UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 for the quarterly
period ended May 25, 1996
Commission File No. 0-18348
BE AEROSPACE, INC.
(Exact name of registrant as specified in its charter)
Delaware 06-1209796
(State of Incorporation) (I.R.S. Employer Identification No.)
1400 Corporate Center Way
Wellington, Florida 33414
(Address of principal executive offices)
(407) 791-5000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES[X] NO[ ]
The registrant has one class of common stock, $ .01 par value, of which
16,623,214 shares were outstanding as of June 14, 1996.
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BE AEROSPACE, INC.
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
<TABLE>
<CAPTION>
May 25, February 24,
1996 1996
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 6,151 $ 15,376
Receivables - trade, less allowance for doubtful
accounts of $5,156 (May 25, 1996)
and $4,973 (February 24, 1996) 63,423 54,242
Inventories, net 72,645 72,569
Other current assets 8,469 7,621
--------- ---------
Total current assets 150,688 149,808
PROPERTY AND EQUIPMENT, net 83,918 86,357
INTANGIBLES AND OTHER ASSETS, net 194,319 197,421
--------- ---------
$ 428,925 $ 433,586
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 45,807 $ 45,102
Accrued expenses 47,984 56,400
Current portion of long-term debt 6,160 6,482
--------- ---------
Total current liabilities 99,951 107,984
LONG-TERM DEBT 272,104 273,192
DEFERRED INCOME TAXES 1,792 1,257
OTHER LIABILITIES 9,121 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; 16,535,714 (May 25, 1996)
16,392,994 (February 24, 1996) issued 165 164
Additional paid-in capital 122,614 121,366
Retained earnings (deficit) (74,562) (75,995)
Cumulative foreign exchange translation adjustment (2,260) (1,378)
--------- ---------
Total stockholders' equity 45,957 44,157
--------- ---------
$ 428,925 $ 433,586
========= =========
</TABLE>
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BE AEROSPACE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
May 25, May 27,
1996 1995
<S> <C> <C>
NET SALES $ 97,302 $ 55,594
COST OF SALES 64,755 37,152
-------- --------
GROSS PROFIT 32,547 18,442
OPERATING EXPENSES:
Selling, general and administrative 11,585 8,300
Research, development and engineering 9,727 13,303
Amortization expense 2,708 2,333
-------- --------
Total operating expenses 24,020 23,936
-------- --------
OPERATING EARNINGS (LOSS) 8,527 (5,494)
INTEREST EXPENSE, net 6,935 4,188
-------- --------
EARNINGS (LOSS) BEFORE INCOME TAXES
AND CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE 1,592 (9,682)
INCOME TAXES 159 --
-------- --------
EARNINGS (LOSS) BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING PRINCIPLE 1,433 (9,682)
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE -- (23,332)
-------- --------
NET EARNINGS (LOSS) $ 1,433 $(33,014)
======== ========
EARNINGS (LOSS) PER COMMON SHARE:
Earnings (loss) before cumulative effect
of change in accounting principle $ .08 $ (.60)
Cumulative effect of change in
accounting principle -- (1.45)
-------- --------
NET EARNINGS (LOSS) PER COMMON SHARE $ .08 $ (2.05)
======== ========
COMMON AND COMMON EQUIVALENT SHARES 17,241 16,097
======== ========
</TABLE>
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BE AEROSPACE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended
May 25, May 27,
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ 1,433 $(33,014)
Adjustments to reconcile net loss to net cash flows
provided by operating activities:
Depreciation and amortization 5,350 4,086
Cumulative effect of
change in accounting principle -- 23,332
Deferred income taxes 534 330
Non cash employee benefit plan contributions 83 169
Changes in operating assets and liabilities:
Accounts receivable (9,402) 2,519
Inventories (209) (2,116)
Other current assets (460) 427
Accounts payable 1,408 1,043
Other liabilities (6,549) (4,438)
-------- --------
Net cash flows used in operating activities (7,812) (7,662)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,218) (1,187)
Change in other assets - net 43 (3,992)
-------- --------
Net cash flows used in investing activities (1,175) (5,179)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under revolving lines of credit -- 7,646
Repayments of long-term debt (1,364) --
Proceeds from issuances of stock 1,165 --
-------- --------
Net cash flow (used in) provided by financing activities (199) 7,646
Effect of exchange rate changes on cash flows (39) 45
-------- --------
Net decrease in cash and cash equivalents (9,225) (5,150)
Cash and cash equivalents, beginning of period 15,376 8,319
-------- --------
Cash and cash equivalents, end of period $ 6,151 $ 3,169
======== ========
Supplemental disclosures of cash flow information:
Cash paid during period for interest $ 6,734 $ 7,250
Cash paid during period for income taxes, net $ (1,102)
</TABLE>
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BE AEROSPACE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MAY 25, 1996 AND MAY 27, 1995
Note 1. Basis of Presentation:
The information set forth in these consolidated financial statements as
of May 25, 1996 and for the three months ended May 25, 1996 and May 27, 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. (the "Company" or
"BEA") for the periods indicated. Results of operations for the interim periods
ended May 25, 1996 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. All significant intercompany transactions have been
eliminated. Certain amounts in the prior years' Consolidated Financial
Statements have been reclassified to conform to the current fiscal year's
presentation.
Certain information normally included in footnote disclosures to the
annual financial statements has been condensed or omitted in accordance with
the rules and regulations of the Securities and Exchange Commission.
[Remainder of page intentionally left blank]
<PAGE>
BE AEROSPACE, INC.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
(Dollars in thousands, except per share data)
The following discussion and analysis addresses the results of the
Company's operations for the three months ended May 25, 1996, as compared to
the Company's results of operations for the three months ended May 27, 1995.
The discussion and analysis then addresses the liquidity and financial
condition of the Company.
THREE MONTHS ENDED MAY 25, 1996, AS COMPARED TO THE RESULTS OF OPERATIONS FOR
THE THREE MONTHS ENDED MAY 27, 1995.
Sales for the three months ended May 25, 1996 were $97,302, or $41,708
(75%) greater than sales of $55,594 for the comparable period in the prior
year. The increase in revenues during fiscal 1997 is attributable to
substantially higher unit volume shipments of all of the Company's products as
a result of improving industry conditions. $26,758 of the $41,708 increase in
revenues for the quarter was due to increased seating product revenues
directly related to the acquisition of Burns Aerospace Corporation ("Burns")
which was completed on January 24, 1996. Excluding the effect of the Burns
acquisition revenues were up 26.9%.
At May 25, 1996 the Company's backlog stood at approximately $475,000, up
from approximately $450,000 at February 24, 1996 and $350,000 at May 27, 1995.
Gross profit was $32,547 (33.4% of sales) for the three months ended May
25, 1996 and was $14,105 greater than the comparable period in the prior year
of $18,442, which represented 33.2% of sales. The increase in gross profit is
the result of the higher sales volume.
Selling, general and administrative expenses were $11,585 (11.9% of
sales) for the three months ended May 25, 1996. This was $3,285 higher than
the comparable period in the prior year of $8,300 (14.9% of sales) and is
primarily due to the acquisition of Burns.
Research, development and engineering expense was $9,727 or 10.0% of
sales for the three months ended May 25, 1996. For the comparable period in
the prior year, research, development and engineering expense was $13,303 or
23.9% of sales. The decrease in expense is the result of a decrease in the
level of activity during the quarter associated with MDDS, offset somewhat by
an increase in product development activity in the seating products division.
Amortization expense for the quarter ended May 25, 1996 of $2,708 was
$375 greater than the amount recorded in the first quarter of fiscal 1995.
This increase is attributable to the Burns acquisition.
Operating expenses in total were essentially unchanged and represent
24.7% of sales this year verses 43.1% in the prior year.
Interest expense, net was $6,935 for the three months ended May 25, 1996,
or $2,747 higher than interest expense of $4,188 recorded for the comparable
period in the prior year, and is due in large part to the increase in the
Company's long-term debt as a result of the Burns acquisition and the upturn
in the Company's business.
<PAGE>
BE AEROSPACE, INC.
THREE MONTHS ENDED MAY 25, 1996, AS COMPARED TO THE RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MAY 27, 1995. (Continued)
Earnings before income taxes and cumulative effect of accounting change
of $1,592 for the quarter ended May 25, 1996 was $11,274 greater than the loss
before taxes and cumulative effect of the accounting change in the prior year.
Income taxes for the quarter ended May 25, 1996 was $159 or 10% of earnings
before income taxes.
Net earnings were $1,433 or $.08 per share for the three months ended May
25, 1996, as compared to a net loss of $33,014 or ($2.05) per share for the
comparable period in the prior year, which includes the cumulative effect of
accounting change of $23,332.
LIQUIDITY AND CAPITAL RESOURCES
BEA's primary requirements for working capital have been directly related
to its accounts receivable and inventory levels, costs associated with the
design and development of the MDDS and other products and scheduled interest
payments on its indebtedness. BEA's working capital was $50,737, as of May 25,
1996, compared to $41,824 as of February 24, 1996.
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. At May 25, 1996
indebtedness in an aggregate principal amount of approximately $38,000,000,
plus letters of credit amounting to approximately $6,000,000, were outstanding
under the Bank Credit Facility. The Company's liquidity requirements consist
primarily of working capital needs and scheduled payments of interest on its
indebtedness and costs associated with integrating Burns.
The Company believes that cash flow from operations and availability
under the Bank Credit Facility provide adequate funds for its working capital
needs, planned capital expenditures and debt service obligations through the
term of the Bank Credit Facility, which expires in January, 2001. The Company
believes that it will be able to refinance its indebtedness prior to its
maturity, 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.
This report includes 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" in the Company's
Registration Statement on Form S-4 dated April 3, 1996, the Company's Form
10-K for the year ended February 24, 1996, as well as future events that have
the effect of reducing the Company's available cash balances, such as
unexpected operating losses or delays in the integration of the Company's
seating business or the delivery of the MDDS interactive video system or
capital expenditures or cash expenditures related to possible future
acquisitions.
<PAGE>
BE AEROSPACE, INC.
PART II -- OTHER INFORMATION
<TABLE>
<CAPTION>
<S> <C> <C>
Item 1. Legal Proceedings Not applicable.
Item 2. Changes in Securities Not applicable.
Item 3. Defaults Upon Senior Securities Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders Not applicable.
Item 5. Other Information None.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits. None
</TABLE>
<PAGE>
BE AEROSPACE, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BE AEROSPACE, INC.
Date: June 21, 1996 By: /s/ Robert J. Khoury
----------------------------
Robert J. Khoury
Vice Chairman and
Chief Executive Officer
Date: June 21, 1996 By: /s/ Thomas P. McCaffrey
-----------------------
Thomas P. McCaffrey
Vice President &
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-22-1997
<PERIOD-END> MAY-25-1996
<CASH> 6,151
<SECURITIES> 0
<RECEIVABLES> 68,579
<ALLOWANCES> (5,156)
<INVENTORY> 72,645
<CURRENT-ASSETS> 150,688
<PP&E> 113,920
<DEPRECIATION> (30,002)
<TOTAL-ASSETS> 428,925
<CURRENT-LIABILITIES> 99,951
<BONDS> 272,104
0
0
<COMMON> 165
<OTHER-SE> 45,792
<TOTAL-LIABILITY-AND-EQUITY> 428,925
<SALES> 97,302
<TOTAL-REVENUES> 97,302
<CGS> 64,755
<TOTAL-COSTS> 88,775
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,935
<INCOME-PRETAX> 1,592
<INCOME-TAX> 159
<INCOME-CONTINUING> 1,433
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,433
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
</TABLE>
