UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 for the quarterly period
ended May 27, 1995
Commission File No. 0-18348
BE AEROSPACE, INC.
(Exact name of registrant as specified in its charter)
Delaware 06-1209796
(State of Incorporation) (I.R.S. Employer Identification No.)
1400 Corporate Center Way
Wellington, Florida 33414
(Address of principal executive offices)
(407) 791-5000
(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[ ]
The registrant has one class of common stock, $ .01 par value, of which
16,154,235 shares were outstanding as of June 28, 1995.
Page 1 of 9
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BE AEROSPACE, INC.
<TABLE>
Item 1. Financial Statements.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
<CAPTION>
May 27, February 25,
1995 1995
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,169 $ 8,319
Receivables - trade, less allowance for doubtful
accounts of $3,862 (May 27, 1995)
and $4,034 (February 25, 1995), 46,735 48,915
Inventories, net 83,398 71,347
Deferred income taxes 5,948 6,502
Other current assets 7,037 7,434
Total current assets 146,287 142,517
PROPERTY AND EQUIPMENT, net 60,156 60,304
INTANGIBLES AND OTHER ASSETS, net 178,256 177,133
$ 384,699 $ 379,954
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 36,367 $ 35,164
Accrued liabilities 19,598 24,481
Income taxes payable 2,303 1,642
Current portion of long-term debt 5,811 4,667
Total current liabilities 64,079 65,954
LONG-TERM DEBT 178,899 172,693
DEFERRED INCOME TAXES 10,969 11,212
OTHER LIABILITIES 4,534 4,764
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 1,000,000 shares
authorized; no shares outstanding
Common stock, $.01 par value; 30,000,000 shares
authorized; 16,117,161 (May 27, 1995)
16,095,790 (February 25, 1995) issued 160 160
Additional paid-in capital 119,379 119,209
Retained earnings 7,439 7,418
Cumulative foreign exchange translation adjustment (760) (1,456)
Total stockholders' equity 126,218 125,331
$ 384,699 $ 379,954
</TABLE>
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BE AEROSPACE, INC.
<TABLE>
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in thousands, except per share data)
<CAPTION>
Three Months Ended
May 27, May 28,
1995 1994
<S> <C> <C>
NET SALES $ 55,594 $ 57,567
COST OF SALES 37,193 38,680
GROSS PROFIT 18,401 18,887
OPERATING EXPENSES:
Selling, general and administrative 8,300 8,074
Research and development 3,547 2,842
Amortization expense 2,333 2,572
Total operating expenses 14,180 13,488
OPERATING EARNINGS 4,221 5,399
INTEREST EXPENSE, net 4,188 3,693
EARNINGS BEFORE INCOME TAXES 33 1,706
INCOME TAXES 12 632
NET EARNINGS $ 21 $ 1,074
NET EARNINGS PER COMMON SHARE $ .00 $ .07
COMMON AND COMMON EQUIVALENT SHARES 16,097 16,059
</TABLE>
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BE AEROSPACE, INC.
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<CAPTION>
Three Months Ended
May 27, May 28,
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 21 $ 1,074
Adjustments to reconcile net earnings to net cash flows
provided by operating activities:
Depreciation 1,753 1,169
Amortization 2,333 2,572
Deferred income taxes 330 67
Non cash employee benefit plan contributions 169
Changes in operating assets and liabilities:
Accounts receivable 2,519 998
Inventories (11,819) (7,558)
Other current assets 427 1,941
Accounts payable 1,043 (363)
Income taxes payable 663 725
Other liabilities (5,101) (4,113)
Net cash flows used in operating activities (7,662) (3,488)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,187) (2,409)
Change in other assets - net (3,992) (611)
Net cash flows used in investing activities (5,179) (3,020)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under revolving lines of credit 7,646
Repayments of long-term debt _____ (1,235)
Net cash flows provided by (used in) financing activities 7,646 (1,235)
Effect of exchange rate changes on cash flows 45 51
Net decrease in cash and cash equivalents (5,150) (7,692)
Cash and cash equivalents, beginning of period 8,319 13,738
Cash and cash equivalents, end of period $ 3,169 $ 6,046
Supplemental disclosures of cash flow information:
Cash paid during period for interest $ 7,250 $ 6,687
Cash paid during period for income taxes, net $ (1,102)
</TABLE>
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BE AEROSPACE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MAY 27, 1995 AND MAY 28, 1994
(Dollars in thousands, except share and per share data)
Note 1. Basis of Presentation:
The information set forth in these consolidated financial statements as of
May 27, 1995 and for the three month periods ended May 27, 1995 and
May 28, 1994 is unaudited and may be subject to normal year-end adjustments.
In the opinion of management, the unaudited consolidated financial statements
reflect all adjustments, consisting only of normal recurring adjustments
necessary to present fairly the financial position of BE Aerospace, Inc.
(the "Company" or "BEA") for the periods indicated. Results of operations
for the interim period ended May 27, 1995 are not necessarily indicative of
the full fiscal year. For further information, including information
with regard to conditions in the airline industry and their possible impact
on the Company, please refer to the Company's annual report on Form 10-K
for the fiscal year ended February 25, 1995, as amended.
The accompanying consolidated financial statements consolidate all of the
Company's subsidiaries. All significant intercompany transactions have been
eliminated. Certain amounts in the prior years' Consolidated Financial
Statements have been reclassified to conform to the current fiscal year's
presentation.
Certain information normally included in footnote disclosures to the
financial statements has been condensed or omitted in accordance with the
rules and regulations of the Securities and Exchange Commission.
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BE AEROSPACE, INC.
(Dollars in thousands, except per share data)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The following discussion and analysis addresses the results of the Company's
operations for the three months ended May 27, 1995, as compared to the
Company's results of operations for the three months ended May 28, 1994.
The discussion and analysis then addresses the liquidity and financial
condition of the Company.
THREE MONTHS ENDED MAY 27, 1995, AS COMPARED TO THE RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MAY 28, 1994.
Sales for the three months ended May 27, 1995 were $55,594 or $1,973 (3%)
lower than sales of $57,567 for the comparable period in the prior year.
The decrease in sales year over year is due to slightly lower volume of
products shipped.
At May 27, 1995 the Company's backlog stood at $350 million up from $331
million at February 25, 1995. The Company's revenues are not expected to
increase appreciably until the level of spending by the airlines for
refurbishment of their existing fleets increases, or unless the Company
begins substantial deliveries of its MDDS interactive entertainment systems
in connection with airline upgrade programs on their existing airline fleets
or unless new aircraft deliveries increase.
Gross profit was $18,401 or 33% of sales for the three months ended
May 27, 1995 and was $486 lower than the comparable period in the prior
year of $18,887, which represented 33% of sales. The decrease in gross
profit for the quarter ended May 27, 1995 is attributable to slightly lower
volume of products sold.
Selling, general and administrative expenses were $8,300 (15% of sales) for
the three months ended May 27, 1995. This was $226 higher than the
comparable period in the prior year of $8,074 (14% of sales) is due to
marginally higher selling costs.
Research and development expense was $3,547 or 6% of sales for the three
months ended May 27, 1995. For the comparable period in the prior year,
research and development expense was $2,842 or 5% of sales. The increase
in expense is the result of a substantial increase in the level of activity
during the quarter.
Amortization expense for the quarter ended May 27, 1995 of $2,333 was $239
lower than the amount recorded in the first quarter of fiscal 1994. The
decrease in amortization expense is due to certain intangible assets which
were written off in fiscal 1995.
Net interest expense was $4,188 for the three months ended May 27, 1995, or
$495 higher than the net interest expense of $3,693 recorded for the
comparable period in the prior year, and is due to the increase in the
Company's long-term debt outstanding during the current period, along with
an increase in interest rates.
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BE AEROSPACE, INC.
THREE MONTHS ENDED MAY 27, 1995, AS COMPARED TO THE RESULTS OF OPERATION
FOR THE THREE MONTHS ENDED MAY 28, 1994 (Continued)
Earnings before income taxes of $33 for the quarter ended May 27, 1995 were
$1,673 less than the prior year primarily as a result of higher research and
development and interest expense incurred during the current quarter.
Income tax expense for the quarter ended May 27, 1995 was $12 or 36% of
earnings before income taxes, as compared to a tax rate of 37% in the first
quarter of fiscal 1994.
Net earnings were $21 or $.00 per share for the three months ended
May 27, 1995 as compared to $1,074 or $.07 per share for the comparable
period in the prior year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary requirements for working capital are directly related
to its accounts receivable and inventory levels, as well as costs associated
with the design and development of its MDDS interactive video system, and
improvements to its property and equipment. The Company's working capital
was $82,208 as of May 27, 1995 compared to $76,563 as of February 25, 1995.
In October 1993, the Company obtained new Credit Facilities aggregating
$85,000. The credit facilities are comprised of two revolving lines of
credit, initially aggregating $40,000 and $45,000. The $40,000 revolving
line of credit is collateralized by the stock of Acurex and may be borrowed
and repaid in $1,000 increments and has decreasing availability through
November 1998. The $45,000 revolving line of credit may be borrowed in
$1,000 increments, is subject to borrowing base calculations set forth in
the credit facility agreement, is collateralized by substantially all the
Company's assets and is all due and payable in full in November 1998. The
credit facilities bear interest at prime plus .50% or at the Company's
option, LIBOR plus 1.75%. As of May 27, 1995, the availability under the
$40,000 revolving line of credit had been reduced to $31,000, resulting in
a total credit facility aggregating $76,000 of which $43,000 was outstanding.
The Company believes that cash on hand, cash flow from operations and funds
available under its credit facilities will be sufficient to meet its working
capital requirements for the foreseeable future.
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BE AEROSPACE, INC.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings. Not applicable.
Item 2. Changes in Securities. Not applicable.
Item 3. Defaults Upon Senior Securities. Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders. Not applicable.
Item 5. Other Information. None.
Item 6. Exhibits and Reports on Form 8-K. None.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
BE AEROSPACE, INC.
Date: July 7, 1995 By: /s/ Amin J. Khoury
Amin J. Khoury
Chairman of the Board and
Chief Executive Officer
Date: July 7, 1995 By: /s/ Thomas P. McCaffrey
Thomas P. McCaffrey
Vice President &
Chief Financial Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-25-1995
<PERIOD-END> MAY-27-1995
<CASH> 3,169
<SECURITIES> 0
<RECEIVABLES> 50,597
<ALLOWANCES> 3,862
<INVENTORY> 83,398
<CURRENT-ASSETS> 146,287
<PP&E> 81,780
<DEPRECIATION> 21,624
<TOTAL-ASSETS> 384,699
<CURRENT-LIABILITIES> 64,079
<BONDS> 0
<COMMON> 160
0
0
<OTHER-SE> 126,058
<TOTAL-LIABILITY-AND-EQUITY> 384,699
<SALES> 55,594
<TOTAL-REVENUES> 55,594
<CGS> 37,193
<TOTAL-COSTS> 51,373
<OTHER-EXPENSES> 14,180
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,188
<INCOME-PRETAX> 33
<INCOME-TAX> 12
<INCOME-CONTINUING> 21
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
