Key Safety Systems, Inc. Business Report up until FY ended Jun. 2015

Divestiture

-In May 2013, the Company has completed the divestiture of its subsidiary, Hamlin, to Littelfuse for USD 145 million. The Hamlin product line includes reed, hall-effect, inductive and its newly developed PWG linear sensing technologies, as well as switches and relays. Hamlin is a global company whose principal facilities are in Lake Mills, Wisconsin, U.S.; Norwich, U.K.; Suzhou, Jiangsu Province, China and Matamoros, Mexico. Hamlin had sales of approximately USD 76 million in 2012.

Recent Developments in U.S.

-In May 2015, the Company announced the acceleration and increase of its existing capital expansion plan for airbag inflators. As a response to increased market demand, the accelerated plan will expand capacity by millions of units approximately two years earlier than originally scheduled, with production ramp-up now starting in December 2015. Both frontal and side impact inflators are included in the capacity expansion project. The Company secured new business at a record rate due to the increased demand, with production for several quick-to-market projects starting in 2016. (From a press release on May 28, 2015)

-In 2012, the Company unveiled the new brand KSS ITALIA, which designs and manufactures components created from exotic materials including carbon fiber, specialty leather, titanium and wood. Its automotive product lineup includes steering wheels, airbags, and an expanding portfolio of exterior and interior trims. KSS ITALIA creations are featured on premium and sport brands like Aston Martin, Bentley, Cadillac, Ferrari, Jaguar, Land Rover, Lotus, Maserati, Porsche and Toyota Racing. (From a press release on May 21, 2012)

-In 2011, the Company announced that its Greenville, Alabama, U.S. factory has commenced production on three-point seat belt assemblies including buckles and retractors for Freedman Seating, a supplier to the U.S. domestic bus and transportation industry serving the heavy- and medium-duty passenger seating market. (From a press release on December 22, 2011)

-In 2011, the Company announced that it will supply its integrated seatbelt tension sensor for three new vehicles in the U.S. market. The product is integrated in a single package within the buckle itself. (From a press release on November 30, 2011)

-In 2011, the Company announced alignment with the new FMVSS 226 ejection mitigation rule, which is intended to reduce the risk of occupant ejection from vehicle, starting from August 2013. Using airbag design and compressed gas inflator technology, the Company is able to meet the new requirement in multiple vehicle architectures. NHTSA's new rule will be phased in for all passenger vehicles sold in the U.S. (From a press release on November 17, 2011)

Recent Developments outside U.S.

<China>
-In December 2013, the Company announced that its "Inflatabelt" would be available for the first time in China. First marketed on the 2011 Ford Explorer, the Company's rear inflatable seat belt is available on six vehicle models and five continents. (From a press release on December 12, 2013)

<Romania>
-In 2011, the Company announced the first airbag shipment from its plant in Arad, Romania. The factory started producing cushions in 2010. The first airbag assembly lines are now producing side airbags for European OEMs. Production capacity at the facility is scheduled to increase rapidly to include a full portfolio of driver, passenger, knee and curtain airbags which will serve more than ten customers. (From a press release on September 30, 2011)

Joint Venture

-In February 2015, the Company announced it has increased its shareholding in KSS-Abhishek Safety Systems Pvt Ltd. The KSS-Abhishek joint venture was formed in 2007 with the mission to provide life-saving products both domestically in India and abroad. KSS-Abhishek has added several new OEM customers since its creation and has also been recognized as a repeat winner of the Suzuki Supplier Performance Award. Through this investment, the Company increased its share from 50% to 65%. The Company plans to continue its partnership with the Gupta shareholders, who increased their holdings to 35%. (From a press release on February 24, 2015)

Business Partnership

-In March 2015, the Company announced that it has signed a cooperation agreement with Mobileye NV. Mobileve NV is the industry leader in real-time machine vision processing and recognition for camera-based Advanced Driver Assistance Systems and autonomous vehicles. This partnership will be based upon Mobileye providing the EyeQ vision processor chip family to the Company. The Company will utilize its extensive safety systems capability to integrate this chip with decision logic and hardware, and serve as a tier 1 supplier to automotive manufacturers worldwide. (From a press release on March 30, 2015)

Major Contracts

-In October 2013, the Company's premium products brand, KSS ITALIA, announced the addition of the Chrysler Group's SRT brand as a new customer. The addition of SRT as a customer expands the Company's presence in the high-end vehicle market. KSS ITALIA has begun production of interior carbon fiber components for the SRT "Viper". (From a press release on October 10, 2013)

-In 2013, the Company announced the first airbag shipment from KSS ITALIA in support of the new Maserati "Quattroporte". (From a press release on February 11, 2013)

-In 2012, the Company announced that it has increased the production capacity of its "Inflatabelt" inflatable seat belt to supply more Ford vehicles starting in January 2012. First to market on the 2011 Ford "Explorer", the Company's rear inflatable seatbelt will additionally be available on the 2013 Ford "Flex", 2013 "Lincoln MKT" and 2013 "Lincoln MKT" launching in 2012. The 2013 "Modeo" will be the first vehicle in its class to offer the "Inflatabelt" in Europe. (From a press release on January 19, 2012)

-In 2011, the Company announced that it is shipping airbags to Kia Motors Manufacturing Georgia (KMMG) in support of the first U.S.-built Kia "Optima" mid-size sedan. The KMMG factory, located in West Point, Georgia, U.S., began producing the Kia "Optima" in September 2011. (From a press release on October 10, 2011)

New Company

-In 2011, the Company announced that it will create a new wholly owned subsidiary in Shanghai, China. The new company, KSS Techtron, will provide design, development and technical analysis services to a broad array of customers representing various industries. (From a press release on July 18, 2011)

Awards

Year Award Recipient Customer Awards
2015 Yangfeng Key Safety Systems (Shanghai) JAC Excellent Supplier Award
2015 Yangfeng Key Safety Systems (Shanghai) JAC S3 Strategy Supplier Award
2015 Yangfeng Key Safety Systems (Shanghai) SAIC Excellent Supplier Award
2015 Yangfeng Key Safety Systems (Shanghai) SAIC GM Technology and Innovation Award
2015 Yangfeng Key Safety Systems (Shanghai) Changan Excellent Supplier Award
2014 Yangfeng Key Safety Systems (Shanghai) Geely Excellent Supplier Award
2014 Yangfeng Key Safety Systems (Shanghai) JAC Excellent Supplier Award
2014 Yangfeng Key Safety Systems (Shanghai) Shanghai Volkswagen Excellent Supplier Recommendation Award
2014 Yangfeng Key Safety Systems (Shanghai) SAIC GM Excellent Supplier Award
2013 KSS-Abhishek Safety Systems Volkswagen Quality Performance Award
2013 The Company GM Quality Excellence Award
2013 KSS-Abhishek Safety Systems Maruti Suzuki Vendor Performance Award
2013 The Company Toyota Motor Europe Certificate of Recognition in the area of cost
2013 Yangfeng Key Safety Systems (Shanghai) Shanghai Volkswagen Best Supplier Award
2013 Yangfeng Key Safety Systems (Shanghai) JAC Best Supplier Award
2013 Yangfeng Key Safety Systems (Shanghai) FAW-VW Best Technology Development Award
2013 Yangfeng Key Safety Systems (Shanghai) Chery Best Quality Supplier Award
2013 Yangfeng Key Safety Systems (Shanghai) BAIC Best Technology Development Award
2012 Yangfeng Key Safety Systems (Shanghai) SAIC GM Technology and Innovation Award
2012 Huzhou factory, Zhejiang Province, China Hyundai Mobis Best Supplier Award
2012 Valle Hermoso factory, Mexico GM Supplier Quality Excellence Award 2012
2012 The Company Ford World Excellence Award
2012 The Company Volkswagen Volkswagen Group Award Puebla 2012
2012 KSS-Abhishek Safety Systems Pvt., Ltd. Maruti Suzuki Vendor Performance Award
2012 Yangfeng Key Safety Systems (Shanghai) Chery Best Quality Supplier Award
2012 Yangfeng Key Safety Systems (Shanghai) JAC Best Supplier Award
2012 Yangfeng Key Safety Systems (Shanghai) Shanghai Volkswagen Excellent Supplier Award
2012 Yangfeng Key Safety Systems (Shanghai) SAIC GM Technology Award
2011 KSS-Abhishek Safety Systems Pvt., Ltd. Maruti Suzuki Vendor Performance Awards
2011 The Company Ford World Excellence Award



R&D Facilities

Name Location
Global Technical Center Sterling Heights, Michigan, U.S.
Raunheim, Germany
Shanghai, China
Yokohama, Japan
Seoul, Korea
Inflator Technical Center Lakeland, Florida, U.S.


-In March 2015, the Company announced the opening of its new SISPARK (Suzhou Industrial Park) Technical Center located in Suzhou, Jiangsu Province, China. The center's design and test capabilities will support advanced technology development and application projects in the active integrated safety arena. The technical center will primarily focus on camera and radar-based Advanced Driver Assistance Systems (ADAS). (From a press release on March 24, 2015)

-In February 2015, the Company announced the opening of its new Silicon Valley technical center located in Sunnyvale, California, U.S. The center will support advanced technology initiatives in both active and passive safety areas. In addition to serving as a focal point for collaborative development, it will also provide a liaison presence for West Coast customers and allow the Company to support independent technology projects. The new technical center will also seek new research and investment partners located throughout the region. (From a press release on February 11, 2015)

-In 2012, the Company has commenced operations in its new technical center located outside Seoul, South Korea. The new Korean technical center has design, evaluation, prototype and test capabilities and occupies over 1,250 square meters over two buildings.

Patent

-In 2012, the Company announced that it received an additional patent covering developments in electrical seat belt technology. The Company was awarded its first patent in this field in 1990, and was just awarded its 33rd electrical seat belt patent. The aim of this latest development is to provide retractor pretensioning for active safety in pre-crash scenarios. (From a press release on February 14, 2012)

Product Development

Dual chamber side airbag
-In 2011, the Company announced the introduction of its Dual Chamber Side Airbag. This technology debuts on the all-new "Yaris" for Toyota Motor Europe. The airbag, using technology co-developed with Toyota, is comprised of a cold gas inflator and a dual chamber cushion equipped with a "one way valve" between the two chambers. The "one way valve" design enables the two chambers to operate at different pressure levels. (From a press release on September 12, 2011)

Investment outside U.S.

<Macedonia>
-The Company announced in May 2015, that it has expanded operations in Europe with the addition of a new airbag cushion factory in Kicevo, Macedonia. Production shipments have begun. The new facility specializes in the cutting and sewing of airbag cushions and serves to expand the Company's global airbag production capacity. The new plant is the Company's first airbag cushion manufacturing plant located in Europe and is expected to employ 1,000 people when fully utilized. (From a press release on May 26, 2015)

-In April 2014, the Company announced plans to increase its production capacities in Europe by establishing a facility in Macedonia. The Company plans to launch a brownfield operation in late 2014 in Kicevo, Macedonia, followed by a greenfield operation in mid-2015. The initial investment into the facility is expected to create between 800 and 1,000 new jobs. Initially, the plant will focus on manufacturing airbag cushions, with the opportunity for further expansion into other product lines in the future. (From a press release on April 3, 2014)

<Mexico>
-In August 2015, the Company announced that it has commenced production in a new carbon fiber trim factory at Valle Hermoso, Mexico. The new operation specializes in producing high quality carbon fiber exterior and interior components. The Company has already booked several programs with multiple OEMs that will be supplied by the new factory. The Mexican operation has been modeled after the existing KSS Italia factory in Tregnago, Italy. That factory currently supplies customers such as Aston Martin, Bentley, Ferrari and Maserati. (From a press release on August 28, 2015)

-In December 2013, the Company announced that it has started in-house die casting operations at its new facility in Valle Hermoso, Mexico. The new facility will initially focus on manufacturing aluminum and magnesium steering wheel armatures, the majority of which will be used in an adjacent 40,000-square-feet facility belonging to the Company. (From a press release on December 4, 2013)

-In 2011, the Company announced that it has completed the installation of its first Mexican-based airbag inflator production lines at its Valle Hermoso, Mexico site. The facility started manufacturing airbag inflators during the second quarter of 2011, and production shipments have now begun. The Valle Hermoso site contains approximately 500,000 square feet of space and can manufacture all three of the Company's main product lines (airbags, seat belts and steering wheels). (From a press release on August 17, 2011)

<China>
-In 2012, the Company announced that its joint venture partnership YFKSS - Yangfeng Key Safety Systems (Shanghai) opened a new manufacturing facility in the Huairou region of Beijing, China. YFKSS will initially occupy 2,000 square meters of the new factory, with more than 100 employees focused on steering wheel production. The site has ample capacity to accommodate further expansion as additional steering wheel business or additional product lines, including airbags and seat belts, phase in. Production has commenced at the factory with first customer shipments scheduled for August 2012. Separately, construction is underway for the new YFKSS Shanghai factory located in the Pudong Kangqiao region of Shanghai, China. That new factory will have more than 50,000 square meters of floor space. (From a press release on June 27, 2012)

<Italy>
-In January 2011, the Company announced the opening of its new facility in Torino, Italy. This facility, located less than one kilometer from Fiat's headquarters, is now operational with engineering, program management, sales, quality and administrative functions on-site. (From a press release on January 12, 2011)