UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-K

                (Mark One)
            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                    For the fiscal year ended March 31, 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 0-23938

                      SAFETY COMPONENTS INTERNATIONAL, INC.
             (Exact name of registrant as specified in its charter)

                     DELAWARE                              33-0596831
         (State or other jurisdiction of               (I.R.S. Employer
          incorporation or organization)             Identification No.)

                41 Stevens Street
            Greenville, South Carolina                      29605
              (Address of principal                       (Zip Code)
                executive offices)


        Registrant's telephone number, including area code (864) 240-2600

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
                                      NONE

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                     Common Stock, par value $.01 per share
                                (Title of Class)

     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 at least the past 90 days [ X ].

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation  S-K  (ss.229.405)  is not contained  herein,  and will not be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information  statements  incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K [ ].

     Indicate by check mark whether the  registrant  has filed all documents and
reports  required  to be filed by  Section  12,  13, or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court [ X ].

     The  aggregate  market value of the common stock held by persons other than
affiliates  of  the  registrant,   as  of  June  25,  2001,  was   approximately
$24,802,000.

     The number of shares  outstanding of the  registrant's  common stock, as of
June 25, 2001, is as follows:

---------------------------------------------- --------------------------------

Class                                                         Number of Shares
---------------------------------------------- --------------------------------

Common Stock, par value $.01 per share                               4,960,381
---------------------------------------------- --------------------------------

                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the Registrant's proxy statement to be filed in connection with
its 2001 annual meeting of shareholders (the "Proxy Statement") are incorporated
by reference into Part III.


<PAGE>


            Cautionary Statement Pursuant to Safe Harbor Provisions
                           of the Private Securities
                          Litigation Reform Act of 1995

     The following  discussion and analysis  should be read in conjunction  with
the Consolidated  Financial Statements,  including the Notes thereto,  appearing
elsewhere  herein.  Statements  in this Annual  Report on Form 10-K that reflect
projections or expectations of future  financial or economic  performance of the
Company,  and  statements  of the  Company's  plans and  objectives  for  future
operations,  including those contained in "Business,"  "Legal  Proceedings," and
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations," and "Quantitative and Qualitative Disclosure about Market Risk," or
relating  to the  Company's  outlook for fiscal  year 2002,  overall  volume and
pricing   trends   or   strategies   and   their   anticipated    results,   are
"forward-looking" statements within the meaning of Section 27A of the Securities
Act of 1933, as amended and Section 21E of the Securities  Exchange Act of 1934,
as amended. Words such as "expects," "anticipates,"  "approximates," "believes,"
"estimates,"  "intends,"  and "hopes" and  variations  of such words and similar
expressions  are  intended  to  identify  such  forward-looking  statements.  No
assurance can be given that actual results or events will not differ  materially
from  those   projected,   estimated,   assumed  or   anticipated  in  any  such
forward-looking  statements.   Important  factors  that  could  result  in  such
differences,  in addition to the other factors  noted with such  forward-looking
statements,  include:  general  economic  conditions  in the  Company's  market,
including  inflation,  recession,  interest  rates and other  economic  factors;
casualty to or other disruption of the Company's  facilities and equipment;  and
other factors that generally affect the automotive industry.


                                       2
<PAGE>


                                     PART I

ITEM 1. BUSINESS

The Company

     Safety Components  International,  Inc. (including,  when context requires,
its  consolidated  subsidiaries,  the  "Company"  or "Safety  Components")  is a
leading, low-cost, independent supplier of automotive airbag fabric and cushions
and technical  fabrics with operations in North America and Europe.  The Company
sells airbag  fabric  domestically  and  cushions  worldwide to all of the major
airbag module integrators that outsource such products.  The Company believes it
produces  approximately  50% of all outsourced  airbag fabric  utilized in North
America,  and that it manufactures  approximately  50% of all outsourced  airbag
cushions in North  America and Europe.  The Company  believes  that it is also a
leading manufacturer of value-added technical fabrics used in a variety of niche
industrial and commercial  applications such as ballistics material for luggage,
filtration, aircraft escape slides, military tents and fire service apparel. The
unique ability to interchange  airbag and specialty  technical fabrics using the
same  equipment  and  similar  manufacturing  processes  allows  the  Company to
effectively utilize its manufacturing assets and lower per unit overhead costs.

     Net sales of  automotive  fabric,  airbag  cushions  and  technical  fabric
products  (the  "automotive  and fabrics"  business or "core  operations")  were
approximately $201.2 million,  $194.7 million and $178.3 million in fiscal 2001,
fiscal 2000 and fiscal 1999,  respectively.  For purposes hereof, fiscal 2001 is
comprised of the  fifty-three  week period ended March 31, 2001,  fiscal 2000 is
comprised of the  fifty-two  week period ended March 25, 2000 and fiscal 1999 is
comprised of the fifty two week period ended March 27, 1999.

     As  discussed  in  "The  2001  Financial   Restructuring   and  Chapter  11
Reorganization"  below, on April 10, 2000 (the "Petition Date"), the Company and
certain  of  its  U.S.   subsidiaries,   including  Safety   Components   Fabric
Technologies,   Inc.  and  Automotive  Safety  Components  International,   Inc.
(collectively,  "Safety Filing Group"),  but excluding  Valentec Wells, LLC (fka
Valentec  International  Corporation,  LLC), Valentec Systems,  Inc. and Galion,
Inc.,  filed a  voluntary  petition  under  Chapter  11 of the  Bankruptcy  Code
("Chapter  11") with the United  States  Bankruptcy  Court for the  District  of
Delaware.

     On October 11,  2000 (the  "Emergence  Date"),  the  Company  emerged  from
Chapter 11. Accordingly,  the Company's financial  statements  subsequent to the
Emergence Date have been prepared in accordance with Statement of Position 90-7,
"Financial  Reporting by Entities in  Reorganization  Under the Bankruptcy Code"
("SOP 90-7"),  issued by the American Institute of Certified Public Accountants.
Under SOP 90-7, the Company's financial  information for the periods on or prior
to October 10, 2000 is termed  "Predecessor  Company" and financial  information
subsequent to October 10, 2000 is termed "Reorganized  Company" and gives effect
to the application of "fresh start"  accounting.  See further  discussion of the
effect of SOP 90-7 in Note 3 to the Company's Consolidated Financial Statements.

The 2001 Financial Restructuring and Chapter 11 Reorganization

     The deterioration in the Company's  financial condition that became evident
in fiscal 1999, arising from a confluence of negative developments, particularly
in the Company's metal and defense business ("non-core operations"),  caused the
Company  to  experience  material  liquidity  constraints  in  fiscal  2000.  In
addition,  following  the default with respect to  obligations  under its credit
agreement (the "KeyBank Credit  Agreement"),  KeyBank National  Association,  as
lender and administrative  agent, and Fleet Bank, as lender  (collectively,  the
"Senior  Lenders")  notified  the  trustee  for the  Company's  10  1/8%  senior
subordinated notes (the "Notes") that they were exercising their rights to block
a scheduled interest payment due on the Notes on January 18, 2000.

     On February 18, 2000, the common stock of the Company was delisted from the
NASDAQ stock exchange.


                                       3
<PAGE>


     The  Company  and an  informal  committee  comprised  of  holders  of  over
two-thirds  in aggregate  dollar amount of the Notes began  negotiations  and in
early  April  2000  reached  an  agreement  (as  amended,   the   "Restructuring
Agreement")  that would be effected through a voluntary filing under Chapter 11.
Pursuant  to the  Restructuring  Agreement,  the  claims of the  holders  of the
Company's Notes  ("Noteholders")  were to be converted into the right to receive
shares of the Company's  post-bankruptcy  common stock when the Company  emerged
from Chapter 11.

     On the April 10,  2000  Petition  Date,  the Safety  Filing  Group  filed a
voluntary  petition under Chapter 11 with the United States Bankruptcy Court for
the District of Delaware (the "Chapter 11 cases").

     On October  11,  2000 the  Safety  Filing  Group  emerged  from  Chapter 11
pursuant to the Plan of Reorganization  (the "Plan") confirmed by the Bankruptcy
Court. Pursuant to the Plan, as confirmed,  upon emergence, all of the Company's
10-1/8%  senior notes due 2007 (an  aggregate of  approximately  $96.8  million,
including  accrued  interest to the Petition Date) were converted into 4,840,774
shares of the Company's  post-bankruptcy  common stock,  and the  pre-bankruptcy
common stock,  excluding  stock held by Robert Zummo (former  Chairman and Chief
Executive  Officer of the  Company),  was converted  into 159,226  shares of the
Company's  post-bankruptcy  common  stock,  including  39,619 shares of treasury
stock,  and  warrants  to acquire an  additional  681,818  shares of such common
stock.  Immediately  upon emergence,  the Company had 5,000,000 shares of common
stock issued and 4,960,381 shares  outstanding and, other than the warrants,  no
shares of common  stock  were  reserved  for  issuance  in respect of claims and
interests  filed and allowed  under the Plan.  In addition,  Safety  Components'
trade suppliers and other creditors were paid in full,  pursuant to the terms of
the Plan, within 90 days of the Emergence Date.

Disposition of Assets and Plant Relocation

     On August 31, 2000,  the Company  finalized  the sale of Valentec  Systems,
Inc. ("Systems"),  a systems integrator with the U.S. Army which coordinated the
manufacture and assembly of components  supplied by various  subcontractors  and
part  of  the  Company's  non-core  operations.  Pursuant  to a  Stock  Purchase
Agreement  dated July 21,  2000,  the Company sold 100% of the shares of capital
stock of Systems to VTECH Corporation for approximately $2.9 million in cash.

     During  fiscal 2001,  the Company  determined to exit its metal and defense
businesses.  These  businesses  consist  of the metal  division  now  located in
Missouri (Valentec Wells, LLC) and the defense products division located in Ohio
(Galion,  Inc.).  To  enhance  the  value  of  these  businesses,   the  Company
consolidated a considerable  portion of its Valentec operations into its Galion,
Ohio  facility and relocated  the  remainder of its  operations  from its former
California  location  to the  lower-cost  facility  in  Missouri,  nearer to its
primary customers.

Core Operations

Structure of the Airbag Industry

     Airbag  systems  consist  of an airbag  module  and an  electronic  control
module,  which are  currently  integrated by  automakers  into their  respective
vehicles. Airbag modules consist of inflators, cushions, housing and trim covers
and are  assembled  by  module  integrators,  most of whom  produce  most of the
components required for a complete module. However, as the industry has evolved,
module integrators have increasingly outsourced non-proprietary components, such
as cushions,  to those  companies  specializing  in the production of individual
components.  The Company  believes  that its module  integrator  customers  will
continue to outsource the majority of their cushion  requirements  as they focus
on the  development of proprietary  technologies  such as inflators and sensors.
Only one of the module  integrators  currently  weaves its own airbag fabric and
the remainder purchase fabric from airbag fabric producers such as the Company.

     Characteristic  for the  industry,  certain  customers  of  airbag  cushion
suppliers are also  competitors.  The Company supplies airbag cushions to module
integrators,  most of which also produce a portion of their cushion requirements
internally.  While none of the module  integrators  produce airbag  cushions for
third  parties,  the Company may compete with its  customers to supply their own
internal cushion  requirements.  However, most of the Company's suppliers do not
produce  cushions for the same car/truck  models for which the Company  produces
cushions.


                                       4
<PAGE>


     Another characteristic of the airbag industry is the existence of potential
barriers to entry.  New entrants that wish to produce and supply airbag cushions
or airbag fabric must undergo a rigorous  qualification  process, which can take
as long as two years.  The Company  believes  that in addition to deterring  new
entrants, the existence of this qualification process represents switching costs
for module  integrators  that are required to assist the new supplier in meeting
automakers' requirements.  Additionally, the Company believes module integrators
are, like their auto-maker customers, trying to limit the number of suppliers.

Products

     The Company's automotive products include passenger, driver and side impact
airbag  cushions  and head  and  thorax  protection  curtains  manufactured  for
installation  in over fifty car and truck models sold  worldwide;  airbag fabric
for sale to airbag  manufacturers;  and stamped and machined  components used in
airbag  modules,  including  passenger  airbag  retainers that attach the airbag
cushion to the module's reaction can, as well as driver-side module products and
components used in airbag inflators. Sales of airbag related products (inclusive
of sales of airbag  fabric) for fiscal  year 2001  accounted  for  approximately
88.0% of the  Company's  consolidated  fiscal  2001 net  sales.  Sales of airbag
related  products for fiscal  years 2000 and 1999  accounted  for  approximately
87.3% and 86.5% of the  Company's  consolidated  fiscal 2000 and 1999 net sales,
respectively.

     In  addition to the airbag  fabric  manufactured  at its Safety  Components
Fabrics Technology, Inc. ("SCFTI") subsidiary in Greenville, South Carolina, the
Company  also  manufactures  a wide array of  specialty  technical  fabrics  for
consumer and  industrial  uses.  These  fabrics  include:  (i) high-end  luggage
fabrics,  including  "ballistics"  fabric  used in  Hartman  and Tumi  brands of
luggage; (ii) filtration fabrics used in aluminum, coal, steel, cement, clay and
brewing  industries;  (iii)  woven  fabrics for use by  manufacturers  of coated
products; (iv) specialty fabrics used in police jackets, protective apparel worn
by  firefighters,  fuel cells,  bomb and cargo chutes,  oil  containment  booms,
aircraft escape slides, and gas diaphragms;  and (v) release liners used in tire
manufacturing.  Sales are made against purchase orders,  pursuant to releases on
open purchase orders, or pursuant to short-term supply contracts of up to twelve
months. Sales of technical related products accounted for approximately 12.0% of
the Company's  consolidated  fiscal 2001 net sales.  Sales of technical  related
products for fiscal years 2000 and 1999  accounted for  approximately  12.7% and
13.5% of the Company's consolidated net sales, respectively.  The market for the
Company's  technical  related  products  is highly  segmented  by product  line.
Marketing and sales of the Company's  technical related products is conducted by
the Company's  marketing and sales staff based in  Greenville,  South  Carolina.
Manufacturing of these products occurs at the South Carolina facility, using the
same equipment and manufacturing process that the Company uses to produce airbag
fabric,  enabling the Company to take advantage of demand  requirements  for the
various  products with minimal  expenditures on production  retooling  costs. By
manufacturing  technical  products  with the same  machines  that  weave  airbag
fabric,  the  Company  is able to  effectively  utilize  capacity  at its  South
Carolina plant and lower per unit overhead costs.

     See  Note  10 to  the  Consolidated  Financial  Statements  for  additional
financial information by product type.

Customers

     The Company  sells its airbag  cushions to airbag  module  integrators  for
inclusion in specified model cars generally pursuant to requirements  contracts.
Certain of these customers also manufacture  airbag cushions to be used in their
production of airbag modules.  The Company markets and sells airbag cushions and
airbag  fabric  through its direct  marketing  and sales forces based in Mexico,
California, South Carolina and Germany.

     The Company sells its fabric either directly to a module  integrator or, in
some cases, to a fabricator (such as the Company),  which sells a sewn airbag to
the module integrator.  Because  driver-side fabric historically has been coated
(creating lower  permeability  for rapid  inflation and eliminating  particulate
burn-through  caused by hot  inflators)  before  fabrication  into airbags,  the
Company  also sells  fabric to coating  companies,  which then resell the coated
fabric to either an airbag  fabricator  or module  integrator.  Sales are either
made against purchase orders,  pursuant to releases on open purchase orders,  or
pursuant to short-term  supply  contracts  generally  having  durations of up to
twelve months.


                                       5
<PAGE>


     The following  describes the Company's  contractual  relationship  with its
significant  customers (listed in alphabetical  order), of which the loss of any
such customer could have a material adverse effect on the Company:

     Autoliv.  The Company supplies airbag cushions and airbag fabric to Autoliv
based upon releases from formal purchase orders,  which typically cover a period
of twelve months and are  negotiated  prior to commitment  with respect to price
and quantity.

     Petri. The Company's  "evergreen" agreement with Petri provides that, prior
to the  commencement  of each calendar year,  the parties will negotiate  price,
quantity and other relevant terms of the airbag cushion supply contract for such
calendar year.

     TRW. The Company has a global supply agreement with TRW with respect to the
supply of airbag fabric, airbag cushions and airbag metal components. The global
supply agreement  includes price and cost reduction  targets by the Company,  as
well as sales growth  targets for the Company,  although TRW is not obligated to
purchase such amounts under the global supply agreement.

Suppliers

     The Company's  principal airbag cushion fabric customers  generally approve
all suppliers of major airbag components or airbag fabric raw materials,  as the
case  may  be.  These  suppliers  are  approved  after   undergoing  a  rigorous
qualification process on their products and manufacturing capabilities.  In many
cases, only one approved source of supply exists for certain airbag  components.
In the event that a sole source supplier experiences prolonged delays in product
shipments or no longer qualifies as a supplier,  the Company would work together
with its  customers to identify  another  qualified  source of supply.  Although
alternative  sources of supply exist,  a prolonged  delay in the approval by the
Company's  customers of any such  alternative  sources of supply could adversely
affect the Company's operating results.  Under the Company's agreements with its
customers, any changes in the cost of major components are passed through to the
customers.

     The raw materials for the Company's  fabric  operations  largely consist of
synthetic yarns provided by DuPont,  Acordis (previously AKZO), Breed, Unifi and
KoSa  (previously  Hoechst  Celanese),  among others.  The primary yarns include
nylon, polyester and Nomex. DuPont is the leading supplier of airbag fabric yarn
to both the market and the Company. DuPont supplies a majority of the nylon yarn
used in the Company's  airbag fabric  operations  pursuant to purchase orders or
releases on open purchase orders.  The loss of DuPont as a supplier could have a
material adverse effect on the Company.

Capacity

     The Company  manufactured  and shipped over 17.8 million airbag cushions to
the Company's North American and European  customers  during fiscal 2001 and the
Company believes it has adequate  capacity to manufacture its fiscal 2002 budget
requirements.

     The Company's South Carolina facility has a current capacity to manufacture
approximately   30.0  million   yards  of  fabric  per  year  and   manufactured
approximately  26.4  million  yards of fabric in fiscal  year 2001.  The Company
utilizes rapier weaving  machines that are versatile in their ability to produce
a broad  array of  specialty  technical  fabrics  for use in a large  number  of
applications.  In addition,  the  Company's  machinery  and  equipment  have the
capability  to weave all types of yarns and fabrics  specified by airbag  module
integrators  as well as a broad  variety of  technical  fabrics.  The ability to
easily interchange the machines between air restraint fabric and other specialty
technical fabrics allows the Company to maximize returns on plant assets.

Competition

     The Company competes with several independent  suppliers of airbag cushions
in the United  States and Europe  for sales to airbag  module  integrators.  The
Company also competes with its airbag module integrator customers, which produce
a substantial  portion of their own airbag  cushions for their own  consumption,
but do not generally  manufacture


                                       6
<PAGE>


airbag cushions for the same vehicle models that the Company manufactures.  Most
airbag module integrators subcontract a portion of their requirements for airbag
cushions.  The Company  believes  that its good  working  relationship  with its
customers,  the Company's high volume and low-cost  manufacturing  capabilities,
consistency and level of quality products,  the agreements or relationships with
its module integrator  customers,  the lengthy process necessary to qualify as a
supplier to an automobile  manufacturer and the costs in the automotive industry
associated  with changes in established  suppliers  create  certain  barriers to
entry for potential competitors.

     The Company  believes the total North American airbag fabric market in 2000
totaled over $150.0  million.  The Company shares this market with another major
competitor,  Milliken,  and at least  three  smaller  fabric  manufacturers.  In
addition,  Takata,  an airbag  module  integrator,  produces  fabric for its own
airbag cushions.  Barriers to entry into this market include substantial capital
requirements  and  lengthy  lead-times  required  for  certification  of  a  new
participant's fabrics by buyers.

     The automotive airbag cushion,  airbag fabric and airbag module markets are
highly competitive. Some of the Company's current and potential competitors have
greater  financial and other  resources than the Company.  The Company  competes
primarily  on  the  basis  of  its  price,  product  quality,  reliability,  and
capability to produce a high volume of many models of passenger  side and driver
side airbags.  In addition,  SCFTI has provided the Company with some measure of
vertical integration,  enhancing its ability to compete in the automotive airbag
industry.  Increased competition, as well as price reductions of airbag systems,
would adversely affect the Company's revenues and profitability.

Technical Center - Europe

     During the past year, the Company's  European  operations  reorganized  its
engineering  group.  Engineers  lead teams of  Company  personnel  from  various
departments and are responsible for product and customer relationships. Included
in  each of  these  teams  are  technical  specialists,  quality  engineers  and
manufacturing  engineers.   This  arrangement  allows  the  same  team  to  take
responsibility for the product from initial drafting to finish,  assuring robust
quotes, smooth launches and efficient  production.  European operations continue
to improve as a result of this reorganization.

     Additionally,   the  Company  has  formalized  development  initiatives  by
creating a Technical Center in Hildesheim,  Germany.  The center has the ability
to conduct static  deployment and analysis using high-speed video equipment.  In
October 2000, the Company added pendulum-testing capability. There also exists a
full sample shop with manual and CNC sewing equipment,  a production-style laser
cutter,  volume  measurement and analysis  equipment,  textile welding and other
non-sewn fastening equipment. The Technical Center also has a complete materials
laboratory,  managed by an experienced  materials  engineer.  Additionally,  the
Technical  Center  utilizes  the services and  expertise of the  laboratory  and
textile   experts   in   Greenville,    South    Carolina.    There   are   also
satellite-engineering  functions in Wales,  United  Kingdom.  The Wales facility
serves  both  customers  and  internal  operations  with  equipment  design  and
manufacturing.  It has a design  group and tool room to develop and  manufacture
specialized equipment and standard tooling.

Technical Center - North America

     In  North  America,  a  comprehensive  textile  laboratory  is  located  in
Greenville,  South  Carolina.  The  Company  has the  ability  to fully test and
analyze  fabrics of any type (airbag or other)  including  US-ASTM,  Europe DIN,
Asian JIS and  Underwriters  NFPA. The Laboratory is A2LA and QS9000  certified,
which are the most important  measures for the industry.  All validation testing
and analytical testing of fabric is performed in Greenville,  South Carolina. In
North America,  the module integrators  perform the majority of advanced cushion
testing;  therefore,  an advanced  Technical Center for cushions does not exist.
However,  all necessary  validation testing and process  development  testing is
performed in Ensenada,  Mexico. North American sales are supported and developed
via Sales  and  Program  Managers  dedicated  to a  particular  account  base of
activity.    Additionally,    the   Ensenada   facility   has   state-of-the-art
prototype-selling  capabilities.  Within  the  production  programs  are  highly
advanced sewing machines,  with 100% dedicated  quality,  engineering and sewing
operators.


                                       7
<PAGE>


Qualification and Quality Control

     The Company has  successfully  completed  the process of  qualifying  as an
airbag supplier.  Each of the Company's  customers  requires the Company to meet
specific  requirements for design validation.  The customer  participates in the
design and process  validations  and must be satisfied with the  reliability and
performance  prior to  awarding a purchase  order.  The  Company  satisfies  all
standards and requirements relating to product performance, which then qualifies
the Company to be a supplier.

     The Company has extensive  quality control and quality assurance systems in
its  U.S.  automotive  facilities,  including  inspection  and  testing  of  all
products,  and is QS 9000 and ISO 9002  certified.  The  Company  also  performs
process  capability  studies and design of  experiments  to  determine  that the
manufacturing  processes  meet or exceed the  quality  levels  required  by each
customer.

     The  Company's  European  facilities  also operate  under  similar  quality
systems  that  meet ISO  9000,  ISO 9001 and ISO 9002  standards,  which are the
international  standards for quality.  As is the case with U.S.  customers,  the
automobile  manufacturers  may  conduct  their own design and  process  testing;
however,  the Company's Technical Center located in Hildesheim,  Germany has the
ability to conduct similar design and testing.

     The Company's  airbag fabric  operations also maintain the highest level of
quality  through  each and  every  process.  The  fabric  operations  have  been
certified as approved suppliers by all of the Company's automotive customers. In
addition, the fabric operations laboratories have obtained accreditation against
ISO Guide 25, ASTM, DIN, JIS and A2LA as well as UL  accreditation.  The Company
was the first airbag fabric  manufacturer  to have its entire business (not just
its manufacturing facility) certified under QS 9000.

Governmental Regulations

     Airbag  systems  installed in  automobiles  sold in the United  States must
comply with certain  government  regulations,  including  Federal  Motor Vehicle
Safety   Standard  208,   promulgated   by  the  United  States   Department  of
Transportation. The Company's customers are required to self-certify that airbag
systems   installed  in  vehicles  sold  in  the  United  States  satisfy  these
requirements.  The Company's  operations  are subject to various  environmental,
employee safety and wage and  transportation  related  statutes and regulations.
The Company believes that it is in substantial compliance with existing laws and
regulations and has obtained or applied for the necessary permits to conduct its
business operations.

Product Liability

     The  Company  is engaged in a  business  that could  expose it to  possible
claims for injury  resulting  from the  failure of  products  sold by it. In the
past,  there has been  increased  public  attention  to  injuries  and deaths of
children and small adults due to the force of the inflation of airbags. To date,
however,  the Company has not been named as a defendant in any product liability
lawsuit nor  threatened  with any such lawsuit.  The Company  maintains  product
liability insurance coverage which management believes to be adequate.  However,
a successful claim brought against the Company  resulting in a final judgment in
excess of its insurance  coverage  could have a material  adverse  effect on the
Company.


                                       8
<PAGE>


Discontinued Operations

     The Company,  through  operations  it intends to sell,  and which have been
classified as "discontinued operations",  is a supplier of projectiles and other
metal components for small to medium caliber  training and tactical  ammunition.
Additionally,  the Company  manufactures  metal airbag module components for the
automotive  airbag industry and other metal components  primarily for small arms
ammunition  used  by the  United  States  Armed  Forces.  The  metal  components
manufactured by the Company are shipped to a loading  facility,  operated either
by the United States Government or a prime defense  contractor,  which loads the
explosives,  assembles  the rounds and  packages  the  ammunition  for use.  The
Company  primarily  manufactures  components  that are used in training  rounds,
which are similar to tactical  rounds but do not contain the same  explosive  or
incendiary  devices contained in tactical rounds.  Because of the continuous use
of  training  ammunition,  the  majority of the rounds  purchased  by the United
States Armed Forces are training  rounds.  In the past the Company has regularly
received  replenishment  orders  from the  United  States  Armed  Forces for its
inventory  of  training  ammunition.  Net  sales of metal  and  defense  related
products were approximately $20.6 million,  $33.6 million,  and $41.6 million in
fiscal  2001,  fiscal  2000 and  fiscal  1999,  respectively.  See Note 4 to the
Consolidated Financial Statements for more information.

Disposition of Assets and Plant Relocation

     On August 31, 2000,  the Company  finalized  the sale of Valentec  Systems,
Inc., a systems  integrator with the U.S. Army which coordinated the manufacture
and assembly of components  supplied by various  subcontractors  and part of the
Company's non-core operations. Pursuant to a Stock Purchase Agreement dated July
21,  2000,  the Company  sold 100% of the shares of capital  stock of Systems to
VTECH Corporation for approximately $2.9 million in cash.

     During  fiscal 2001,  the Company  determined to exit its metal and defense
businesses.  These  businesses  consist  of the metal  division  now  located in
Missouri (Valentec Wells, LLC) and the defense products division located in Ohio
(Galion,  Inc.).  To  enhance  the  value  of  these  businesses,   the  Company
consolidated a considerable  portion of its Valentec operations into its Galion,
Ohio  facility and relocated  the  remainder of its  operations  from its former
California location to a lower-cost facility in Missouri,  nearer to its primary
customers.

Markets and Customers

     The  Company's  defense  related  sales are made to the United States Armed
Forces, certain prime defense contractors for the United States Armed Forces and
foreign  governments or contractors  for foreign  governments.  The Company is a
principal or sole source  supplier for many of the  projectiles  and other metal
components  it  manufactures.  There can be no  assurance,  however,  that other
companies will not begin to manufacture  such products in the future and replace
part or all of the sales by the Company of these products.

Manufacturing and Production

     The  Company's  Valentec  Wells,  LLC operation  manufactures  metal airbag
module  components for the automotive airbag industry and other metal components
primarily for small arms ammunition for use by the defense industry.

     The Company's Galion,  Inc.  operation  manufactures  projectiles and other
metal components for inclusion in small to medium caliber  ammunition  utilizing
primarily  multi-spindle screw machines at its manufacturing facility in Galion,
Ohio. The  manufacturing  process includes the impact extrusion of steel bars to
form the blank or rough form shape of the metal components, the machining of the
inside and outside of the metal  components  to form their final shape,  various
heat and  phosphate  treatments  and  painting.  The Company  believes  that its
manufacturing equipment,  machinery and processes are sufficient for its current
needs and for its needs in the foreseeable future.


                                       9
<PAGE>


Suppliers

     The Company  believes that adequate  supplies of the raw materials  used in
the  manufacture  of its small to medium  caliber  products are  available  from
existing  and,  in most  cases,  alternative  sources,  although  the Company is
frequently  limited to procuring  such  materials  and  components  from sources
approved by the United States Government.

Quality Control

     The  Company's  defense  operations  employ  Statistical  Process  Controls
extensively throughout its manufacturing process to ensure that required quality
levels are  maintained  and that products are  manufactured  in accordance  with
specifications.  The Company  satisfies  the United  States  Government  quality
control standard Million-Q-9858A and ISO-9002.

Competition

     The Company competes for contracts with other potential  suppliers based on
price and the  ability to  manufacture  superior  quality  products  to required
specifications  and  tolerances.  The  Company  believes  that  it  has  certain
competitive advantages including its high volume,  cost-efficient  manufacturing
capability,  its  co-development  of new products  with its  customers,  and the
United  States  Government's  inclination  to  remain  with  long-term  reliable
suppliers.  Since the Company's processes do not include a significant amount of
proprietary information, however, there can be no assurance that other companies
will not, in time, be able to duplicate the Company's manufacturing processes.

United States Government Contracts

     Virtually the Company's entire defense related  contracts are negotiated as
firm fixed price  contracts with the United States  Government or certain of the
United States  Government's  prime  contractors.  These contracts are subject to
audit and may be adjusted accordingly.

     A majority of the Company's manufacturing agreements with the United States
Armed  Forces  and its  prime  defense  contractors  are for  the  provision  of
components for a one year term,  subject,  in certain cases, to the right of the
United States Government to renew the contract for an additional term.  Renewals
of  United  States  Government   contracts  depend  upon  annual   Congressional
appropriations  and the current  requirements of the United States Armed Forces.
United States Government  contracts and contracts with defense  contractors are,
by their terms,  subject to termination by the United States  Government for its
convenience.  Fixed price  contracts  provide for payment upon  termination  for
items  delivered to and accepted by the United  States  Government,  and, if the
termination is for convenience,  for payment of the contractor's  costs incurred
through the date of termination  plus the costs of settling and paying claims by
terminated subcontractors,  other settlement expenses and a reasonable profit on
the costs incurred.

Seasonality

     The Company's  airbag cushions and airbag fabric business is subject to the
seasonal characteristics of the automotive industry in which generally there are
seasonal plant shutdowns in the third and fourth quarters of each calendar year.

Backlog

     The Company does not reflect an order for airbag  cushions or airbag fabric
in backlog  until it has  received a purchase  order and a material  procurement
release  that  specifies  the  quantity  ordered and  specific  delivery  dates.
Generally, these orders are shipped within four to eight weeks of receipt of the
purchase order and material release.  As a result,  the Company does not believe
backlog is a reliable measure of future airbag sales.


                                       10
<PAGE>


Risks Resulting from Foreign Operations

     Certain of the Company's  consolidated net sales are generated  outside the
United States.  Foreign operations and exports to foreign markets are subject to
a number of special risks  including,  but not limited to, risks with respect to
fluctuations in currency exchange rates, economic and political destabilization,
other disruption of markets, restrictive actions by foreign governments (such as
restrictions on transfer of funds, export duties and quotas, foreign customs and
tariffs and unexpected changes in regulatory  environments),  changes in foreign
laws regarding trade and investment,  difficulty in obtaining  distribution  and
support,  nationalization,  the laws and policies of the United States affecting
trade,  foreign  investment  and loans  and  foreign  tax laws.  There can be no
assurance  that one or a  combination  of these factors will not have a material
adverse  effect on the  Company's  ability to increase  or maintain  its foreign
sales or on its future results of operations.

     In  addition,  the  Company has  significant  manufacturing  operations  in
foreign  countries  and  purchases a portion of its raw  materials  from foreign
suppliers.  The production costs, profit margins and competitive position of the
Company are affected by the  strength of the  currencies  in countries  where it
manufactures  or purchases  goods  relative to the strength of the currencies in
countries where its products are sold.

     Certain of the Company's  operations  generate net sales and incur expenses
in foreign  currencies.  The  Company's  financial  results  from  international
operations may be affected by fluctuations in currency  exchange rates.  Certain
exchange  rate risks to the Company are  limited by  contractual  clauses in the
Company's agreement with TRW for European supply of airbags. Future fluctuations
in  certain  currency  exchange  rates  could  adversely  affect  the  Company's
financial results.

     See  Note  10  to  the  Consolidated  Financial  Statements  for  financial
information by geographic area.

Employees

     At March 31, 2001, the Company  employed  approximately  2,800 employees in
its continuing  operations and  approximately  175 employees in its discontinued
operations. The Company's hourly employees in Mexico are entitled to a federally
regulated  minimum wage,  which is adjusted,  at minimum,  every two years.  The
Company's  employees  at  its  Mexican  facility  are  unionized.  In  addition,
Automotive Safety Components  International  GmbH & Co. KG, the Company's wholly
owned German  subsidiary,  has a workers'  council  pursuant to German statutory
labor law. A workers'  council also  represents  the  employees at the Company's
facilities  in the U.K.  The  Company  has not  experienced  any work  stoppages
related to its work force and considers its relations with its employees and all
unions currently representing its employees to be good.

Environmental Matters

     Like similar companies, the Company's operations and properties are subject
to a wide variety of increasingly  complex and stringent  federal,  state, local
and  international  laws and  regulations,  including  those  governing the use,
storage,  handling,  generation,  treatment,  emission,  release,  discharge and
disposal  of certain  materials,  substances  and  wastes,  the  remediation  of
contaminated  soil and  groundwater,  and the  health  and  safety of  employees
(collectively,  "Environmental  Laws"). Such laws, including but not limited to,
those under  CERCLA,  may impose  joint and several  liability  and may apply to
conditions at properties presently or formerly owned or operated by an entity or
its  predecessor as well as to conditions of properties at which wastes or other
contamination  attributable  to an entity or its  predecessor  have been sent or
otherwise come to be located.  The nature of the Company's operations exposes it
to the risk of claims with respect to such matters and there can be no assurance
that  violations  of such  laws  have not  occurred  or will  not  occur or that
material  costs or  liabilities  will not be  incurred in  connection  with such
claims.  Based upon its experience to date, the Company believes that the future
cost of  compliance  with  existing  Environmental  Laws and liability for known
environmental  claims  pursuant  to such  Environmental  Laws,  will  not have a
material  adverse  effect  on  the  Company's  financial  position,  results  of
operations  or cash flows.  However,  future  events,  such as new  information,
changes  in  existing  Environmental  Laws or  their  interpretation,  and  more
vigorous  enforcement  policies  of  regulatory  agencies,   may  give  rise  to
additional expenditures or liabilities that could be material.


                                       11
<PAGE>


     The Company has identified two areas of  underground  contamination  at the
Company's  facility  in Galion,  Ohio.  One area  involves a  localized  plating
solution  spill.  The second area  involves a  chlorinated  solvent spill in the
vicinity of a former  above  ground  storage  area.  The  Company  has  retained
environmental   consultants  to  quantify  the  extent  of  this  problem.  Such
environmental   consultants  estimate  that  the  Company's  voluntary  plan  of
remediation  could  take three to five years to  implement,  followed  by annual
maintenance.  The  consultants  also  estimate  that  remediation  costs will be
approximately  $250,000,  which  the  Company  had  accrued  in other  long-term
liabilities  at March 31, 2001 and March 25,  2000.  However,  depending  on the
actual extent of impact to the Company or more  stringent  regulatory  criteria,
these  costs  could  be  higher.  Additionally,   an  underground  contamination
involving machinery fluids exists at the former Valentec facility in Costa Mesa,
California  and the Regional  Water  Quality  Control  Board has approved a site
remediation  plan.  The  remediation  plan currently  involves the  simultaneous
operation of a groundwater and vapor extraction system. Such plan is expected to
take approximately five years to implement at an estimated cost of approximately
$368,000.  To date, the Company has spent  approximately  $325,000  implementing
such plan with approximately one year remaining. The additional anticipated cost
for that year is accrued for as of March 31, 2001.  In addition,  SCFTI has been
identified along with numerous other parties as a Potentially  Responsible Party
at the Aquatech Environmental, Inc. Superfund Site. The Company believes that it
is a de minimis  party with respect to the site and that future  clean-up  costs
incurred by the Company will not be material.

     A Phase II study revealed limited organic groundwater  contamination at the
SCFTI facility in South Carolina in 1997. At the time of the Company's  purchase
of such facility, $185,000 of the purchase price thereof was placed in escrow to
pay  for,  if  necessary,  environmental  remediation  and  monitoring  at  such
facility.  Based on the results of the  groundwater  monitoring that already has
been  conducted,  and on the  Company's  discussions  with  the  South  Carolina
Department of Health and Environmental Control ("DHEC"), no further work will be
required and the escrow account was liquidated in fiscal year 2001.

     Additionally,  low  levels  of  contaminants  were  found at  SCFTI  during
groundwater  sampling in 1998. In February 1999, the facility  received a notice
letter  from  DHEC   regarding  the   groundwater   contamination.   While  DHEC
acknowledges  that there does not appear to be an active source for  groundwater
impact at the  facility,  it required  the  facility to perform  sampling of two
existing  monitoring wells located on the property for contaminants.  Low levels
of  contaminants  again were  detected.  DHEC has requested that the Company (i)
confirm that no  residential  wells exist in the area,  (ii) perform  additional
sampling,   and  (iii)  propose  a  program  for  in-site   remediation  of  the
groundwater,   involving  injection  of  nutrients  to  biodegrade  the  organic
compounds in the groundwater. The Company does not believe that these costs will
be material.

     In the opinion of management, no material expenditures beyond those accrued
at March 31,  2001 will be  required  for the  Company's  environmental  control
efforts and the final outcome of these matters will not have a material  adverse
effect on the Company's financial position, results of operations or cash flows.
The  Company  believes  that  it  currently  is in  compliance  with  applicable
environmental  regulations  in all material  respects.  Management's  opinion is
based on the advice of independent consultants on environmental matters.

Patents

     The Company holds eleven patents and seven additional  patents are pending.
All  patents  relate  to  technical  improvements  for  enhancement  of  product
performance with respect to the Company's  airbag,  fabric and technical related
products.  Provided that all requisite  maintenance  fees are paid,  the patents
held by the Company will expire between the years 2014 and 2020.

Engineering, Research & Development

     The Company's  fabric and airbag  cushions  operations  have  maintained an
active design and  development  effort focused toward new and enhanced  products
and manufacturing  processes. The Company specifically designs and engineers its
fabrics  to meet its  customers'  applications  and needs.  While the  component
manufacturer  originates most design  requirements,  the Company is dedicated to
improving the quality of existing  products,  as well as developing


                                       12
<PAGE>


new products for all applications.  Costs associated with design and development
for  fabric  and airbag  cushions  were  approximately  $688,000,  $665,000  and
$1,090,000 during fiscal 2001, fiscal 2000 and fiscal 1999, respectively.

Related Parties

     The Company, in years prior to fiscal 1999,  performed certain services for
an affiliated company,  Valentec  International  Limited ("VIL"), a U.K. company
majority owned by Mr. Robert A. Zummo,  the former Chief  Executive  Officer and
Chairman  of  the  Board  of  the  Company.  During  fiscal  2000,  the  Company
established a $600,000  reserve  against its receivable of $1.2 million from VIL
due to uncertainty  about VIL's ability to repay such amount. In connection with
the restructuring  discussed in Note 1 to the Consolidated Financial Statements,
Mr. Zummo agreed that the Company could reduce future  payments to him under his
employment  agreement to cover such  receivable in the event that the Company is
not repaid by VIL.  At March 31,  2001,  VIL had not repaid the  Company and the
gross  amount owed to Mr. Zummo under his  employment  agreement is in excess of
the amount owed to the Company by VIL.

ITEM 2. PROPERTIES

     The  Company's  corporate  headquarters  are located in  Greenville,  South
Carolina in a facility owned by the Company, adjacent to its SCFTI manufacturing
facility. The Company manufactures airbag and technical fabrics related products
in five  locations,  with total plant area of  approximately  1.2 million square
feet  (including  administrative,   warehouse,   engineering  and  research  and
development  areas  housed at company  locations).  Below is an  overview of the
Company's  properties  at its  airbag and  technical  fabrics  related  products
facilities and its metal and defense facilities (discontinued  operations) as of
June 25, 2001.
<TABLE>
<CAPTION>
                                                                   Floor Area     Owned/        Lease
                           Location                                (Sq. Ft.)      Leased     Expiration
                           --------                                ---------      ------     ----------
<S>                                                                      <C>      <C>           <C>       <C>
Airbag and Technical Fabrics Related Products
   Ensenada, Mexico (airbag cushion)                                     97,000   Leased        2003      (1)(2)
   Greenville, South Carolina (airbag and technical fabrics)            826,000    Owned         N/A      (1)(3)
   Hildesheim, Germany (airbag cushions)                                 70,000    Owned         N/A      (1)
   Jevicko, Czech Republic (airbag cushions)                            100,000    Owned         N/A      (4)
   Crumlin, Wales (airbag cushions)                                      60,000   Leased        2003      (1)
   Otay Mesa, California (warehouse)                                     16,000   Leased        2003      (5)

Metal and Defense (Discontinued Operations)
   Lake City, Missouri (metal components)                                55,000   Leased        2009      (4)(6)
   Galion, Ohio (defense products and metal components)                  97,000    Owned         N/A      (4)
</TABLE>
------------
(1)  Manufacturing, research and development and office space

(2)  Lease also provides for two one-year renewal options

(3)  Corporate office

(4)  Manufacturing and office space

(5)  Finished goods distribution center

(6)  Lease also provides for a four-year renewal option


                                       13
<PAGE>


ITEM 3. LEGAL PROCEEDINGS

     The Chapter 11 cases remain open until all claims,  disputes and  pleadings
are resolved  before the  Bankruptcy  Court.  At March 31, 2001, the Company has
material  disputes  with  respect to a $2.7 million  claim based upon  rejection
damages under a lease at a former facility in Costa Mesa,  California.  Based on
advice  from  outside  legal  counsel,  management  believes  that  an  adequate
liability has been established for this matter at March 31, 2001.

     The Company and several of its  present or former  officers  and  directors
were named defendants in a class action lawsuit commenced by shareholders of the
Company in the United  States  District  Court for the  District  of New Jersey.
Eight  separate  lawsuits  were  filed,   alleging  violations  of  the  federal
securities  laws,  and were  consolidated  into one  action.  The  parties  have
executed  an  Agreement  of  Settlement,  dated  April 16,  2001,  to settle the
consolidated  class action litigation for $4 million.  The Company's  directors'
and officers'  insurance  carrier will satisfy the  settlement  obligations  and
accordingly, such resolution has no effect on the Company's financial condition,
results of operations or cash flows.

     The Company, from time to time, also becomes party to legal proceedings and
administrative  actions, which are of an ordinary or routine nature,  incidental
to the  operations  of the  Company.  Although  it is  difficult  to predict the
outcome of any legal  proceeding,  in the opinion of the  Company's  management,
such proceedings and actions should not, individually or in the aggregate,  have
a material adverse effect on the Company's  financial  condition,  operations or
cash flow.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     The  Company  held a Special  Meeting of  Stockholders  on April 11,  2001,
adjourned to April 27,  2001.  Only  holders of record of the  Company's  common
stock as of March 16,  2001 were  entitled  to notice  of,  and to vote at,  the
meeting.

     At the meeting,  the Company's  stockholders voted in favor of the approval
of the Safety Components International,  Inc. 2001 Stock Option Plan authorizing
the  issuance of up to 900,000  shares of the  Company's  common stock under the
plan to key employees, including officers, and/or directors and consultants. The
vote of approval  for such item was  4,109,058  FOR,  238,230  AGAINST,  and 153
ABSTAINING.

     At the meeting,  the Company's  stockholders also voted in favor of certain
cash payments  payable to, and decreases in the exercise price of, certain stock
options to be granted  pursuant  to the stock  option  plan for the  benefit of,
members of the Company's management under employment agreements and/or severance
arrangements  entered  into by the  Company,  only in the  event of a change  of
control of the Company.  The vote of approval for such item was  4,226,705  FOR,
120,612 AGAINST, and 124 ABSTAINING.


                                       14
<PAGE>


                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
        MATTERS

     Pursuant to the Restructuring  Agreement discussed in Item 1, the claims of
the Noteholders were converted into the right to receive 4,840,774 shares of the
Company's  common  stock  on  the  Emergence  Date  (4,816,574   shares  to  the
Noteholders and 24,200 shares to the financial advisors of the Noteholders). The
pre-bankruptcy  common  stock,  excluding  stock  held by Robert A.  Zummo,  the
Company's  former  Chairman and Chief  Executive  Officer,  was  converted  into
159,226 shares of the Company's  post-bankruptcy  common stock, including 39,619
shares of treasury stock (aggregate 5,000,000 shares issued and 4,960,381 shares
outstanding) and warrants to acquire an additional 681,818 shares of such common
stock on the Emergence  Date.  All other options and warrants were  cancelled on
the Emergence Date.

     The common stock is not listed on any  exchange,  but rather  trades on the
Over-The-Counter  Bulletin  Board.  The following  table sets forth the range of
high and low bid  information for reported sale prices of the common stock since
its distribution  after the Emergence Date. Share  information is not meaningful
prior to the Emergence Date due to the significant  change in capital  structure
that resulted from the Plan of Reorganization.

                                         High                     Low
                                         ----                     ---
Year Ended March 31, 2001
  Fourth Quarter (A)                   $  4.25                 $  0.12

(A) There were no trades of record of the  Company's  common stock noted to have
occurred on the Over-The-Counter Bulletin Board until February 5, 2001.

     As of June 25, 2001 there were  approximately  154 holders of record of the
Company's Common Stock.

     To date,  the Company has not paid any cash  dividends to its  stockholders
and  presently  intends to  continue  its policy of  retaining  its  earnings to
support the growth and  development  of its  business.  Further,  the  Company's
existing credit agreement restricts the Company's ability to pay dividends.


                                       15
<PAGE>


ITEM 6. SELECTED FINANCIAL DATA

     The following table presents  selected  consolidated  historical  financial
data for the  Company as of the dates and for the fiscal  years  indicated.  The
selected historical financial data for the period from October 11, 2000 to March
31, 2001,  the period from March 26, 2000 to October 10, 2000,  for fiscal years
ended March 25,  2000,  March 27, 1999,  March 28, 1998,  and March 31, 1997 has
been derived from the audited  Consolidated  Financial Statements of the Company
for such periods.  The presentation of certain  previously  reported amounts has
been  reclassified  to  conform  to the  current  presentation  and  to  reflect
discontinued  operations  of the  non-core  businesses  (metal and  defense)  as
discussed in Note 4 to the Consolidated Financial Statements of the Company. The
Consolidated  Financial Statements for the period from October 11, 2000 to March
31, 2001  reflect the  Company's  emergence  from  Chapter 11 and were  prepared
utilizing  the  principles of fresh start  accounting  contained in the American
Institute  of  Certified  Public   Accountants'   Statement  of  Position  90-7,
"Financial  Statements by Entities in Reorganization Under the Bankruptcy Code."
As a result of the  implementation  of fresh  start  accounting,  certain of the
selected  financial  data for the period from October 11, 2000 to March 31, 2001
is not comparable to the selected financial data of prior periods. See Note 3 to
the Consolidated  Financial  Statements of the Company for further discussion of
the effects of fresh start  accounting on the Company's  Consolidated  Financial
Statements. As a result of differences in comparability, selected financial data
for the  "Reorganized  Company" has been separately  identified from that of the
"Predecessor  Company."  The  information  set  forth  below  should  be read in
conjunction with  "Management's  Discussion and Analysis of Financial  Condition
and Results of Operations" and the Company's  Consolidated  Financial Statements
and the notes thereto,  included elsewhere in this Report (in thousands,  except
per share data and footnotes):

<TABLE>
<CAPTION>
                                                       Reorganized
                                                         Company                             Predecessor Company
                                                      -------------|---------------------------------------------------------------
                                                                   |                          Fiscal Year Ended
                                                       Period from | Period from    -----------------------------------------------
                                                         10/11/00  |   3/26/00
                                                            to     |      to
                                                          3/31/01  |   10/10/00    3/25/00      3/27/99      3/28/98      3/31/97
                                                        (25 Weeks) |  (28 Weeks)  (52 Weeks)   (52 Weeks)   (52 Weeks)   (52 Weeks)
                                                      -------------|---------------------------------------------------------------
<S>                                                      <C>          <C>          <C>          <C>          <C>          <C>
INCOME STATEMENT DATA (1)                                          |
Net sales (10)                                           $  92,052 |  $ 109,139    $ 194,667    $ 178,348    $ 130,154    $  68,858
Cost of sales, including depreciation                       79,337 |     93,307      168,249      158,806      107,908       55,923
                                                         --------- |  ---------    ---------    ---------    ---------    ---------
Gross profit                                                12,715 |     15,832       26,418       19,542       22,246       12,935
Selling, general and administrative expenses                 5,235 |      5,941       13,443       10,487        8,550        5,842
Research and development expenses                              335 |        353          665        1,090          357           --
Amortization of intangible assets                              448 |        675        1,486        1,528        1,147          348
Restructuring and restatement (6)                               -- |         --        3,969           --           --           --
Relocation and reorganization costs (7)                         -- |         --           --        3,238        1,789           --
Terminated investment agreement costs (8)                       -- |         --           --        2,500           --           --
                                                         --------- |  ---------    ---------    ---------    ---------    ---------
Operating income                                             6,697 |      8,863        6,855          699       10,403        6,745
Other expense (income)                                        (280)|        878        1,729          766          (42)         156
Interest expense, net (5)                                    2,514 |      3,833       13,975       12,566        7,540        1,555
                                                         --------- |  ---------    ---------    ---------    ---------    ---------
Income (loss) from continuing operations before                    |
   reorganization items                                      4,463 |      4,152       (8,849)     (12,633)       2,905        5,034
Reorganization items (3)                                        -- |     41,740           --           --           --           --
                                                         --------- |  ---------    ---------    ---------    ---------    ---------
Income (loss) from continuing operations before                    |
income taxes                                                 4,463 |    (37,588)      (8,849)     (12,633)       2,905        5,034
Income tax provision (benefit)                               1,769 |    (17,511)       6,154       (3,321)       1,927        2,995
                                                         --------- |  ---------    ---------    ---------    ---------    ---------
Income (loss) from continuing operations                     2,694 |    (20,077)     (15,003)      (9,312)         978        2,039
Discontinued operations, net of taxes:                             |
   Loss (gain) from discontinued operations                     -- |      1,440       20,142        4,351       (2,368)      (1,807)
   Loss (gain) on disposition of discontinued                      |
operations                                                   1,444 |       (214)          --           --           --           --
                                                                   |
Extraordinary gain (loss), net of taxes (4) (9)                 -- |     29,370           --           --           --         (383)
Cumulative  effect of change in accounting, net of              -- |         --           --           --           --       (1,259)
taxes (9)                                                          |
                                                         --------- |  ---------    ---------    ---------    ---------    ---------
Net income (loss)                                        $   1,250 |  $   8,067    $ (35,145)   $ (13,663)   $   3,346    $   2,204
                                                         ========= |  =========    =========    =========    =========    =========
PER SHARE DATA, BASIC AND DILUTED (2):                             |
Income from continuing operations                        $    0.54 |
Loss from discontinued operations                            (0.29)|
                                                         --------- |
Net income per common share                              $    0.25 |
                                                         ========= |
Weighted average number of shares outstanding, basic               |
     and diluted                                             4,960 |
                                                         ========= |
</TABLE>


                                       16
<PAGE>


<TABLE>
<CAPTION>
                                                      Reorganized |
                                                        Company   |                     Predecessor Company
                                                       -----------|----------------------------------------------------------
                                                        3/31/01   |    3/25/00         3/27/99        3/28/98       3/31/97
                                                       -----------|----------------------------------------------------------
BALANCE SHEET DATA                                                |
<S>                                                    <C>            <C>             <C>            <C>            <C>
Working capital (11)                                   $  27,970  |   $(103,105)      $  31,404      $  26,617      $  12,957
Total assets (10)                                        130,683  |     168,695         206,748        180,134         69,774
Senior subordinated notes                                     --  |      90,000          90,000         90,000             --
Long term debt, net of current portion                    43,541  |      15,145          53,109         22,954         21,296
Stockholders' equity (deficit)                            51,943  |     (14,440)         22,456         36,532         35,274
</TABLE>
---------------
Notes to Selected Financial Data:

(1)  The Company did not declare dividends during fiscal years 2001, 2000, 1999,
     1998 or 1997.

(2)  Share and per share data are not meaningful on or prior to October 10, 2000
     due to the significant  change in the capital  structure that resulted from
     the Plan of Reorganization.

(3)  During the period from March 26, 2000 to October  10,  2000,  the impact of
     adjusting  assets and liabilities to fair value in accordance with SOP 90-7
     resulted in a net charge of approximately $34.0 million.  Professional fees
     and  expenses  of $3.7  million  included in  Reorganization  Items for the
     period represent fees and expenses  associated with the Company's financial
     restructuring and Chapter 11 bankruptcy proceeding.  The revaluation of the
     Notes totaled $2.9 million,  representing the write-off of related deferred
     financing  costs.   Also  included  in  this  amount  is  $1.1  million  of
     restructuring  charges  that  consist  primarily  of a  charge  for  future
     severance  payments to the Company's  former  Chairman and Chief  Executive
     Officer.

(4)  During  the period  from March 26,  2000 to  October  10,  2000,  the early
     extinguishment  of the Notes and related  accrued  interest  resulted in an
     extraordinary gain of $29.9 million,  net of income taxes of $17.5 million.
     This was offset by a loss  recognized in the amount of $573,000  related to
     deferred  financing  costs  associated  with the early  termination  of the
     previous credit facility during the period.

(5)  Contractual  interest  for the period  from March 26,  2000 to October  10,
     2000,  was $8.5  million.  Interest  expense  on the  Company's  Notes  was
     reported to the Petition Date (April 10, 2000).  Such interest  expense was
     not reported subsequent to that date because it was not required to be paid
     during the  bankruptcy  proceedings  and was not an allowed claim under the
     Plan of  Reorganization.  The difference  between reported interest expense
     and stated  contractual  interest  expense of the  Predecessor  Company was
     approximately  $4.7  million  for the period from March 26, 2000 to October
     10, 2000.

(6)  During  fiscal 2000,  the Company  incurred  approximately  $4.0 million of
     costs  associated with the  investigation  and restatement of the Company's
     financial statements for fiscal 1999 and 1998, and the restructuring of the
     Company's balance sheet.

(7)  During fiscal 1999 and fiscal 1998, the Company incurred approximately $3.2
     million and $1.8 million,  respectively, of pre-tax charges associated with
     the  reorganization  and  relocation of certain of its foreign and domestic
     operations.  These costs were incurred to consolidate production within the
     Company's  foreign  operations to lower cost facilities  located within the
     foreign  market  (1999  and  1998),  close the China  facility  (1999)  and
     relocate the  corporate  headquarters  to the Company's  Greenville,  South
     Carolina facility (1999).

(8)  During fiscal 1999,  after  exploring a variety of strategic  alternatives,
     the Company  entered into  investment  agreement  with a third  party.  The
     Company  and the third party  subsequently  reached a mutual  agreement  to
     terminate such agreement.  The Company incurred  approximately $2.5 million
     of fees and expenses during fiscal 1999 related to the investment agreement
     and its  termination.  This charge  included a  reimbursement  to the third
     party for fees and expenses incurred by it.

(9)  During fiscal 1997,  the Company  changed its accounting for product launch
     costs from the  deferral  method to the  expense as  incurred  method.  The
     Company  recorded  the  cumulative  effect  of this  change  in  accounting
     principle in the amount of $1.3 million,  net of income taxes. In addition,
     in  connection   with  a  new  loan  agreement  the  Company   recorded  an
     extraordinary  loss of  $383,000,  net of  income  taxes,  relating  to the
     write-off of deferred  financing  costs  incurred  for the previous  credit
     facility.

(10) The growth in net sales and total assets between fiscal years 1997 and 1999
     is attributable  to the  acquisitions of the ASCI GmbH facility in Germany,
     and the SCFTI facility in Greenville, SC, respectively.

(11) As of March 25, 2000, the working  capital of the Company was in a negative
     position due to the  reclassification  of the $90 million  Notes to current
     liabilities.


                                       17
<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

Overview

     The Company is a leading low-cost independent supplier of automotive airbag
fabric and cushions,  with  operations  in North America and Europe.  Due to the
Company's   historical  and  anticipated   growth,  the  Company  believes  that
period-to-period  comparisons  of its  financial  results  are  not  necessarily
meaningful and should not be relied upon as an indication of future performance.
The  following  discussion  should  be read in  conjunction  with the  Company's
Consolidated Financial Statements and notes thereto, appearing elsewhere in this
report.

Results of Operations

     On October 10, 2000, the Company  consummated a Plan of  Reorganization  as
discussed  in the  Consolidated  Financial  Statements  and the  Notes  thereto.
Accordingly,  the Consolidated  Financial Statements for the period from October
11, 2000 to March 31, 2001 reflect the Company's  emergence  from Chapter 11 and
were prepared utilizing the principles of fresh start reporting contained in the
American Institute of Certified Public Accountants'  Statement of Position 90-7,
"Financial  Reporting by Entities in Reorganization  Under the Bankruptcy Code".
As a result of the  implementation  of fresh  start  accounting,  the  financial
information  for the  period  from  October  11,  2000 to March 31,  2001 is not
comparable to the financial  information of prior periods.  The following  table
summarizes  operating  results of the Company for fiscal 2001, 2000 and 1999 (in
thousands):

<TABLE>
<CAPTION>
                                                                                                      | Reorganized
                                                                       Predecessor Company            |   Company         Combined
                                                       -----------------------------------------------|----------------------------
                                                         Fifty-two       Fifty-two      Period from   | Period from     Fifty-three
                                                        Weeks Ended     Weeks Ended       3/26/00     |   10/11/00      Weeks Ended
                                                           3/27/99         3/25/00       to 10/10/00  |  to 3/31/01       3/31/01
                                                       -----------------------------------------------|----------------------------
<S>                                                       <C>             <C>             <C>             <C>             <C>
Net sales                                                 $ 178,348       $ 194,667       $ 109,139   |   $  92,052       $ 201,191
Gross profit                                                 19,542          26,418          15,832   |      12,715          28,547
Income from operations                                          699           6,855           8,863   |       6,697          15,560
Other expense (income), net                                     766           1,729             878   |        (280)            598
Interest expense, net                                        12,566          13,975           3,833   |       2,514           6,347
Reorganization items                                           --              --            41,740   |        --            41,740
Income tax (benefit) provision                               (3,321)          6,154         (17,511)  |       1,769         (15,742)
Loss on discontinued operations, net of                                                               |
    taxes                                                    (4,351)        (20,142)         (1,226)  |      (1,444)         (2,670)
Extraordinary gain, net of taxes                               --              --            29,370   |        --            29,370
Net (loss) income                                         $ (13,663)      $ (35,145)      $   8,067   |   $   1,250       $   9,317
</TABLE>

     Results of operations for the fifty-three  week period ended March 31, 2001
contain an  additional  week of  operations  as compared to the  fifty-two  week
periods  ended March 25,  2000 and March 27,  1999 as a result of the  Company's
fiscal  year  ending  on the  Saturday  closest  to March 31.  The  Consolidated
Financial  Statements for all periods  presented above have been reclassified to
reflect the Company's non-core businesses as discontinued operations. See Note 4
to  the  Consolidated  Financial  Statements  for  further  information  on  the
discontinued operations.

     The following table sets forth certain operating results as a percentage of
net sales for the periods indicated:

                                           Predecessor Company      Combined
                                        --------------------------------------
                                         Fifty-two    Fifty-two    Fifty-three
                                        Weeks Ended  Weeks Ended  Weeks Ended
                                          3/27/99      3/25/00      3/31/01
                                        --------------------------------------
Net sales                                  100.0%       100.0%       100.0%
Gross profit                                11.0         13.6         14.2
Income from operations                       0.4          3.5          7.7
Interest expense, net                        7.0          7.2          3.2
Income tax (benefit) provision              (1.9)         3.2         (7.8)
Net (loss) income                           (7.7)       (18.1)         4.6


                                       18
<PAGE>


Fifty-three  Weeks Ended March 31, 2001 Compared to Fifty-two  Weeks Ended March
25, 2000

     The  Consolidated  Financial  Statements  for the period  subsequent to the
consummation  of the Plan of  Reorganization  (period  from  October 11, 2000 to
March 31, 2001) were prepared under the principles of fresh start  reporting for
companies emerging from a plan of reorganization and are not comparable to prior
periods.  The Company  believes that the most  meaningful  comparisons  are made
using the combined  financial  information for the period from March 26, 2000 to
March 31, 2001 (fiscal 2001) above and therefore this discussion  addresses such
combined information.

     Net Sales. Net sales increased by $6.5 million or 3.4% to $201.2 million in
fiscal 2001 compared to fiscal 2000.  While the additional week of operations in
the year resulted in greater than half of the  increased net sales,  the balance
of the increase is  attributable  primarily  to increased  sales volume from new
sales contracts with existing airbag cushions  customers in the U.S. and Europe.
North American  operations  showed  increased sales of $11.6 million or 9.9% for
airbag cushions and airbag and technical  fabrics products over the prior fiscal
year. Within North American  operations,  airbag cushions net sales increased by
$14.2  million or 30.5% while airbag and technical  fabrics net sales  decreased
$2.6 million or 3.7% over the prior  fiscal  year.  The decrease in net sales of
airbag and technical  fabrics is a result of  reallocation of loom capacity away
from  externally  sold fabrics to airbag fabric  weaving for internal use by the
Company's  North American airbag  cushions  manufacturing  facility in Ensenada,
Mexico.  European operations  experienced decreased net sales of $5.1 million or
6.6% over the prior fiscal year, due to the adverse  impact of foreign  currency
translation  rates  approximating  10.1%.  The  European  operations  net  sales
increased in local currency by $2.5 million (using current year rates),  but the
adverse  effect  of lower  foreign  currency  translation  rates  resulted  in a
decrease of approximately $7.6 million.

     Gross  Profit.  Gross  profit  increased  by $2.1  million or 8.1% to $28.5
million  in fiscal  2001  compared  to the prior  fiscal  year.  North  American
operations experienced an increase in gross profit of approximately $4.1 million
resulting from increased net sales and efficiency  gains,  offset partially by a
charge of $710,000  resulting from the application of fresh start  accounting to
record inventory at its fair value, as well as a decrease in gross profit in the
European  operations  of $2.0  million  due to the  adverse  impact  of  foreign
exchange  rates and  unfavorable  product mix.  Gross profit  improvements  also
resulted  from a decrease in  depreciation  expense as a result of the decreased
cost basis of fixed assets resulting from the adoption of fresh start accounting
at the Emergence  Date.  Gross profit as a percentage of net sales  increased to
approximately  14.2% from 13.6% for the prior  fiscal  year.  The  increase as a
percentage of net sales was due to the items discussed above.

     Income from Operations. Income from operations increased by $8.7 million or
127.0% to $15.6  million in fiscal 2001  compared to the prior fiscal year.  The
increase is attributable to the $2.1 million  increase in gross profit discussed
above,  and  decreases  in the  Company's  selling,  general and  administrative
("SG&A") and amortization  expenses.  SG&A and amortization  expenses  decreased
$2.6 million  primarily from  efficiencies  gained and cost savings arising from
the Company's cost controls and restructuring  efforts. These SG&A expenses were
impacted  favorably  by a  $740,000  reversal  of a Chapter  11-related  reserve
following proceedings that were settled in the Company's favor. Additionally, in
fiscal  2000,  the  Company  incurred   approximately  $4.0  million  of  legal,
professional  and re-financing  related costs associated with the  investigation
and restatement of its financial  statements for fiscal years 1999 and 1998, and
its restructuring efforts leading up to its filing under Chapter 11 on April 10,
2000.  Income from operations as a percentage of net sales increased to 7.7% for
fiscal 2001 from 3.5% for fiscal 2000. The increase as a percentage of net sales
was primarily a result of the items discussed above.

     Other Expense. Other expense decreased by $1.1 million or 65.4% to $598,000
in fiscal 2001  compared to the prior fiscal year.  The decrease from prior year
is  attributable  primarily  to  decreased  realized  exchange  losses and other
expenses.

     Interest Expense.  Interest expense decreased $7.6 million or 54.6% to $6.3
million in fiscal  2001  compared  to the prior  fiscal  year.  The  decrease is
attributable to the Company not being required to recognize  interest expense of
$8.7  million  after  April 10,  2000 on its  Notes  pursuant  to the  Company's
Restructuring  Agreement  in the  Chapter  11  bankruptcy  proceeding,  and  the
offsetting  effect of interest on higher  revolving  credit  balances  that were
incurred due to the funding of reorganization expenses versus the prior year.


                                       19
<PAGE>


     Reorganization   Items.   Professional   fees  and  expenses   included  in
Reorganization  Items  totaled $3.7 million for fiscal 2001,  and such  expenses
represent  fees and  expenses  of the  Company's  various  legal  and  financial
advisors,   the  financial  and  legal  advisors  for  the  Senior  Lenders  and
Noteholders,  and other  professionals  associated with the Company's  financial
restructuring and Chapter 11 bankruptcy proceeding. The revaluation of the Notes
totaled $2.9 million,  representing the write-off of related deferred  financing
costs.  Also included in  Reorganization  Items in fiscal 2001 are restructuring
charges that consist primarily of a charge for future severance  payments to the
Company's former Chairman and Chief Executive  Officer.  The impact of adjusting
assets and  liabilities to fair value in accordance  with SOP 90-7 resulted in a
net charge of approximately $34.0 million.

     Income  Taxes.  Income taxes for fiscal 2001 reflect a benefit  principally
due to fresh start and other reorganization adjustments,  offset by current year
tax liability relating to taxable income from operations and certain adjustments
for deferred tax valuation  allowances  previously  established against deferred
tax assets.

     Discontinued Operations.  Loss from discontinued operations decreased $17.5
million or 86.7% to $2.7  million in fiscal 2001  compared  to the prior  fiscal
year. The decrease is primarily  attributable to the prior year's inclusion of a
$17.7 million  goodwill  write-off due to impairment of goodwill  related to the
Valentec  Wells  operations.  The current year loss on  discontinued  operations
includes a $1.2  million  realized  gain on the sale of Valentec  Systems,  Inc.
offset by estimated plant relocation expenses, interest costs, professional fees
and estimated  losses until the expected  disposition  of the remaining  defense
businesses.  During the fourth quarter of fiscal 2001,  the Company  recorded an
additional  charge  of  $1,444,000  net of  income  taxes of  $848,000,  for the
estimated net loss on the disposition of the non-core businesses.

     Extraordinary  Gain.  The early  extinguishment  of the  Notes and  related
accrued  interest  resulted in an  extraordinary  gain of $29.9 million,  net of
income  taxes of $17.5  million.  This was  offset by a loss  recognized  in the
amount of $573,000 for the write-off of deferred financing costs associated with
the early termination of the KeyBank Credit Agreement during the current year.

     Net Income.  Net income was $9.3  million in fiscal 2001  compared to a net
loss of $35.1 million in fiscal 2000.  This  increase in earnings  resulted from
the items discussed above.

Year Ended March 25, 2000 Compared to Year Ended March 27, 1999

     Net Sales.  Net sales  increased by $16.3 million or 9.2% to $194.7 million
in fiscal 2000 compared to fiscal 1999. The increase was primarily  attributable
to increased net sales volume from new sales  contracts with existing  customers
in the U.S. and Europe.  North  American  operations  experienced  increased net
sales of $11.6  million or 11.3% for air bag cushions  and airbag and  technical
fabrics products over the prior fiscal year.  Within North American  operations,
airbag  cushions net sales  increased by $12.7 million or 37.7% while airbag and
technical fabrics net sales decreased $1.1 million or 1.5% over the prior fiscal
year.  The decrease in net sales of airbag and technical  fabrics is a result of
reallocation of loom capacity away from externally sold fabrics to airbag fabric
weaving  for  internal  use by the  Company's  North  American  airbag  cushions
manufacturing  facility in Ensenada,  Mexico.  European  operations  experienced
increased net sales of $4.7 million or 6.1% over the prior fiscal year,  despite
such  sales  having  been  adversely  impacted  (approximately  4.7%) by foreign
currency translation rates. The European operations net sales increased in local
currency by $7.7 million (using  current year rates),  but the adverse effect of
lower foreign currency translation rates affected the increases by approximately
$3.0 million.

     Gross  Profit.  Gross  profit  increased  by $6.9 million or 35.2% to $26.4
million  compared  to the prior  fiscal  year.  The  increase  was  attributable
primarily to improved  margins in the North  American  and  European  automotive
operations  arising from efficiency  improvements  and related  successes in the
Lean Manufacturing  program that the Company began implementing in the beginning
of fiscal 2000,  and favorable  product mix. Gross profit as a percentage of net
sales increased to approximately 13.6% from 11.0% for the prior fiscal year. The
increase as a percentage of net sales was due to the items discussed above.

     Income from Operations. Income from operations increased by $6.2 million to
$6.9 million  compared to the prior fiscal year. The increase is attributable to
the $6.9 million  increase from gross  profits  discussed  above,  offset by net
additional  operating costs of  approximately  $720,000.  Such costs included an
additional $2.5 million for general office expenses and  professional  and legal
fees.  Also, in fiscal 2000 the Company incurred  approximately  $4.0 million of
legal,   professional  and  re-financing   related  costs  associated  with  the
investigation and restatement of its financial


                                       20
<PAGE>


statements for fiscal years 1999 and 1998, and its restructuring efforts leading
up to its filing under  Chapter 11 on April 10,  2000.  For fiscal year 1999 the
Company  expensed  approximately  $2.5 million of fees and  expenses  during the
fourth quarter related to a failed  investment  agreement and termination  fees.
Also during fiscal year 1999, the Company incurred approximately $3.2 million of
relocation and reorganization costs associated with the following:  $2.4 million
for the move of labor intensive passenger airbag lines from the Company's German
facility to the lower labor cost Czech Republic facility; approximately $300,000
associated  with the closure of its former  China  facility;  and  approximately
$500,000 related to the relocation of its corporate office to its South Carolina
facility.  Income from operations as a percentage of net sales increased to 3.5%
for fiscal 2000 from 0.4% for fiscal 1999.  The increase as a percentage  of net
sales was primarily a result of the items discussed above.

     Other  Expense.  Other expense  increased by $1.0 million or 125.7% to $1.7
million  compared to the prior fiscal year.  The increase over the prior year is
attributable primarily to increased realized exchange losses and other expenses.

     Interest  Expense.  Interest  expense  increased  $1.4  million to $14.0 as
compared to the prior year.  The increase is primarily  due to higher  revolving
credit balances during the year and additional  indebtedness over the prior year
- primarily the mortgage for the Hildesheim, German facility.

     Income Taxes.  Income taxes for fiscal 2000 reflect  primarily  adjustments
for deferred tax valuation allowances established against deferred tax assets.

     Discontinued Operations.  Loss from discontinued operations increased $15.8
million to $20.1  million as compared to the prior fiscal year.  The increase is
primarily  attributable to a $17.7 million goodwill write-off in fiscal 2000 due
to impairment of goodwill related to the Valentec Wells  operations.  A bad debt
charge of $1.5 million  associated  with a contract  dispute with a  significant
customer of Valentec Wells was recorded in fiscal 1999.

     Net Loss.  Net loss was $35.1 million in fiscal 2000 compared to a net loss
of $13.7 million for fiscal 1999.  This change resulted from the items discussed
above.


                                       21
<PAGE>


Certain Supplemental Financial Data

     The following pro forma consolidated  statement of operations  combines the
results of operations for the period from March 26, 2000 to October 10, 2000 and
the period from October 11, 2000 to March 31, 2001 and  reflects  the  financial
results of the Company as if the Plan of Reorganization had been in effect as of
March 26, 2000. The pro forma  information  does not purport to be indicative of
the results that would have been obtained had such  transactions  been completed
as of the  beginning  of the period  presented  or that may be  obtained  in the
future (in thousands except for share and per share data).
<TABLE>
<CAPTION>
                                                                          Fifty-three Weeks Ended March 31, 2001
                                              --------------------------------------------------------------------------------------
                                                   Predecessor       Reorganized
                                                     Company           Company
                                              --------------------------------------------------------------------------------------
                                                   Period from    |   Period from
                                                  March 26, 2000  |October 11, 2000  Combined      Pro forma
                                               to October 10, 2000|to March 31, 2001   Total       Adjustments             Pro forma
                                              --------------------|-----------------------------------------------------------------
<S>                                                    <C>            <C>            <C>            <C>            <C>     <C>
Net sales                                              $ 109,139  |   $  92,052      $ 201,191                             $ 201,191
Cost of sales, excluding depreciation                     89,406  |      76,201        165,607      $    (710)     (a)       164,897
Depreciation                                               3,901  |       3,136          7,037         (1,197)     (b)         5,840
                                                       ---------  |   ---------      ---------      ---------              ---------
Gross profit                                              15,832  |      12,715         28,547          1,907                 30,454
Selling and marketing expenses                             1,074  |         931          2,005             --                  2,005
General and administrative expenses                        4,867  |       4,304          9,171             --                  9,171
Research and development expenses                            353  |         335            688             --                    688
Amortization of intangible assets                            675  |         448          1,123           (241)     (c)           882
                                                       ---------  |   ---------      ---------      ---------              ---------
Income from operations                                     8,863  |       6,697         15,560          2,148                 17,708
Other expense (income), net                                  878  |        (280)           598             --                    598
Interest expense, net                                      3,833  |       2,514          6,347           (144)     (d)         6,203
                                                       ---------  |   ---------      ---------      ---------              ---------
Income from continuing operations                                 |
  before reorganization items                              4,152  |       4,463          8,615          2,292                 10,907
Reorganization items                                      41,740  |          --         41,740        (41,740)     (e)            --
                                                       ---------  |   ---------      ---------      ---------              ---------
Income (loss) from continuing                                     |
    operations before income taxes                       (37,588) |       4,463        (33,125)        44,032                 10,907
Income tax (benefit) provision                           (17,511) |       1,769         15,742         19,778      (f)         4,036
                                                       ---------  |   ---------      ---------      ---------              ---------
Income (loss) from continuing                                     |
    operations                                           (20,077) |       2,694        (17,383)        24,254                  6,871
Discontinued operations, net of tax:                              |
   Loss from discontinued operations                       1,440  |          --          1,440             --                  1,440
   Loss (gain) on disposition                               (214) |       1,444          1,230             --                  1,230
                                                       ---------  |   ---------      ---------      ---------              ---------
Income (loss) before extraordinary                                |
    gain                                                 (21,303) |       1,250        (20,053)        24,254                  4,201
Extraordinary gain                                        29,370  |          --         29,370        (29,370)     (g)            --
                                                       ---------  |   ---------      ---------      ---------              ---------
Net income                                             $   8,067  |   $   1,250      $   9,317      $  (5,116)             $   4,201
                                                       =========  |   =========      =========      =========              =========

Weighted average number of common shares outstanding, basic and diluted                                                    4,960,381

Net income per common share - basic and diluted                                                                            =========
                                                                                                                               $0.85
                                                                                                                           =========
</TABLE>

Notes - amounts in thousands
----------------------------

(a)  Reflects the reversal of the additional cost of sales recognized during the
     period due to the fair market value  adjustment of the Company's  inventory
     in accordance with fresh start accounting.

(b)  Reflects the decrease in  depreciation  expense that would have resulted if
     the revaluation of the Company's property, plant and equipment had occurred
     at March 26, 2000.

(c)  The  following   table  details  the  net  adjustment  to  amortization  of
     intangible assets:

     Elimination of goodwill amortization                             $ (626)
     Amortization of excess reorganization value                         385
                                                                      ------
                                                                      $ (241)
                                                                      ======
                                       22
<PAGE>


(d)  The following table details the net adjustment to interest  expense related
     to the Plan of Reorganization:

     Decrease in interest expense due to exchange
       of senior subordinated notes                                   $ (326)
     Elimination of amortization of deferred financing
          costs on the former credit facility                            (10)
     Amortization of deferred financing costs on
          new credit facility                                            192
                                                                      ------
                                                                      $ (144)
                                                                      ======

(e)  Reflects the  elimination  of  reorganization  items  including  fair value
     adjustment,  restructuring charges, professional fees and expenses, loss on
     revaluation of senior notes and interest earned.

(f)  Reflects  the  estimated  income  tax  effects  resulting  from the Plan of
     Reorganization  and the  application of fresh start  accounting.  Pro forma
     income tax expense is calculated  using a 37% effective tax rate multiplied
     by taxable income before  amortization of reorganization  value. Income tax
     expense is calculated  after giving effect to certain  differences  between
     taxable  income  and book  income  including  the  amortization  of  excess
     reorganization value.

(g)  Reflects the elimination of the gain on early extinguishment of debt.

Liquidity and Capital Resources

     It  is  expected   that  the  Company's   equipment  and  working   capital
requirements will continue to increase as a result of the anticipated  growth of
its  operations.  The  Company  expects  that it will spend  approximately  $6.2
million  for  capital  projects  in fiscal  2002.  This growth is expected to be
funded through a combination of cash flows from operations,  equipment financing
and through the use of the Company's line of credit.

Senior Subordinated Notes

     On October 11,  2000,  the Safety  Filing  Group  emerged  from  Chapter 11
pursuant to the Plan confirmed by the Bankruptcy Court. Pursuant to the Plan, as
confirmed,  upon  emergence  all of the  Company's  10-1/8%  Notes  due 2007 (an
aggregate of  approximately  $96.8 million,  including  accrued  interest to the
Petition  Date)  were   converted   into  4,840,774   shares  of  the  Company's
post-bankruptcy  common stock, and the  pre-bankruptcy  common stock,  excluding
stock held by Robert Zummo (former  Chairman and Chief Executive  Officer of the
Company),  was converted  into 159,226  shares of the Company's  post-bankruptcy
common stock, including 39,619 shares of treasury stock, and warrants to acquire
an additional  681,818 shares of common stock.  Immediately upon emergence,  the
Company  had  5,000,000  shares of common  stock  issued  and  4,960,381  shares
outstanding  and,  other  than the  warrants,  no shares of  common  stock  were
reserved for issuance in respect of claims and interests filed and allowed under
the Plan. In addition,  Safety  Components'  trade suppliers and other creditors
were paid in full,  pursuant  to the  terms of the  Plan,  within 90 days of the
Emergence Date.

Credit Facilities

     In connection with its emergence from Chapter 11, the Company announced the
closing on October 11, 2000 of a three-year,  $35.0  million,  revolving  credit
facility  with  Congress  Financial  Corporation   (Southern),   (the  "Congress
Facility"),  expiring  October 11,  2003.  With the  proceeds  from the Congress
Facility,  the  Company  paid  off  its   debtor-in-possession   ("DIP")  credit
facilities  with Bank of  America.  In addition to the  Congress  Facility,  the
Company also closed on October 11, 2000,  a two-year  subordinated  secured note
facility  with  the  Senior   Lenders  for  $20.9  million  (the   "Subordinated
Facility"), with a fixed interest rate of 11.0%, expiring on October 11, 2002.

     Under the Congress Facility, the Company may borrow up to the lesser of (a)
$35.0 million or (b) 85% of eligible accounts  receivable,  plus 60% of eligible
finished goods, plus 50% of raw materials.  Included within borrowings permitted
under the Congress Facility (and its borrowing  limitations) are $7.1 million in
term loans which are to be repaid in equal monthly installments of approximately
$127,000,  with the unpaid principal amount due on October 11, 2003,  unless the
Congress  Facility  is renewed at that time.  Also  included  within  borrowings
permitted  under  the  Congress  Facility  is a $3.0  million  letter  of credit
facility,   through  which  the  Company  had  $350,000  of


                                       23
<PAGE>


letters  of  credit  outstanding  at March 31,  2001.  At March  31,  2001,  the
Company's  availability for additional  borrowings  (under the maximum allowable
limit) was approximately $17.7 million.

     The interest  rate on the Congress  Facility is variable,  depending on the
amount of the Company's Excess  Availability (as defined) at any particular time
and the Company's Fixed Charge  Coverage Ratio (as defined).  Under the terms of
the Congress  Facility,  the Company may make borrowings  based on prime rate or
Eurodollar rate, in each case with an applicable  margin applied to the rate. At
March 31,  2001,  the  margin  on prime  rate  loans was 0.0% and the  margin on
Eurodollar  rate loans was 2.0%. The Company is required to pay a commitment fee
of 0.375% on the unused portion of the Congress Facility.

     The  Congress  Facility  and the  Subordinated  Facility  both  require the
Company to meet a minimum adjusted net worth (as defined) covenant. In addition,
the Subordinated Facility provides for mandatory prepayments of principal in the
event that the  Company's  Consolidated  EBITDA  (as  defined)  exceeds  certain
specified levels following the Emergence Date. As of March 31, 2001, the Company
estimates  $750,000  in  prepayments  are  required to be made in the next year.
Additionally,  both the Congress Facility and the Subordinated  Facility contain
certain restrictive  covenants that impose limitations upon, among other things,
the  Company's  ability to borrow  monies  under the  Congress  Facility;  incur
indebtedness (including capitalized lease arrangements); become or remain liable
with respect to any guaranty;  make loans; acquire investments;  declare or make
dividends  (no  dividends are permitted to be repaid to holders of the Company's
common stock) or other distributions;  merge, consolidate,  liquidate or dispose
of assets or  indebtedness;  incur liens;  issue  capital  stock;  or change its
business.  At March 31, 2001,  the Company was in compliance  with all financial
and non-financial covenants. Substantially all assets of the Company are pledged
as  collateral  for  the  borrowings   under  the  Congress   Facility  and  the
Subordinated Facility.

Pre-Chapter 11 Emergence

     On April 26,  2000,  the Safety  Filing  Group  received  Bankruptcy  Court
approval of a $30.6 million  senior DIP  financing  facility that it had entered
into with Bank of America, N.A. The senior DIP financing was expected to provide
adequate  funding for all  post-petition  trade and  employee  obligations,  the
partial  paydown of the  pre-petition  secured  debt and the  Company's  ongoing
operating  needs  during the  restructuring  process.  In  conjunction  with the
closing of the senior DIP financing  facility on May 9, 2000, the Senior Lenders
received a principal  paydown of  approximately  $17.0 million and retained as a
replacement of their  pre-petition  credit facility the remaining  approximately
$20.9 million portion of their indebtedness as an 11.0% per annum  post-petition
subordinated DIP facility.

Other Long-term Obligations

     On June 4, 1997, the Company secured a $7.5 million  mortgage note facility
with Bank Austria.  The note is payable in semi-annual  installments of $375,000
through March 31, 2002, at which time the remaining  unpaid  balance is due, and
bears  interest at 1.0% over LIBOR.  The assets of the Company's  Czech Republic
facility secure the note.

     On July 10,  1998,  the  Company  entered  into a $10.0  million  financing
arrangement  with  KeyCorp  Leasing,  a division of Key  Corporate  Capital Inc.
("KeyCorp").  The KeyCorp  financing  agreement  has a  seven-year  term,  bears
interest  at a rate of  1.25%  over  LIBOR  and  requires  monthly  payments  of
approximately $150,000 and is secured by certain equipment located at SCFTI.

     On April 1, 1999, the Company secured a $2.9 million mortgage note facility
with Deutsche Bank to purchase a facility in Germany. The note is secured by the
real estate in Germany acquired through the mortgage.  In July 1999, the Company
refinanced  the note and reduced the  outstanding  indebtedness  to $2.1 million
(currently  $1.8  million due to exchange  rates)  consisting  of two  tranches.
Tranche A totals  approximately  $1.1 million  bearing  interest at 4.05% and is
payable in  semi-annual  installments  of  approximately  $70,000  beginning  on
December 30, 2001 through June 30, 2009. Tranche B totals approximately $674,000
bearing  interest  at  3.75%  and is  payable  in  semi-annual  installments  of
approximately $19,000 also beginning on December 30, 2001 through June 30, 2019.

     During the  fifty-three  weeks ended March 31, 2001,  net cash  provided by
operating activities  (continuing  operations only) was $3.0 million.  Such cash
was provided  primarily by improved results of operations  (before the effect of
Reorganization  Items) as compared to prior years.  Net cash used by  continuing
operations for investing  activities was $3.7 million, of which $4.0 million was
used for the acquisition of additional  property,  plant and


                                       24
<PAGE>


equipment to expand the Company's  production capacity worldwide.  Net cash used
by continuing  operations for financing  activities in fiscal year 2001 was $3.6
million,   which  resulted  from  the  Company's   repayments  of  various  debt
instruments,   including  primarily  certain  of  the  Company's  pre-bankruptcy
instruments and DIP financing.  The above  activities,  in conjunction  with the
effect  of  foreign  exchange  rates  resulted  in a net  decrease  in cash  for
continuing operations of $4.8 million in fiscal year 2001.

New Accounting Pronouncements

     The  Financial  Accounting  Standards  Board issued  Statement of Financial
Accounting  Standards ("SFAS") 133,  "Accounting for Derivative  Instruments and
Hedging  Activities" which, as amended, is effective for periods beginning after
June 15, 2000. Accordingly,  this standard is effective for the Company's fiscal
year 2002,  commencing on April 1, 2001. This new standard requires  recognition
of all derivatives,  including certain derivative  instruments embedded in other
contracts,  as either  assets  or  liabilities  in the  statement  of  financial
position and  measurement of those  instruments  at fair value.  The adoption of
SFAS 133 on April 1, 2001, had no effect on the Company's consolidated financial
statements.

Seasonality and Inflation

     The automotive  operations are subject to the seasonal  characteristics  of
the automotive industry in which generally there are seasonal plant shutdowns in
the third and fourth  quarters  of each  calendar  year.  The  Company  does not
believe that its operations to date have been materially affected by inflation.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     To the extent that amounts borrowed under the Congress Facility and certain
other indebtedness are outstanding, the Company has market risk relating to such
amounts  because the interest rates under such  agreements  are variable.  As of
June 25,  2001,  the  Company's  interest  rates  under  the  Congress  Facility
approximated  6.5%. Due to the variability of the interest rates, a hypothetical
increase or decrease in the interest  rates of 100 basis points  relating to the
Congress Facility will result in an addition or reduction to interest expense of
approximately $226,000 on an annual basis.

     The Company's operations in Germany, the United Kingdom, the Czech Republic
and Mexico expose the Company to currency  exchange rates risk.  Currently,  the
Company does not enter into any hedging  arrangements  to reduce this  exposure.
The Company is not aware of any facts or circumstances that would  significantly
impact such  exposures  in the  near-term.  If,  however,  there was a sustained
decline  of these  currencies  versus  the U.S.  dollar,  then the  Consolidated
Financial Statements could be materially affected.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     This item appears in Item 14(a)(1) and (2) of this Report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

     Not applicable.


                                       25
<PAGE>


                                    PART III

ITEMS 10, 11, 12 AND 13.

     The information  called for by Items 10, 11, 12 and 13 of this Form 10-K is
incorporated  by reference to those  respective  portions of the Company's  2001
Proxy Statement, which contains such information.

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)(1)  The  financial   statements,   related  notes  thereto  and  reports  of
        independent  accountants  required  by Item 8 are listed in the index on
        page F-1 herein.

(2)     Unless otherwise attached, all financial statement schedules are omitted
        because they are not applicable or the required  information is shown in
        the Company's Consolidated Financial Statements or the notes thereto.

(3)     Exhibits:

        2.1     Joint Plan of Reorganization of Safety Components  Debtors Under
                Chapter 11 Bankruptcy Code dated June 12, 2000 (6)
        2.2     First Amended Joint Plan of  Reorganization of Safety Components
                International,  Inc.,  Safety  Components  Fabric  Technologies,
                Inc.,  Automotive  Safety Components  International,  Inc., ASCI
                Holdings  Germany (DE) Inc.,  ASCI  Holdings UK (DE) Inc.,  ASCI
                Holdings Mexico (DE) Inc., and ASCI Holdings Czech (DE) Inc. (7)
        3.1     Certificate of Amendment of the Amended and Restated Certificate
                of Incorporation of Safety Components International, Inc. (8)
        3.2     Amended Bylaws of Safety Components International, Inc. (9)
        4.1     Restructuring  Agreement  dated  April 6,  2000  between  Safety
                Components   International,   Inc.,  Robert  A.  Zummo  and  the
                consenting holders signatory thereto (4)
        4.2     First Amendment to  Restructuring  Agreement dated as of May 10,
                2000  between  Safety  Components  and  the  consenting  holders
                signatory thereto (5)
        10.1    Form of Master Equipment Lease  Agreement,  dated as of July 10,
                1998,  between  KeyCorp  Leasing,  a division  of Key  Corporate
                Capital Inc. and Safety Components International, Inc. (2)
        10.2    Loan and Security Agreement dated as of October 11, 2000, by and
                among Safety  Components  International,  Inc., the subsidiaries
                named therein as Borrowers and Guarantors and Congress Financial
                Corporation (Southern) (10)
        10.3    Subordinated  Secured Credit  Agreement  dated as of October 11,
                2000, by and among Safety  Components  International,  Inc., the
                subsidiaries named therein as Borrowers and Guarantors,  KeyBank
                National Association ("KeyBank") and Fleet Bank, as lenders, and
                KeyBank as administrative agent (11)
        *10.4   Safety Components International, Inc. 2001 Stock Option Plan
        *10.5   Employment  agreement,  effective  May 18, 2001  between  Safety
                Components International, Inc. and John C. Corey
        *10.6   Employment  agreement,  effective  May 18, 2001  between  Safety
                Components International, Inc. and Brian P. Menezes
        *10.7   Employment  agreement,  effective  May 18, 2001  between  Safety
                Components International, Inc. and Stephen B Duerk
        *10.8   Form of Stock Option Agreement
        *10.9   Form of Severance Letter
        10.10   TRW/SCI Multi Year Agreement dated as of April 1, 1996 among TRW
                Vehicle Safety Systems,  Inc.,  TRW, Inc. and Safety  Components
                International,  Inc.  Confidential  treatment  requested  as  to
                certain  portions  of this  exhibit.  Such  portions  have  been
                redacted (1)


                                       26
<PAGE>


        10.11   Warrant Agreement,  dated as of October 11, 2000, by and between
                Safety  Components  International,  Inc. and  Continental  Stock
                Transfer  and Trust  Company,  acting  solely in its capacity as
                agent for each of the holders of Warrants issued by the Company
        *10.12  Employment  agreement,  effective April 19, 1999, between Safety
                Components International, Inc. and Robert A. Zummo
        *10.13  Employment  agreement,  effective March 29, 1999, between Safety
                Components International, Inc. and John C. Corey
        *10.14  Employment agreement,  effective August 23, 1999, between Safety
                Components International, Inc. and Brian P. Menezes
        *10.15  Employment  agreement,  dated as of June 1, 1998 between  Safety
                Components International, Inc. and Stephen Duerk (3)
        *10.16  Safety Components International,  Inc. 2001 Management Incentive
                Bonus Program
        21.1    Subsidiaries of Safety Components

*   Indicates exhibits relating to executive compensation
----------
Footnotes:

     (1)  Incorporated  by reference to the Company's  Quarterly  Report on Form
          10-Q for the quarter ended December 31, 1996 (as exhibit 10.23).

     (2)  Incorporated  by reference to the Company's  Quarterly  Report on Form
          10-Q for the quarter ended September 26, 1998 (as exhibit 10.50).

     (3)  Incorporated  by reference to the Company's  Quarterly  Report on Form
          10-Q for the quarter ended September 26, 1998 (as exhibit 10.49).

     (4)  Incorporated by reference to the Company's Current Report on Form 8-K,
          filed with the Commission on April 13, 2000.

     (5)  Incorporated by reference to the Company's Current Report on Form 8-K,
          filed with the Commission on May 19, 2000.

     (6)  Incorporated by reference to the Company's Annual Report on Form 10-K,
          for the fiscal year ended March 25, 2000 (as exhibit 2.3).

     (7)  Incorporated  by reference to the Company's  Quarterly  Report on Form
          10-Q for the quarter ended October 10, 2000 (as exhibit 2.4).

     (8)  Incorporated  by reference to the Company's  Quarterly  Report on Form
          10-Q for the quarter ended October 10, 2000 (as exhibit 3.5).

     (9)  Incorporated  by reference to the Company's  Quarterly  Report on Form
          10-Q for the quarter ended October 10, 2000 (as exhibit 3.6).

     (10) Incorporated  by reference to the Company's  Quarterly  Report on Form
          10-Q for the quarter ended October 10, 2000 (as exhibit 10.68).

     (11) Incorporated  by reference to the Company's  Quarterly  Report on Form
          10-Q for the quarter ended October 10, 2000 (as exhibit 10.69).

(b)  Reports on Form 8-K.

     No reports on Form 8-K were required to be filed by the Company  during the
fourth quarter of fiscal 2001.


                                       27
<PAGE>

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) 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.

                                          SAFETY COMPONENTS INTERNATIONAL, INC.


                                           By:   /s/ John C. Corey
                                                 -----------------
                                                 John C. Corey
                                                 Chief Executive Officer,
                                                 President and Director

                                           Date:    June 27, 2001

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
Name and Signature                                   Title                                       Date
---------------------------                          -----                                       ----

<S>                                                  <C>                                         <C>
/s/ John C. Corey                                    Chief Executive Officer,                    June 27, 2001
---------------------------                          President and Director
John C. Corey

/s/ Carroll R. Wetzel, Jr.                           Director, Chairman of the Board             June 27, 2001
---------------------------
Carroll R. Wetzel, Jr.

/s/ Brian P. Menezes                                 Vice President, Chief Financial             June 27, 2001
---------------------------                          Officer (Principal Financial Officer)
Brian P. Menezes

/s/ William F. Nelli                                 Corporate Controller                        June 27, 2001
---------------------------                          (Principal Accounting Officer)
William F. Nelli

/s/ Ben E. Waide III                                 Director                                    June 27, 2001
---------------------------
Ben E. Waide III

/s/ W. Allan Hopkins                                 Director                                    June 27, 2001
---------------------------
W. Allan Hopkins

/s/ Andy Goldfarb                                    Director                                    June 27, 2001
------------------
Andy Goldfarb
</TABLE>


                                       28



<PAGE>


SAFETY COMPONENTS INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
<TABLE>
<CAPTION>
                                                                                                         Page

<S>                                                                                                       <C>
INDEPENDENT AUDITORS' REPORTS                                                                             F-2

CONSOLIDATED FINANCIAL STATEMENTS:

     Consolidated Balance Sheets as of March 31, 2001 (Reorganized Company)
        and March 25, 2000 (Predecessor Company)                                                          F-4

     Consolidated  Statements of Operations for the period from October 11, 2000
        to March 31, 2001 (Reorganized  Company), the period from March 26, 2000
        to October  10,  2000,  and the Years ended March 25, 2000 and March 27,
        1999 (Predecessor Company)                                                                        F-5

     Consolidated  Statements of  Stockholders'  Equity (Deficit) for the period
        from  October  11,  2000 to March 31, 2001  (Reorganized  Company),  the
        period from March 26, 2000 to October 10, 2000, and the Years ended
        March 25, 2000 and March 27, 1999 (Predecessor Company)                                           F-6

     Consolidated  Statements of Cash Flows for the period from October 11, 2000
        to March 31, 2001 (Reorganized  Company), the period from March 26, 2000
        to October 10, 2000, and the Years ended March 25, 2000
        and March 27, 1999 (Predecessor Company)                                                          F-7

     Notes to Consolidated Financial Statements                                                           F-8
</TABLE>


SUPPLEMENTAL SCHEDULE:

II  Valuation and Qualifying Accounts



                                      F-1
<PAGE>


                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Safety Components International, Inc.
Greenville, South Carolina

We have audited the accompanying consolidated balance sheet of Safety Components
International,  Inc.  and  subsidiaries  (the  "Company")  as of March 31,  2001
(Reorganized Company balance sheet) and the related  consolidated  statements of
operations,  stockholders' equity (deficit),  and cash flows for the period from
October 11, 2000 to March 31, 2001  (Reorganized  Company  operations),  and the
period from March 26, 2000 to October 10, 2000 (Predecessor Company operations).
Our audit also  included the  financial  statement  schedule for the period from
October 11, 2000 to March 31, 2001  (Reorganized  Company),  and the period from
March 26, 2000 to October 10, 2000 (Predecessor  Company) listed in the Index as
Supplemental  Schedule II. These  financial  statements and financial  statement
schedule are the responsibility of the Company's management.  Our responsibility
is to express an opinion on these financial  statements and financial  statement
schedule based on our audit. The financial statements of the Predecessor Company
for  the  years  ended  March  25,  2000  and  March  27,  1999,  prior  to  the
reclassification  for  discontinued  operations  discussed  in  Note  4  to  the
financial  statements,  were audited by other auditors whose report,  dated June
30,  2000,  on those  Predecessor  Company  statements  included an  explanatory
paragraph  that  described  the  Company's  bankruptcy  proceedings  and plan of
reorganization.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

As  discussed in Note 1 to the  financial  statements,  on August 31, 2000,  the
United States  Bankruptcy Court signed an order confirming the Company's plan of
reorganization which became effective after the close of business on October 10,
2000.  Accordingly,  the accompanying financial statements have been prepared in
conformity  with AICPA  Statement of Position  90-7,  "Financial  Reporting  for
Entities  in  Reorganization  Under the  Bankruptcy  Code," for the  Reorganized
Company as a new entity with assets, liabilities, and a capital structure having
carrying values not comparable with prior periods as described in Note 3.

In our opinion,  such  Reorganized  Company  consolidated  financial  statements
present fairly, in all material respects,  the financial position of the Company
at March 31, 2001,  and the results of its operations and its cash flows for the
period from  October 11, 2000 to March 31, 2001 in  conformity  with  accounting
principles  generally accepted in the United States of America.  Further, in our
opinion,  such Predecessor  Company  consolidated  financial  statements present
fairly,  in  all  material  respects,   the  Predecessor  Company's  results  of
operations  and cash flows for the period  from  March 26,  2000 to October  10,
2000, in conformity with accounting  principles generally accepted in the United
States of America.  Also, in our opinion,  such financial statement schedule for
the period from October 11, 2000 to March 31, 2001 (Reorganized Company) and the
period  from March 26,  2000 to October 10,  2000  (Predecessor  Company),  when
considered in relation to the basic consolidated financial statements taken as a
whole,  presents  fairly in all  material  respects  the  information  set forth
therein.

We also audited the adjustments  described in Note 4 to the financial statements
that were applied to reclassify the Predecessor Company financial statements for
the  years  ended  March  25,  2000 and  March  27,  1999 to give  effect to the
Company's  metal and  defense  businesses  as  discontinued  operations.  In our
opinion, such adjustments are appropriate and have been properly applied.

DELOITTE & TOUCHE LLP

Greenville, South Carolina
June 14, 2001


                                      F-2
<PAGE>


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of
Safety Components International, Inc.:


We  have  audited  the   consolidated   balance   sheet  of  Safety   Components
International,  Inc. (a Delaware  corporation)  and subsidiaries as of March 25,
2000  and the  related  consolidated  statements  of  operations,  stockholders'
(deficit)  equity and cash flows for each of the two fiscal  years in the period
ended March 25, 2000 prior to the restatement (and, therefore, are not presented
herein) for the  discontinued  operations as described in Note 4 to the restated
financial  statements.  These financial statements are the responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements (prior to the restatement for the discontinued  operations)
based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the  financial  statements  (prior to the  restatement  for the
discontinued  operations)  referred to above  present  fairly,  in all  material
respects,  the financial position of Safety Components  International,  Inc. and
subsidiaries as of March 25, 2000 and the results of their  operations and their
cash flows for each of the two fiscal  years in the period  ended March 25, 2000
in  conformity  with  accounting  principles  generally  accepted  in the United
States.

The  consolidated  financial  statements  (prior  to  the  restatement  for  the
discontinued  operations)  have been  prepared  assuming  that the Company  will
continue  as a  going  concern.  As  discussed  in  Note 1 to  the  consolidated
financial  statements,  on April 10,  2000,  the Company and certain of its U.S.
subsidiaries each filed a voluntary  petition for relief under Chapter 11 of the
United States  Bankruptcy  Code. On June 12, 2000, the Company filed its plan of
reorganization and disclosure  statement,  which detailed information  including
management's turnaround business strategy. In addition, the Company has suffered
recurring losses from operations and at March 25, 2000 had a net working capital
deficit and  shareholders'  deficit.  Continuation  of the business is dependent
upon  the  confirmation  of a plan  of  reorganization,  the  confirmation  of a
disclosure  statement (court hearing scheduled on July 19, 2000), the ability to
secure  on-going  debtor-in-possession  and exit  financing  and the  ability to
achieve successful future operations. The current debtor-in-possession status of
the Company,  along with the factors  indicated above,  raise  substantial doubt
about the Company's ability to continue as a going concern.  Management's  plans
in  regard  to these  matters  are also  described  in Note 1. The  consolidated
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.

Our audit was made for the purpose of forming an opinion on the basic  financial
statements (prior to the restatement for the discontinued operations) taken as a
whole. The schedule (prior to the restatement for the  discontinued  operations)
listed  in the index to  consolidated  financial  statements  is  presented  for
purposes of complying with the Securities and Exchange Commission's rules and is
not  part  of the  basic  financial  statements.  This  schedule  (prior  to the
restatement for the discontinued  operations) has been subjected to the auditing
procedures applied in the audit of the basic financial  statements (prior to the
restatement for the discontinued  operations) and, in our opinion, fairly states
in all material  respects the financial data required to be set forth therein in
relation to the basic  financial  statements  (prior to the  restatement for the
discontinued operations), taken as a whole.

ARTHUR ANDERSEN LLP

New York, New York
June 30, 2000



                                      F-3
<PAGE>

             SAFETY COMPONENTS INTERNATIONAL, INC. AND SUBSIDIARIES

                        CONSOLIDATED BALANCE SHEETS

                (in thousands, except share and per share data)

<TABLE>
<CAPTION>


                                                                                                    Reorganized| Predecessor
                                                                                                      Company  |   Company
                                                                                                     March 31, |  March 25,
                                                                                                        2001   |    2000
                                                                                                    ---------  | ---------
<S>                                                                                                 <C>          <C>
ASSETS (Note 7)                                                                                                |
                                                                                                               |
Current assets:                                                                                                |
     Cash and cash equivalents ..................................................................   $   5,885  | $  10,264
     Accounts receivable, net (Note 5) ..........................................................      32,730  |    33,326
     Receivable from affiliate, net (Note 6) ....................................................         564  |       564
     Inventories, net (Note 5) ..................................................................      16,626  |    14,016
     Prepaid and other (Note 8) .................................................................       4,403  |     2,898
                                                                                                    ---------  | ---------
             Total current assets ...............................................................      60,208  |    61,068
                                                                                                               |
Property, plant and equipment, net (Notes 3 and 5) ..............................................      45,555  |    56,316
Reorganization value in excess of amounts allocable to identifiable assets (Note 3) .............      15,111  |        --
Intangible assets, net (Notes 2, 3 and 4) .......................................................       1,118  |    35,391
Other assets (Note 2) ...........................................................................       1,124  |     4,557
Net assets held for sale (Note 4) ...............................................................       7,567  |    11,363
                                                                                                    ---------  | ---------
             Total assets .......................................................................   $ 130,683  | $ 168,695
                                                                                                    =========  | =========
                                                                                                               |
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                                                 |
                                                                                                               |
Current liabilities:                                                                                           |
     Accounts payable ...........................................................................   $  11,962  | $  19,147
     Accrued and other current liabilities (Note 8) .............................................      11,751  |    13,919
     Current portion of long-term debt (Notes 3 and 7) ..........................................       8,525  |   131,107
                                                                                                    ---------  | ---------
             Total current liabilities ..........................................................      32,238  |   164,173
                                                                                                               |
Long-term debt (Notes 3 and 7) ..................................................................      43,541  |    15,145
Other long-term liabilities (Notes 8 and 9) .....................................................       2,961  |     3,817
                                                                                                    ---------  | ---------
             Total liabilities ..................................................................      78,740  |   183,135
                                                                                                    ---------  | ---------
Commitments and contingencies (Note 9)                                                                         |
                                                                                                               |
Stockholders' equity (deficit) (Notes 3 and 12):                                                               |
     Predecessor Company preferred stock: 2,000,000 shares authorized and unissued ..............          --  |        --
     Reorganized Company preferred stock: 5,000,000 shares authorized and unissued ..............          --  |        --
     Predecessor Company common stock:  $.01 par value per share - 10,000,000 shares                           |
        authorized; 6,629,008 shares issued and 5,136,316 shares outstanding ....................          --  |        66
     Reorganized Company common stock:  $.01 par value per share - 20,000,000 shares                           |
        authorized; 5,000,000 shares issued and 4,960,381 shares outstanding ....................          50  |        --
     Common stock warrants ......................................................................          34  |        51
     Additional paid-in-capital .................................................................      50,916  |    45,168
     Treasury stock:  39,619 and 1,492,692 shares at cost, respectively .........................        (404) |   (15,439)
     Retained earnings (deficit) ................................................................       1,250  |   (36,279)
     Accumulated other comprehensive income (loss) ..............................................          97  |    (8,007)
                                                                                                    ---------  | ---------
             Total stockholders' equity (deficit) ...............................................      51,943  |   (14,440)
                                                                                                    ---------  | ---------
             Total liabilities and stockholders' equity (deficit) ...............................   $ 130,683  | $ 168,695
                                                                                                    =========  | =========
</TABLE>

                       See notes to financial statements.
                                      F-4
<PAGE>


             SAFETY COMPONENTS INTERNATIONAL, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                      (in thousands, except per share data)


<TABLE>
<CAPTION>
                                                                 Reorganized   |               Predecessor Company
                                                                  Company      |
                                                                 Period from   |     Period from
                                                              October 11, 2000 |  March 26, 2000 to    Year ended      Year ended
                                                              to March 31, 2001|  October 10, 2000   March 25, 2000  March 27, 1999
                                                              -----------------|  -----------------  --------------  --------------
                                                                               |
<S>                                                                  <C>             <C>              <C>             <C>
Net sales (Note 2) ..............................................  $    92,052 |     $    109,139     $    194,667    $    178,348
Cost of sales, excluding depreciation (Note 2) ..................       76,201 |           89,406          160,804         152,443
Depreciation ....................................................        3,136 |            3,901            7,445           6,363
                                                                   ----------- |     ------------     ------------    ------------
                                                                               |
          Gross profit ..........................................       12,715 |           15,832           26,418          19,542
                                                                               |
Selling and marketing expenses ..................................          931 |            1,074            3,153           2,499
General and administrative expenses (Note 3) ....................        4,304 |            4,867           10,290           7,988
Research and development expenses ...............................          335 |              353              665           1,090
Amortization of intangible assets ...............................          448 |              675            1,486           1,528
Restructuring and restatement (Note 1) ..........................         --   |             --              3,969            --
Terminated investment agreement costs (Note 1) ..................         --   |             --               --             2,500
Relocation and reorganization costs (Note 1) ....................         --   |             --               --             3,238
                                                                   ----------- |     ------------     ------------    ------------
                                                                               |
          Income from operations ................................        6,697 |            8,863            6,855             699
                                                                               |
Other expense (income), net .....................................         (280)|              878            1,729             766
Interest expense, net (contractual interest                                    |
     of $8,486 during the period from                                          |
     March 26, 2000 to October 10, 2000 (Note 1)) ...............        2,514 |            3,833           13,975          12,566
                                                                   ----------- |     ------------     ------------    ------------
          Income (loss) from continuing                                        |
          operations before reorganization items ................        4,463 |            4,152           (8,849)        (12,633)
                                                                               |
Reorganization items (Note 3)                                                  |
                                                                               |
Fair value adjustments ..........................................         --   |           34,013             --              --
Restructuring charges ...........................................         --   |            1,125             --              --
Professional fees and expenses ..................................         --   |            3,729             --              --
Loss on revaluation of senior subordinated notes ................         --   |            2,902             --              --
Interest earned on accumulated cash .............................         --   |              (29)            --              --
                                                                   ----------- |     ------------     ------------    ------------
          Income (loss) from continuing operations before income               |
             provision (benefit) ................................        4,463 |          (37,588)          (8,849)        (12,633)
                                                                               |
Provision (benefit) for income taxes (Note 8) ...................        1,769 |          (17,511)           6,154          (3,321)
                                                                   ----------- |     ------------     ------------    ------------
          Income (loss) from continuing operations ..............        2,694 |          (20,077)         (15,003)         (9,312)
                                                                               |
Discontinued operations (Note 4):                                              |
                                                                               |
Loss from discontinued operations, net of income                               |
     tax benefit of $847 for the period from                                   |
     March 26, 2000 to October 10, 2000 .........................         --   |            1,440           20,142           4,351
Loss (gain) on disposition of discontinued                                     |
    operations, net of income tax benefit                                      |
    of $848, and provision of $125, respectively ................        1,444 |             (214)            --              --
                                                                   ----------- |     ------------     ------------    ------------
                                                                               |
          Income (loss) before extraordinary gain ...............        1,250 |          (21,303)         (35,145)        (13,663)
                                                                               |
Extraordinary gain on early extinguishment                                     |
    of debt, net of income taxes of $17,473 .....................         --   |           29,370             --              --
                                                                   ----------- |     ------------     ------------    ------------
Net income (loss) ...............................................  $     1,250 |     $      8,067     $    (35,145)   $    (13,663)
                                                                   =========== |     ============     ============    ============
                                                                               |
Net income per common share, basic and diluted: (A)                            |
          Income from continuing operations .....................  $      0.54 |
          Loss from discontinued operations .....................         0.29 |
                                                                   -----------
Net income per share, basic and diluted .........................  $      0.25 |
                                                                   =========== |
Weighted average number of shares outstanding,                                 |
     basic and diluted (A) ......................................        4,960 |
                                                                   =========== |

</TABLE>


(A) Share and per share data are not meaningful prior to October 10, 2000 due to
the  significant  change in capital  structure  in  connection  with the Plan of
Reorganization (Note 1).

                       See notes to financial statements.


                                      F-5
<PAGE>

             SAFETY COMPONENTS INTERNATIONAL, INC. AND SUBSIDIARIES

            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

                          (in thousands, except shares)


<TABLE>
<CAPTION>
                                                                                                            Accumulated
                                                Common    Common   Common   Additional Treasury   Retained     Other
                                                Stock      Stock    Stock    Paid -in   Stock     Earnings  Comprehensive
                                                Shares     Amount  Warrants  Capital    Amount    (Deficit)  Income (Loss)  Total
                                               ---------   -----   -------- --------   -------    --------   -----------  --------
<S>                                            <C>          <C>     <C>     <C>       <C>         <C>         <C>         <C>
Predecessor Company
Balance at March 28, 1998 ...................  5,045,383    $ 65    $  1    $44,040   $(15,439)   $ 12,529    $ (4,664)   $ 36,532
                                               ---------    ----    ----    -------   --------    --------    --------    --------
   Issuance of common stock .................     90,933       1     --       1,128       --          --          --         1,129
   Net loss .................................       --       --      --        --         --       (13,663)       --       (13,663)
   Foreign currency translation adjustment ..       --       --      --        --         --          --        (1,542)     (1,542)
                                               ---------    ----    ----    -------   --------    --------    --------    --------
Balance at March 27, 1999 ...................  5,136,316      66       1     45,168    (15,439)     (1,134)     (6,206)     22,456
   Issuance of common stock warrants ........       --       --       50       --         --          --          --            50
   Net loss .................................       --       --      --        --         --       (35,145)       --       (35,145)
   Foreign currency translation adjustment ..       --       --      --        --         --          --        (1,801)     (1,801)
                                               ---------    ----    ----    -------   --------    --------    --------    --------
Balance at March 25, 2000 ...................  5,136,316      66      51     45,168    (15,439)    (36,279)     (8,007)    (14,440)
   Net income for the period from
   March 26, 2000 to October 10, 2000 .......       --       --      --        --         --         8,067        --         8,067
   Foreign currency translation adjustment ..       --       --      --        --         --          --        (3,707)     (3,707)
   Fresh start adjustments .................. (5,136,316)    (66)    (51)      --       15,439      28,212      11,714      55,248
   Issuance of common stock and warrants ....  5,000,000      50      34      5,748       --          --          --         5,832
   Treasury stock held by subsidiary ........    (39,619)    --      --        --         (404)       --          --          (404)
                                               ---------    ----    ----    -------   --------    --------    --------    --------
Balance at October 10, 2000 .................  4,960,381      50      34     50,916       (404)       --          --        50,596
Reorganized Company
   Net income for the period from
     October 11, 2000 to March 31, 2001 .....       --       --      --        --         --         1,250        --         1,250
   Foreign currency translation adjustment ..       --       --      --        --         --          --            97          97
                                               ---------    ----    ----    -------   --------    --------    --------    --------
Balance at March 31, 2001 ...................  4,960,381    $ 50    $ 34    $50,916   $   (404)   $  1,250    $     97    $ 51,943
                                               =========    ====    ====    =======   ========    ========    ========    ========

</TABLE>


                       See notes to financial statements.


                                      F-6
<PAGE>

             SAFETY COMPONENTS INTERNATIONAL, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (in thousands)

<TABLE>
<CAPTION>


                                                                  Reorganized    |                 Predecessor Company
                                                                    Company      |
                                                                  Period from    |   Period from
                                                               October 11, 2000  | March 26, 2000 to    Year ended      Year ended
                                                              to March 31, 2001  | October 10, 2000   March 25, 2000  March 27, 1999
                                                              ------------------ | -----------------  --------------  -------------
<S>                                                                  <C>              <C>                <C>            <C>
Cash Flows From Operating Activities:                                            |
  Net income (loss) ..............................................   $     1,250 |    $     8,067        $   (35,145)   $   (13,663)
  Loss from discontinued operations ..............................          --   |          1,440             20,142          4,351
  Loss (gain) on disposition of discontinued operations ..........         1,444 |           (214)              --             --
  Extraordinary gain on early extinguishment of debt .............          --   |        (29,370)              --             --
                                                                     ----------- |    -----------        -----------    -----------
  Income (loss) from continuing operations .......................         2,694 |        (20,077)           (15,003)        (9,312)
  Adjustments to reconcile income (loss) from continuing                         |
    operations to net cash provided by (used in)                                 |
      operating activities:                                                      |
      Reorganization items:                                                      |
        Fair value adjustments ...................................          --   |         34,013               --             --
        Loss on revaluation of senior subordinated notes .........          --   |          2,902               --             --
        Interest received on accumulated cash due to                             |
          Chapter 11 proceeding ..................................          --   |            (29)              --             --
      Depreciation ...............................................         3,136 |          3,901              7,445          6,363
      Amortization ...............................................           448 |            675              1,486          1,528
      Provision for bad debts ....................................           608 |             92                713          1,490
      (Gain) loss on disposal and write-off of fixed assets                      |
        and investments ..........................................           (34)|            (39)               870          2,339
      Deferred taxes .............................................          --   |        (17,511)             6,154         (4,162)
      Changes in operating assets and liabilities:                               |
          Accounts receivable and receivable from affliate .......        (1,285)|          1,239              3,036        (13,520)
          Inventories ............................................         2,104 |         (4,714)             5,154         (2,386)
          Prepaid and other current assets .......................         1,218 |          1,278                 (8)           638
          Other assets ...........................................          (927)|          2,977              2,782            778
          Accounts payable .......................................        (6,382)|         (1,061)            (2,594)         6,377
          Accrued liabilities ....................................        (2,068)|           (202)             2,521          2,629
                                                                     ----------- |    -----------        -----------    -----------
                                                                                 |
        Net cash provided by (used in) continuing operations .....          (488)|          3,444             12,556         (7,238)
        Net cash used in discontinued operations .................          (178)|         (1,733)            (1,349)        (2,482)
                                                                     ----------- |    -----------        -----------    -----------
                                                                                 |
        Net cash provided by (used in) operating activities ......          (666)|          1,711             11,207         (9,720)
                                                                     ----------- |    -----------        -----------    -----------
                                                                                 |
Cash Flows From Investing Activities:                                            |
      Additions to property, plant and equipment .................        (2,112)|         (1,812)            (7,001)       (11,516)
      Proceeds from sale of other assets .........................           176 |             13               --             --
      Additional consideration and costs for acquisitions ........          --   |           --               (2,061)        (2,788)
                                                                     ----------- |    -----------        -----------    -----------
        Net cash used in continuing operations ...................        (1,936)|         (1,799)            (9,062)       (14,304)
        Net cash provided by (used in) discontinued operations....           (40)|          2,863               (740)        (2,338)
                                                                     ----------- |    -----------        -----------    -----------
        Net cash provided by (used in) investing activities ......        (1,976)|          1,064             (9,802)       (16,642)
                                                                     ----------- |    -----------        -----------    -----------
 Cash Flows From Financing Activities:                                           |
      Net (repayment) borrowings on KeyBank revolving credit                     |
        facility .................................................          --   |        (37,900)               700         23,024
      (Repayment of ) proceeds from KeyBank Subordinated                         |
        DIP term note ............................................       (20,900)|         20,900               --             --
      Proceeds from KeyBank Subordinated Secured term note .......        20,900 |           --                 --             --
      Net proceeds from Congress Subordinated term note ..........         7,080 |           --                 --             --
      Net borrowing on Congress revolving credit facility ........        10,002 |           --                 --             --
      (Repayment of) proceeds from Bank of America DIP                           |
        revolving credit facility ................................        (8,986)|          8,986               --             --
      (Repayment of) proceeds from Bank of America DIP term note..        (2,244)|          2,244               --             --
      Proceeds from Deutsche Bank Mortgage .......................          --   |           --                2,136           --
      Net borrowings (repayment) of other debt and long                          |
        term obligations .........................................        (1,865)|         (1,816)            (3,476)         8,257
      Net proceeds from sale of common stock .....................          --   |           --                 --            1,056
                                                                     ----------- |    -----------        -----------    -----------
        Net cash provided by (used in) continuing operations .....         3,987 |         (7,586)              (640)        32,337
        Net cash used in discontinued operations .................          (224)|           (298)              (868)          (707)
                                                                     ----------- |    -----------        -----------    -----------
        Net cash provided by (used in) financing activities ......         3,763 |         (7,884)            (1,508)        31,630
                                                                     ----------- |    -----------        -----------    -----------
                                                                                 |
Effect of exchange rate changes on cash and cash equivalents .....          (101)|           (290)              (240)          (710)
                                                                     ----------- |    -----------        -----------    -----------
Change in cash and cash equivalents ..............................         1,020 |         (5,399)              (343)         4,558
Cash and cash equivalents, beginning of period ...................         4,865 |         10,264             10,607          6,049
                                                                     ----------- |    -----------        -----------    -----------
Cash and cash equivalents, end of period .........................   $     5,885 |    $     4,865        $    10,264    $    10,607
                                                                     =========== |    ===========        ===========    ===========
                                                                                 |
Supplemental  disclosure of cash flow  information:                              |
  Cash paid during the period for:                                               |
                                                                                 |
      Interest ...................................................   $     1,571 |    $     1,608        $     9,191    $    12,144
      Income taxes ...............................................          --   |           --                   35            391
                                                                                 |
Supplemental disclosure of non-cash investing                                    |
  and financing activities:                                                      |
                                                                                 |
  Equipment acquired under capital lease obligations .............   $      --   |    $      --          $     1,085    $      --
  Elimination of 10 1/8% Senior Subordinated Notes,                              |
    including accrued interest ...................................          --   |        (96,784)              --             --
  Write off of common stock of Predecessor Company ...............          --   |            (66)              --             --
  Write off of common stock warrants of Predecessor Company ......          --   |            (51)              --             --
  Elimination of treasury stock of Predecessor Company ...........          --   |        (15,439)              --             --
  Issuance of common stock of Reorganized Company ................          --   |          5,798               --             --
  Issuance of common stock warrants of Reorganized Company .......          --   |             34               --             --
  Acquisition of treasury stock of Reorganized Company ...........          --   |            404               --             --
</TABLE>



                       See notes to financial statements.

                                      F-7
<PAGE>


             SAFETY COMPONENTS INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 Business and Basis of Presentation

     Safety Components  International,  Inc. (including,  when context requires,
its  consolidated  subsidiaries,  the  "Company" or "SCI")  operates in a single
segment as a supplier of  automotive  airbag  fabric and cushions and  technical
fabrics with operations in North America and Europe.

     As discussed in  "Financial  Restructuring  and Chapter 11  Reorganization"
below, on April 10, 2000 (the "Petition  Date"),  the Company and certain of its
U.S.  subsidiaries  (including  Safety  Components  Fabric  Technologies,   Inc.
("SCFTI") and Automotive Safety Components  International,  Inc.  (collectively,
"Safety  Filing  Group"),  but  excluding  Valentec  Wells,  LLC  (fka  Valentec
International Corporation,  LLC, Valentec Systems, Inc. and Galion, Inc.), filed
a voluntary petition under Chapter 11 of the Bankruptcy Code ("Chapter 11") with
the United States Bankruptcy Court for the District of Delaware.

     On October 11,  2000 (the  "Emergence  Date"),  the  Company  emerged  from
Chapter 11. Accordingly,  the Company's financial  statements  subsequent to the
Emergence Date have been prepared in accordance with Statement of Position 90-7,
"Financial  Reporting by Entities in  Reorganization  Under the Bankruptcy Code"
("SOP 90-7"),  issued by the American Institute of Certified Public Accountants.
Under SOP 90-7, the Company's financial  information for the periods on or prior
to October 10, 2000 is termed  "Predecessor  Company" and financial  information
subsequent to October 10, 2000 is termed "Reorganized  Company" and gives effect
to the application of "fresh start"  accounting.  See further  discussion of the
effect of SOP 90-7 on the Company's  consolidated financial statements at Note 3
herein.

     The  accompanying  consolidated  statements of operations  reflect  certain
restructuring  fees  and  expenses  including  professional  fees  and  expenses
directly related to the debt restructuring and reorganization.  Interest expense
on the  Company's  senior  subordinated  notes has been reported to the Petition
Date. Such interest expense was not reported  subsequent to that date because it
was not  required to be paid during the  bankruptcy  proceedings  and was not an
allowed claim under the Plan of Reorganization.  The difference between reported
interest  expense and stated  contractual  interest  expense of the  Predecessor
Company  was  approximately  $4.7  million for the period from March 26, 2000 to
October 10, 2000.

Financial Restructuring and Chapter 11 Reorganization

     The deterioration in the Company's  financial condition that became evident
in fiscal 1999, arising from a confluence of negative developments, particularly
in the non-core businesses,  caused the Company to experience material liquidity
constraints in fiscal 2000. In addition,  following the Company's restatement of
its  earnings  and a default  with  respect  to  obligations  under  its  credit
agreement (the "KeyBank Credit  Agreement"),  KeyBank National  Association,  as
lender and administrative  agent, and Fleet Bank, as lender  (collectively,  the
"Senior  Lenders")  notified  the  trustee  for the  Company's  10  1/8%  senior
subordinated notes (the "Notes") that they were exercising their rights to block
a scheduled interest payment due on the Notes on January 18, 2000.

     On February 18, 2000, the common stock of the Company was delisted from the
NASDAQ stock exchange.

     The  Company  and an  informal  committee  comprised  of  holders  of  over
two-thirds  in aggregate  dollar amount of the Notes began  negotiations  and in
early  April  2000  reached  an  agreement  (as  amended,   the   "Restructuring
Agreement")  that would be effected through a voluntary filing under Chapter 11.
Pursuant  to the  Restructuring  Agreement,  the  claims of the  holders  of the
Company's Notes  ("Noteholders")  were to be converted into the right to receive
shares of the Company's  post-bankruptcy  common stock when the Company  emerged
from Chapter 11.

     On the April 10,  2000  Petition  Date,  the Safety  Filing  Group  filed a
voluntary  petition under Chapter 11 with the United States Bankruptcy Court for
the District of Delaware (the "Chapter 11 cases").


                                      F-8
<PAGE>


             SAFETY COMPONENTS INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     On October 11,  2000,  the Safety  Filing  Group  emerged  from  Chapter 11
pursuant to the Plan of Reorganization (the "Plan"), confirmed by the Bankruptcy
Court.  Pursuant to the Plan, as confirmed,  upon emergence all of the Company's
10-1/8%  senior notes due 2007 (an  aggregate of  approximately  $96.8  million,
including  accrued  interest to the Petition Date) were converted into 4,840,774
shares of the Company's  post-bankruptcy  common stock,  and the  pre-bankruptcy
common stock,  excluding  stock held by Robert Zummo (former  Chairman and Chief
Executive  Officer of the  Company),  was converted  into 159,226  shares of the
Company's  post-bankruptcy  common  stock,  including  39,619 shares of treasury
stock,  and  warrants  to acquire an  additional  681,818  shares of such common
stock.  Immediately  upon  emergence the Company had 5,000,000  shares of common
stock issued and 4,960,381 shares  outstanding and, other than the warrants,  no
shares of common  stock  were  reserved  for  issuance  in respect of claims and
interests  filed and allowed  under the Plan.  In addition,  Safety  Components'
trade suppliers and other creditors were paid in full,  pursuant to the terms of
the Plan, within 90 days of the Emergence Date.

Restructuring and Restatement Costs

     During  the third and  fourth  quarter of fiscal  year  2000,  the  Company
incurred  approximately  $4.0 million of legal,  professional  and  re-financing
costs  associated  with  the  investigation  and  restatement  of its  financial
statements for fiscal years 1998 and 1999, and it restructuring  efforts leading
up to its filing under  Chapter 11 on April 10,  2000.  During the first half of
fiscal year 2001, the Company  continued to incur such costs associated with its
restructuring  efforts,  all of which have been  classified  as  "Reorganization
Items" in the accompanying  consolidated  statement of operations for the period
from  March 26,  2000 to  October  10,  2000.  Additional  Reorganization  Items
included  fair  value  adjustments  and a loss  on  the  revaluation  of  senior
subordinated notes due to the implementation of the Plan and the requirements of
SOP 90-7.

Relocation and Reorganization Costs

     During the third quarter of fiscal year 1999, the Company  reevaluated  its
strategic decision to exit the manufacturing of airbags in Germany. The original
plan called for the closure and relocation of the entire ASCI GmbH manufacturing
operation in  Hildesheim,  Germany to the  Company's  Czech  Republic and United
Kingdom  production  facilities.   During  fiscal  1999,  the  Company  incurred
approximately  $2.4 million of pre-tax costs  associated  with the relocation of
substantially all of the labor-intensive  passenger airbags,  which was recorded
within  relocation  and  reorganization  expense.  These costs were  investments
toward  consolidating  labor-intensive  production  within the Company's foreign
operations to its low-cost  facilities located within the foreign market.  While
the  Company   accomplished   the  relocation  of   substantially   all  of  the
labor-intensive  passenger  airbag  manufacturing  operations,  the  Company had
decided not to relocate the remaining  automated  airbag  operations,  primarily
driver and side  impact  bags.  The  decision  to remain in Germany was based on
current and anticipated  program delivery  commitments at that time. The Company
purchased a new facility in Hildesheim,  Germany near the existing  facility and
completed  its move into the new facility  during  fiscal year 2000.  Additional
costs of  approximately  $800,000  were  incurred  during  fiscal  year  1999 in
association  with the closure of the  Company's  former  China  facility and the
relocation of the Company's corporate office to its South Carolina facility.

Terminated Investment Agreement

     During   fiscal  year  1999,   after   exploring  a  variety  of  strategic
alternatives,  the Company  entered  into an  Investment  Agreement  ("the Brera
Investment  Agreement")  with Brera  Capital  Partners,  LLC, and Brera  Capital
Partners Limited Partnership ("Brera"),  which provided for, among other things,
a $28.0 million convertible  preferred stock investment by Brera in the Company.
On May 4, 1999,  the Company and Brera  reached a mutual  agreement to terminate
the Brera Investment Agreement.  The Company recorded approximately $2.5 million
of fees and  expenses  during the fourth  quarter of fiscal year 1999 related to
the  agreement  and  its  subsequent   termination.   This  charge   included  a
reimbursement  to Brera for fees and  expenses  incurred by it. The Company paid
approximately $500,000 and $2.0 million of the fees and expenses in fiscal years
1999 and 2000, respectively.


                                      F-9
<PAGE>

             SAFETY COMPONENTS INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 2 Summary of Significant Accounting Policies

Principles of consolidation

     The  accompanying   consolidated   financial   statements   include  Safety
Components  International,  Inc. and its  subsidiaries,  all of which are wholly
owned. Significant intercompany transactions and accounts have been eliminated.

Reclassifications of prior period amounts for discontinued operations

     As discussed in Note 4, effective  October 10, 2000, the Company  concluded
to sell its non-core  (metal and  defense)  operations.  Accordingly,  all prior
period  amounts  have been  reclassified  so that the net assets of the non-core
metal and defense  businesses are presented as "net assets held for sale" in the
accompanying  consolidated  balance  sheets  and the  operating  results  of the
non-core  businesses  have been  presented as  "discontinued  operations" in the
accompanying consolidated statements of operations.

Fiscal year

     The  Company's  operations  are based on a fifty-two  or  fifty-three  week
fiscal  year  ending  on the  Saturday  closest  to March 31.  Fiscal  year 2001
consisted  of  fifty-three  weeks  including  the period  from March 26, 2000 to
October 10, 2000  (Predecessor  Company) and the period from October 11, 2000 to
March 31, 2001 (Reorganized Company).  Fiscal years 2000 and 1999 each consisted
of  fifty-two  week  years,  ending  on March  25,  2000  and  March  27,  1999,
respectively.

Use of estimates

     The consolidated financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America,  which
require management to make estimates and assumptions that affect the amounts and
disclosures  reported  in  the  financial  statements  and  accompanying  notes.
Significant  estimates  made  by  management  include  allowances  for  doubtful
accounts receivable,  reserves for inventories,  legal actions and environmental
issues,  earnings (losses) until disposition of discontinued  operations and the
net realizable value of the discontinued  operations.  Management  believes that
its estimates included in the financial statements, including for these matters,
are reasonable. However, actual results could differ from those estimates.

Cash equivalents

     The  Company  considers  all highly  liquid  investments  with an  original
maturity of three months or less to be cash equivalents.

Concentration of credit risk

     The Company is subject to a concentration  of credit risk consisting of its
trade   receivables.   At  March  31,  2001,   three  customers   accounted  for
approximately  38%,  24% and 12% of its trade  receivables.  At March 25,  2000,
three  customers  accounted  for  approximately  28%,  24% and 21% of its  trade
receivables.  The Company performs  ongoing credit  evaluations of its customers
and  generally  does not require  collateral.  The Company  evaluates  potential
losses  for  uncollectible  accounts  and such  losses  have  historically  been
immaterial and within management's expectations.

Inventories

     Inventories  represent direct materials,  labor and overhead costs incurred
for products not yet  delivered  and are stated at the lower of cost  (first-in,
first-out) or market.


                                      F-10
<PAGE>


             SAFETY COMPONENTS INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     DuPont  supplies  a  significant  portion  of the  nylon  yarn  used in the
Company's airbag fabric operations.  The loss of DuPont as a supplier could have
a material adverse effect on the Company.

Property, plant and equipment

     Property,   plant  and  equipment  are  stated  at  cost  less  accumulated
depreciation. Depreciation is calculated using the straight-line method over the
estimated useful lives of the assets.  Leasehold improvements are amortized over
the shorter of their estimated useful lives or the term of the underlying lease.
Estimated useful lives by class of assets are as follows:

      Machinery and equipment..........     4  -  10 years
      Furniture and fixtures...........     3  -   5 years
      Buildings........................     25 -  40 years
      Leasehold improvements...........     Lesser of useful life or lease term

     Expenditures  for  repairs  and  maintenance  are  charged  to  expense  as
incurred. Renewals or betterments of significant items are capitalized.

     The Company assesses the recoverability of long-lived assets  periodically.
If  there  is an  indication  of  impairment  of  such  assets,  the  amount  of
impairment,  if any, is charged to operations in the period in which  impairment
is determined by management.  The  methodology  that  management uses to project
results of operations is based on projected  undiscounted  cash flows  generated
from the assets in service.

Reorganization value in excess of amounts allocable to identifiable assets

     Reorganization  value in excess of amounts allocable to identifiable assets
results from the application of "fresh start"  reporting as discussed in Note 3,
which  requires  the  Predecessor  Company's  unidentified  intangibles,  net of
amortization, to be reduced to zero and a new amount to be recorded equaling the
excess of the fair value of the  Company  over the fair value  allocated  to its
identifiable assets. This excess is classified as reorganization value in excess
of amounts allocable to identifiable assets ("Excess  Reorganization Value") and
is being  amortized over a twenty-year  period.  For the period from October 11,
2000 to March 31, 2001, amortization totaled approximately $396,000.

Intangible assets

     At March 31, 2001, intangible assets consist of patents stated at cost less
accumulated  amortization.  Such patents are amortized over the expected periods
to be  benefited,  which have been  determined  to have lives  between 15 and 20
years. Accumulated amortization at March 31, 2001 was approximately $90,000.

     At March 25,  2000,  the Company had  patents and other  intangible  assets
consisting of goodwill and non-compete  agreements associated with the Company's
acquisitions  that were being  amortized on a straight line basis over 40 years.
Accumulated  amortization at March 25, 2000 was approximately $4.9 million. As a
result of the  implementation  of fresh start accounting as described in Note 3,
the other intangible  assets of approximately $32 million were written off as of
October 10, 2000.

Asset impairment

     The Company  continually  monitors  conditions that may affect the carrying
value of its  excess  reorganization  value and other  intangible  assets.  When
conditions  indicate potential  impairment of such assets, the Company evaluates
projected  future cash flows  associated with the assets.  When projected future
cash  flows,  not  discounted  for the time  value of  money,  are less than the
carrying value of the asset, the impaired asset is written down to its estimated
fair value.


                                      F-11
<PAGE>

             SAFETY COMPONENTS INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Deferred financing costs

     Costs  incurred in connection  with financing  activities  (see Note 7) are
deferred and amortized using the  straight-line  method (which  approximates the
effective  interest  method),  and  are  charged  to  interest  expense  in  the
accompanying  consolidated  statements of  operations.  Total costs deferred and
included under other assets in the accompanying  consolidated  balance sheets at
March  31,  2001 and  March  25,  2000  were  $1.1  million  and  $3.7  million,
respectively.  As a result of the  bankruptcy  filing  discussed  in Note 1, the
deferred  financing  costs at March 25,  2000 were  written  off as the debt was
refinanced.

Income taxes

     Income taxes are recognized  for financial  reporting  purposes  during the
year in which transactions enter into the determination of income, with deferred
taxes being provided for temporary  differences  between the basis for financial
reporting purposes and the basis for income tax reporting purposes.

Revenue recognition

     The Company has adopted the  Securities  and  Exchange  Commission's  Staff
Accounting Bulletin ("SAB") 101 regarding revenue recognition.  SAB 101 requires
that a Company  recognize  revenue only when all of the  following  criteria are
met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred
or services have been performed; (3) the seller's price to the buyer is fixed or
determinable; and (4) collectibility is reasonably assured. Upon adoption of SAB
101,  there was no impact  on the  Company's  financial  condition,  results  of
operations or cash flows.

     The Company  generally  recognizes  revenue from product  sales when it has
shipped the goods. At the customer's request,  shipment of the completed product
is  sometimes  delayed.  In such  instances,  and as  permitted  by SAB 101 when
certain criteria are met, revenues are recognized when the customer acknowledges
transfer of title,  assumes risks of ownership and accepts the related  billing.
Additionally,  the Company accrues for sales returns and other allowances at the
time of shipment based upon historical experience.

     The Company, for its Valentec Systems,  Inc. ("Systems") business (included
in  Discontinued  Operations)  that was  sold in  fiscal  year  2000  (Note  4),
accounted for long-term  contracts  under the  percentage of completion  method,
whereby  progress  toward  contract  completion  was measured on a cost incurred
basis (including direct labor,  materials and allocable  indirect  manufacturing
overhead and general and administrative  costs).  Losses on long-term  contracts
were recognized in the period when such losses were identified.

Annual revenues from major customers

     The Company's  net sales to three  customers in the period from October 11,
2000 to March 31,  2001 and the period  from March 26,  2000 to October 10, 2000
aggregated  approximately  31%,  26%,  16%,  and  30%,  28%,  13% of net  sales,
respectively.  The  Company's  net sales to three  customers in fiscal year 2000
aggregated  approximately 27%, 19% and 17% of net sales. The Company's net sales
to two customers in fiscal year 1999 aggregated approximately 27% and 17% of net
sales.

Environmental expenditures

     Environmental  expenditures that result from the remediation of an existing
condition  caused by past  operations  that will not  contribute  to  current or
future revenues are expensed.  Expenditures which extend the life of the related
property  or  prevent  future   environmental   contamination  are  capitalized.
Liabilities are recognized for remedial  activities when the cleanup is probable
and the cost can be reasonably estimated.



                                      F-12
<PAGE>


             SAFETY COMPONENTS INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Advertising costs

     The Company  recognizes  advertising  costs as incurred.  Advertising costs
were approximately $40,000, $35,000, $73,000 and $134,000 during the period from
October  11, 2000 to March 31,  2001,  the period from March 26, 2000 to October
10, 2000,  and the years ended March 25, 2000 and March 27, 1999,  respectively,
and were  recorded  as a  component  of selling  and  marketing  expenses in the
accompanying consolidated statements of operations.

Shipping costs

     The  costs  to  ship  products  to  customers  of  approximately  $830,000,
$930,000, $2.4 million, and $2.7 million during the period from October 11, 2000
to March 31, 2001,  the period from March 26, 2000 to October 10, 2000,  and the
years ended March 25, 2000 and March 27, 1999,  respectively,  are included as a
component  of cost of  sales  in the  accompanying  consolidated  statements  of
operations.

Research and development expenses

     Research and development  costs are charged to operations when incurred and
are  included in  operating  expenses.  The  amounts  charged in the period from
October 11, 2000 to March 31, 2001 and the period from March 26, 2000 to October
10,  2000,  and years ended March 25, 2000 and March 27,  1999,  were  $335,000,
$353,000, $665,000 and $1,090,000, respectively.

Comprehensive income

     Statement   of  Financial   Accounting   Standards   No.  130,   "Reporting
Comprehensive  Income",  establishes  standards  for  reporting  and  display of
comprehensive  income  and  its  components  in a full  set  of  general-purpose
financial statements.  The Company currently has one item,  unrecognized gain or
loss  on  foreign   currency   translation,   which  is  a  component  of  other
comprehensive income (see Note 13).

Earnings per share

     Basic  earnings  per share  ("EPS")  excludes  dilution  and is computed by
dividing income available to common stockholders by the weighted-average  number
of common shares  outstanding for the period.  Diluted EPS is computed using the
weighted average number of common shares and potentially  dilutive common shares
outstanding  for the period.  For the period from  October 11, 2000 to March 31,
2001,  there were no dilutive  equity  instruments  and  accordingly,  basic and
diluted EPS for that period are the same.  For the periods  prior to October 10,
2000,  share and per share data is not shown as it is not  meaningful due to the
significant  change in capital  structure in connection with the  reorganization
under bankruptcy discussed in Note 1.

Foreign currency translation

     Financial   statements  of  substantially  all  of  the  Company's  foreign
operations are prepared  using the local  currency as the  functional  currency.
Translation  of these foreign  operations to United States  dollars occurs using
the current  exchange  rate for balance  sheet  accounts and a weighted  average
exchange rate for results of foreign operations. Translation gains or losses are
recognized in "accumulated other comprehensive  income (loss)" as a component of
equity.

     For the  Company's  Mexican  subsidiary,  whose  financial  statements  are
prepared using the United States dollar as the functional currency,  translation
of the financial  statements are included in the results of  operations.  During
the periods presented herein, such amounts were not significant.

     Foreign  currency  transaction  gains (losses) are reflected in operations.
During the period from October 11, 2000 to March 31, 2001, the period from March
26, 2000 to October 10, 2000, and years ended March 25, 2000 and


                                      F-13
<PAGE>

             SAFETY COMPONENTS INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


March 27, 1999,  transaction gains (losses)  included in operations  amounted to
$222,000, $(861,000), $(820,000) and $107,000, respectively.

Fair value of financial instruments

     The consolidated financial statements include financial instruments whereby
the fair market value of such instruments may differ from amounts reflected on a
historical basis. Financial instruments of the Company consist of cash deposits,
accounts receivable,  advances to affiliates,  accounts payable, certain accrued
liabilities  and long-term  debt. The carrying amount of the Company's long term
debt at March 31, 2001 approximates fair market value based on prevailing market
rates. The Company's other financial  instruments  generally  approximate  their
fair values based on the short-term nature of these instruments.

Reclassifications

     Certain reclassifications,  including discontinued operations as previously
discussed,  have been made to the  consolidated  financial  statements for prior
periods to conform to the March 31, 2001 presentation.

Note 3  Fresh Start Reporting

     As previously discussed, the accompanying consolidated financial statements
reflect the use of "fresh start" reporting as required by SOP 90-7. Under "fresh
start"  reporting,  the  Company's  assets  and  liabilities  were  adjusted  to
estimated  fair values and  resulted in the creation of a new  reporting  entity
(the "Reorganized  Company") with no accumulated deficit as of October 10, 2000.
Accordingly,  the consolidated financial statements for periods prior to October
10,  2000  (the  "Predecessor  Company")  are  not  comparable  to  consolidated
financial  statements for periods subsequent to October 10, 2000. In conjunction
with the revaluation of the assets and liabilities,  a reorganization  value for
the entity was determined  based upon the  approximate  fair value of the entity
before  considering  debt  requirements.  Under  "fresh  start"  reporting,  the
reorganization  value of the  entity is  allocated  to the  entity's  assets and
liabilities.  The portion of the reorganization  value that cannot be attributed
to specific tangible or identified  intangible assets of the Reorganized Company
is  reported  as  "reorganization   value  in  excess  of  amount  allocable  to
identifiable assets."

     The total  reorganization  value  assigned to the  Company's net assets was
determined  by  independent  valuation,   using  the  going-concern   enterprise
approach.   Such  valuation  resulted  in  an  estimated   reorganization  value
attributable  to the  Company's  issued  common  stock  of  approximately  $51.0
million, of which approximately $15.4 million was determined to be the excess of
the  reorganization  value  over the fair  value of the net  assets.  The Excess
Reorganization Value is being amortized over twenty years.

     The results of operations in the  accompanying  consolidated  statements of
operations  of the  Predecessor  Company  for the period  from March 26, 2000 to
October 10, 2000 reflect the  operations  prior to the Company's  emergence from
bankruptcy,  including the effects of fresh start reporting adjustments. In this
regard, the consolidated  statement of operations of the Predecessor Company for
the period from March 26, 2000 to October  10,  2000  reflects an  extraordinary
gain of $29.9 million,  net of tax of $17.5 million  related to the discharge of
the Notes.  This was offset by a loss  recognized  in the amount of $573,000 for
the write-off of deferred  financing costs associated with the early termination
of  the  KeyBank  Credit   Agreement  during  the  period.   Additionally,   the
consolidated  statement of operations of the Predecessor  Company for the period
from March 26, 2000 to October 10, 2000 reflects $41.7 million of Reorganization
Items,  consisting  primarily of gains and losses related to the  adjustments of
assets and liabilities to fair value,  professional fees and expenses associated
with the Company's financial restructuring and Chapter 11 bankruptcy proceeding,
a charge for the revaluation of the Notes (representing the write-off of related
deferred financing costs) and restructuring  charges that consisted primarily of
a charge for future  severance  payments to the  Company's  former  chairman and
chief executive officer.

     During the period  from  October 11,  2000 to March 31,  2001,  the Company
recorded certain transactions through continuing  operations that related to the
Reorganization  Items  recorded in the period from March 26, 2000 to October 10,
2000.  Income from  operations for the period from October 11, 2000 to March 31,
2001 was  impacted


                                      F-14
<PAGE>


             SAFETY COMPONENTS INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


favorably  by a  $740,000  reversal  of a reserve  recorded  originally  through
Reorganization Items in the period from March 26, 2000 to October 10, 2000. Such
reserve  was related to a disputed  claim filed with the Court in the  Company's
Chapter 11 proceedings, which was settled subsequently in the Company's favor.

     The following  summarizes  the effects of "fresh  start"  accounting on the
Company's  consolidated  balance  sheet as of October  10,  2000 (in  thousands)
(unaudited):
<TABLE>
<CAPTION>
                                                           Pre-Fresh Start                                            Fresh Start
                                                             Balance Sheet     Reorganization      Fresh Start       Balance Sheet
                                                           October 10, 2000    Adjustments (a)   Adjustments (b)    October 10, 2000
                                                            ---------------    ---------------   ---------------    ---------------
<S>                                                         <C>                <C>               <C>                <C>
Current assets                                              $        59,357                      $           710    $        60,067
Property, plant and
   equipment, net                                                    53,056                               (6,635)            46,421
Excess reorganization value                                              --                               15,412             15,412
Intangible assets, net                                               33,263                              (32,190)             1,073
Other assets                                                          1,580                                                   1,580
Net assets held for sale                                              7,257                                                   7,257
                                                            ---------------    ---------------   ---------------    ---------------
     Total                                                  $       154,513    $            --   $       (22,703)   $       131,810
                                                            ===============    ===============   ===============    ===============

Accounts payable                                            $        18,086                                         $        18,086
Accrued and other current liabilities
                                                                     13,157    $         1,100                               14,257
Current portion of long-term debt                                    14,310                                                  14,310
Long-term debt                                                       33,803                                                  33,803
Other long-term liabilities                                             758                                                     758
Liabilities subject to
   compromise-Notes                                                  96,784            (96,784)                                  --
Common stock                                                             66                (16)                                  50
Common stock warrants                                                    51                (17)                                  34
Additional paid-in capital                                           45,168              5,748                               50,916
Treasury stock                                                      (15,439)            15,035                                 (404)
Accumulated deficit                                                 (40,517)            74,934   $       (34,417)                --
Cumulative translation
    adjustment                                                      (11,714)                              11,714                 --
                                                            ---------------    ---------------   ---------------    ---------------
    Total                                                   $       154,513    $            --   $       (22,703)   $       131,810
                                                            ===============    ===============   ===============    ===============
</TABLE>

(a)  To record the transactions  associated with the Plan as described in Note 1
     and eliminate the accumulated deficit.

(b)  To record the  adjustments  to assets  and  liabilities  to  reflect  their
     estimated fair value,  including the establishment of Excess Reorganization
     Value.

Note 4 Discontinued Operations

     As  previously  discussed,  the  Company  concluded  to exit its  metal and
defense  businesses.  To  enhance  the value of these  businesses,  the  Company
consolidated a considerable  portion of its Valentec operations into its Galion,
Ohio facility and relocated the remainder to a lower-cost  facility in Missouri,
nearer to its primary customers.  These businesses consist of the metal division
now  located in  Missouri  (Valentec  Wells,  LLC) and the  defense  systems and
products  divisions  located in New  Jersey  (Valentec  Systems,  Inc.) and Ohio
(Galion,  Inc.).  As a result of this  decision  by the  Company's  new board of
directors upon the October 10, 2000 emergence from  bankruptcy,  the Company has
reported its non-core operations as discontinued  operations in the accompanying
consolidated  financial  statements.   Amounts  in  the  consolidated  financial
statements  and related  notes for all prior periods have been  reclassified  to
reflect these non-core businesses as discontinued operations.  Accordingly,  the
Company  reported the results of operations of the metal and defense  businesses
as a loss on discontinued  operations that, for the Predecessor Company's period
from


                                      F-15
<PAGE>


             SAFETY COMPONENTS INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


March 26,  2000 to  October  10,  2000,  totaled  $1,440,000,  net of income tax
benefit of $847,000  and totaled  $20.1  million and $4.4 million for the fiscal
years ended March 25, 2000 and March 27, 1999, respectively. For the Predecessor
Company's  period from March 26, 2000 to October 10, 2000, the Company  recorded
$214,000,  net of income taxes of $125,000,  for the  estimated  net gain on the
disposition of the non-core businesses,  including the realized gain on the sale
of Valentec Systems, Inc. ("Systems") discussed below. Subsequently, the Company
experienced  production problems associated with electrical rolling blackouts at
its  California  location  and  other  disruptions  associated  with  relocating
Valentec  Wells,  LLC and closing the former  California  facility,  among other
items.  During the fourth  quarter  of fiscal  2001,  the  Company  recorded  an
additional  charge of  $1,444,000,  net of  income  taxes of  $848,000,  for the
estimated net loss on the disposition of the non-core businesses.

     On August 31, 2000, the Company finalized the sale of Systems.  Pursuant to
a Stock  Purchase  Agreement  dated July 21, 2000,  the Company sold 100% of the
shares of capital stock of Systems to VTECH Corporation for  approximately  $2.9
million in cash.  The sale of Systems  resulted in an  approximate  $1.2 million
gain that was included in the gain on disposition of discontinued  operations in
the  accompanying  consolidated  statements  of  operations  of the  Predecessor
Company  for the  period  from  March 26,  2000 to  October  10,  2000.  Systems
accounted for $3.9 million,  $16.4 million and $22.6 million of consolidated net
sales for the  Predecessor  Company's  period from March 26, 2000 to October 10,
2000, and the years ended March 25, 2000 and March 27, 1999, respectively.

     Following  is  a  summary  of  financial   information  for  the  Company's
discontinued metal and defense operations (in thousands):
<TABLE>
<CAPTION>

                                  Reorganized Company     |                    Predecessor Company
                                --------------------------|---------------------------------------------------------------
                                  Period from October 11, |  Period from March 26, 2000   Year Ended       Year Ended
                                  2000 to March 31, 2001  |    to October 10, 2000        March 25, 2000   March 27, 1999
                                --------------------------|-------------------------- ------------------ -----------------
<S>                                      <C>                        <C>                   <C>                <C>
Net sales                                $ 9,563          |         $ 11,026              $ 33,599           $ 41,633
Discontinued operations:                                  |
     Loss from operations,                                |
    net of income taxes                       --          |            1,440                20,142(a)           4,351
                                                          |
     Loss (gain) on                                       |
    disposition, net of                    1,444          |             (214)                   --                 --
    income taxes                                          |
</TABLE>

(a) During fiscal year 2000, the Company recognized a goodwill impairment charge
of  $17.7  million,  with  no  associated  tax  benefit,  related  to  the  1997
acquisition  of  Valentec.  Operating  results of Valentec  deteriorated  during
fiscal  year  2000  arising  from the loss of  business  with a major  customer.
Accordingly,  management concluded that intangible assets in the amount of $17.7
million were no longer recoverable through future operations and such amount was
written-off. The estimated fair value was based on anticipated future cash flows
discounted at a rate commensurate with the risk involved.

     Net assets of discontinued  operations at March 31, 2001 and March 25, 2000
were as follows (in thousands):

                                          Reorganized    |   Predecessor
                                            Company      |     Company
                                         --------------  |  --------------
                                         March 31, 2001  |  March 25, 2000
                                         --------------  |  --------------
 Accounts receivable                            $ 3,824  |         $ 7,955
 Inventories, net                                 1,471  |             810
 Property, plant and equipment, net               5,791  |           9,463
                                         --------------  |  --------------
        Total assets                             11,086  |          18,228
 Current liabilities                             (2,676) |          (5,330)
 Note payable and other liabilities                (843) |          (1,535)
                                         --------------  |  --------------
        Net assets held for sale                $ 7,567  |        $ 11,363
                                         ==============  |  ==============




                                      F-16
<PAGE>


             SAFETY COMPONENTS INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 5 Composition of Certain Consolidated Balance Sheet Accounts (in thousands)
<TABLE>
<CAPTION>

                                                                          Reorganized   |  Predecessor
                                                                             Company    |    Company
                                                                          ------------  |  ------------
                                                                         March 31, 2001 | March 25, 2000
                                                                          ------------  |  ------------
<S>                                                                       <C>              <C>
 Accounts receivable:                                                                   |
      Trade receivables, net of allowances of $951 and $206 at                          |
          March 31, 2001 and March 25, 2000, respectively                 $     32,258  |  $     32,542
      Other                                                                        472  |           784
                                                                          ------------  |  ------------
      Total                                                               $     32,730  |  $     33,326
                                                                          ============  |  ============
                                                                                        |
Inventories:                                                                            |
      Raw materials                                                       $      5,167  |  $      5,716
      Work-in-process                                                            5,991  |         5,752
      Finished goods                                                             5,468  |         2,548
                                                                          ------------  |  ------------
      Total                                                               $     16,626  |  $     14,016
                                                                          ============  |  ============
                                                                                        |
Property, plant and equipment:                                                          |
      Land and buildings                                                  $     14,236  |  $     12,321
      Machinery and equipment                                                   32,961  |        58,008
      Furniture and fixtures                                                       435  |         3,299
      Construction in process                                                      952  |           984
                                                                          ------------  |  ------------
                                                                                48,584  |       74,612
      Less - accumulated depreciation and amortization                          (3,029) |      (18,296)
                                                                          ------------  | ------------
      Total                                                               $     45,555  | $     56,316
                                                                          ============  | ============
</TABLE>

     Inventories and property,  plant and equipment of the  Reorganized  Company
were revalued on October 10, 2000 to their  estimated fair value pursuant to SOP
90-7. See Note 3 for further explanation of the fresh start adjustments.  Due to
the  revaluation  of property,  plant and  equipment  on October 10,  2000,  the
Company  changed  certain of its estimated  useful lives  beginning in the third
quarter of fiscal 2001.  Such change in useful lives affected only the Machinery
and  Equipment  category,  with useful  lives now ranging  from 4 to 10 years in
length.

Note 6 Related Party Transactions

     The Company, in years prior to fiscal 1999,  performed certain services for
an affiliated company,  Valentec  International  Limited ("VIL"), a U.K. company
majority  owned by Robert A.  Zummo,  the former  Chief  Executive  Officer  and
Chairman  of  the  Board  of  the  Company.  During  fiscal  2000,  the  Company
established a $600,000  reserve  against its receivable of $1.2 million from VIL
due to uncertainty  about VIL's ability to repay such amount. In connection with
the  restructuring  discussed in Note 1, Mr. Zummo agreed that the Company could
reduce  future  payments  to him under his  employment  agreement  to cover such
receivable  in the event that the  Company  is not  repaid by VIL.  At March 31,
2001,  VIL had not repaid the  Company and the gross  amount  owed to Mr.  Zummo
under his employment agreement is in excess of the amount owed to the Company by
VIL.



                                      F-17
<PAGE>

             SAFETY COMPONENTS INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 7  Long-Term Debt  (in thousands)
<TABLE>
<CAPTION>
                                                                                                      Reorganized   |  Predecessor
                                                                                                        Company     |    Company
                                                                                                     -------------- | --------------
                                                                                                     March 31, 2001 | March 25, 2000
                                                                                                     -------------- | --------------
<S>                                                                                                  <C>              <C>
Senior subordinated notes due July 15, 2007, bearing interest at 10 1/8%                                            |
     (cancelled pursuant to Plan of Reorganization - see Note 3)                                     $          --  | $      90,000
KeyBank subordinated secured note due October 11, 2002,                                                             |
     bearing interest at 11%                                                                                20,900  |            --
KeyBank revolving credit facility, bearing interest at 3.0% over LIBOR,                                             |
    refinanced on May 9, 2000                                                                                   --  |        37,850
Congress revolving credit facility due on October 11, 2003, bearing a                                               |
    variable interest rate (8.5% at March 31, 2001)                                                         10,002  |            --
Congress term note due on October 11, 2003, bearing a variable interest rate                                        |
    (8.4% at March 31, 2001)                                                                                 7,080  |            --
KeyCorp equipment note due August, 2005                                                                      6,738  |         8,074
Bank Austria mortgage note due March, 2002                                                                   4,500  |         5,625
Deutsche Bank mortgage note with separate tranches due in 2009 and 2019                                      1,797  |         2,136
A.I. Credit Corp. note due November, 2001                                                                      201  |           526
Note payable paid in full on February 14, 2001                                                                  --  |           398
Capital equipment notes payable, with various interest rates of                                                     |
     8.02% to 16.0%, maturing at various dates through November, 2004                                          848  |         1,643
                                                                                                     -------------  | -------------
Total long-term debt                                                                                        52,066  |       146,252
Less - current portion of long-term debt                                                                    (8,525) |      (131,107)
                                                                                                     -------------  | -------------
Total long-term portion of debt                                                                      $      43,541  | $      15,145
                                                                                                     =============  |=============
</TABLE>

Senior Subordinated Notes (cancelled pursuant to Plan of Reorganization)

     On October 11,  2000,  the Safety  Filing  Group  emerged  from  Chapter 11
pursuant to the Plan  confirmed by the Bankruptcy  Court.  Pursuant to the Plan,
all of the Company's 10-1/8% senior subordinated notes due 2007 (an aggregate of
approximately  $96.8 million,  including  accrued interest to the Petition Date)
were  converted into 4,840,774  shares of the Company's  post-bankruptcy  common
stock.

Credit Facilities

     In connection with its emergence from Chapter 11, the Company announced the
closing on October 11, 2000 of a three-year,  $35.0  million,  revolving  credit
facility  with  Congress  Financial  Corporation   (Southern),   (the  "Congress
Facility"),  expiring  October 11,  2003.  With the  proceeds  from the Congress
Facility,  the  Company  paid  off  its   debtor-in-possession   ("DIP")  credit
facilities  with Bank of  America.  In addition to the  Congress  Facility,  the
Company also closed on October 11, 2000,  a two-year  subordinated  secured note
facility  with  the  Senior   Lenders  for  $20.9  million  (the   "Subordinated
Facility"), with a fixed interest rate of 11.0%, expiring on October 11, 2002.

     Under the Congress Facility, the Company may borrow up to the lesser of (a)
$35.0 million or (b) 85% of eligible accounts  receivable,  plus 60% of eligible
finished goods, plus 50% of raw materials.  Included within borrowings permitted
under the Congress Facility (and its borrowing  limitations) are $7.1 million in
term loans which are to be repaid in equal monthly installments of approximately
$127,000,  with the unpaid principal amount due on October 11, 2003,  unless the
Congress  Facility  is renewed at that time.  Also  included  within  borrowings
permitted


                                      F-18
<PAGE>

             SAFETY COMPONENTS INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


under the Congress Facility is a $3.0 million letter of credit facility, through
which the Company had  $350,000  of letters of credit  outstanding  at March 31,
2001. At March 31, 2001, the Company's  availability  for additional  borrowings
(under the maximum allowable limit) was approximately $17.7 million.

     The interest  rate on the Congress  Facility is variable,  depending on the
amount of the Company's Excess  Availability (as defined) at any particular time
and the Company's Fixed Charge  Coverage Ratio (as defined).  Under the terms of
the Congress  Facility,  the Company may make borrowings  based on prime rate or
Eurodollar rate, in each case with an applicable  margin applied to the rate. At
March 31,  2001,  the  margin  on prime  rate  loans was 0.0% and the  margin on
Eurodollar  rate loans was 2.0%. The Company is required to pay a commitment fee
of 0.375% on the unused portion of the Congress Facility.

     The  Congress  Facility  and the  Subordinated  Facility  both  require the
Company to meet a minimum adjusted net worth (as defined) covenant. In addition,
the Subordinated Facility provides for mandatory prepayments of principal in the
event that the  Company's  Consolidated  EBITDA  (as  defined)  exceeds  certain
specified levels following the Emergence Date. As of March 31, 2001, the Company
estimates  $750,000  in  prepayments  are  required to be made in the next year.
Additionally,  both the Congress Facility and the Subordinated  Facility contain
certain restrictive  covenants that impose limitations upon, among other things,
the  Company's  ability to borrow  monies  under the  Congress  Facility;  incur
indebtedness (including capitalized lease arrangements); become or remain liable
with respect to any guaranty;  make loans; acquire investments;  declare or make
dividends  (no  dividends are permitted to be repaid to holders of the Company's
common stock) or other distributions;  merge, consolidate,  liquidate or dispose
of assets or  indebtedness;  incur liens;  issue  capital  stock;  or change its
business.  At March 31, 2001,  the Company was in compliance  with all financial
and non-financial covenants. Substantially all assets of the Company are pledged
as  collateral  for  the  borrowings   under  the  Congress   Facility  and  the
Subordinated Facility.

Pre-Chapter 11 Emergence

     On April 26,  2000,  the Safety  Filing  Group  received  Bankruptcy  Court
approval of a $30.6 million  senior DIP  financing  facility that it had entered
into with Bank of America, N.A. The senior DIP financing was expected to provide
adequate  funding for all  post-petition  trade and  employee  obligations,  the
partial  paydown of the  pre-petition  secured  debt and the  Company's  ongoing
operating  needs  during the  restructuring  process.  In  conjunction  with the
closing of the senior DIP financing  facility on May 9, 2000, the Senior Lenders
received a principal  paydown of  approximately  $17.0 million and retained as a
replacement of their  pre-petition  credit facility the remaining  approximately
$20.9 million portion of their indebtedness as an 11.0% per annum  post-petition
subordinated DIP facility.

 Other Long-term Obligations

     On July 10,  1998,  the  Company  entered  into a $10.0  million  financing
arrangement  with  KeyCorp  Leasing,  a division of Key  Corporate  Capital Inc.
("KeyCorp").  The KeyCorp  financing  agreement  has a  seven-year  term,  bears
interest at a rate of 1.25% over LIBOR  (7.65% at March 31,  2001) and  requires
monthly payments of approximately  $150,000 and is secured by certain  equipment
located at SCFTI.

     On June 4, 1997, the Company secured a $7.5 million  mortgage note facility
with Bank Austria.  The note is payable in semi-annual  installments of $375,000
through March 31, 2002, at which time the remaining  unpaid  balance is due, and
bears  interest at 1.0% over LIBOR (5.93% at March 31, 2001).  The assets of the
Company's Czech Republic facility secure the note.

     On April 1, 1999, the Company secured a $2.9 million mortgage note facility
with Deutsche Bank to purchase a facility in Germany. The note is secured by the
real estate in Germany acquired through the mortgage.  In July 1999, the Company
refinanced  the note and reduced the  outstanding  indebtedness  to $2.1 million
(currently  $1.8  million due to exchange  rates)  consisting  of two  tranches.
Tranche A totals  approximately  $1.1 million  bearing  interest at 4.05% and is
payable in  semi-annual  installments  of  approximately  $70,000  beginning  on
December 30, 2001 through June


                                      F-19
<PAGE>


             SAFETY COMPONENTS INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


30, 2009. Tranche B totals approximately  $674,000 bearing interest at 3.75% and
is payable in semi-annual  installments of approximately  $19,000 also beginning
on December 30, 2001 through June 30, 2019.

     On November 3, 1998,  the Company  entered into an unsecured  note facility
with A.I. Credit Corp. of $772,000 (including transaction and other fees), which
requires  monthly  payments of $29,000 through November 3, 2001 and bears stated
interest at 7.57%.

     Future annual minimum  principal  payments at March 31, 2001 are due in the
following fiscal years (in thousands):

              2002                                   $  8,525
              2003                                     22,024
              2004                                     11,888
              2005                                      1,965
              2006                                      6,582
              Thereafter                                1,082
                                                -------------
                                                     $ 52,066
                                                =============

Note 8 Income Taxes

     Net operating loss ("NOL")  carryforwards from prior years were utilized to
offset the  cancellation of  indebtedness  ("COD") income in connection with the
Company's reorganization under Chapter 11. COD income is the amount by which the
indebtedness discharged  (approximately $96.8 million) exceeds any consideration
given in exchange  (approximately $51 million in equity value) therefore.  After
first applying NOL carryforwards to offset COD income, the excess COD income was
offset  against the tax basis of assets until all tax  attributes  of the parent
level of the Company were absolved.

     The provision  (benefit) for income taxes is comprised of the following (in
thousands):
<TABLE>
<CAPTION>

                                             Reorganized Company  |                      Predecessor Company
                                              --------------------|---------------------------------------------------------------
                                                  Period from     |     Period from
                                             October 11, 2000 to  | March 26, 2000 to        Year Ended            Year Ended
                                                March 31, 2001    |  October 10, 2000       March 25, 2000        March 27, 1999
                                              --------------------|---------------------------------------------------------------
<S>                                            <C>                    <C>                  <C>                    <C>
  Current taxes:                                                  |
     Federal                                   $            1,965 |                  --                    --    $             (930)
     State                                                    220 |                  --                    --                   110
     Foreign                                                 (416)|                  --                    --                  (138)
                                                                  |
Deferred taxes:                                                   |
     Federal                                                   -- |  $          (15,266)   $            5,280                (2,845)
     State                                                     -- |             (2,245)                  450                    45
     Foreign                                                   -- |                 --                   424                   437
                                               ------------------ | ------------------    ------------------    ------------------
                                               $            1,769 | $          (17,511)   $            6,154    $           (3,321)
                                               ================== | ==================    ==================    ==================

</TABLE>


                                      F-20
<PAGE>


             SAFETY COMPONENTS INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     The provision  (benefit) for income taxes differs from the amount  computed
by  applying  the  federal  income  tax rate to income  (loss)  from  continuing
operations before income taxes as follows:
<TABLE>
<CAPTION>

                                               Reorganized Company                   Predecessor Company
                                              ----------------------|-----------------------------------------------------
                                                   Period from      |     Period from
                                               October  11, 2000 to |   March 26, 2000 to      Year Ended     Year Ended
                                                 March 31, 2001     |   October 10, 2000     March 25, 2000  March 27, 1999
                                              ----------------------|-----------------------------------------------------
<S>                                                        <C>                 <C>               <C>             <C>
Expected taxes at federal statutory rate                   34%      |          (34%)             (34%)           (34%)
State income taxes, net of federal benefits                 3       |           (1)                -                -
Foreign earnings taxed at different rates                   3       |            -                (2)               1
Valuation allowance on deferred tax assets                  -       |          (30)               35               11
Recovery of non-taxable bankruptcy expense                 (5)      |            -                 -                -
Non-deductible intangibles and other, net                   5       |           18                22                2
                                              ----------------------|------------------ ----------------- ----------------
                                                           40%      |          (47)%               21%              (20%)
                                              ======================|================== ================= ================
</TABLE>

     The following summarizes the deferred tax assets  (liabilities)  recognized
in the accompanying consolidated balance sheets (in thousands):
<TABLE>
<CAPTION>
                                                                                                  Reorganized    |   Predecessor
                                                                                                     Company     |     Company
                                                                                                 --------------- |  ---------------
                                                                                                 March 31, 2001  |  March 25, 2000
                                                                                                 --------------- |  ---------------
<S>                                                                                              <C>                <C>
Deferred tax assets (liabilities):                                                                               |
      Accrued liabilities                                                                        $         1,860 |  $         1,032
      Inventory and receivables                                                                              934 |              519
      Property, plant and equipment                                                                       (4,447)|           (6,240)
      Accruals for discontinued operations                                                                 1,441 |               --
      Intangibles                                                                                           (410)|           (2,851)
      Net operating loss acquired from Valentec                                                               -- |            1,674
      Federal net operating loss                                                                              -- |           15,537
      Foreign net operating loss                                                                             622 |              622
      Other                                                                                                      |
                                                                                                              -- |              (38)
                                                                                                 --------------- |  ---------------
           Net deferred tax assets before valuation allowances                                                -- |           10,255
      Valuation allowance on deferred tax assets                                                              -- |          (11,797)
                                                                                                 --------------- |  ---------------
           Net deferred tax liabilities                                                          $            -- |  $        (1,542)
                                                                                                 =============== |  ===============
                                                                                                                 |
Recognized as follows in the accompanying consolidated balance sheets:                                           |
      Current deferred tax assets                                                                $         2,000 |
      Long-term deferred tax liabilities                                                                  (2,000)|           (1,542)
                                                                                                 --------------- |  ---------------
           Net deferred tax liabilities                                                          $            -- | $        (1,542)
                                                                                                 =============== | ===============
</TABLE>

     Current  deferred tax assets are  included in "prepaid  and other"  current
assets and long-term  deferred tax liabilities are included in "other  long-term
liabilities" in the accompanying consolidated balance sheets.

     No taxes  have been  provided  relating  to the  possible  distribution  of
approximately   $12.7  million  of  undistributed   earnings  considered  to  be
permanently reinvested in foreign operations.

Note 9 Commitments and Contingencies

Legal proceedings

     The Chapter 11 cases remain open until all claims,  disputes and  pleadings
are resolved  before the  Bankruptcy  Court.  At March 31, 2001, the Company has
material  disputes  with  respect to a $2.7 million  claim based upon  rejection
damages under a lease at a former facility in Costa Mesa,  California.  Based on
advice  from  outside  legal  counsel,  management  believes  that  an  adequate
liability has been established for this matter at March 31, 2001.


                                      F-21
<PAGE>


             SAFETY COMPONENTS INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     The Company and several of its  present or former  officers  and  directors
were named defendants in a class action lawsuit commenced by shareholders of the
Company in the United  States  District  Court for the  District  of New Jersey.
Eight  separate  lawsuits  were  filed,   alleging  violations  of  the  federal
securities  laws,  and were  consolidated  into one  action.  The  parties  have
executed  an  Agreement  of  Settlement,  dated  April 16,  2001,  to settle the
consolidated class action litigation for $4.0 million.  The Company's directors'
and officers'  insurance  carrier will satisfy the  settlement  obligations  and
accordingly, such resolution has no effect on the Company's financial condition,
results of operations or cash flows.

     From time to time,  the Company is a defendant in legal  actions  involving
claims arising in the normal course of business.  The Company believes that as a
result of its legal defenses none of these actions  presently pending would have
a material  adverse effect on its financial  position,  results of operations or
cash flows.

Operating leases

     The Company has  non-cancelable  operating  leases for equipment and office
space that expire at various dates through 2009.  Certain of the lease  payments
are subject to adjustment  for inflation.  The Company  incurred rent expense of
$1.4 million,  $1.5  million,  $2.9 million and $2.6 million for the period from
October  11, 2000 to March 31,  2001,  the period from March 26, 2000 to October
10,  2000  and  for  the  years  ended  March  25,  2000  and  March  27,  1999,
respectively.

     Future  annual  minimum  lease  payments for all  non-cancelable  operating
leases as of March 31, 2001 are as follows (in thousands):

               2002                           $1,773
               2003                            1,238
               2004                              393
               2005                              304
               2006                              304
               Thereafter                        609
                                        ------------
                                              $4,621
                                        ============

Environmental issues

     The Company has identified two areas of  underground  contamination  at the
Company's  facility  in Galion,  Ohio.  One area  involves a  localized  plating
solution  spill.  The second area  involves a  chlorinated  solvent spill in the
vicinity of a former  above  ground  storage  area.  The  Company  has  retained
environmental   consultants  to  quantify  the  extent  of  this  problem.  Such
environmental   consultants  estimate  that  the  Company's  voluntary  plan  of
remediation  could  take three to five years to  implement,  followed  by annual
maintenance.  The  consultants  also  estimate  that  remediation  costs will be
approximately  $250,000,  which  the  Company  had  accrued  in other  long-term
liabilities  at March 31, 2001 and March 25,  2000.  However,  depending  on the
actual extent of impact to the Company or more  stringent  regulatory  criteria,
these  costs  could  be  higher.  Additionally,   an  underground  contamination
involving machinery fluids exists at the former Valentec Wells facility in Costa
Mesa,  California  and the Regional  Water Quality  Control Board has approved a
site remediation plan. The remediation plan currently  involves the simultaneous
operation of a groundwater and vapor extraction system. Such plan is expected to
take approximately five years to implement at an estimated cost of approximately
$368,000.  To date, the Company has spent  approximately  $325,000  implementing
such plan with approximately one year remaining. The additional anticipated cost
for that year is accrued for as of March 31, 2001.  In addition,  SCFTI has been
identified along with numerous other parties as a Potentially  Responsible Party
at the Aquatech Environmental, Inc. Superfund Site. The Company believes that it
is a de minimis  party with respect to the site and that future  clean-up  costs
incurred by the Company will not be material.

     A Phase II study revealed limited organic groundwater  contamination at the
SCFTI facility in South Carolina in 1997. At the time of the Company's  purchase
of such facility, $185,000 of the purchase price thereof was placed in


                                      F-22
<PAGE>


             SAFETY COMPONENTS INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


escrow to pay for, if necessary,  environmental  remediation  and  monitoring at
such facility.  Based on the results of the groundwater  monitoring that already
has been  conducted,  and on the Company's  discussions  with the South Carolina
Department of Health and Environmental Control ("DHEC"), no further work will be
required and the escrow account was liquidated in fiscal year 2001.

     Additionally,  low  levels  of  contaminants  were  found at  SCFTI  during
groundwater  sampling in 1998. In February 1999, the facility  received a notice
letter  from  DHEC   regarding  the   groundwater   contamination.   While  DHEC
acknowledges  that there does not appear to be an active source for  groundwater
impact at the  facility,  it required  the  facility to perform  sampling of two
existing  monitoring wells located on the property for contaminants.  Low levels
of  contaminants  again were  detected.  DHEC has requested that the Company (i)
confirm that no  residential  wells exist in the area,  (ii) perform  additional
sampling,   and  (iii)  propose  a  program  for  in-site   remediation  of  the
groundwater,   involving  injection  of  nutrients  to  biodegrade  the  organic
compounds in the groundwater. The Company does not believe that these costs will
be material.

     In the opinion of management, no material expenditures beyond those accrued
at March 31,  2001 will be  required  for the  Company's  environmental  control
efforts and the final outcome of these matters will not have a material  adverse
effect on the Company's financial position or results of future operations.  The
Company   believes   that  it  currently  is  in  compliance   with   applicable
environmental  regulations  in all material  respects.  Management's  opinion is
based on the advice of independent consultants on environmental matters.

Note 10 Product and Geographic Information

     The Company  attributes its revenues from external customers and long-lived
assets to a particular  country based on the geographic  location of each of the
Company's production  facilities.  Summarized  financial  information by product
type and geographic area is as follows:
<TABLE>
<CAPTION>

                                                         Reorganized Company                   Predecessor Company
                                                         -------------------|-------------------------------------------------------
Revenues from external                                   October 11, 2000 to| March 26, 2000 to    Year ended          Year ended
customers                                                   March 31, 2001  | October 10, 2000    March 25, 2000     March 27, 1999
                                                         -------------------|-------------------------------------------------------
<S>                                                        <C>                <C>                <C>                <C>
United States                                                               |
    Airbag Fabric                                          $         17,883 | $         26,288   $         46,205   $         47,768
    Technical Fabric                                                 11,488 |           12,576             24,624             23,936
Mexico                                                                      |
    Airbag Cushions                                                  27,180 |           33,703             46,652             33,888
Germany                                                                     |
    Airbag Cushions                                                  21,679 |           22,409             54,222             58,697
Other European Countries                                                    |
    Airbag Cushions                                                  13,822 |           14,163             22,964             14,059
                                                           ---------------- | ----------------   ----------------   ----------------
Total Net Sales                                            $         92,052 | $        109,139   $        194,667   $        178,348
                                                           ================ | ================   ================   ================
</TABLE>



                                      F-23
<PAGE>


             SAFETY COMPONENTS INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>

Long-lived Assets at Fiscal Year End:   Reorganized Company | Predecessor Company
                                        ------------------- | -------------------
                                           March 31, 2001   |   March 25, 2000
                                           --------------   |   --------------
<S>                                            <C>                 <C>
United States                                  $35,853      |      $52,527
                                                            |
Mexico                                           4,560      |        6,811
                                                            |
Germany                                          9,543      |       21,807
                                                            |
Other European Countries                        12,952      |       15,119
                                               -------      |      -------
                                                            |
Total Long-lived Assets                        $62,908      |     $96,264
                                               =======      |     =======

</TABLE>

Note 11 Employee Benefit Plans

     The Company has a defined  contribution plan qualified under Section 401(k)
of the  Internal  Revenue  Code for eligible  employees.  The Safety  Components
International,  Inc. 401(k) Plan (the "401(k) Plan") provides for  discretionary
employer  contributions.  The 401(k) Plan  provides for a Company match equal to
50% of the employee's  contribution up to 6% of the employee's salary.  Employer
contributions  become 100% vested after two years of vested service. The Company
contributed approximately $156,000,  $175,000,  $403,000 and $398,000 during the
period from  October 11, 2000 to March 31,  2001,  period from March 26, 2000 to
October  10,  2000,  and  years  ended  March  25,  2000  and  March  27,  1999,
respectively, to the 401(k) Plan.

Note 12 Common Stock and Stock Warrants

     Pursuant to the Restructuring  Agreement discussed in Note 1, the claims of
the Noteholders were converted into the right to receive 4,840,774 shares of the
Company's  common  stock  on  the  Emergence  Date  (4,816,574   shares  to  the
Noteholders and 24,200 shares to the financial advisors of the Noteholders). The
pre-bankruptcy  common  stock,  excluding  stock  held by Robert A.  Zummo,  the
Company's  former  Chairman and Chief  Executive  Officer,  was  converted  into
159,226 shares of the Company's  post-bankruptcy  common stock, including 39,619
shares of treasury stock (aggregate 5,000,000 shares issued and 4,960,381 shares
outstanding) and warrants to acquire an additional 681,818 shares of such common
stock on the Emergence  Date.  All other options and warrants were  cancelled on
the Emergence Date.

     The warrants that were granted pursuant to the  Restructuring  Agreement to
purchase  681,818 shares of the Company's common stock have an exercise price of
$19.99 per share and  expire on or before  April 10,  2003.  The  warrants  were
assigned an estimated fair value at October 10, 2000, based on the Black-Scholes
model, of $34,000.  Since the strike price of the warrants is in excess of their
fair value at date of grant,  no  compensation  expense  was  recognized  on the
warrants.  Such  warrants  were not included in computing  diluted  earnings per
share for the  period  from  October  11,  2000 to March 31,  2001  because  the
exercise  price of the  warrants  exceeds  the fair  market  value of the common
Stock.


                                      F-24
<PAGE>

             SAFETY COMPONENTS INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 13 Comprehensive Income

     The  components  of   comprehensive   income  (loss)  are  as  follows  (in
thousands):
<TABLE>
<CAPTION>

                                Reorganized Company                           Predecessor Company
                               --------------------------|---------------------------------------------------------------
                                    Period from          |      Period from          Year ended          Year ended
                                  October 11, 2000       |    March 26, 2000
                                 To March 31, 2001       |  To October 10, 2000    March 25, 2000      March 27, 1999
                               --------------------------|---------------------------------------------------------------
<S>                              <C>                        <C>                    <C>                  <C>
Net income (loss)                $         1,250         |  $           8,067      $        (35,145)    $      (13,663)
Foreign currency                                         |
     translation adjustment                   97         |             (3,707)               (1,801)            (1,542)
                                 ------------------------|  --------------------   -------------------  -----------------
Comprehensive income                                     |
     (loss)                      $         1,347         |  $           4,360      $        (36,946)    $      (15,205)
                                =========================|  ====================   ===================  =================
</TABLE>

     At October  10,  2000,  in  accordance  with fresh  start  accounting,  all
intercompany  loans were  translated  at their  current  translation  rates and,
accordingly,  the cumulative  translation  adjustment  within the  stockholders'
equity section of the consolidated balance sheet was zero.

Note 14 Accounting Standard Adopted After Fiscal Year End

     The  Financial  Accounting  Standards  Board issued  Statement of Financial
Accounting  Standards ("SFAS") 133,  "Accounting for Derivative  Instruments and
Hedging  Activities" which, as amended, is effective for periods beginning after
June 15, 2000. Accordingly,  this standard is effective for the Company's fiscal
year 2002,  commencing on April 1, 2001. This new standard requires  recognition
of all derivatives,  including certain derivative  instruments embedded in other
contracts,  as either  assets  or  liabilities  in the  statement  of  financial
position and  measurement of those  instruments  at fair value.  The adoption of
SFAS 133 on April 1, 2001, had no effect on the Company's consolidated financial
statements.

Note 15 Unaudited Quarterly Results

     Unaudited quarterly financial information for fiscal years 2001 and 2000 is
set forth below (in thousands,  except per share data). All previously  reported
information for the Predecessor Company has been reclassified for the effects of
the  former  metal  and  defense  operations  that  have  been  reclassified  as
Discontinued Operations.  In addition, per share data of the Predecessor Company
is not  meaningful  due to  the  significant  change  in the  Company's  capital
structure in connection with the Plan of Reorganization.
<TABLE>
<CAPTION>

                                                                                            Quarter Ended
                                                                     Predecessor Company                   Reorganized Company
                                                             ------------------------------------|----------------------------------
                                                                 June 24,         October 10,    |   December 30,      March 31,
                                                                   2000               2000       |       2000            2001
                                                             ------------------------------------|----------------------------------
<S>                                                          <C>                <C>                <C>               <C>
Fiscal 2001                                                                                      |
Net sales                                                    $        52,048    $        57,091  | $        42,071   $        49,981
Gross profit                                                           8,140              7,692  |           5,418             7,297
Income from operations                                                 4,679              4,184  |           2,024             4,673
Income (loss) before extraordinary gain                               (2,068)           (19,235) |           1,225                25
Net income (loss)                                                     (2,641)            10,708  |           1,225                25
Net income per share, basic and diluted                                   --                 --  |            0.25              0.00
</TABLE>


                                      F-25
<PAGE>


             SAFETY COMPONENTS INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                                                                                             Quarter Ended
                                                                                          Predecessor Company
                                                                  -----------------------------------------------------------------
                                                                     June 26,      September 25,     December 25,       March 25,
                                                                       1999            1999             1999              2000
                                                                  -----------------------------------------------------------------
<S>                                                               <C>              <C>               <C>               <C>
Fiscal 2000
Net sales                                                         $     52,546     $     46,040      $     47,714      $     48,367
Gross profit                                                             7,368            6,215             6,141             6,694
Income (loss) from operations                                            4,073            1,994             1,294              (505)
Net income (loss)                                                          641           (1,431)          (19,238)          (15,117)

</TABLE>

Note 16 Subsequent Event (Unaudited)

     On May 18,  2001,  the Safety  Components  International,  Inc.  2001 Stock
Option Plan ("Stock  Option  Plan")  became  effective  pursuant to  shareholder
approval. The Stock Option Plan provides for the issuance of options to purchase
up to an  aggregate of 900,000  shares of SCI's  Common  Stock to key  officers,
employees, directors and consultants of SCI or its affiliates. Unless designated
otherwise  by the  Compensation  Committee  of the Board of  Directors,  options
granted pursuant to the Stock Option Plan are intended to be nonstatutory  stock
options.  The Compensation  Committee determines the exercise price and the term
of options granted pursuant to the Stock Option Plan at the time of grant.  Each
award is  determined  by the  Compensation  Committee  on an  individual  basis.
Options to purchase a total of approximately 522,100 shares of common stock at a
price of $8.75 per share  (subject to adjustment in certain  circumstances),  to
become  exercisable  over a period of three  years from the date of grant on May
18,  2001,  were  granted by the  Compensation  Committee  to  approximately  50
employee participants and to the outside directors under the Stock Option Plan.


                                      F-26
<PAGE>



             SAFETY COMPONENTS INTERNATIONAL, INC. AND SUBSIDIARIES

         Schedule II - Valuation and Qualifying Accounts (in thousands)
<TABLE>
<CAPTION>
                                                                                          Additions
                                                                                          Charged to
                                                                            Beginning      Costs and      Deductions/     Ending
                                                                             Balance        Expenses      Write-Offs      Balance
                                                                           ------------   ------------   ------------   ------------
<S>                                                                        <C>            <C>            <C>            <C>
For the year ended March 27, 1999:
    Allowance for doubtful accounts                                        $        130   $      1,780   $      1,490   $        420
    European relocation and reorganization reserve                                2,500             --          1,243          1,257
    Relocation and reorganization reserve                                            --            500             --            500
    Reserve on deferred tax assets                                                   --          1,674             --          1,674
                                                                           ------------   ------------   ------------   ------------
                                                                           $      2,630   $      3,954   $      2,733   $      3,851
                                                                           ============   ============   ============   ============
For the year ended March 25, 2000:
    Allowance for doubtful accounts                                        $        420   $        156   $        370   $        206
    European relocation and reorganization reserve                                1,257             --          1,257             --
    Relocation and reorganization reserve                                           500             23            147            376
    Reserve for receivable from affiliate                                            --            600             --            600
    Reserve on deferred tax assets                                                1,674         10,123             --         11,797
                                                                           ------------   ------------   ------------   ------------
                                                                           $      3,851   $     10,902   $      1,774   $     12,979
                                                                           ============   ============   ============   ============
For the period from March 26, 2000 to October 10, 2000:
    Allowance for doubtful accounts                                        $        206   $      1,081   $         --   $      1,287
    Relocation and reorganization reserve                                           376             --            376             --
    Reserve for receivable from affiliate                                           600             --             --            600
    Reserve on deferred tax assets                                               11,797             --         10,898            899
                                                                           ------------   ------------   ------------   ------------
                                                                           $     12,979   $      1,081   $     11,274   $      2,786
                                                                           ============   ============   ============   ============
For the period from October 11, 2000 to March 31, 2001:
    Allowance for doubtful accounts                                        $      1,287   $        608   $        944   $        951
    Reserve for receivable from affiliate                                           600             --             --            600
    Reserve on deferred tax assets                                                  899             --            899             --
                                                                           ------------   ------------   ------------   ------------
                                                                           $      2,786   $        608   $      1,843   $      1,551
                                                                           ============   ============   ============   ============
</TABLE>



<PAGE>



                  EXHIBIT 21.1 - Subsidiaries of The Registrant


<TABLE>
<CAPTION>

<S>                                                                      <C>                   <C>
----------------------------------------------------------------------------------------------------------------------
                                                                         Jurisdiction          Names under which
                                                                         Where                 subsidiary does
Name of Subsidiary                                                       Organized             Business
----------------------------------------------------------------------------------------------------------------------
Safety Components Fabric Technologies, Inc.                              Delaware              Safety Components
                                                                                               Fabric Technologies,
                                                                                               Inc.
----------------------------------------------------------------------------------------------------------------------
                                                                                               Automotive Safety
Automotive Safety Components International, Inc.                         Delaware              Components
                                                                                               International, Inc.
----------------------------------------------------------------------------------------------------------------------
ASCI Holdings Germany (DE), Inc.                                         Delaware
----------------------------------------------------------------------------------------------------------------------
ASCI Holdings Mexico (DE), Inc.                                          Delaware
----------------------------------------------------------------------------------------------------------------------
ASCI Holdings UK (DE), Inc.                                              Delaware
----------------------------------------------------------------------------------------------------------------------
ASCI Holdings Czech (DE), Inc.                                           Delaware
----------------------------------------------------------------------------------------------------------------------
Automotive Safety Components International GmbH & Co. KG                 Germany               Automotive Safety
                                                                                               Components
                                                                                               International GmbH &
                                                                                               Co. KG
----------------------------------------------------------------------------------------------------------------------
Automotive Safety Components International Verwaltungs GmbH              Germany               Automotive Safety
                                                                                               Components
                                                                                               International
                                                                                               Verwaltungs GmbH
----------------------------------------------------------------------------------------------------------------------
Automotive Safety Components International S.A. de C.V.                  Mexico                Automotive Safety
                                                                                               Components
                                                                                               International, S.A.
                                                                                               de C.V.
----------------------------------------------------------------------------------------------------------------------
Automotive Safety Components International Limited                       United Kingdom        Automotive Safety
                                                                                               Components
                                                                                               International Limited
----------------------------------------------------------------------------------------------------------------------
Automotive Safety Components International, s.r.o.                       Czech Republic        Automotive Safety
                                                                                               Components
                                                                                               International s.r.o.
----------------------------------------------------------------------------------------------------------------------
Galion, Inc.                                                             Delaware              Galion, Inc.
----------------------------------------------------------------------------------------------------------------------
Valentec Wells, LLC                                                      Delaware              Valentec Wells, LLC
(f/k/a Valentec International Corporation, LLC)                                                Valentec Wells
----------------------------------------------------------------------------------------------------------------------
</TABLE>