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: March 31, 1999
                                       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 February 15, 1999,  36,849,160  shares of the registrant's  common
stock, par value $.01 per share, were outstanding.







<PAGE>



                                          
                                            




                                             INDEX


PART I. FINANCIAL INFORMATION                                             PAGE


ITEM 1.  FINANCIAL STATEMENTS

               Consolidated Condensed Balance Sheets - March 31, 1999
                  (Unaudited)and June 30, 1998 .........................    1

               Consolidated Condensed Statements of Operations (Unaudited)
                  Three and nine months ended March 31, 1999 and 1998...    3

               Consolidated Condensed Statements of Cash Flows (Unaudited)
                  Nine months ended March 31, 1999 and 1998.............    4

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

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
           CONDITION AND RESULTS OF OPERATIONS .........................   20



PART II.  OTHER INFORMATION


ITEM 1. Legal Proceedings..............................................    30

ITEM 4. Submission of Matters to a Vote of Security Holders............    30

ITEM 6. Exhibits and Reports on Form 8-K ..............................    30

SIGNATURES ............................................................    31






                                       i


<PAGE>



                                        
                                          



                         PART I - FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS

<TABLE>
BREED TECHNOLOGIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
IN MILLIONS, EXCEPT FOR SHARE DATA
<CAPTION>
                                                     March 31,       June 30,
                                                       1999            1998
                                                  -------------    -----------
                                                           (Unaudited)
<S>     <C>    <C>    <C>    <C>    <C>    <C>
ASSETS
Current Assets:
  Cash and cash equivalents                          $   25.9         $   44.4
  Accounts receivable, principally trade                301.3            275.3
  Inventories:
    Raw materials                                        58.0             75.0
    Work in process                                      22.7             18.2
    Finished goods                                       18.4             15.9
                                                    -----------      ----------
        Total Inventories                                99.1            109.1
                                                    ------------     ----------
    Income tax receivable                                 1.5             64.6
    Prepaid expenses and other current assets            37.6             27.7
                                                    ------------     ----------

        Total Current Assets                             465.4            521.1

Property, plant and equipment, net                       322.2            365.2
Intangibles, net                                         549.6            692.1
Net assets held for sale                                  52.4             29.0
Other assets                                              34.5             42.5
                              Total Assets           $ 1,424.1        $ 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>
                                                       March 31,       June 30,
                                                         1999            1998
                                                     -------------    ----------
                                                              (Unaudited)
<S>     <C>    <C>    <C>    <C>    <C>    <C>
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:

  Notes payable and current portion of long-term       $   607.7       $   46.9
   debt(Note 3)
  Accounts payable                                         272.3          254.9
  Accrued expenses                                         190.2          233.2
                                                     -------------    ----------
        Total Current Liabilities                        1,070.2          535.0

Long-term debt (Note 3)                                    347.6          851.1
Other long-term liabilities                                 14.3           25.6
                                                     -------------    ----------
        Total Liabilities                                1,432.1        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 36,848,632 and 36,850,261
  shares at March 31, 1999 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
  March 31, 1999 and June 30, 1998                            --             --

  Additional paid-in capital                               197.4          197.6
  Warrants                                                   1.9            1.9
  Retained deficit                                        (424.5)        (184.0)
  Accumulated other comprehensive loss (Notes 4 and 5)     (33.2)         (27.4)
  Unearned compensation                                       --           (0.3)
                                                     -------------    ----------
    Total Stockholders' Deficit                           (258.0)         (11.8)
                                                     -------------    ----------
        Total Liabilities and Stockholders' Deficit   $  1,424.1      $ 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     Nine Months Ended
                                                               March 31,             March 31,
                                                          ------------------     -----------------
                                                           1999        1998       1999       1998
                                                          -------    -------    -------    -------
<S>                                                <C>        <C>         <C>       <C>     
Net sales                                                $  401.2   $  431.7    $1136.6   $  967.6
Cost of sales                                               357.0      356.8      998.0      836.1
                                                          --------   --------   --------   --------
Gross profit                                                 44.2       74.9      138.6      131.5
                                                          --------   --------   --------   --------
Operating expenses:                                                                 
  Selling, general and administrative expenses               20.5       22.1       64.6       59.7
  Research, development and engineering expenses             23.3       22.4       72.7       49.9
  Repositioning and impairment charges (Notes 2 & 10)       135.2         --      135.2      259.5
  In-process research and development expenses                 --         --         --       77.5
  Amortization of intangibles                                 5.8        6.8       17.6       12.7
                                                          --------   --------   --------   --------
    Total operating expenses                                184.8       51.3      290.1      459.3
                                                          --------   --------   --------   --------
        Operating income (loss)                            (140.6)       23.6    (151.5)    (327.8)

Interest expense                                             23.1        28.2      65.2       63.7
Other income (expense), net                                  (0.7)        2.8        --        2.8
                                                          ---------  ---------  --------   --------
  Loss before income taxes and distributions
   on Company obligated mandatorily redeemable
   convertible preferred securities                        (164.4)      (1.8)    (216.7)    (388.7)
Income taxes (benefit)(Note 6)                                3.1      (4.4)        4.9     (54.3)
Distributions on Company obligated mandatorily
  redeemable convertible preferred securities                 4.3        4.3       13.1        5.7
                                                          ---------  ---------  --------   --------
Loss before extraordinary item                             (171.8)      (1.7)    (234.7)    (340.1)
Extraordinary loss net of tax benefit of $1.4 million          --         --         --       (0.7)
                                                          ---------  ---------  --------   --------                    
        Net loss                                         $ (171.8)   $  (1.7)   $(234.7)  $ (340.8)
                                                          =========  =========  ========   ========

Loss per share (Note 7):
Basic loss per share
     Loss before extraordinary item                       $ (4.66)    $(0.05)   $ (6.37)  $ (10.33)
     Extraordinary item                                        --         --         --     (0.02)
                                                          ---------  ---------  --------   --------
               Net loss                                   $ (4.66)    $(0.05)   $ (6.37)  $ (10.35)
                                                          =========  =========  ========   ========
Diluted loss per share
     Loss before extraordinary item                       $ (4.66)    $(0.05)   $ (6.37)  $ (10.33)
     Extraordinary item                                        --         --         --     (0.02)
                                                          ---------  ---------  --------   --------
               Net loss                                   $ (4.66)    $(0.05)   $ (6.37)  $ (10.35)
                                                          =========  =========  ========   ========
Shares used for computation:
     Basic                                                  36.849     35.380     36.849     32.923
     Diluted                                                36.849     35.380     36.849     32.923


SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
</TABLE>


                                     - 3 -
<PAGE>


                                         



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

<CAPTION>
                                                          Nine Months Ended March 31,
                                                             1999              1998
                                                          ----------         ---------
<S>     <C>    <C>    <C>    <C>    <C>    <C>
Cash Flows from Operating Activities:
    Net loss                                             $   (234.7)        $  (340.8)
Adjustments to reconcile net loss to net cash used in
 operating activities:
   Depreciation and amortization                               55.6              43.4
   Changes in working capital items and other                 139.0             267.5
                                                          ----------         ---------
        Net cash used in operating activities                 (40.1)            (29.9)
                                                          ----------         ---------

Cash Flows from Investing Activities:
  Cost of acquisitions and capital expenditures               (50.8)           (760.1)
  Proceeds from sale of assets                                  4.5               4.2
                                                          ----------         ---------
        Net cash used in investing activities                 (46.3)           (755.9)
                                                          ----------         ---------

Cash Flows from Financing Activities:
    Proceeds from debt                                        489.5           1,182.0
    Proceeds from Preference Stock issuance                      --             554.0
    Repayment of debt                                        (432.3)           (722.3)
    Redemption of Preference Stock                               --            (210.0)
    Cash dividends paid                                          --              (2.2)
    Proceeds from common stock issued                            --               1.6
                                                          ----------         ---------
        Net cash provided by financing activities              57.2             803.1
                                                          ----------         ---------

Effect of exchange rate changes on cash                        10.7             (11.9)
                                                          ----------         ---------

Net (decrease) increase in cash and cash equivalents          (18.5)              5.4
Cash and cash equivalents at beginning of period               44.4              18.7
                                                          ----------         ---------
Cash and cash equivalents at end of period                $    25.9         $    24.1
                                                          ==========         =========

SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
</TABLE>

                                      - 4 -







<PAGE>


                                         
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION

GENERAL - 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 and nine  months  ended March 31, 1999 are not
necessarily  indicative of 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.

REVENUE  RECOGNITION AND SALES COMMITMENTS - The Company recognizes revenue when
title and risk of loss  transfers  to its  customers,  which is  generally  upon
shipment of products to customers.  The company generally enters into agreements
with  its  customers  at the  beginning  of a given  vehicle's  life to  produce
products.  Once such agreements are entered into by the Company,  fulfillment of
the  customer's  purchasing  requirements  is generally  the  obligation  of the
Company for the entire  production  life of the  vehicle  (which  averages  five
years).  In certain  instances,  the Company  may be  committed  under  existing
agreements to supply  products to its  customers at selling  prices that are not
sufficient  to  cover  the  direct  cost  to  produce  such  products.  In  such
situations,  the Company records a liability for the estimated  future amount of
such losses under such  agreements to the earliest date on which the Company can
terminate such agreements.  Such losses are recognized at the time that the loss
is  probable  and  reasonably   estimable.   Losses  are  estimated  based  upon
information  available at the time of the estimate,  including future production
volume  estimates,  length of the program and selling price and production  cost
information.

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's Repositioning Program has been substantially completed as of March 31,
1999,  with the  remaining  repositioning  actions  such as the sale of  Gallino
Plastics  (see Note 9) to be  completed  by June 30,  1999.  Any excess  accrual
balance will be adjusted in the June 1999 quarter results of operations.

During the nine months ended March 31, 1999,  the  repositioning  and impairment
accrual was reduced by $9.5 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 March 31, 1999:
<TABLE>
<CAPTION>

                                              Accrual                           Accrual
                                              Balance                           Balance
                                              at June   Cash        Non-Cash       at
     IN MILLIONS                              30, 1998  Reductions  Reductions  March
                                                                                31, 1999
     ---------------------------------------- --------- ----------- ----------- ----------
<S>                                            <C>        <C>          <C>       <C>    
     Headcount reductions                      $  15.9    $   3.5      $   --    $  12.4
     Facility consolidations                      18.9        6.0          --       12.9
     ====================================== =========== ========== =========== ==========
          Total                                $  34.8    $   9.5      $   --    $  25.3
     ====================================== =========== ========== =========== ==========
</TABLE>

The  Company is  considering  a second  repositioning  plan  however,  no formal
decision has been committed to by management or the Board of Directors. 
                                   

                                      - 5 -

<PAGE>


NOTE 3 - DEBT
<TABLE>

A summary of debt follows:

<CAPTION>
                                                                       March 31,        June 30,
                                                                         1999             1998
                                                                      -----------     -----------
<S>                      <C>       <C>             <C> <C>  
Term Loan A, interest at 8.01% and 7.825% at March 31, 1999,and 
  June 30, 1998, respectively, installments due 1999 through 2004    $    297.6        $   309.2
Term Loan B, interest at 8.51%and 8.075% at March 31, 1999, and
  June 30, 1998, respectively, installments due 2005 through 2006         190.4            197.8
Revolver, interest at 8.00% at March 31, 1999                              92.0
Senior Subordinated Notes, interest at 9.75% and 9.25% at March 31,
  1999 and June 30, 1998 respectively, due April 15, 2008                 330.0            330.0
Foreign short-term lines of credit, weighted average
  interest rate of 5.67%, installments due various                         20.4             30.4
Mortgages and equipment financing loans                                    24.9             30.6
                                                                      -----------     -----------
Total debt                                                                955.3            898.0
Less current maturities                                                   607.7             46.9
                                                                      -----------     -----------
Total long-term debt                                                 $    347.6        $   851.1
                                                                      ===========     ===========
</TABLE>

On April  28,  1998,  the  Company  entered  into a new  $675.0  million  credit
facility.  At March 31, 1999,  the Company had an aggregate of $580.0 million of
borrowings  outstanding  under the credit  facility,  which bore  interest  at a
weighted  average  rate of  8.1725%  per annum at such date,  and had  aggregate
borrowing  availability  thereunder of $14.0 million.  Because the Company would
have been in violation  of certain  financial  covenants  in the loan  agreement
relating to the credit  facility as of March 31,  1999,  the Company  obtained a
waiver of these  covenants  from the lenders that was  effective  from March 30,
1999 through June 29, 1999 (the "Fourth Waiver"). Pursuant to the Fourth Waiver,
the maximum borrowing  availability under the company's revolving line of credit
was decreased from its original level of $150.0  million  (including  letters of
credit) to $125.0 million  (including  letters of credit).  The Company paid the
lenders fees aggregating $1.1 million in connection with the Fourth Waiver.

On March 3, 1999 the Company obtained an additional  waiver (the "Third Waiver")
in anticipation of the Company's  disposition of its Gallino Plastics  business.
The Third Waiver  provided for the release from the credit  facility's  negative
pledge provision  limiting the Company's ability to pledge its retained interest
in the new joint venture  formed as a result of the  disposition  of the Gallino
Plastics  business and removed certain  restrictions that would have limited the
Company's  ability to transfer the shares of its FAS S.p.A.  and A.P. Co. S.r.l.
subsidiaries which are an integral part of the Gallino Plastics  business.  (See
the Subsequent Event Note as it relates to the Gallino Plastics business.)

On February 11, 1999, the Company obtained a waiver (the "Second Waiver") of the
net worth covenant in the loan agreement relating to the credit facility as well
as an event of default  that  existed due to the  Company's  failure to register
certain  securities as required under certain agreements to which it is a party.
The Second Waiver was  effective  from February 13, 1999 through March 30, 1999.
In connection with the Second Waiver,  the maximum borrowing  availability under
the revolving line of credit was increased to $125.0 million  (including letters
of  credit)  from  $110.0  million  (including  letters  of  credit)  previously
established at the granting of the "First Waiver"  discussed  below. The Company
paid the lenders fees  aggregating  $1.3 million in  connection  with the Second
Waiver.


                                     - 6 -
<PAGE>




On December 31, 1998 the Company  obtained a waiver (the "First  Waiver") of the
net worth covenant in the loan agreement  relating to the credit  facility.  The
First Waiver was  effective  from  December 30, 1998 through  February 12, 1999.
Pursuant to the First  Waiver,  the  maximum  borrowing  availability  under the
Company's  revolving line of credit was decreased from $150.0 million (including
letters of credit) to $110.0 million (including letters of credit).

Although the Company intends to negotiate the necessary amendments on additional
waivers with its lenders,  there can be no assurance  that it will be able to do
so. Any amendment to the loan agreement must be approved by the lenders  holding
more than 50% of the  commitments  and borrowings  outstanding  under the credit
facility.  In the  absence  of a  further  waiver  or an  amendment  to the loan
agreement, after June 29, 1999, the lenders would be entitled to exercise all of
their rights under the loan agreement including,  without limitation,  declaring
all amounts  outstanding  under the credit facility  immediately due and payable
and/or  exercising  their  rights with  respect to the  collateral  securing the
credit facility which consists of, among other things,  substantially all of the
real and personal property of the Company and its subsidiaries.

If the  Company is unable to obtain a further  waiver or  amendment  to the loan
agreement, the Company may not have sufficient cash to meet its working capital,
debt service and capital  expenditure needs beyond June 29, 1999, in which case,
the Company may 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.  Consequently,  the inability to
obtain any such waiver, amendment or alternative financing would have a material
adverse effect on the Company's financial condition and results of operations.

Until such time as the credit  facility  is  amended as  discussed  above or all
amounts  outstanding  under the credit  facility are repaid in full,  borrowings
outstanding  under the credit facility will be classified as a current liability
on the Company's consolidated balance sheet.

On April 28, 1998,  the Company  issued and sold an aggregate of $330 million of
its  9.25%  Senior  Subordinated  Notes  due 2008  (the  "Notes")  in a  private
transaction  under Rule 144A under the  Securities  Act of 1933, as amended (the
"Securities Act") (the "Notes Offering"). In connection with the Notes Offering,
the Company entered into a registration rights agreement (the "Notes Agreement")
pursuant  to which it agreed to offer to  exchange  the Notes for  substantially
identical  9.25%  Senior  Subordinated  Notes  due  2008  registered  under  the
Securities  Act (the "Exchange  Offer").  Pursuant to the Notes  Agreement,  the
Company was required to complete  the Exchange  Offer by the date 180 days after
April  28,  1998 (the  "Closing  Date").  The  Company  filed  the  registration
statement  relating to the Exchange Offer on June 24, 1998. Because the Exchange
Offer  had not been  consummated  on or prior  to the  date 180 days  after  the
Closing Date as required under the Notes  Agreement,  the interest rate borne by
the Notes  increased  pursuant to the Notes  Agreement by 0.25% on the 181st day
after the Closing Date. The interest rate  increased  thereafter by 0.25% on the
1st day of each subsequent  90-day period.  The Notes bore interest at a rate of
9.75% per annum at March 31, 1999. The Exchange Offer was completed on April 12,
1999  restoring the interest rate with respect to the notes to the original rate
of 9.25% as of April 12, 1999.

On November 25, 1997, the Company sold $257.7  million of its 6.50%  Convertible
Subordinated  Debentures due 2027 (the "Convertible  Debentures") to BTI Capital
Trust, which,  concurrently therewith, sold $250.0 million aggregate liquidation
amount of its 6.50%  Convertible  Trust  Preferred  Securities  (the  "Preferred
Securities") (which are fully and unconditionally  guaranteed by the Company) in
a private  transaction  under Rule 144A under the Securities Act (the "Preferred
Securities Offering"). In connection with the Preferred Securities Offering, the
Company entered into a registration rights agreement (the "Preferred  Securities
Agreement") pursuant to which it agreed to register (and cause BTI Capital Trust
to  register),  among other things,  the  Convertible  Debentures  and Preferred
Securities.   Pursuant  to  the  Preferred  Securities   Agreement,   the  Shelf
Registration  Statement (as defined  therein) was required to be effective on or
prior to June 17, 1998.  The Company filed the Shelf  Registration  Statement on
March 18,  1998.  Because  the Shelf  Registration  Statement  was not  declared
effective by June 17, 1998, the interest rate on the Convertible  Debentures and
the distribution rate applicable to the Preferred Securities increased by 0.25%,
payable in arrears,  with the first quarterly  payment due on the first interest
or distribution date following June 17, 1998.

                                     - 7 -

<PAGE>

The Shelf  Registration  Statement was declared  effective on March 11, 1999 and
the  interest  rate borne by the Notes and the  Convertible  Debentures  and the
distribution  rate in respect of the  Preferred  Securities  was  reduced to the
original amounts on March 11, 1999.

On May 12, 1999,  the Company gave notice to BTI Capital  Trust of its selection
of an  Extension  Period.  Payments of interest on the Debt  Securities  will be
deferred,  and no interest shall be due and payable during the Extension  Period
the Company has selected.  The Extension  Period will not exceed 20  consecutive
quarters,  including the quarter  ending June 30, 1999,  and no future  payments
will be made during this time until further notice. As a result,  BTI will defer
the  quarterly  dividend  payment due May 15, 1999  relating to its  convertible
preferred as permitted under the trust instrument.

NOTE 4 -COMPREHENSIVE INCOME OR LOSS

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  loss
and its  components.  The  adoption  of this  Statement  requires  that  foreign
currency translation  adjustments be included in other comprehensive loss, which
prior to adoption were reported separately in stockholders'  equity. There is no
tax effect because the Company intends to reinvest  foreign  earnings in foreign
business  operations.  Prior year financial statements have been reclassified to
conform to the requirements of SFAS No. 130. 
<TABLE>
<CAPTION>
                                                       Nine months ended March 31,
                                                    --------------------------------
                                                         1999               1998
                                                     -----------         ----------
<S>                                                   <C>                <C>      
    Net loss                                          $ (234.7)          $ (340.8)
    Foreign currency translation adjustment               (5.8)             (11.9)
                                                     -----------         ----------
    Comprehensive loss                                $ (240.5)          $ (352.7)
                                                     ===========         ==========
</TABLE>
 
NOTE 5 - FOREIGN CURRENCY TRANSLATIONS

The Company  translates  foreign  currencies into U.S. dollars using quarter-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  loss and included in
other comprehensive loss 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 nine
months ended March 31, 1999 key European currencies strengthened relative to the
U.S. dollar and then weakened to end the nine month period relatively unchanged.
As a result, the conversion of foreign balance sheets into U.S. dollars had very
little impact on the foreign currency  translation  adjustment reported for such
nine month  period and the related  assets and  liabilities  as measured in U.S.
dollars remained relatively  constant.  The change in the U.S. dollar during the
nine months  ended March 31, 1999 did not have a material  impact on the results
of operations.

NOTE 6 -INCOME TAXES

During the nine months ended March 31, 1999,  the Company  recorded  foreign tax
expense of $5.4 million  which was partially  offset by a $0.5 million  domestic
benefit  for a tax  credit.  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 year's  taxable  income.  A valuation
allowance  has been  recognized  to reduce to zero,  foreign  net  deferred  tax
assets, primarily related to net operating loss carry-forwards in Finland, Spain
and the U.K. and  restructuring  charges in Italy.  Income taxes will be paid in
foreign  jurisdictions  in which there is no ability to offset  income earned in
such jurisdictions against tax loss carry-forwards.

                                     - 8 -

<PAGE>

NOTE 7 - LOSS PER SHARE
<TABLE>
The following  table sets forth the computation of the numerator and denominator
of the basic and diluted loss per share calculations:

<CAPTION>
                                                 Three Months Ended        Nine Months Ended
                                                     March 31,                 March 31,
                                                 1999          1998        1999         1998
                                                -----          ----        ----         ----
                                                (AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)

<S>     <C>    <C>    <C>    <C>    <C>    <C>
BASIC LOSS

     Loss before extraordinary item             $ (171.8)    $  (1.7)    $ (234.7)   $ (340.1)
     Extraordinary item, net                          --          --           --        (0.7)
                                                ---------    --------    ---------   ---------
     Loss applicable to common stock            $ (171.8)    $  (1.7)    $ (234.7)    $ (340.8)
                                                =========    ========    =========   =========
Weighted average common shares outstanding        36.849       35.380      36.849       32.923
                                                =========    ========    =========   =========                        
BASIC LOSS PER SHARE
     Loss before extraordinary item             $  (4.66)    $  (0.05)   $  (6.37)    $ (10.33)
     Extraordinary item                               --           --          --        (0.02)
                                                ---------    ---------   ---------   ---------
               Net loss                         $  (4.66)    $  (0.05)   $  (6.37)    $ (10.35)
                                                =========    =========   =========   =========
DILUTED LOSS
     Loss before extraordinary item            $  (171.8)    $   (1.7)   $ (234.7)   $  (340.1)
     Extraordinary item, net                           --           --         --        (0.7)
                                                ---------    ---------   ---------   ----------
     Loss applicable to common stock           $  (171.8)    $   (1.7)   $ (234.7)   $  (340.8)
                                                =========    =========   =========   ==========
Share computation:                                                     
     Weighted average common shares outstanding    36.849       35.380     36.849        32.923
     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                                 36.849       35.380     36.849       32.923

DILUTED LOSS PER SHARE
     Loss before extraordinary item             $  (4.66)    $  (0.05)   $  (6.37)   $  (10.33)
     Extraordinary item                               --           --          --        (0.02)
                                                ---------    ---------   ---------   ----------
               Net loss                         $  (4.66)    $  (0.05)   $  (6.37)   $  (10.35)
                                                =========    =========   =========   ==========

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

Each Company obligated mandatorily  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.


                                     - 9 -
<PAGE>




Options to purchase  2,326,895  shares of common stock at prices  between $6.875
and $32.25 per share were outstanding as of March 31, 1999 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  shares subject to the VTI warrants have not been
included in the computation of diluted earnings per share for the three and nine
months ended March 31, 1999 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 subject to the NationsBank  warrant have not been
included in the computation of diluted earnings per share for the three and nine
months ended March 31, 1999 because the effect would be anti-dilutive.

NOTE 8 - BSRS JOINT VENTURE

The Company and Siemens Aktiengesallschaft  ("Siemens") completed formation of a
joint  venture,  known as BSRS  Restraint  Systems  International  GmbH & Co. KG
("BSRS"),  in June 1998.  Pursuant to the joint  venture  agreement  between the
Company and Siemens,  on June 30, 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 (net book value
approximates  fair  value) to BSRS and  Siemens  contributed  its shares in PARS
Ruckhaltesysteme  GmbH,  which  operates  crash  test  facilities  and  develops
occupant safety systems.

NOTE 9 - SUBSEQUENT EVENTS

The Company  acquired  Gallino in July 1996  primarily  for its  steering  wheel
business.  In 1997, the Company evaluated whether the nonsteering wheel business
of Gallino,  consisting of the manufacture of instrument panel, bumper and other
plastic  trim  components,  could be  integrated  into the core  business of the
Company and determined  that this non-core  business was not compatible with the
Company's future plans.

During the fourth  quarter of fiscal  1997,  the Company  committed to a plan to
dispose of the nonsteering wheel business.  The Company recorded the nonsteering
wheel  business  at its net  realizable  value  based on amounts  set forth in a
letter of intent to sell the  business to a third party.  In December  1997 when
the transaction was not consummated the Company wrote down the carrying value to
the  estimated  net  realizable  value based on then current  negotiations.  For
financial reporting purposes, the assets and liabilities  attributable to all of
Gallino's  nonsteering  wheel business have been classified in the  consolidated
balance sheet as Assets Held for Sale.

On May 6, 1999, the Company  completed the sale of 70% of the nonsteering  wheel
business of Gallino for  approximately  $43.0  million  subject to post  closing
adjustments in connection with the establishment of a joint venture with Textron
Automotive  Company,  Inc. and Magneti Marelli S.p.A. The Company has retained a
30%  interest  in the  joint  venture,  which  will be  known as  Textron  Breed
Automotive,  S.r.l.  The  nonsteering  wheel portion of Gallino  reported $128.3
million in sales for the nine months  ended March 1999.  The results of the sale
of  the  nonsteering   wheel  business  of  Gallino  will  be  included  in  the
Repositioning Program (See Note 2).


                                     - 10 -

<PAGE>


NOTE 10 - ASSET IMPAIRMENT CHARGE

In view of the losses in 1999,  and as a part of the Company's  annual  planning
process,  the Company  performed an impairment  review of its long-lived  assets
consistent  with  SFAS  No.  121  "Accounting  For  Long-Lived  Assets  and  for
Long-Lived  Assets to be Disposed of". The Company  determined that its European
seat belt business was impaired and wrote down the assets to the estimated  fair
value based on discounted cash flows. The third quarter charge of $135.2 million
(no related tax effect)  reduced  intangible  assets by $108.9 million and fixed
assets by $26.3 million. The Company also determined that its North American and
European airbag  businesses,  while not impaired at this time, could be impaired
in the future if those  businesses  do not  achieve  their  expected  results of
operations.

The Company  acquired the European  seat belt business in October 1997 as a part
of its acquisition of the worldwide safety  restraint  business of AlliedSignal.
In October 1997, the Company purchased  substantially all the assets and assumed
certain  liabilities of AlliedSignal  (SRS) related to the design,  development,
manufacturing,  marketing and selling of automotive  occupant restraint products
and systems  (including,  but not limited to seat belt and airbag assemblies and
components)  for $710.0  million in cash  subject  to  post-closing  adjustments
stipulated in the asset purchase agreement.

The impairment  charge was necessary  because the European seat belt  businesses
are  performing  materially  worse than  expected and have  contracts to provide
products at losses or marginal  profits.  Consequently,  the  businesses are not
providing sufficient cash flows to recover the value of the long-lived assets.


NOTE 11 - 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 due 2008 ("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
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 March 31,
1999 and June 30, 1998, the condensed consolidating statements of operations for
the three  and nine  months  ended  March  31,  1999 and 1998 and the  condensed
consolidating  statements of cash flows for the nine months ended March 31, 1999
and 1998, for the Subsidiary Guarantors, the Non-Guarantor Subsidiaries,  Parent
only and the Company consolidated.





                                     - 11 -

<PAGE>








<TABLE>

                    BREED TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEET
                                 MARCH 31, 1999
                                   (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                          $   (19.1)     $     21.4    $    23.6        $       --       $     25.9
Accounts receivable, principally trade                 508.1           137.1          2.9            (346.8)           301.3
Inventories                                             52.6            47.6           --              (1.1)            99.1
Other current assets                                    11.2            17.6         10.3                --             39.1
                                                  -------------   -------------   --------     --------------   --------------
          Total current assets                         552.8           223.7         36.8            (347.9)           465.4
Property, plant and equipment, net                     158.0           158.7         37.4             (31.9)           322.2
Intangibles, net                                       488.6           165.2          4.7            (108.9)           549.6
Net assets held for sale                                  --            84.8        (32.4)               --             52.4
Other assets                                            22.2            (5.4)     1,028.1          (1,010.4)            34.5
                                                  -------------   -------------   --------     --------------   --------------
           Total assets                           $  1,221.6      $    627.0    $ 1,074.6        $ (1,499.1)      $  1,424.1
                                                  =============   =============   ========     ==============   ==============

LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
     Notes payable and current portion of          $     --       $     27.7    $  580.0         $       --       $    607.7
       long-term debt
     Accounts payable                                  73.2            169.5        30.6               (1.0)           272.3
     Accrued expenses                                  93.4            175.4       269.3             (347.9)           190.2
                                                  -------------   -------------   --------     --------------   --------------
          Total current liabilities                   166.6            372.6       879.9             (348.9)         1,070.2
Long-term debt                                           --             17.6       330.0                 --            347.6
Other long-term liabilities                             5.1             11.7        (2.5)                --             14.3
                                                  -------------   -------------   --------     --------------   --------------
          Total liabilities                           171.7            401.9     1,207.4             (348.9)         1,432.1
Company obligated mandatorily redeemable
  convertible preferred securities                       --               --       250.0                 --            250.0
Stockholders' equity (deficit)                      1,049.9            225.1      (382.8)          (1,150.2)          (258.0)
                                                  -------------   -------------   --------     --------------   --------------
          Total liabilities and                  $  1,221.6       $    627.0    $1,074.6         $ (1,499.1)      $  1,424.1
            stockholders' equity (deficit)        =============   =============   ========     ==============   ==============

</TABLE>


                                     - 12 -



<PAGE>







<TABLE>

                    BREED TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED 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          $      --       $    35.2     $   11.7       $      --       $    46.9
       long-term debt
     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                    $ 1,359.9       $   739.5     $1,167.5      $ (1,617.0)       $ 1,649.9
            stockholders' equity (deficit)        ============   ==============   ========    ==============   ==============
</TABLE>



                                     - 13 -



<PAGE>








<TABLE>


                    BREED TECHNOLOGIES, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
                        THREE MONTHS ENDED MARCH 31, 1999
                                   (Unaudited)
                                   IN MILLIONS

<CAPTION>

                                                                    NON-
                                                  SUBSIDIARY      GUARANTOR        PARENT
                                                  GUARANTORS     SUBSIDIARIES       ONLY      ELIMINATIONS     CONSOLIDATED
                                                -------------   --------------    --------   --------------   --------------
<S>                                            <C>           <C>           <C>        <C>             <C>       
Net sales                                         $   216.9      $    216.9       $    --     $    (32.6)      $    401.2
Cost of sales                                         199.0           187.0           3.6          (32.6)           357.0
                                                -------------   --------------    --------   --------------   --------------
    Gross profit                                       17.9            29.9          (3.6)            --             44.2
                                                -------------   --------------    --------   --------------   --------------
Selling, general and administrative expenses            4.0             7.7           8.8             --             20.5
Research, development and engineering expenses         12.8             8.7           1.8             --             23.3
Impairment charges                                       --           135.2            --             --            135.2
Amortization of intangibles                             4.8             0.9           0.1             --              5.8
                                                -------------   --------------    --------   --------------   --------------
    Operating income (loss)                            (3.7)         (122.6)        (14.3)            --           (140.6)
Interest expense                                         --             1.5          21.6             --             23.1
Other income (expense), net                            (2.3)            6.3          (6.1)           1.4             (0.7)
                                                -------------   --------------    --------   --------------   --------------
  Earnings (loss) before income taxes and
   distributions on Company obligated
   mandatorily redeemable convertible
   preferred securities                                (6.0)         (117.8)        (42.0)           1.4           (164.4)
Income taxes (benefit)                                   --             3.1            --             --              3.1
Distributions on Company obligated
  mandatorily redeemable convertible 
  preferred securities                                   --              --           4.3             --              4.3
                                                -------------   --------------    --------   --------------   --------------
    Net earnings (loss)                           $    (6.0)     $   (120.9)     $  (46.3)      $    1.4       $   (171.8)
                                                =============   ==============    ========   ==============   ==============
</TABLE>


                                     - 14 -










<PAGE>



<TABLE>


                    BREED TECHNOLOGIES, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
                        NINE MONTHS ENDED MARCH 31, 1999
                                   (Unaudited)
                                   IN MILLIONS


<CAPTION>
                                                                     NON-
                                                    SUBSIDIARY     GUARANTOR      PARENT
                                                    GUARANTORS    SUBSIDIARIES     ONLY      ELIMINATIONS    CONSOLIDATED
                                                   ------------  --------------  --------   --------------  --------------
<S>                                            <C>           <C>           <C>        <C>            <C>        
Net sales                                            $   620.2    $    622.7     $    --     $   (106.3)     $   1,136.6
Cost of sales                                            553.1         543.1         8.1         (106.3)           998.0
                                                   ------------  --------------  --------   --------------  --------------
    Gross profit                                          67.1          79.6        (8.1)            --            138.6
                                                   ------------  --------------  --------   --------------  --------------
Selling, general and administrative expenses              12.9          25.5        26.2             --             64.6
Research, development and engineering expenses            43.1          24.2         5.4             --             72.7
Impairment charges                                          --         135.2          --             --            135.2
Amortization of intangibles                               15.5           2.9        (0.8)            --             17.6
                                                   ------------  --------------  --------   --------------  --------------
    Operating income (loss)                               (4.4)       (108.2)      (38.9)            --           (151.5)
Interest expense                                            --           6.4        59.8             --             66.2
Other income (expense), net                               (1.8)         11.3        (9.4)           0.9              1.0
                                                   ------------  --------------  --------   --------------  --------------
  Earnings (loss) before income taxes and
   distributions on Company obligated 
   mandatorily redeemable convertible 
   preferred securities                                   (6.2)       (103.3)     (108.1)           0.9           (216.7)
Income taxes (benefit)                                      --           4.9          --             --              4.9
Distributions on Company obligated
  mandatorily redeemable convertible 
  preferred securities                                      --            --        13.1             --             13.1
                                                   ------------  --------------  --------   --------------  --------------
    Net earnings (loss)                              $    (6.2)   $   (108.2)    $(121.2)       $    0.9      $   (234.7)
                                                   ============  ==============  ========   ==============  ==============

</TABLE>

                                     - 15 -




<PAGE>

<TABLE>


                    BREED TECHNOLOGIES, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
                        THREE MONTHS ENDED MARCH 31, 1998
                                   (Unaudited)
                                   IN MILLIONS

<CAPTION>

                                                                      NON-
                                                   SUBSIDIARY      GUARANTOR       PARENT
                                                   GUARANTORS     SUBSIDIARIES      ONLY      ELIMINATIONS    CONSOLIDATED
                                                 -------------   --------------  ---------   --------------  --------------
<S>                                            <C>           <C>           <C>        <C>             <C>       
Net sales                                         $   269.3      $    194.0      $    --      $    (31.6)       $    431.7
Cost of sales                                         220.4           169.1         (1.0)          (31.7)            356.8
                                                 -------------   --------------  ---------   --------------  --------------
    Gross profit                                       48.9            24.9          1.0             0.1              74.9
                                                 -------------   --------------  ---------   --------------  --------------
Selling, general and administrative expenses            4.6            10.4          7.0             0.1              22.1
Research, development and engineering expenses         16.3             5.9          0.2              --              22.4
Repositioning and impairment charges                     --              --           --              --                --
In-process research and development expenses             --              --           --              --                --
Amortization of intangibles                             6.5             1.0         (0.7)             --               6.8
                                                 -------------   --------------  ---------   --------------  --------------
    Operating income (loss)                            21.5             7.6         (5.5)             --              23.6
Interest expense                                         --             2.5         25.7              --              28.2
Other income (expense), net                             2.0             1.4         (0.7)            0.1               2.8
                                                 -------------   --------------  ---------   --------------  --------------
  Loss before income taxes and distributions
    on Company obligated mandatorily redeemable
    convertible preferred securities                   23.5             6.5        (31.9)            0.1              (1.8)
Income taxes (benefit)                                  4.1             4.6        (13.1)             --              (4.4)
Distributions on Company obligated mandatorily
  redeemable convertible preferred securities            --              --          4.3              --               4.3
                                                 -------------   --------------  ---------   --------------  --------------
Earnings (loss) before extraordinary loss              19.4             1.9        (23.1)            0.1              (1.7)
Extraordinary loss, net of tax benefit of                --              --           --              --                --
  $1.4 million
                                                  -------------   --------------  ---------   --------------  --------------
    Net earnings (loss)                           $    19.4       $     1.9      $ (23.1)      $     0.1         $    (1.7)


</TABLE>

                                     - 16 -



<PAGE>






<TABLE>

                    BREED TECHNOLOGIES, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
                        NINE MONTHS ENDED MARCH 31, 1998
                                   (Unaudited)
                                   IN MILLIONS

<CAPTION>

                                                                    NON-
                                                  SUBSIDIARY       GUARANTOR       PARENT
                                                  GUARANTORS      SUBSIDIARIES      ONLY      ELIMINATIONS    CONSOLIDATED
                                                 ------------    --------------   --------   --------------  --------------
<S>                                           <C>            <C>           <C>        <C>             <C>       
Net sales                                         $   567.8       $    488.0     $    --      $    (88.2)      $    967.6
Cost of sales                                         484.9            431.0        (1.6)          (78.2)           836.1
                                                 ------------    --------------   --------   --------------  --------------
    Gross profit                                       82.9             57.0         1.6           (10.0)           131.5
                                                 ------------    --------------   --------   --------------  --------------
Selling, general and administrative expenses            9.9             29.8        20.0              --             59.7
Research, development and engineering expenses         24.5             12.7        12.7              --             49.9
Repositioning and impairment charges                  (15.2)             1.9       282.8           (10.0)           259.5
In-process research and development charges            77.5               --          --              --             77.5
Amortization of intangibles                            10.8              3.1        (1.2)             --             12.7
                                                 ------------    --------------   --------   --------------  --------------
    Operating loss                                    (24.6)             9.5      (312.7)             --           (327.8)
Interest expense                                         --              5.7        58.0              --             63.7
Other income (expense), net                             3.3              0.3        (0.6)           (0.2)             2.8
                                                 ------------    --------------   --------   --------------  --------------
  Loss before income taxes and distributions
    on Company obligated mandatorily redeemable
    convertible preferred securities                  (21.3)             4.1      (371.3)           (0.2)          (388.7)
Income taxes (benefit)                                  7.6              6.3       (68.2)             --            (54.3)
Distributions on Company obligated mandatorily
 redeemable convertible preferred securities             --               --         5.7              --              5.7
                                                 ------------    --------------   --------   --------------  --------------
Earnings (loss) before extraordinary loss             (28.9)            (2.2)     (308.8)           (0.2)          (340.1)
Extraordinary loss, net of tax benefit of                --               --         0.7              --              0.7
  $0.4 million
                                                 ------------    --------------   --------   --------------  --------------
    Net loss                                      $   (28.9)       $    (2.2)    $(309.5)      $    (0.2)      $   (340.8)
                                                 ============    ==============   ========   ==============  ==============

</TABLE>

                                     - 17 -



<PAGE>







<TABLE>


                    BREED TECHNOLOGIES, INC. AND SUBSIDIARIES
                  CONSOLIDATED CONDENSED STATEMENT OF CASH FLOW
                        NINE MONTHS ENDED MARCH 31, 1999
                                   (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)                              $     5.5      $   (106.4)    $ (134.7)      $     0.9      $   (234.7)
Adjustments to reconcile net earnings (loss)
 to net cash provided by (used in) operating
 activities:
  Depreciation and amortization                         32.7            22.1          0.8              --            55.6
  Changes in working capital items and other            (8.7)          102.4         46.2            (0.9)          139.0
                                                  ------------   --------------   --------   --------------  --------------
  Net cash provided by (used in) operating activities   29.5            18.1        (87.7)             --           (40.1)
                                                  ------------   --------------   --------   --------------  --------------
Cash flows from investing activities:
  Capital expenditures                                 (21.0)          (19.8)       (10.0)             --           (50.8)
  Proceeds from sale of assets                           1.1             3.4           --              --             4.5
                                                  ------------   --------------   --------   --------------  --------------
  Net cash (used in) investing activities              (19.9)          (16.4)       (10.0)             --           (46.3)
                                                  ------------   --------------   --------   --------------  --------------
Cash flows from financing activities:
    Proceeds from debt                                    --             5.2        484.3              --           489.5
    Repayment of debt                                   (5.8)          (15.2)      (411.3)             --          (432.3)
                                                  ------------   --------------   --------   --------------  --------------
  Net cash provided by (used in) financing activities   (5.8)          (10.0)        73.0              --            57.2
                                                  ------------   --------------   --------   --------------  --------------
Effect of exchange rate changes on cash                   --            10.7           --              --            10.7
                                                  ------------   --------------   --------   --------------  --------------
Increase (decrease) in cash and cash                     3.8             2.4        (24.7)             --           (18.5)
equivalents
Cash and cash equivalents at beginning of period       (22.9)           19.0         48.3              --            44.4
                                                  ------------   --------------   --------   --------------  --------------
Cash and cash equivalents at end of period         $   (19.1)     $     21.4     $   23.6       $      --      $     25.9
                                                  ============   ==============   ========   ==============  ==============
</TABLE>                      


                                     - 18 -



<PAGE>







<TABLE>

                    BREED TECHNOLOGIES, INC. AND SUBSIDIARIES
                  CONSOLIDATED CONDENSED STATEMENT OF CASH FLOW
                        NINE MONTHS ENDED MARCH 31, 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 loss                                          $   (28.5)     $   (1.1)    $ (311.0)     $    (0.2)     $   (340.8)
Adjustments to reconcile net loss to net
 cash provided by (used in) operating
 activities:
    Depreciation and amortization                          26.6          16.8           --             --            43.4
    Changes in working capital items and other             (7.4)         10.4        264.3            0.2           267.5
                                                    -------------  ------------  ---------   --------------   ------------
    Net cash provided by (used in)operating activities     (9.3)         26.1        (46.7)            --           (29.9)
                                                    -------------  ------------  ---------   --------------   ------------
Cash flows from investing activities:
    Cost of acquisitions and capital expenditures         (19.9)        (33.6)      (706.6)            --          (760.1)
    Proceeds from sale of assets                            1.9           2.3                                         4.2
                                                    -------------  ------------  ---------   --------------   ------------
    Net cash (used in) investing activities               (18.0)        (31.3)      (706.6)            --          (755.9)
                                                    -------------  ------------  ---------   --------------   ------------
Cash flows from financing activities:
    Proceeds from debt                                      --           15.6      1,166.4             --         1,182.0
    Proceeds from Preference Stock issuance                 --             --        554.0             --           554.0
    Repayment of debt                                     (6.2)            --       (716.1)            --          (722.3)
    Redemption of Preference Stock                          --             --       (210.0)            --          (210.0)
    Cash dividends paid                                     --             --         (2.2)            --            (2.2)
    Proceeds from common stock issued                       --             --          1.6             --             1.6
                                                    -------------  ------------  ---------   --------------   ------------
    Net cash provided by financing activities             (6.2)          15.6        793.7             --           803.1
                                                    -------------  ------------  ---------   --------------   ------------
Effect of exchange rate changes on cash                     --          (11.9)          --             --           (11.9)
                                                    -------------  ------------  ---------   --------------   ------------
Increase (decrease) in cash and cash equivalents         (33.5)          (1.5)        40.4             --             5.4
Cash and cash equivalents at beginning of period            --           20.0         (1.3)            --            18.7
                                                    -------------  ------------  ---------   --------------   ------------
Cash and cash equivalents at end of period           $   (33.5)     $    18.5     $   39.1      $      --      $     24.1
                                                    =============  ============  =========   ==============   ============
</TABLE>

                                     - 19 -



<PAGE>


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

OVERVIEW

IMPLEMENTATION OF REPOSITIONING PROGRAM

The Company  formulated  the  Repositioning  Program  during the  quarter  ended
December 31, 1997. As of March 31, 1999, the Company had reduced its global work
force  by  approximately  4,998  employees  (compared  to  a  net  reduction  of
approximately  4,300  employees as of December 31, 1998) and closed  and/or sold
approximately  45 manufacturing  facilities.  During the nine months ended March
31, 1999, the Company incurred  disruption  costs of approximately  $6.3 million
associated  with closing and relocating  manufacturing  facilities in connection
with the Repositioning  Program. These costs were included in cost of sales. The
Company's Repositioning Program has been substantially completed as of March 31,
1999  with the  remaining  repositioning  actions,  such as the sale of  Gallino
Plastics (see Note 9) to be completed by June 30, 1999.

As of March 31,  1999,  actions  taken by the  Company  in  connection  with the
Repositioning  Program have  resulted in  approximately  $97.6 million in annual
cost  savings to the Company.  The benefit of cost savings  realized to date has
been  substantially  offset by costs associated with an unusually high number of
product launches  commenced during the three months ended September 30, 1998. In
addition,  the Company  believes  that the benefit of  anticipated  cost savings
during fiscal 1999  attributable  to the  Repositioning  Program will be further
offset in part due to the deteriorating  business  conditions at United Steering
Systmes, Custom Trim and the seat belt business acquired from AlliedSignal.

PRODUCT LAUNCHES

The  Company's  results of  operations  for the nine months ended March 31, 1999
were adversely impacted by a number of factors including higher costs associated
with an 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 launched 44 products  compared to 10 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, 1997). 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
nine months ended March 31, 1999, the Company was required to allocate resources
during the period to such  launches  that would  have  otherwise  been  directed
towards  implementing the Repositioning  Program. For example, the Company could
not implement scheduled personnel  reductions during such period pursuant to the
Repositioning Program and, in some instances, additional personnel were hired to
support these launches.  In addition,  the Company  incurred  significant  costs
associated  with (i) premium  freight (both in receiving  materials from vendors
and shipping  products to customers)  as a result of these product  launches and
(ii) generally higher material content  requirements in connection with launches
relating  to  seatbelt  and airbag  programs.  To address  the  increased  costs
relating  to higher  material  content  requirements,  the  Company  is  seeking
customer  approval  of  certain  engineering  changes  with  respect  to certain
programs that the Company  believes will lower material costs for such programs,
has sought  price  reductions  from  certain  vendors  and, in some  cases,  has
increased  prices  for  subject  products.  As a result of the  reallocation  of
resources and these significant  costs,  these launches  adversely  impacted the
Company's  results of  operations  for the three and nine months ended March 31,
1999 and  partially  offset  the  benefit  of cost  savings  realized  under the
Repositioning Program to date.

                                     - 20 -

<PAGE>



RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998

Net sales  decreased  7% to $401.2  million for the three months ended March 31,
1999 from $431.7 million for the three months ended March 31, 1998. The decrease
in net sales was primarily due to lower sales in airbags of approximately  $16.0
million,  the continued decline in EMS sensor sales, lower sales in the steering
wheel division, primarily in Europe, of $3.2 million and the sale of Italtest on
January 1, 1999.  These  decreases were partially  offset by increased  sales of
seat belts compared to the prior year quarter.

EMS sensors  sales  decreased  48% to $13.9  million for the three  months ended
March 31, 1999 from $26.6  million for the three  months  ended March 31,  1998.
This decrease was primarily due to lower demand as major customers  continued to
shift from EMS sensors to electronic sensors. The Company believes that sales of
EMS  sensors  will  continue  to decline in the  foreseeable  future and are not
expected to have a material impact on the Company's future results.

Cost of sales was flat at $357.0  million for the three  months  ended March 31,
1999  compared to $356.8  million  for the three  months  ended March 31,  1998.
Despite the decrease in sales during the quarter  compared to last year, cost of
sales  remained  flat due to an  increase  in cost of  sales  in the  seat  belt
division due to the new product launches with higher production costs.

Gross profit decreased 41% to $44.2 million for the three months ended March 31,
1999 from $74.9 million for the three months ended March 31, 1998.  Gross profit
as a  percentage  of net sales was 11% for the three months ended March 31, 1999
compared to 17% for the three  months  ended March 31,  1998.  This  decrease in
gross  profit as a  percentage  of net sales during the three months ended March
31,  1999  was due to (i) a shift  in  product  mix to a  higher  proportion  of
products  with lower average  margins,  primarily  seat belts,  than the average
margin  attributable  to products  sold by the Company  during the three  months
ended  March  31,  1998 and (ii) a shift in  product  mix from high  margin  EMS
sensors to lower margin products .

Selling,  general and administrative  expenses decreased 7% to $20.5 million for
the three  months  ended March 31, 1999 from $22.1  million for the three months
ended March 31, 1998. The decrease was  attributable to generally lower selling,
general and administrative expenses company wide due to cost savings as a result
of the Company's Repositioning Program.

Research, development and engineering expenses increased 4% to $23.3 million for
the three  months  ended March 31, 1999 from $22.4  million for the three months
ended March 31, 1998. This increase reflected increased costs associated with HS
Technik and Design,  which was acquired in May 1998, and an increase in spending
for new product development, additional application engineering costs associated
with future product launches,  increasing demand for more  sophisticated  safety
systems by our customers and to meet government regulated  specifications.  This
increase was partially offset by cost savings relating to reduced  headcount and
related expenses as a result of the Repositioning Program.

Amortization  of  intangibles  decreased by $1.0 million during the three months
ended March 31, 1999. The decrease in amortization  expense was primarily due to
refinement  of  the  allocation  of  Purchase  Price  associated  with  the  SRS
acquisition.

Operating loss excluding impairment charges for the three months ended March 31,
1999 was $5.4 million  compared to an operating  profit of $23.6 million for the
three months ended March 31, 1998.  Operating  loss as a percentage of net sales
was (1)% for the three  months  ended March 31, 1999  compared to a profit of 5%
for the three months ended March 31, 1998.  The operating loss was primarily due
to lower  sales  volume and lower  gross  profit  margin due to higher seat belt
production  costs and  declining  EMS sensor  sales and the one time  charge for
impairment of $135.2 million in European seat belt operations (See Note 10).

                                     - 21 -

<PAGE>


Interest  expense  including  the  distribution  on the  redeemable  convertible
preferred  securities for the three months ended March 31, 1999 decreased 15% to
$27.5  million.  This  decrease  was  primarily  due to slightly  lower  average
interest rates during the third quarter this year versus third quarter last year
as well as lower bank fees.

During the three months ended March 31, 1999, the Company recorded a foreign tax
expense in the amount of $3.1 million.  No 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.







                                     - 22 -







<PAGE>



RESULTS OF OPERATIONS

NINE MONTHS ENDED MARCH 31, 1999 COMPARED TO NINE MONTHS ENDED MARCH 31, 1998

Net sales increased 17% to $1,136.6  million for the nine months ended March 31,
1999 from $967.6  million for the nine months ended March 31, 1998. The increase
in net  sales was due to the  acquisition  of SRS on  October  30,  1997,  which
accounted for approximately  $267.4 million of the increase in net sales for the
nine months ended March 31, 1999.

EMS sensors sales decreased 47% to $43.1 million for the nine months ended March
31,  1999 from $81.3  million for the nine months  ended  March 31,  1998.  This
decrease was primarily due to lower demand as major customers continued to shift
from EMS sensors to electronic sensors..  The Company believes that sales of EMS
sensors will continue to decline in the foreseeable  future and are not expected
to have a material impact on the Company's future results.

Cost of sales  increased  19% to $998.0  million for the nine months ended March
31, 1999 from  $836.1  million for the nine  months  ended March 31,  1998.  The
increase  reflects  additional  production costs for the nine months ended March
31, 1999 resulting from the  acquisition of SRS in fiscal 1998 and the unusually
high  number  of  product  launches  commenced  during  the three  months  ended
September 30, 1998. See discussion above under "Product Launches". This increase
in production  costs was partially offset by lower cost of sales associated with
the loss of sales volume as discussed above and a reduction in production  costs
as a result of actions taken under the Repositioning  Program. In addition,  the
Company incurred  approximately  $6.3 million during the nine months ended March
31,  1999  related  to  disruption   costs   associated   with  the  closing  of
manufacturing  facilities in connection with the Repositioning  Program, as well
as a $1.3 million charge relating to settlement of a warranty claim.

Gross profit  increased 5% to $138.6 million for the nine months ended March 31,
1999 from $131.5 million for the nine months ended March 31, 1998.  Gross profit
as a  percentage  of net sales was 12% for the nine months  ended March 31, 1999
compared to 14% for the nine months ended March 31,  1998.  Gross profit for the
nine months ended March 31, 1998  reflected a $28.4 million  charge against cost
of sales relating to manufacturing processes acquired in connection with the SRS
acquisition  that  were  exited.  Excluding  this  charge,  gross  profit  as  a
percentage of net sales for the nine months ended March 31, 1998 would have been
17% compared to 12% for the nine months ended March 31, 1999.  This  decrease in
gross profit as a percentage  of net sales was due to (i) a shift in product mix
to a higher  proportion of products with lower average  margins,  primarily seat
belts,  than the average  margin,  attributable  to products sold by the Company
during the nine months  ended March 31,  1998,  (ii) a shift in product mix from
EMS  sensors  to lower  margin  products,  and  (iii) higher  production  costs
associated with the unusually high number of product  launches  commenced during
the three months ended September 30, 1998.

Selling, general and administrative expenses increased 8.0% to $64.6 million for
the nine  months  ended  March 31,  1999 from $59.7  million for the nine months
ended March 31,  1998.  The  increase  was  primarily  attributable  to expenses
aggregating $1.1 million incurred to settle a claim relating to the Lemelson bar
coding patent,  costs  associated  with SRS, which was acquired in October 1997,
and bad debt  expenses  aggregating  $0.6  million.  This  increase  in selling,
general  and  administrative  expenses  was  partially  offset  by cost  savings
associated with the Repositioning Program.

Research,  development and engineering  expenses  increased 46% to $72.7 million
for the nine months ended March 31, 1999 from $49.9  million for the nine months
ended March 31, 1998. This increase  reflected  increased costs  associated with
the  ongoing  activities  of SRS,  which was  acquired in October  1997,  and HS
Technik and Design,  which was acquired in May 1998, and an increase in spending
for new product development, additional application engineering costs associated
with future product launches,  increasing demand for more  sophisticated  safety
systems by our customers, and to meet government regulated specifications.  This
increase was partially offset by cost savings relating to reduced  headcount and
related expenses as a result of the Repositioning Program.

                                     - 23 -

<PAGE>



Amortization  of  intangibles  increased by $4.9 million  during the nine months
ended March 31, 1999.  The increase in  amortization  expense was  primarily the
result of the goodwill and other intangibles  associated with the acquisition of
SRS.

Operating  loss for the nine  months  ended  March 31,  1999 was $151.5  million
compared to $327.8  million for the nine months ended March 31, 1998.  Operating
loss as a percentage  of net sales was (13)% for the nine months ended March 31,
1999  compared to (34)% for the nine months ended March 31, 1998.  The operating
loss for the nine  months  ended  March 31,  1998  includes  $365.4  million  in
one-time charges:  (i) $259.5 million of repositioning  and impairment  charges,
(ii) a $77.5  million  charge  relating to the  write-off of certain  in-process
research and development, and (iii) a $28.4 million charge against cost of sales
for inventory and long-term  contracts relating to manufacturing  processes that
will be exited.  Excluding  these  $365.4  million of charges,  the  decrease in
operating income was primarily due to the shift in product mix, product launches
and disruption  costs  discussed above and the one time charge for impairment of
$135.2 million in European seat belt operations.

Interest  expense  including  the  distribution  on the  redeemable  convertible
preferred  securities  for the nine months ended March 31, 1999 increased 13% to
$78.3 million as compared to the nine months ended March 31, 1998. This increase
in interest  expense was  primarily  due to the  increase in average  borrowings
outstanding as a result of the acquisition of SRS in October 1997. This increase
was  offset  partially  by  interest  savings   resulting  from  voluntary  debt
reductions.

During the nine months  ended March 31, 1999 the Company  recorded a foreign tax
expense of $5.4 million  which was partially  offset by a $0.5 million  domestic
benefit  for a tax  credit.  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  and capital  expenditures.  The Company intends to fund
these cash needs with cash from operations  together with  borrowings  available
under its credit  facility.  On April 28, 1998,  the Company  entered into a new
$675.0 million credit facility.

On April  28,  1998,  the  Company  entered  into a new  $675.0  million  credit
facility.  At March 31, 1999,  the Company had an aggregate of $580.0 million of
borrowings  outstanding  under the credit  facility,  which bore  interest  at a
weighted  average  rate of  8.1725%  per annum at such date,  and had  aggregate
borrowing  availability  thereunder of $14.0 million.  Because the Company would
have been in violation  of certain  financial  covenants  in the loan  agreement
relating to the credit  facility as of March 31,  1999,  the Company  obtained a
waiver of these  covenants  from the lenders that was  effective  from March 30,
1999 through June 29, 1999 (the "Fourth Waiver"). Pursuant to the Fourth Waiver,
the maximum borrowing  availability under the company's revolving line of credit
was decreased from its original level of $150.0  million  (including  letters of
credit) to $125.0 million  (including  letters of credit).  The Company paid the
lenders fees aggregating $1.1 million in connection with the Fourth Waiver.

On March 3, 1999 the Company obtained an additional  waiver (the "Third Waiver")
in anticipation of the Company's  disposition of its Gallino Plastics  business.
The Third Waiver  provided for the release from the credit  facility's  negative
pledge provision  limiting the Company's ability to pledge its retained interest
in the new joint venture  formed as a result of the  disposition  of the Gallino
Plastics  business and removed certain  restrictions that would have limited the
Company's  ability to transfer the shares of its FAS S.p.A.  and A.P. Co. S.r.l.
subsidiaries which are an integral part of the Gallino Plastics  business.  (See
the Subsequent Events Section as it relates to the Gallino Plastics business.)

                                     - 24 -

<PAGE>


On February 11, 1999, the Company obtained a waiver (the "Second Waiver") of the
net worth covenant in the loan agreement relating to the credit facility as well
as an event of default  that  existed due to the  Company's  failure to register
certain  securities as required under certain agreements to which it is a party.
The Second Waiver was  effective  from February 13, 1999 through March 30, 1999.
In connection with the Second Waiver,  the maximum borrowing  availability under
the revolving line of credit was increased to $125.0 million  (including letters
of  credit)  from  $110.0  million  (including  letters  of  credit)  previously
established at the granting of the "First Waiver"  discussed  below. The Company
paid the lenders fees  aggregating  $1.3 million in  connection  with the Second
Waiver.

On December 31, 1998 the Company  obtained a waiver (the "First  Waiver") of the
net worth covenant in the loan agreement  relating to the credit  facility.  The
First Waiver was  effective  from  December 30, 1998 through  February 12, 1999.
Pursuant to the First  Waiver,  the  maximum  borrowing  availability  under the
Company's  revolving line of credit was decreased from $150.0 million (including
letters of credit) to $110.0 million (including letters of credit).

Although the Company intends to negotiate the necessary amendments on additional
waivers with its lenders,  there can be no assurance  that it will be able to do
so. Any amendment to the loan agreement must be approved by the lenders  holding
more than 50% of the  commitments  and borrowings  outstanding  under the credit
facility.  In the  absence  of a  further  waiver  or an  amendment  to the loan
agreement, after June 29, 1999, the lenders would be entitled to exercise all of
their rights under the loan agreement including,  without limitation,  declaring
all amounts  outstanding  under the credit facility  immediately due and payable
and/or  exercising  their  rights with  respect to the  collateral  securing the
credit facility which consists of, among other things,  substantially all of the
real and personal property of the Company and its subsidiaries.

If the  Company is unable to obtain a further  waiver or  amendment  to the loan
agreement, the Company may not have sufficient cash to meet its working capital,
debt service and capital  expenditure needs beyond June 29, 1999, in which case,
the Company may 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.  Consequently,  the inability to
obtain any such waiver, amendment or alternative financing would have a material
adverse effect on the Company's financial condition and results of operations.

Until such time as the credit  facility  is  amended as  discussed  above or all
amounts  outstanding  under the credit  facility are repaid in full,  borrowings
outstanding  under the credit facility will be classified as a current liability
on the Company's consolidated balance sheet.

On April 28, 1998,  the Company  issued and sold an aggregate of $330 million of
its  9.25%  Senior  Subordinated  Notes  due 2008  (the  "Notes")  in a  private
transaction  under Rule 144A under the  Securities  Act of 1933, as amended (the
"Securities Act") (the "Notes Offering"). In connection with the Notes Offering,
the Company entered into a registration rights agreement (the "Notes Agreement")
pursuant  to which it agreed to offer to  exchange  the Notes for  substantially
identical  9.25%  Senior  Subordinated  Notes  due  2008  registered  under  the
Securities  Act (the "Exchange  Offer").  Pursuant to the Notes  Agreement,  the
Company was required to complete  the Exchange  Offer by the date 180 days after
April  28,  1998 (the  "Closing  Date").  The  Company  filed  the  registration
statement  relating to the Exchange Offer on June 24, 1998. Because the Exchange
Offer  had not been  consummated  on or prior  to the  date 180 days  after  the
Closing Date as required under the Notes  Agreement,  the interest rate borne by
the Notes  increased  pursuant to the Notes  Agreement by 0.25% on the 181st day
after the Closing Date. The interest rate  increased  thereafter by 0.25% on the
1st day of each subsequent  90-day period.  The Notes bore interest at a rate of
9.75% per annum at March 31, 1999. The Exchange Offer was completed on April 12,
1999  restoring the interest rate with respect to the notes to the original rate
of 9.25% as of April 12, 1999.

                                     - 25 -

<PAGE>


On November 25, 1997, the Company sold $257.7  million of its 6.50%  Convertible
Subordinated  Debentures due 2027 (the "Convertible  Debentures") to BTI Capital
Trust, which,  concurrently therewith, sold $250.0 million aggregate liquidation
amount of its 6.50%  Convertible  Trust  Preferred  Securities  (the  "Preferred
Securities") (which are fully and unconditionally  guaranteed by the Company) in
a private  transaction  under Rule 144A under the Securities Act (the "Preferred
Securities Offering"). In connection with the Preferred Securities Offering, the
Company entered into a registration rights agreement (the "Preferred  Securities
Agreement") pursuant to which it agreed to register (and cause BTI Capital Trust
to  register),  among other things,  the  Convertible  Debentures  and Preferred
Securities.   Pursuant  to  the  Preferred  Securities   Agreement,   the  Shelf
Registration  Statement (as defined  therein) was required to be effective on or
prior to June 17, 1998.  The Company filed the Shelf  Registration  Statement on
March 18,  1998.  Because  the Shelf  Registration  Statement  was not  declared
effective by June 17, 1998, the interest rate on the Convertible  Debentures and
the distribution rate applicable to the Preferred Securities increased by 0.25%,
payable in arrears,  with the first quarterly  payment due on the first interest
or distribution date following June 17, 1998.

The Shelf  Registration  Statement was declared  effective on March 11, 1999 and
the  interest  rate borne by the Notes and the  Convertible  Debentures  and the
distribution  rate in respect of the  Preferred  Securities  was  reduced to the
original amounts on March 11, 1999.

On May 12, 1999,  the Company gave notice to BTI Capital  Trust of its selection
of an  Extension  Period.  Payments of interest on the Debt  Securities  will be
deferred,  and no interest shall be due and payable during the Extension  Period
the Company has selected.  The Extension  Period will not exceed 20  consecutive
quarters,  including the quarter  ending June 30, 1999,  and no future  payments
will be made during this time until further notice. As a result,  BTI will defer
the  quarterly  dividend  payment due May 15, 1999  relating to its  convertible
preferred holders as permitted under the trust instrument.

Capital  expenditures  aggregated  $50.8 million for the nine months ended March
31, 1999. 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   $14.0  million  during  the  remainder  of  fiscal  1999.   Cash
investments in BSRS during the period were not material.  The Company's  ability
to invest in BSRS is limited under the Company's  credit facility and the Senior
Subordinated Notes due 2008.

The Company has market risk  exposure  from the impact of interest rate changes.
The Company has elected to manage this risk  through the  maturity  structure of
its  borrowings  and through the use of interest rate swap and cap  instruments.
Currently, interest rates affecting approximately 33% of the Company's debt will
vary directly with market rates due to the short-term nature of its maturity and
the absence of interest rate management  instruments  associated with this debt.
Given the  Company's  present  exposure to rate  movements,  each 0.5% change in
rates will impact interest  approximately  $1.5 million annually.  This analysis
considers only the impact of the hypothetical  interest rate changes and not the
overall economic activity impacting the Company.

YEAR 2000
The Year 2000 Issue is the result of computer  programs  being written using two
digits  rather than four to define the  applicable  year.  Any of the  Company's
computer  programs or hardware that have  date-sensitive  or embedded  chips may
recognize  a date using "00" as the year 1900  rather  than the year 2000.  This
could  result in a system  failure  or  miscalculation  causing  disruptions  of
operations,  including,  among other  things,  a temporary  inability to process
transactions, send invoices, or engage in similar normal business activities.

The Company is a member of the  Automotive  Industry  Action  Group  (AIAG),  an
automotive  trade  association  whose  members  are the North  American  vehicle
manufacturers and many large suppliers.  These member organizations  assemble as
the AIAG to  tackle  industry  issues  in  supply,  manufacturing,  engineering,
quality and finance.  The AIAG investigates the benefits of commonization in new
areas,  examines  established  processes  with an eye  toward  improvements  and
compares procedures to determine best practices.  The result of this work is the
development of new  technologies  and the standards that govern their usage. One
of the issues the AIAG has been charged with confronting is Year 2000 compliance
among automotive suppliers.

                                     - 26 -

<PAGE>


As a member of the AIAG and in conjunction with our major customers, the Company
has used the AIAG guidelines for Y2K compliance.  The phases  prescribed by AIAG
are:

AWARENESS  Within the Company the level of awareness of the  significance of the
Y2K issue has been elevated  through meetings and  notifications  throughout the
organization. This phase of the project is an ongoing effort.

INVENTORY The Company  conducted a worldwide  inventory of all computer hardware
and software (including business and operational applications, operating systems
and  third  party  products)  and  other  equipment  that  may be at  risk,  and
identified key third party businesses whose Y2K failure might most significantly
impact the Company. This phase has been completed.

RISK EVALUATION  After the  identification  of each at-risk system,  the Company
assessed how critical the system was to the business operation and the potential
impact of failure.  Resources for remediation  were allocated based on the level
of risk assigned. This phase has been completed.

REMEDIATION All but two critical systems had been remediated by March 1999, with
the two remaining systems'  remediation efforts expected to be completed by June
1999.  The Company will  continue to address  remediation  of other systems on a
prioritized basis thereafter.

TESTING After remediation, all implemented solutions will be tested in isolation
and with their  interface with all other systems.  This phase is closely related
to the remediation phase and is scheduled for completion by June 30, 1999.

ACCEPTANCE AND  IMPLEMENTATION  This phase involves  having  functional  experts
review test  results and  pre-established  criteria to ensure  compliance.  This
phase  assures that  business  processes or groups of  components  will function
correctly  regardless of dates used. The Company expects all critical systems to
be accepted and implemented by August 31, 1999.

The  Company  has  determined  that it will be  required  to modify  or  replace
portions of its  software and  hardware so its  computer  systems will  properly
utilize dates beyond December 31, 1999. These assessments indicated that some of
the  Company's   significant   information   technology  systems  and  operating
equipment, (i.e., production and manufacturing systems) could be affected.

Affected  operating  equipment  includes  automated  assembly  lines and related
technologies  used in various  aspects of the  manufacturing  process.  However,
based on a review of its product  lines,  the Company  has  determined  that the
products it has sold and will continue to sell do not require  remediation to be
Year 2000  compliant.  Accordingly,  the Company  does not believe the Year 2000
presents  a  material  exposure  as it relates  to the  Company's  products.  In
addition,  the Company has gathered  information  about the Year 2000 compliance
status of its significant  suppliers and subcontractors and continues to monitor
their compliance.

For its information  technology  exposures,  once software is  reprogrammed  and
replaced for a system,  the Company  begins  testing and  implementation.  These
phases run concurrently for different systems. Except for two, completion of the
remediation  phase for all significant  systems was completed by March 31, 1999,
with all  remediated  systems to be fully tested and  implemented  by August 31,
1999. The  remediation of operating  equipment is  significantly  more difficult
than the remediation of the information  technology  systems because some of the
manufacturers  of that  equipment  are no longer in  business.  Testing  of this
equipment is also more difficult than the testing of the information  technology
systems.  Once  testing  is  complete,  the  operating  equipment  is ready  for
immediate use. The Company completed its remediation  efforts by March 31, 1999.
Testing and implementation of all critical equipment is expected to be completed
by June 30, 1999.


                                     - 27 -

<PAGE>

The Company is in the process of working with  suppliers and customers to ensure
that the Company's  systems that interface  directly with third parties are Year
2000  compliant by December 31, 1999.  The Company has completed its  assessment
efforts.  Testing of all significant material systems was completed by March 31,
1999.  Implementation  is expected to be completed by June 30, 1999. Each vendor
queried believed its order entry and inventory  management systems would be Year
2000 compliant by the end of 1999.

The Company has queried its important  suppliers and customers that do not share
information  systems with the Company.  To date, the Company is not aware of any
suppliers  or  customers  Year 2000  issue  that  would  materially  impact  the
Company's results of operations or financial condition. However, the Company has
no means of ensuring that suppliers and customers  will be Year 2000 ready.  The
inability of its external agents to complete their Year 2000 resolution  process
in a  timely  fashion  could  materially  impact  the  Company.  The  effect  of
noncompliance by its suppliers and customers is not determinable.

The Company will utilize  both  internal and external  resources to reprogram or
replace,  test and implement the software and operating  equipment for Year 2000
modifications.  The  total  cost of the Year 2000  project  is  estimated  at $7
million and is being funded with cash from operations.  To date, the Company has
incurred  approximately  $4.5 million  ($4.5 million  expensed)  relating to all
phases of the Year 2000  project.  Of the total  remaining  project  costs,  the
remaining  $2.5  million  relates to repair of hardware and software and will be
expensed as incurred.

The  Company's  plan to  complete  the  Year  2000  modifications  are  based on
management's best estimates,  which were derived utilizing numerous  assumptions
of future events including the continued availability of certain resources,  and
other factors. Estimates on the status of completion and the expected completion
dates are based on costs  incurred  to date  compared to total  expected  costs.
However,  there can be no guarantee  these estimates will be achieved and actual
results could differ  materially from those plans.  Specific  factors that might
cause  such  material   differences   include,  but  are  not  limited  to,  the
availability  and cost of personnel  trained in this area, the ability to locate
and correct all relevant computer codes, and similar uncertainties.

There can be no assurance that the Company will be completely  successful in its
efforts to address  Year 2000  issues.  The Company  could  suffer lost sales or
other  negative  consequences,  including,  but not  limited  to,  diversion  of
resources,  damage to the Company's  reputation,  increased service and warranty
costs  and  litigation,  any of which  could  materially  adversely  affect  the
Company's business operations or financial statements.

The Company is also dependent on third parties such as its customers, suppliers,
service providers and other business  partners.  If these or other third parties
fail to  adequately  address Year 2000 issues,  the Company  could  experience a
negative impact on its business operations or financial statements. For example,
the failure of certain of the  Company's  principal  suppliers to have Year 2000
compliant  internal  systems could impact the Company's  ability to  manufacture
and/or  ship  its  products  or  to  maintain  adequate   inventory  levels  for
production.

Although the Company has not yet developed a comprehensive  contingency  plan to
address  situations  that may result if the  Company or the third  parties  upon
which the Company is dependent  are unable to achieve Year 2000  readiness,  the
Company's Year 2000  compliance  program is ongoing and its ultimate  scope,  as
well as the consideration of contingency plans, will continue to be evaluated as
new information becomes available.




                                     - 28 -



<PAGE>



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.











                                     - 29 -





<PAGE>








                                 PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

The Company  reported  the matter  entitled  TAKATA  CORPORATION  ("TAKATA")  V.
ALLIEDSIGNAL,  INC. AND BREED TECHNOLOGIES,  INC. (United States District Court,
District of Delaware,  case no. 98-94) (the  "Original  Complaint")  in Part II,
Item 3,  "Legal  Proceedings"  of its 10K/A for the  fiscal  year ended June 30,
1998.  The Original  Complaint  alleged patent  infringement  on the part of the
Company  relating  to  the  production  of two  seat  belt  retractors  formerly
manufactured  by  AlliedSignal  and now  manufactured  by the Company.  The suit
sought  monetary  damages  and  injunctive  relief.  Under  the  Asset  Purchase
Agreement relating to the SRS Acquisition (the "APA"),  AlliedSignal is required
to indemnify the Company (on a net after tax basis) against any monetary damages
incurred  by  the  Company  in  connection  with  this  lawsuit,  including  any
reasonable  royalties  that  might  be paid in  respect  of sales  made  through
February 2000. The complaint was subsequently  amended to include allegations of
infringement relating to four additional products ("Subsequent  Claims").  These
claims are subject to partial  indemnification  by  AlliedSignal  under the APA.
During the quarter  ended March 31,  1999,  the Company  settled all of the four
Subsequent  Claims  through a mutual  release  of claims  as to  certain  of the
products and by securing license agreements with Takata which permit the Company
to  manufacture  the  products  for  paid up  and/or  (depending  upon  volumes)
continuing royalties. The licenses, in the belief of management, will not have a
material  adverse  effect on the  Company's  financial  condition  or results of
operation.  The subject of the  Original  Complaint  remains  responsibility  of
AlliedSignal under the APA.

CENTOCO HOLDINGS LIMITED AND KS CENTOCO LTD. V. MAGNA INTERNATIONAL, INC., FRANK
STRONACH, MST AUTOMOTIVE,  INC., MST AUTOMOTIVE OF AMERICA, INC.,  ACTS-ADVANCED
CAR TECHNOLOGY SYSTEMS,  GMBH & CO. KG, TRW, INC. TRW AUTOMOTIVE SAFETY SYSTEMS,
GMBH,  SIEMENS  AG, BSRS  RESTRAINT  SYSTEMS  INTERNATIONAL,  GMBH & CO KG, BSRS
RESTRAINT  SYSTEMS L.P. AND BREED  TECHNOLOGIES,  INC.  ONTARIO COURT OF JUSTICE
(GENERAL DIVISION),  FILE NO. 97-GD-41605.  On or about March 11, 1999, a number
of parties,  including  the  Company,  were added to pending  litigation  in the
aforementioned   matter.  The  lawsuit  is  based  upon  alleged  violations  of
intellectual  property rights related to airbag technology and seeks declaratory
and  injunctive  relief,  and damages in excess of $2.5  billion.  The Complaint
alleges  that  certain   technology  owned  by  the  plaintiffs  was  improperly
transferred to third parties  through a complex series of licenses and corporate
mergers.  One of the alleged recipients of this technology is Siemens,  A.G. The
Company's only involvement in the case is as Siemens' partner in BSRS. While the
outcome of this lawsuit cannot be predicted with certainty, based upon currently
available information, the Company does not believe that this matter will have a
material  adverse  effect on the  Company's  financial  condition  or results of
operation.

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


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

  (a)  Exhibits

None

    (b)  Reports on Form 8-K

None



                                     - 30 -



<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)





                                      By:   /S/   JOHN C. SONTHEIMER  
                                           ----------------------------         
                                              John C. Sontheimer
                                              Chief Financial Officer




                                     - 31 -