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


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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                    FORM 10-Q

            [X] Quarterly Report Pursuant to Section 13 or 15(d) of
                       The Securities Exchange Act of 1934

               For the quarterly period ended: September 30, 1998
                                       or

            [ ] Transition Report Pursuant to Section 13 or 15(d) of
                       The Securities Exchange Act of 1934

                           Commission File No. 1-11474

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

                            BREED TECHNOLOGIES, INC.
               (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

                               Delaware 22-2767118
         (STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)

                             5300 Old Tampa Highway
                             Lakeland, Florida 33811
              (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

                                 (941) 668-6000
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

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

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

      As of  November  12,  1998,36,849,438  shares of the  registrant's  common
stock, par value $.01 per share, were outstanding.


-------------------------------------------------------------------------------
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<PAGE>









                                     INDEX


PART I.     FINANCIAL INFORMATION                                         PAGE


ITEM 1.  FINANCIAL STATEMENTS

            Consolidated Condensed Balance Sheets - September 30, 1998
               (Unaudited)and June 30, 1998 ...........................     1

            Consolidated Condensed Statements of Operations (Unaudited)
               Three months ended September 30, 1998 and 1997..........     3

            Consolidated Condensed Statements of Cash Flows (Unaudited)
               Three months ended September 30, 1998 and 1997 .........     4

            Notes to Consolidated Condensed Financial Statements
               (Unaudited) ............................................     5

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
             CONDITION AND RESULTS OF OPERATIONS ......................    16


PART II.  OTHER INFORMATION


ITEM 3. Legal Proceedings..............................................    20

ITEM 4. Submission of Matters to a Vote of Security Holders............    20

ITEM 6. Exhibits and Reports on Form 8-K ..............................    20

SIGNATURES ............................................................    21




                                        i

<PAGE>




                         PART I - FINANCIAL INFORMATION6


ITEM 1.     FINANCIAL STATEMENTS

<TABLE>
BREED TECHNOLOGIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
IN MILLIONS, EXCEPT FOR SHARE DATA

<CAPTION>
                                            September 30,    June 30,
                                                1998           1998
                                            ------------    ----------
                                            (Unaudited)
<S>     <C>    <C>    <C>    <C>    <C>    <C>
ASSETS
Current Assets:
  Cash and cash equivalents                   $21.4           $44.4
  Accounts receivable, principally trade      283.4           275.3
  Inventories:
   Raw materials                               56.8            75.0
   Work in process                             31.2            18.2
   Finished goods                              29.3            15.9
                                           --------        --------
      Total Inventories                       117.3           109.1
                                           --------        --------
  Income tax receivable                         2.2            64.6
  Prepaid expenses and other current assets    31.6            27.7
                                           --------        --------

      Total Current Assets                    455.9           521.1

Property, plant and equipment, net            373.3           365.2
Intangibles, net                              696.4           692.1
Net assets held for sale                       38.2            29.0
Other assets                                   49.4            42.5
                                           --------        --------
       Total Assets                        $1,613.2        $1,649.9
                                           ========        ========

See Notes to Consolidated Condensed Financial Statements.
</TABLE>

                                        1

<PAGE>


<TABLE>
BREED TECHNOLOGIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
IN MILLIONS, EXCEPT FOR SHARE DATA

<CAPTION>

                                            September 30,    June 30,
                                                1998           1998
                                            ------------    ----------
                                            (Unaudited)
<S>     <C>    <C>    <C>    <C>    <C>    <C>
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
  Notes payable and current portion of 
   long-term debt (Note 3)                      $42.2         $46.9 
  Accounts payable                              272.7         254.9
  Accrued expenses                              207.7         233.2
                                             --------      --------
      Total Current Liabilities                 522.6         535.0
                                             --------      --------

Long-term debt (Note 3)                         834.7         851.1
Other long-term liabilities                      25.7          25.6
                                             --------      --------
      Total Liabilities                       1,383.0       1,411.7
                                             --------      --------

Company obligated mandatorily redeemable 
 convertible preferred securities               250.0         250.0
Stockholders' Deficit:
 Common stock, par value $0.01, authorized 
  75,000,000  shares, issued and outstanding
  36,849,438 and 36,850,261 shares at 
  September 30, 1998 and June 30, 1998,
  respectively                                    0.4           0.4
 Series A Preference Stock par value $0.01,  
  authorized 5,000,000 shares, issued and 
  outstanding 1 share at September 30, 1998
  and June 30, 1998                                --            --
  Additional paid-in capital                    197.6         197.6
  Warrants                                        1.9           1.9
  Retained deficit                            (212.5)       (184.0)
  Accumulated other comprehensive
   income (Notes 4 and 5)                       (7.0)        (27.4)
  Unearned compensation                         (0.2)         (0.3)
                                             --------      --------
   Total Stockholders' Deficit                 (19.8)        (11.8)
                                             --------      --------
      Total Liabilities and Stockholders'
       Deficit                               $1,613.2      $1,649.9
                                             ========      ========



See Notes to Consolidated Condensed Financial Statements.
</TABLE>



                                        2

<PAGE>


<TABLE>
BREED TECHNOLOGIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
IN MILLIONS, EXCEPT PER SHARE DATA


<CAPTION>

                                                Three Months Ended
                                                  September 30,
                                                ------------------
                                                 1998        1997
<S>     <C>    <C>    <C>    <C>    <C>    <C>
Net sales                                       $339.1      $195.2

Cost of sales                                    291.7       166.9
                                                ------      ------
Gross profit                                      47.4        28.3
                                                ------      ------
Operating expenses:
  Selling, general and administrative expenses    20.9        16.2
  Research, development and engineering expenses  23.7         8.9
  Amortization of intangibles                      5.8         2.0
                                                ------      ------
   Total operating expenses                       50.4        27.1
                                                ------      ------
      Operating income (loss)                    (3.0)         1.2
Interest expense                                  22.1         8.4
Other income (expense), net                        1.0       (0.4)
                                                ------      ------
      Earnings (loss) before income taxes, and 
       distributions on Company obligated 
       mandatorily redeemable convertible
       preferred securities                      (24.1)      (7.6)         
Income taxes (benefit) (Note 6)                      --      (3.4)
Distributions on Company obligated mandatorily
 redeemable convertible preferred securities        4.4         --
                                                 ------     ------
      Net (loss)                                $(28.5)     $(4.2)
                                                 ======     ======
Earnings (loss) per share (Note 7):
      Basic earnings (loss)                     $(0.77)    $(0.13)
                                                ======      ======
      Diluted earnings (loss)                   $(0.77)    $(0.13)
                                                ======      ======
Shares used for computation:
      Basic                                     36.850      31.682
      Diluted                                   36.850      31.682


See Notes to Consolidated Condensed Financial Statements.
</TABLE>


                                        3

<PAGE>


<TABLE>
BREED TECHNOLOGIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
IN MILLIONS

<CAPTION>

                                                Three Months Ended September 30,
                                                  -------------------------
                                                    1998             1997
                                                  ---------        --------
<S>     <C>    <C>    <C>    <C>    <C>    <C>
Cash Flows from Operating Activities:
  Net (loss)                                        $(28.5)          $(4.2)
Adjustments to reconcile net loss to net cash 
 provided by (used in) operating activities:
  Depreciation and amortization                        18.6            12.7
  Changes in working capital items and other           33.6          (16.5)
                                                  ---------        --------
     Net cash provided by (used in)operating
      activities                                       23.7           (8.0)
                                                  ---------        --------

Cash Flows from Investing Activities:
  Capital expenditures                               (18.5)           (6.9)
  Proceeds from sale of assets                          0.1             0.4
                                                  ---------        --------
     Net cash used in investing activities           (18.4)           (6.5)
                                                  ---------        --------

Cash Flows from Financing Activities:
  Proceeds from (repayment of) debt, net             (21.1)            13.1
  Cash dividends paid                                    --           (2.2)
  Proceeds from common stock issued                      --             0.2
                                                  ---------        --------
      Net cash provided by (used in)financing 
       activities                                    (21.1)            11.1
                                                  ---------        --------
Effect of exchange rate changes on cash               (7.2)           (3.2)
                                                  ---------        --------
Net decrease in cash and cash equivalents            (23.0)           (6.6)
Cash and cash equivalents at beginning of period       44.4            18.7
                                                  ---------        --------
Cash and cash equivalents at end of period            $21.4           $12.1
                                                  =========        ========



See Notes to Consolidated Condensed Financial Statements.
</TABLE>





















                                        4

<PAGE>



              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION

The accompanying  unaudited consolidated condensed financial statements of Breed
Technologies,  Inc. (the  "Company" or "Breed") have been prepared in accordance
with generally accepted accounting  principles for interim financial information
and  with the  instructions  to Form  10-Q and  Article  10 of  Regulation  S-X.
Accordingly,  they do not include all of the  information  and notes required by
generally accepted accounting principles for complete financial  statements.  In
the opinion of  management,  all  adjustments  (consisting  of normal  recurring
accruals)  considered  necessary  for a fair  presentation  have been  included.
Operating  results  for the  three  months  ended  September  30,  1998  are not
necessarily  indicative  of the results that may be expected for the year ending
June 30, 1999. The  consolidated  financial  statements  include the accounts of
Breed and all majority owned subsidiaries. All significant intercompany accounts
and transactions  have been eliminated.  For further  information,  refer to the
consolidated  financial  statements and notes thereto  included in the Company's
Annual Report on Form 10-K/A for the year ended June 30, 1998.

POST RETIREMENT HEALTH CARE BENEFITS- The Company's  accumulated post retirement
benefit obligation of $3.5 million as of June 30, 1998 is unfunded.

NOTE 2 - REPOSITIONING AND IMPAIRMENT CHARGES

During  the  quarter  ended  December  31,  1997,   the  Company   formulated  a
repositioning   program   which  is  intended  to  (i)  enhance  the   Company's
competitiveness  and productivity,  (ii) reduce costs and increase asset control
and (iii)  improve  processes  and systems (the  "Repositioning  Program").  The
Company expects that the Repositioning  Program will be substantially  completed
by March 31, 1999.

During  the three  months  ended  September  30,  1998,  the  repositioning  and
impairment accrual was reduced by $5.7 million as a result of cash charges.  The
following table sets forth the details and the cumulative  activity  relating to
the repositioning and impairment charge as of September 30, 1998:
<TABLE>
<CAPTION>

                                                                  Accrual
                              Accrual                            Balance at
                            Balance at      Cash     Non-Cash    September
IN MILLIONS                June 30, 1998 Reductions Reductions    30, 1998
-------------------------- ------------- ---------- ----------- ------------
<S>                                <C>         <C>          <C>        <C>  
Headcount reductions               $15.9       $3.2         $--        $12.7
Facility consolidations             18.9        2.5          --         16.4
-------------------------- ------------- ---------- ----------- ------------
     Total                         $34.8       $5.7         $--        $29.1
========================== ============= ========== =========== ============
</TABLE>











                                        5

<PAGE>



NOTE 3 - LONG-TERM DEBT
<TABLE>

A summary of long-term debt follows:
<CAPTION>

                                                        Three months ended,
                                                     -------------------------
                                                     September 30,    June 30,
                                                         1998           1998
                                                     ------------    -----------
<S>     <C>    <C>    <C>    <C>    <C>    <C>
Term Loan A, interest at 7.815% and 7.825% at 
  September 30, 1998, and June 30, 1998, respectively,
  installments due 1999 through 2004                     $297.6         $309.2
Term Loan B, interest at 8.065% and 8.075% at 
  September 30, 1998, and June 30, 1998, respectively, 
  installments due 2004 through 2006                      190.4          197.8
Senior Subordinated Notes, interest at
  9.25%, due April 15, 2008                               330.0          330.0
Foreign short-term lines of credit, weighted average
  interest rate of 6.8%, installments due various          29.4           30.4
Mortgages and equipment financing loans                    29.5           30.6
                                                     ------------    -----------

Total debt                                                876.9          898.0
                                                     ------------    -----------
Less current maturities                                    42.2           40.9
                                                     ------------    -----------
Total long-term debt                                     $834.7         $851.1
                                                     ============    ===========
</TABLE>

At  September  30,  1998,  the Company  had an  aggregate  of $488.0  million of
borrowings  outstanding  under the credit  facility and had aggregate  borrowing
availability  thereunder  of  $137.3  million.  During  the three  months  ended
September 30, 1998, the Company decreased its outstanding  indebtedness by $21.0
million.  The decrease resulted from a $19.0 million voluntary prepayment toward
outstanding  term loan balances  under the credit  facility and the repayment of
$2.0 million of borrowings  outstanding  under short-term lines of credit of the
Company's foreign subsidiaries.

NOTE 4 -COMPREHENSIVE INCOME

Effective July 1, 1998, the Company  adopted  Statement of Financial  Accounting
Standards No. 130, "Reporting  Comprehensive  Income" ("SFAS No. 130"). SFAS No.
130 establishes new rules for the reporting and display of comprehensive  income
and its  components.  The  adoption  of this  Statement  requires  that  foreign
currency  translation  adjustments  be included in other  comprehensive  income,
which prior to adoption were reported separately in stockholders'  equity. There
is no tax effect  because  the Company  intends to reinvest  earnings in foreign
business  operations.  Prior year financial statements have been reclassified to
conform to the requirements of SFAS No. 130.
<TABLE>

<CAPTION>
                                       Three months ended September 30,
                                         ---------------------------
                                            1998               1997
                                         ----------         ---------
<S>     <C>    <C>    <C>    <C>    <C>    <C>
Net (loss)                                 $(28.5)             $(4.2)
Foreign currency transistion adjustment       20.4              (3.2)
                                        ----------          ---------
Comprehensive income (loss)                 $(8.1)             $(7.4)
                                        ==========          =========
</TABLE>


                                        6

<PAGE>



NOTE 5 - FOREIGN CURRENCY TRANSLATIONS

The Company  translates  foreign  currencies  into U.S.  dollars using  year-end
exchange rates for foreign assets and liabilities and weighted average rates for
foreign  income and  expenses.  Translation  gains and losses  arising  from the
conversion of the foreign balance sheets and income statements into U.S. dollars
are reflected as a separate  component of  comprehensive  income and included in
other comprehensive income in accumulated stockholders' deficit. With respect to
operations in Mexico, the functional  currency is the U.S. dollar, and any gains
or losses from  translations are included  directly in income.  During the three
months ended September 30, 1998 major European currencies  strengthened relative
to the U.S. dollar.  As a result,  the conversion of foreign balance sheets into
U.S. dollars improved the foreign currency  translation  adjustment reported for
such three month period and  increased  the related  assets and  liabilities  as
measured in U.S. dollars. The change in the U.S. dollar during the quarter ended
September 30, 1998 did not have a material impact on the result of operations.

NOTE 6 -INCOME TAXES

During the three  months  ended  September  30,  1998,  the  Company  recorded a
domestic  benefit  of $0.5  million,  which was fully  offset by a $0.5  million
foreign  expense.  No other tax benefit was  recognized  for either  domestic or
foreign  purposes due to the  provisions  of  Statement of Financial  Accounting
Standards No. 109,  "Accounting  for Income Taxes" (SFAS No. 109).  SFAS No. 109
requires a valuation  allowance to reduce the  deferred tax assets  reported if,
based on the  weight  of the  evidence,  it is more  likely  than not that  some
portion or all of the deferred  tax assets will not be realized.  The need for a
valuation allowance was addressed  separately for domestic and foreign purposes.
For domestic purposes, the Company is in a cumulative loss position and pursuant
to SFAS No. 109, a valuation allowance was recorded by the Company to offset the
portion of the domestic  deferred tax asset which,  upon reversal,  could not be
carried back against prior years taxable income. A valuation  allowance has been
recognized to reduce to zero, foreign deferred tax assets,  primarily related to
net  operating  loss   carryforwards   in  Finland,   Spain  and  the  U.K.  and
restructuring  charges in Italy.  A portion of income taxes will be paid in some
foreign  jurisdictions  because  income  earned could not be offset  against net
operating losses.
























                                        7

<PAGE>



NOTE 7 - EARNINGS (LOSS) PER SHARE

The following  table sets forth the computation of the numerator and denominator
of the basic and diluted earnings (loss) per share calculations:
<TABLE>

<CAPTION>
                                                   Three Months Ended
                                                      September 30,
                                             ------------------------------
                                                 1998               1997
                                       (AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
<S>     <C>    <C>    <C>    <C>    <C>    <C>
BASIC EARNINGS PER SHARE

Net (loss) applicable to common stock           $(28.5)             $(4.2)
Weighted average common shares outstanding        36.850             31.682
                                            -----------        -----------
Basic earnings (loss) per share                 $(0.77)            $(0.13)
                                            ===========        ===========

DILUTED EARNINGS PER SHARE
Net (loss) applicable to common stock           $(28.5)             $(4.2)

Share computation:
  Weighted average common shares outstanding     36.850             31.682
  Effect of diluted securities:   
    Assumed exercise of stock options and warrants    *                  *
    Series A Preference Stock                         *                 --
    Company obligated mandatorily redeemable    
      convertible preferred securities                *                 --
                                                -----------        -----------
  Weighted average common shares outstanding
    as adjusted                                  36.850             31.682
                                                -----------        -----------
Diluted earnings (loss) per share               $(0.77)            $(0.13)
                                                ===========        ===========

  * ITEMS NOT ASSUMED IN THE COMPUTATION BECAUSE THEIR EFFECT IS ANTI-DILUTIVE
</TABLE>

Each Company Obligated Mandatory  Redeemable  Convertible  Preferred Security is
convertible,  at the option of the holder,  into shares of the Company's  common
stock,  at a conversion rate of 2.1973 shares of common stock for each Preferred
Security, subject to adjustment in certain circumstances.

Options to purchase  2,423,345  shares of common stock at prices  between $6.875
and $32.25 per share were  outstanding  as of  September  30,  1998 but were not
included in the  computation  of diluted  earnings per share  because the effect
would be anti-dilutive.

As part of the acquisition of VTI in June 1995, the Company issued to certain of
the former  stockholders  of VTI  warrants to  purchase up to 100,000  shares of
common stock  between July 1, 1998 and June 30,  2000,  at an exercise  price of
$25.75 per share. The 100,000 warrants have not been included in the computation
of diluted  earnings  per share for the three months  ended  September  30, 1998
because the effect would be anti-dilutive.

In connection  with the bridge loan credit  facility  entered into in connection
with the  acquisition  of the  safety  restraints  systems  business  ("SRS") of
AlliedSignal,  the Company  issued to  NationsBank,  N.A., a warrant to purchase
250,000  shares of common  stock of the Company at an exercise  price of $23.125
per share.  The 250,000  shares have not been  included  in the  computation  of
diluted earnings per share for the three months ended September 30, 1998 because
the effect would be anti-dilutive.



                                        8

<PAGE>



NOTE 8 - BSRS JOINT VENTURE

The Company and Siemens Aktiengesallschaft  ("Siemens") completed formation of a
joint venture,  known as BSRS Restraint Systems International  G.m.b.H. & Co. KG
("BSRS"),  in June 1998.  Pursuant to the joint  venture  agreement  between the
Company and Siemens,  on July 1, 1998,  the Company  transferred  various assets
relating  to the  development,  research  and  testing  of  integrated  occupant
protection systems having an aggregate value of $5.6 million to BSRS and Siemens
contributed its shares in PARS Ruckhaltesysteme  G.m.b.H.,  which operates crash
test facilities and develops occupant safety systems.

NOTE 9 - FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS AND NON-GUARANTOR
         SUBSIDIARIES

The Company conducts a significant portion of its business through subsidiaries.
On April 28, 1998,  the Company  issued and sold an aggregate of $330 million of
9.25%  Senior  Subordinated  Notes ("the  Notes").  The Notes of the Company are
guaranteed,  jointly  and  severally  on a  senior  subordinated  basis,  by the
domestic  subsidiaries of the Company (the "Subsidiary  Guarantors")  other than
BTI  Capital  Trust  and  certain  domestic  subsidiaries  owned  by  a  foreign
subsidiary  of the Company  (the  "Non-Guarantor  Subsidiaries").  The Notes are
effectively  subordinated  in right of  payment  to all  indebtedness  and other
liabilities (including trade payables) of the Non-Guarantor Subsidiaries.

Presented below are the condensed  consolidating  balance sheets as of September
30, 1998 and June 30, 1998, the condensed  consolidating statement of operations
for the  three  months  ended  September  30,  1998 and  1997 and the  condensed
consolidating  statement of cash flows for the three months ended  September 30,
1998 and 1997, for the Subsidiary  Guarantors,  the Non-Guarantor  Subsidiaries,
Parent only and the Company consolidated.





























                                        9

<PAGE>


<TABLE>
                    BREED TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATING BALANCE SHEET
                               SEPTEMBER 30, 1998
                                   (Unaudited)
                                   IN MILLIONS


                                      NON-
<CAPTION>
                                       SUBSIDIARY    GUARANTOR      PARENT
                                       GUARANTORS    SUBSIDIARIES    ONLY      ELIMINATIONS   CONSOLIDATED
                                       ----------    ----------     -------    ------------   -----------
<S>     <C>    <C>    <C>    <C>    <C>    <C>
ASSETS
Cash and cash equivalents                  $(7.0)         $17.5       $10.9             $--         $21.4
Accounts receivable, principally trade      130.9         149.2         3.3                         283.4
Inventories                                  56.3          61.0          --              --         117.3
Other current assets                        679.6          93.8         8.7         (748.3)          33.8
                                       ----------    ----------     -------    ------------   -----------
      Total current assets                  859.8         321.5        22.9         (748.3)         455.9
Property, plant and equipment, net          173.9         163.9        35.5                         373.3
Intangibles, net                            518.6         171.0         6.8                         696.4
Net assets held for sale                       --          38.2          --                          38.2
Other assets                                 35.1           5.6     1,034.5       (1,025.8)          49.4
      Total assets                       $1,587.4        $700.2     $1,099.7     $(1,774.1)      $1,613.2
                                       ==========    ==========     =======    ============   ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
  Notes payable and current portion of 
   long term debt                             $--         $34.0        $8.2             $--         $42.2
  Accounts payable                           87.2         179.0         6.5                         272.7
  Accrued expenses                          431.4         168.3       331.4         (723.4)         207.7
                                       ----------    ----------     -------    ------------   -----------
      Total current liabilities             518.6         381.3       346.1         (723.4)         522.6
Long-term debt                                 --          24.9       809.8              --         834.7
Other long-term liabilities                  13.9          13.6       (1.8)              --          25.7
                                       ----------    ----------     -------    ------------   -----------
      Total liabilities                     532.5         419.8     1,154.1         (723.4)       1,383.0
Company obligated mandatorily redeemable
 convertible preferred securities                            --       250.0              --         250.0
Stockholders' equity (deficit)            1,054.9         280.4     (304.4)       (1,050.7)        (19.8)
                                       ----------    ----------     -------    ------------   -----------
      Total liabilities and
       stockholders' equity (deficit)    $1,587.4        $700.2     $1,099.7     $(1,774.1)      $1,613.2
                                       ==========    ==========     =======    ============   ===========


</TABLE>







                                       10

<PAGE>


<TABLE>
                    BREED TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATING BALANCE SHEET
                                  JUNE 30, 1998
                                   (Unaudited)
                                   IN MILLIONS


<CAPTION>
                                      NON-
                                       SUBSIDIARY    GUARANTOR      PARENT
                                       GUARANTORS    SUBSIDIARIES    ONLY      ELIMINATIONS   CONSOLIDATED
                                       ----------    ----------     -------    ------------   -----------
<S>     <C>    <C>    <C>    <C>    <C>    <C>
ASSETS
Cash and cash equivalents                 $(22.9)         $19.0       $48.3             $--         $44.4
Accounts receivable, principally trade      138.8         135.9         0.6              --         275.3
Inventories                                  57.3          51.8          --              --         109.1
Other current assets                        527.5          72.1        67.4         (574.7)          92.3
                                       ----------    ----------     -------    ------------   -----------
      Total current assets                  700.7         278.8       116.3         (574.7)         521.1
Property, plant and equipment, net          203.1         129.5        32.6              --         365.2
Intangibles, net                            431.1         257.8         3.2              --         692.1
Net assets held for sale                       --          29.0          --              --          29.0
Other assets                                 25.0          44.4     1,015.4       (1,042.3)          42.5
      Total assets                       $1,359.9        $739.5     $1,167.5     $(1,617.0)      $1,649.9
                                       ==========    ==========     =======    ============   ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
  Notes payable and current portion of 
   long term debt                             $--         $35.2       $11.7             $--         $46.9
  Accounts payable                           84.9         158.9        11.1              --         254.9
  Accrued expenses                          229.0         235.4       346.6         (577.8)         233.2
                                       ----------    ----------     -------    ------------   -----------
      Total current liabilities             313.9         429.5       369.4         (577.8)         535.0
Long-term debt                                 --          25.8       825.3                         851.1
Other long-term liabilities                  10.5          16.1       (1.0)              --          25.6
                                       ----------    ----------     -------    ------------   -----------
      Total liabilities                     324.4         471.4     1,193.7         (577.8)       1,411.7
Company obligated mandatorily redeemable
 convertible preferred securities              --            --       250.0              --         250.0
Stockholders' equity (deficit)            1,035.5         268.1     (276.2)       (1,039.2)        (11.8)
                                       ----------    ----------     -------    ------------   -----------
      Total liabilities and 
       stockholders' equity (deficit)    $1,359.9        $739.5     $1,167.5     $(1,617.0)      $1,649.9
                                       ==========    ==========     =======    ============   ===========
</TABLE>









                                       11

<PAGE>


<TABLE>

                    BREED TECHNOLOGIES, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATING STATEMENT OF OPERATION
                      THREE MONTHS ENDED SEPTEMBER 30, 1998
                                   (Unaudited)
                                   IN MILLIONS


 <CAPTION>
                                    NON-
                                      SUBSIDIARY    GUARANTOR     PARENT
                                      GUARANTORS   SUBSIDIARIES    ONLY      ELIMINATIONS   CONSOLIDATED
                                      ----------   -----------    -------    -----------    ----------
<S>     <C>    <C>    <C>    <C>    <C>    <C>
Net Sales                                 $185.2        $187.7        $--        $(33.8)        $339.1
Cost of sales                              160.2         162.7        2.6         (33.8)         291.7
                                      ----------   -----------               -----------    ----------
   Gross profit                             25.0          25.0      (2.6)             --          47.4
                                      ----------   -----------    -------    -----------    ----------
Selling, general and administrative
 expenses                                    5.8           8.3        6.8                         20.9
Research, development, and engineering
 expenses                                   15.4           7.1        1.2                         23.7
Amortization of intangibles                  4.9           0.8        0.1                          5.8
                                      ----------   -----------    -------    -----------    ----------
   Operating income (loss)                 (1.1)           8.8     (10.7)             --         (3.0)
Interest expense                              --           2.9       19.2                         22.1
Other income (expense), net                  1.2           0.5      (0.7)                          1.0
                                      ----------   -----------    -------    -----------    ----------
  Earnings (loss) before income taxes,
   and distributions on Company obligated
   mandatorily redeemable convertible
   preferred securities                      0.1           6.4     (30.6)             --        (24.1)
Income taxes (benefit)                        --           0.5      (0.5)                           --
Distributions on Company obligated
 mandatorily redeemable convertible
 preferred securities                         --            --        4.4                          4.4
                                      ----------   -----------               -----------    ----------
   Net earnings (loss)                      $0.1          $5.9    $(34.5)            $--       $(28.5)
                                      ==========   ===========    =======    ===========    ==========

</TABLE>




















                                       12

<PAGE>


<TABLE>
                    BREED TECHNOLOGIES, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATING STATEMENT OF OPERATION
                      THREE MONTHS ENDED SEPTEMBER 30, 1997
                                   (Unaudited)
                                   IN MILLIONS


<CAPTION>
                                      NON-
                                      SUBSIDIARY    GUARANTOR     PARENT
                                      GUARANTORS   SUBSIDIARIES    ONLY      ELIMINATIONS   CONSOLIDATED
                                      ----------   -----------    -------    -----------    ----------
<S>     <C>    <C>    <C>    <C>    <C>    <C>
Net Sales                                  $96.3        $118.5        $--        $(19.6)        $195.2
Cost of sales                               78.4         104.8        3.3         (19.6)         166.9
                                      ----------   -----------               -----------    ----------
   Gross profit                             17.9          13.7      (3.3)             --          28.3
                                      ----------   -----------    -------    -----------    ----------
Selling, general and administrative 
 expenses                                    1.7           8.0        6.5                         16.2
Research, development, and engineering
 expenses                                    1.2           1.5        6.2                          8.9
Amortization of intangibles                  0.8           1.0        0.2                          2.0
                                      ----------   -----------    -------    -----------    ----------
   Operating income (loss)                  14.2           3.2     (16.2)             --           1.2
Interest expense                              --           1.7        6.7                          8.4
Other income (expense), net                  3.2         (1.6)      (2.0)                        (0.4)
                                      ----------   -----------    -------    -----------    ----------
  Earnings (loss) before income taxes,
   and distributions on Company obligated
   mandatorily redeemable convertible 
   preferred securities                     17.4         (0.1)     (24.9)             --         (7.6)
Income taxes (benefit)                       6.6           0.2     (10.2)                        (3.4)
Distributions on Company obligated 
 mandatorily redeemable convertible
 preferred securities                         --            --         --                           --
                                      ----------   -----------               -----------    ----------
   Net earnings (loss)                     $10.8        $(0.3)    $(14.7)            $--        $(4.2)
                                      ==========   ===========    =======    ===========    ==========

</TABLE>


                                       13

<PAGE>


<TABLE>
                    BREED TECHNOLOGIES, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOW
                      THREE MONTHS ENDED SEPTEMBER 30, 1998
                                   (Unaudited)
                                   IN MILLIONS


<CAPTION>
                                      NON-
                                      SUBSIDIARY    GUARANTOR     PARENT
                                      GUARANTORS   SUBSIDIARIES    ONLY      ELIMINATIONS   CONSOLIDATED
                                      ----------   -----------    -------    -----------    ----------
<S>     <C>    <C>    <C>    <C>    <C>    <C>
Cash flows from operating activities:
  Net earnings(loss)                        $0.1          $5.9    $(34.5)            $--       $(28.5)
Adjustments to reconcile net earnings
 (loss) to net cash provided by (used in)
 operating activities:
  Depreciation and amortization             10.9           7.3        0.4                         18.6
  Changes in working capital items 
   and other                                11.5           0.7       21.4                         33.6
                                      ----------   -----------    -------    -----------    ----------
  Net cash provided by (used in) 
   operating activities                     22.5          13.9     (12.7)             --          23.7
                                      ----------   -----------    -------    -----------    ----------
Cash flows from investing activities:
  Capital expenditures                     (6.6)         (6.2)      (5.7)                       (18.5)
  Proceeds from sale of assets                --           0.1         --             --           0.1
                                      ----------   -----------    -------    -----------    ----------
  Net cash (used in) investing activities  (6.6)         (6.1)      (5.7)                       (18.4)
                                      ----------   -----------    -------    -----------    ----------
Cash flows from financing activities:
  Proceeds from (repayment of) debt, net      --         (2.1)     (19.0)                       (21.1)
                                      ----------   -----------    -------    -----------    ----------
   Net cash (used in) financing activities    --         (2.1)     (19.0)                       (21.1)
                                      ----------   -----------    -------    -----------    ----------
Effect of exchange rate changes on cash       --         (7.2)         --             --         (7.2)
                                      ----------   -----------    -------    -----------    ----------
Increase (decrease) in cash and 
 cash equivalents                           15.9         (1.5)     (37.4)             --        (23.0)
Cash and cash equivalents at beginning 
 of period                                (22.9)          19.0       48.3             --          44.4
                                      ----------   -----------    -------    -----------    ----------
Cash and cash equivalents at end 
 of period                                $(7.0)         $17.5      $10.9            $--         $21.4
                                      ==========   ===========    =======    ===========    ==========

</TABLE>

















                                       14

<PAGE>



<TABLE>
                    BREED TECHNOLOGIES, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOW
                      THREE MONTHS ENDED SEPTEMBER 30, 1997
                                   (Unaudited)
                                   IN MILLIONS


<CAPTION>
                                      NON-
                                      SUBSIDIARY    GUARANTOR     PARENT
                                      GUARANTORS   SUBSIDIARIES    ONLY      ELIMINATIONS   CONSOLIDATED
                                      ----------   -----------    -------    -----------    ----------
<S>     <C>    <C>    <C>    <C>    <C>    <C>
Cash flows from operating activities:
  Net earnings(loss)                       $10.8        $(0.3)    $(14.7)            $--        $(4.2)
Adjustments to reconcile net earnings 
 (loss) to net cash provided by (used in) 
 operating activities:
  Depreciation and amortization              6.0           5.1        1.6                         12.7
  Changes in working capital items 
   and other                               (9.7)         (7.2)        0.4                       (16.5)
                                      ----------   -----------    -------    -----------    ----------
  Net cash provided by (used in)
   operating activities                      7.1         (2.4)     (12.7)                        (8.0)
                                      ----------   -----------    -------    -----------    ----------
Cash flows from investing activities:
  Capital expenditures                     (3.5)         (2.3)      (1.1)                        (6.9)
  Proceeds from sale of assets               0.4            --         --                          0.4
                                      ----------   -----------    -------    -----------    ----------
  Net cash (used in) investing activities  (3.1)         (2.3)      (1.1)                        (6.5)
                                      ----------   -----------    -------    -----------    ----------
Cash flows from financing activities:
  Proceeds from (repayment of) debt, net      --           1.7       11.4                         13.1
                                      ----------   -----------    -------    -----------    ----------
  Net change in equity                        --            --      (2.0)                        (2.0)
                                      ----------   -----------    -------    -----------    ----------
   Net cash provided by financing activities  --           1.7        9.4                         11.1
                                      ----------   -----------    -------    -----------    ----------
Effect of exchange rate changes on cash       --         (3.2)         --             --         (3.2)
                                      ----------   -----------    -------    -----------    ----------
Increase (decrease) in cash and 
 cash equivalents                            4.0         (6.2)      (4.4)             --         (6.6)
Cash and cash equivalents at beginning 
 of period                                    --          20.0      (1.3)             --          18.7
                                      ----------   -----------    -------    -----------    ----------
Cash and cash equivalents at end
 of period                                  $4.0         $13.8     $(5.7)            $--         $12.1
                                      ==========   ===========    =======    ===========    ==========

</TABLE>





                                       15

<PAGE>



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

OVERVIEW

IMPLEMENTATION OF REPOSITIONING PROGRAM

The Company began  implementing  the  Repositioning  Program  during the quarter
ended  December 31, 1997. As of September 30, 1998,  the Company had reduced its
global work force by approximately  1,827 employees (compared to a net reduction
of 2,700  employees  at June 30, 1998) and closed  and/or sold 24  manufacturing
facilities.  The  increase  in the  Company's  global  workforce  was  necessary
primarily  to support  the restart of  production  under the  Company's  General
Motors programs following conclusion of the General Motors strike as well as the
unusually  high number of product  launches  commenced  during the three  months
ended September 30, 1998.  During the three months ended September 30, 1998, the
Company incurred  disruption costs of approximately $2.8 million associated with
closing  and  relocating   manufacturing   facilities  in  connection  with  the
Repositioning Program. These costs were included in cost of sales.

As of September 30, 1998,  actions  taken by the Company in connection  with the
Repositioning  Program have  resulted in  approximately  $67.2 million in annual
cost  savings to the Company  (compared to $70 million in annual cost savings at
June 30, 1998).  During the three months ended  September  30, 1998,  previously
realized  cost savings were offset by higher labor costs  relating to the global
work force  additions  discussed  above.  Moreover,  the benefit of cost savings
realized to date was significantly  offset by costs associated with an unusually
high number of product  launches.  In addition,  the Company  believes  that the
benefit of  anticipated  cost savings  during  fiscal 1999  attributable  to the
Repositioning  Program will be offset in part due to the deteriorating  business
conditions at USS and Custom Trim.

FIRST QUARTER PRODUCT LAUNCHES

The  Company's  results of operations  for the three months ended  September 30,
1998 were  adversely  impacted  by a number of factors  including  higher  costs
associated with an unusually high number of product launches during such period.
During the three  months  ended  September  30,  1998,  the Company  launched 44
products compared to10 products launched during the three months ended September
30, 1997 and an average of 15  products  launched  during the second,  third and
fourth quarters of fiscal 1998, (which includes product launches attributable to
SRS,  which was  acquired on October 30,  1998).  A "launch"  means the start of
production  of a product  and the  related  activities  including,  among  other
things,  manufacturing,  engineering,  quality, sales and administrative support
necessary to bring a product into  production.  A "launch"  continues until such
time  as the  Company  is  able  to  meet  the  customer's  quality  and  volume
requirements  for the  product  on a  consistent  basis with  normal  production
resources and is typically a resource intensive and complex process.

As a result of the higher than normal  number of launches  commenced  during the
three months  ended  September  30,  1998,  the Company was required to allocate
resources to such  launches  that would have  otherwise  been  directed  towards
implementing  the  Repositioning  Program.  For example,  the Company  could not
implement scheduled personnel  reductions pursuant to the Repositioning  Program
and,  in some  instances,  additional  personnel  were  hired to  support  these
launches.  Management  believes that these  launches  together with new launches
anticipated  during the three  months  ending  December 31, 1998 may continue to
adversely impact the Company's  results of operations for such period and/or its
ability  to  realize  and  benefit  from  anticipated  cost  savings  under  the
Repositioning Program during such period.






                                       16

<PAGE>



RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1997

Net sales  increased 74% to $339.1 million for the three months ended  September
30, 1998 from $195.2 million for the three months ended  September 30, 1997. The
increase in net sales was due to the  acquisition  of SRS on October  30,  1997,
which accounted for approximately  $175.6 million of increased net sales for the
three months ended  September  30, 1998.  That  increase in net sales was offset
significantly  by reduced  sales volume due to the General  Motors  strike,  the
usual  shutdown of the  European  automotive  business  during  August  1998,  a
reduction  in net sales  attributable  to USS and Custom Trim due to  previously
announced  deteriorating  business  conditions,  and a decrease  in sales of EMS
sensors.  The strike at General Motors,  which began in June 1998 and ended July
1998, reduced net sales by $13.7 million ($5.9 million of which was attributable
to BREED and $7.8 million of which was attributable to SRS) while  deteriorating
business  conditions  at USS and Custom Trim reduced net sales by  approximately
$10.1 million. The Company expects that net sales attributable to USS and Custom
Trim will  continue to decline  significantly  during the balance of fiscal 1999
due to the loss of  business  (and the  failure to replace  such  business  on a
timely basis with new business) and industry-wide  pricing pressures.  The usual
shutdown of the European  automotive  business had a disproportionate  impact on
net sales during the three months ended September 30, 1998 because of the higher
volume of business in Europe during such period due to the acquisition of SRS on
October 30, 1998.

EMS sensors  sales  decreased  42% to $16.6  million for the three  months ended
September 30, 1998 from $28.6  million for the three months ended  September 30,
1997.  This  decrease  was  primarily  due to lower  demand  as major  customers
continued  to shift from EMS  sensors to  electronic  sensors  that are  sourced
internally.  The Company  believes  that sales of EMS sensors  will  continue to
decline in the foreseeable future.

Cost of sales  increased  75% to  $291.7  million  for the  three  months  ended
September 30, 1998 from $166.9 million for the three months ended  September 30,
1997. The increase  reflects the additional  production  costs of $155.5 million
for the three months ended September 30, 1998, resulting from the acquisition of
SRS in fiscal 1998.  This increase in production  costs was offset by lower cost
of sales  associated  with the loss of sales  volume  as  discussed  above and a
reduction in production costs caused by the closing of manufacturing  facilities
and labor savings associated with the Repositioning  Program.  In addition,  the
Company  incurred  approximately  $2.8  million  during the three  months  ended
September 30, 1998 related to disruption  costs  associated  with the closing of
manufacturing facilities in connection with the Repositioning Program.

Gross profit increased 68% to $47.4 million for the three months ended September
30, 1998 from $28.3 million for the three months ended September 30, 1997. Gross
profit as a percentage of net sales was 14% for the three months ended September
30, 1998  compared to 15% for the three months  ended  September  30, 1997.  The
decrease in gross margin was  primarily  attributable  to (i) a shift in product
mix from high margin EMS sensors to lower margin  products,  primarily  steering
wheels,  plastics  and  seatbelts,  acquired  in recent  acquisitions,  (ii) the
General  Motors  strike and (iii)  disruption  costs  incurred  during the three
months ended September 30, 1998.  Excluding disruption costs, gross margin would
have been 15% for three months ended September 30, 1998.

Selling,  general and administrative expenses increased 29% to $20.9 million for
the three  months  ended  September  30,  1998 from $16.2  million for the three
months ended  September  30, 1997.  The increase was primarily  attributable  to
costs of $3.7  million  associated  with SRS,  which was acquired on October 30,
1997.

Research,  development and engineering  expenses increased 166% to $23.7 million
for the three  months ended  September  30, 1998 from $8.9 million for the three
months  ended  September  30,  1997.  This  increase  reflects  increased  costs
aggregating $16.0 million  associated with the ongoing  activities of SRS, which
was

                                       17

<PAGE>



acquired in October 1997,  and HS Technik and Design,  which was acquired in May
1998,  an increase  in  spending  for new  product  development  and  additional
application  engineering  costs  associated  with  new  product  launches.  This
increase was offset by cost savings  relating to reduced  headcount  and related
expenses as a result of the Company's Repositioning Program.

Amortization  of  intangibles  increased by $3.8 million during the three months
ended September 30, 1998. The increase in amortization expense was primarily the
result of the goodwill and other intangibles  associated with the acquisition of
SRS.

Operating income (loss) for the three months ended September 30, 1998 was $(3.0)
million  compared to $1.2 million for the three months ended September 30, 1997.
Operating  income  (loss)  as a  percentage  of net sales was (1)% for the three
months  ended  September  30,  1998  compared to 1% for the three  months  ended
September  30, 1997.  The decrease in operating  income was primarily due to the
shift in product mix, the General Motors strike and disruption  costs  discussed
above.  Exclusive  of the effects of the General  Motors  strike and  disruption
costs,  operating income would have been $7.6 million or 2% of net sales for the
three months ended September 30, 1998.

Interest expense for the three months ended September 30, 1998 increased 163% to
$22.1  million for the three months ended  September  30, 1997.  The increase in
interest  expense  was  primarily  due to the  increase  in  average  borrowings
outstanding as a result of the  acquisition of SRS in fiscal 1998. This increase
was  offset  partially  by  interest  savings   resulting  from  voluntary  debt
reductions.

During the three months ended September 30, 1998 the Company recorded a domestic
benefit  of $0.5  million  which was  fully  offset  by a $0.5  million  foreign
expense.  No other tax benefit  was  recognized  for either  domestic or foreign
purposes  due to the  provisions  of SFAS No.  109.  SFAS No. 109 states  that a
valuation  allowance is recognized  if, it is more likely than not, some portion
or all of the  deferred tax asset will not be  realized.  For both  domestic and
foreign jurisdictions, a valuation allowance for the deferred income tax benefit
related to the current loss incurred has been recorded.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary cash  requirements are for working capital,  servicing the
Company's  indebtedness,  capital  expenditures  and  acquisitions.  The Company
believes that cash generated from operations together with borrowings  available
under its credit  facility  will be  sufficient  to meet the  Company's  working
capital,  debt  service  and  capital  expenditure  needs  as well  as  required
investments in BSRS for the  foreseeable  future.  However,  if unexpected  cash
needs  arise,  there can be no assurance  that cash  generated  from  operations
together with borrowings  available under the Company's  credit facility will be
sufficient  to meet such needs,  in which case the  Company  will be required to
obtain  financing  from  other  sources.  There  can be no  assurance  that such
financing  will be  available  or,  if  available,  that  it  will  be on  terms
satisfactory to the Company.  The Company's ability to invest in BSRS is limited
under the Company's credit facility and the Notes.

Cash flow from  operating  activities  for the three months ended  September 30,
1998 was a surplus of $23.7 million  compared with a deficit of $8.0 million for
the three  months  ended  September  30,  1997.  The  increase in cash flow from
operations was primarily the receipt of an income tax refund of $62.6 million on
September 25, 1998, less the increase in the net loss of $24.3 million.

Capital  expenditures  aggregated  $18.5  million  for the  three  months  ended
September  30,  1998.  Investments  continue to be made to support  productivity
improvements,  cost reduction  programs,  finance new program launches,  capital
needs to improve manufacturing  efficiency and added capability for existing and
new products and  reconfigurations  of manufacturing  facilities relating to the
Repositioning  Program.  The Company  estimates that capital  expenditures  will
aggregate approximately $56.5 million during the

                                       18

<PAGE>



remainder of fiscal 1999.

On April  28,  1998,  the  Company  entered  into a new  $675.0  million  credit
facility.  At September 30, 1998, the Company had an aggregate of $488.0 million
of borrowings  outstanding  under the credit facility,  which bore interest at a
weighted  average  rate of  8.8%  per  annum  at such  date,  and had  aggregate
borrowing  availability  thereunder of $137.3  million.  During the three months
ended September 30, 1998, the Company decreased its outstanding  indebtedness by
$21.0 million.  The decrease resulted from a $19.0 million voluntary  prepayment
toward  outstanding  term  loan  balances  under  the  credit  facility  and the
repayment of $2.0 million of borrowings  outstanding  under  short-term lines of
credit of the Company's foreign subsidiaries.  The debt reduction resulting from
the prepayment  substantially satisfies the mandatory prepayment of amortization
through June 1999 and June 2004 for Term Loans A and B, respectively,  under the
credit facility.

FORWARD LOOKING STATEMENTS

Statements herein regarding estimated cost savings and the Company's anticipated
performance in future periods constitute  forward-looking  statements within the
meaning of the Securities  Act of 1933 and the Securities  Exchange Act of 1934.
Such statements are subject to certain risks and uncertainties  that could cause
actual  amounts to differ  materially  from  those  projected.  With  respect to
estimated cost savings,  management has made assumptions regarding,  among other
things,  the  timing of plant  closures,  the  amount  and  timing  of  expected
short-term operating losses and reductions in fixed labor costs. The realization
of cost savings is subject to certain risks, including,  among other things, the
risks that expected  operating  losses have been  underestimated,  expected cost
reductions  have  been  overestimated,  unexpected  costs and  expenses  will be
incurred and anticipated operating  efficiencies will not be achieved.  Further,
statements  herein  regarding the Company's  performance  in future  periods are
subject  to risks  relating  to,  among  other  things,  possible  higher  costs
associated  with  product   launches,   difficulties  in  integrating   acquired
businesses,  deterioration of relationships  with material  customers,  possible
significant  product  liability  claims,  decreases in demand for the  Company's
products  and  adverse  changes  in  general  market  and  industry  conditions.
Management believes these  forward-looking  statements are reasonable;  however,
undue reliance should not be placed on such  forward-looking  statements,  which
are based on current expectations.























                                       19

<PAGE>




                           PART II - OTHER INFORMATION

ITEM 3.  LEGAL PROCEEDINGS

On October  22,  1998,  AlliedSignal,  Inc.  tendered  the  defense of an action
entitled Garcia, et. al. v. General Motors  Corporation and AlliedSignal,  Inc.,
Cause No.  98-093642-E in the Cameron County,  Texas,  District Court, under the
indemnification  provisions of the Asset Purchase  Agreement ("APA") between the
Company and AlliedSignal  pursuant to which the Company  purchased SRS. The suit
seeks  class  action  status  and  alleges  that a seat belt  buckle  previously
manufactured by AlliedSignal and now manufactured by the Company is defective in
design.  The  Company  has  notified  AlliedSignal  (i)  that a  portion  of the
liability was excluded under the APA and is AlliedSignal's responsibility,  (ii)
the remedy sought is a shared  liability  under the APA, (iii) the claims in the
complaint,  if proven,  constitute a breach of a representation  by AlliedSignal
under the APA and thus any related liability would be AlliedSignal's  liability.
The  Company  has  agreed to defend  the matter  under a  reservation  of rights
against  AlliedSignal.  AlliedSignal  had denied liability under the APA but has
acknowledged the Company's  reservation of rights.  The Company is investigating
the allegations and does not yet have sufficient  information upon which to form
a belief as to the outcome of such  litigation  or  likelihood  or extent of any
loss.

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

None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

  (a)  Exhibits

None

    (b)  Reports on Form 8-K -

The  following  reports  have  been  filed on Form 8-K with the  Securities  and
Exchange  Commission  during the first quarter of fiscal 1999: (a) the Company's
Current  Report on Form 8-K filed on August 31, 1998  announcing  a delay in the
release of the Company's  earnings for the quarter and year ended June 30, 1998,
(b) the  Company's  Current  Report of Form 8-K on September 4, 1998  announcing
certain  information  regarding  previously  recorded  repositioning  and  other
special  charges and other  business  developments,  (c) the  Company's  Current
Report on Form 8-K on September 18, 1998  announcing  the  resolution of certain
outstanding items with the Securities and Exchange Commission, (d) the Company's
Current  Report of Form 8-K on September  21, 1998  announcing  the Company will
restate its financial  statements for the second quarter ended December 31, 1997
and the third quarter  ended March 31, 1998 to take into account  changes in the
repositioning and other special charges.












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<PAGE>



                                   SIGNATURES

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

                            Breed Technologies, Inc.
                                  (REGISTRANT)



November 16, 1998

                             By: /s/ Frank J. Gnisci
                                 Frank J. Gnisci
                          Executive Vice President and
                             Chief Financial Officer




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