BE AEROSPACE INC, 424B1, 1996-12-13

BE AEROSPACE INC
424B1, 1996-12-13
PUBLIC BLDG & RELATED FURNITURE

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<PAGE> 1

PROSPECTUS

Filed Pursuant to Rule 424(b)(1)
File No. 333-16235

4,000,000 Shares

BE Aerospace, Inc.
COMMON STOCK
------------------------

ALL OF THE SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE, OFFERED HEREBY ARE
BEING SOLD BY THE COMPANY. THE COMMON STOCK IS QUOTED ON THE NASDAQ
NATIONAL MARKET UNDER THE SYMBOL "BEAV." ON DECEMBER 12, 1996,
THE REPORTED LAST SALE PRICE OF THE COMMON STOCK ON THE
NASDAQ NATIONAL MARKET WAS $25 1/4.

------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 7 HEREOF FOR INFORMATION
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------

PRICE $25 A SHARE

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

<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
--------------------- --------------------- ---------------------
<S> <C> <C> <C>
Per Share................... $25.00 $1.31 $23.69
Total(3).................... $100,000,000 $5,240,000 $94,760,000
</TABLE>

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

(1) The Company and certain stockholders of the Company (the "Selling
Stockholders") have agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriters."

(2) Before deducting expenses payable by the Company estimated at $825,000.

(3) The Company and the Selling Stockholders have granted the Underwriters
an option, exercisable within 30 days of the date hereof, to purchase up
to an aggregate of 535,000 and 65,000 additional Shares of Common Stock,
respectively, at the price to public less underwriting discounts and
commissions, for the purpose of covering over-allotments, if any. If the
Underwriters exercise such option in full, the total price to public,
underwriting discounts and commissions, proceeds to Company and proceeds
to the Selling Stockholders will be $115,000,000, $6,026,000,
$107,434,150 and $1,539,850, respectively. See "Underwriters."

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

The Shares are offered, subject to prior sale, when, as and if accepted by
the Underwriters named herein and subject to approval of certain legal matters
by Shearman & Sterling, counsel for the Underwriters. It is expected that
delivery of the Shares will be made on or about December 18, 1996, at the
offices of Morgan Stanley & Co. Incorporated, New York, New York, against
payment therefor in immediately available funds.

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

MORGAN STANLEY & CO.
Incorporated
CS FIRST BOSTON

PAINEWEBBER INCORPORATED

December 12, 1996

<PAGE> 2
[LOGO] B/E Aerospace is the world's leading manufacturer of
commercial aircraft cabin interior products.

In-Flight Entertainment [PHOTO OF INDIVIDUAL
ENTERTAINMENT SYSTEM]

[PHOTO OF INDIVIDUAL
ENTERTAINMENT SYSTEM]

[PHOTO OF PERSON IN AIRLINE SEAT]

[PHOTO OF AIRLINE SEATS] Seating [PHOTO OF AIRLINE SEATS]

Galley Products

[PHOTO OF COFFEE [PHOTO OF GALLEY [PHOTO OF
MAKER] STRUCTURE] BEVERAGE CHILLER]
<PAGE> 3

NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDERS
OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE SHARES OF COMMON
STOCK OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION TO
SUCH PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.

NO ACTION HAS BEEN OR WILL BE TAKEN IN ANY JURISDICTION BY THE COMPANY OR
BY ANY UNDERWRITER THAT WOULD PERMIT A PUBLIC OFFERING OF THE COMMON STOCK OR
POSSESSION OR DISTRIBUTION OF THIS PROSPECTUS IN ANY JURISDICTION WHERE ACTION
FOR THAT PURPOSE IS REQUIRED, OTHER THAN IN THE UNITED STATES. PERSONS INTO
WHOSE POSSESSION THIS PROSPECTUS COMES ARE REQUIRED BY THE COMPANY AND THE
UNDERWRITERS TO INFORM THEMSELVES ABOUT AND TO OBSERVE ANY RESTRICTIONS AS TO
THE OFFERING OF THE COMMON STOCK AND THE DISTRIBUTION OF THIS PROSPECTUS.
------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 2
Risk Factors.......................... 7
The Company........................... 10
Use of Proceeds....................... 10
Capitalization........................ 10
Price Range of Common Stock........... 11
Dividend Policy....................... 11
Selected Financial Data............... 12
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 14
Business.............................. 20

<CAPTION>
PAGE
----
<S> <C>
Management............................ 32
Security Ownership of Certain
Beneficial Owners and Management.... 35
Description of Capital Stock.......... 37
Underwriters.......................... 39
Legal Matters......................... 40
Experts............................... 40
Available Information................. 41
Incorporation of Certain Documents by
Reference........................... 41
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS (IF ANY) MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON
STOCK ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 10b-6A UNDER THE
SECURITIES EXCHANGE ACT OF 1934 (THE "EXCHANGE ACT"). SEE "UNDERWRITERS."

DURING THIS OFFERING, CERTAIN PERSONS AFFILIATED WITH PERSONS PARTICIPATING
IN THE DISTRIBUTION MAY ENGAGE IN TRANSACTIONS FOR THEIR OWN ACCOUNTS OR FOR THE
ACCOUNTS OF OTHERS IN THE COMMON STOCK PURSUANT TO EXEMPTIONS FROM RULES 10b-6,
10b-7, AND 10b-8 UNDER THE EXCHANGE ACT.
------------------------

The following trademarks are mentioned in this Prospectus: Silhouette(TM)
and Combi(TM) are registered trademarks of BE Aerospace, Inc.; Nintendo(R) is a
registered trademark of Nintendo of America, Inc.; and Sega(R) is a registered
trademark of Sega Enterprises, Ltd.
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements,
including the related notes, appearing elsewhere in this Prospectus. As used in
this Prospectus, unless the context otherwise requires, the "Company," "B/E
Aerospace" or "B/E" refers to BE Aerospace, Inc., a Delaware corporation.
References herein to a fiscal year end relate to a year ending on the last
Saturday in February (for example, fiscal 1996 refers to the Company's fiscal
year ended February 24, 1996). Unless otherwise indicated, the information in
this Prospectus assumes that the Underwriters' over-allotment option will not be
exercised. Market share information presented herein does not include markets in
the former Soviet Union and will vary, sometimes significantly, from year to
year. Investors should carefully consider the information set forth under the
heading "Risk Factors."

THE COMPANY

B/E Aerospace is the world's largest manufacturer of commercial aircraft
cabin interior products, serving virtually all major airlines with a broad line
of products, including aircraft seats, a full line of food and beverage
preparation and storage equipment, galley structures and in-flight entertainment
systems. In addition, B/E provides upgrade, maintenance and repair services for
the products which it manufactures as well as for those supplied by other
manufacturers.

Management believes that the Company has achieved the leading global market
position in each of its major product categories. B/E is the largest
manufacturer of airline seats in the world, offering an extensive line of first
class, business class, tourist class and commuter seats. The Company is also the
world's largest manufacturer of galley equipment for both narrow- and wide-body
aircraft, including a wide selection of coffee and beverage makers, water
boilers, ovens, liquid containers, refrigeration equipment and galley
structures. In addition, the Company is the leading manufacturer of passenger
entertainment and service systems, including passenger control systems and
individual passenger in-flight entertainment systems. The Company believes that
individual passenger in-flight entertainment systems will be one of the fastest
growing and among the largest product categories in the commercial aircraft
cabin interior products industry in the future.

As of August 31, 1996, B/E's backlog was at a record $480 million
(excluding any additional backlog attributable to United Airlines from the
matters described under "Recent Developments") and, during the six months ended
August 31, 1996, the Company has experienced significant growth in revenues and
operating earnings.

COMPETITIVE STRENGTHS

The Company believes that it has a strong competitive position attributable
to a number of factors, including the following:

- - Leading Market Share and Significant Installed Base. Management believes that
the Company has achieved the leading global market positions in each of its
major product categories, with worldwide market shares, based upon industry
sources, of approximately 50% in aircraft seats, 90% in coffee makers, 90% in
refrigeration equipment and 50% in ovens, in each case based on unit sales for
the six months ended August 31, 1996, and 33% in individual passenger
in-flight entertainment systems, determined on the basis of installed base as
of August 31, 1996. The Company believes these market shares provide it with
significant competitive advantages in serving its customers, including
economies of scale and the ability to commit greater product development,
global product support and marketing resources. Furthermore, because of
economies of scale, in part attributable to its large market shares and its
approximate $2.6 billion installed base of cabin interior equipment (valued at
replacement prices as of August 31, 1996), the Company believes it is among
the lowest cost producers in the cabin interior products industry. The Company
also believes that its large installed base provides B/E with a significant
advantage over competitors in obtaining orders for retrofit and refurbishment
programs, principally because airlines tend to purchase equipment from the
original supplier. In addition, because of the need for compatible spare parts
at airline maintenance depots and the desire of airlines to maximize fleet
commonality, a single vendor is typically used for all aircraft of the same
type operated by a particular airline.

2
<PAGE> 5

- - Broadest Product Line in the Industry. Management believes the Company offers
more technologically advanced products for the cabin interiors of commercial
aircraft than any other manufacturer. With an established reputation for
quality, service and product innovation, the Company enjoys broad recognition
among the world's commercial airlines. The Company maintains a constant
dialogue with a wide array of existing and potential customers, enabling it to
become aware of emerging industry trends and needs and thereby play a leading
role in product development. The Company has continued to expand its product
line, believing that the airline industry increasingly will seek an integrated
approach to the development, testing and sourcing of the aircraft's cabin
interior.

- - Technological Leadership/New Product Development. Management believes that
the Company is a technological leader in its industry, with the largest R&D
organization in the industry currently comprised of 319 engineers. The Company
believes that its R&D effort and its on-site engineers at both the airlines
and airframe manufacturers enable B/E to consistently introduce innovative
products and thereby gain early entrant advantages and substantial market
shares. Examples of such product development include: the Company's family of
in-flight entertainment systems, which it believes to be superior to existing
operational systems in terms of performance, reliability, weight, heat
generation and flexibility to adapt to changing technology; a
cappuccino/espresso maker; a quick chill wine cooling system; and a
constant-pressure, steam cooking oven, which the Company believes
substantially improves the appearance, aroma and taste of airline food.

GROWTH OPPORTUNITIES

B/E believes that it is benefiting from three major growth trends occurring
in the commercial aircraft cabin interior products industry:

- - Increase in Refurbishment and Upgrade Orders. B/E's substantial installed
base provides significant ongoing revenues from replacements, upgrades,
repairs and spare parts. Approximately two-thirds of B/E's revenues and
operating earnings for the six months ended August 31, 1996 were derived from
refurbishment and upgrade orders. In the late 1980s and early 1990s, the
airline industry suffered a significant downturn, which resulted in a deferral
of cabin interior maintenance expenditures. Since early 1994, the airlines
have experienced a turnaround in operating results, leading the domestic
airline industry to record operating earnings during 1995 and 1996 to date.
Deterioration of cabin interior product functionality and aesthetics within
the commercial airline fleets during the industry downturn has encouraged
airlines to increase spending on refurbishments and upgrades. The Company
believes that it is well positioned to benefit over the next several years as
a result of the airlines' dramatically improved financial condition and
liquidity and the need to refurbish and upgrade cabin interiors. The Company's
recent growth in backlog, revenues and operating earnings has been almost
entirely from refurbishment and upgrade programs, and the Company is currently
experiencing a high level of new order quote activity related to such
programs.

- - Expansion of Worldwide Fleet and Shift Toward Wide-Body Aircraft. Industry
sources report that the airlines are experiencing extremely high load factors
and that a significant number of new aircraft will be purchased to meet
projected growth in worldwide air travel, which is expected to nearly double
by 2005. According to the Current Market Outlook published by the Boeing
Commercial Airplane Group in 1996 (the "Boeing Report"), the worldwide fleet
of commercial passenger aircraft is projected to expand from approximately
11,000 at the end of 1995 to approximately 16,000 by the end of 2005. The
Company believes that growth in aircraft interior product shipments related to
new aircraft deliveries will begin in 1997. For example, Boeing has indicated
that it plans to ship 215 aircraft in 1996 as compared with 340, 385, and 380,
respectively, in each of the subsequent years through 1999. The Company
generally receives orders related to new aircraft deliveries approximately six
months before the delivery date. Furthermore, according to the July 1996
Airline Monitor, the percentage of new Boeing aircraft deliveries projected to
be wide-body aircraft for 1996 through 1998 is 43%, as compared to 32% for the
three-year period ended December 31, 1995. This shift toward wide-body
aircraft is significant to the Company since these aircraft require
substantially more seats, galley equipment and in-flight entertainment
products per aircraft than do narrow-body aircraft.

3
<PAGE> 6

- - Emergence of Individual Passenger In-flight Entertainment Systems as a Major
New Product Category. Airlines increasingly are demanding individual passenger
in-flight entertainment systems as a method to attract and retain customers,
as the availability of such service affects passengers' decisions on airline
selection. These systems also provide the airlines with the opportunity to
generate increased revenues, without raising ticket prices, by charging
passengers for the services used. The Company expects that individual
passenger in-flight entertainment systems will be one of the fastest growing
and among the largest product categories in the commercial aircraft cabin
interior products industry in the future.

The Company has developed a number of individual in-flight entertainment
systems that are designed to meet the varying technological and price
specifications of the airlines. The Company's three current systems are the
B/E 2000, a system that provides non-interactive video programming; the B/E
2000M, which offers similar functionality to the B/E 2000 but is fully
upgradable to the Company's Multimedia Digital Distribution System ("MDDS")
product; and the MDDS product itself. The MDDS product is a fully interactive
entertainment system with the capacity to provide movies on demand,
telecommunications, gaming and other services. As of August 31, 1996, B/E had
entered into contracts to supply individual passenger entertainment systems to
a number of airlines, including British Airways, Air France and KLM. As of
August 31, 1996 B/E had an in-flight entertainment systems backlog of
approximately $152 million (excluding any additional backlog attributable to
United Airlines from the matters described under "Recent Developments").

RECENT DEVELOPMENTS

On November 15, 1996, the Company announced that United Airlines had
selected B/E as a supplier of individual in-flight entertainment systems for its
B777, B747-400 and B767-300 aircraft. While such selection is subject to
negotiation of definitive documentation, the Company expects an initial order of
approximately $60 million of the B/E 2000M system, to be installed on 54 United
Airlines aircraft. If United Airlines decides to upgrade its B/E 2000M
entertainment systems to full MDDS interactive functionality, significant
additional orders would follow. Pending the negotiation of the final contract,
United Airlines has authorized the Company to proceed with necessary engineering
and other long lead time items. The Company also announced on the same date that
it had been selected, in a program valued at $70 million, to supply all of
United Airlines' seating requirements for its Premiere Connoisseur Class
services, including business class on all of its wide-body fleet, and first
class on all of its narrow-body fleet. On November 6, 1996, B/E announced that
the MDDS (including the B/E 2000M) is now being offered by Boeing to its
customers as a line fit option for both the B777 and the B747 aircraft, allowing
airlines to specify the MDDS as their in-flight entertainment system choice on
these Boeing aircraft. Prior to this announcement, the MDDS could only be
installed as a retrofit option after the airlines took initial delivery of new
aircraft.

THE OFFERING

<TABLE>
<S> <C>
Common Stock Offered by the Company.................. 4,000,000 shares
Common Stock to be Outstanding after the Offering.... 21,704,275 shares(1)
Use of Proceeds...................................... To repay amounts currently outstanding
under certain of the Company's existing
bank credit facilities and for general
corporate purposes, including working
capital requirements to support increased
sales and possible investments in
strategic acquisitions. See "Use of
Proceeds."
NASDAQ Symbol........................................ BEAV
</TABLE>

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

(1) As of November 30, 1996 and does not include 2,489,825 shares of Common
Stock issuable upon exercise of outstanding stock options on the date
hereof, including 1,503,577 shares issuable pursuant to options which are
currently exercisable.

4
<PAGE> 7

SUMMARY FINANCIAL DATA

The financial data as of and for the fiscal years ended February 24, 1996,
February 25, 1995, and February 26, 1994, except backlog, have been derived from
financial statements which have been audited by B/E's independent auditors. The
financial data as of and for the six months ended August 31, 1996 and August 26,
1995 have been derived from financial statements which are unaudited, but, in
the opinion of management, include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the financial
position and results of operations for such periods. Operating results for the
six months ended August 31, 1996 and August 26, 1995 are not necessarily
indicative of results that may be expected for a full year. The following
financial information is qualified by reference to, and should be read in
conjunction with, the B/E historical financial statements, including notes
thereto, and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
SIX MONTHS ENDED FISCAL YEAR ENDED
--------------------------- --------------------------------------
AUGUST 31, AUGUST 26, FEB. 24, FEB. 25, FEB. 26,
1996(A) 1995 1996(A) 1995 1994
---------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS:
Net sales....................................... $200,328 $113,045 $232,582 $229,347 $203,364
Cost of sales................................... 133,342 75,925 160,031 154,863 136,307
-------- -------- -------- -------- --------
Gross profit.................................. 66,986 37,120 72,551 74,484 67,057
Operating expenses:
Selling, general and administrative........... 24,254 16,743 42,000 31,787 28,164
Research, development and engineering......... 19,157 24,774(c) 58,327(c) 12,860 9,876
Amortization expenses......................... 5,514 4,650 9,499 9,954 7,599
Other expenses................................ -- -- 4,170(b) 23,736(b) --
-------- -------- -------- -------- --------
Operating earnings (loss)....................... 18,061 (9,047) (41,445) (3,853) 21,418
Interest expense, net........................... 14,399 8,149 18,636 15,019 12,581
-------- -------- -------- -------- --------
Earnings (loss) before income taxes (benefit)
and cumulative effect of accounting change.... 3,662 (17,196) (60,081) (18,872) 8,837
Income taxes (benefit).......................... 366 -- -- (6,806) 3,481
-------- -------- -------- -------- --------
Earnings (loss) before cumulative effect of
accounting change............................. 3,296 (17,196) (60,081) (12,066) 5,356
Cumulative effect of accounting change.......... -- (23,332)(c) (23,332)(c) -- --
-------- -------- -------- -------- --------
Net earnings (loss)............................. $ 3,296 $(40,528) $(83,413) $(12,066) $ 5,356
======== ======== ======== ======== ========
Earnings (loss) per common share:
Earnings (loss) before cumulative effect of
accounting change............................. $ 0.19 $ (1.07) $ (3.71) $ (0.75) $ 0.35
Cumulative effect of accounting change.......... -- (1.45)(c) (1.44)(c) -- --
-------- -------- -------- -------- --------
Net earnings (loss)............................. $ 0.19 $ (2.52) $ (5.15) $ (0.75) $ 0.35
======== ======== ======== ======== ========
Common and common equivalent shares............. 17,446 16,108 16,158 16,021 15,438
OTHER DATA:
Depreciation and amortization................... $ 11,840 $ 8,413 $ 18,435 $ 16,146 $ 13,115
Capital expenditures............................ 7,065 8,168 13,656 12,172 11,002
Backlog, at period end.......................... 480,000 345,000 450,000 331,000 241,000
</TABLE>

<TABLE>
<CAPTION>
AS OF AUGUST 31, 1996
---------------------------
ACTUAL AS ADJUSTED(d)
-------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital......................................................................... $ 62,282 $ 98,617
Total assets............................................................................ 443,340 479,675
Long-term debt.......................................................................... 282,058 225,000
Stockholders' equity.................................................................... 52,144 146,079
</TABLE>

5
<PAGE> 8

SUMMARY FINANCIAL DATA (CONTINUED)

FOOTNOTES TO TABLE

(a) On January 24, 1996, the Company acquired all of the stock of Burns
Aerospace Corporation ("Burns"), an industry leader in commercial aircraft
seating. The acquisition of Burns was accounted for as a purchase, and the
results of Burns are included in B/E's historical financial data from the
date of acquisition.

(b) In fiscal 1996, in conjunction with the Company's rationalization of its
seating business and as a result of the Burns acquisition, the Company
recorded a charge to earnings of $4.2 million related to costs associated
with the integration and consolidation of the Company's European seating
operations. In fiscal 1995, the Company charged to earnings $23.7 million of
expenses primarily related to intangible assets and inventories associated
with the Company's earlier generations of passenger entertainment systems.

(c) In fiscal 1996, the Company changed its method of accounting relating to the
capitalization of pre-contract engineering costs that were previously
included as a component of inventories and amortized to earnings as the
product was shipped. Effective February 26, 1995, such costs have been
charged to research and development and expensed as incurred, and, as a
result, periods prior to fiscal 1996 are not comparable. In connection with
such change in accounting, the Company recorded a charge to earnings of
$23.3 million. See Note 2 of Notes to Consolidated Financial Statements.

(d) Adjusted to reflect the sale of 4,000,000 shares of Common Stock offered by
the Company hereby and the application of net proceeds as described in "Use
of Proceeds."

6
<PAGE> 9

RISK FACTORS

In addition to the other information in this Prospectus, prospective
investors should consider carefully the following factors in evaluating the
Company and its business before purchasing the shares of Common Stock offered
hereby.

DEPENDENCE UPON CONDITIONS IN THE AIRLINE INDUSTRY

The Company's customers are the world's commercial airlines. As a result,
the Company's business is directly dependent upon the conditions in the highly
cyclical and competitive commercial airline industry. In the late 1980s and
early 1990s, the world airline industry suffered a severe downturn, which
resulted in record losses and several air carriers seeking protection under
bankruptcy laws. As a consequence, during such period, airlines sought to
conserve cash by reducing or deferring scheduled cabin interior refurbishment
and upgrade programs and delaying purchases of new aircraft. This led to a
significant contraction in the commercial aircraft cabin interior products
industry, and a decline in the Company's business and profitability. The airline
industry has experienced an economic turnaround and the levels of airline
spending on refurbishment and new aircraft purchases have expanded. However, due
to the volatility of the airline industry there can be no assurance that the
current profitability of the airline industry will continue or that the airlines
will maintain or increase expenditures on cabin interior products for
refurbishments or new aircraft.

In addition, the airline industry is undergoing a process of consolidation
and significantly increased competition. Such consolidation could result in a
reduction in future aircraft orders as overlapping routes are eliminated and
airlines seek greater economies through higher aircraft utilization. Increased
airline competition may also result in airlines seeking to reduce costs by
promoting greater price competition from airline cabin interior products
manufacturers, thereby adversely affecting the Company's revenues and margins.

NEW PRODUCT INTRODUCTIONS AND TECHNOLOGICAL CHANGE

Airlines currently are taking delivery of a new generation of aircraft and
demanding increasingly sophisticated cabin interior products. As a result, the
cabin interior configurations of commercial aircraft are becoming more complex
and will require more technologically advanced and integrated products. For
example, airlines increasingly are seeking sophisticated in-flight entertainment
systems, such as the MDDS interactive individual passenger in-flight
entertainment system developed by B/E, which the Company expects will provide a
significant percentage of its future revenues. Development of the MDDS required
substantial investment by the Company and third parties in research, development
and engineering. MDDS is not yet in commercial production. The future success of
the Company will depend, to a significant extent, on its ability to manufacture
successfully and deliver, on a timely basis, its MDDS product and to have the
MDDS perform at the level expected by B/E's customers and their passengers, as
well as the Company's ability to continue to develop, profitably manufacture and
deliver, on a timely basis, other technologically advanced, reliable high-
quality products which can be readily integrated into complex cabin interior
configurations. See "Business -- Products and Services."

COMPETITION

The Company competes with a number of established companies that have
significantly greater financial, technological and marketing resources than the
Company. Although the Company has achieved a significant share of the market for
a number of its cabin interior products, there can be no assurance that the
Company will be able to maintain this market share. The ability of the Company
to maintain its market share will depend not only on its ability to remain the
supplier of retrofit and refurbishment products and spare parts on the
commercial fleets on which its products are currently in service but also on its
success in causing its products to be selected for installation in new aircraft,
including next generation aircraft, expected to be purchased by the airlines
over the next decade, and in avoiding product obsolescence. In addition, the
Company's primary competitor in the market for new passenger entertainment
products, including individual seat video and in-flight entertainment and cabin
management systems, Matsushita Electronics, has significantly greater
technological capabilities and financial and marketing resources than the
Company. See "Business -- Competition."

7
<PAGE> 10

ADVERSE CONSEQUENCES OF FINANCIAL LEVERAGE

Following the Offering, the Company will continue to have substantial
indebtedness and, as a result, significant debt service obligations. As of
August 31, 1996, after giving effect to the Offering and the application of the
net proceeds therefrom, the Company would have had approximately $230 million
aggregate amount of indebtedness outstanding, representing 61% of total
capitalization. See "Use of Proceeds" and "Capitalization."

The degree of the Company's leverage could have important consequences to
purchasers of the shares of Common Stock offered hereby, including: (i) limiting
the Company's ability to obtain additional financing to fund future working
capital requirements, capital expenditures, acquisitions or other general
corporate requirements; (ii) requiring a substantial portion of the Company's
cash flow from operations to be dedicated to debt service requirements, thereby
reducing the funds available for operations and further business opportunities;
and (iii) increasing the Company's vulnerability to adverse economic and
industry conditions. In addition, since any borrowings under the Company's bank
credit facilities will be at variable rates of interest, the Company will be
vulnerable to increases in interest rates. The Company may incur additional
indebtedness in the future, although its ability to do so will be restricted by
the indenture governing the Company's Senior Subordinated Notes due 2006 (the
"Senior Subordinated Notes"), the indenture governing the Company's Senior Notes
due 2003 (the "Senior Notes") and the Company's bank credit facilities. The
ability of the Company to make scheduled payments under its present and future
indebtedness will depend on, among other things, the future operating
performance of the Company and the Company's ability to refinance its
indebtedness when necessary. Each of these factors is to a large extent subject
to economic, financial, competitive and other factors beyond the Company's
control.

The Company's bank credit facilities and the indentures governing the
Senior Notes and the Senior Subordinated Notes contain numerous financial and
operating covenants that will limit the discretion of the Company's management
with respect to certain business matters. These covenants will place significant
restrictions on, among other things, the ability of the Company to incur
additional indebtedness, to create liens or other encumbrances, to make certain
payments and investments, and to sell or otherwise dispose of assets and merge
or consolidate with other entities. The Company's bank credit facilities also
require the Company to meet certain financial ratios and tests. A failure to
comply with the obligations contained in the Company's bank credit facilities,
or the indentures governing the Senior Notes and the Senior Subordinated Notes,
could result in an event of default under the Company's bank credit facilities,
or the aforementioned indentures, which could permit acceleration of the related
debt and acceleration of debt under other instruments that may contain
cross-acceleration or cross-default provisions.

ABILITY TO INTEGRATE ACQUIRED BUSINESSES

Since 1992, B/E has acquired nine companies. The Company intends to
consider future strategic acquisitions in the commercial airline cabin interior
industry, some of which could be material to the Company. The ability of the
Company to continue to achieve its goals will depend upon its ability to
integrate effectively any future acquisition, and to achieve cost efficiencies.
Although B/E has been successful in the past in doing so, there can be no
assurance that it will continue to be successful.

REGULATION

The Federal Aviation Administration (the "FAA") prescribes standards and
licensing requirements for aircraft components, including virtually all
commercial airline cabin interior products, and licenses component repair
stations within the United States. Comparable agencies regulate these matters in
other countries. If the Company fails to obtain a required license for one of
its products or services or loses a license previously granted, the sale of the
subject product or service would be prohibited by law until such license is
obtained or renewed. In addition, designing new products to meet existing FAA
requirements and retrofitting installed products to comply with new FAA
requirements can be both expensive and time-consuming. See "Business --
Government Regulation."

8
<PAGE> 11

CERTAIN LEGAL PROCEEDING

In July 1995, B/E became aware that the U.S. Attorney's Office for the
District of Connecticut, in conjunction with the Department of Commerce and the
U.S. Customs Service, is conducting a grand jury investigation focused on
possible non-compliance by B/E with certain statutory and regulatory provisions
relating to export licensing and controls. The investigation relates primarily
to the sale of passenger seats and related spare parts for civilian commercial
passenger aircraft to Iran Air from 1992 through mid-1995. B/E has been advised
that it is a target of the investigation; however, neither it nor any current or
former directors, officers, or employees have been charged in connection with
the investigation. The investigation is at an early stage and, while the Company
intends to defend itself vigorously, the ultimate outcome of the investigation
cannot presently be determined. An adverse outcome could have a material adverse
effect upon the operations and/or financial condition of the Company.

9
<PAGE> 12

THE COMPANY

B/E Aerospace is the world's largest supplier of commercial aircraft cabin
interior products, serving virtually all major airlines with a broad line of
products, including aircraft seats, galley products and structures and in-flight
entertainment systems. B/E's executive offices are located at 1400 Corporate
Center Way, Wellington, Florida 33414, and its telephone number is (561)
791-5000.

USE OF PROCEEDS

The net proceeds to be received by the Company from the sale of the
4,000,000 shares of Common Stock offered hereby are approximately $93.9 million
($106.6 million if the Underwriters' overallotment option is exercised in full;
the Company will not receive any proceeds from the sale of Common Stock by the
Selling Stockholders pursuant to any exercise of the Underwriters' overallotment
option). The Company intends to use approximately $57.6 million of the net
proceeds from the Offering to repay the outstanding balances under certain B/E
bank credit facilities. The bank indebtedness which the Company intends to repay
accrued interest at a weighted average rate of 7.56% per annum as of August 31,
1996 and had maturities extending through March 2003. A portion of such debt to
be repaid was incurred within the past year for working capital purposes.
Assuming such repayment, the Company would have available under its bank credit
facilities approximately $97.0 million for subsequent borrowings. The remainder
of the net proceeds will be used for general corporate purposes, including
working capital requirements to support increased sales, and possible
investments in strategic acquisitions. The Company currently has no agreements,
commitments or understandings with respect to any acquisitions. Pending
application as described above, the net proceeds of the Offering will be
invested in short-term investments.

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
August 31, 1996 and as adjusted to give effect to the sale of the 4,000,000
shares of Common Stock offered by the Company hereby after deducting estimated
underwriting discounts, commissions and other offering expenses, and the
application of the net proceeds of the Offering as described in "Use of
Proceeds." The table should be read in conjunction with the financial
statements, including notes thereto, included elsewhere in the Prospectus.

<TABLE>
<CAPTION>
AS OF AUGUST 31, 1996
---------------------------
ACTUAL AS ADJUSTED(a)
-------- --------------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Short-term debt, including current maturities of long-term debt.... $ 5,459 $ 4,917
-------- --------
Long-term debt, excluding current maturities:
Bank indebtedness................................................ 57,058 --
Senior Notes..................................................... 125,000 125,000
Senior Subordinated Notes........................................ 100,000 100,000
-------- --------
Total long-term debt.......................................... 282,058 225,000
-------- --------
Stockholders' equity
Preferred Stock, $.01 par value, 1,000,000 shares authorized; no
shares issued and outstanding................................. -- --
Common Stock, $.01 par value, 30,000,000 shares authorized;
16,877,867 shares issued and outstanding (20,877,867 shares,
as adjusted)(b)............................................... 169 209
Additional paid-in capital....................................... 125,730 219,625
Retained earnings................................................ (72,699) (72,699)
Currency translation adjustment.................................. (1,056) (1,056)
-------- --------
Total stockholders' equity.................................... 52,144 146,079
-------- --------
Total capitalization..................................... $339,661 $375,996
======== ========
</TABLE>

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

(a) Adjusted to reflect the sale of 4,000,000 shares of Common Stock offered by
the Company hereby. The Company intends to use approximately $57.6 million
of the net proceeds from the Offering to repay certain outstanding bank
indebtedness, which accrued interest at a weighted average of 7.56% per
annum as of August 31, 1996. Assuming such repayment, the Company would have
available under its various bank credit facilities approximately $97.0
million for subsequent borrowings.

(b) Excludes 746,500 shares of Common Stock issued pursuant to stock options
exercised after August 31, 1996. Also excludes 3,214,512 shares of Common
Stock reserved for issuance under the Company's various stock options plans,
including 1,503,577 options which are currently exercisable.

10
<PAGE> 13

PRICE RANGE OF COMMON STOCK

The Company's Common Stock is quoted on the NASDAQ National Market System
under the symbol "BEAV." The following table sets forth, for the periods
indicated, the range of high and low per share closing prices for the Common
Stock as reported by NASDAQ:

<TABLE>
<CAPTION>
HIGH LOW
----- ----
<S> <C> <C>
FISCAL YEAR ENDED FEBRUARY 26, 1994:
First Quarter....................................................... 12 1/2 8 3/4
Second Quarter...................................................... 15 1/4 12 1/4
Third Quarter....................................................... 15 10
Fourth Quarter...................................................... 12 8 3/4
FISCAL YEAR ENDED FEBRUARY 25, 1995:
First Quarter....................................................... 11 1/2 7 7/8
Second Quarter...................................................... 9 1/2 7 3/8
Third Quarter....................................................... 9 1/4 7 1/2
Fourth Quarter...................................................... 8 1/2 5 3/8
FISCAL YEAR ENDED FEBRUARY 24, 1996:
First Quarter....................................................... 8 5/8 5 1/4
Second Quarter...................................................... 9 1/4 7 1/4
Third Quarter....................................................... 9 9/16 7 1/2
Fourth Quarter...................................................... 13 5/8 8 7/8
FISCAL YEAR ENDED FEBRUARY 22, 1997:
First Quarter....................................................... 16 1/4 9 7/8
Second Quarter...................................................... 16 3/4 12 3/8
Third Quarter....................................................... 24 1/2 15 7/8
Fourth Quarter (through December 11, 1996).......................... 25 1/2 22 7/8
</TABLE>

As of November 30, 1996, the Company had 278 shareholders of record, and
management estimates that there were approximately 3,300 beneficial owners of
the Company's Common Stock. A recent last sale price of the Common Stock as
reported by NASDAQ is set forth on the cover page of this Prospectus.

DIVIDEND POLICY

The Company has never paid a cash dividend and does not plan to pay cash
dividends on its Common Stock in the foreseeable future. It is the current
policy of the Company's Board of Directors to retain any future earnings for use
in the business of the Company. In addition, terms of the Company's Senior
Notes, Senior Subordinated Notes and bank credit facilities place restrictions
on the amount of dividends which may be declared.

11
<PAGE> 14

SELECTED FINANCIAL DATA

On February 28, 1992, B/E acquired from the Pullman Company certain assets
and liabilities of PTC Aerospace, Inc. ("PTC") and Aircraft Products Company
("APC") and changed its fiscal year-end to the last Saturday in February. On
April 2, 1992, B/E acquired the stock of Flight Equipment Engineering Limited
("FEEL"). During fiscal 1994, B/E completed the following acquisitions: (a) on
April 29, 1993, B/E acquired all of the stock of Royal Inventum, B.V.
("Inventum"); (b) on August 23, 1993, B/E acquired all of the stock of Nordskog
Industries ("Nordskog"); (c) on August 26, 1993, B/E acquired all of the stock
of Acurex Corporation ("Acurex"); and (d) on October 13, 1993, B/E acquired
substantially all of the assets of Philips Airvision ("Airvision"). On January
24, 1996, the Company acquired all of the stock of Burns Aerospace Corporation
("Burns"), an industry leader in commercial aircraft seating. The financial data
as of and for the fiscal years ended February 24, 1996, February 25, 1995,
February 26, 1994 and February 27, 1993, the seven months ended February 29,
1992 and the fiscal year ended July 28, 1991 have been derived from financial
statements which have been audited by B/E's independent auditors. The financial
data as of and for the six months ended August 31, 1996 and August 26, 1995 have
been derived from financial statements which are unaudited, but, in the opinion
of management, include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the financial position and
results of operations for such periods. Operating results for the six months
ended August 31, 1996 and August 26, 1995 are not necessarily indicative of
results that may be expected for a full year. The following financial
information is qualified by reference to, and should be read in conjunction
with, the B/E historical financial statements, including notes thereto, and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
SIX MONTHS ENDED FISCAL YEAR ENDED SEVEN MONTHS FISCAL YEAR
---------------------- ------------------------------------------------------ ENDED ENDED
AUGUST 31, AUGUST 26, FEBRUARY 24, FEBRUARY 25, FEBRUARY 26, FEBRUARY 27, FEBRUARY 29, JULY 28,
1996(a) 1995 1996(a) 1995 1994 1993 1992 1991
---------- ---------- ------------ ------------ ------------ ------------ ------------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS:
Net sales........... $200,328 $113,045 $232,582 $229,347 $203,364 $198,019 $ 12,192 $24,278
Cost of sales....... 133,342 75,925 160,031 154,863 136,307 137,690 5,626 10,645
-------- -------- -------- -------- -------- -------- -------- -------
Gross
profit.... 66,986 37,120 72,551 74,484 67,057 60,329 6,566 13,633
Operating expenses:
Selling, general
and
administrative... 24,254 16,743 42,000 31,787 28,164 21,698 4,871(e) 4,855
Research,
development and
engineering..... 19,157 24,774(c) 58,327(c) 12,860 9,876 11,299 1,324 1,809
Amortization
expense......... 5,514 4,650 9,499 9,954 7,599 4,551 3,707(e) --
Other expenses.... -- -- 4,170(b) 23,736(b) -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------
Operating earnings
(loss)............ 18,061 (9,047) (41,445) (3,853) 21,418 22,781 (3,336) 6,969
Interest (income)
expense, net...... 14,399 8,149 18,636 15,019 12,581 3,955 (743) (211)
-------- -------- -------- -------- -------- -------- -------- -------
Earnings (loss)
before income
taxes (benefit),
extraordinary item
and cumulative
effect of
accounting
change............ 3,662 (17,196) (60,081) (18,872) 8,837 18,826 (2,593) 7,180
Income taxes
(benefit)......... 366 -- -- (6,806) 3,481 6,676 (860) 2,478
-------- -------- -------- -------- -------- -------- -------- -------
Earnings (loss)
before
extraordinary item
and cumulative
effect of
accounting
change............ 3,296 (17,196) (60,081) (12,066) 5,356 12,150 (1,733) 4,702
Extraordinary item,
net of tax
effect............ -- -- -- -- -- (522)(d) -- --
Cumulative effect of
accounting
change............ -- (23,332)(c) (23,332)(c) -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------
Net earnings
(loss)............ $ 3,296 $(40,528) $(83,413) $(12,066) $ 5,356 $ 11,628 $ (1,733) $ 4,702
======== ======== ======== ======== ======== ======== ======== =======
Earnings (loss) per
common share:
Earnings (loss)
before
cumulative
effect of
accounting
change.......... $ 0.19 $ (1.07) $ (3.71) $ (0.75) $ 0.35 $ 1.03 $ (0.18) $ 0.65
Cumulative effect
of accounting
change.......... -- (1.45)(c) (1.44)(c) -- -- (0.05)(d) -- --
-------- -------- -------- -------- -------- -------- -------- -------
Net earnings
(loss)............ $ 0.19 $ (2.52) $ (5.15) $ (0.75) $ 0.35 $ 0.98 $ (0.18) $ 0.65
======== ======== ======== ======== ======== ======== ======== =======
Common and common
equivalent
shares............ 17,446 16,108 16,158 16,021 15,438 11,847 9,604 7,248
Supplemental
earnings (loss)
per common
share:(f)
Earnings (loss)
before
cumulative
effect of
accounting
change.......... $ 0.28 $ (2.99)
Cumulative effect
of accounting
change.......... -- (1.25)
-------- --------
Net earnings
(loss).......... $ 0.28 $ (4.24)
======== ========
BALANCE SHEET DATA
(END OF PERIOD):
Working capital..... $ 62,282 $ 53,022 $ 41,824 $ 76,563 $ 76,874 $133,661 $ 27,367 $13,500
Total assets........ 443,340 355,125 433,586 379,954 375,009 314,055 135,330 26,034
Long-term debt...... 282,058 188,435 273,192 172,693 159,170 127,743 40,500 --
Shareholders'
equity............ 52,144 86,630 44,157 125,331 133,993 107,974 57,057 22,467
</TABLE>

12
<PAGE> 15

SELECTED FINANCIAL DATA (CONTINUED)

FOOTNOTES TO TABLE

(a) On January 24, 1996, the Company acquired all of the stock of Burns, an
industry leader in commercial aircraft seating. The acquisition of Burns
was accounted for as a purchase, and the results of Burns are included in
B/E's historical financial data from the date of acquisition.

(b) In fiscal 1996, in conjunction with the Company's rationalization of its
seating business and as a result of the Burns acquisition, the Company
recorded a charge to earnings of $4.2 million related to costs associated
with the integration and consolidation of the Company's European seating
operations. In fiscal 1995, the Company charged to earnings $23.7 million
of expenses primarily related to intangible assets and inventories
associated with the Company's earlier generations of passenger
entertainment systems.

(c) In fiscal 1996, the Company changed its method of accounting relating to the
capitalization of pre-contract engineering costs that were previously
included as a component of inventories and amortized to earnings as the
product was shipped. Effective February 24, 1995, such costs have been
charged to research and development and expensed as incurred and, as a
result, periods prior to fiscal 1996 are not comparable. In connection with
such change in accounting, the Company recorded a charge to earnings of
$23.3 million. See Note 2 of Notes to Consolidated Financial Statements.

(d) As a result of the sale of Senior Notes in 1993, the Company wrote off the
unamortized portion of certain debt issuance costs related to its prior
credit agreement.

(e) During the seven months ended February 29, 1992, approximately $3.1 million
of non-recurring expenses related to writedown of intangible assets and
$2.1 million of costs associated with the Company's acquisitions were
charged to amortization expense and selling, general and administrative
expenses, respectively.

(f) As required by APB 15, the Supplemental earnings (loss) per common share
data adjust the Statement of Operations data and Common and common
equivalent shares to give effect to: (i) the assumed issuance of 2,452,760
shares of Common Stock by the Company which would be necessary to generate
proceeds (using a share price of $25), net of estimated offering costs,
sufficient to repay $57.6 million of indebtedness; and (ii) the elimination
of interest expense related to such borrowings for each period, net of tax.
The supplemental data do not give effect to the issuance of an additional
1,547,240 shares of Common Stock offered by the Company, the proceeds of
which will be used as set forth under "Use of Proceeds".

13
<PAGE> 16

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS)

INTRODUCTION

B/E has become the world's leading manufacturer of commercial aircraft
interior products through the strategic acquisitions of seating, in-flight
passenger entertainment and services systems and galley products businesses.
B/E's products include an extensive line of first, business, tourist class and
commuter seats, a broad range of galley products including coffee and beverage
makers, ovens, liquid containers, refrigeration equipment and galley structures,
as well as a line of in-flight entertainment products including the MDDS
interactive video system. B/E markets and sells its products to its customers,
the airlines, through an integrated worldwide approach, focused by airline and
encompassing B/E's entire product line.

B/E's revenues are generally derived from two primary sources:
refurbishment or upgrade programs for the airlines' existing worldwide fleets,
and new aircraft deliveries. B/E believes its large installed base of products,
estimated to be approximately $2.6 billion as of August 31, 1996 (valued at
replacement prices), gives it a significant advantage over competitors in
obtaining orders for refurbishment programs, principally due to the tendency of
the airlines to purchase equipment for such programs from the original supplier.
With the exception of spare parts sales, B/E's revenues are generated from
programs initiated by the airlines which may vary significantly from year to
year in terms of size, mix of products and length of delivery. As a result,
B/E's revenues and margins may fluctuate from period to period based upon the
size and timing of the program and the type of products sold. Historically, B/E
experienced certain trends in its two revenue drivers: as the airlines took
deliveries of large numbers of new aircraft, refurbishment programs as a
percentage of revenues declined and, similarly, when new aircraft deliveries
declined, refurbishment programs tended to increase in number and size. During
the most recent airline industry recession, which ended in 1994, the airlines
significantly depleted their cash reserves and incurred record losses. In an
effort to improve their liquidity, the airlines conserved cash by reducing or
deferring cabin interior refurbishment and upgrade programs and purchases of new
aircraft. As a result, in contrast with historical experience, B/E experienced
declines in the number of both new orders and refurbishments.

Since early 1994, the airlines have experienced a significant turnaround in
operating results, with the domestic airline industry achieving record operating
earnings during 1995 and 1996 to date. Consequently, during fiscal 1996 and the
six months ended August 31, 1996, B/E has experienced significant growth in
backlog of seating and galley products, and, during the six months ended August
31, 1996, has experienced significant growth in revenues and operating earnings.
This growth is a reflection of the airlines' need to begin refurbishing worn
fleets and their ability to do so as a result of the strengthening of the
airlines' balance sheets.

B/E has substantially expanded the size, scope and nature of its business
as a result of a number of acquisitions. During the fiscal year ended February
26, 1994, B/E completed the following acquisitions: (a) on April 29, 1993, the
Company acquired, through a Dutch holding company, all of the capital stock of
Inventum, a supplier of galley inserts including ovens, beverage makers and
water boilers to airlines located primarily in Europe and the Pacific Rim; (b)
on August 23, 1993, the Company acquired all of the capital stock of Nordskog,
an industry pioneer in galley structures and inserts; (c) on August 26, 1993,
the Company acquired all of the capital stock of Acurex, the leading worldwide
supplier of commercial aircraft refrigeration products; and (d) on October 13,
1993, the Company acquired substantially all of the assets and certain of the
liabilities of Airvision, a manufacturer of in-flight entertainment equipment.
On January 24, 1996, the Company acquired all of the stock of Burns, an industry
leader in commercial aircraft seating. While the Company will continue to be
susceptible to industry-wide conditions, management believes that the Company's
significantly more diversified product line and revenue base achieved through
acquisitions has reduced its exposure to demand fluctuations in any one product
area.

The Burns acquisition has had a significant impact on B/E's results of
operations. Burns was one of the three leading North American suppliers of
commercial aircraft passenger seats, with a base of airline customers that was
largely complementary to that of B/E. B/E's and Burns' approximate share of the

14
<PAGE> 17

worldwide seating products market at the time of acquisition were 30% and 20%,
respectively, based on fiscal 1995 unit sales. By consolidating engineering,
marketing, administration and manufacturing operations of the two companies, B/E
has been able to reduce fixed costs, thereby enhancing its low-cost position.

B/E's business strategy is to maintain its market leadership position
through various initiatives, including new product development. In fiscal 1996,
research, development and engineering expenses totaled $58,327, or 25% of net
sales, primarily consisting of costs related to the development of the MDDS,
with the balance attributable to its seating products and galley businesses.
During the six months ended August 31, 1996, primarily as a result of the
substantial completion of the engineering associated with the development of the
MDDS, such expenses were $19,157, or 10% of net sales. The Company expects that
its research, development and engineering expenses will increase in fiscal 1998
as a result of the introduction of the MDDS as a line fit option on the Boeing
B777 and B747 aircraft. See "Prospectus Summary -- Recent Developments."

RESULTS OF OPERATIONS -- SIX MONTHS ENDED AUGUST 31, 1996
COMPARED TO THE SIX MONTHS ENDED AUGUST 26, 1995

Sales for the six months ended August 31, 1996 were $200,328, or 77% higher
than sales of $113,045 for the comparable period in the prior year. The increase
in sales is attributable to substantially higher unit volume shipments of all
the Company's products as a result of improving industry conditions. Of the
$87,283 increase in sales for the six-month period, $56,129 was due to increased
seating revenues directly related to the acquisition of Burns. Excluding the
effect of the Burns acquisition, sales increased 28% from the comparable period
in the prior year.

At August 31, 1996, the Company's backlog was approximately $480,000, up
from $450,000 at February 24, 1996. New order bookings in the six months ended
August 31, 1996 of $230,000 were $112,000 greater than new order bookings of
$118,000 for the comparable period in the prior year. Management estimates that
approximately 36% of its backlog is deliverable during the balance of fiscal
1997.

Gross profit was $66,986, or 33.4% of sales, for the six months ended
August 31, 1996 and was $29,866 higher than gross profit for the comparable
period in the prior year of $37,120, which represented 32.8% of sales. The
increase in gross profit is primarily the result of the higher sales volumes.

Selling, general and administrative expenses were $24,254, or 12.1% of
sales, for the six months ended August 31, 1996. This was $7,511 higher than
selling, general and administrative expenses for the comparable period in the
prior year of $16,743, or 14.8% of sales, principally due to the substantial
increases in revenues and the acquisition of Burns.

Research, development and engineering expenses were $19,157, or 9.6% of
sales, for the six months ended August 31, 1996. For the comparable period in
the prior year, research and development expense was $24,774, or 21.9% of sales.
The decrease in expenses during the current year is the result of a decrease in
the level of activity associated with the MDDS, offset somewhat by an increase
in product development activity in the Seating Products Division.

Amortization expense for the six months ended August 31, 1996 of $5,514 was
$864 more than the amount recorded in the first half of fiscal 1996 as a result
of the Burns acquisition.

Net interest expense was $14,399 for the six months ended August 31, 1996,
or $6,250 higher than the net interest expense of $8,149 recorded for the
comparable period in the prior year, and is due to the increase in the Company's
long-term debt outstanding as a result of the Burns acquisition and the upturn
in the Company's business.

Earnings before income taxes of $3,662 for the six months ended August 31,
1996 were $20,858 more than the loss before income taxes of $(17,196) in the
prior period.

Income taxes for the six months ended August 31, 1996 were $366, or 10% of
earnings before income taxes, as compared to no tax provision in the first half
of fiscal 1996.

15
<PAGE> 18

Net earnings were $3,296, or $.19 per share, for the six months ended
August 31, 1996 as compared to a net loss of $(40,528) or $(2.52) per share for
the comparable period in the prior year, which included the cumulative effect of
an accounting change of $23,332.

RESULTS OF OPERATIONS -- YEAR ENDED FEBRUARY 24, 1996 COMPARED WITH YEAR ENDED
FEBRUARY 25, 1995

Sales for the year ended February 24, 1996 were $232,582, or 1% greater
than sales of $229,347 in the prior year. This increase in sales is primarily
related to the inclusion of results of operations of Burns, which was acquired
during the fourth quarter of fiscal 1996. Offsetting this increase in revenues
was the negative impact of the ten-week strike at Boeing, which ended December
14, 1995.

At February 24, 1996, the Company's backlog stood at approximately
$450,000, up from $331,000 at February 25, 1995. The increase in backlog is
attributable to the acquisition of Burns, along with solid growth from orders
placed by the airlines. During the year ended February 24, 1996, and for the
first time in over two years, the airlines placed orders for the Company's
seating and galley products in excess of its shipment levels, resulting in an
increase in its seating and galley products backlog.

Gross profit was $72,551, or 31.3% of sales, for the year ended February
24, 1996 and was $1,933 less than gross profit for the prior year of $74,484,
which represented 32.5% of sales. The decrease in gross profit during the year
ended February 24, 1996 is primarily the result of the mix of products sold.

Selling, general and administrative expenses were $42,000, or 18.1% of
sales, for the year ended February 24, 1996. This was $10,213 higher than
selling, general and administrative expenses in the prior year of $31,787, or
13.9% of sales, principally due to costs associated with the Burns acquisition
and related organizational changes brought about by this acquisition, higher
promotional and selling costs associated with B/E's participation in industry
trade shows, and higher medical benefits and legal costs during fiscal 1996.

Effective as of the beginning of fiscal 1996, the Company changed its
method of accounting for pre-contract engineering expenditures associated with
customer orders. These expenditures, which previously were carried in inventory
for amortization over future deliveries, are now expensed as incurred. As a
result of this change in accounting method, research, development and
engineering expenses for the year ended February 24, 1996 increased by $45,467
to $58,327, as compared to $12,860 in the prior year.

Amortization expense for the year ended February 24, 1996 of $9,499 was
$455 less than the amount recorded in the prior year, and is due to the lower
level of intangible assets being amortized during fiscal 1996.

Other expenses were $4,170 for the year ended February 24, 1996 and relate
to costs associated with the integration and consolidation of the Company's
European seating business. Other expenses for the year ended February 25, 1995
were $23,736 and related primarily to a charge associated with B/E's earlier
generations of passenger entertainment systems.

Net interest expense was $18,636 for the year ended February 24, 1996, or
$3,617 higher than net interest expense of $15,019 recorded in the prior year.
This increase is the result of an increase in the amount of the Company's
long-term debt outstanding, as well as higher interest rates.

No income tax benefit was provided for the year ended February 24, 1996 as
compared to a tax benefit of $(6,806), or 36% of the loss before income taxes,
for the prior year.

The Company recorded the cumulative effect of an accounting change of
$23,332 during the year ended February 24, 1996. Such amount represents the
total amount of capitalized pre-contract engineering costs which were included
in inventories as of February 25, 1995.

The net loss for fiscal 1996 was $(83,413), or $(5.15) per share, as
compared to a net loss of $(12,066), or $(.75) per share, in the prior year.

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<PAGE> 19

RESULTS OF OPERATIONS -- YEAR ENDED FEBRUARY 25, 1995 (FISCAL 1995) COMPARED
WITH YEAR ENDED FEBRUARY 26, 1994 (FISCAL 1994)

Sales for the year ended February 25, 1995 were $229,347, or 13% higher
than sales of $203,364 in the prior year. The increase in sales was primarily
related to the results of operations of businesses acquired at the end of the
second quarter of fiscal 1994. The level of activity in the cabin interior
products industry continued to reflect the depressed conditions within the
airline industry.

At February 25, 1995, B/E's backlog stood at $331,000, up from $241,000 at
February 26, 1994. Substantially all of the growth in backlog was attributable
to B/E's in-flight entertainment products; backlog for B/E's seating and galley
products continued to decline through fiscal 1995 as a result of the depressed
conditions present in the airline industry.

Gross profit was $74,484, or 32% of sales, for the year ended February 25,
1995 and was $7,427, or 11%, greater than the prior year's gross profit of
$67,057, which represented 33% of sales. The increase in gross profit during the
fiscal year ended February 25, 1995 was in large part the result of higher
revenues associated with the businesses acquired at the end of the second
quarter of fiscal 1994.

Selling, general and administrative expenses were $31,787, or 14% of sales,
for the year ended February 25, 1995. This was $3,623, or 13%, higher than the
selling, general and administrative expenses in the prior year of $28,164, or
14% of sales, principally due to the acquisitions completed during fiscal 1995.

Research, development and engineering expenses were $12,860, or 6% of
sales, for the fiscal year ended February 25, 1995. For the prior year, research
and development expenses were $9,876, or 5% of sales. The increase in research,
development and engineering expense was attributable to B/E's ongoing new
product development programs.

Amortization expense for the fiscal year ended February 25, 1995 of $9,954,
was $2,355, or 31%, higher than the amount recorded in the prior year, and was
due to the acquisitions completed during fiscal 1995.

Other expenses consisted of a charge of $23,736, related primarily to
intangible assets and inventories associated with B/E's earlier generations of
passenger entertainment systems. The introduction of B/E's MDDS, which B/E
expects to become the industry's standard for in-flight passenger and service
entertainment, has captured the dominant market share with it receiving contract
awards from major airlines totaling more than $150,000 during the fiscal year
ended February 25, 1995. The MDDS also caused major carriers to convert programs
for earlier products of B/E to the MDDS and has resulted in two of B/E's
principal competitors offering to develop for the airlines systems similar to
B/E's MDDS. These events caused the in-flight entertainment industry to
reevaluate its product offerings and, in the process, have impaired the value of
certain of its assets. As a result, B/E has written down certain of its assets
principally related to its earlier systems.

Principally due to the other expenses described above, B/E recorded a net
operating loss of ($3,853) for the fiscal year ended February 25, 1995, as
compared to operating earnings of $21,418 in the prior year. Operating earnings
for the period before the special charge mentioned above were $19,883.

Net interest expense of $15,019 for the fiscal year ended February 25, 1995
was $2,438, or 19%, higher than net interest expense of $12,581 in the prior
year. This increase was the result of an increase in the amount of B/E's
long-term debt outstanding, as well as higher interest rates.

An income tax benefit of $(6,806), or 36% of the loss before income taxes,
was recognized principally as the result of the charge described above. Income
tax expense for the fiscal year ended February 25, 1994 was $3,481, or 39% of
earnings before income taxes.

The net loss for fiscal 1995 was $(12,066) or $(.75) per share as compared
to net earnings of $5,356, or $.35 per share in the prior year, principally due
to the charge.

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<PAGE> 20

LIQUIDITY AND CAPITAL RESOURCES

The Company's liquidity requirements consist primarily of working capital
needs and scheduled payments of interest on its indebtedness. As a result of the
Burns acquisition, the Company has significantly increased cash requirements for
the payment of interest on its outstanding borrowings.

B/E's primary requirements for working capital have been directly related
to increased accounts receivable and inventory levels as a result of revenue
growth. B/E's working capital was $62,282 as of August 31, 1996, compared to
$41,824 as of February 24, 1996.

In January 1996 the Company amended its existing credit facilities with The
Chase Manhattan Bank by increasing the aggregate principal amount that may be
borrowed thereunder to $100,000 (the "Bank Credit Facility"). The Bank Credit
Facility consists of a $25,000 Reducing Revolver and a $75,000 Revolving
Facility. The amount of the Reducing Revolver will be reduced automatically by
12.5% on April 19, 1999 and on each of the seven succeeding quarterly
anniversaries of such date. The Reducing Revolver is collateralized by all of
the issued and outstanding capital stock of Acurex, a wholly owned subsidiary,
and has a five year maturity and the Revolving Facility is collateralized by all
of the Company's accounts receivable, all of its inventory and substantially all
of its other personal property and has a five-year maturity. The Bank Credit
Facility contains customary affirmative covenants, negative covenants and
conditions of borrowing. At November 15, 1996 indebtedness in an aggregate
principal amount of approximately $47,000, plus letters of credit amounting to
approximately $5,000, were outstanding under the Bank Credit Facility. The
Company intends to use approximately $57,600 of the net proceeds from the
Offering to repay the outstanding balances under certain B/E bank credit
facilities. Assuming such repayment, the Company would have available under its
bank credit facilities approximately $97,000 for subsequent borrowings.

The Senior Notes and Senior Subordinated Notes are due March 1, 2003 and
February 1, 2006, respectively.

At August 31, 1996, the Company's cash and cash equivalents were $14,188 as
compared to $15,376 at February 24, 1996. Cash used in operating activities
during the six months ended August 31, 1996 was $(4,022), and cash used in
operating activities in fiscal 1996 was $(8,296). The primary source of cash
during the six months ended August 31, 1996 was net earnings of $3,296, non-cash
charges for depreciation and amortization of $11,840 and approximately $3,900
from the issuance of Common Stock pursuant to stock option exercises and
employee benefit plans, offset by a use of cash of $19,158 principally due to
increases in receivables and inventories, as well as decreases in current
liabilities. The primary source of cash during the year ended Feburary 24, 1996
was non-cash charges for depreciation and amortization of $18,435 and the
cumulative effect of the accounting change of $23,332 which was offset by a use
of cash for research, development and engineering of $58,327 and for inventory
of $11,929.

The Company's capital expenditures were $7,065 and $8,168 during the six
months ended August 31, 1996 and August 26, 1995, respectively, and $13,656,
$12,172, and $11,002 in fiscal 1996, 1995, and 1994, respectively.

The Company believes that cash flow from operations and availability under
the Bank Credit Facility will provide adequate funds for its working capital
needs, planned capital expenditures and debt service obligations through the
term of the Bank Credit Facility. The Company believes that it will be able to
refinance the Bank Credit Facility prior to its termination, although there can
be no assurance that it will be able to do so. The Company's ability to fund its
operations and make planned capital expenditures, to make scheduled payments and
to refinance its indebtedness depends on its future operating performance and
cash flow, which, in turn, are subject to prevailing economic conditions and to
financial, business and other factors, some of which are beyond its control.

INDUSTRY CONDITIONS

The Company's customers are the world's commercial airlines. As a result,
the Company's business is directly dependent upon the conditions in the
commercial airline industry. In the late 1980s and early 1990s the world airline
industry suffered a severe downturn which resulted in record losses and several
air carriers

18
<PAGE> 21

seeking protection under bankruptcy laws. As a consequence, during such period,
airlines sought to conserve cash by reducing or deferring scheduled cabin
interior refurbishment and upgrade programs and delaying purchases of new
aircraft. This led to a significant contraction in the commercial aircraft cabin
interior products industry, and a decline in the Company's business and
profitability. Over the last two years, the airline industry has experienced an
economic turnaround, with significantly improved results, and a number of the
world's airlines have placed significant orders for new aircraft over the past
12 months. Industry sources are now predicting that new aircraft deliveries will
increase over the next several years. Due to the volatility of the airline
industry, there can be no assurance that the recent profitability of the airline
industry will continue or that the airlines will maintain or increase
expenditures on cabin interior products for refurbishments or new aircraft.

The foregoing statements include forward-looking statements which involve
risks and uncertainties. The Company's actual experience may differ materially
from that discussed above. Factors that might cause such a difference include,
but are not limited to, those discussed in "Risk Factors," as well as future
events that have the effect of reducing the Company's operating income and
available cash balances, such as unexpected operating losses or delays in the
integration of the Company's seating business, the delivery of the MDDS
interactive video system, new or expected refurbishments, or cash expenditures
related to possible future acquisitions.

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<PAGE> 22

BUSINESS

INTRODUCTION

As of August 31, 1996, B/E's backlog was at a record $480 million
(excluding any additional backlog attributable to United Airlines from the
matters described under "Prospectus Summary -- Recent Developments") and, during
the six months ended August 31, 1996, the Company has experienced significant
growth in revenues and operating earnings.

INDUSTRY OVERVIEW

The commercial aircraft cabin interior products industry encompasses a
broad range of products and services, including not only aircraft seating
products, passenger entertainment and service systems, and food and beverage
preparation and storage systems, but also lavatories, lighting systems,
evacuation equipment and overhead bins. Management estimates that the industry
had annual sales in excess of one billion dollars during fiscal 1996.

Historically, revenues in the cabin interior products industry have been
derived from five sources: (i) new installation programs in which airlines
purchase new equipment to outfit a newly delivered aircraft; (ii) retrofit
programs in which airlines purchase new components to overhaul completely the
interiors of aircraft already in service; (iii) refurbishment programs in which
airlines purchase components and services to improve the appearance and
functionality of certain cabin interior equipment; (iv) spare parts; and (v)
technology upgrades. The retrofit and refurbishment cycles for commercial
aircraft cabin interior products differ by product category. Aircraft seating
typically has a refurbishment cycle of one to two years and a retrofit cycle of
seven to eight years, although during the industry downturn, these periods
tended to be extended. See "Recent Industry Conditions." Galley structures and
products are periodically upgraded or repaired, and require a continual flow of
spare parts, but may be retrofitted only once or twice during the life of the
aircraft.

The various product categories currently manufactured by the Company
include:

- Aircraft Seats. This is the largest single product category in the
industry and includes first class, business class, tourist class and
commuter seats. Prices range from $1,150 to $10,000 per seat. Management
estimates that the aggregate size of the worldwide aircraft seat market
(including spare parts) during fiscal 1996, which still reflected
economic conditions stemming from the recent airline industry downturn,
was in excess of $400 million, and has ranged as high as approximately
$510 million in the past five years. Approximately ten companies
worldwide, including the Company, supply aircraft seats, although the
Company (which has an approximately 50% market share) and two other
competitors share approximately 90% of the market.

- Passenger Entertainment and Service Systems ("PESS"). This product
category includes individual seat video systems, overhead video
projection systems, audio distribution systems, passenger control

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<PAGE> 23

units ("PCUs") and related wiring and harness assemblies and
sophisticated interactive telecommunications and entertainment systems.
Prices for PCUs range from $18,000 to $115,000 per aircraft. Individual
passenger in-flight entertainment systems currently range in price from
approximately $3,000 to $8,000 per seat. Management estimates that the
aggregate size of the worldwide PESS market was approximately $250
million during fiscal 1996. Industry sources expect the PESS market to
increase substantially in the near term as individual passenger
entertainment systems become standard in-flight entertainment equipment
in first, business and tourist classes on wide-body, and with the further
development of live broadcast in-flight television, many narrow-body
aircraft. PESS products are currently supplied by approximately five
companies worldwide. The Company has a market share of approximately 33%
in individual passenger in-flight entertainment systems, determined on
the basis of installed units as of August 31, 1996.

- Galley Products. This product category includes complete galley systems
for both narrow- and wide-body aircraft, including a wide selection of
coffee and beverage makers, water boilers, ovens, liquid containers, air
chillers, wine coolers and other refrigeration equipment and other galley
components. Prices for coffee makers and ovens range from $3,000 to
$10,000. Prices for aircraft refrigeration products range from $14,500 to
$28,500. Prices for complete aircraft galley systems range from $120,000
for narrow-body aircraft to $1,000,000 for wide-body aircraft. Management
estimates that the aggregate size of the worldwide galley equipment
market during fiscal 1996 was in excess of $250 million and has ranged as
high as approximately $300 million during the past five years. The
majority of the Company's sales of galley products have been associated
with deliveries of new aircraft to the airlines (particularly galley
structures and refrigeration equipment). While there are approximately 22
companies worldwide who supply galley equipment to the airline industry,
the Company is the only manufacturer with a complete line of galley
equipment.

The Company operates in the commercial aircraft cabin interior products
segment of the commercial airlines supplier industry. Revenues for similar
classes of products or services within this business segment for the six months
ended August 1996 and 1995, and for the three most recent fiscal years are
presented below:

<TABLE>
<CAPTION>
SIX MONTHS
ENDED AUGUST FISCAL YEAR
------------- ----------------------
1996 1995 1996 1995 1994
---- ---- ---- ---- ----
(UNAUDITED; DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Seating products...................................... $105 $ 48 $ 97 $100 $ 99
Galley products....................................... 47 39 79 81 59
Passenger entertainment and service systems........... 23 15 33 34 36
Services.............................................. 25 11 24 14 9
---- ---- ---- ---- ----
Total revenues...................................... $200 $113 $233 $229 $203
==== ==== ==== ==== ====
</TABLE>

RECENT INDUSTRY CONDITIONS

The Company's principal customers are the world's commercial airlines. The
airlines, particularly the U.S. carriers, incurred record losses during the
three-year period ended December 31, 1993. The losses incurred during the
downturn seriously impaired airline balance sheets and negatively influenced
airline purchasing decisions with respect to both new aircraft and refurbishment
programs. The domestic airlines in large part returned to profitable operations
during calendar 1994 and calendar 1995, and have started to restore their
balance sheets since then through cash generated from operations and debt and
equity placements. Further, throughout calendar 1996, the aircraft manufacturers
began experiencing a significant increase in new aircraft orders. Among those
factors expected to affect the cabin interior products industry are the
following:

- Large Existing Installed Base. According to the Boeing Report, the world
commercial passenger aircraft fleet, as of the end of 1995, consisted of
11,066 aircraft, including 3,281 aircraft with fewer than 120 seats,
4,930 aircraft with between 120 and 240 seats and 2,855 aircraft with
more than 240 seats. Based on such fleet numbers, management estimates
that the total worldwide installed base of commercial aircraft cabin
interior products, valued at replacement prices, was approximately $7.9

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<PAGE> 24

billion at the end of 1995. This existing installed base will generate
continued retrofit, refurbishment and spare parts revenue, particularly
in light of the deterioration of existing interior cabin functionality
and aesthetics resulting from the airlines' deferral of refurbishment
programs in recent years.

- Expanding Worldwide Fleet. Worldwide air traffic has grown in every year
since 1946 (except in 1990) and, according to the Boeing Report, is
projected to grow at a compounded average rate of approximately five
percent per year through 2015, increasing annual revenue passenger miles
from approximately 1.4 trillion in 1993 to approximately 4.3 trillion by
2015. Industry sources report that the airlines are experiencing
extremely high load factors and that a significant number of new aircraft
will be purchased to meet the growth in worldwide air travel, which is
expected to nearly double by 2005. According to the Boeing Report, the
worldwide fleet of commercial passenger aircraft is projected to expand
from approximately 11,000 at the end of 1995 to approximately 16,000 by
the end of 2005. The Company believes that growth in aircraft interior
product shipments related to new aircraft deliveries will begin in 1997.
For example, Boeing has indicated that it plans to ship 215 aircraft in
1996 as compared with 340, 385, and 380, respectively, in each of the
subsequent years through 1999. The Company generally receives orders
related to new deliveries approximately six months before an aircraft is
delivered. According to Airbus Industrie Global Market Forecast published
in March 1995 (the "Airbus Industrie Report"), the worldwide installed
seat base, which management considers to be a good indicator for
potential growth in the aircraft cabin interior products industry, is
expected to increase from approximately 1.6 million passenger seats at
the end of 1994 to approximately 3.9 million passenger seats at the end
of 2014. The expanding worldwide fleet will generate additional revenues
from new installation programs, and the increase in the size of the
installed base will generate additional and continual retrofit,
refurbishment and spare parts revenue.

- Wide-body Aircraft Orders. Orders for wide-body, long-haul aircraft
constitute an increasing share of total new airframe orders. According to
the July 1996 Airline Monitor, the percentage of Boeing aircraft
deliveries projected to be wide-body aircraft for 1996 through 1998 is
43%, as compared to 32% for the three-year period ended December 31,
1995. Wide-body aircraft currently carry up to three times the number of
seats as narrow-body aircraft, and because of multiple classes of
service, including large first class and business class configurations,
the Company's average revenue per seat on wide-body aircraft is also
higher. Aircraft crews on wide-body aircraft may make and serve between
300 and 900 meals and may brew and serve more than 2,000 cups of coffee
on a single flight. As a result, wide-body aircraft may require as much
as seven times the dollar value of cabin interior products as narrow-body
aircraft, as well as products which are technically more sophisticated
and typically more expensive. Further, individual passenger in-flight
entertainment systems are installed principally on wide-body aircraft.
Airlines are increasingly demanding such systems for long-haul flights to
attract and retain customers, especially as the quality of in-flight
entertainment has become a differentiating factor in passengers' airline
selection decisions. Such systems also provide the airlines with the
opportunity to increase revenues per passenger mile, without raising
ticket prices, by charging individually for services used. For these
reasons, management believes that in the future, interactive in-flight
entertainment systems will be installed on essentially all wide-body
aircraft and, with the further development of live broadcast in-flight
television, many narrow-body planes.

- New Product Development. The commercial aircraft cabin interior products
industry is engaged in intensive development and marketing efforts for a
number of new products, including convertible seats, interactive
individual passenger entertainment systems, advanced telecommunications
equipment and new galley equipment. Interactive video technology provides
a passenger with a wide range of computer capabilities, which are
designed to accept information generated by the passenger and communicate
such information to the cabin crew for assisting passengers and crew with
food service selection, the purchase of duty-free goods, information in
connection with the arrival time, connecting flights, gate and other
passenger information, as well as facilitate effective on-board inventory
control and provide individual entertainment. New cabin interior products
will generate new installation and retrofit revenues as well as service
revenues from equipment maintenance, inspection and repair.

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<PAGE> 25

- Growing Upgrade, Maintenance, Inspection and Repair Service
Markets. Historically the airlines have relied on their airframe and
engine mechanics to repair or replace cabin interior products that have
become damaged or otherwise non-functional. As cabin interior product
configurations have become increasingly sophisticated and the airline
industry increasingly competitive, the airlines have begun to outsource
such services in order to increase productivity and reduce costs and
overhead. Outsourced services include product upgrades (such as the
installation of a telecommunications module or individual passenger
entertainment unit in an aircraft seat not originally designed to
accommodate such equipment), cabin interior product maintenance and
inspection, as well as other repair services.

COMPETITIVE STRENGTHS AND BUSINESS STRATEGY

The Company believes that it has a strong competitive position attributable
to a number of factors including the following:

- Leading Market Share and Significant Installed Base. Management believes
that the Company has achieved the leading global market positions in each
of its major product categories, with market shares, based upon industry
sources, of approximately 50% in aircraft seats, 90% in coffee makers,
90% in refrigeration equipment and 50% in ovens, in each case based on
unit sales for the six months ended August 31, 1996, and 33% in
individual passenger in-flight entertainment systems, determined on the
basis of installed base as of August 31, 1996. The Company believes these
market shares provide it with significant competitive advantages in
serving its customers, including economies of scale and the ability to
commit greater product development, global product support and marketing
resources. Furthermore, because of economies of scale, in part
attributable to its large market shares and its approximate $2.6 billion
installed base of cabin interior equipment (valued at replacement prices
as of August 31, 1996), the Company believes it is among the lowest cost
producers in the cabin interior products industry. The Company also
believes that its large installed base provides B/E with a significant
advantage over competitors in obtaining orders for retrofit and
refurbishment programs, principally because airlines tend to purchase
equipment from the original supplier. In addition, because of the need
for compatible spare parts at airline maintenance depots and the desire
of airlines to maximize fleet commonality, a single vendor is typically
used for all aircraft of the same type operated by a particular airline.
Finally, B/E is better positioned to obtain any on-going upgrade,
maintenance, inspection and repair service contracts due to the size of
its installed base.

- Broadest Product Line in the Industry. Management believes the Company
offers more technologically advanced products for the cabin interiors of
commercial aircraft than any other manufacturer. With an established
reputation for quality, service and product innovation, the Company
enjoys broad recognition among the world's commercial airlines. The
Company maintains a constant dialogue with a wide array of existing and
potential customers, enabling it to become aware of emerging industry
trends and needs and thereby play a leading role in product development.
The Company has continued to expand its product line, believing that the
airline industry increasingly will seek an integrated approach to the
development, testing and sourcing of the aircraft's cabin interior.

- Technological Leadership/New Product Development. Management believes
that the Company is a technological leader in its industry, with the
largest R&D organization in the industry currently comprised of 319
engineers. The Company believes that its R&D effort and its on-site
engineers at both the airlines and airframe manufacturers enable B/E to
consistently introduce innovative products and thereby gain early entrant
advantages and substantial market shares. Examples of such product
development include: the Company's family of in-flight entertainment
systems, which it believes to be superior to existing operational systems
in terms of performance, reliability, weight, heat generation and
flexibility to adapt to changing technology; a cappuccino/espresso maker;
a quick chill wine cooling system; and a constant-pressure, steam cooking
oven, which the Company believes substantially improves the appearance,
aroma and taste of airline food.

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<PAGE> 26

The Company's business strategy is to maintain its leadership position and
best serve its airline customers by (i) offering the broadest and most
integrated product line in the industry for both new product sales and follow-on
products and services; (ii) pursuing a worldwide marketing approach focused by
airline and encompassing the Company's entire product line; (iii) remaining the
technological leader, as well as significantly growing its installed base of
products in the developing in-flight individual passenger entertainment market;
(iv) enhancing its position in the growing upgrade, maintenance, inspection and
repair services market; and (v) pursuing selective strategic acquisitions in the
commercial aircraft cabin interior products industry.

GROWTH OPPORTUNITIES

B/E believes that it is benefiting from three major growth trends occurring
in the commercial aircraft cabin interior products industry:

- Increase in Refurbishment and Upgrade Orders. B/E's substantial
installed base provides significant ongoing revenues from replacements,
upgrades, repairs and spare parts. Approximately two-thirds of B/E's
revenues and operating earnings for the six months ended August 31, 1996
were derived from refurbishment and upgrade orders. In the late 1980s and
early 1990s, the airline industry suffered a significant downturn, which
resulted in a deferral of cabin interior maintenance expenditures. Since
early 1994, the airlines have experienced a turnaround in operating
results, leading the domestic airline industry to record operating
earnings during 1995 and 1996 to date. Deterioration of cabin interior
product functionality and aesthetics within the commercial airline fleets
during the industry downturn has encouraged airlines to increase spending
on refurbishments and upgrades. The Company believes that it is well
positioned to benefit over the next several years as a result of the
airlines' dramatically improved financial condition and liquidity and the
need to refurbish and upgrade cabin interiors. The Company's recent
growth in backlog, revenues and operating earnings has been almost
entirely from refurbishment and upgrade programs, and the Company is
currently experiencing a high level of new order quote activity related
to such programs.

- Expansion of Worldwide Fleet and Shift Toward Wide-Body Aircraft. B/E
will benefit from the significant number of new aircraft which will need
to be purchased to meet projected growth in worldwide air travel in three
ways: (a) shipments of interior products to equip these new aircraft; (b)
expansion in the overall fleet, leading to more potential refurbishment
and upgrade revenues; and (c) a shift in new aircraft shipments toward
wide-body aircraft, which require substantially more seats, galley
equipment and in-flight entertainment products per aircraft than do
narrow-body aircraft. Due to the time lag in significantly increasing
production rates of new aircraft at the airframe manufacturers, the
Company does not expect the impact of new aircraft deliveries to be felt
in the commercial aircraft cabin interior product industry until calendar
1997. See "-- Recent Industry Conditions."

- Emergence of Individual Passenger In-flight Entertainment Systems as a
Major New Product Category. Airlines increasingly are demanding
individual passenger in-flight entertainment systems as a method to
attract and retain customers, as the availability of such service affects
passengers' decisions on airline selection. These systems also provide
the airlines with the opportunity to generate increased revenues, without
raising ticket prices, by charging passengers for the services used. The
Company expects that individual passenger in-flight entertainment systems
will be one of the fastest growing and among the largest product
categories in the commercial aircraft cabin interior products industry in
the future.

PRODUCTS AND SERVICES

Seating Products

The Company is the world's leading manufacturer of aircraft seats, offering
a wide selection of first class, business class, tourist class and commuter
seats. A typical seat sold by the Company includes the seat frame, cushions,
armrests and tray table, together with a variety of optional features such as
in-flight entertainment systems, oxygen masks and telephones. Management
estimates that the Company has an aggregate installed

24
<PAGE> 27

base as of August 31, 1996 of aircraft seats, valued at replacement prices, of
approximately $1.25 billion comprised of more than 735,000 seats.

- Tourist Class. The Company is the leading manufacturer of tourist class
seats in both the U.S. and worldwide markets. B/E has designed tourist
class seats which incorporate features not previously utilized in that
class, such as top-mounted passenger control units, footrests and
improved oxygen systems.

- First and Business Classes. First class and business class seats are
generally larger, heavier and more complicated in design, and are
substantially more expensive than other types of aircraft seats. The
Company's first class seats and certain of its business class seats are
equipped with an articulating bottom cushion suspension system,
sophisticated hydraulic leg-rests and large tables.

- Convertible Seats. The Company has developed two types of seats which
can be converted from a tourist class triple-row seat to a business class
double-row seat with minimal conversion complexity. Convertible seats
allow airline customers to optimize the ratio of business class to
tourist class seats for a given aircraft configuration.

- Commuter Seats. The Company is the leading manufacturer of commuter
seats in both the U.S. and worldwide markets. The Company's
Silhouette(TM) Composite commuter seats are similar to commercial jet
seats in comfort and performance but are lightweight and require minimal
maintenance.

- Spares. Aircraft seats are exposed to significant stress in the course
of normal passenger activity, and certain seat parts are particularly
susceptible to damage from continued use. As a result, a significant
market exists for spare parts.

Passenger Entertainment and Service Systems

Management estimates that the Company has the largest installed base of
PESS products in the world, which, valued at replacement prices, is
approximately $290 million. The Company has the leading share of the market for
PCUs and related wiring and harness assemblies, and has developed products aimed
at other portions of the PESS market, including individual seat video systems,
advanced multiplexer and hard-wired distribution systems and other products. The
Company believes that it is a market leader in individual passenger in-flight
entertainment systems and that this product category will be one of the fastest
growing and among the largest product categories in the commercial aircraft
cabin interior products industry in the future.

- Individual Passenger Entertainment. The Company has developed a number
of in-flight entertainment systems that are designed to meet the
technological and price specifications of the airlines:

B/E 2000. The 2000, introduced in 1991, is the Company's
first-generation individual in-flight video system and offers
centralized electronic distribution of a limited range of programming.
Since its introduction, the Company has sold approximately 13,500 units
of the B/E 2000 to 10 airlines.

MDDS Family. The Company has developed a family of next-generation,
individual passenger in-flight entertainment products, which includes
the 2000M and the MDDS:

B/E 2000M -- The 2000M is an in-flight entertainment system that
offers similar functionality to the 2000 but is designed to be
upgradeable to the Company's fully interactive MDDS. Since its
introduction in 1994, the Company has sold approximately 3,600
units of the 2000M to 5 airlines. On November 15, 1996, the
Company announced that United Airlines had selected B/E as a
supplier of individual in-flight entertainment systems for its
B777, B747-400, and B767-300 aircraft. While such selection is
subject to negotiation of definitive documentation, the Company
expects an initial order of approximately $60 million of the B/E
2000M system, to be installed on 54 United Airlines aircraft. If
United Airlines decides to upgrade its B/E 2000M entertainment
systems to full MDDS interactive functionality, significant
additional orders would follow. Pending the negotiation of the
final contract, United Airlines has authorized the Company to
proceed with necessary engineering and other long lead time
items.

25
<PAGE> 28

MDDS -- B/E's MDDS is a state-of-the-art, fully interactive
individual passenger in-flight entertainment system which has
the capacity to offer numerous movies on demand,
telecommunications, gaming, Nintendo(@), Sega(@) and PC-based
games, in-flight shopping and, in the future, live television,
among other services. The system was first installed, on a
limited basis, on a British Airways Boeing 747-400 in November
1995 and, upon successful completion of live tests, is expected
to be installed in all classes of service on approximately 90
aircraft. MDDS is not yet in commercial production. On November
6, 1996, B/E announced that the MDDS (including the B/E 2000M)
is now being offered by Boeing to its customers as a line fit
option for both the B777 and B747 aircraft, allowing airlines to
specify the MDDS as their in-flight entertainment system of
choice on these Boeing aircraft. Prior to this announcement, the
MDDS could only be installed as a retrofit option after the
airlines took initial delivery of new aircraft.

As of August 31, 1996, B/E had entered into contracts to supply
individual passenger entertainment systems to a number of airlines,
including Air France, British Airways and KLM, and had an in-flight
entertainment systems backlog of approximately $152 million (excluding
any additional backlog attributable to United Airlines from the matters
described under "Prospectus Summary -- Recent Developments").

- PCUs, Wiring and Harness Assemblies. The Company's PCU product line is
the broadest in the industry, including over 300 different designs which
are functionally similar but differ widely due to the style preferences
and technical requirements of the various airlines. Wiring and harness
assemblies (which stabilize installed wiring) are sold as a package with
PCUs and vary as widely as PCU types.

- Distribution Systems. The Company has manufactured hard-wired audio
(since 1963) and video distribution systems (since 1992) and is currently
the principal supplier of such systems to the airline industry. The
Company also offers frequency division multiplex distribution systems
which deliver substantially improved audio performance compared to
competitors' multiplex systems.

Galley Equipment and Structures
The Company is the world's largest manufacturer of galley equipment for
both narrow- and wide-body aircraft, offering a wide selection of coffee and
beverage makers, water boilers, ovens, liquid containers, refrigeration
equipment and other galley components as well as galley structures. Management
estimates that the Company has an aggregate installed base of galley equipment
and structures, valued at replacement prices, of approximately $1.0 billion.

- Coffee Makers. The Company is the leading supplier of aircraft coffee
makers, with equipment currently installed in virtually every type of
aircraft for almost every major airline. The Company manufactures a broad
line of coffee makers, coffee warmers and water boilers including the
Flash Brew Coffee Maker, with the capability to brew 54 ounces of coffee
in one minute, a Combi(TM) unit which will brew coffee or boil water for
tea while utilizing 25% less electrical power than traditional 5,000 watt
water boilers, and a recently introduced cappuccino/espresso maker.

- Ovens. The Company is a significant supplier of a broad line of
specialized ovens, including high-heat efficiency ovens, high-heat
convection ovens, and warming ovens. The Company's newest offering, the
DS-2000 Steam Oven represents a new method of preparing food in-flight by
maintaining constant temperature and moisture in the food. It addresses
the airlines' needs to provide a wider range of foods than can be
prepared by convection ovens.

- Refrigeration Equipment. The Company is the worldwide industry leader in
the design, manufacture, and supply of commercial aircraft refrigeration
equipment. The Company recently introduced a self-contained wine and
beverage chiller, the first unit specifically designed to rapidly chill
wine and beverages on board an aircraft.

- Galley Structures. Galley structures are generally custom designed to
accommodate the unique product specifications and features required by a
particular carrier. Galley structures require intensive design and
engineering work and are among the most sophisticated and expensive of
the aircraft's cabin

26
<PAGE> 29

interior products. The Company provides a variety of galley structures,
closets and class dividers, emphasizing sophisticated and higher
value-added galleys for wide-body aircraft.

Upgrade, Maintenance, Inspection and Repair Services

The Company is an active participant in the growing upgrade, maintenance,
inspection and repair services market. Management believes that the Company's
broad and integrated product line and close relationships with its airline
customers position the Company to become a leading service provider in this
market. The Company believes that this market offers a significant opportunity
for growth. Most participants in this market are small, and management believes
that the Company is the only major product manufacturer in the industry
currently participating in this market.

- Upgrade. The Company provides a variety of upgrade services for cabin
interior products. For example, the Company has begun to install
individual passenger video and telecommunications modules in seat backs
and center consoles which were otherwise not originally designed for such
products. The Company has this capability regardless of whether it
manufactures the product or whether the product is produced by others.

- Maintenance, Inspection and Repair. These services are provided at
selected airports on an overnight or between scheduled flights basis, or
at seven service centers maintained by the Company. The Company has been
engaged by several airlines to remove entire sets of aircraft seats, wash
and repair them and reinstall the seats within a one-week period. In
addition, the Company offers maintenance and repair services which may be
provided on an overnight basis when an aircraft is not flying or at the
airport gate in the period between an aircraft's scheduled flights.
During this process cabin interior products are checked by Company
employees for damage and functionality and are repaired or replaced with
available spares. Frequently, the spare part is a Company product even if
the original part was supplied by another manufacturer.

RESEARCH, DEVELOPMENT AND ENGINEERING

The Company works closely with commercial airlines to improve existing
products and identify customers' emerging needs. B/E's expenditures in research,
development and engineering totaled $19.2 million, $58.3 million, $12.9 million,
and $9.9 million for the six months ended August 31, 1996 and the fiscal years
ended February 24, 1996, February 25, 1995, and February 26, 1994, respectively.
B/E employs 319 professionals in the engineering and product development areas.
The Company believes that it has the largest engineering organization in the
cabin interior products industry, with not only software, electronic, electrical
and mechanical design skills but also substantial expertise in materials
composition and custom cabin interior layout design.

MARKETING AND CUSTOMERS

The Company markets and sells its products directly to virtually all of the
world's major airlines. B/E has a sales and marketing organization of 83
persons, along with 15 independent sales representatives. B/E sales to non-US
airlines were $112.5 million, $124.5 million, $114.5 million, and $85.2 million
for the six months ended August 31, 1996, and the fiscal years ended February
24, 1996, February 25, 1995, and February 26, 1994, respectively, or
approximately 56%, 54%, 50%, and 42%, respectively, of net sales during such
periods.

Airlines select suppliers of cabin interior products primarily on the basis
of custom design capabilities, product quality and performance, prompt delivery,
after-sales service and price. B/E believes that its large installed base, its
timely responsiveness in connection with the custom design, manufacture,
delivery and after-sales service of its products and its broad product line and
stringent customer and regulatory requirements all present barriers to entry for
potential new competitors in the cabin interior products market.

The Company believes that its integrated worldwide marketing approach,
focused by airline and encompassing the Company's entire product line, is
preferred by airlines. Led by a B/E senior executive, teams representing each
product line serve designated airlines which together account for approximately
60%

27
<PAGE> 30

of the purchases of products manufactured by B/E. These airline customer teams
have developed customer specific strategies to meet each airline's product and
service needs. The Company also staffs "on-site" customer engineers at major
airlines and airframe manufacturers to represent its entire product line and
work closely with the customers to develop specifications for each successive
generation of products required by the airlines. These engineers help customers
integrate the wide range of cabin interior products and assist in obtaining the
applicable regulatory certification for each particular product or cabin
configuration. Through its on-site customer engineers, the Company expects to be
able more efficiently to design and integrate products which address the
requirements of its customers. The Company provides program management services,
integrating all on-board cabin interior equipment and systems, including
installation and FAA certification, allowing airlines to substantially reduce
costs. The Company believes that it is one of the only suppliers in the
commercial aircraft cabin interior products industry with the size, resources,
breadth of product line and global product support capability to operate in this
manner.

No customer accounted for more than 10% of B/E's revenues in the six months
ended August 31, 1996 or during the fiscal years ended February 24, 1996,
February 25, 1995 or February 26, 1994. Because of differing schedules of
various airlines for purchases of new aircraft and for retrofit and
refurbishment of existing aircraft, that portion of the Company's revenues
attributable to particular airlines varies from year to year.

BACKLOG

Management estimates that B/E's backlog at August 31, 1996 was
approximately $480 million, approximately 36% of which management believes to be
deliverable during the remainder of fiscal 1997, compared with a backlog of $450
million on February 24, 1996. A significant portion of the Company's backlog
represents MDDS orders from British Airways which were placed in fiscal 1995.

CUSTOMER SERVICE

The Company believes that it provides the highest level of customer service
available in the commercial aircraft cabin interior products industry and that
such service is a critical factor in the Company's success. The key elements of
such service include (i) rapid response to requests for engineering designs,
price quotes and technical specifications; (ii) flexibility with respect to
customized features; (iii) on-time delivery; (iv) immediate availability of
spare parts for a broad range of products; and (v) prompt attention to customer
problems, including on-site customer training. Customer service is particularly
important to airlines due to the high cost to the airlines of late delivery,
malfunctions and other problems.

WARRANTY AND PRODUCT LIABILITY

The Company warrants its products, or specific components thereof, for
periods ranging from one to seven years, depending upon product type and
component. The Company generally establishes reserves for product warranty
expense on the basis of the ratio of warranty costs incurred by the product over
the warranty period to sales of the product over the warranty period. Actual
warranty costs reduce the warranty reserve as they are incurred. Management
periodically reviews the adequacy of accrued product warranty reserves.
Revisions of accrued product warranty reserves are recognized in the period in
which such revisions are determined.

In addition, due to the nature of the Company's products, the Company
currently carries product liability insurance. The Company believes that its
insurance is generally sufficient to cover product liability claims.

COMPETITION

The commercial aircraft cabin interior products market is relatively
fragmented with a number of competitors in each of the individual product
categories. Due to the global nature of the commercial airline industry,
competition in product categories comes from both U.S. and foreign
manufacturers. However, as aircraft cabin interiors have become increasingly
sophisticated and technically complex, airlines have demanded higher levels of
engineering support and customer service than many smaller cabin interior
products suppliers can provide. At the same time, airlines have recognized that
cabin interior product suppliers must be

28
<PAGE> 31

able to integrate a wide range of products, including sophisticated electronic
components, particularly in wide-body aircraft. Management believes that these
increasing demands of airlines upon their suppliers will result in a number of
suppliers leaving the cabin interior products industry and a consolidation of
those suppliers which remain. The Company has participated in this consolidation
through strategic acquisitions and internal growth and intends to continue to
participate in the consolidation.

The Company's principal competitors for seating products include Group
Zodiac S.A., Keiper Recaro GmbH, and a number of other producers in the European
community and Japan. The Company's principal competitors for PESS products are
Matsushita Electronics ("MAS") and Hughes Avicom as to PCUs, and MAS as to
individual seat video systems. The Company's primary competitors for galley
products are JAMCO Limited and Buderus Sell GmbH (a subsidiary of
Metallgesellschaft A.G.). See "Risk Factors -- Competition."

MANUFACTURING AND RAW MATERIALS

The Company's manufacturing operations consist of both the in-house
manufacturing of component parts and subassemblies and the assembly of Company
specified and designed component parts which are purchased from outside vendors.
The Company maintains state-of-the-art facilities, and management has an
on-going strategic manufacturing improvement plan utilizing focused factories
and cellular production technologies in which each of the product lines is
manufactured in a dedicated factory. Management expects that continuous
improvement from implementation of this plan for each of its product lines will
occur over the next several years and should lower production costs, cycle times
and inventory requirements and at the same time improve product quality and
customer response.

GOVERNMENT REGULATION

The FAA prescribes standards and licensing requirements for aircraft
components, and licenses component repair stations within the United States.
Comparable agencies regulate such matters in other countries. The Company holds
several FAA component certificates and performs component repairs at a number of
its US facilities under FAA repair station licenses. The Company also holds an
approval issued by the UK Civil Aviation Authority to design, manufacture,
inspect and test aircraft seating products in Leighton Buzzard, England and in
Kilkeel, Northern Ireland and the necessary approvals to design, manufacture,
inspect, test and repair its galley products in Nieuwegein, The Netherlands and
to inspect, test and repair products at its six service centers throughout the
world.

In March 1992, the FAA adopted Technical Standard Order C127 which requires
that all seats on certain new generation commercial aircraft installed after
such date be certified to meet a number of new safety requirements, including an
ability to withstand a 16G force. Management understands that the FAA plans to
adopt in the near future additional regulations which will require that within
the next five years all seats, including those on existing older commercial
aircraft which are subject to the FAA's jurisdiction, will have to comply with
similar seat safety requirements. The Company has developed a number of seat
models which meet these new seat safety regulations.

PATENTS

B/E currently holds 48 United States patents and 50 international patents,
covering a variety of products. However, the Company believes that the
termination, expiration or infringement of one or more of such patents would not
have a material adverse effect on the business or prospects of the Company.

LEGAL PROCEEDINGS

29
<PAGE> 32

has been advised that it is a target of the investigation; however, neither it
nor any current or former directors, officers, or employees have been charged in
connection with the investigation. The investigation is at an early stage and,
while the Company intends to defend itself vigorously, the ultimate outcome of
the investigation cannot presently be determined. An adverse outcome could have
a material adverse effect upon the operations and/or financial condition of the
Company.

EMPLOYEES

As of October 31, 1996, B/E had approximately 2,693 employees.
Approximately 74% of these employees are engaged in manufacturing, 12% in
engineering, research and development, and 14% in sales, marketing, product
support and general administration. Approximately 18% of the employees are
represented by a union. B/E considers its employee relations to be good.

PROPERTIES

As of August 31, 1996, B/E had 18 principal facilities, where it leased or
owned an aggregate of approximately 1,122,950 square feet of space. The
following table describes the principal facilities and indicates the location,
function and approximate size of each:

<TABLE>
<CAPTION>
FACILITY
SIZE
LOCATION PRODUCTS AND FUNCTION (SQ. FEET) OWNERSHIP
- ---------------------------------- -------------------------------------- ---------- ---------
<S> <C> <C> <C>
CORPORATE:
Wellington, Florida Corporate headquarters, finance,
marketing and sales................... 17,700 Owned
Longwood, Florida Administration........................ 1,300 Leased
SEATING PRODUCTS:
Litchfield, Connecticut Manufacturing, service and
warehousing........................... 147,700 Owned
Winston-Salem, North Carolina Seating products division
headquarters, research and
development, finance, marketing, sales
and manufacturing..................... 264,800 Owned
Leighton Buzzard, England Manufacturing, service, research and
development, sales support, finance
and warehousing....................... 114,000 Owned(a)
Kilkeel, Northern Ireland Manufacturing, sales support
and warehousing....................... 64,500 Leased/Owned(b)
GALLEY PRODUCTS:
Anaheim, California Manufacturing, service, research and
development, sales support, finance
and warehousing....................... 57,100 Leased
Delray Beach, Florida Manufacturing, service, research and
development, sales support, finance
and warehousing; galley products
division headquarters................. 52,000 Owned
Jacksonville, Florida Manufacturing, service, engineering,
and warehousing....................... 75,000 Owned
Nieuwegein, The Netherlands Manufacturing, service, research and
development, sales support, finance
and warehousing....................... 39,000 Leased
</TABLE>

30
<PAGE> 33

<TABLE>
<CAPTION>
FACILITY
SIZE
LOCATION PRODUCTS AND FUNCTION (SQ. FEET) OWNERSHIP
- ---------------------------------- -------------------------------------- ---------- ---------
<S> <C> <C> <C>
PESS PRODUCTS:
Irvine, California Manufacturing, service, research and
development, sales support, finance
and warehousing; in-flight
entertainment division headquarters... 106,700 Leased
SERVICES:
Orange, California Upgrade, maintenance, inspection and
repair, finance, sales support and
warehousing; service division
headquarters.......................... 106,300 Leased
Longwood, Florida Upgrade, maintenance, inspection and
repair................................ 19,200 Leased
Longwood, Florida Upgrade, maintenance, inspection and
repair................................ 5,300 Leased
Burnsville, Minnesota Upgrade, maintenance, inspection
and repair............................ 7,200 Leased
Linden, New Jersey Upgrade, maintenance, inspection
and repair............................ 5,800 Leased
Redmond, Washington Upgrade, maintenance, inspection
and repair............................ 5,350 Leased
Chesham, England Upgrade, maintenance, inspection
and repair............................ 34,000 Owned(a)
</TABLE>

- ---------------
(a) B/E's owned properties in England are mortgaged to Barclays Bank PLC to
collateralize credit facilities of FEEL in aggregate amounts of up to
approximately L7.0 million.

(b) Approximately 38,500 square feet of the Kilkeel, Northern Ireland facilities
are owned with the balance leased.

The Company believes that its facilities are suitable for their present
intended purposes and adequate for the Company's present and anticipated level
of operations. As a result of recent conditions in the airline industry as
described in "Recent Industry Conditions," B/E's facilities have been
substantially underutilized for the past several years. The Company believes
that its ongoing facility integration program, together with anticipated
continued growth in airline profitability, should result in significant
improvement in the degree of utilization in the Company's facilities.

31
<PAGE> 34

MANAGEMENT

The following table sets forth information regarding the directors and
executive officers of the Company. Officers of the Company are elected annually
by the Board of Directors.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------- --- ------------------------------------------------------------
<S> <C> <C>
Amin J. Khoury............... 57 Chairman of the Board
Robert J. Khoury............. 54 Vice Chairman of the Board and Chief Executive Officer
Paul E. Fulchino............. 50 President, Chief Operating Officer and Director
Marco C. Lanza............... 40 Executive Vice President, Marketing and Product Development
Vice President, Chief Financial Officer and Assistant
Thomas P. McCaffrey.......... 42 Secretary
Edmund J. Moriarty........... 51 Vice President, General Counsel and Secretary
Jeffrey P. Holtzman.......... 41 Vice President, Treasurer and Assistant Secretary
G. Bernard Jewell............ 55 President, Seating Products Division
E. Ernest Schwartz........... 60 President, Galley Products Division
Arthur H. Lipton............. 58 President, In-flight Entertainment Division
Jim C. Cowart+............... 45 Director
Richard G. Hamermesh*+....... 48 Director
Brian H. Rowe................ 65 Director
Hansjoerg Wyss*.............. 61 Director
</TABLE>

- ---------------
* Member, Audit Committee.
+ Member, Stock Option and Compensation Committee.

The Company's Restated Certificate of Incorporation provides that the Board
of Directors is classified into three classes, as nearly as equal in number as
possible, so that each director (after a transitional period) will serve for
three years, with one class of directors being elected each year. The Board is
currently comprised of three Class I Directors (Brian H. Rowe, Jim C. Cowart and
Paul E. Fulchino), two Class II Directors (Robert J. Khoury and Hansjoerg Wyss)
and two Class III Directors (Amin J. Khoury and Richard G. Hamermesh). The terms
of the Class I, Class II and Class III Directors expire upon the election and
qualification of successor directors at annual meetings of stockholders held
following the end of fiscal years 1998, 1996 and 1997, respectively. The
nonmanagement directors receive compensation of $2,500 per calendar quarter. The
executive officers of the Company are elected annually by the Board of Directors
following the annual meeting of stockholders and serve at the discretion of the
Board of Directors.

Amin J. Khoury has been Chairman of the Board of the Company since July
1987 and was Chief Executive Officer until April 1, 1996. Since 1986, Mr. Khoury
has also been the Managing Director of The K.A.D. Companies, Inc., an
investment, venture capital and consulting firm. Mr. Khoury is currently the
Chairman of the Board of Directors of Applied Extrusion Technologies, Inc., a
manufacturer of oriented polypropylene films used in consumer products labeling
and packaging applications, and a member of the Board of Directors of Brooks
Automation, Inc., the leading manufacturer in the U.S. of vacuum central wafer
handling systems for semiconductor manufacturing and Aurora Electronics, Inc., a
leading provider of parts support services to computer service organizations.
Mr. Khoury is employed by the Company pursuant to an Employment Agreement which
expires in 2002. Mr. Khoury is the brother of Robert J. Khoury.

Robert J. Khoury has been a Director of the Company since July 1987. Mr.
Khoury was elected Vice Chairman and Chief Executive Officer effective April 1,
1996; from July 1987 until that date, Mr. Khoury served as the Company's
President and Chief Operating Officer. From 1986 to 1987, Mr. Khoury was Vice
President of The K.A.D. Companies, Inc. The Company has entered into an
Employment Agreement with Mr. Khoury which expires in 2001. Mr. Khoury is the
brother of Amin J. Khoury.

Paul E. Fulchino was elected a Director and President and Chief Operating
Officer of the Company effective April 1, 1996. From 1990 to 1996, Mr. Fulchino
served as President and Vice Chairman of Mercer Management Consulting, Inc.
("Mercer"), a general management consulting firm with over 1,100 employees.

32
<PAGE> 35

In addition to his management responsibilities as President of Mercer, Mr.
Fulchino also had responsibility for advising clients throughout the world,
particularly with respect to the transportation industry, including a number of
major airlines. The Company has entered into an Employment Agreement with Mr.
Fulchino extending through March 31, 1999.

Marco C. Lanza has been the Executive Vice President, Marketing and Product
Development since January 1994. From March 1992 through January 1994, Mr. Lanza
was President of the In-flight Entertainment Division of the Company. From 1987
through February 1992, Mr. Lanza was Vice President, Marketing and Product
Development, of the Company. The Company has entered into an Employment
Agreement with Mr. Lanza extending through December 31, 1999.

Thomas P. McCaffrey has been Vice President and Chief Financial Officer
since May 1993. From August 1989 through May 1993, Mr. McCaffrey was an Audit
Director with Deloitte & Touche LLP, and from 1976 through 1989 served in
several capacities, including Audit Partner, with Coleman & Grant. The Company
has entered into an Employment Agreement with Mr. McCaffrey extending through
December 31, 1999 in which he agrees to serve as Chief Financial Officer of the
Company.

Edmund J. Moriarty has been Vice President, General Counsel and Secretary
since November 16, 1995. From 1991 to 1995, Mr. Moriarty served as Vice
President and General Counsel to Rollins, Inc., a national service company. From
1982 through 1991, Mr. Moriarty served as Vice President and General Counsel to
Old Ben Coal Company, a wholly owned coal subsidiary of The Standard Oil
Company.

Jeffrey P. Holtzman has been Treasurer since September 1993 and Vice
President since November 1996. From June 1986 to July 1993, Mr. Holtzman served
in several capacities at FPL Group, Inc., including Assistant Treasurer and
Manager of Financial Planning. Mr. Holtzman previously worked for Mellon Bank,
Gulf Oil and Arthur Young & Company.

G. Bernard Jewell has been President of the Company's Seating Products
Division since March 1996. From February 1994 through February 1996, Mr. Jewell
was President, Services Division of the Company. From April 1992 through January
1994, Mr. Jewell was Group Vice President, Marketing and Product Development of
the Company. From 1988 to 1992, Mr. Jewell was President of Burns Aerospace
Corporation, a manufacturer of commercial aircraft cabin interior products.

E. Ernest Schwartz has been President of the Galley Products Division of
the Company since March 1992. From 1986 through February 1992, Mr. Schwartz was
President of Aircraft Products Company, which was acquired by the Company in
1992.

Arthur H. Lipton has been the President of the In-flight Entertainment
Division since July 1995. From 1990 to 1995, Mr. Lipton was the Senior Vice
President and General Manager of the Wyse Technology Display Division. Prior to
that he was with the Xerox Corporation for 20 years with his last position being
Vice President and General Manager of their Imaging Business Unit.

Jim C. Cowart has been a Director of the Company since November 1989. Since
January 1993, Mr. Cowart has been the Chairman of the Board of Directors and
Chief Executive Officer of Aurora Electronics, Inc. Since January 1992, Mr.
Cowart has also been a Director of EOS Capital, Inc., a private capital firm
retained by the Company for strategic planning, competitive analysis, financial
relations and other services. From 1987 until 1991, Mr. Cowart was a general
partner of Capital Resource Partners, a private capital investment manager. From
1982 to 1987, Mr. Cowart was a Senior Vice President of Investment Banking at
Shearson Lehman Brothers and was the President of Shearson Venture Capital, Inc.

Richard G. Hamermesh has been a Director of the Company since July 1987.
Since August 1987, Dr. Hamermesh has been the Managing Partner of the Center for
Executive Development, an independent management consulting company, and, from
December 1986 to August 1987, Dr. Hamermesh was an independent consultant. Prior
to such time, Dr. Hamermesh was on the faculty at the Harvard Business School.
Dr. Hamermesh is also a Director of Applied Extrusion Technologies, Inc.

Brian H. Rowe has been a Director of the Company since July 1995. Mr. Rowe
is currently Chairman Emeritus of GE Aircraft Engines, a principal business unit
of the General Electric Company, where he also

33
<PAGE> 36

served as Chairman from September 1993 through January 1995 and as President
from 1979 through 1993. From March 1994 to November 1995, Mr. Rowe served as a
Director of Astrostructures Hamble Limited, a manufacturer of military and civil
aircraft components. Since March 1995, Mr. Rowe has also been a Director of
Atlas Air Inc., an air cargo carrier. Since January 1980 Mr. Rowe has been a
Director of Fifth Third Bank, an Ohio banking corporation. Since October 1995,
Mr. Rowe has been a Director of Cincinnati Bell Inc., a communications services
company. Since December 1995, Mr. Rowe has also been a Director of Stewart &
Stevenson Services, Inc., a custom packager of engine systems, and Textron Inc.,
a manufacturer of mechanical devices for aircraft and other applications. Since
January 1996, Mr. Rowe has served as Executive Vice Chairman of American
Regional Aircraft Industries, Inc.

Hansjoerg Wyss has been a Director of the Company since October 1989. Since
1977, Mr. Wyss has been a Director and the Chairman and Chief Executive Officer
of Synthes (U.S.A.) and Synthes (Canada), Ltd., manufacturers and distributors
of orthopedic implants and instruments. Mr. Wyss is also a Director of Applied
Extrusion Technologies, Inc.

34
<PAGE> 37

SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

The following table and notes thereto set forth certain information with
respect to the beneficial ownership of the Company's Common Stock as of November
30, 1996, and as adjusted to reflect the sale of the shares offered hereby, by
(i) each person who is known to the Company to beneficially own more than 5% of
the outstanding shares of Common Stock of the Company, (ii) each of the chief
executive officer and the four other most highly paid executive officers of the
Company in fiscal 1996 (collectively, the "Named Executive Officers") and each
director of the Company, and (iii) all Named Executive Officers and directors of
the Company as a group. Except as otherwise indicated, each of the stockholders
named below has sole voting and investment power with respect to the shares of
Common Stock beneficially owned:

<TABLE>
<CAPTION>
PERCENT OF TOTAL(A)
---------------------
NUMBER OF PRIOR TO AFTER
NAMES SHARES OFFERING OFFERING
- --------------------------------------------------------------- --------- -------- --------
<S> <C> <C> <C>
Wellington Management Company.................................. 2,210,600 11.9% 9.8%
75 State Street
Boston, MA 02109
Frank Russell Co. Inc. ........................................ 998,200 5.4 4.4
909 A Street
Tacoma, WA 98401
Amin J. Khoury+*............................................... 270,300(b) 1.4 1.2
Marco C. Lanza+................................................ 203,285(c) 1.1 0.9
Hansjoerg Wyss*................................................ 193,609(d) 1.0 0.9
Robert J. Khoury+*............................................. 110,164(e) 0.6 0.5
Jim C. Cowart*................................................. 100,500(f) 0.5 0.4
Thomas P. McCaffrey+........................................... 70,784(g) 0.4 0.3
Richard G. Hamermesh*.......................................... 43,301(h) 0.2 0.2
E. Ernest Schwartz+............................................ 24,750(i) 0.1 0.1
Paul E. Fulchino*.............................................. 12,768(j) 0.1 0.1
Brian H. Rowe*................................................. 10,000(k) 0.1 **
All Directors and Named Executives Officers as a group (14
persons)..................................................... 1,163,528(l) 6.2 5.1
</TABLE>

- ---------------
+ Named Executive Officer

* Director of the Company

** Less than 0.1%

(a) The number of shares of Common Stock deemed outstanding includes: (i)
17,704,275 shares outstanding as of November 30, 1996; and (ii) shares of
Common Stock subject to outstanding stock options which are exercisable by
the named individual or group in the next sixty days (commencing December
1, 1996).

(b) Represents shares issuable upon the exercise of stock options exercisable in
the next sixty days.

(c) Includes 181,250 shares issuable upon the exercise of stock options
exercisable in the next sixty days and shares owned through the Company
401(k) plan.

(d) Includes 52,500 shares issuable upon the exercise of stock options
exercisable in the next sixty days. Excludes options to purchase 7,500
shares of Common Stock which are not exercisable in the next sixty days.

(e) Includes 107,500 shares issuable upon the exercise of stock options
exercisable in the next sixty days and shares owned through the Company
401(k) plan. Excludes options to purchase 52,500 shares of Common Stock
which are not exercisable in the next sixty days.

(f) Includes 20,000 shares acquired by a profit sharing plan in which Mr.
Cowart has a fifty percent interest and 77,500 shares issuable upon the
exercise of stock options exercisable in the next sixty days. Excludes
options to purchase 12,500 shares of Common Stock which are not exercisable
in the next sixty days.

35
<PAGE> 38

(g) Includes 65,000 shares issuable upon the exercise of stock options
exercisable in the next sixty days. Excludes options to purchase 50,000
shares of Common Stock which are not exercisable in the next sixty days.

(h) Includes 2,000 shares held in trusts for the benefit of Mr. Hamermesh's two
children, of which trust Mr. Hamermesh and his wife are trustees and in
which shares Mr. Hamermesh disclaims all beneficial interest. Also includes
32,500 shares issuable upon the exercise of stock options exercisable in the
next sixty days. Excludes options to purchase 7,500 shares of Common Stock
which are not exercisable in the next sixty days.

(i) Includes 23,750 shares issuable upon the exercise of stock options
exercisable in the next sixty days. Excludes options to purchase 31,250
shares of Common Stock which are not exercisable in the next sixty days.

(j) Excludes 187,500 shares issuable upon the exercise of stock options not
exercisable in the next sixty days.

(k) Includes 10,000 shares issuable upon the exercise of stock options
exercisable in the next sixty days. Excludes options to purchase 30,000
shares of Common Stock which are not exercisable in the next sixty days.

(l) Includes 946,800 shares issuable upon the exercise of stock options
exercisable in the next sixty days. Excludes options to purchase 557,500
shares of Common Stock which are not exercisable in the next sixty days.

SELLING STOCKHOLDERS

Pursuant to the Underwriting Agreement, the Underwriters have been granted
an option to purchase up to an aggregate of 600,000 shares of Common Stock from
the Company and the Selling Stockholders for the purpose of covering
overallotments, if any. The Selling Stockholders, Sheila L. Palandjian, the PAP
Stock Trust (for the benefit of Peter A. Palandjian), the PLP Stock Trust (for
the benefit of Paul L. Palandjian) and the LP Stock Trust (for the benefit of
Leon Palandjian), who respectively owned options to purchase 35,000, 46,666,
46,667 and 46,667 shares of Common Stock before the Offering, have granted such
overallotment option to the Underwriters with respect to 35,000, 10,000, 10,000
and 10,000 shares of Common Stock, respectively, and will own options to
purchase 0, 36,666, 36,667 and 36,667 shares of Common Stock, respectively, if
the overallotment option is exercised in full with respect to the Selling
Stockholders' shares. The Selling Stockholders are the surviving spouse and
trusts for the benefit of the children of Petros A. Palandjian, a former
director of the Company who died in August, 1996.

If the Underwriters exercise their overallotment option, the shares of
Common Stock purchased thereunder will first be purchased from the Selling
Stockholders on a pro rata basis (based upon the aggregate number of shares that
may be purchased from the Selling Stockholders) until all such shares of Common
Stock to be sold by the Selling Stockholders have been purchased, and the
remaining shares, if any, will be purchased from the Company.

36
<PAGE> 39

DESCRIPTION OF CAPITAL STOCK

COMMON STOCK

The Company is authorized to issue 30,000,000 shares of Common Stock, $0.01
par value, of which 16,877,867 shares were outstanding as of August 31, 1996,
and held by approximately 242 stockholders of record. Holders of Common Stock
are entitled to one vote per share on all matters to be voted upon by the
stockholders and to receive such dividends as may be declared by the Board of
Directors out of funds legally available therefor. The indentures relating to
the Company's Senior Notes and Senior Subordinated Notes and the Bank Credit
Agreement, however, currently restrict dividend payments by the Company to its
stockholders. In the event of a liquidation, dissolution or winding up of the
Company, holders of Common Stock have the right to a ratable portion of the
assets remaining after payment of liabilities. Holders of Common Stock do not
have cumulative voting, preemptive, redemption or conversion rights. All
outstanding shares of Common Stock are, and the shares to be sold in this
offering will be, fully paid and non-assessable.

PREFERRED STOCK

The Company's Restated Certificate of Incorporation (the "Certificate")
provides, among other things, for the authorization of 1,000,000 shares of
Preferred Stock, $0.01 par value (the "Preferred Stock"). The shares of
Preferred Stock may be issued from time to time at the discretion of the Board
of Directors without stockholder approval. The Board of Directors is authorized
to issue these shares in different classes and series and, with respect to each
class or series, to determine the dividend rate, the redemption provisions,
conversion provisions, liquidation preference and other rights and privileges
not in conflict with the Certificate. No shares of Preferred Stock are
outstanding, and the Company has no immediate plans to issue any Preferred
Stock. While issuance of Preferred Stock could provide needed flexibility in
connection with possible acquisitions and other corporate purposes, such
issuance could also make it more difficult for a third party to acquire a
majority of the outstanding voting stock of the Company or discourage an attempt
to gain control of the Company. In addition, the Board of Directors, without
stockholder approval, can issue shares of Preferred Stock with voting and
conversion rights which could adversely affect the voting power and other rights
of the holders of Common Stock.

DIRECTORS' EXCULPATION AND INDEMNIFICATION

The Certificate provides that no director of the Company shall be liable to
the Company or its stockholders for monetary damages for any breach of fiduciary
duty as a director, except to the extent otherwise required by the Delaware
General Corporation Law (the "DGCL"). The effect of this provision of the
Certificate is to eliminate the rights of the Company and its stockholders
(through stockholders' derivative suits on behalf of the Company) to recover
monetary damages against a director for breach of a fiduciary duty of care as a
director. This provision does not limit or eliminate the rights of the Company
or any stockholder to seek non-monetary relief, such as an injunction or
rescission in the event of a breach of a director's duty of care. In addition,
the Certificate provides that, if the DGCL is amended to authorize the further
elimination or limitation of the liability of a director, then the liability of
the directors shall be eliminated or limited to the fullest extent permitted by
the DGCL, as so amended. These provisions will not alter the liability of
directors under federal or state securities laws. The Certificate also includes
provisions for the indemnification of the Company's directors and officers to
the fullest extent permitted by Section 145 of the DGCL.

ELECTION AND REMOVAL OF DIRECTORS

The Certificate classifies the board of directors into three classes, as
nearly equal in number as possible, so that each director will serve for three
years, with one class of directors being elected each year. The Certificate also
provides that directors may be removed for cause only with the approval of the
holders of at least two-thirds of the voting power of the Company's shares
entitled to vote generally in the election of directors at an annual meeting or
special meeting called for such purpose. In addition, the Certificate requires
at least two-thirds of the voting power of the Company's shares entitled to vote
generally in the election of

37
<PAGE> 40

directors at an annual meeting or special meeting called for such purpose to
alter, amend or repeal the provisions relating to the classified board and
removal of directors described above.

Management believes that the Certificate provisions described in the
preceding paragraph (the "Provisions"), taken together, reduce the possibility
that a third party could effect a change in the composition of the Company's
board of directors without the support of the incumbent board. The Provisions,
however, may have significant effects on the ability of stockholders of the
Company to change the composition of the incumbent board, to benefit from
transactions which are opposed by the incumbent board, to assume control of the
Company or effect a fundamental corporate transaction such as a merger.
Nevertheless, although the Company has not experienced any problems in the past
with the continuity or stability of the board, management believes that the
Provisions help assure the continuity and stability of the Company's policies in
the future, since the majority of the directors at any time will have prior
experience as directors of the Company.

SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW

The Company is subject to the provisions of Section 203 of DGCL. That
section provides, with certain exceptions, that a Delaware corporation may not
engage in any of a broad range of business combinations with a person or
affiliate, or associate of such person, who is an "interested stockholder" for a
period of three years from the date that such person became an interested
stockholder unless: (i) the transaction resulting in a person becoming an
interested stockholder, or the business combination, is approved by the board of
directors of the corporation before the person becomes an interested
stockholder; (ii) the interested stockholder acquires 85% or more of the
outstanding voting stock of the corporation in the same transaction that makes
it an interested stockholder (excluding shares owned by persons who are both
officers and directors of the corporation, and shares held by certain employee
stock ownership plans); or (iii) on or after the date the person becomes an
interested stockholder, the business combination is approved by the
corporation's board of directors and by the holders of at least 66 2/3% of the
corporation's outstanding voting stock at an annual or special meeting,
excluding shares owned by the interested stockholder. An "interested
stockholder" is defined as any person that is (i) the owner of 15% or more of
the outstanding voting stock of the corporation or (ii) an affiliate or
associate of the corporation and was the owner of 15% or more of the outstanding
voting stock of the corporation at any time within the three-year period
immediately prior to the date on which it is sought to be determined whether
such person is an interested stockholder.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Company's Common Stock is The
First National Bank of Boston, 100 Federal Street, Boston, Massachusetts 02110.

38
<PAGE> 41

UNDERWRITERS

Under the terms and subject to the conditions in the Underwriting Agreement
dated the date hereof (the "Underwriting Agreement"), the Underwriters named
below (the "Underwriters") have severally agreed to purchase, and the Company
has agreed to sell to them, severally, the respective number of shares of the
Company's Common Stock set forth opposite the names of such Underwriters below:

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
------------------------------------------------------------------------ ---------
<S> <C>
Morgan Stanley & Co. Incorporated..................................... 933,334
CS First Boston Corporation........................................... 933,333
PaineWebber Incorporated.............................................. 933,333
Robert W. Baird & Co. Incorporated.................................... 50,000
BT Securities Corporation............................................. 100,000
Chase Securities Inc. ................................................ 100,000
Donaldson, Lufkin & Jenrette Securities Corporation................... 100,000
A.G. Edwards & Sons, Inc. ............................................ 100,000
Furman Selz LLC....................................................... 50,000
Gabelli & Company, Inc. .............................................. 50,000
Goldman, Sachs & Co. ................................................. 100,000
Gruntal & Co., Incorporated........................................... 100,000
Janney Montgomery Scott Inc. ......................................... 50,000
Jefferies & Company, Inc. ............................................ 50,000
Ladenburg, Thalmann & Co. Inc. ....................................... 100,000
Ragen MacKenzie Incorporated.......................................... 50,000
Raymond James & Associates, Inc. ..................................... 50,000
Smith Barney Inc. .................................................... 100,000
Southeast Research Partners, Inc. .................................... 50,000
---------
Total............................................................ 4,000,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares of Common Stock
offered hereby are subject to the approval of certain legal matters by their
counsel and to certain other conditions. The Underwriters are obligated to take
and pay for all of the shares of Common Stock offered hereby (other than those
covered by the over-allotment option described below) if any such shares are
taken.

The Underwriters propose to offer part of the Common Stock directly to the
public at the Price to Public set forth on the cover page hereof and part to
certain dealers at a price which represents a concession not in excess of $0.79
per share under the public offering price. The Underwriters may allow, and such
dealers may reallow, a concession not in excess of $0.10 a share to other
Underwriters or to certain dealers.

Pursuant to the Underwriting Agreement, the Company and the Selling
Stockholders have granted to the Underwriters an option, exercisable for 30 days
from the date of the Prospectus, to purchase up to 535,000 and 65,000 additional
shares of Common Stock, respectively, at the Price to Public set forth on the
cover page hereof, less underwriting discounts and commissions. The Underwriters
may exercise such option to purchase solely for the purpose of covering
over-allotments, if any, made in connection with the offering of the shares of
Common Stock offered hereby. To the extent such option is exercised, each
Underwriter will become obligated, subject to certain conditions, to purchase
approximately the same percentage of such additional shares as the number set
forth next to such Underwriter's name in the preceding table bears to the total
number of shares as offered hereby.

The Company and directors and executive officers of the Company have agreed
with certain exceptions, not to (i) offer, pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option or

39
<PAGE> 42

contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock
or (ii) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (i) or (ii) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise, except for the shares to be sold in the offering, for a period of at
least 90 days from the date of this Prospectus without the prior written consent
of Morgan Stanley & Co. Incorporated, on behalf of the several Underwriters. If
any such consent is given it would not necessarily be preceded or followed by a
public announcement thereof.

In connection with the offering of Common Stock hereby, the Underwriters
may engage in passive market making transactions in the Company's Common Stock
on the Nasdaq National Market immediately prior to the commencement of the sale
of shares in this offering, in accordance with Rule 10b-6A under the Exchange
Act. Passive market making consists of displaying bids on the Nasdaq National
Market limited by the bid prices of market makers not connected with this
offering and purchases limited by such prices and effected in response to order
flow. Net purchases by a passive market maker on each day are limited in amount
to 30% of the passive market maker's average daily trading volume in the Common
Stock during the period of the two full consecutive calendar months prior to the
filing with the Commission of the Registration Statement of which this
Prospectus is a part and must be discontinued when such limit is reached.
Passive market making may stabilize the market price of the Common Stock at a
level above that which might otherwise prevail and, if commenced, may be
discontinued at any time.

The Company, the Selling Stockholders and the Underwriters have agreed to
indemnify each other against certain liabilities, including liabilities under
the Securities Act.

Chase Securities Inc., one of the Underwriters, is an affiliate of The
Chase Manhattan Bank which is the agent and a lender under the Bank Credit
Facility. The Company intends to use a portion of the net proceeds of the
offering to repay outstanding amounts under the Bank Credit Facility and The
Chase Manhattan Bank will receive its proportionate share of such repayment. See
"Use of Proceeds." Because more than 10% of the net offering proceeds will be
paid to an affiliate of a member of the National Association of Securities
Dealers, Inc. (the "NASD"), the Offering is being conducted in accordance with
Rule 2710(c)(8) of the Conduct Rules of the NASD.

LEGAL MATTERS

The validity of the shares of Common Stock being offered hereby will be
passed upon for the Company by Ropes & Gray, Boston, Massachusetts. Certain
legal matters in connection with this offering will be passed upon for the
Underwriters by Shearman & Sterling, New York, New York.

EXPERTS

The financial statements and the related financial statement schedule of BE
Aerospace, Inc. as of February 24, 1996 and February 25, 1995, and for each of
the three fiscal years in the period ended February 24, 1996, appearing in this
Prospectus and the Registration Statement referred to below, have been audited
by Deloitte & Touche L.L.P., independent auditors, as set forth in their report
dated April 19, 1996, appearing elsewhere herein and in the Registration
Statement and are included in reliance upon such report given upon the authority
of such firm as experts in accounting and auditing.

The audited financial statements of Burns Aerospace, Inc. as of December
31, 1994 and December 31, 1993, and for each of the three years in the period
ended December 31, 1994, incorporated by reference in this Prospectus and the
Registration Statement referred to below, have been audited by Arthur Andersen
LLP, independent public accountants, as set forth in their report dated November
27, 1995, incorporated by reference herein and in the Registration Statement and
are included in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.

40
<PAGE> 43

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files periodic reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Reports, proxy and
information statements, and other information filed by the Company with the
Commission pursuant to the informational requirements of the Exchange Act may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549, and at the regional offices of the Commission located at 7 World
Trade Center, 13th Floor, New York, New York 10048 and Suite 1400, Citicorp
Center, 14th Floor, 500 West Madison Street, Chicago, Illinois 60661. Copies of
such material can be obtained at prescribed rates by writing to the Commission,
Public Reference Section, 450 Fifth Street N.W., Washington, D.C. 20549. The
Company's Common Stock is listed on the NASDAQ National Market System, and such
reports, proxy and information statements, and other information can also be
inspected at the offices of NASDAQ Operations, 1735 K Street, N.W., Washington,
D.C. 20006.

The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act of 1933, as amended, with respect to the Common
Stock offered hereby (the "Registration Statement"). This Prospectus does not
contain all the information set forth in the Registration Statement and in the
exhibits and schedules thereto. For further information about the Company and
the securities offered hereby, reference is hereby made to the Registration
Statement and to the exhibits and schedules thereto, which may be inspected
without charge at the principal office of the Commission in Washington, D.C. and
copies of all or any part of which may be obtained from the Commission upon
payment of the prescribed fees. Statements contained in this Prospectus as to
the contents of any contract or any other document are not necessarily complete
and in each instance reference is made to the copy of such contract or document
filed as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed with the Securities and Exchange Commission
(the "Commission") pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), are incorporated by reference in this Prospectus: (i) the
Company's Annual Report on Form 10-K for the fiscal year ended February 24,
1996; (ii) the Company's Quarterly Reports on Form 10-Q for the quarters ended
on May 25, 1996 and August 31, 1996; (iii) the Company's Current Report on Form
8-K dated April 5, 1996; (iv) the Company's Current Report on Form 8-K dated
November 14, 1996; and (v) the description of the Company's Common Stock
contained in the Company's Registration Statement on Form 8-A filed under
Section 12 of the Exchange Act, including any amendment or report updating such
description.

All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act, after the initial filing of the
Registration Statement and prior to the termination of this offering shall be
deemed to be incorporated by reference herein and to be a part hereof from the
respective dates of the filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.

The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon written or oral request of any such person, a
copy of any and all of such documents (other than exhibits to such documents
which are not specifically incorporated by reference into such documents).
Requests for such copies should be directed to the Chief Financial Officer, BE
Aerospace, Inc., 1400 Corporate Center Way, Wellington, Florida 33414 (telephone
number (561) 791-5000).

41
<PAGE> 44

BE AEROSPACE, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
SIX MONTHS ENDED AUGUST 31, 1996 AND AUGUST 26, 1995
Consolidated Balance Sheet, August 31, 1996 (Unaudited).......................... F-2
Consolidated Statements of Operations for the Six Months Ended August 31, 1996
and
August 26, 1995 (Unaudited).................................................... F-3
Consolidated Statements of Cash Flows for the Six Months Ended August 31, 1996
and August 26, 1995 (Unaudited)................................................. F-4
Notes to Consolidated Financial Statements for the Six Months Ended August 31,
1996 and August 26, 1995 (Unaudited)............................................ F-5
FISCAL YEARS ENDED FEBRUARY 24, 1996, FEBRUARY 25, 1995 AND FEBRUARY 26, 1994
Independent Auditors' Report..................................................... F-6
Consolidated Balance Sheets, February 24, 1996 and February 25, 1995............. F-7
Consolidated Statements of Operations for the Years Ended February 24, 1996,
February 25, 1995 and February 26, 1994......................................... F-8
Consolidated Statements of Stockholders' Equity for the Years Ended February 24,
1996, February 25, 1995, and February 26, 1994.................................. F-9
Consolidated Statements of Cash Flows for the Years Ended February 24, 1996,
February 25, 1995 and February 26, 1994......................................... F-10
Notes to Consolidated Financial Statements for the Years Ended February 24, 1996,
February 25, 1995, and February 26, 1994....................................... F-12
Schedule II - Valuation and Qualifying Accounts for the Years Ended February 24,
1996, February 25, 1995, and February 26, 1994.................................. F-26
</TABLE>

F-1
<PAGE> 45

BE AEROSPACE, INC.

CONSOLIDATED BALANCE SHEETS

(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
FEBRUARY 24,
1996
AUGUST 31, ------------
1996
----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents........................................ $ 14,188 $ 15,376
Receivables -- trade, less allowance for doubtful accounts of
$4,562 (August 31, 1996) and $4,973 (February 24, 1996)......... 59,935 54,242
Inventories, net................................................. 77,518 72,569
Other current assets............................................. 8,138 7,621
-------- --------
Total current assets........................................ 159,779 149,808
Property and Equipment, net........................................... 86,887 86,357
Intangibles and Other Assets, net..................................... 196,674 197,421
-------- --------
$ 443,340 $433,586
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable................................................. $ 41,867 $ 45,102
Accrued expenses................................................. 50,171 56,400
Current portion of long-term debt................................ 5,459 6,482
-------- --------
Total current liabilities................................... 97,497 107,984
Long-Term Debt........................................................ 282,058 273,192
Deferred Income Taxes................................................. 1,923 1,257
Other Liabilities..................................................... 9,718 6,996
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;
16,877,867 (August 31, 1996) 16,392,994 (February 24, 1996)
issued.......................................................... 169 164
Additional paid-in capital....................................... 125,730 121,366
Retained deficit................................................. (72,699) (75,995)
Cumulative foreign exchange translation adjustment............... (1,056) (1,378)
-------- --------
Total stockholders' equity.................................. 52,144 44,157
-------- --------
$ 443,340 $433,586
======== ========
</TABLE>

F-2
<PAGE> 46

BE AEROSPACE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
-------------------------
AUGUST 31, AUGUST 26,
1996 1995
---------- ----------
(UNAUDITED)
<S> <C> <C>
Net Sales.............................................................. $ 200,328 $ 113,045
Cost of Sales.......................................................... 133,342 75,925
-------- --------
Gross Profit........................................................... 66,986 37,120
Operating Expenses:
Selling, general and administrative............................... 24,254 16,743
Research, development and engineering............................. 19,157 24,774
Amortization expense.............................................. 5,514 4,650
-------- --------
Total operating expenses..................................... 48,925 46,167
Operating Earnings (Loss).............................................. 18,061 (9,047)
Interest Expense, net.................................................. 14,399 8,149
-------- --------
Earnings (Loss) Before Income Taxes and Cumulative Effect of Change in
Accounting Principle................................................. 3,662 (17,196)
Income Taxes........................................................... 366 --
-------- --------
Earnings (Loss) Before Cumulative Effect of Change in Accounting
Principle............................................................ 3,296 (17,196)
Cumulative Effect of Change in Accounting Principle.................... -- (23,332)
-------- --------
Net Earnings (Loss).................................................... $ 3,296 $ (40,528)
======== ========
Earnings (Loss) Per Common Share:
Earnings (Loss) Before Cumulative Effect of Change in Accounting
Principle............................................................ $ .19 $ (1.07)
Cumulative Effect of Change in Accounting Principle.................... -- (1.45)
-------- --------
Net Earnings (Loss) Per Common Share................................... $ .19 $ (2.52)
======== ========
Common and Common Equivalent Shares.................................... 17,446 16,108
======== ========
</TABLE>

F-3
<PAGE> 47

BE AEROSPACE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
-------------------------
AUGUST 31, AUGUST 26,
1996 1995
---------- ----------
(UNAUDITED)
<S> <C> <C>
Cash Flows from Operating Activities:
Net earnings (loss)........................................... $ 3,296 $(40,528)
Adjustments to reconcile net loss to net cash flows provided
by operating activities:
Depreciation and amortization............................ 11,840 8,413
Cumulative effect of change in accounting principle...... -- 23,332
Deferred income taxes.................................... 524 948
Non cash employee benefit plan contributions............. 442 683
Changes in operating assets and liabilities:
Accounts receivable................................. (5,596) 4,306
Inventories......................................... (4,693) (3,813)
Other current assets................................ (512) 120
Accounts payable.................................... (3,724) 3,555
Other liabilities................................... (5,599) (5,312)
---------- ----------
Net cash flows used in operating activities................... (4,022) (8,296)
---------- ----------
Cash Flows from Investing Activities:
Capital expenditures.......................................... (7,065) (8,168)
Change in intangibles and other assets -- net................. (4,591) (2,095)
---------- ----------
Net cash flows used in investing activities................... (11,656) (10,263)
---------- ----------
Cash Flows from Financing Activities:
Net borrowings under revolving lines of credit................ 10,576 17,665
Proceeds from issuances of stock.............................. 3,927 153
---------- ----------
Net cash flows provided by financing activities............... 14,503 17,818
---------- ----------
Effect of exchange rate changes on cash flows...................... (13) (88)
---------- ----------
Net decrease in cash and cash equivalents.......................... (1,188) (829)
Cash and cash equivalents, beginning of period..................... 15,376 8,319
---------- ----------
Cash and cash equivalents, end of period........................... $ 14,188 $ 7,490
---------- ----------
Supplemental disclosures of cash flow information:
Cash paid during period for interest.......................... $ 13,336 $ 8,510
Cash paid during period for income taxes, net................. $ 309 --
</TABLE>

F-4
<PAGE> 48

BE AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED AUGUST 31, 1996 AND AUGUST 26, 1995

NOTE 1. BASIS OF PRESENTATION:

The information set forth in these consolidated financial statements as of
August 31, 1996 and for the six-month periods ended August 31, 1996 and August
26, 1995 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. for the periods
indicated. Results of operations for the interim periods ended August 31, 1996
and August 26, 1995 are not necessarily indicative of the results of operations
for 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 24, 1996.

The accompanying consolidated financial statements consolidate all of the
Company's subsidiaries.

Certain information normally included in footnote disclosures to the annual
financial statements has been condensed or omitted in accordance with the rules
and regulations of the Securities and Exchange Commission.

F-5
<PAGE> 49

BE AEROSPACE, INC.

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
BE Aerospace, Inc.
Wellington, Florida

We have audited the accompanying consolidated balance sheets of BE
Aerospace, Inc. and subsidiaries as of February 24, 1996 and February 25, 1995,
and the related consolidated statements of operations, stockholders' equity and
cash flows for each of the three years in the period ended February 24, 1996.
Our audits also included the financial statement schedule on page F-26. These
financial statements and financial statement schedule are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits.

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

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of BE Aerospace, Inc. and
subsidiaries as of February 24, 1996 and February 25, 1995, and the results of
their operations and their cash flows for each of the three years in the period
ended February 24, 1996, in conformity with generally accepted accounting
principles. Also, in our opinion, such financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

As discussed in Note 2 to the consolidated financial statements, in the
year ended February 24, 1996 the Company changed its method of accounting for
engineering expenditures.

DELOITTE & TOUCHE LLP

Costa Mesa, California
April 19, 1996

F-6
<PAGE> 50

BE AEROSPACE, INC.

CONSOLIDATED BALANCE SHEETS, FEBRUARY 24, 1996 AND FEBRUARY 25, 1995

(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents........................................ $ 15,376 $ 8,319
Accounts receivable -- trade, less allowance for doubtful
accounts
of $4,973 (1996) and $4,034 (1995)............................. 54,242 48,915
Inventories, net................................................. 72,569 71,347
Deferred income taxes............................................ -- 6,502
Income tax refund receivable..................................... -- 1,019
Other current assets............................................. 7,621 6,415
-------- --------
Total current assets........................................ 149,808 142,517
-------- --------
Property and Equipment, net........................................... 86,357 60,304
Intangibles and Other Assets, net..................................... 197,421 177,133
-------- --------
$433,586 $379,954
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable................................................. $ 45,102 $ 35,164
Accrued liabilities.............................................. 56,400 26,123
Current portion of long-term debt................................ 6,482 4,667
-------- --------
Total current liabilities................................... 107,984 65,954
-------- --------
Long-Term Debt........................................................ 273,192 172,693
Deferred Income Taxes................................................. 1,257 11,212
Other Liabilities..................................................... 6,996 4,764
Commitments and Contingencies
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;
16,392,994 (1996) and 16,095,790 (1995) shares issued and
outstanding..................................................... 164 160
Additional paid-in capital....................................... 121,366 119,209
Retained earnings (deficit)...................................... (75,995) 7,418
Cumulative foreign exchange translation adjustment............... (1,378) (1,456)
-------- --------
Total stockholders' equity.................................. 44,157 125,331
-------- --------
$433,586 $379,954
======== ========
</TABLE>

See notes to consolidated financial statements.

F-7
<PAGE> 51

BE AEROSPACE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED FEBRUARY 24, 1996, FEBRUARY 25, 1995 AND FEBRUARY 26, 1994
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------------
FEBRUARY 24, FEBRUARY 25, FEBRUARY 26,
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Net Sales............................................... $232,582 $229,347 $203,364
Cost of Sales........................................... 160,031 154,863 136,307
-------- -------- --------
Gross Profit............................................ 72,551 74,484 67,057
Operating Expenses:
Selling, general and administrative................ 42,000 31,787 28,164
Research, development and engineering.............. 58,327 12,860 9,876
Amortization of intangible assets.................. 9,499 9,954 7,599
Other expenses..................................... 4,170 23,736 --
-------- -------- --------
Total operating expenses...................... 113,996 78,337 45,639
-------- -------- --------
Operating Earnings (Loss)............................... (41,445) (3,853) 21,418
Interest Expense, net................................... 18,636 15,019 12,581
-------- -------- --------
Earnings (Loss) Before Income Taxes (Benefit) and
Cumulative Effect of Change in Accounting Principle... (60,081) (18,872) 8,837
Income Taxes (Benefit).................................. -- (6,806) 3,481
-------- -------- --------
Earnings (Loss) Before Cumulative Effect of Change in
Accounting Principle.................................. (60,081) (12,066) 5,356
Cumulative Effect of Change in Accounting Principle..... (23,332) -- --
-------- -------- --------
Net Earnings (Loss)..................................... $(83,413) $(12,066) $ 5,356
======== ======== ========
Earnings (Loss) per Common Share:
Earnings (loss) before cumulative effect of change
in accounting principle.......................... $ (3.71) $ (0.75) $ 0.35
Cumulative effect of change in accounting
principle........................................ (1.44) -- --
-------- -------- --------
Net earnings (loss)................................ $ (5.15) $ (0.75) $ 0.35
======== ======== ========
</TABLE>

See notes to consolidated financial statements.

F-8
<PAGE> 52

BE AEROSPACE, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED FEBRUARY 24, 1996, FEBRUARY 25, 1995 AND FEBRUARY 26, 1994
(IN THOUSANDS)

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL RETAINED CURRENCY TOTAL
---------------- PAID-IN EARNINGS TRANSLATION STOCKHOLDERS'
SHARES AMOUNT CAPITAL (DEFICIT) ADJUSTMENT EQUITY
------ ------ ---------- -------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, FEBRUARY 27, 1993...... 14,606 $146 $ 98,156 $ 14,128 $ (4,456) $ 107,974
Issuance of common stock........ 1,272 12 19,080 -- -- 19,092
Exercise of stock options....... 107 1 963 -- -- 964
Tax benefit from exercise of non
statutory stock options....... -- -- 158 -- -- 158
Net earnings.................... -- -- -- 5,356 -- 5,356
Foreign currency translation
adjustment.................... -- -- -- -- 449 449
------ ---- -------- -------- ------- --------
BALANCE, FEBRUARY 26, 1994...... 15,985 159 118,357 19,484 (4,007) 133,993
Sale of stock under employee
stock purchase plan........... 15 -- 132 -- -- 132
Employee benefit plan matching
contribution.................. 96 1 720 -- -- 721
Net loss........................ -- -- -- (12,066) -- (12,066)
Foreign currency translation
adjustment.................... -- -- -- -- 2,551 2,551
------ ---- -------- -------- ------- --------
BALANCE, FEBRUARY 25, 1995...... 16,096 160 119,209 7,418 (1,456) 125,331
Sale of stock under employee
stock purchase plan........... 74 1 403 -- -- 404
Exercise of stock options....... 121 2 896 -- -- 898
Employee benefit plan matching
contribution.................. 102 1 858 -- -- 859
Net loss........................ -- -- -- (83,413) -- (83,413)
Foreign currency translation
adjustment.................... -- -- -- -- 78 78
------ ---- -------- -------- ------- --------
BALANCE, FEBRUARY 24, 1996...... 16,393 $164 $ 121,366 $(75,995) $ (1,378) $ 44,157
====== ==== ======== ======== ======= ========
</TABLE>

See notes to consolidated financial statements.

F-9
<PAGE> 53

BE AEROSPACE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED FEBRUARY 24, 1996, FEBRUARY 25, 1995 AND FEBRUARY 26, 1994
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net earnings (loss)...................................... $(83,413) $(12,066) $ 5,356
Adjustments to reconcile net earnings (loss) to net
cash flows (used in) provided by operating
activities:
Cumulative effect of accounting change.............. 23,332 -- --
Depreciation and amortization....................... 18,435 16,146 13,115
Change in intangible assets......................... -- 8,588 --
Deferred income taxes............................... (3,453) (6,764) 1,657
Non cash employee benefit plan contributions........ 859 721 --
Changes in operating assets and liabilities, net of
effects from acquisitions:
Accounts receivable.............................. 6,068 6,226 (3,188)
Inventories...................................... (11,929) (16,863) (4,153)
Income tax refunds receivable.................... 1,019 915 (1,934)
Other current assets............................. (1,657) (1,500) (2,047)
Accounts payable................................. 3,008 7,295 6,056
Other liabilities................................ 13,169 (642) (9,071)
-------- -------- --------
Net cash flows (used in) provided by operating (34,562) 2,056 5,791
activities...............................................
-------- -------- --------
Cash Flows from Investing Activities:
Payments for purchase of property and equipment.......... (13,656) (12,172) (11,002)
Change in other assets................................... (5,914) (8,610) (5,077)
Acquisitions............................................. (42,500) -- (107,506)
-------- -------- --------
Net cash flows used in investing activities................ (62,070) (20,782) (123,585)
-------- -------- --------
Cash Flows from Financing Activities:
Net borrowings under revolving lines of credit........... 2,000 9,080 --
Proceeds from issuance of stock, net of repurchases...... 1,302 132 964
Principal payments on long-term debt..................... (942) -- (13,514)
Proceeds from long-term debt............................. 101,252 3,873 130,010
-------- -------- --------
Net cash flow provided by financing activities............. 103,612 13,085 117,460
-------- -------- --------
Effect of exchange rate changes on cash flows.............. 77 222 (198)
-------- -------- --------
Net increase (decrease) in cash and cash equivalents....... 7,057 (5,419) (532)
Cash and cash equivalents, beginning of year............... 8,319 13,738 14,270
-------- -------- --------
Cash and cash equivalents, end of year..................... $ 15,376 $ 8,319 $ 13,738
======== ======== ========
</TABLE>

See notes to consolidated financial statements.

F-10
<PAGE> 54

BE AEROSPACE, INC.

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Cash paid (received) during year for:
Interest................................................. $16,967 $16,664 $ 7,524
Income taxes -- net...................................... (3,292) (1,096) 2,918
Schedule of Noncash Transactions:
Tax benefit upon exercise of nonstatutory stock
options................................................ -- -- 158
Liabilities assumed and accrued acquisition costs
incurred in connection with the acquisitions........... 27,532 -- 19,954
Liabilities incurred in connection with purchase of land
and buildings.......................................... -- 4,000 4,932
Common stock issued in connection with the
acquisitions........................................... -- -- 19,100
</TABLE>

See notes to consolidated financial statements.

F-11
<PAGE> 55

BE AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 24, 1996, FEBRUARY 25, 1995 AND FEBRUARY 26, 1994
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Basis of Presentation

BE Aerospace, Inc. (the "Company") operates in a single business segment
and designs, manufactures, sells and services a broad line of commercial
aircraft cabin interior products consisting of a broad range of aircraft seating
products, passenger entertainment and service systems, and galley products,
including structures as well as all food and beverage storage and preparation
equipment. The Company's customers are the world's commercial airlines. As a
result, the Company's business is directly dependent upon the conditions in the
commercial airline industry.

As described in Note 3, the Company has completed several business
combinations, all accounted for using purchase accounting. On February 28, 1992,
the Company acquired from the Pullman Company all of the assets and certain of
the liabilities of PTC Aerospace, Inc. (PTC) and Aircraft Products Company (APC)
(collectively, the Business Unit). Following the acquisition of the Business
Unit, the Company changed its name to BE Aerospace, Inc. On April 2, 1992, the
Company, through its Dutch holding company, acquired all of the outstanding
stock of Flight Engineering and Equipment Limited (FEEL) and substantially all
of the operating assets of JFB Engineering Limited (JFB), both English
corporations. On April 30, 1993, the Company acquired all of the outstanding
stock of Royal Inventum B.V., a Dutch corporation (Inventum). On August 26,
1993, the Company acquired all of the outstanding stock of Acurex Corporation, a
California corporation (Acurex) and, on August 23, 1993, the Company acquired
all of the outstanding stock of Nordskog Industries, Inc., a California
corporation (Nordskog). On October 13, 1993, the Company acquired substantially
all of the assets and certain of the liabilities of Philips Airvision of
Valencia, California (Airvision), a division of Philips Electronics Corporation,
North America Corporation. On January 24, 1996, the Company acquired all of the
outstanding stock of Burns Aerospace Corporation, a Delaware corporation.

Consolidation --

The accompanying financial statements consolidate the accounts of BE
Aerospace, Inc. and its wholly-owned subsidiaries. All intercompany transactions
and balances have been eliminated in consolidation.

Use of Estimates --

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Income Taxes --

In accordance with Statement of Financial Accounting Standards (SFAS) No.
109, the Company provides deferred income taxes for temporary differences
between amounts of assets and liabilities recognized for financial reporting
purposes and such amounts recognized for income tax purposes.

Warranty Costs --

Estimated costs related to product warranties are accrued at the time
products are sold.

Revenue Recognition --

Sales of assembled products, equipment or services are recorded on the date
of shipment or, if required, upon acceptance by the customer. The Company sells
its products primarily to airlines worldwide, including

F-12
<PAGE> 56

BE AEROSPACE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 24, 1996, FEBRUARY 25, 1995 AND FEBRUARY 26, 1994
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

occasional sales collateralized by letters of credit in countries where
customary payment terms exceed one year. The Company performs ongoing credit
evaluations of its customers and maintains reserves for potential credit losses.
Actual losses have been within management's expectations.

Cash Equivalents --

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

Intangible Assets --

The Company amortizes intangible assets using the straight-line method
based on the estimated economic lives of the assets, which range from 7-30
years. The Company annually evaluates the carrying value of the intangible
assets versus the cash benefit expected to be realized and adjusts for any
impairment of value. As discussed in Note 16, the Company introduced a new
product to the inflight entertainment industry, causing the industry in general
to re-evaluate its product offerings and, in the process, impairing the value of
certain assets, including certain earlier Company technology. Accordingly,
certain intangible assets related to these product offerings were written down
to their estimated realizable value during the year ended February 25, 1995.

Research and Development --

Research and development expenditures are expensed as incurred.

Stock-Based Compensation --

In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123 (SFAS 123), Accounting for Stock-Based
Compensation, which will be effective for the Company beginning February 25,
1996. SFAS 123 requires extended disclosures of stock-based compensation
arrangements with employees and encourages (but does not require) compensation
cost to be measured based on the fair value of the equity instrument awarded.
Companies are permitted, however, to continue to apply Accounting Principle
Board Opinion No. 25 (APB 25), which recognizes compensation cost based on the
intrinsic value of the equity instrument awarded. The Company will continue to
apply APB 25 to its stock-based compensation awards to employees and will
disclose the required pro forma effect on net income and earnings per share
beginning in fiscal 1997.

Earnings (Loss) per Common Share --

Earnings (loss) per common share amounts are computed using the
weighted-average number of common and common equivalent (where not antidilutive)
shares outstanding during each period. The number of weighted average shares of
common stock outstanding amounted to 16,185,000, 16,021,000, and 15,438,000 for
the years ended February 24, 1996, February 25, 1995, and February 26, 1994.

Foreign Currency Translation --

In accordance with the provisions of SFAS No. 52, "Foreign Currency
Translation," the assets and liabilities located outside the United States are
translated into U.S. dollars at the rates of exchange in effect at the balance
sheet dates. Income and expense items are translated at the average exchange
rates prevailing during the period. Gains and losses resulting from foreign
currency transactions are recognized currently in income, and those resulting
from translation of financial statements are accumulated as a separate component
of stockholders' equity.

F-13
<PAGE> 57

BE AEROSPACE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 24, 1996, FEBRUARY 25, 1995 AND FEBRUARY 26, 1994
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

2. ACCOUNTING CHANGE

The Company undertook a comprehensive review of the engineering
capitalization policies followed by its competitors and others in its industry
peer group. The results of this study and an evaluation of the Company's policy
led the Company to conclude that it should adopt the accounting method that it
believes is followed by most of its competitors and certain members of its
industry peer group. Previously, the Company had capitalized pre-contract
engineering costs as a component of inventories, which were then amortized to
earnings as the product was shipped. The Company now expenses such costs as they
are incurred. While the accounting policy for pre-contract engineering
expenditures previously followed by the Company was in accordance with generally
accepted accounting principles, the changed policy is preferable.

The effect of this change in accounting for periods through February 25,
1995 was a charge of $23,332 ($1.44 per share); the effect of expensing
engineering costs for the year ended February 24, 1996 was a charge of $42,114
($2.60). The following table summarizes the pro forma net earnings (loss) and
per share amounts for each period presented. Primarily as a result of this
accounting change, inventories decreased by approximately $65,446 as of February
24, 1996.

Pro forma amounts assuming the change in application of accounting
principle applied retroactively (unaudited):

<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------------
FEBRUARY 24, FEBRUARY 25, FEBRUARY 26,
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Net (loss) earnings...................... $(60,081) $(35,398) $688
Net (loss) earnings per share............ $ (3.71) $ (2.20) $.04
</TABLE>

3. ACQUISITIONS

The Company completed a number of acquisitions during the years ended
February 24, 1996 (1996 Acquisition) and February 26, 1994 (1994 Acquisitions)
which are described below. Funds for the 1996 and 1994 Acquisitions were
obtained from proceeds of the long-term debt issuance described in Note 8.

1996 ACQUISITION

Burns -- On January 24, 1996 the Company acquired all of the outstanding
capital stock of Burns Aerospace Corporation which designs, manufactures, sells
and services aircraft seating products to commercial airlines worldwide. The
aggregate acquisition cost of $70,032 includes the payment of $42,500 to the
seller, the assumption of approximately $27,532 of liabilities, including
related acquisition costs, and certain purchase accounting reserves.

The aggregate purchase price for the Burns acquisition has been allocated
to the net assets acquired based on appraisals and management's estimates as
follows:

<TABLE>
<S> <C>
Receivables.......................................................... $11,396
Inventories.......................................................... 12,624
Other current assets................................................. 806
Property and equipment............................................... 21,695
Intangible and other assets.......................................... 23,511
-------
$70,032
=======
</TABLE>

F-14
<PAGE> 58

BE AEROSPACE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 24, 1996, FEBRUARY 25, 1995 AND FEBRUARY 26, 1994
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

The following table presents unaudited pro forma operating results for the
fiscal years ended February 1996 and 1995, respectively, as if the 1996
acquisition had occurred on February 27, 1994:

<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Net sales............................................... $327,073 $322,841
Net loss................................................ $(88,113) $(15,061)
-------- --------
Net loss per share...................................... $ (5.44) $ (.94)
======== ========
</TABLE>

None of the above proforma amounts reflect the anticipated cost savings
associated with the Burns business integration plan.

1994 ACQUISITIONS

Inventum -- On April 30, 1993, the Company acquired all of the capital
stock of Inventum which designs, manufactures, sells and services galley inserts
such as ovens, beverage makers, and water boilers to commercial airlines located
primarily in Europe and the Pacific Rim. The aggregate acquisition cost of
$39,964 includes the payment of $33,095 to the seller, the assumption of
approximately $3,614 of liabilities, plus related acquisition costs, and certain
purchase accounting reserves.

Acurex -- On August 26, 1993, the Company acquired all of the outstanding
capital stock of Acurex which designs, manufactures, sells and services aircraft
refrigeration appliances such as chillers, refrigeration units and wine chillers
to commercial airlines worldwide. The aggregate acquisition cost of $70,454
includes the payment of $45,000 to the seller, the assumption of approximately
$2,507 of liabilities, the issuance of 1,272,728 shares of the Company's common
stock to the sellers, valued at $15.00 per share, plus related acquisition
costs, and certain purchase accounting reserves.

Nordskog -- On August 23, 1993, the Company acquired all of the outstanding
capital stock of Nordskog which designs, manufactures, sells and services
aircraft galley structures and inserts to commercial airlines worldwide. The
aggregate acquisition cost of $25,402 includes a cash payment of $17,158 to the
seller, the assumption of approximately $2,374 of liabilities, plus related
acquisition costs, and certain purchase accounting reserves.

Airvision -- On October 13, 1993, the Company acquired substantially all of
the assets and certain of the liabilities of Airvision which designs,
manufactures, sells and services in-seat video products, including interactive
video for commercial airlines worldwide. The aggregate acquisition cost of
$16,601 includes the payment of $12,253 to the seller, the assumption of
approximately $1,640 of liabilities, plus related acquisition costs, and certain
purchase accounting reserves.

The aggregate purchase price for the 1994 Acquisitions has been allocated
to the net assets acquired based on appraisals and management's estimates as
follows:

<TABLE>
<S> <C>
Cash and cash equivalents........................................... $ 4,403
Receivables......................................................... 14,403
Inventories......................................................... 21,392
Property and equipment.............................................. 5,424
Intangible and other assets......................................... 106,799
--------
$152,421
========
</TABLE>

F-15
<PAGE> 59

BE AEROSPACE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 24, 1996, FEBRUARY 25, 1995 AND FEBRUARY 26, 1994
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

4. INVENTORIES

Inventories are valued at the lower of cost or market using the weighted
average cost method. Inventories consist of the following:

<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Raw materials............................................. $28,252 $23,675
Work-in-process........................................... 39,045 39,131
Finished goods............................................ 5,272 8,541
------- -------
$72,569 $71,347
======= =======
</TABLE>

Inventories at February 25, 1995 included $23,332 of capitalized
pre-contract engineering costs. As described in Note 2, during fiscal 1996, the
Company changed its method of accounting for such costs.

5. PROPERTY AND EQUIPMENT

Property and equipment are carried at cost, and depreciated and amortized
generally on the straight-line method over their estimated useful lives of three
to 20 years (term of lease as to leasehold improvements). Property and equipment
consist of the following:

<TABLE>
<CAPTION>
YEARS 1996 1995
----- -------- --------
<S> <C> <C> <C>
Land, buildings and improvements................ 15-20 $ 39,979 $ 31,920
Machinery....................................... 5-12 46,374 29,743
Tooling......................................... 3-5 14,819 10,324
Furniture and equipment......................... 3-5 12,758 7,075
-------- --------
113,930 79,062
Less accumulated depreciation and
amortization.................................. (27,573) (18,758)
-------- --------
$ 86,357 $ 60,304
======== ========
</TABLE>

6. INTANGIBLES AND OTHER ASSETS

Intangibles and other assets consist of the following:

<TABLE>
<CAPTION>
STRAIGHT-LINE
AMORTIZATION
PERIOD (YEARS) 1996 1995
-------------- -------- --------
<S> <C> <C> <C>
Covenants not-to-compete.................. 14 $ 10,198 $ 9,198
Product technology, production plans and
drawings................................ 7-20 60,201 56,774
Replacement parts annuity................. 20 29,416 26,042
Product approvals and technical manuals... 20 18,529 13,909
Goodwill.................................. 30 77,256 68,651
Debt issue costs.......................... 10 12,592 5,662
Trademarks and patents.................... 20 10,470 9,114
Other..................................... 11,761 9,482
-------- --------
230,423 198,832
Less accumulated amortization........ (33,002) (21,699)
-------- --------
$197,421 $177,133
======== ========
</TABLE>

F-16
<PAGE> 60

BE AEROSPACE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 24, 1996, FEBRUARY 25, 1995 AND FEBRUARY 26, 1994
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

7. ACCRUED LIABILITIES

Accrued liabilities consist of the following:

<TABLE>
<CAPTION>
1996 1995
-------- -------
<S> <C> <C>
Accrued product warranties.............................. $ 3,455 $ 2,969
Accrued salaries, vacation and related benefits......... 10,479 5,502
Accrued acquisition expenses............................ 11,105 2,507
Accrued interest........................................ 7,449 6,694
Customer advances....................................... 5,940 --
Accrued income taxes.................................... 7,315 1,642
Other accrued liabilities............................... 10,657 6,809
-------- -------
$ 56,400 $26,123
======== =======
</TABLE>

8. LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Senior notes............................................. $124,313 $124,215
Senior subordinated notes................................ 100,000 --
Revolving lines of credit................................ 38,000 36,000
Term loan................................................ 16,665 16,577
Other long-term debt..................................... 696 568
-------- --------
279,674 177,360
Less current portion of long-term debt................... (6,482) (4,667)
-------- --------
$273,192 $172,693
======== ========
</TABLE>

In January 1996, the Company amended its existing credit facilities by
increasing the aggregate principal amount that may be borrowed thereunder to
$100,000 (the "Bank Credit Facility"). The Bank Credit Facility consists of a
$25,000 Reducing Revolver and a $75,000 Revolving Facility. The amount of the
Reducing Revolver will be reduced automatically by 12.5% on April 19, 1999 and
on each of the seven succeeding quarterly anniversaries of such date. The
Reducing Revolver is collateralized by all of the issued and outstanding capital
stock of Acurex and has a five-year maturity, with the commitments of the
lenders thereunder reducing during such five-year period. The Revolving Facility
is collateralized by all of the Company's accounts receivable, all of its
inventory and substantially all of its other personal property and has a
five-year maturity. The Bank Credit Facility contains customary affirmative
covenants, negative covenants and conditions of borrowing, all of which were met
by the Company as of February 24, 1996. Borrowings under the Bank Credit
Facility were used to refinance the remaining borrowings under the Company's
then outstanding credit facility.

Borrowings under the Bank Credit Facility currently bear interest at LIBOR
plus 1.75% or prime (as defined) plus 1/2%. The interest to be charged on the
Bank Credit Facility can increase or decrease based upon specified operating
performance criteria set forth in the Bank Credit Facility Agreement. Amounts
may be borrowed or repaid in $1,000 increments. At February 24, 1996,
approximately $5,800 of letters of credit were outstanding, reducing the
aggregate Bank Credit Facility availability to approximately $56,200.

On January 24, 1996, the Company sold $100,000 of 9 7/8% Senior
Subordinated Notes (the "Senior Subordinated Notes"). The proceeds from the
Senior Subordinated Notes were utilized to acquire Burns and refinance the
Company's then outstanding Bank credit facilities.

F-17
<PAGE> 61

BE AEROSPACE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 24, 1996, FEBRUARY 25, 1995 AND FEBRUARY 26, 1994
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

The Senior Subordinated Notes are unsecured senior subordinated obligations
of the Company and are subordinated to all senior indebtedness of the Company
and mature on February 1, 2006. Interest on the Senior Subordinated Notes is
payable semi-annually in arrears February 1 and August 1 of each year. The
Senior Subordinated Notes are redeemable at the option of the Company, in whole
or in part, at any time after February 1, 2001 at predetermined redemption
prices together with accrued and unpaid interest through the date of redemption.
Upon a change of control (as defined), each holder of the Senior Subordinated
Notes may require the Company to repurchase such holder's Senior Subordinated
Notes at 101% of the principal amount thereof, plus accrued and unpaid interest
to the date of such purchase. The Senior Subordinated Notes contain certain
restrictive covenants, all of which were met by the Company as of February 24,
1996, including limitations on future indebtedness, restricted payments,
transactions with affiliates, liens, dividends, mergers and transfers of assets.

On February 24, 1993, the Company sold $125,000 of 9 3/4% Senior Notes (the
"Senior Notes"), which were priced to yield 9 7/8%. The Company received the
proceeds from the Senior Notes on March 3, 1993 and utilized $32,545 thereof to
repay the outstanding balance of the Company's then outstanding bank
obligations. The Senior Notes are senior unsecured obligations of the Company,
ranking equally with any future senior obligations of the Company and mature on
March 1, 2003. Interest on the Senior Notes is payable semi-annually in arrears
on March 1 and September 1 of each year. The Senior Notes are redeemable at the
option of the Company, in whole or in part, at any time on or after March 1,
1998 at predetermined redemption prices, together with accrued and unpaid
interest through the date of redemption. Upon a change of control (as defined),
each holder of the Senior Notes may require the Company to repurchase such
holder's Senior Notes at 101% of the principal amount thereof, plus accrued and
unpaid interest to the date of such purchase. The Senior Notes contain certain
restrictive covenants, all of which were met by the Company as of February 24,
1996, including limitations on future indebtedness, restricted payments,
transactions with affiliates, liens, dividends, mergers and transfers of assets.

Terms of the Senior Notes provide that, among other things, the payment of
cash dividends on Common Stock is limited to a cumulative amount that equals
fifty percent of the Company's consolidated adjusted net income since the date
of the Senior Notes' issuance, plus the sum of $10,000 and other equity
adjustments (as defined therein). The payment of cash dividends may only be made
if the Company is not in default under the terms of the Senior Notes. The Bank
Credit Facility also contains restrictions on the cumulative amount of dividends
that may be paid. As of February 24, 1996, no cash dividends could have been
declared by the Company.

The Company has a U.K. revolving line of credit and term loan facility
aggregating $13,300 (the FEEL Credit Agreement). The FEEL Credit Agreement is
collateralized by substantially all of the assets of FEEL. Borrowings may be
made under the line of credit provided FEEL is in compliance with certain
covenants, all of which were met or waived as of February 24, 1996. Aggregate
borrowings outstanding under the FEEL Credit Agreement were approximately
$12,815 as of February 24, 1996. Such borrowings will be repaid in pounds
sterling.

The Company also has a Netherlands revolving line of credit agreement for
approximately $1,000 (the Inventum Credit Agreement). The Inventum Credit
Agreement is collateralized by substantially all of the assets of Inventum.
Borrowings may be made under the line of credit provided Inventum is in
compliance with certain covenants, all of which were met by Inventum as of
February 24, 1996. There were no borrowings outstanding under the Inventum
Credit Agreement as of February 24, 1996.

During fiscal 1995, the Company entered into term loan agreements
aggregating $4,000 which are collateralized by two of the Company's recently
constructed properties. These term loans bear interest at

F-18
<PAGE> 62

BE AEROSPACE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 24, 1996, FEBRUARY 25, 1995 AND FEBRUARY 26, 1994
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

prime (as defined) plus 1/2% or LIBOR plus 1 3/4%, at the option of the Company
and contain certain restrictive covenants, all of which were met by the Company
as of February 24, 1996.

Maturities of long-term debt are as follows:

<TABLE>
<S> <C>
Fiscal year ending February:
1997........................................................... $ 6,482
1998........................................................... 1,591
1999........................................................... 1,424
2000........................................................... 1,357
2001........................................................... 39,358
Thereafter.......................................................... 229,462
--------
$279,674
========
</TABLE>

9. INCOME TAXES

Income tax expense (benefit) consists of the following:

<TABLE>
<CAPTION>
1996 1995 1994
------- ------- ------
<S> <C> <C> <C>
Current:
Federal..................................... $ 1,972 $ (786) $1,408
State....................................... 818 105 139
Foreign..................................... 663 639 277
------- ------- ------
$ 3,453 $ (42) $1,824
======= ======= ======
Deferred:
Federal..................................... $(2,635) $(5,146) $ 155
State....................................... (818) (904) 266
Foreign..................................... -- (714) 1,236
(3,453) (6,764) 1,657
------- ------- ------
$ -0- $(6,806) $3,481
======= ======= ======
</TABLE>

The difference between income tax expense (benefit) and the amount computed
by applying the statutory U.S. federal income tax rate (35%) to the pretax
earnings before change in accounting principle consists of the following:

<TABLE>
<CAPTION>
1996 1995 1994
-------- ------- ------
<S> <C> <C> <C>
Statutory U.S. federal income tax expense
(benefit)..................................... $(21,028) $(6,605) $3,093
Operating loss without tax benefit.............. 14,569 -- --
Foreign tax rate differential................... 3,324 -- --
State income taxes, net......................... -- (519) 264
Goodwill amortization........................... 558 708 290
Research and development credit................. -- (600) --
Foreign Sales Corporation tax benefit........... -- (353) (281)
Other, net...................................... 2,577 563 115
-------- ------- ------
$ -0- $(6,806) $3,481
======== ======= ======
</TABLE>

F-19
<PAGE> 63

BE AEROSPACE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 24, 1996, FEBRUARY 25, 1995 AND FEBRUARY 26, 1994
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

The tax effects of temporary differences and carryforwards that give rise
to the Company's deferred income tax assets and liabilities consist of the
following:

<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Engineering costs...................................... $ 22,182 $ --
Inventory reserves..................................... 5,164 2,396
Acquisition reserves................................... 991 855
Inventory costs capitalized for tax purposes........... 815 815
Bad debt reserves...................................... 658 1,415
Other.................................................. 1,611 1,021
-------- --------
Net current deferred income tax assets................. $ 31,421 $ 6,502
======== ========
Intangible assets...................................... (14,701) (16,421)
Depreciation........................................... (1,556) (1,904)
Net operating loss carryforward........................ 9,254 3,708
Research credit carryforward........................... 600 600
Other.................................................. 1,137 2,805
-------- --------
Net noncurrent deferred income tax liabilities......... (5,266) (11,212)
-------- --------
Valuation allowance.................................... (27,412) --
-------- --------
Net deferred tax liabilities........................... $ (1,257) $ (4,710)
======== ========
</TABLE>

Due to uncertainty surrounding the realization of the benefits of its net
deferred tax asset, the Company has established a valuation allowance of $27,412
against its otherwise recognizable net deferred tax asset.

As of February 24, 1996, the Company had approximately $22,816 of federal
operating loss carryforwards which expire at various dates through 2011, federal
research credit carryforwards of $600 which expire at various dates through
2011, and alternative minimum tax credit carryforwards of $269 which have no
expiration date.

The Company has not provided for any residual U.S. income taxes on the
approximately $2,855 of earnings from its foreign subsidiaries because such
earnings are intended to be indefinitely reinvested. Such residual U.S. income
taxes, if provided for, would be immaterial.

The Company's federal tax returns for the years ended February 26, 1994 and
February 27, 1993 are currently under examination by the Internal Revenue
Service. Management believes that the resolution of this examination will not
have a material adverse effect on the Company's results of operations or its
financial condition.

F-20
<PAGE> 64

BE AEROSPACE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 24, 1996, FEBRUARY 25, 1995 AND FEBRUARY 26, 1994
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

10. COMMITMENTS AND CONTINGENCIES

Leases--

The Company leases certain of its office, manufacturing and service
facilities under operating leases which expire at various times through August
2003. Rent expense for fiscal 1996, 1995, and 1994 was approximately $2,943,
$2,276 and $2,091, respectively. Future payments under leases with terms
currently greater than one year are as follows:

<TABLE>
<S> <C>
Year ending February:
1997........................................................... $ 5,308
1998........................................................... 4,318
1999........................................................... 2,567
2000........................................................... 1,460
2001........................................................... 1,257
Thereafter.......................................................... 3,063
-------
$17,973
=======
</TABLE>

Contingencies --

BEA has been advised that the U.S. Attorney's Office for the District of
Connecticut, in conjunction with the Department of Commerce and the U.S. Customs
Service, is conducting a grand jury investigation focused on possible
non-compliance by BEA with certain statutory and regulatory provisions relating
to export licensing and controls. The investigation relates primarily to the
sale of passenger seats and related spare parts for civilian commercial
passenger aircraft to Iran Air from 1992 through mid-1995. BEA has been advised
that it is a target of the investigation; however, neither it nor any current or
former directors, officers, or employees have been charged in connection with
the investigation. The investigation is at an early stage and, while the Company
intends to defend itself vigorously, the ultimate outcome of the investigation
cannot presently be determined. An adverse outcome could have a material adverse
effect upon the operations and/or financial condition of the Company.

The Company is also a defendant in various other legal actions arising in
the normal course of business, the outcome of which, in the opinion of
management, neither individually nor in the aggregate are likely to result in a
material adverse effect to the Company's financial statements.

Employment Agreements --

The Company has employment and compensation agreements with two key
officers of the Company. One of the agreements provides for an officer to earn a
minimum of $450 adjusted annually for changes in the consumer price index (as
defined) per year through 2001, as well as a deferred compensation benefit equal
to the aggregate annual compensation earned through termination and payable
thereafter. Such deferred compensation will be payable in equal monthly
installments over the same number of years it was earned. The other agreement
provides for an officer to receive annual minimum compensation of $450, and an
incentive bonus not to exceed 100% of the officer's then-current salary through
1998. In addition, if the officer terminates his employment on or after April
28, 1996, the Company is obligated to pay the officer annually, as deferred
compensation, an amount equal to 100% of the officer's annual salary (as
defined) for a period of ten years from the date of termination. Such deferred
compensation has been accrued at the present value of the obligation at February
24, 1996.

The Company has other employment agreements with certain key members of
management that provide for aggregate minimum annual base compensation of
$1,660, expiring on various dates through 1999.

F-21
<PAGE> 65

BE AEROSPACE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 24, 1996, FEBRUARY 25, 1995 AND FEBRUARY 26, 1994
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

Supply Agreement --

The Company has entered into a supply agreement with Applied Extrusion
Technologies, Inc. ("AET"), a related party by way of common management. Under
this agreement, the Company has agreed to purchase its requirements for certain
component parts through April 1998 at a price that results in a 33-1/3% gross
margin to AET. The Company's purchases under this contract for the years ended
February 24, 1996, February 25, 1995, and February 26, 1994 were $1,301, $984,
$1,040, respectively.

11. PROFIT-SHARING PLAN

In August 1988, the Company established a non-qualified contributory
profit-sharing plan. Effective August 1, 1989, this plan was amended to
incorporate a 401(k) Plan which permits the Company to match a portion of
employee contributions and to make profit-sharing contributions to all
participants (as defined). Commencing in 1995, the Company's 401(k) Plan was
amended to permit the Company's matching contribution to be made in common stock
of the Company. The Company recognized expenses of $859, $757, and $585 related
to this plan for the years ended February 24, 1996, February 25, 1995 and
February 26, 1994, respectively.

12. STOCKHOLDERS' EQUITY

Stock Option Plans --

The Company has various stock option plans, including the 1989 Stock Option
Plan, the 1991 Directors Stock Option Plan and the 1992 Share Option Scheme
(collectively the "Option Plans"), under which shares of the Company's common
stock may be granted to key employees and directors of the Company. The Option
Plans provide for granting key employees options to purchase the Company's
common stock. Options are granted at the discretion of the compensation and
stock option committee of the Board of Directors, and the option term cannot
exceed ten years. Options granted generally vest at the rate of 25% per year
from the date of grant and are exercisable to the extent vested.

In August 1995, the compensation and stock option committee of the Board of
Directors reviewed the exercise prices of the options then outstanding, current
market conditions, as well as other factors, and deemed it appropriate to
re-price 540,800 options with exercise prices ranging from $9.25 to $11.75 per
share to $7.625 per share, which was the fair market value as of that date.

The following table sets forth options granted, cancelled, forfeited and
outstanding:

<TABLE>
<CAPTION>
FEBRUARY 26, 1996 FEBRUARY 25, 1995 FEBRUARY 26, 1994
-------------------------- -------------------------- --------------------------
OPTION PRICE OPTION PRICE OPTION PRICE
OPTIONS PER SHARE OPTIONS PER SHARE OPTIONS PER SHARE
--------- -------------- --------- -------------- --------- --------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning of period.... 2,871,287 $ .81 - $13.00 2,493,162 $ .81 - $13.00 2,215,112 $ .81 - $14.00
Options granted..................... 731,925 $7.37 - $10.37 484,500 $7.44 - $ 8.75 404,500 $8.75 - $11.75
Options exercised................... (139,750) $ .81 - $ 8.75 (375) $ .81 (106,450) $8.75 - $ 9.50
Options forfeited................... (743,112) $7.00 - $13.00 (106,000) $8.25 - $11.75 (20,000) $8.75 - $12.25
--------- --------- ---------
Outstanding, end of period.......... 2,720,350 $ .81 - $13.00 2,871,287 $ .81 - $13.00 2,493,162 $ .81 - $13.00
========= ========= =========
</TABLE>

13. EMPLOYEE STOCK PURCHASE PLAN

The Company has established a qualified Employee Stock Purchase Plan, the
terms of which allow for qualified employees (as defined) to participate in the
purchase of designated shares of the Company's common stock at a price equal to
the lower of 85% of the closing price at the beginning or end of each semi-
annual stock purchase period. The Company issued 73,544 and 15,065 shares of
stock during fiscal 1996 and 1995 (none in fiscal 1994) pursuant to this plan at
a price per share of $5.50 and $7.01, respectively.

F-22
<PAGE> 66

BE AEROSPACE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 24, 1996, FEBRUARY 25, 1995 AND FEBRUARY 26, 1994
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

14. RELATED PARTY TRANSACTIONS

Aurora, a private capital firm, has provided assistance to the Company in
developing its acquisition program, the acquisitions of the Business Unit, FEEL
and AFL, Inventum, Nordskog and Acurex as well as in its 1992 equity offering,
strategic planning, competitive analysis and financial relations. During fiscal
1994, the Company had an arrangement with Aurora under which Aurora was entitled
to receive reimbursement for its reasonable expenses and to receive a monthly
retainer of $20 which was credited against any fees earned for services rendered
related to certain transactions, including $100 for each acquisition consummated
in fiscal 1994. This arrangement was terminated effective July 1993. Aurora
earned approximately $300 during the year ended February 26, 1994 related to the
1994 Acquisitions. A member of the Company's Board of Directors is a part owner
of Aurora.

15. EXPORT SALES AND MAJOR CUSTOMERS

Export sales from the United States to customers in foreign countries
amounted to approximately $61,717 $61,645, and $44,058 in fiscal 1996, 1995, and
1994, respectively. Total sales to all customers in foreign countries amounted
to approximately $124,469, $114,511 and $85,239 in fiscal 1996, 1995 and 1994,
respectively. Total sales to Europe amounted to 18%, 22% and 28% in fiscal 1996,
1995 and 1994, respectively. Total sales to Asia amounted to 20%, 19% and 21% in
fiscal 1995, 1994 and 1993, respectively. Major customers (i.e., customers
representing more than 10% of total sales) change from year to year depending on
the level of refurbishment activity and/or the level of new aircraft purchases
by such customers. There were no major customers in fiscal 1996, 1995 or 1994.

16. OTHER EXPENSES

Other expenses for the year ended February 24, 1996 relate to costs
associated with the integration and consolidation of the Company's European
seating business. Other expenses for the year ended February 25, 1995 consisted
of a charge related primarily to intangible assets ($10,835) and inventories
($11,216) associated with the Company's passenger entertainment systems. The
introduction of the Company's MDDS interactive video system, which the Company
expects to become the industry's standard for inflight passenger and service
entertainment, has captured the dominant market share with contract awards from
the major airlines totaling more than $150,000 during the year ended February
24, 1996. The MDDS system also has recently caused major carriers to convert
programs for earlier products to the Company's MDDS system and has caused two of
the Company's principal competitors to offer to develop for the airlines systems
similar to the Company's MDDS system. These events have caused the inflight
entertainment industry to re-evaluate its product offerings and, in the process,
have impaired the value of certain of its assets. As a result, the Company has
written down certain of its assets, including certain customer-specific
inventories and other assets.

17. FOREIGN OPERATIONS

Geographic Area --

The Company operated principally in two geographic areas, the United States
and Europe during the years ended February 24, 1996, February 25, 1995, and
February 26, 1994. There were no significant transfers between geographic areas
during the period. Identifiable assets are those assets of the Company that are
identified with the operations in each geographic area.

F-23
<PAGE> 67

BE AEROSPACE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 24, 1996, FEBRUARY 25, 1995 AND FEBRUARY 26, 1994
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

The following table presents operating results for the years ended February
24, 1996, February 25, 1995, and February 26, 1994 and identifiable assets as of
February 24, 1996, February 25, 1995, and February 26, 1994 by geographic area.

<TABLE>
<CAPTION>
UNITED
1996 STATES EUROPE CONSOLIDATED
------------------------------------------- -------- -------- ------------
<S> <C> <C> <C>
Sales to unaffiliated customers............ $169,830 $ 62,752 $232,582
Gross profit............................... 53,772 18,779 72,551
Selling, general and administrative and
amortization expenses.................... 39,833 11,666 51,499
Research, development and engineering...... 49,574 8,753 58,327
Other expenses............................. 187 3,983 4,170
Interest expense, net...................... 17,600 1,036 18,636
Loss before income taxes and cumulative
effect of accounting change.............. (53,422) (6,659) (60,081)
Identifiable assets........................ 332,832 100,754 433,586
</TABLE>

<TABLE>
<CAPTION>
UNITED
1995 STATES EUROPE CONSOLIDATED
------------------------------------------- -------- -------- ------------
<S> <C> <C> <C>
Sales to unaffiliated customers............ $170,542 $ 58,805 $229,347
Gross profit............................... 56,296 18,188 74,484
Selling, general and administrative and
amortization expenses.................... 32,183 9,558 41,741
Research, development and engineering...... 9,834 3,026 12,860
Other expenses............................. 23,736 -- 23,736
Interest expense, net...................... 11,835 3,184 15,019
Loss before income taxes................... (18,578) (294) (18,872)
Identifiable assets........................ 279,402 100,552 379,954
</TABLE>

<TABLE>
<CAPTION>
UNITED
1994 STATES EUROPE CONSOLIDATED
------------------------------------------- -------- -------- ------------
<S> <C> <C> <C>
Sales to unaffiliated customers............ $156,638 $ 46,726 $203,364
Gross profit............................... 51,401 15,656 67,057
Selling, general and administrative and
amortization expenses.................... 27,288 8,475 35,763
Research, development and engineering...... 7,783 2,093 9,876
Interest expense, net...................... 11,424 1,157 12,581
Earnings before income taxes............... 4,814 4,023 8,837
Identifiable assets........................ 280,827 94,182 375,009
</TABLE>

18. FAIR VALUE INFORMATION

The following disclosure of the estimated fair value of financial
instruments at February 24, 1996 and February 25, 1995 is made in accordance
with the requirements of SFAS No. 107, "Disclosures about Fair Value of
Financial Instruments." The estimated fair value amounts have been determined by
the Company using available market information and appropriate valuation
methodologies. However, considerable judgment is required in interpreting market
data to develop the estimates of fair value. Accordingly, the estimates
presented herein are not necessarily indicative of the amounts that the Company
could realize in a current market exchange. The use of different market
assumptions and/or estimation methodologies may have a material effect on the
estimated fair value amounts.

The carrying amounts of cash and cash equivalents, accounts receivable --
trade, and accounts payable are a reasonable estimate of their fair values.
Except for the Company's Senior Notes and Senior

F-24
<PAGE> 68

BE AEROSPACE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 24, 1996, FEBRUARY 25, 1995 AND FEBRUARY 26, 1994
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

Subordinated Notes at February 24, 1996, the Company's Senior Notes have a
carrying value of $124,313 and fair value of $130,625, while the Company's
Senior Subordinated Notes have a carrying value of $100,000 and fair value of
$102,750. The carrying amount of other long-term debt approximates fair value
because the obligations either bear interest at floating rates or compare
favorably with fixed rate obligations that would be available to the Company.

The fair value information presented herein is based on pertinent
information available to management as of February 24, 1996. Although management
is not aware of any factors that would significantly affect the estimated fair
value amounts, such amounts have not been comprehensively revalued for purposes
of these consolidated financial statements since that date, and current
estimates of fair value may differ significantly from the amounts presented
herein.

19. SELECTED QUARTERLY DATA (UNAUDITED)

Summarized quarterly financial data for fiscal 1996 is as follows:

<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY 24, 1996
----------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
<S> <C> <C> <C> <C>
As previously reported:
Sales............................................. $55,594 $57,451 $55,188 $64,349
Gross profit...................................... 18,401 17,573 17,519 17,664
Selling, general & administrative................. 8,300 8,443 8,504 16,692
Research, development and engineering............. 3.547 4,433 3,611 21,071
Operating earnings (loss)......................... 4,221 3,337 (1,113) (22,617)
Net earnings (loss)............................... 33 (375) (3,368) (28,864)
Net earnings (loss) per share..................... 0.00 (0.02) (0.21) (1.92)
As restated due to accounting change:
Sales............................................. $55,594 $57,451 $55,188 $64,349
Gross profit...................................... 18,401 18,719 17,726 17,664
Selling, general & administrative................. 8,300 8,443 8,504 16,692
Research, development & engineering............... 13,303 11,471 12,483 21,071
Operating (loss).................................. (5,494) (3,553) (9,782) (22,617)
Net (loss) before cumulative effect of accounting (9,682) (7,514) (14,021) (28,864)
change..........................................
Cumulative effect of accounting change............ (23,332) -- -- --
Net loss.......................................... (33,014) (7,514) (14,021) (28,864)
Loss per common share:
Net loss per share:
Before cumulative effect of accounting change..... $ (0.60) $ (0.45) $ (0.74) $ (1.92)
Cumulative effect of accounting change............ (1.44) -- -- --
------- ------- ------- -------
Net loss per share................................ $ (2.04) $ (0.45) $ (0.74) $ (1.92)
</TABLE>

Selling, general and administrative expense and research, development and
engineering expense for the fourth quarter reflect a significant increase
primarily attributable to the Burns acquisition.

Summarized quarterly financial data for fiscal 1995 is as follows:

<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY 25, 1995
----------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net sales.............................................. $57,567 $55,197 $57,281 $59,302
Gross profit........................................... 18,887 18,408 18,668 18,521
Net earnings (loss).................................... 1,074 964 (14,569) 465
Net earnings (loss) per common share................... .07 .06 (.90) .03
</TABLE>

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<PAGE> 69

SCHEDULE II

BE AEROSPACE, INC.

VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED FEBRUARY 24, 1996, FEBRUARY 25, 1995 AND FEBRUARY 26, 1994
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
BALANCE BALANCE
AT BEGINNING AT END
OF YEAR EXPENSES OTHER DEDUCTIONS OF YEAR
------------ -------- ------- ---------- -------
<S> <C> <C> <C> <C> <C>
Deducted From Assets:
Allowance for doubtful accounts:
1996.............................. $ 4,034 $ 162 $1,449 (1) $ 672 $ 4,973
1995.............................. 2,208 3,119 -- 1,293 4,034
1994.............................. 1,304 774 650 (2) 520 2,208
Reserve for obsolete inventories:
1996.............................. $ 10,664 $6,022 $5,840 (1) $2,741 $19,785
1995.............................. 7,557 2,787 2,754 (2) 2,434 10,664
1994.............................. 2,885 1,880 4,452 (2) 1,660 7,557
Included In Liabilities:
Accrued product warranties:
1996.............................. $ 2,969 $2,758 $ 936 (1) $3,208 $ 3,455
1995.............................. 2,388 2,544 666 (2) 2,629 2,969
1994.............................. 1,856 1,926 (184 ) 1,210 2,388
</TABLE>

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

(1) Burns acquisition

(2) 1994 acquisitions

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