BE AEROSPACE, INC.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended August 29, 1998
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)
(561) 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
24,447,963 shares were outstanding as of December 16, 1998.
<PAGE>
Item 1. Financial Statements
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED BALANCE SHEETS(UNAUDITED)
(Dollars in thousands, except share data)
August 29, February 28,
1998 1998
(As restated,
see Note 7.)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 29,203 $ 164,685
Accounts receivable - trade, less allowance for doubtful
accounts of $4,817 (August 29, 1998)
and $2,190 (February 28, 1998) 113,524 87,931
Inventories, net 188,668 121,728
Other current assets 9,506 7,869
------------- --------------
Total current assets 340,901 382,213
------------- --------------
PROPERTY AND EQUIPMENT, net 136,873 103,821
INTANGIBLES AND OTHER ASSETS, net 423,394 195,723
------------- --------------
$ 901,168 $ 681,757
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 56,874 $ 47,858
Accrued liabilities 93,580 38,566
Current portion of long-term debt 7,983 33,285
------------- --------------
Total current liabilities 158,437 119,709
------------- --------------
LONG-TERM DEBT 464,813 349,557
DEFERRED INCOME TAXES 1,161 1,207
OTHER LIABILITIES 19,512 14,509
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 1,000,000 shares
authorized; no shares outstanding - -
Common stock, $.01 par value; 50,000,000 shares
authorized; 28,251,910 (August 29, 1998) and
22,891,918 (February 28, 1998) issued and outstanding 283 229
Additional paid-in capital 359,660 240,289
Accumulated deficit (100,094) (40,724)
Cumulative foreign exchange translation adjustment (2,604) (3,019)
-------------- ---------------
Total stockholders' equity 257,245 196,775
------------- --------------
$ 901,168 $ 681,757
============= ==============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------
August 29, August 30,
1998 1997
(As restated,
see Note 7.)
<S> <C> <C>
NET SALES $ 156,352 $ 119,843
COST OF SALES 96,752 75,694
----------- -----------
GROSS PROFIT 59,600 44,149
OPERATING EXPENSES:
Selling, general and administrative 19,042 15,032
Research, development and engineering 12,770 11,542
Amortization 5,381 2,676
In-process research and development and
acquisition-related expenses 46,902 -
----------- ------------
Total operating expenses 84,095 29,250
----------- ------------
OPERATING EARNINGS (LOSS) (24,495) 14,899
INTEREST EXPENSE, net 8,664 5,401
----------- -----------
EARNINGS (LOSS) BEFORE INCOME TAXES (33,159) 9,498
INCOME TAXES 2,336 1,421
----------- -----------
NET EARNINGS (LOSS) $ (35,495) $ 8,077
============ ============
BASIC NET EARNINGS (LOSS) PER COMMON SHARE $ (1.44) $ .36
============ ============
DILUTED NET EARNINGS (LOSS) PER COMMON SHARE $ (1.44) $ .34
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
---------------------------------
August 29, August 30,
1998 1997
(As restated,
see Note 7.)
<S> <C> <C>
NET SALES $ 296,343 $ 233,689
COST OF SALES 184,863 148,477
----------- ----------
GROSS PROFIT 111,480 85,212
OPERATING EXPENSES:
Selling, general and administrative 37,041 27,935
Research, development and engineering 24,742 22,550
Amortization 9,414 5,529
In-process research and development and
acquisition-related expenses 79,155 -
----------- ----------
Total operating expenses 150,352 56,014
----------- ----------
OPERATING EARNINGS (LOSS) (38,872) 29,198
INTEREST EXPENSE, net 16,446 11,531
----------- ----------
EARNINGS (LOSS) BEFORE INCOME TAXES (55,318) 17,667
INCOME TAXES 4,052 2,647
----------- ---------
NET EARNINGS (LOSS) $ (59,370) $ 15,020
============ ==============
BASIC NET EARNINGS (LOSS) PER COMMON SHARE $ (2.49) $ .68
============ ==============
DILUTED NET EARNINGS (LOSS) PER COMMON SHARE $ (2.49) $ .64
============ =============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
-----------------------------------
August 29, August 30,
1998 1997
(As restated,
see Note 7.)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ (59,370) $ 15,020
Adjustments to reconcile net earnings (loss) to net cash flows
provided by operating activities:
In-process research and development and acquisition-
related expenses 79,155 -
Depreciation and amortization 18,312 12,465
Deferred income taxes (70) (344)
Non-cash employee benefit plan contributions 1,055 804
Changes in operating assets and liabilities, net of effects from
acquisitions:
Accounts receivable 6,163 (388)
Inventories (45,435) (5,332)
Other current assets (1,115) (3,011)
Accounts payable 4,538 2,918
Accrued liabilities 8,552 (1,606)
---------- ------------
Net cash flows provided by operating activities 11,785 20,526
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (20,210) (11,656)
Change in intangible and other assets (3,991) (2,464)
Acquisitions, net of cash acquired (209,636) -
----------- ------------
Net cash flows used in investing activities (233,837) (14,120)
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under bank credit facilities 119,542 (957)
Proceeds from issuances of stock, net of expenses 2,604 7,455
Principal payments on long-term debt (35,962) -
----------- -----------
Net cash flows provided by financing activities 86,184 6,498
---------- ------------
Effect of exchange rate changes on cash flows 386 (177)
---------- ------------
Net increase (decrease) in cash and cash equivalents (135,482) 12,727
Cash and cash equivalents, beginning of period 164,685 44,149
---------- ------------
Cash and cash equivalents, end of period $ 29,203 $ 56,876
========== ===========
Supplemental disclosures of cash flow information:
Cash paid during period for:
Interest $ 4,897 $ 11,343
Income taxes, net $ 460 $ 568
Schedule of noncash transactions:
Fair market value of assets acquired in acquisitions $ 372,359 -
Cash paid for businesses acquired in acquisitions $ 328,459 -
Common stock issued in connection with acquisitions $ 117,213 -
Liabilities assumed and accrued acquisition costs
incurred in connection with acquisitions $ 43,900 -
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
Notes to Condensed Consolidated Financial Statements August 29, 1998 and
August 30, 1997
(UNAUDITED - DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Note 1. Basis of Presentation
The condensed consolidated financial statements of BE Aerospace,
Inc., its wholly-owned and majority-owned subsidiaries (the "Company"
or "B/E") have been prepared by the Company and are unaudited
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information related to the Company's
organization, significant accounting policies and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted. In the opinion of management, these unaudited
condensed consolidated financial statements reflect all material
adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the results of operations and
statements of financial position for the interim periods presented.
These results are not necessarily indicative of a full year's results
of operations.
Although the Company believes that the disclosures provided are
adequate to make the information presented not misleading, these
unaudited interim condensed consolidated financial statements should
be read in conjunction with the audited consolidated financial
statements and notes thereto included in the Company's Annual Report
on Form 10-K/A for the fiscal year ended February 28, 1998.
Note 2. Fiscal 1999 Acquisitions
On April 13, 1998, the Company completed its acquisition of Puritan
Bennett Aero Systems Co. ("PBASCO") for approximately $69,700 in cash
and the assumption of liabilities aggregating approximately $2,810.
PBASCO is the leading manufacturer of commercial aircraft oxygen
delivery systems and "WEMAC" air valve components and in addition
supplies overhead lights and switches, crew masks and protective
breathing devices for both commercial and general aviation aircraft.
During the first quarter of fiscal 1999, the Company recorded a
charge of $13,000 associated with the PBASCO transaction, for the
write-off of in-process research and development and
acquisition-related expenses.
On April 21, 1998, the Company acquired substantially all of the
assets of Aircraft Modular Products ("AMP") for approximately
$117,300 in cash and assumed certain liabilities aggregating
approximately $2,840. AMP is a leading manufacturer of cabin interior
products for general aviation (business jet) and commercial-type VIP
aircraft, providing a broad line of products including seating,
sidewalls, bulkheads, credenzas, closets, galley structures,
lavatories, tables and sofas; along with related spare parts. During
the first quarter of fiscal 1999, the Company recorded a charge of
$19,253 associated with the AMP transaction, for the write-off of
in-process research and development and acquisition-related expenses.
<PAGE>
On August 7, 1998, the Company acquired all of the capital stock of
SMR Aerospace, Inc. and its affiliates, SMR Developers LLC and SMR
Associates (together "SMR") for an aggregate purchase price of
approximately $141,500 and the assumption of liabilities aggregating
approximately $21,100. The Company paid for the acquisition of SMR by
issuing four million shares (the "SMR Shares") of Company stock (then
valued at approximately $30 per share) to the former stockholders of
SMR and paying them $2,000 in cash. The Company also paid $22,000 in
cash to the employee stock ownership plan of a subsidiary of SMR
Aerospace to purchase the minority equity interest in such subsidiary
held by the ESOP. The Company agreed to register for sale with the
Securities and Exchange Commission the SMR Shares. If the net
proceeds from the sale of the shares, which included the $2,000 in
cash already paid, was less than $120,000, subject to adjustment (the
purchase price adjustments were finalized in November 1998 and
aggregated approximately $500), the Company agreed to pay such
difference to the selling stockholders in cash. The Company's
obligations to the selling stockholders were secured by an
irrevocable stand-by letter of credit from The Chase Manhattan Bank
in favor of the selling stockholders. This letter of credit could
have been drawn upon after December 31, 1998 if the selling
stockholders had not received net proceeds of $120,000, including the
$2,000 in cash already paid, from the sale of the SMR Shares. Because
of the market price for the Company's common stock and the Company's
payment obligation to the selling stockholders described above, the
Company decided to repurchase the SMR Shares with approximately
$118,000, (representing the net proceeds of $120,000 the Company was
obligated to pay the selling stockholders, less the $2,000 in cash
the Company already paid them) of the proceeds from the sale of 9
1/2% Senior Subordinated Notes instead of registering them for sale.
In connection with the repurchase of the SMR Shares, the irrevocable
stand-by letter of credit was returned to The Chase Manhattan Bank.
SMR is a leader in providing design, integration, installation, and
certification services for commercial aircraft passenger cabin
interiors. SMR provides a broad range of interior reconfiguration
services that allow airlines to change the size of certain classes of
service, modify and upgrade the seating, install telecommunications
or entertainment options, relocate galleys, lavatories, and overhead
bins and install crew rest compartments. SMR is also a supplier of
structural design and integration services, including airframe
modifications for passenger-to-freighter conversions. In addition,
SMR provides a variety of niche products and components that are used
for reconfigurations and conversions. SMR's services are performed
primarily on an aftermarket basis and its customers include major
airlines such as United Airlines, Japan Airlines, British Airways,
Air France, Cathay Pacific and Qantas, as well as Boeing, Airborne
Express and Federal Express. During the second quarter of fiscal
1999, the Company recorded a charge of $46,902 associated with the
SMR transaction, for the write-off of in-process research and
development and acquisition-related expenses.
<PAGE>
As a result of the acquisitions of PBASCO, AMP and SMR, the Company
has recorded a charge aggregating $79,155 for the write-off of
acquired in-process research and development and acquisition-related
expenses associated with the transactions. In-process research and
development expenses arose from new product development projects that
were in various stages of completion at the respective acquired
enterprises at the date of acquisition. In-process research and
development expenses for products under development at the date of
acquisition that had not established technological feasibility and
for which no alternative use was identified were written off. The
in-process research and development projects have been valued based
on expected net cash flows over the product life, costs to complete,
the stage of completion of the projects, the result of which has been
discounted to reflect the inherent risk associated with the
completion of the projects, and the realization of the efforts
expended.
New product development projects underway at PBASCO at the date of
acquisition included, among others, modular drop boxes, passenger and
flight crew oxygen masks, oxygen regulators and generators,
protective breathing equipment, on board oxygen generating systems,
reading lights, passenger service units, external viewing systems for
executive and commercial aircraft and cabin monitoring systems.
In-process research and development and acquisition-related expenses
associated with PBASCO were approximately $13,000. The Company has
determined that these projects were approximately 28% complete at the
date of acquisition, and estimates that the cost to complete these
projects will aggregate approximately $11,800, and will be incurred
over a four year period.
New product development projects underway at AMP at the date of
acquisition included, among others, executive aircraft interior
products for the Bombardier Global Express, Boeing Business Jet,
Airbus Corporate Jet, Cessna Citation 560XL, Cessna Citation 560
Ultra, Visionaire Vantage and Lear 60, as well as other specific
executive aircraft seating products. In-process research and
development and acquisition-related expenses associated with AMP were
approximately $19,253. The Company has determined that these projects
were approximately 25% complete at the date of acquisition, and
estimates that the cost to complete these projects will aggregate
approximately $4,800, and will be incurred over a two year period.
New product development projects underway at SMR at the date of
acquisition included, among others, pneumatic and electrical deicing
systems for the substantial majority of all executive and commuter
aircraft types, crew rest modules for selected wide-body aircraft,
passenger to freighter and combi to freighter conversion kits for
selected wide-body aircraft, hovercraft skirting devices, cargo nets,
and smoke barriers. In-process research and development and
acquisition-related expenses associated with SMR were approximately
$46,902. The Company has determined that these projects were
approximately 60% complete at the date of acquisition, and estimates
that the cost to complete these projects will aggregate approximately
$2,700, and will be incurred over a two year period.
<PAGE>
Uncertainties that could impede progress to a developed technology
include (i) availability of financial resources to complete the
development, (ii) regulatory approval (FAA, CAA, etc.) required for
each product before it can be installed on an aircraft, (iii) continued
economic feasibility of developed technologies, (iv) customer
acceptance and (v) general competitive conditions in the industry.
There can be no assurance that the in-process research and development
projects will be successfully completed and commercially introduced.
Note 3. Comprehensive Income
In the first quarter of fiscal 1999, the Company adopted Statement of
Financial Accounting Standards ("SFAS" or "Statement") No. 130,
"Reporting Comprehensive Income," which establishes standards for the
reporting and display of comprehensive income. Comprehensive income
is defined as all changes in a company's net assets except changes
resulting from transactions with shareholders. It differs from net
income in that certain items currently recorded to equity would be a
part of comprehensive income. The following table sets forth the
computation of comprehensive income for the periods presented:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------ --------------------------
August 29, August 30, August 29, August 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net earnings (loss) $ (35,495) $ 8,077 $ (59,370) $ 15,020
Other comprehensive income:
Foreign exchange translation adjustment 943 (2,374) 415 (2,742)
-------------- --------- ----------- ---------
Comprehensive income (loss) $ (34,552) $ 5,703 $ (58,955) $ 12,278
============= ======= =========== =========
</TABLE>
Note 4. Segment Information
In June 1997, the Financial Accounting Standards Board issued SFAS
No. 131, "Disclosures about Segments of an Enterprise and Related
Information." SFAS No. 131 redefines how operating segments are
determined and requires disclosure of certain financial and
descriptive information about a company's operating segments. The
Company believes the required segment information disclosure under
SFAS No. 131 will be more comprehensive than previously provided,
including expanded disclosure of income statement and balance sheet
items. The Statement is effective for fiscal years beginning after
December 15, 1997; however, application is not required for interim
periods in the initial year of its application. The Company adopted
the Statement effective March 1, 1998.
<PAGE>
Note 5. Long-Term Debt
8% Senior Subordinated Notes - In February 1998, the Company sold
$250,000 of 8% Senior Subordinated Notes, priced to yield 8.02% (the
"8% Notes"). In conjunction with the sale of the 8% Notes, the
Company initiated a tender offer for its 9 3/4% Notes. The net
proceeds from the offering of approximately $240,419 were used for
the tender offer (which expired on February 25, 1998) in which
approximately $101,808 of the 9 3/4% Notes were retired; the
remaining $23,192 of the 9 3/4% Notes were redeemed on March 16,
1998.
Credit Facilities - In August 1998, the Company amended its credit
facilities with The Chase Manhattan Bank (the "Bank Credit
Facility"). The Bank Credit Facility consists of a $100,000 revolving
credit facility (of which $50,000 may be utilized for acquisitions)
and an acquisition facility of up to $100,000. An interim revolving
credit commitment of $120,000 available for the irrevocable letter of
credit in connection with the SMR acquisition, which was added in the
August 1998 amendment, was returned to The Chase Manhattan Bank and
canceled on November 2, 1998 when the SMR shares were repurchased.
The revolving credit facility expires in April 2004 and the
acquisition facility is amortizable over five years beginning in
April 1999. The Bank Credit Facility is collateralized by the
Company's accounts receivable, inventories and by substantially all
of its other personal property. The Bank Credit Facility contains
customary affirmative covenants, negative covenants and conditions of
borrowing, all of which were met by the Company as of August 29,
1998. At August 29, 1998, indebtedness under the existing Bank Credit
Facility consisted of letters of credit aggregating approximately
$124,000 (including the $120,000 SMR letter of credit) and
outstanding borrowings under the revolving and acquisition facilities
credit aggregating $121,000 (bearing interest at LIBOR plus 1.50%, as
defined).
<PAGE>
Note 6. Earnings (Loss) Per Share
The following table sets forth the computation of basic and diluted
earnings (loss) per share for the three months and six months ended
August 29, 1998 and August 30, 1997.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
---------------------------- ------------------------------
August 29, August 30, August 29, August 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Numerator - Net earnings (loss) $ (35,495) $ 8,077 $ (59,370) $ 15,020
============ ========= =========== ========
Denominator:
Denominator for basic earnings (loss) per
share -
Weighted average shares 24,575 22,269 23,822 22,103
Effect of dilutive securities -
Employee stock options - 1,258 - 1,390
-------------- ---------- ----------- --------
Denominator for diluted earnings (loss) per
share -
Adjusted weighted average shares 24,575 23,527 23,822 23,493
============ ========== =========== ========
Basic earnings (loss) per share $ (1.44) $ .36 $ (2.49) $ .68
============= ============ =========== ========
Diluted earnings (loss) per share $ (1.44) $ .34 $ (2.49) $ .64
============= ============ =========== ========
</TABLE>
Note 7. Subsequent Event
On September 3, 1998, the Company acquired substantially all of the
galley equipment assets and assumed related liabilities of C F Taylor
Interiors Limited and acquired the common stock of C F Taylor (Wales)
Limited (collectively "C F Taylor"), both wholly owned subsidiaries of
EIS Group PLC, for a total cash purchase price of approximately
(pound)14,900 (approximately $25,100), subject to adjustment. C F
Taylor is a manufacturer of galley equipment for both narrow and
wide-body aircraft, including galley structures, crew rests and related
spare parts.
Note 8. Restatement
Subsequent to the issuance of the Company's August 29, 1998 financial
statements, the Company's management revised the amount of the purchase
price allocated to in-process research and development relating to the
acquisitions of PBASCO and AMP during April 1998 and SMR during August
1998 (see Note 2). As a result, the Company's financial statements for
the three-month and six-month periods ended August 29, 1998 have been
restated to reduce the in-process research and development charge by
$90,000 and to increase intangible assets by a like amount. The change
had no impact on net cash flows provided by operations. The effect of
the restatement on the accompanying financial statements is as follows:
<PAGE>
<TABLE>
<CAPTION>
August 29, 1998 August 29, 1998
As restated As previously reported
------------------------- ----------------------------
<S> <C> <C>
BALANCE SHEET:
Intangibles and other assets, net $ 423,394 $ 335,447
Total assets 901,168 813,221
Accrued liabilities 93,580 93,928
Total current liabilities 158,437 158,785
Accumulated deficit (100,094) (188,389)
Total stockholders' equity 257,245 168,950
Total liabilities and stockholders' equity 901,168 813,221
3 months ended 3 months ended
August 29, 1998 August 29, 1998
STATEMENT OF OPERATIONS: As restated As previously reported
------------------------- ----------------------------
Amortization 5,381 3,919
In-process research and development and
acquisition-related expenses 46,902 70,902
Total operating expenses 84,095 106,633
Operating earnings (loss) (24,495) (47,033)
Earnings (loss) before income taxes (33,159) (55,697)
Income taxes 2,336 2,585
Net earnings (loss) (35,495) (58,282)
Basic net earnings (loss) per common share (1.44) (2.37)
Diluted net earnings (loss) per common share (1.44) (2.37)
Six months Six months
August 29, 1998 August 29, 1998
STATEMENT OF OPERATIONS: As restated As previously reported
------------------------- ----------------------------
Amortization 9,414 7,360
In-process research and development and
acquisition-related expenses 79,155 169,155
Total operating expenses 150,352 238,298
Operating earnings (loss) (38,872) (126,818)
Earnings (loss) before income taxes (55,318) (143,264)
Income taxes 4,052 4,401
Net earnings (loss) (59,370) (147,665)
Basic net earnings (loss) per common share (2.49) (6.20)
Diluted net earnings (loss) per common share (2.49) (6.20)
</TABLE>
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 August 29, 1998, as
compared to the Company's results of operations for the three months
ended August 30, 1997. The discussion and analysis then addresses the
results of the Company's operations for the six months ended August 29,
1998, as compared to the Company's results of operations for the six
months ended August 30, 1997. The discussion and analysis then
addresses the liquidity and financial condition of the Company and
other matters. As discussed in notes to the financial statements the
Company restated its August 29, 1998 financial statements to reduce the
amount of the in-process research and development charge by $90,000
resulting from the acquisitions of PBASCO and AMP during April 1998 and
SMR in August 1998 (see Note 2).
<PAGE>
On April 13, 1998, the Company completed its acquisition of Puritan
Bennett Aero Systems Co. ("PBASCO") for approximately $69,700 in cash and
the assumption of liabilities aggregating approximately $2,810. PBASCO is
the leading manufacturer of commercial aircraft oxygen delivery systems
and "WEMAC" air valve components and in addition supplies overhead lights
and switches, crew masks and protective breathing devices for both
commercial and general aviation aircraft.
On April 21, 1998, the Company acquired substantially all of the assets
of Aircraft Modular Products ("AMP") for approximately $117,300 in cash
and assumed certain liabilities aggregating approximately $2,840. AMP is
a leading manufacturer of cabin interior products for general aviation
(business jet) and commercial - type VIP aircraft, providing a broad line
of products including seating, sidewalls, bulkheads, credenzas, closets,
galley structures, lavatories, tables and sofas; along with related spare
parts.
On August 7, 1998, the Company acquired all of the capital stock of SMR
Aerospace, Inc. and its affiliates, SMR Developers LLC and SMR Associates
(together "SMR") for an aggregate purchase price of approximately
$141,500 and the assumption of liabilities aggregating approximately
$21,100. SMR is a leader in providing design, integration, installation
and certification services for commercial aircraft passenger cabin
interiors. SMR provides a broad range of interior reconfiguration
services that allow airlines to change the size of certain classes of
service, modify and upgrade the seating, install telecommunications or
entertainment options, relocate galleys, lavatories, and overhead bins
and install crew rest compartments. SMR is also a supplier of structural
design and integration services, including airframe modifications for
passenger-to-freighter conversions. In addition, SMR provides a variety
of niche products and components that are used for reconfigurations and
conversions. SMR's services are performed primarily on an aftermarket
basis and its customers include major airlines such as United Airlines,
Japan Airlines, British Airways, Air France, Cathay Pacific and Qantas,
as well as Boeing, Airborne Express and Federal Express.
As a result of the acquisitions of PBASCO, AMP and SMR, the Company has
recorded a charge of $79,155 for the write-off of acquired in-process
research and development and acquisition-related expenses associated
with these and other transactions. In-process research and development
expenses arose from new product development projects that were in
various stages of completion at the respective acquired enterprises at
the dates of acquisitions. In-process research and development expenses
for products under development at the date of acquisition that had not
established technological feasibility and for which no alternative use
was identified were written off. The in-process research and
development projects have been valued based on expected net cash flows
over the product life, costs to complete, the stage of completion of
the projects, the result of which has been discounted to reflect the
inherent risk associated with the completion of the projects, and the
realization of the efforts expended.
<PAGE>
New product development projects underway at PBASCO at the date of
acquisition included, among others, modular drop boxes, passenger and
flight crew oxygen masks, oxygen regulators and generators, protective
breathing equipment, on board oxygen generating systems, reading lights,
passenger service units, external viewing systems for executive and
commercial aircraft and cabin monitoring systems. In-process research and
development and acquisition-related expenses associated with PBASCO were
approximately $13,000. The Company has determined that these projects
were approximately 28% complete at the date of acquisition, and estimates
that the cost to complete these projects will aggregate approximately
$11,800, and will be incurred over a four year period.
New product development projects underway at AMP at the date of
acquisition included, among others, executive aircraft interior products
for the Bombardier Global Express, Boeing Business Jet, Airbus Corporate
Jet, Cessna Citation 560XL, Cessna Citation 560 Ultra, Visionaire Vantage
and Lear 60, as well as other specific executive aircraft seating
products. In-process research and development and acquisition-related
expenses associated with AMP were approximately $19,253. The Company has
determined that these projects were approximately 25% complete at the
date of acquisition, and estimates that the cost to complete these
projects will aggregate approximately $4,800, and will be incurred over a
two year period.
New product development projects underway at SMR at the date of
acquisition included, among others, pneumatic and electrical deicing
systems for the substantial majority of all executive and commuter
aircraft types, crew rest modules for selected wide-body aircraft,
passenger to freighter and combi to freighter conversion kits for
selected wide-body aircraft, hovercraft skirting devices, cargo nets, and
smoke barriers. In-process research and development and
acquisition-related expenses associated with SMR were approximately
$46,902. The Company has determined that these projects were
approximately 60% complete at the date of acquisition, and estimates that
the cost to complete these projects will aggregate approximately $2,700,
and will be incurred over a two year period.
Uncertainties that could impede progress to a developed technology
include (i) availability of financial resources to complete the
development, (ii) regulatory approval (FAA, CAA, etc.) required for each
product before it can be installed on an aircraft, (iii) economic
feasibility of developed technologies, (iv) customer acceptance and (v)
general competitive conditions in the industry. There can be no assurance
that the in-process research and development projects will be
successfully completed and commercially introduced.
The acquisition of PBASCO, AMP and SMR are collectively referred to as
the "Acquisitions." The Acquisitions have been accounted for using
purchase accounting.
Recently, Rockwell Collins has entered the in-flight entertainment
industry by purchasing Hughes Avicom, and in doing so has changed the
competitive landscape for this line of business. The Company has
evaluated the impact of the changing market conditions, and has
<PAGE>
determined that the long-term success of this line of business may be
enhanced by teaming with a partner with substantial economic and
technology resources. In connection therewith, the Company may monetize a
portion, or if no suitable partner can be found, all of its investment in
its in-flight entertainment business.
<PAGE>
THREE MONTHS ENDED AUGUST 29, 1998, AS COMPARED TO THE RESULTS OF
OPERATIONS FOR THE THREE MONTHS ENDED AUGUST 30, 1997
Net sales for the fiscal 1999 three-month period were $156,352, or
$36,509 (30%) greater than sales of $119,843 for the comparable period in
the prior year. The Acquisitions accounted for a substantial portion of
the increase in revenues during the quarter ended August 29,1998; AMP and
PBASCO contributed approximately $22,700, with SMR adding $6,000 of
revenues. Internal growth during the quarter was unusually low due to
uneven airline scheduling requirements. The Company does not believe this
period is reflective of the Company's strong growth in orders and
backlog. As described below, the Company expects very significant
internal growth during the second half of the year and significant
internal growth for the full year. During the three months ended August
29, 1998 and year ended February 28, 1998, the Seating Products and
Interior Systems Groups, exclusive of businesses acquired during fiscal
1999, generated approximately 79% and 78% respectively, of total
revenues. During the eighteen month period August 29, 1998, these two
groups generated their highest bookings ever, with program awards of
approximately $764,909 from the world's airlines, including, among
others, Delta Air Lines, US Airways, British Airways, United Airlines,
American Airlines and Northwest Airlines. The Seating Products Group,
which generated approximately 52% of total revenues in fiscal 1998, had
its strongest booking quarter ever, with a book to bill ratio of
approximately 1.9:1 during the three months ended August 29, 1998. Total
bookings for the Company during the quarter were approximately $215,000,
and the Company experienced a book to bill ratio of almost 1.4:1. The
scheduled delivery dates for the Seating Products and Interior Systems
Groups along with scheduled deliveries for other programs form the basis
for management's expectation of very significant internal revenue growth
for the Company during the second half of fiscal 1999.
Gross profit was $59,600 (38.1% of sales) for the three months ended
August 29, 1998. This was $15,451, or 35%, greater than the comparable
period in the prior year of $44,149, which represented 36.8% of sales.
The increase in gross profit is attributable to the growth in revenues
and the improved gross margins.
Selling, general and administrative expenses were $19,042 (12.2% of
sales) for the three months ended August 29, 1998. This was $4,010, or
27%, greater than the comparable period in the prior year of $15,032
(12.5% of sales). The increase in selling, general and administrative
expenses was primarily due to inclusion of the relevant expenses from the
Acquisitions along with increases associated with internal growth.
Research, development and engineering expenses were $12,770 (8.2% of
sales) for the three months ended August 29, 1998, an increase of $1,228
over the comparable period in the prior year. The increase in research,
development and engineering expense in the current period is primarily
attributable to on-going new product development activities.
Amortization expense for the quarter ended August 29, 1998 of $5,381, was
$2,705 greater than the amount recorded in the second quarter of fiscal
1998 due to the Acquisitions.
<PAGE>
Based on management's assumptions,a portion of the Acquisitions'
purchase price was allocated to purchased research and development that
had not reached technological feasibility and had no future alternative
use. During the second quarter of fiscal 1999, the Company recorded a
charge of $46,902 for the write-off of in-process research and
development and acquisition-related expenses. Management estimates that
the research and development cost to complete the in-process research
and development related to projects underway at PBASCO, AMP and SMR
will aggregate approximately $19,300, which will be incurred over a two
to four year period.
Due, in part, to the acquisition-related charges of $46,902 during the
current quarter, the Company incurred an operating loss of $(24,495),
as compared to operating earnings of $14,899 during the comparable
period in the prior year. Operating earnings excluding the
acquisition-related charges were $22,407.
Interest expense, net was $8,664 for the three months ended August 29,
1998, or $3,263 greater than interest expense of $5,401 for the
comparable period in the prior year. The increase in interest expense is
due to the increase in the Company's long-term debt.
The loss before income taxes in the current quarter was $(33,159), (which
includes in-process research and development and acquisition-related
expenses of $46,902) as compared to earnings before incomes taxes of
$9,498 in the prior year's comparable period. Earnings before income
taxes excluding the acquisition-related charges were $13,743. Income tax
expense for the quarter ended August 29, 1998 was $2,336, as compared to
$1,421 in the prior year's comparable period.
The net loss for the quarter ended August 29, 1998 was $(35,495), or
$(1.44) per share (diluted), as compared to net earnings of $8,077, or
$.34 per share (diluted), for the comparable period in the prior year.
SIX MONTHS ENDED AUGUST 29, 1998, AS COMPARED TO THE RESULTS OF
OPERATIONS FOR THE SIX MONTHS ENDED AUGUST 30, 1997
Net sales for the fiscal 1999 six-month period were $296,343, an increase
of $62,654, or 27% over the comparable period in the prior year. The
recent acquisitions of PBASCO, AMP and SMR accounted for a substantial
portion of the increase in revenues during this period; AMP and PBASCO
generated approximately $36,700 of revenues, with SMR adding
approximately $6,000. Internal growth during the six month period was low
due to uneven airline scheduling requirements. The Company does not
believe this period is reflective of the Company's strong growth in
orders and backlog. As described below, the Company expects very
significant internal growth during the second half of the year and
significant internal growth for the full year. During each of the six
months ended August 29, 1998 and the year ended February 28, 1998, the
Seating Products and Interior Systems Groups, exclusive of businesses
acquired during fiscal 1999, generated approximately 78% of total
<PAGE>
revenues. During the eighteen month period ended August 29, 1998, these
two groups generated their highest bookings ever, with program awards of
approximately $764,909 from the world's airlines, including, among
others, Delta Air Lines, USAirways, British Airways, United Airlines,
American Airlines and Northwest Airlines. The Seating Products Group,
which generated approximately 52% of total revenues in fiscal 1998, had
its strongest booking quarter ever, with a book to bill ratio of
approximately 1.9:1; total bookings for the Company during the quarter
were approximately $215,000, and the Company experienced a book to bill
ratio of almost 1.4:1. Of the Company's backlog of approximately $700,000
as of August 29, 1998, approximately $302,000 is deliverable by the end
of fiscal 1999. The scheduled delivery dates for the Seating Products and
Interior Systems Groups along with scheduled deliveries for other
programs form the basis for management's expectation of very significant
internal growth for the Company during the second half of fiscal 1999.
Gross profit was $111,480 (37.6% of sales) for the six months ended
August 29, 1998. This was $26,268, or 31%, greater than the comparable
period in the prior year of $85,212, which represented 36.5% of sales.
The primary reasons for the improvement in gross margins include: (i)
shift in product mix in all divisions toward higher margins products,
(ii) higher unit volumes and (iii) a company-wide re-engineering program
which has resulted in higher employee productivity and better
manufacturing efficiency.
Selling, general and administrative expenses were $37,041 (12.5% of
sales) for the six months ended August 29, 1998. This was $9,106, or 33%,
greater than the comparable period in the prior year of$ 27,935
year of $27,935 (12.0% of sales). The increase in selling, general and
administrative expenses was primarily due to inclusion of the relevant
expenses of the acquired companies along with increases associated with
internal growth.
Research, development and engineering expenses were $24,742 (8.3% of
sales) for the six months ended August 29, 1998, an increase of $2,192
over the comparable period in the prior year. The increase in research,
development and engineering expense in the current period is primarily
attributable to on-going new product development activities.
Amortization expense for the six months ended August 29 1998 of $9,414
was $3,885 greater than the amount recorded in the comparable period
in the prior year.
Based on management's assumptions, a portion of the Acquisitions'
purchase price was allocated to purchased research and development that
had not reached technological feasibility and had no future alternative
use. During the first six months of fiscal 1999, the Company recorded a
charge of $79,155 for the write-off of the acquired in-process research
and development and acquisition-related expenses. Management estimates
that the research and development cost to complete the in-process
research and development related to projects underway at PBASCO, AMP
and SMR will aggregate approximately $19,300, which will be incurred
over a two to four year period.
<PAGE>
Due, in part, to the acquisition-related charges of $79,155 during the
six months ended August 29, 1998, the Company incurred an operating
loss of $(38,872), as compared to operating earnings of $29,198 in the
prior year. Operating earnings excluding the acquisition-related
charges were $40,283.
Interest expense, net was $16,446 for the six months ended August 29,
1998, or $4,915 greater than interest expense of $11,531 for the
comparable period in the prior year and is due to the increase in the
Company's long-term debt.
The loss before income taxes in the current quarter was $(55,318), (which
includes in-process research and development and acquisition-related
expenses of $79,155) as compared to earnings before incomes taxes of
$17,667 in the prior year's comparable period. Earnings before income
taxes excluding the acquisition-related charges were $23,837. Income tax
expense for the six months ended August 29, 1998 was $4,052, as compared
to $2,647 in the prior year's comparable period.
The net loss for the six months ended August 29, 1998 was $(59,370), or
$(2.49) per share (diluted), as compared to net earnings of $15,020, or
$.64 per share (diluted), for the comparable period in the prior year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity requirements consist of working capital needs,
ongoing capital expenditures and scheduled payments of interest and
principal on its indebtedness. B/E's primary requirements for working
capital have been directly related to increased accounts receivable and
inventory levels as a result of both acquisitions and revenue growth.
B/E's working capital was $182,464 as of August 29, 1998, as compared to
$262,504 as of February 28,1998.
At August 29, 1998, the Company's cash and cash equivalents were
$29,203, as compared to $164,685 at February 28, 1998. Cash provided
from operating activities was $11,785 for the six months ended August
29, 1998.
The primary source of cash during the six months en months ended August
29, 1998 was the net loss of $(59,370) offset by non-cash charges for
in-process research and development, depreciation, amortization and
acquisition-related expenses of $97,467, decreases in accounts
receivable of $6,163 and increases in accounts payable and accrued
liabilities of $13,090, offset by a use of cash of $46,550 related to
increases in inventories and other current assets. The primary use of
cash during the six month period was $209,636 for the acquisitions of
PBASCO, AMP and SMR.
<PAGE>
The Company's capital expenditures were $20,210 and $11,656 during the
six months ended August 29, 1998 and August 30, 1997, respectively. The
increase in capital expenditures was primarily attributable to (i) the
development of a new management information system to replace the
Company's existing systems, many of which were inherited in acquisitions,
and (ii) expenditures for plant modernization. The management information
system is expected to be installed over 18 months and will be year 2000
compliant. The Company anticipates ongoing annual capital expenditures of
approximately $35,000 for the next several years to be in line with the
expanded growth in business and the recent acquisitions.
In August 1998, the Company amended its credit facilities with The Chase
Manhattan Bank (the "Bank Credit Facility"). The Bank Credit Facility
consists of a $100,000 revolving credit facility (of which $50,000 may be
utilized for acquisitions) and an acquisition facility of up to $100,000.
An interim revolving credit commitment of $120,000 available for the
irrevocable letter of credit in connection with the SMR acquisition,
which was added in the August 1998 amendment, was returned to The Chase
Manhattan Bank and canceled on November 2, 1998 when the SMR shares were
repurchased. The revolving credit facility expires in April 2004 and the
acquisition facility is amortizable over five years beginning in April
1999. Current maturities associated with the Bank Credit Facility
aggregate $7,500.
The Bank Credit Facility is collateralized by the Company's accounts
receivable, inventories and by substantially all of its other personal
property. The Bank Credit Facility contains customary affirmative
covenants, negative covenants and conditions of borrowing, all of which
were met by the Company as of August 29, 1998. At August 29, 1998,
indebtedness under the existing Bank Credit Facility consisted of letters
of credit aggregating approximately $124,000 (including the $120,000 SMR
letter of credit) and outstanding borrowings under the revolving and
acquisition facilities credit aggregating $121,000 (bearing interest at
LIBOR plus 1.50%, as defined).
In February 1998, the Company sold $250,000 of 8% Senior Subordinated
Notes. In conjunction with the sale of the 8% Notes, the Company
initiated a tender offer for the $125,000 of 9 3/4% Senior Notes due
2003 (the "9 3/4% Notes"). The net proceeds from the offering of
approximately $240,419 were used (i) for the tender offer (which expired
on February 25, 1998) in which approximately $101,800 of the 9 3/4% Notes
were retired, (ii) to call the remaining 9 3/4% Notes on March 16, 1998
and (iii) together with the proceeds from the Bank Credit Facility, to
fund the acquisitions of PBASCO and AMP.
<PAGE>
Long-term debt consists of the Bank Credit Facility, 9 7/8% Senior
Subordinated Notes ("9 7/8% Notes") and 8% Notes. The 9 7/8% Notes and 8%
Notes mature on February 1, 2006 and March 1, 2008, respectively.
The Company believes that the 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 requirements 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, make planned capital expenditures, make scheduled payments
and 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.
DEFERRED TAX ASSETS
The Company has established a valuation allowance related to the
utilization of its deferred tax assets because of uncertainties that
preclude it from determining that it is more likely than not that it will
be able to generate taxable income to realize such assets during the
operating loss carryforward period, which expires in 2012. Such
uncertainties include recent cumulative losses by the Company, the highly
cyclical nature of the industry in which it operates, economic conditions
in Asia which is impacting the airframe manufacturers and the airlines,
the Company's high degree of financial leverage and risks associated with
the integration of acquisitions. The Company monitors these as well as
other positive and negative factors that may arise in the future, as it
assesses the necessity for a valuation allowance for its deferred tax
assets.
YEAR 2000 COSTS
The "Year 2000" issue is the result of computer programs using two digits
rather than four to define the applicable year. Because of this
programming convention, software, hardware or firmware may recognize a
date using "00" as the year 1900 rather than the year 2000. Use of
non-Year 2000 compliant programs could result in system failures,
miscalculations or errors causing disruptions of operations or other
business problems, including, among others, a temporary inability to
process transactions and invoices or engage in similar normal business
activities.
B/E Technology Initiatives Program - The Company has experienced
substantial growth as a result of having completed 15 acquisitions since
1989. Essentially all of the acquired businesses were operating on a
separate information system, using different hardware and software
platforms. In fiscal 1997, the Company undertook to examine its systems,
both pre-existing and acquired for Year 2000 compliance with a view to
replacing non-compliant systems and creating an integrated Year 2000
compliant system. In addition, the Company has undertaken a comprehensive
<PAGE>
program to address the Year 2000 issue with respect to the following
non-system areas: (i) network switching, (ii) the Company's
non-information technology systems (such as buildings, plant, equipment
and other infrastructure systems that may contain embedded
microcontroller technology) and (iii) the status of major vendors, third
party network service providers and other material service providers
(insofar as they relate to the Company's business). As explained below,
the Company's efforts to assess its systems as well as non-system areas
related to Year 2000 compliance involve (i) a wide-ranging assessment of
the Year 2000 problems that may affect the Company, (ii) the development
of remedies to address the problems discovered in the assessment phase
and (iii) testing of the remedies.
Assessment Phase - The Company has identified substantially all of its
major hardware and software platforms in use as well as the relevant
non-system areas described above. The Company has determined its systems
requirements on a company-wide basis and has begun the implementation of
an enterprise resource planning ("ERP") system, which is intended to be a
single system data base onto which all the Company's individual systems
will be migrated. In relation thereto, the Company has signed contracts
with substantially all of its significant hardware, software and other
equipment vendors and third party network service providers related to
Year 2000 compliance.
Remediation and Testing Phase - In implementing the ERP system, the
Company undertook and has completed a remediation and testing phase of
all internal systems, LANs, WANs and PBXs. These phases were intended to
address potential Year 2000 problems of the ERP system in relation to
both information technology, non-information technology systems and then
to demonstrate that the ERP software was Year 2000 compliant. ERP system
software was selected and applications implemented by a team of internal
users, outside system integrator specialists and ERP application experts.
The ERP system was tested between June 1997 to 1998 by this team of
experts. To date, four locations have been fully implemented on the ERP
system. This Company-wide solution is being deployed to all other B/E
sites in a manner that is designed to meet full implementation for all
non-Year 2000 compliant sites by the year 2000.
Program to Assess and Monitor Progress of Third Parties - As noted above,
B/E has also undertaken an action plan to assess and monitor the progress
of third party vendors in resolving Year 2000 issues. To date, the
Company has (I) obtained guidance from outside counsel to ensure legal
compliance, (ii) generated correspondence to each of its third party
vendors to assess their Y2K readiness, (iii) contracted a `Vendor 2K'
fully automated tracking program to track all correspondence to/from
vendors to track timely responses via an automatic computer generated
`trigger,' to provide an electronic folder for easy reference and
retention and to specifically track internally identified `critical'
vendors. The Company is also currently in the midst of developing an
internal consolidated database of enterprise wide vendors. Future actions
that the Company expects to take in connection with the monitoring of its
third party vendors include a target mailing of correspondence to vendors
scheduled for mid-January 1999. Replies from these vendors will be
requested to be returned within 20 days. The Company intends to continue
follow up with any vendors who indicate any material problems in their
replies. The Company believes that the majority of the required
compliance will be completed by the end of the first quarter of 1999.
<PAGE>
Contingency Plans - The Company has begun to analyze contingency plans to
handle worse case Year 2000 scenarios that the Company believes
reasonably could occur and, if necessary, intends to develop a timetable
for completing such contingency plans.
Costs Related to the Year 2000 Issue - Through August 29, 1998, the
Company has incurred approximately $17,000 in costs related to the
implementation of the ERP system. The Company currently estimates that
total ERP implementation will cost approximately $30,000 and a portion of
the costs have and will be capitalized to the extent permitted under
generally accepted accounting principles. The Company expects that it
will incur approximately $6,000 related to this program during calendar
1998 and an additional $7,000 during calendar 1999.
Risks Related to the Year 2000 Issue - Although the Company's efforts to
be Year 2000 compliant are intended to minimize the adverse effects of
the Year 2000 issue on the Company's business and operations, the actual
effects of the issue will not be known until 2000. Difficulties in
implementing the ERP system or failure by the Company to fully implement
the ERP system or the failure of its major vendors, third party network
service providers, and other material service providers and customers to
adequately address their respective Year 2000 issues in a timely manner
would have a material adverse effect on the Company's business, results
of operations, and financial condition. The Company's capital
requirements may differ materially from the foregoing estimate as a
result of regulatory, technological and competitive developments
(including market developments and new opportunities) in the Company's
industry.
This report includes forward-looking statements that involve risks and
uncertainties. The Company's actual experience may differ materially from
that anticipated in such statements. Factors that might cause such a
difference include, but are not limited to, those discussed in "Risk
Factors" contained in Exhibit 99.1 of the Company's Annual Report on Form
10-K/A for the fiscal year ended February 28, 1998, and in the Company's
Form S-3 dated September 11, 1998, Form S-3/A dated September 28, 1998
and September 30, 1998 and Form S-4 dated November 20, 1998, as well as
future events that have the effect of reducing the Company's available
cash balances, such as unexpected operating losses, delays in the
integration of the Company's acquired businesses, delivery of the
Company's MDDS interactive video system, delays in the implementation of
the Company's Year 2000 readiness program, customer delivery
requirements, new or expected refurbishments or cash expenditures related
to possible future acquisitions.
<PAGE>
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
1. Annual meting took place on August 5, 1998
2. Directors elected (Class I) - Jim C. Cowart, Paul E. Fulchino
and Brian H. Rowe
3. Directors whose term of office continued after meeting
(Class II and III) - Richard G. Hamermesh, Amin J. Khoury,
Robert J. Khoury and Hansjorg Wyss
4. MacBride Principles
1. Election of three Class I Directors
For Withheld
Jim C. Cowart 20,625,994 378,458
Paul E. Fulchino 20,609,916 394,536
Brian H. Rowe 20,616,736 387,716
2. Proposal to amend the Amended and Restated 1989 Stock Option Plan by
increasing the aggregate number of shares for grant thereunder
For Against Abstain Broker Non-Votes
18,639,270 2,316,129 49,053
3. Proposal to amend the 1991 Directors Stock Option Plan by increasing the
aggregate number of shares available for grant thereunder
For Against Abstain Broker Non-Votes
18,965,866 1,980,603 57,983
4. Proposal to adopt the MacBride Principles
For Against Abstain Broker Non-Votes
1,972,506 13,861,308 725,083 4,445,555
Item 5. Other Information None.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
1. Exhibit 27. Financial Data Schedule for the six months ended
August 29, 1998
b. Reports on Form 8-K
1. August 24, 1998 Acquisition of SMR Aerospace
2. November 18, 1998 Stock Rights Plan
<PAGE>
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: December 18, 1998 By: /s/ Robert J. Khoury
--------------------------------
Robert J. Khoury
Vice Chairman and
Chief Executive Officer
Date: December 18, 1998 By: /s/ Thomas P. McCaffrey
-----------------------------
Thomas P. McCaffrey
Corporate Senior Vice President of
Administration and Chief
Financial Officer
