        
|                                                     | Retained earnings (deficit)                                                                                                                                 |                                                |        | (137,016         | )      
|                                                     |                                                                                                                                                             |                                                |        |                  |        
|                                                     |                                                                                                                                                             | Total stockholders' equity (deficit)           |        |                  | (69,134
|                                                     |                                                                                                                                                             |                                                |        |                  |        
|Total liabilities and stockholders' equity (deficit) |                                                                                                                                                             | $                                              | 91,749 |                  | $      
|                                                     |                                                                                                                                                             |                                                |        |                  |        

See accompanying notes to consolidated financial statements.

3

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SPECIAL DEVICES, INCORPORATED AND SUBSIDIARY  CONSOLIDATED STATEMENTS OF OPERATIONS  (Dollars in thousands)(Unaudited)

|                                                                     |                                                                                               | Three Months Ended                                                         |        | Nine Months Ended |        
|-------------------------------------------------------------------- | --------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------- | ------ | ----------------- | -------
|
|Net sales                                                            |                                                                                               | $                                                                          | 28,428 |                   | $      
|Cost of sales                                                        |                                                                                               |                                                                            | 26,790 |                   |        
|                                                                     |                                                                                               |                                                                            |        |                   |        
|                                                                     |                                                                                               | Gross profit                                                               |        |                   | 1,638  
|                                                                     |                                                                                               |                                                                            |        |                   |        
|Operating expenses                                                   |                                                                                               |                                                                            | 4,788  |                   |        
|Environmental and other investigation costs                          |                                                                                               |                                                                            | 552    |                   |        
|                                                                     |                                                                                               |                                                                            |        |                   |        
|                                                                     |                                                                                               | Total operating expenses                                                   |        |                   | 5,340  
|                                                                     |                                                                                               |                                                                            |        |                   |        
|                                                                     |                                                                                               | Income (loss) from operations                                              |        |                   | (3,702 
|                                                                     |                                                                                               |                                                                            |        |                   |        
|Other expense:                                                       |                                                                                               |                                                                            |        |                   |        
|                                                                     | Interest expense, net                                                                         |                                                                            |        | (2,985            | )      
|                                                                     | Loss on disposal of assets                                                                    |                                                                            |        | (5,047            | )      
|                                                                     |                                                                                               |                                                                            |        |                   |        
|                                                                     |                                                                                               | Total other expense                                                        |        |                   | (8,032 
|                                                                     |                                                                                               |                                                                            |        |                   |        
|                                                                     |                                                                                               | Loss from continuing operations before extraordinary gain and income taxes |        |                   | (11,734
|Income tax benefit                                                   |                                                                                               |                                                                            | (4,294 | )                 |        
|                                                                     |                                                                                               |                                                                            |        |                   |        
|                                                                     |                                                                                               | Loss from continuing operations before extraordinary gain                  |        |                   | (7,440 
|                                                                     |                                                                                               |                                                                            |        |                   |        
|Discontinued operations:                                             |                                                                                               |                                                                            |        |                   |        
|                                                                     | Income from discontinued operations, net of taxes of $23, $961, $745 and $2,122, respectively |                                                                            |        | 35                |        
|                                                                     | Gain on sale of discontinued operations, net of taxes of $10,158                              |                                                                            |        | 15,237            |        
|Extraordinary gain on extinguishment of debt, net of taxes of $1,884 |                                                                                               |                                                                            | 2,826  |                   |        
|                                                                     |                                                                                               |                                                                            |        |                   |        
|                                                                     |                                                                                               | Net income (loss)                                                          |        | $                 | 10,658 
|                                                                     |                                                                                               |                                                                            |        |                   |        

See
accompanying notes to consolidated financial statements.

4

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SPECIAL DEVICES, INCORPORATED AND SUBSIDIARY  CONSOLIDATED STATEMENTS OF CASH FLOWS  (Dollars in thousands)(Unaudited)

|                                                                                                                 |                                              | Nine Months Ended                                        |       
|---------------------------------------------------------------------------------------------------------------- | -------------------------------------------- | -------------------------------------------------------- | ------
|
|Cash Flows From Operating Activities:                                                                            |                                              |                                                          |       
|                                                                                                                 | Net income (loss)                            |                                                          | $     
|                                                                                                                 | Extraordinary gain on extinguishment of debt |                                                          |       
|                                                                                                                 | Income from discontinued operations          |                                                          |       
|                                                                                                                 | Gain on sale of discontinued operations      |                                                          |       
|                                                                                                                 |                                              |                                                          |       
|                                                                                                                 | Loss from continuing operations              |                                                          |       
|Adjustments to reconcile loss from continuing operations to net cash provided by (used in) operating activities: |                                              |                                                          |       
|                                                                                                                 |                                              | Depreciation and amortization                            |       
|                                                                                                                 |                                              | Loss on disposal of assets                               |       
|                                                                                                                 |                                              | Deferred income taxes                                    |       
|                                                                                                                 | Changes in assets and liabilities:           |                                                          |       
|                                                                                                                 |                                              | Accounts receivable and other assets                     |       
|                                                                                                                 |                                              | Inventories                                              |       
|                                                                                                                 |                                              | Accounts payable and other liabilities                   |       
|                                                                                                                 |                                              | Income taxes payable                                     |       
|                                                                                                                 |                                              | Other                                                    |       
|                                                                                                                 |                                              |                                                          |       
|                                                                                                                 |                                              | Net cash provided by continuing operations               |       
|                                                                                                                 |                                              | Net cash provided by (used in) discontinued operations   |       
|                                                                                                                 |                                              |                                                          |       
|                                                                                                                 |                                              | Net cash provided by (used in) operating activities      |       
|                                                                                                                 |                                              |                                                          |       
|Cash Flows From Investing Activities:                                                                            |                                              |                                                          |       
|                                                                                                                 |                                              | Purchases of property, plant and equipment               |       
|                                                                                                                 |                                              | Proceeds from real estate transaction                    |       
|                                                                                                                 |                                              | Proceeds on sale of discontinued operations              |       
|                                                                                                                 |                                              | Other                                                    |       
|                                                                                                                 |                                              |                                                          |       
|                                                                                                                 |                                              | Net cash provided by (used in) investing activities      |       
|                                                                                                                 |                                              |                                                          |       
|Cash Flows From Financing Activities:                                                                            |                                              |                                                          |       
|                                                                                                                 |                                              | Net payments (borrowings) under revolving line of credit |       
|                                                                                                                 |                                              | Repayment of long-term debt                              |       
|                                                                                                                 |                                              | Repurchase of senior subordinated notes                  |       
|                                                                                                                 |                                              | Proceeds from term loan                                  |       
|                                                                                                                 |                                              | Proceeds from issuance of redeemable preferred stock     |       
|                                                                                                                 |                                              | Other                                                    |       
|                                                                                                                 |                                              |                                                          |       
|                                                                                                                 |                                              | Net cash provided by (used in) financing activities      |       
|                                                                                                                 |                                              |                                                          |       
|Net increase in cash                                                                                             |                                              |                                                          | 11,117
|Cash at beginning of year                                                                                        |                                              |                                                          | 596   
|                                                                                                                 |                                              |                                                          |       
|Cash at end of period                                                                                            |                                              | $                                                        | 11,713
|                                                                                                                 |                                              |                                                          |       
|Supplemental disclosure of cash flow information:                                                                |                                              |                                                          |       
|                                                                                                                 | Cash paid during the period for:             |                                                          |       
|                                                                                                                 |                                              | Interest                                                 |       
|                                                                                                                 |                                              | Income taxes                                             |       
|                                                                                                                 | Noncash investing and financing activities:  |                                                          |       
|                                                                                                                 |                                              | Notes receivable from disposals of assets                |       

See accompanying notes to consolidated financial statements.

5

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SPECIAL DEVICES, INCORPORATED AND SUBSIDIARY  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

1.  Company Operations

Special Devices, Incorporated, a Delaware corporation (the "Company" or "SDI"), is a leading designer and manufacturer of highly reliable precision engineered
pyrotechnic devices. These devices are used predominantly in vehicle airbag and other automotive safety systems. The Company's primary products are initiators, which function like an "electrical
match" to ignite the gas generating charge in an automotive airbag system. We believe that the Automotive Products Division is the world's largest independent supplier of initiators sold to leading
domestic and foreign automotive airbag system manufacturers. Those manufacturers use SDI's product in the assembly of integrated airbag safety systems, which they then sell to automobile original
equipment manufacturers.

The
divestiture of the Aerospace Division, which included Scot, Incorporated ("Scot"), was completed in a series of transactions in 2000 and 2001. As previously disclosed, Scot was
divested on September 21, 2000. The net assets of the remaining operations of the Aerospace Division were sold on May 11, 2001 (the "Aerospace Sale"). See Note 10.

The
principal executive offices of the Company are located at 14370 White Sage Road, Moorpark, California 93021 and its telephone number is (805) 553-1200.

2.  Interim Financial Statements

The accompanying unaudited consolidated condensed financial statements of the Company include all adjustments (consisting of normal recurring entries) which
management believes are necessary for a fair
statement of the financial position and results of operations for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles ("GAAP") have been condensed or omitted. It is recommended that the accompanying consolidated condensed financial statements be read in conjunction with
the Company's audited financial statements and footnotes as of and for the year ended October 31, 2000. Operating results for the nine-month period ended July 29, 2001 are
not necessarily indicative of the operating results for the full year. Certain prior year amounts have been reclassified to conform with the current year presentation.

3.  Recent Accounting Pronouncements

In December 1999, the Securities and Exchange Commission (the "SEC") issued Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition
in Financial Statements", which provides guidance on the recognition, presentation, and disclosure of revenue in financial statements filed with the SEC. The Company will adopt SAB 101 in the fourth
quarter of 2001 and does not expect such adoption to have a material impact on either the financial position or results of operations of the Company.

In
June 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations", SFAS
No. 142, "Goodwill and Intangible Assets", and SFAS 143, "Accounting for Asset Retirement Obligations." SFAS No. 141 requires that the purchase method of accounting be used for
all business combinations, establishes specific criteria for recognizing intangible assets separately from goodwill and requires certain disclosures regarding reasons for a business combination and
the allocation of the purchase price paid. SFAS No. 141 is effective for all business combinations initiated after June 30, 2001 and for all business combinations accounted for using the
purchase accounting method for which the date of acquisition is after June 30, 2001. SFAS No. 142 establishes that goodwill and certain intangible assets will no longer

6

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be amortized to earnings, but instead tested for impairment at least annually. SFAS 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the
period in which it is incurred if a reasonable estimate of fair value can be made, that the associated asset retirement costs be capitalized as part of the carrying amount of the asset and requires
certain disclosures providing descriptions of the asset retirement obligations and reconciliations of changes in components of those obligations. Except for business combinations initiated after
June 30, 2001, the Company is required to adopt the provisions of SFAS No. 141, SFAS No. 142 and SFAS No. 143 on November 1, 2002. The Company does not expect the
adoption of SFAS 141, SFAS 142 or SFAS 143 to have a material impact on the Company's results of operations or financial position.

4.  Inventories

Inventories consist of the following components:

July 29,
2001

October 31,
2000(In thousands)Raw materials and components

$
3,577

$
7,241Work in process


1,384


1,121Finished goods


4,372


3,368Total inventories

$
9,333

$
11,730


Inventory
amounts relating to the Aerospace Division were reclassified to "Net assets of discontinued operations" in the Consolidated Balance Sheet at October 31, 2000.

5.  Debt

In June 2001, the Company repaid its existing senior term loan and revolving credit facility (the "Prior Credit Facility") with the proceeds of the
Aerospace Sale and the Real Estate Transaction and terminated its credit agreement with a syndicate of banks. The Company entered into a new credit facility (the "New Credit Facility") in
June 2001 which consists of a $25.0 million five-year Revolving
Credit Facility (the "New Revolver") and a $5.0 million five-year Term Loan (the "New Term Loan"). Available borrowings under the New Revolver are based on a formula comprised of
accounts receivable and inventory.

The
New Revolver and the New Term Loan bear interest at the Bank's Base Rate or the LIBOR Rate plus applicable margins. The Company has the option of electing the LIBOR Rate on all or
a portion of the amount outstanding under the New Credit Facility prior to the start of each quarterly interest period. The New Term Loan had an effective rate of 7.25% per annum at July 29,
2001. At July 29, 2001, no amount was outstanding under the New Revolver. Letters of credit outstanding under the New Revolver reduce the amount of borrowings available. The Company had
$4.0 million in letters of credit outstanding at July 29, 2001. The total amount available under the New Revolver at July 29, 2001 was $8.8 million subject to compliance
with certain financial and operating covenants which the Company must meet on a quarterly basis.

Substantially
all of the Company's assets are pledged as collateral under the New Credit Facility.

In
July 2001, the Company purchased $14.6 million face value of its Senior Subordinated Notes (the "Notes") in the open market for $7.4 million. At
July 29, 2001, the Company had $85.4 million of Notes outstanding. The Notes are due in December 2008, and bear interest at 113/8% per annum. Subsequent to
July 29, 2001, the Company purchased another $11.0 million face value of Notes at a

7

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cost of $6.0 million. Interest is payable semi-annually in June and December. The Notes are noncollateralized obligations of the Company and are subordinated to its obligations
under the New Credit Facility.

The
fair value and carrying amount of long-term debt, including short-term borrowings, are as follows:

July 29,
2001

October 31,
2000(In thousands)Fair value

$
48,569

$
55,175Carrying amount

$
90,430

$
135,175


The
Company's borrowings under the New Term Loan and the New Revolver have variable rates that reflect currently available terms and conditions for similar debt. The carrying amount
of the New Term Loan and New Revolver is a reasonable estimate of its fair value. The Notes are traded occasionally in public markets.

6.  Redeemable Preferred Stock

The Company issued 4,000 shares of Series A Cumulative Convertible Preferred Stock ("Preferred Stock") to participating stockholders on
February 28, 2001 for a total consideration of $4.0 million.

The
Preferred Stock is redeemable at the option of the Company at any time at a stated liquidation value of one thousand dollars per share (the "Stated Liquidation Value") plus
accrued dividends (the "Liquidation Preference"). Holders of the Preferred Stock have the option to require the Company to redeem their shares at the Liquidation Preference upon a change in control as
defined. The Preferred Stock has therefore been recorded as Redeemable Preferred Stock.

The
Preferred Stock is convertible into the Company's Common Stock upon the occurrence of certain triggering events as defined, which includes the fifth anniversary of the issuance of
the Preferred Stock. Each share of Preferred Stock is convertible into the number of shares of Common Stock which results
from dividing the Stated Liquidation Value by the conversion price (the "Conversion Price"). The Conversion Price is $5.00 per share and is subject to antidilutive adjustments.

7.  Redeemable Common Stock

Some of the outstanding shares of Common Stock held by certain stockholders, are subject to the right, under certain conditions, to require the Company to
purchase all or a portion of these shares at a price per share based on a formula. Accordingly, these 735,294 shares have been recorded as redeemable common stock. Annual accretion on the redeemable
common stock is $3.0 million.

8.  Stockholders' Equity

The Company issued warrant certificates in June 2001 for 135,382 warrants in connection with the Real Estate Transaction. The warrant certificates
expire in June 2021 and entitle the holders to purchase one share of Common Stock, par value of $.01, for each warrant at an exercise price of $34.00 per share.

8

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9.  Commitments and Contingencies

OSHA Investigations.On April 24, 2000, an accidental initiation incident occurred at the premises leased by the
Company from McCormick Selph, Inc. ("MSI") in Hollister, California for the Company's microgas generator ("MGG") production line, which it acquired from MSI in July 1999. The incident
resulted in the death of one of the Company's employees and injury to another. Prior to the April 24, 2000 incident, the Company had intended to move its MGG operations in Hollister to its
Mesa, Arizona facility. Following the incident, the Company moved its MGG production to Mesa and ceased operations at the Hollister facility. The State of California, Department of Industrial
Relations, Division of Occupational Safety and Health ("Cal-OSHA") conducted a post-incident and process safety management inspection, which resulted in the issuance on
October 20, 2000 of administrative citations
for alleged safety violations and proposed fines aggregating approximately $250,000. The Company appealed the citations and the appeal is pending. The District Attorney's Office for San Benito County
filed a complaint on April 23, 2001 charging the Company with two misdemeanors and two felonies. On May 8, 2001, SDI entered into a civil and criminal settlement agreement pursuant to
which the pending case was resolved for a total of $1.0 million which was accrued during the quarter ended April 29, 2001. Under the agreement, SDI entered a nolo contendere plea to the
two misdemeanor violations, and will pay a $30,000 criminal fine and a $970,000 civil settlement. The $970,000 civil settlement will be offset by: (1) payments of up to $200,000 to resolve the
Cal-OSHA administrative citations; (2) payments of up to $200,000 made to victims of the accident and their families; and (3) payments of up to $20,000 for the State's
investigation costs. Further proceedings on the two felony counts are stayed for two years and will be dismissed upon SDI's completion of a two-year term of probation.

A
separate Cal-OSHA investigation is also pending. On September 1, 2000, an accidental initiation incident occurred at the Company's Moorpark facility and two
employees were injured. Cal-OSHA conducted a post-incident and process safety management inspection, which resulted in the issuance in late February 2001 of citations
for alleged safety violations and proposed fines aggregating approximately $168,000. The Company has appealed the citations and the appeal is pending. Because the accident resulted in a serious
injury, the Cal-OSHA's Bureau of Investigation ("BOI") is conducting its own investigation to determine whether to refer the matter to the District Attorney's Office for Ventura County.
Given the limited information available regarding the BOI's inquiry, it is impossible to predict or assess the likelihood of an unfavorable outcome. At this stage, it is not possible to predict or
assess the amount of potential liabilities associated with this pending Cal-OSHA matter, which could result in civil and/or criminal liabilities and penalties.

Other Litigation.The Company is a defendant in various other pending claims and lawsuits. In the opinion of the
Company's management, after consultation with counsel, disposition of such matters is not expected to have a material adverse effect upon the Company's results of operations, financial position or
liquidity.

10.  Aerospace Sale

The Aerospace Division, which included Scot, Incorporated, comprised our Aerospace segment (the "Aerospace Segment"). As previously disclosed, the Company
divested Scot on September 21, 2000 and on May 11, 2001, the Company completed the sale of the net assets comprising the remaining operations of the Aerospace Division. Proceeds from the
sale were used to pay senior indebtedness under the Prior Credit Facility. A related party received a transaction fee of $0.5 million and expense reimbursements as advisors to the transaction.

9

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The disposal of the Aerospace Segment has been accounted for as discontinued operations ("Discontinued Operations"). The divestiture of Scot was originally accounted for as a sale of
a subsidiary since it was only a part of the Company's Aerospace operations. Due to the sale of the remainder of the Aerospace operations, the Company reclassified the Scot transaction and the results
of Scot's operations to Discontinued Operations.

The
following are the assets and liabilities of the Aerospace Segment shown net as "Net assets of discontinued operations" in the Company's Consolidated Balance Sheet at
October 31, 2000:

October 31,
2000Accounts receivable

$
4,343Inventories


8,748Net property, plant and equipment


1,558Other assets


33Total assets


14,682Accounts payable


(1,740
)Accrued liabilities


(254
)Total liabilities


(1,994
)Net assets of discontinued operations

$
12,688


Net
sales of the Aerospace Division were $0.3 million and $10.2 million for the three months ended July 29, 2001 and July 30, 2000, respectively. Net sales
of the Aerospace Division were $11.4 million and $29.7 million for the nine months ended July 29, 2001 and July 30, 2000, respectively.

11.  Real Estate Transaction

On June 5, 2001, the Company completed the sale and leaseback of its facilities in Moorpark, California and Mesa, Arizona to Autosafe Airbag 14(CA) LP
and Autosafe Airbag 12(CA) LP for cash and notes receivable. The transaction resulted in a loss of $4.8 million that was recorded in the three months ended July 29, 2001. Net cash
proceeds were $27.0 million which were used to pay senior indebtedness under the Prior Credit Facility with the balance used for general corporate purposes. A related party received a
transaction fee of $1.0 million and expense reimbursements as advisors to the transaction. The lease provides for an initial term of twenty years with options to extend for two ten
year-terms and annual rent of $3.9 million with yearly rent escalations based on the Consumer Price Index beginning in 2003.

12.  Extraordinary Gain on Extinguishment of Debt

The Company recorded an extraordinary gain of $4.7 million, before taxes of $1.9 million, during the three months ended July 29, 2001. The
Company purchased $14.6 million face value of Notes in the open market for $7.4 million resulting in a gain of $6.8 million, net of the write off of $0.4 million in prepaid
financing fees. This $6.8 million gain was partially offset by prepaid financing fees of $2.1 million which were written off in connection with the termination of the Company's Prior Credit
Facility.

10

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

We sold the net assets comprising our remaining Aerospace operations on May 11, 2001 and the results of operations for the Aerospace Segment have been
reclassified to Discontinued Operations. The narrative that follows relates to the continuing operations of our Automotive Products Division.

The
following table sets forth, for the periods indicated, the percentage of net sales represented by certain items in the Company's Consolidated Statements of Operations.

Three Months Ended

Nine Months EndedJuly 29,
2001

July 30,
2000

July 29,
2001

July 30,
2000Net sales

100.0
%
100.0
%
100.0
%
100.0
%Cost of sales

94.2

89.0

87.5

87.1Gross profit

5.8

11.0

12.5

12.9Operating expenses

16.9

10.8

12.9

10.0Environmental and other investigation costs

1.9



1.7

Income (loss) from operations

(13.0
)%
0.2
%
(2.1
)%
2.9
%


Comparison of the Three Months Ended July 29, 2001 to the Three Months Ended July 30, 2000

Net Sales

Consolidated net sales for the third quarter of 2001 were $28.4 million, compared to consolidated net sales of $32.4 million for the third
quarter of 2000. The decrease was primarily due to lower automotive industry production in July, unfavorable product mix and lower unit pricing.

Gross Profit

Consolidated gross profit for the third quarter of 2001 was $1.6 million or 5.8% of consolidated net sales, compared to consolidated gross profit of
$3.6 million or 11.0% of consolidated net sales for the third quarter of 2000. The decrease is primarily due to the write-off of $2.5 million in obsolete inventory.
Consolidated gross margin was 14.6% for the third quarter of 2001, excluding the inventory adjustment. The improvement in gross margin is primarily due to cost reductions in excess of unit price
reductions.

Operating Expenses

Consolidated operating expenses for the third quarter of 2001 were $4.8 million or 16.9% of consolidated net sales, compared with consolidated operating
expenses of $3.5 million or 10.8% of consolidated net sales for the third quarter of 2000 (excluding expenses for environmental and other investigations in both years). The increase is
primarily due to increased spending for research and development for new products, higher legal expense and an accrued incentive bonus in 2001.

Expenses Related to Environmental and Other Investigations

There were $0.6 million in expenses related to our former Newhall, California facility in the third quarter of 2001, while no such expenses were
incurred in the third quarter of 2000.

11

---

Other Expense

Net interest expense was $3.0 million for the third quarter of 2001 compared to net interest expense of $4.1 million for the third quarter of
2000. The decrease was primarily due to a reduction in outstanding
debt. Average debt outstanding was $120.9 million in the third quarter of 2001, compared with $183.9 million in the third quarter of 2000. We used the net proceeds from the Scot
divestiture, the Aerospace Sale and the Real Estate Transaction to repay borrowings under our Prior Credit Facility and to retire a portion of our Senior Subordinated Notes ("Notes").

Loss
on disposal of assets was $5.0 million for the third quarter of 2001 compared with $0.1 million for the third quarter of 2000. The majority of these losses
($4.8 million) relate to the sale of our real estate assets in the third quarter of 2001.

Comparison of the Nine Months Ended July 29, 2001 to the Nine Months Ended July 30, 2000

Net Sales

Consolidated net sales for the nine months ended July 29, 2001 were $91.9 million, compared to consolidated net sales of $99.3 million for
the same period in 2000. The decrease was primarily due to unfavorable product mix and lower unit pricing, partially offset by increased unit shipments.

Gross Profit

Consolidated gross profit for the nine months ended July 29, 2001 was $11.5 million or 12.5% of consolidated net sales, compared to consolidated
gross profit of $12.8 or 12.9% of consolidated net sales for the nine months ended July 30, 2000. The decrease is primarily due to the write-off of $2.5 million in obsolete
inventory. Consolidated gross margin was 15.3% for the nine months ending July 29, 2001, excluding the inventory adjustment. The improvement in gross margin is primarily due to cost reductions
in excess of unit price reductions and increased unit shipments.

Operating Expenses

Consolidated operating expenses for the nine months ended July 29, 2001 were $11.9 million or 12.9% of consolidated net sales, compared with
consolidated operating expenses of $9.9 million or 10.0% of consolidated net sales for the same period in 2000 (excluding expenses for environmental and other investigations in both years). The
increase is primarily due to increased spending for research and development for new products, higher legal and insurance expense and an accrued incentive bonus in 2001.

Expenses Related to Environmental and Other Investigations

There were $1.6 million in expenses related to environmental and other investigations in the first nine months of 2001, while no such expenses were
incurred in the first nine months of 2000. These expenses included $1.0 million related to the settlement of the Cal-OSHA Hollister investigation and $0.6 million related to
our former Newhall, California facility.

Other Expense

Net interest expense was $10.4 million for the nine months ended July 29, 2001, a $2.4 million decrease compared with net interest expense
of $12.8 million for the same period in 2000. The decrease was primarily due to a reduction in outstanding debt. Average debt outstanding was $138.0 million in the first nine months of
2001, compared with $180.7 million in the first nine months of 2000. We used the net proceeds from the Scot divestiture, the Aerospace Sale and the Real Estate Transaction to repay borrowings
under our Prior Credit Facility and to retire a portion of our Notes.

12

---

Loss on disposal of assets was $6.3 million for the nine months ended July 29, 2001, compared with $0.1 million for the nine months ended July 30, 2000. We
recorded a $4.8 million loss in the third quarter of 2001 on the sale of our real estate assets and a $1.2 million loss in the second quarter of 2001 on the disposition of assets related
to our discontinued glass seal operations.

Liquidity and Capital Resources

Our principal sources of liquidity are cash flow from operations and borrowings under our credit facilities. Our principal uses of cash are debt service
requirements, capital expenditures and working capital.

Proceeds
from the Aerospace Sale and the Real Estate Transaction were used to repay our existing senior term loan and revolving credit facility (the "Prior Credit Facility"), which we
then terminated in June 2001. We entered into a new credit facility (the "New Credit Facility") in June 2001 which consists of a $25.0 million Revolving Credit Facility (the "New
Revolver") and a $5.0 million Term Loan (the "New Term Loan"). Available borrowings under the New Revolver are based on a formula comprised of our accounts receivable and inventory.

As
of July 29, 2001, we had $4.0 million of letters of credit outstanding under the New Revolver. The total amount available under the New Revolver at July 29,
2001 was $8.8 million subject to compliance with certain financial covenants. As of July 29, 2001, we were in compliance with all such covenants.

Continuing
operations provided cash of $1.6 million and $0.2 million in the nine months ended July 29, 2001 and July 30, 2000, respectively. Cash from the
increase in profitability was used to reduce trade payables and accrued liabilities in 2001. Capital expenditures, primarily for manufacturing equipment, were $4.3 million in the nine months
ended July 29, 2001 and $10.4 million in the nine months ended July 30, 2000. We expect to spend approximately $5.0 to $6.0 million on capital expenditures, primarily for
manufacturing equipment, during each of fiscal 2001 and 2002. An estimated tax payment of approximately $2.0 million is due in October 2001. We anticipate making a capital contribution
of approximately Euro1.0 million during the next six months to a German joint venture formed in June 2001. We expect to make the aforementioned payments with cash from operations and
borrowings under the New Revolver.

Our
working capital was $14.8 million at July 29, 2001, an increase of $29.7 million from a working capital deficit of ($14.9) million at October 31, 2000.
The increase was due to cash proceeds received on the issuance of preferred stock, the Aerospace Sale and the Real Estate Transaction, net of the repayment of long-term debt outstanding
under the Prior Credit Facility and the repurchase of our Notes.

Our
ability to pay the interest on, or to refinance our debt, or to fund planned capital expenditures, will depend on our future performance which, to a certain extent, is subject to
general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. While management believes that we will be able to meet our liquidity needs, there can
be no assurance that our business will generate sufficient cash flow from operations or that future borrowings will be available under the New Revolver in an amount sufficient to enable us to service
our debt, or to fund our other liquidity needs.

Accounting Developments

In December 1999, the Securities and Exchange Commission (the "SEC") issued Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition
in Financial Statements", which provides guidance on the recognition, presentation, and disclosure of revenue in financial statements filed with

13

---

the SEC. We will adopt SAB 101 in the fourth quarter of 2001 and do not expect such adoption to have a material impact on our financial position or results of operations.

In
June 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations", SFAS
No. 142, "Goodwill and Intangible Assets", and SFAS 143, "Accounting for Asset Retirement Obligations." SFAS No. 141 requires that the purchase method of accounting be used for
all business combinations, establishes specific criteria for recognizing intangible assets separately from goodwill and requires certain disclosures regarding reasons for a business combination and
the allocation of the purchase price paid. SFAS No. 141 is effective for all business combinations initiated after June 30, 2001 and for all business combinations accounted for using the
purchase accounting method for which the date of acquisition is after June 30, 2001. SFAS No. 142 establishes that goodwill and certain intangible assets will no longer be amortized to
earnings, but instead tested for impairment at least annually. SFAS 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is
incurred if a reasonable estimate of fair value can be made, that the associated asset retirement costs be capitalized as part of the carrying amount of the asset and requires certain disclosures
providing descriptions of the asset retirement obligations and reconciliations of changes in components of those obligations. Except for business combinations initiated after June 30, 2001, we
are required to adopt the provisions of SFAS No. 141, SFAS No. 142 and SFAS 143 on November 1, 2002. We do not expect the adoption of SFAS 141, SFAS 142 or
SFAS 143 to have a material impact on our results of operations or financial position.

Forward-Looking Information

This report on Form 10-Q contains certain forward-looking statements and information relating to our business that are based on the beliefs
of management as well as assumptions made by and information currently available to management. The words "anticipates," "believes," "estimates," "expects," "plans," "intends," and similar
expressions, as they relate to our operations, are intended to identify forward-looking statements. Such statements reflect our current views with respect to future events and are subject to certain
risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statement. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated or expected. We do not intend to
update these forward-looking statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

We do not have any derivative financial instruments and do not hold or issue them for trading purposes. Certain amounts borrowed under our New Credit Facility
are at variable rates and we are thus subject to market risk resulting from interest rate fluctuations. Our interest rate swap agreement with the agent under our Prior Credit Facility terminated
March 7, 2001.

We
also are exposed to market risks related to fluctuations in interest rates on the Notes we issued in December 1998. For fixed rate debt such as the Notes, changes in
interest rates generally affect the fair
value of the debt instrument. However, we do not have an obligation to repay the Notes prior to maturity in December 2008.

PART IIOTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For OSHA Investigations, see Note 9 to the Consolidated Financial Statements in Part I that we hereby incorporate by reference. For other legal
proceedings, see our Annual Report on Form 10-K405 for the year ended October 31, 2000.

ITEM 3 THROUGH 5.

Omitted as not applicable.

14

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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

|Exhibit No. |  | Description                                                                                                                                                                                                                  
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.1(k)      |  | Purchase Agreement, dated as of December 11, 1998, among SDI Acquisition Corp. and BT Alex. Brown Incorporated and Paribas Corporation.                                                                                      
|2.1(a)      |  | Amended and Restated Agreement and Plan of Merger, dated as of June 19, 1998, between the Company and SDI Acquisition Corp.                                                                                                  
|2.2(b)      |  | Amendment No.1, dated as of October 27, 1998, to the Amended and Restated Agreement and Plan of Merger between the Company and SDI Acquisition Corp.                                                                         
|2.3(c)      |  | Guaranty Agreement, dated as of June 19, 1998, between J.F. Lehman Equity Investors I, LP and the Company.                                                                                                                   
|3.1(k)      |  | Certificate of Incorporation of the Company.                                                                                                                                                                                 
|3.2(k)      |  | Bylaws of the Company.                                                                                                                                                                                                       
|4.1(k)      |  | Indenture, dated as of December 15, 1998, among SDI Acquisition Corp., the Guarantors named therein and United States Trust Company of New York, as Trustee.                                                                 
|4.2(k)      |  | First Supplemental Indenture, dated as of December 15, 1998, among the Company, the Guarantors named therein and the United States Trust Company of New York, as Trustee.                                                    
|4.3(k)      |  | Form of 113/8% Senior Subordinated Note due 2008, Series A (see Exhibit A of the First Supplemental Indenture in Exhibit 4.2).                                                                                               
|4.4(k)      |  | Form of 113/8% Senior Subordinated Note due 2008, Series B (see Exhibit B of the First Supplemental Indenture in Exhibit 4.2).                                                                                               
|4.5(k)      |  | Registration Rights Agreement, dated as of December 15, 1998, among SDI Acquisition Corp., as Issuer and BT Alex. Brown Incorporated and Paribas Corporation as Initial Purchasers.                                          
|4.6(p)      |  | Certificate of Designation of Preferences and Relative Participating, Optional and Other Special Rights of Series A 6% Cumulative Convertible Preferred Stock of Special Devices, Incorporated dated as of
February 28, 2001.
|10.2(k)     |  | Credit Agreement, dated as of December 15, 1998, among the Company, various banks and Bankers Trust Company, as Lead Arranger and Administrative Agent.                                                                      
|10.6(k)     |  | Management Agreement dated as of December 15, 1998, between the Company and J.F. Lehman & Company.                                                                                                                           
|10.7(k)     |  | Management Services Agreement, dated as of December 15, 1998, between the Company and J.F. Lehman & Company.                                                                                                                 
|10.8(k)     |  | Subscription Agreement, dated as of September 7, 1998, among the Company, Paribas Principal Inc., J.F. Lehman Equity Investors I, LP and JFL Co-Invest Partners I, LP.                                                       
|10.9(k)     |  | Amendment No. 1 to Subscription Agreement, dated as of December 3, 1998, among the Company, Paribas Principal Inc., J.F. Lehman Equity Investors I, LP and JFL Co-Invest Partners I, LP.                                     
|10.10(k)    |  | Amendment No. 2 to Subscription Agreement, dated as of December 15, 1998, among the Company, Paribas Principal Inc., J.F. Lehman Equity Investors I, LP and JFL Co-Invest Partners I, LP.                                    

15

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|10.11(k) |  | Stockholders Agreement, dated as of December 15, 1998, among the Company, J.F. Lehman & Co., J.F. Lehman Equity Investors I, LP, JFL Co-Invest Partners I, LP, the Neubauer Family Trust, by Walter Neubauer trustee,
 and the Treinen Family Trust, by Thomas F. Treinen trustee.           
|-------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.12(k) |  | Pledge Agreement, dated as of December 15, 1998, between the Neubauer Family Trust, by Walter Neubauer, trustee and J.F. Lehman & Company.                                                                                                                                                   
|10.13(k) |  | Rollover Stockholders Agreement, dated as of December 15, 1998, among the Company, J.F. Lehman & Co., the Neubauer Family Trust, by Walter Neubauer trustee, and the Treinen Family Trust, by Thomas F. Treinen
trustee.                                                                     
|10.14(k) |  | Pledge Agreement, dated as of December 15, 1998, between Thomas Treinen Family Trust, by Thomas F. Treinen, trustee and J.F. Lehman & Company.                                                                                                                                               
|10.15(k) |  | Registration Rights Agreement, dated as of December 15, 1998, among the Company, J.F. Lehman Equity Investors I, LP, JFL Co-Invest Partners I, LP, Paribas Principal Inc., the Neubauer Family Trust, by Walter Neubauer
trustee, and the Treinen Family Trust, by Thomas F. Treinen trustee.
|10.17(d) |  | Letter Agreement dated June 8, 1990 between the Company and Hermetic Seal Corporation.                                                                                                                                                                                                       
|10.18(d) |  | Master Purchase Agreement, dated May 15, 1990, between the Company and TRW Inc. (confidential treatment granted as to part).                                                                                                                                                                 
|10.19(d) |  | Technology License Agreement dated November 7, 1990 between the Company and Davey Bickford Smith.                                                                                                                                                                                            
|10.20(e) |  | Amended and Restated 1991 Stock Incentive Plan of the Company.                                                                                                                                                                                                                               
|10.21(d) |  | Special Devices, Incorporated 401(k) Plan.                                                                                                                                                                                                                                                   
|10.22(e) |  | First Amendment to Master Purchase Agreement, dated February 25, 1993, between the Company and TRW, Inc. (confidential treatment granted as to part).                                                                                                                                        
|10.23(f) |  | Letter Agreement, dated November 30, 1994 between the Company and Hermetic Seal Corporation (confidential treatment granted as to part).                                                                                                                                                     
|10.25(g) |  | Second Amendment to Master Purchase Agreement, dated March 8, 1995, between the Company and TRW, Inc. (confidential treatment granted as to part).                                                                                                                                           
|10.26(h) |  | Supply Agreement dated as of November 14, 1995 between the Company and Autoliv International, Inc. (confidential treatment requested as to part).                                                                                                                                            
|10.27(i) |  | Development Agreement, dated August 28, 1996, between Company and the City of Moorpark.                                                                                                                                                                                                      
|10.28(j) |  | Purchase Agreement, dated September 30, 1997, between the Company and Hermetic Seal Corporation (confidential treatment requested as to part).                                                                                                                                               
|10.29(l) |  | Employment Agreement dated October 1, 1999 between the Company and Thomas W. Cresante.                                                                                                                                                                                                       
|10.31(l) |  | 1999 Stock Option Plan dated June 23, 1999.                                                                                                                                                                                                                                                  
|10.33(l) |  | Capital Call Agreement dated January 26, 2000 among the Company, various banks, and Bankers Trust Company as Administrative Agent.                                                                                                                                                           
|10.34(l) |  | Second Amendment to Credit Agreement, dated January 26, 2000 among the Company, various banks, and Bankers Trust Company, as Lead Arranger or Administrative Agent.                                                                                                                          
|10.35(n) |  | Third Amendment to Credit Agreement, dated June 7, 2000 among the Company, various banks, and Bankers Trust Company, as Lead Arranger or Administrative Agent.                                                                                                                               

16

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|10.36(n) |  | Fourth Amendment to Credit Agreement, dated September 18, 2000 among the Company, various banks, and Bankers Trust Company, as Lead Arranger or Administrative Agent.                                                                                        
|-------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.37(n) |  | Fifth Amendment to Credit Agreement, dated January 12, 2001 among the Company, various banks, and Bankers Trust Company, as Lead Arranger or Administrative Agent.                                                                                           
|10.38(n) |  | Capital Call Agreement dated September 18, 2000 among the Company, various banks, and Bankers Trust Company as Administrative Agent.                                                                                                                         
|10.39(p) |  | First Amendment to Credit Agreement, dated July 14, 1999 among the Company, various banks, and Bankers Trust Company, as Lead Arranger or Administrative Agent.                                                                                              
|10.40(p) |  | Sixth Amendment to Credit Agreement, dated April 25, 2001 among the Company, various banks, and Bankers Trust Company, as Lead Arranger or Administrative Agent.                                                                                             
|10.41    |  | Partnership Agreement, dated as of June 26, 2001, among SDI Germany GmbH, Klaus-Jurgen Dittrich and Frank Dittrich.                                                                                                                                          
|10.42    |  | Side Agreement, dated as of June 26, 2001, among the Company, Anhaltinische Chemische Fabriken ACF GmbH, Molan-Werk Dittrich Gessellschaft mit beschrankter Haftung & Co. Komman-ditgesellschaft, SDI Germany
GmbH, Klaus-Jurgen Dittrich and Frank Dittrich.
|10.43    |  | Loan and Security Agreement, dated as of June 27, 2001, among the Company and Foothill Capital Corporation.                                                                                                                                                  
|25.1(k)  |  | Form T-1 Statement of Eligibility of United States Trust Company of New York to act as trustee under the Indenture.                                                                                                                                          
|99.1(m)  |  | Special Devices, Incorporated Press Release dated September 22, 2000.                                                                                                                                                                                        
|99.2(m)  |  | Agreement and Plan of Merger between the Company and Wind Point Partners IV, L.P.                                                                                                                                                                            
|99.3(o)  |  | Special Devices, Incorporated Press Release dated May 14, 2000.                                                                                                                                                                                              
|99.4(o)  |  | Asset Purchase Agreement, dated as of March 27, 2001, among the Company, PS/EMC West LLC and Pacific Scientific Company (solely with respect to Section 7.2 thereof).                                                                                        
|99.5(o)  |  | Amendment No. 1 to Asset Purchase Agreement dated as of May 11, 2001.                                                                                                                                                                                        
|99.6(p)  |  | Lease Agreement, dated as of June 4, 2001, among the Company, Autosafe Airbag 14 (CA) LP and Autosafe Airbag 12 (CA) LP.                                                                                                                                     

---

17

---

None

18

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

|                          |  | SPECIAL DEVICES, INCORPORATED                                                                                                          
|------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------
|Dated: September 12, 2001 |  | /s/THOMAS W. CRESANTEThomas W. Cresante
Director, President and Chief Executive Officer
(Principal Executive Officer)                  
|Dated: September 12, 2001 |  | /s/DONALD C. CAMPIONDonald C. Campion
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)

19

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