BE AEROSPACE INC
S-3/A, 1998-09-28
PUBLIC BLDG & RELATED FURNITURE
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   As filed with the Securities and Exchange Commission on September 25, 1998.
                                                      Registration No. 333-60209
================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                              ---------------------
                                 Amendment No. 2
                                       to
                                    FORM S-3
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933
                              ---------------------


                               BE AEROSPACE, INC.


             (Exact name of registrant as specified in its charter)


           Delaware                                          06-1209796
(State or other jurisdiction of                           (I.R.S. Employer
incorporation or organization)                           Identification No.)

       1400 Corporate Center Way, Wellington, Florida 33414 (561) 791-5000
    (Address, including zip code, and telephone number, including area code,
                  of registrant's principal executive offices)
                            Edmund J. Moriarty, Esq.
                                 General Counsel
                            1400 Corporate Center Way
                              Wellington, FL 33414
                      (561) 791-5000 / (561) 791-3966 (fax)
 (Name, address, including zip code, and telephone number, including area code,
                             of agent for service)
                              ---------------------

                        Copies of all communications to:

       Rohan S. Weerasinghe, Esq.                 Winthrop G. Minot, Esq.
          Shearman & Sterling                          Ropes & Gray
          599 Lexington Avenue                   One International Place
        New York, New York 10022               Boston, Massachusetts 02110
 (212) 848-4000 / (212) 848-7179 (fax)     (617) 951-7000/(617) 951-7050 (fax)

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

      Approximate date of commencement of proposed sale to the public: From time
to time or at one time after the effective date of this Registration Statement.
      If the only  securities  being  registered  on this Form are being offered
pursuant to dividend or interest  reinvestment plans, please check the following
box. |_|
      If any of the securities  being  registered on this Form are to be offered
on a delayed or continuous  basis  pursuant to Rule 415 under the Securities Act
of 1933 (the "Securities Act") other than securities  offered only in connection
with dividend or interest reinvestment plans, check the following box. |X|
      If this Form is filed to register  additional  securities  for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list  the  Securities  Act  registration  statement  number  of the  earlier
effective registration statement for the same offering. |_|
      If this Form is a  post-effective  amendment filed pursuant to Rule 462(c)
under the  Securities  Act,  check the following box and list the Securities Act
registration  statement number of the earlier effective  registration  statement
for the same offering. |_|
      If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|

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

         The registrant hereby amends this  Registration  Statement on such date
or dates as may be necessary to delay its  effective  date until the  registrant
shall file a further amendment which specifically  states that this Registration
Statement shall  thereafter  become effective in accordance with Section 8(a) of
the Securities  Act of 1933 or until this  Registration  Statement  shall become
effective on such date as the Commission,  acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE>
Information   contained  herein  is  subject  to  completion  or  amendment.   A
registration  statement  relating  to these  securities  has been filed with the
Securities  and Exchange  Commission.  These  securities may not be sold nor may
offers to buy be accepted prior to the time the registration  statement  becomes
effective.  This  Prospectus  shall  not  constitute  an  offer  to  sell or the
solicitation of an offer to buy nor shall there be any sale of these  securities
in any State in which such offer,  solicitation  or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.

                 SUBJECT TO COMPLETION, DATED September 25, 1998

                                5,166,675 Shares
[Logo]                          BE AEROSPACE, INC.
                                  Common Stock
                                ----------------

         All of the shares (the "Shares") of Common Stock of BE Aerospace, Inc.,
a Delaware  corporation ("B/E" or the "Company"),  par value $.01 per share (the
"Common Stock"), offered hereby are being offered by certain stockholders listed
herein  (collectively,  the "Selling  Stockholders"),  who may from time to time
offer for sale shares of the Common  Stock.  The Selling  Stockholders  received
such shares in connection with the  acquisitions of either ASI, ALC or SMR (each
as defined  herein).  Except as provided by the SMR  Acquisition  Agreement  (as
defined herein),  the Company will not receive any proceeds from the sale by the
Selling Stockholders of the Shares. See "Selling Stockholders."

         Pursuant to the SMR  Acquisition  Agreement,  the Company has agreed to
use reasonable  efforts to effectuate a fully  underwritten  public  offering of
Common Stock that could include all or a portion of the Shares. The price in any
such  underwritten  offering would be negotiated with the  underwriters.  To the
extent any Shares are not sold by or for the account of the Selling Stockholders
in any such underwritten offering, or any of the Selling Stockholders choose not
to participate in such  underwritten  offering,  the Selling  Stockholders  have
advised  the  Company  that the  Shares of Common  Stock  offered  hereby may be
offered or sold by or for the account of such Selling Stockholders, from time to
time, to purchasers  directly,  or through brokers in brokerage  transactions on
the  Nasdaq  National  Market,  or to  underwriters  or  dealers  in  negotiated
transactions  or in a combination of such methods of sale, at fixed prices which
may be  changed,  at market  prices  prevailing  at the time of sale,  at prices
related to such prevailing market prices or at negotiated  prices.  From time to
time the  Selling  Stockholders  may engage in short  sales,  puts and calls and
other transactions in securities of the Company, or derivatives thereof, and may
sell and  deliver  the Shares in  connection  therewith.  Brokers,  dealers  and
underwriters  that  participate in the  distribution of the Common Stock offered
hereby  may be deemed to be  underwriters  under the  Securities  Act of 1933 as
amended, and together with the rules and regulations thereunder (the "Securities
Act"),  and any  discounts  or  commissions  received  by them from the  Selling
Stockholders  and any profit on the resale of the Common Stock offered hereby by
them may be  deemed  to be  underwriting  discounts  and  commissions  under the
Securities Act. The Selling  Stockholders may be deemed to be underwriters under
the  Securities  Act. The Company will bear all expenses in connection  with the
offering made hereunder, other than, in the case of the Selling Stockholders who
received  their shares in connection  with the  acquisitions  of ASI or ALC, all
applicable stock transfer taxes, brokerage  commissions,  underwriting discounts
or commissions and fees of such Selling Stockholders' counsel which will be paid
by such Selling  Stockholders,  pursuant to the relevant  Merger  Agreements (as
defined  herein).  The Company has agreed to indemnify the Selling  Stockholders
against certain liabilities,  including certain liabilities under the Securities
Act, in connection with the registration and the offering and sale of the Common
Stock offered hereby. See "Plan of Distribution."

         The Common  Stock is listed on the Nasdaq  National  Market  ("Nasdaq")
under the symbol  "BEAV." On September 24, 1998, the last reported sale price of
the Common Stock was $22.75 per share.

         If necessary, certain information relating to the Selling Stockholders,
the terms of each sale of Common  Stock  offered  hereby,  including  the public
offering price, the names of any underwriters or agents,  the  compensation,  if
any, of such  underwriters  or agents and the other terms in connection with the
sale of the Common Stock,  in respect of which this Prospectus is delivered will
be  set  forth  in  an  accompanying   Prospectus  Supplement  (the  "Prospectus
Supplement").

         FOR A  DISCUSSION  OF CERTAIN  FACTORS  THAT  SHOULD BE  CONSIDERED  BY
PROSPECTIVE  PURCHASERS OF THE COMMON STOCK OFFERED  HEREBY,  SEE "RISK FACTORS"
BEGINNING ON PAGE 5.

      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.
                                ----------------

                  The date of this Prospectus is       , 1998.
<PAGE>



No  person  has  been  authorized  to  give  any  information  or  to  make  any
representations  other than those contained in this Prospectus or any Prospectus
Supplement and, if given or made, such information or  representations  must not
be relied upon as having been  authorized.  This  Prospectus  and any Prospectus
Supplement does not constitute an offer to sell or the  solicitation of an offer
to buy any securities  other than the securities to which it relates or an offer
to  sell  or  the  solicitation  of an  offer  to  buy  such  securities  in any
circumstances  in which such offer or  solicitation  is  unlawful.  Neither  the
delivery  of this  Prospectus  or any  Prospectus  Supplement  nor any sale made
hereunder or thereunder shall, under any  circumstances,  create any implication
that  there has been no  change in the  affairs  of the  Company  since the date
hereof or thereof or that the information contained herein or therein is correct
as of any time subsequent to the date of such information.

                              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 reports, proxy statements, and other information with
the Securities and Exchange Commission (the "Commission").  Such reports,  proxy
statements  and other  information  can be  inspected  and  copied at the public
reference  facilities of the  Commission at Room 1024,  450 Fifth Street,  N.W.,
Washington,  D.C. 20549;  and at the  Commission's  regional offices at 500 West
Madison Street,  Suite 1400,  Chicago,  Illinois 60661 and 7 World Trade Center,
13th Floor,  New York,  New York 10048.  Copies of such material can be obtained
from the Public Reference  Section of the Commission at 450 Fifth Street,  N.W.,
Washington,  D.C. 20549 at prescribed  rates. Such material may also be accessed
electronically  by  means  of the  Commission's  home  page on the  Internet  at
http://www.sec.gov.

         The Company has filed with the Commission a  registration  statement on
Form S-3 (the "Registration Statement") under the Securities Act with respect to
the Common Stock to which this  Prospectus  relates.  This  Prospectus  does not
contain all the information  set forth in the  Registration  Statement,  certain
portions of which have been omitted as permitted by the rules and regulations of
the  Commission.  For further  information  with  respect to the Company and the
Common Stock,  reference is made to the  Registration  Statement,  including the
exhibits thereto. The Registration  Statement may be inspected by anyone without
charge at the principal office of the Commission in Washington, D.C., and copies
of all or part of it may be obtained  from the  Commission  upon  payment of the
prescribed fees.

                 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

         The  following   documents   heretofore   filed  with  the   Commission
(Commission  File  No.  000-18348)  by the  Company  are  incorporated  in  this
Prospectus by reference and made a part hereof:

         (1)      B/E's Annual  Report on Form 10-K for the year ended  February
                  28, 1998 (the "1998 10-K"),  filed with the  Commission on May
                  29, 1998,  as amended by the  amendment to the 1998 10-K filed
                  with the Commission on June 29, 1998.

         (2)      The Company's  Quarterly  Reports on Form 10-Q for the quarter
                  ended May 30, 1998, filed with the Commission on July 14, 1998
                  and  the  quarter  ended  August  29,  1998,  filed  with  the
                  Commission on September 25, 1998.

         (3)      The description of the Company's Common Stock contained in the
                  Company's  Registration  Statement  on Form 8-A filed with the
                  Commission  on March 7, 1990 under  Section 12 of the Exchange
                  Act,   including   any  report  or  amendment   updating  such
                  description.

         (4)      The Company's  Current  Reports on Form 8-K filed on April 13,
                  1998,  April  27,  1998,  May 8,  1998 and  August  24,  1998,
                  respectively.

         All documents subsequently filed by B/E with the Commission pursuant to
Section 13(a),  13(c), 14 or 15(d) of the Exchange Act after the date hereof and
prior to the  termination of the offering of the Common Stock shall be deemed to
be  incorporated  by  reference  into this  Prospectus  and to be a part of this
Prospectus from the date of filing of such document.

                                       -2-

<PAGE>



Any statement  contained  herein,  or in a document all or a portion of which is
incorporated or deemed to be incorporated by reference  herein,  shall be deemed
to be modified or superseded for purposes of the Registration Statement and this
Prospectus  to the  extent  that a  statement  contained  herein or in any other
subsequently  filed document that is also 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 the Registration Statement or this Prospectus.

         This  Prospectus  incorporates  documents  by  reference  which are not
presented herein or delivered  herewith.  B/E will provide without charge to any
person to whom this  Prospectus is delivered,  on the written or oral request of
such person,  a copy of any or all of the foregoing  documents  incorporated  by
reference,  other than  exhibits to such  documents  (unless  such  exhibits are
specifically  incorporated by reference into such  documents).  Written requests
should be directed  to:  Chief  Financial  Officer,  BE  Aerospace,  Inc.,  1400
Corporate Center Way, Wellington,  FL 33414.  Telephone requests may be directed
to B/E at (561) 791-5000.

         In  connection  with  any  underwritten  offering  of the  Shares,  the
underwriters  and certain persons  participating  in such offering may engage in
transactions  that  stabilize,  maintain  or  otherwise  affect the price of the
Common Stock,  including  over-allotment,  stabilizing  transactions,  syndicate
short covering  transactions and penalty bids. Such transactions may be effected
on the Nasdaq, in the over-the-counter  market or otherwise.  Such transactions,
if commenced, may be discontinued at any time.

                                   THE COMPANY

General

         B/E is the  world's  largest  manufacturer  of  commercial  and general
aviation aircraft cabin interior products,  serving virtually all major airlines
and a wide variety of general  aviation  customers  and airframe  manufacturers.
Management  believes  that  the  Company  has  achieved  leading  global  market
positions in each of its major product categories, which include aircraft seats,
food and beverage  preparation and storage equipment,  galley and other interior
structures,   oxygen   delivery   systems,   lighting   systems  and   in-flight
entertainment   systems.   In  addition,   B/E  provides  design,   integration,
installation  and  certification  services,   offering  its  customers  in-house
capabilities   to  design,   project   manage,   integrate,   test  and  certify
reconfigurations  and  modifications  to  commercial  aircraft  passenger  cabin
interiors and to manufacture  related products,  including  engineering kits and
interface components. B/E also provides upgrade, maintenance and repair services
for its airline customers around the world.

         B/E's  executive  offices  are  located at 1400  Corporate  Center Way,
Wellington, Florida 33414, and its telephone number is (561) 791-5000.

Recent Acquisitions

         On March 27,  1998,  the Company  acquired  Aerospace  Interiors,  Inc.
("ASI") for a total of 201,895  shares of Common Stock,  representing a purchase
price of approximately $5.6 million.  ASI services,  cleans and repairs aircraft
interior  parts and  products,  and is a leading  provider  of seat  repair  and
maintenance services performed by non-airline entities.
See "Selling Stockholders."

         On April, 14, 1998, the Company acquired  Puritan-Bennett  Aero Systems
Co. ("PBASCO"), a wholly owned subsidiary of Nellcor Puritan Bennett Inc., for a
cash  purchase  price of $69.7  million.  PBASCO  is a leading  manufacturer  of
commercial   aircraft  oxygen  delivery  systems  and  passenger   service  unit
components and systems  ("PSU") and is a major supplier of air valves,  overhead
lights and switches for both commercial and general aviation aircraft.

         On April 21,  1998,  the Company  acquired  Aircraft  Modular  Products
("AMP")  for  a  cash  purchase  price  of  $117.3  million.  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, credenza, closets, galley structures, lavatories,
tables and sofas, as well as related spare parts.

                                       -3-

<PAGE>



         On July 30, 1998, the Company acquired Aerospace  Lighting  Corporation
("ALC") for a total of 964,780  shares of Common Stock,  representing a purchase
price of  approximately  $28.1  million.  ALC is a market  leader  in  producing
interior  fluorescent  lighting systems for business and corporate jet aircraft.
See "Selling Stockholders."

         On August  7,  1998,  the  Company  acquired  the  common  stock of SMR
Aerospace,  Inc.,  the  membership  interests  of SMR  Developers  LLC,  and the
partnership interests of SMR Associates (together, the "SMR Companies" or "SMR")
for a total aggregate purchase price of approximately $120.0 million, subject to
adjustment  (the  "SMR  Purchase  Price").   Pursuant  to  the  SMR  Acquisition
Agreement,  the  Company  issued  4,000,000  shares of  Common  Stock to the SMR
Sellers (as defined  herein) and paid the SMR Sellers $2.0 million in cash.  The
Company also paid $22.0  million in cash to the employee  stock  ownership  plan
(the "ESOP") of Flight Structures,  Inc. ("FSI"), a subsidiary of SMR Aerospace,
Inc.,  pursuant to a separate Stock Purchase Agreement between the ESOP and B/E,
to purchase the minority equity  interest in FSI held by the ESOP,  bringing the
total  aggregate  purchase  price  paid by B/E for SMR to  approximately  $142.0
million.  To the  extent the Net  Proceeds  (as  defined in the SMR  Acquisition
Agreement),  which  include the $2 million in cash  already  received by the SMR
Sellers,  from the sale of the 4,000,000 shares of Common Stock is less than the
SMR Purchase Price, the Company will pay such difference to the SMR Sellers with
funds  drawn  under  the  Bank  Credit  Facility  (as  defined  herein).   B/E's
obligations to the SMR Sellers under the SMR  Acquisition  Agreement are secured
by an  irrevocable  stand-by  letter of credit from The Chase  Manhattan Bank in
favor of the SMR Sellers.  If such Net Proceeds  exceed the SMR Purchase  Price,
the SMR Sellers will remit such excess to the Company.

         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 which 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 to  facilitate
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.  See "Selling
Stockholders."

         On September 3, 1998,  the Company  acquired  substantially  all of the
galley equipment  assets and assumed related  liabilities of CF Taylor Interiors
Limited and acquired the common stock of CF Taylor (Wales) Limited (collectively
"CF Taylor"),  both wholly owned subsidiaries of EIS Group PLC, for a total cash
purchase  price  of  approximately  (pound)14.9  million,  (approximately  $25.1
million, based upon the exchange rate in effect on September 3, 1998). CF Taylor
is a manufacturer of galley  equipment for both narrow- and wide-body  aircraft,
including galley structures, crew rests and related spare parts.


                                       -4-

<PAGE>



                                  RISK FACTORS

         Prior to making an  investment  decision  with respect to the Shares of
Common Stock offered hereby, prospective investors should carefully consider the
specific  factors set forth below,  together  with all of the other  information
appearing  herein,  in light  of  their  particular  investment  objectives  and
financial circumstances.

Dependence upon Conditions in the Airline Industry

         The Company's principal 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 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 by 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 now experienced five consecutive  years of profitability  including
record  profitability  in each of the last three calendar years.  This financial
turnaround has, in part, been driven by record load factors,  rising fare prices
and declining fuel costs. The airlines have substantially restored their balance
sheets through cash generated from operations and debt and equity placements. As
a result,  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  of 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.

         Recently,  turbulence  in the  financial  and currency  markets of many
Asian countries has led to uncertainty  with respect to the economic outlook for
these  countries.  Of the Company's  $700 million of backlog at August 29, 1998,
the Company had $34 million with Asian carriers deliverable in fiscal 1999 and a
further  $86 million  deliverable  in  subsequent  fiscal  years.  Of such Asian
carrier backlog,  approximately  $34 million was with Japan Airlines,  Singapore
Airlines and Cathay Pacific. Although not all carriers have been affected by the
current  economic  events in the Pacific Rim,  certain  carriers could cancel or
defer their existing  orders and future orders from airlines in these  countries
may be adversely  affected.  In addition,  in June 1998,  Boeing  announced that
economic conditions in Asia has caused it to adjust their production  schedules,
reducing wide body production by  approximately 24 aircraft per year in 1999 and
2000 and increasing narrow body aircraft production by approximately 12 aircraft
per year for the same period.

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.  The Company  expects  that
in-flight   entertainment  systems,   including  live  broadcast  television  on
narrow-body  aircraft,  will  provide a  significant  percentage  of its  future
revenues.  Development of the MDDS and related in-flight  entertainment  systems
required  substantial  investment  by the Company and third parties in research,
development  and  engineering.  The future  success of the Company may depend to
some extent on its ability to manufacture  successfully and deliver, on a timely
basis,  in-flight  entertainment  products and to have these products 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,

                                       -5-

<PAGE>



on  a  timely  basis,  other  technologically  advanced,  reliable  high-quality
products,   which  can  be  readily   integrated  into  complex  cabin  interior
configurations.

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  commercial  airline 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.

         The  Company's  primary  competitors  in the market  for new  passenger
entertainment   products,   including   individual   seat  video  and  in-flight
entertainment  and cabin  management  systems,  are Matsushita  Electronics  and
Rockwell  Collins,   each  of  which  has  significantly  greater  technological
capabilities and financial and marketing resources than the Company.

Adverse Consequences of Financial Leverage

         The Company has substantial indebtedness and, as a result,  significant
debt service  obligations.  As of August 29, 1998, the Company had approximately
$472.8  million  aggregate  amount  of  indebtedness  outstanding,  representing
approximately 74% of total capitalization.  The degree of the Company's leverage
could have  important  consequences  to  purchasers  or holders of its shares of
Common Stock, 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 indentures governing the
Company's  97/8% Senior  Subordinated  Notes due 2006 (the "97/8% Notes") and 8%
Senior  Subordinated  Notes  due 2008 (the "8%  Notes")  and by the terms of its
existing  credit  facilities  with The Chase  Manhattan  Bank (the "Bank  Credit
Facility").  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
97/8% Notes and 8% 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,
including dividend payments 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 97/8% Notes and 8% Notes,  could result in an
event of default under the Company's Bank Credit Facility, 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.


                                       -6-

<PAGE>



Customer Delivery Requirements

         The commercial  aircraft cabin interior  products industry is currently
experiencing  a period of rapid  growth.  From  February  22, 1997 to August 29,
1998, the Company has experienced an approximately  67% increase in its backlog.
The  ability of the Company to receive  new  contract  awards and to deliver its
existing backlog is dependent upon its (and its suppliers')  ability to increase
deliveries to meet the recent surge in demand.  Although the Company believes it
has sufficient  manufacturing  capacity to meet customer demand, there can be no
assurance that the Company, or its suppliers, will be able to meet the increased
product delivery requirements.

General Aviation Acquisitions; Ability to Integrate Acquired Businesses; 
Additional Capital Requirements

         Between 1989 and January 1996,  the Company  acquired  nine  companies.
During fiscal 1999,  the Company  acquired six additional  companies,  including
ASI, PBASCO, AMP, ALC, SMR and CF Taylor.  Through several recent  acquisitions,
the Company has  expanded  its  activities  from the  commercial  to the general
aviation  market.  There can be no assurance that the Company will be successful
in entering the general aviation market.  The Company intends to consider future
strategic  acquisitions  in the  commercial  airline and general  aviation cabin
interior  industries,  some of which could be material to the Company. B/E is in
discussions from time to time with one or more third parties regarding  possible
acquisitions. As of the date of this Prospectus, except as disclosed herein, the
Company  has no  agreements  or  understanding  with a  prospective  acquisition
candidate  in respect of a specific  transaction.  The ability of the Company to
continue  to  achieve  its goals  will  depend  upon its  ability  to  integrate
effectively  the  recent  and  any  future  acquisitions  and  to  achieve  cost
efficiencies.  Although B/E has been  successful  in the past in doing so, there
can be no assurance  that the Company will continue to be  successful.  See "The
Company -- Recent Acquisitions."

         Depending  upon,  among other  things,  the  acquisition  opportunities
available,  the Company may need to raise additional funds. The Company may seek
such additional funds through public offerings or private  placements of debt or
equity securities or bank loans. Issuance of additional equity securities by the
Company could result in substantial dilution to stockholders.  In the absence of
such financing,  the Company's ability to make future acquisitions in accordance
with its business strategy, to absorb adverse operating results, to fund capital
expenditures or to respond to changing  business and economic  conditions may be
adversely  affected,  all of which  may have a  material  adverse  effect on the
Company's business, results of operations and financial condition.

Regulation

         The Federal Aviation  Administration  (the "FAA") prescribes  standards
and licensing  requirements  for aircraft  components,  including  virtually all
commercial  airline and general aviation 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.

Risks Associated with the Year 2000 Issue

         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  separate
information systems, using different hardware and software platforms.  In fiscal
1997, the Company undertook to examine its systems,

                                       -7-

<PAGE>



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  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  has  completed  both  remediation  and testing  phases of all  internal
systems, LAN's, WAN's and PBX's. These phases were intended to address potential
Year 2000 problems of the ERP system in relation to both information  technology
and  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,  one  location  has 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 December 31, 1999.

         Contingency  Plans. The Company has begun to analyze  contingency plans
to handle worst 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. To date, the Company has incurred
approximately  $17  million in costs  related to the  implementation  of the ERP
system. The Company currently  estimates the total ERP implementation  will cost
approximately $30 million.  Implementation costs have and will be capitalized to
the extent permitted under generally accepted accounting principles. The Company
expects  that it will incur  approximately  $6 million  related to this  program
during the  remainder  of  calendar  1998 and an  additional  $7 million  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 could 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.



                                       -8-

<PAGE>



Risks Inherent in International Operations; Risks Associated with the Conversion
by Certain EU Member States to the "Euro"

         Foreign  operations of B/E accounted for 26% of total sales for each of
the six months ended August 29, 1998 and fiscal 1998, as compared to 24% and 25%
for the six months  ended  August 30,  1997 and fiscal  1997,  respectively.  In
addition,  the Company has direct  investments  in a number of  subsidiaries  in
foreign  countries  (primarily in Europe).  Fluctuations in the value of foreign
currencies   affect  the  dollar  value  of  B/E's  net  investment  in  foreign
subsidiaries,  with these fluctuations being included in a separate component of
stockholders'  equity.  Operating results of foreign subsidiaries are translated
into U.S.  dollars at average monthly  exchange rates.  For the six months ended
August 29, 1998 and fiscal 1998,  the impact of such  transactions  on operating
results was not significant; however, B/E reported a cumulative foreign currency
translation amount of $(2.6) million in stockholders'  equity at August 29, 1998
as a result of foreign currency adjustments,  and there can be no assurance that
the  Company  will not  incur  additional  adjustments  in  future  periods.  In
addition,  the U.S.  dollar  value of  transactions  based in  foreign  currency
(collections on foreign sales or payments for foreign purchases) also fluctuates
with exchange rates.  Historically,  foreign currency risk has not been material
because a substantial  majority of the Company's sales have been  denominated in
the currency of the country of product  origin and no  repatriation  of earnings
has  occurred (or is  anticipated).  However,  there can be no assurance  that a
substantial majority of sales will continue to be denominated in the currency of
the  country of  product  origin or as to the impact of changes in the value the
United States dollar or other currencies.  The largest foreign currency exposure
results from activity in Dutch guilders, British pounds and Japanese yen.

         B/E has not hedged net foreign investments in the past, although it may
engage in hedging  transactions  in the  future to manage or reduce its  foreign
exchange  risk.  There can be no  assurance  that B/E's  attempts  to manage its
foreign currency exchange risk will be successful.

         The Company's  foreign  operations  could also be subject to unexpected
changes in  regulatory  requirements,  tariffs  and other  market  barriers  and
political and economic instability in the countries where it operates. There can
be no  assurance  as to the  impact  of any such  events  that may  occur in the
future.  See  "Risk  Factors  --  Dependence  upon  Conditions  in  the  Airline
Industry."

         In addition, the Company may be exposed to certain risks as a result of
the  conversion  by  certain  European  Union  ("EU")  member  states  of  their
respective  currencies to the "euro" as legal  currency on January 1, 1999.  The
conversion rates between such EU member states'  currencies and the euro will be
fixed by the  Council of the EU.  Risks  related to the  conversion  to the euro
could  include,  among  other  things,  effects  on  pricing  due  to  increased
cross-border  price  transparency,   costs  of  modifying  information  systems,
including  both software and  hardware,  costs of relying on third parties whose
systems also require modification, changes in the conduct of business and in the
principal  markets  for the  Company's  products  and  services  and  changes in
currency  exchange rate risk. The Company has analyzed whether the conversion to
the euro will materially  affect its business  operations.  While the Company is
uncertain  as to the  impact of the  conversion,  the  Company  does not  expect
anticipated  costs  in  connection  with  the euro  conversion  to be  material.
However,  the  actual  effects  of the  conversion  cannot  be known  until  the
conversion  to the euro has taken place and there can be no  assurance  that the
actual effects of the conversion could not have a material adverse effect on the
Company's business, results of operations, and financial condition.

Environmental Matters

         The  Company is  subject  to  regulation  by  federal,  state and local
authorities  establishing health and environmental quality standards, and may be
subject to liability or penalties for violations of those standards. The Company
is also subject to laws,  ordinances and  regulations  governing  remediation of
contamination  at facilities it owns or operates or to which it sends  hazardous
substances or wastes for treatment,  recycling or disposal. The Company believes
that it is in compliance,  in all material respects, with all laws affecting its
business.  However,  there can be no assurance that the Company will continue to
comply  with all such laws,  or with  amended,  new or more  stringent  laws and
regulations  which may be adopted in the future.  Any such  violation of law may
result in  penalties  and/or  liability  in  private  actions  filed by  injured
parties.  In addition,  future discovery of any  environmental  contamination or
liability at any of the Company's facilities, including

                                       -9-

<PAGE>



facilities  that may be acquired in connection with any  acquisition,  may cause
the Company to incur significant expenses as a result thereof.

Dividend Policy; Restrictions on Payment of Dividends

         The  Company  has never paid a cash  dividend  and does not plan to pay
cash dividends on its Common Stock in the foreseeable future. The Company's Bank
Credit  Facility and the  Indentures  governing the 97/8% Notes and the 8% Notes
restrict  and limit  the  payment  of  dividends  on the  Common  Stock.  Future
indebtedness  may also contain  restrictions  and  limitations on the payment of
dividends on the Common Stock.

Certain Anti-Takeover Provisions

         The Company's Restated Certificate of Incorporation and By-laws contain
provisions that may have the effect of discouraging a third party from making an
acquisition  of the  Company  by means  of a  tender  offer,  proxy  contest  or
otherwise. The Restated Certificate of Incorporation and By-laws of the Company,
among other things, (i) classify the Board of Directors into three classes, with
directors of each class serving for a staggered  three-year period, (ii) provide
that  directors  may be removed only for cause and only upon 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 such  directors,  (iii) require at
least  two-thirds of the voting power of the Company's  shares  entitled to vote
generally in the election of directors to alter,  amend or repeal the provisions
relating to the classified  board and removal of directors  described  above and
(iv)  permit  the  Board  of  Directors  to fill  vacancies  and  newly  created
directorships on the Board.  Such provisions would make the removal of incumbent
directors  more  difficult  and  time-consuming  and  may  have  the  effect  of
discouraging a tender offer or other takeover attempt not previously approved by
the  Board  of  Directors.   Under  the  Company's   Restated   Certificate   of
Incorporation,  the Board of Directors of the Company also has the  authority to
issue up to 1,000,000 shares of preferred stock in one or more series and to fix
the  powers,  preferences  and  rights of any such  series  without  stockholder
approval.  The Board of Directors could,  therefore,  issue, without stockholder
approval,  preferred  stock with voting and other  rights  that could  adversely
affect the voting  power of the  holders of Common  Stock and could make it more
difficult for a third party to gain control of the Company.  In addition,  under
certain circumstances, Section 203 of the Delaware General Corporation Law makes
it more difficult for an "interested  stockholder" (generally a 15% stockholder)
to effect  various  business  combinations  with a corporation  for a three-year
period.  See "Description of Capital Stock".




                                      -10-

<PAGE>



           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                  (Dollars in thousands, except per share data)

Introduction

         B/E is the  world's  largest  manufacturer  of  commercial  and general
aviation  aircraft cabin interior  products serving virtually all major airlines
and a wide variety of general  aviation  customers  and airframe  manufacturers.
Management  believes  that  the  Company  has  achieved  leading  global  market
positions in each of its major product categories, which include aircraft seats,
food and beverage  preparation and storage equipment,  galley and other interior
structures,   oxygen   delivery   systems,   lighting   systems  and   in-flight
entertainment   systems.   In  addition,   B/E  provides  design,   integration,
installation  and  certification  services,   offering  its  customers  in-house
capabilities   to  design,   project   manage,   integrate,   test  and  certify
reconfigurations  and modifications for commercial  aircraft cabin interiors and
to  manufacture  related  products,  including  engineering  kits and  interface
components.  B/E also provides upgrade,  maintenance and repair services for its
airline customers around the world.

         B/E's  revenues  are  generally   derived  from  two  primary  sources:
refurbishment  or  upgrade  programs  for  the  existing   worldwide  fleets  of
commercial  and general  aviation  aircraft,  and new aircraft  deliveries.  B/E
believes its large  installed  base of products,  estimated to be  approximately
$4,900,000  as of August 29, 1998  (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.  Changes in revenues by classes of product are
the result of  acquisitions  and volume  demand in the  industry,  as more fully
described in the  discussion  and analysis that follows.  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 calendar years 1995 through 1997. Consequently,
during fiscal 1998 B/E has experienced  significant growth in backlog of seating
and galley  products,  and 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.  On January  24,  1996,  the
Company  acquired all of the stock of Burns,  an industry  leader in  commercial
aircraft  seating.  On March 27, 1998,  the Company  acquired all of the capital
stock of Aerospace Interiors,  Inc., which services, cleans and repairs aircraft
interior  parts and  products,  and is a leading  provider  of seat  repair  and
maintenance services performed by non-airline  entities.  On April 13, 1998, the
Company  acquired  substantially  all of the assets and  assumed  certain of the
liabilities of PBASCO,  a leading  manufacturer  of commercial  aircraft  oxygen
delivery  systems,  a leading  manufacturer of passenger service unit components
and systems,  and a major supplier of air valves,  overhead lights and switches,
crew masks and  protective  breathing  devices.  On April 21, 1998,  the Company
acquired  substantially all of the assets and assumed certain of the liabilities
of AMP, a leading  manufacturer of cabin interior  products for general aviation
(business jet) and commercial  type VIP aircraft.  On July 30, 1998, the Company
acquired all of the capital stock of ALC, a market leader in producing  interior
fluorescent lighting systems for business and corporate jet aircraft.  On August
7, 1998, the Company acquired all of the capital stock of SMR Aerospace, Inc., a
leader in providing design, integration, installation

                                      -11-

<PAGE>



and certification services for commercial aircraft passenger cabin interiors. On
September  3,  1998,  the  Company  acquired  substantially  all of  the  galley
equipment assets and assumed related liabilities of CF Taylor, a manufacturer of
galley equipment and structures for both narrow- and wide-body  aircraft.  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.

         As a result of the acquisitions of PBASCO, AMP and SMR, the Company has
recorded a charge of $169,155 for the write-off of acquired  in-process research
and   development  and  acquisition   related   expenses   associated  with  the
transactions.  In addition, in connection with the acquisition of CF Taylor, the
Company  anticipates  that a portion of the purchase  price will be allocated to
acquired   in-process   research  and  development.   The  Company  has  engaged
consultants  to assist in the  allocation  of the  purchase  price of CF Taylor,
which the Company  anticipates  will be completed  prior to the end of the third
quarter ending on November 28, 1998,  however,  based on recent  acquisitions by
the Company,  the Company  does not expect that the purchase  price that will be
allocated to in-process research and development,  and subsequently written off,
will be in excess of 10% of the CF Taylor  purchase price.  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 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.

         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,  Visionare  Vantage and Lear 60, as
well  as  other  specific  executive  aircraft  seating  products.  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.  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.

         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 $19,000, which would be incurred over a
3-4 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.

         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 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.  Accordingly,  the Company may
monetize  all or a portion  of its  investment  in its  in-flight  entertainment
business.

         Over the last two  fiscal  years,  the  Company's  gross  margins  have
improved substantially,  increasing from 31.2% in fiscal 1996 to 34.4% in fiscal
1997 and to 36.7% in fiscal 1998.  The primary  reasons for the  improvement  in
gross margins  include:  (i) shift in product mix in all divisions toward higher
margin   products;   (ii)  higher  unit  volumes;   and  (iii)  a   company-wide
re-engineering  program which has resulted in higher employee  productivity  and
better manufacturing efficiency.


                                      -12-

<PAGE>



         B/E's business strategy is to maintain its market  leadership  position
through various initiatives,  including new product development. In fiscal 1998,
research,  development and engineering  expenses totaled $45,685, or 9.4% of net
sales,  primarily  consisting of costs related to the  development  of the MDDS,
with the balance attributable to the seating and galley products businesses.

         In January 1998, the Company  resolved a long-running  dispute with the
U.S.  Government over export sales between 1992 and 1995 to Iran, which resulted
in a charge of $4,664 in its fourth quarter, which ended February 28, 1998.
See "Business -- Legal Proceedings."

         The  following  discussion  and analysis  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  results  of the  Company's
operations  for the year ended  February  28, 1998 as compared to the  Company's
results of operations  for the year ended  February 22, 1997. The discussion and
analysis then  addresses the results of the  Company's  operations  for the year
ended  February 22, 1997 as compared to the Company's  results of operations for
the year ended February 24, 1996. The discussion and analysis then addresses the
liquidity and financial condition of the Company and other matters.

Six Months Ended August 29, 1998, as Compared to the Six Months Ended 
August 30, 1997

         Net sales for the  fiscal  1999  six-month  period  were  $296,343,  an
increase of  approximately  $62,700,  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, in the aggregate,  with SMR
adding approximately  $6,000.  Internal growth during the six months 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
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
during  the  quarter  ended  August  29,  1998,  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. 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 margin 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  (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 ongoing
new product development activities.


                                      -13-

<PAGE>



         Amortization expense for the six months ended August 29, 1998 of $7,360
was $1,831  greater  than the amount  recorded in the  comparable  period in the
prior year.

         Based on management's assumptions,  a portion of the purchase price for
each of the  recent  acquisitions  of  PBASCO,  AMP and  SMR  was  allocated  to
purchased in-process 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 $169,155  for the  wirte-off of
acquired  in-process  research and  development,  acquisition-related  and other
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  $19,000  which will be incurred over a 3-4
year period.

         Due to the  acquisition-related  charges  of  $169,155  during  the six
months  ended  August 29,  1998,  the  Company  incurred  an  operating  loss of
$(126,818),  as compared to  operating  earnings of $29,198 in the prior  year's
comparable period. Operating earnings excluding the acquisition-related  charges
were $42,337.

         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  $(143,264)
(which includes  in-process  research and development,  acquisition-related  and
other  expenses of $169,155)  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 $25,891. Income tax expense for
the six months  ended  August 29, 1998 was $4,401,  as compared to $2,647 in the
prior year's comparable period.

         The net loss for the six months ended  August 29, 1998 was  $(147,665),
or $(6.20) per share  (diluted),  as compared to net earnings of $15,020 or $.64
per share (diluted), for the comparable period in the prior year.

Year Ended February 28, 1998 Compared to Year Ended February 22, 1997

         Sales for the year ended February 28, 1998 were $487,999, or 18% higher
than sales of  $412,379  in the prior  year,  and  reflected  a 24%  increase in
product sales, offset by a $13,305 decline in service revenues  (attributable to
discontinued service lines of business). Year over year, the Company experienced
an increase in seating products  revenues of  approximately  $35,000 (or 16%), a
$25,000, or 25% increase in interior systems products revenues and a $29,000, or
56% increase in in-flight entertainment products revenues. The revenue increases
for the Seating  Products and In-Flight  Entertainment  Groups are primarily the
result of retrofit  programs that seven of the ten largest airlines in the world
have commenced, while the increase in revenues for the Interior Systems Products
Group is primarily related to both the surge in new aircraft  deliveries and the
increase in retrofit activity.

         Gross  profit  was  $178,905,  or 36.7% of  sales,  for the year  ended
February  28, 1998 and was  $37,083,  or 26% greater than the prior year's gross
profit of  $141,822,  which  represented  34.4% of sales.  The increase in gross
profit,  while  primarily  the  result  of the  higher  sales  volume,  was also
positively impacted by the 230 basis point improvement in gross margin.

         Selling,  general and administrative  expenses were $58,622,  or 12% of
sales, for the year ended February 28, 1998. This was $6,888, or 13% higher than
the selling,  general and administrative  expenses for the prior year of $51,734
(12.5%  of  sales),  and is  primarily  due to the  higher  level of  sales  and
quotation  activity,  as well as a higher  level of  customer  service,  product
support and information technology activities.

         Research, development and engineering expenses were $45,685, or 9.4% of
sales,  for the  fiscal  year  ended  February  28,  1998.  For the prior  year,
research,  development and engineering  expenses were $37,083, or 9.0% of sales.
The increase in research,  development and engineering was attributable to B/E's
ongoing  new  product  development  programs,  including  costs  related  to the
development of the MDDS and related Boeing line-fit expenditures.

                                      -14-

<PAGE>



         Amortization  expense  for the fiscal year ended  February  28, 1998 of
$11,265 was $658, or 6% higher than the amount recorded in the prior year.

         Other expenses for the fiscal year ended February 28, 1998 consisted of
a non-recurring charge of $4,664 related to the settlement of a dispute with the
U.S.  Government  over certain export sales between 1992 and 1995. See "Business
- -- Legal Proceedings."

         Net interest  expense was $22,765 for the year ended  February 28, 1998
or $4,402 less than the net interest  expense of $27,167  recorded for the prior
year and is due to the decrease in the Company's long-term debt.

         The  increase  in gross  profit  offset by  somewhat  higher  operating
expenses and lower  interest  expenses in the current year  resulted in earnings
before  income  taxes,  extraordinary  item and  cumulative  effect of change in
accounting principle of $35,904, an increase of $20,673 over the prior year.

         Income taxes for the year ended  February 28, 1998 were $5,386,  or 15%
of earnings before income taxes as compared to $1,522, or 10% of earnings before
income taxes, in the prior year.

         Earnings  before  extraordinary  item were $30,518,  or $1.30 per share
(diluted),  which  includes  the  $4,664  non-recurring  charge  related  to the
settlement of the dispute with the U.S. Government,  for the year ended February
28, 1998,  as compared to $13,709,  or $.72 per share  (diluted),  for the prior
year.

         The Company  incurred an  extraordinary  charge of $8,956 during fiscal
1998 for unamortized debt issue costs,  tender and redemption  premiums and fees
and expenses related to the repurchase of its 9 3/4% Notes.

         Net earnings were $21,562, or $.96 per share (basic) and $.92 per share
(diluted), for the year ended February 28, 1998, as compared to $13,709, or $.77
per share (basic) and $.72 per share (diluted), for the prior year.

Year Ended February 22, 1997 Compared to Year Ended February 24, 1996

         Sales for the year ended February 22, 1997 were $412,379, or 77% higher
than sales of $232,582 for the  comparable  period in the prior year.  Year over
year,  Seating revenues increased  $120,000,  and Services revenues increased by
$19,000.  The acquisition of Burns accounted for  approximately  $104,000 of the
$139,000  increase.  Year over  year,  the  interior  systems  products  rose by
$22,000, or 28% while in-flight  entertainment revenues increased by $19,000, or
58%. The revenue increases for the Seating Products and In-flight  Entertainment
Groups are primarily the result of retrofit  programs  underway  throughout  the
airline industry, while the increase in revenues for the Interior Products Group
is  primarily  related  to both the  surge in new  aircraft  deliveries  and the
increase in retrofit  activity.  Excluding the effect of the Burns  acquisition,
sales increased 33% year over year.

         Gross  profit  was  $141,822,  or 34.4% of  sales,  for the year  ended
February 22, 1997,  and was $69,271  higher than gross profit for the comparable
period in the prior  year of  $72,551,  which  represented  31.2% of sales.  The
increase in gross profit was  primarily  the result of the higher sales  volumes
and the mix of all products and services sold.

         Selling,  general and administrative expenses were $51,734, or 12.5% of
sales,  for the year  ended  February  22,  1997.  This was $9,734  higher  than
selling,  general and  administrative  expenses for the comparable period in the
prior year of $42,000,  or 18.1% of sales,  principally  due to the  substantial
increases in revenues and the acquisition of Burns.

         Research, development and engineering expenses were $37,083, or 9.0% of
sales,  for the year ended February 22, 1997.  For the comparable  period in the
prior year, research and development expense was $58,327, or 25.1% of sales. The
decrease in expenses during the current year was the result of a decrease in the
level of activity  associated with the MDDS  interactive  entertainment  system,
offset  somewhat by an increase in product  development  activity in the Seating
Products Group.

                                      -15-

<PAGE>




         Amortization  expense of $10,607 for the year ended  February  22, 1997
was $1,108 more than the amount recorded in fiscal 1996 as a result of the Burns
acquisition.

         Other  expenses  of $4,170 for the year ended  February  24, 1996 was a
charge  to  earnings  related  to  costs  associated  with the  integration  and
consolidation of the Company's  European  seating  operations in connection with
the  Company's  rationalization  of its seating  business and as a result of the
Burns acquisition. There was no similar charge in fiscal 1997.

         Net interest  expense was $27,167 for the year ended February 22, 1997,
or $8,531  higher  than the net  interest  expense of $18,636  recorded  for the
comparable  period  in the  prior  year,  and  was  due to the  increase  in the
Company's long-term debt outstanding  throughout most of fiscal 1997 as a result
of the 9 7/8% Notes issued at the time of the Burns acquisition.

         Earnings before income taxes of $15,231 for the year ended February 22,
1997 were $75,312 more than the loss before income taxes of $60,081 in the prior
year.

         Income taxes for the year ended  February 22, 1997 were $1,522,  or 10%
of earnings before income taxes, as compared to no tax provision in fiscal 1996.

         Net earnings were $13,709, or $.77 per share (basic) and $.72 per share
(diluted),  for the year ended  February  22,  1997 as compared to a net loss of
($83,413), or ($5.15) per share (basic and diluted) for the comparable period in
the prior year, which included the cumulative  effect of an accounting change of
$23,332.

Bookings and Backlog Information

         Management  estimates  that  B/E's  backlog  at  August  29,  1998  was
approximately  $700,000,  approximately  57% of which management  believes to be
deliverable  during the 12 months  following  August 29, 1998,  compared  with a
backlog of $560,000  and  $420,000 on February  28, 1998 and  February 22, 1997,
respectively  (as adjusted for the debooking of the British Airways MDDS program
in August 1997 described below).

         On September 15, 1997,  British  Airways ("BA") notified the Company of
its  decision  not to  conduct a flight  trial of B/E's MDDS  interactive  video
system.  BA  ultimately  selected  a  competitor's  system  for their  in-flight
entertainment  equipment needs. As a result of BA's decision not to move forward
with  the  interactive   program,  as  of  August  1997,  the  Company  debooked
approximately  $155,000 of backlog  related to the MDDS  program.  Although  the
Company has debooked the BA backlog,  the Company is  continuing to complete the
initial  development  and testing of the MDDS product and has completed line fit
certification  of its MDDS System on Boeing  747-400  aircraft and has delivered
the first MDDS product to its launch  customer,  Japan Airlines,  in April 1998.
See "Business -- Products and Services."

Liquidity and Capital Resources

         The Company's liquidity  requirements consist of working capital needs,
ongoing  capital   expenditures  and  scheduled  payments  of  interest  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
revenue  growth.  B/E's  working  capital was $182,116 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 $9,686 for the six months ended August 29, 1998.  The
primary  source of cash during the six months  ended August 29, 1998 was the net
loss of  ($147,665)  offset by non-cash  charges  for  in-process  research  and
development,  depreciation,  amortization  and  acquisition-related  expenses of
$185,413,  decreases in accounts  receivable  of $6,163 and increases in accrued
and other liabilities of $11,438, offset by a use of cash

                                      -16-

<PAGE>



of $46,150  related to increases in inventories  and other current  assets.  The
primary use of cash during the six-month period was $209,636 for the acquisition
of PBASCO, AMP and SMR.

         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.

         On August 7, 1998, the Company  amended its credit  facilities with The
Chase  Manhattan Bank by increasing the aggregate  principal  amount that may be
borrowed thereunder by $120,000,  up to $320,000, by adding an interim revolving
credit  commitment  to provide  for an  irrevocable  letter of credit (the "Bank
Credit Facility").  Pursuant to the SMR Acquisition Agreement, to the extent the
Net Proceeds (as defined),  which include the $2,000 in cash already received by
the SMR Sellers, from the sale of the four million shares of Common Stock by the
SMR sellers is less than $120,000,  the Company will pay such  difference to the
SMR Sellers with funds drawn under the Bank Credit Facility.

         The Bank  Credit  Facility  consists  of a  $100,000  revolving  credit
facility,  an  acquisition  facility of up to $100,000 and an interim  revolving
credit commitment of $120,000  available for the irrevocable letter of credit in
connection with the SMR  acquisition.  The revolving  credit facility expires in
April 2004, the acquisition facility is amortizable over five years beginning in
April 1999, and the interim revolving credit  commitment  terminates on April 2,
1999. At the termination of the interim  revolving credit  commitment or, at the
option of the Company,  upon the earlier expiration of the Company's  obligation
to maintain the irrevocable  letter of credit,  the aggregate  principal  amount
that may be borrowed under the Bank Credit Facility will be reduced by $120,000,
back to $200,000.

         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 and outstanding  borrowings under the revolving and acquisition  credit
facilities  aggregating  $121,000 (bearing interest at LIBOR plus 1.50% or prime
plus 0.25%, as defined).

         In February 1998, the Company sold $250,000 of 8% 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 AMP and PBASCO.  The Company incurred an extraordinary
charge of $8,956  for  unamortized  debt  issue  costs,  tender  and  redemption
premiums and fees and expenses  related to the  repurchase  of the 9 3/4% Notes.
Long-term debt consists of the Bank Credit Facility, the 9 7/8% Notes and the 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.


                                      -17-

<PAGE>



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  asset  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  separate
information systems, 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  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,  LAN's, WAN's and PBX's. These phases were intended to address
potential  Year 2000 problems of the ERP system in relation to both  information
technology and  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,  one  location  has 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 December 31, 1999.

         Contingency  Plans. The Company has begun to analyze  contingency plans
to handle worst case Year 2000  scenarios that the Company  believes  reasonably
could occur and, if  necessary,  intends to develop a timetable  for  completing
such contingency plans.

                                      -18-

<PAGE>



         Costs Related to the Year 2000 Issue. To date, the Company has incurred
approximately  $17,000 in costs related to the implementation of the ERP system.
The  Company  currently   estimates  the  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
the remainder of 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.

Industry Conditions

         The Company's principal 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 now experienced five consecutive  years of profitability  including
record  profitability  in each of the last three calendar years.  This financial
turnaround has, in part, been driven by record load factors,  rising fare prices
and declining fuel costs. The airlines have substantially restored their balance
sheets through cash generated from operations and debt and equity placements. As
a result,  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   economics   through  higher  aircraft
utilization.  Increased airline  competition may also result in airlines seeking
to reduce costs by  producing  greater  price  competition  from  airline  cabin
interior  products  manufacturers,  thereby  adversely  affecting  the Company's
revenues and margins.

         Recently,  turbulence  in the  financial  and currency  markets of many
Asian countries has led to uncertainty  with respect to the economic outlook for
these  countries.  Of the Company's  $700,000 of backlog at August 29, 1998, the
Company had $34,000 with Asian carriers deliverable in fiscal 1999 and a further
$86,000  deliverable in subsequent  fiscal years. Of such Asian carrier backlog,
approximately  $34,000 is with Japan  Airlines,  Singapore  Airlines  and Cathay
Pacific.  Although not all carriers have been  affected by the current  economic
events in the Pacific Rim, certain carriers could cancel or defer their existing
orders and future  orders from  airlines  in these  countries  may be  adversely
affected.



                                      -19-

<PAGE>



            CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

         Certain   statements   contained  in  "Risk   Factors,"   "Management's
Discussion  and  Analysis of  Financial  Condition  and Results of  Operations,"
"Business"  and  elsewhere,  and  incorporated  by reference  herein,  including
statements  regarding  the  business  strategy  of the  Company,  the  Company's
expected internal growth,  potential strategic acquisitions,  the products which
the  Company  expects  to  offer,  implementation  of the  Company's  Year  2000
readiness  program,  anticipated  development  and  marketing  expenditures  and
regulatory reform,  effects of the conversion by certain EU member states to the
"euro," the intent, belief or current expectations of the Company, its directors
or its officers,  primarily with respect to the future operating  performance of
the  Company,  and  other  statements  contained  herein,  and  incorporated  by
reference  herein,   regarding  matters  that  are  not  historical  facts,  are
"forward-looking"  statements (as such term is defined in the Private Securities
Litigation  Reform Act of 1995).  In addition,  when used in this Prospectus and
elsewhere,  the words  "believe,"  "anticipate,"  "expect,"  intend" and similar
expressions are intended to identify  forward-looking  statements.  Because such
statements include risks and uncertainties, actual results may differ materially
from those expressed or implied by such forward-looking statements. Factors that
could cause actual results to differ  materially from those expressed or implied
by such forward-looking  statements include, but are not limited to, the factors
set forth 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, 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.



                                      -20-

<PAGE>



                                    BUSINESS

Introduction

         B/E is the  world's  largest  manufacturer  of  commercial  and general
aviation aircraft cabin interior products,  serving virtually all major airlines
and a wide variety of general  aviation  customers  and airframe  manufacturers.
Management  believes  that  the  Company  has  achieved  leading  global  market
positions in each of its major product categories, which include aircraft seats,
food and beverage  preparation and storage equipment,  galley and other interior
structures,   oxygen   delivery   systems,   lighting   systems  and   in-flight
entertainment   systems.   In  addition,   B/E  provides  design,   integration,
installation  and  certification  services,   offering  its  customers  in-house
capabilities   to  design,   project   manage,   integrate,   test  and  certify
reconfigurations  and  modifications  for commercial  aircraft  passenger  cabin
interiors and to manufacture  related products,  including  engineering kits and
interface components. B/E also provides upgrade, maintenance and repair services
for its airline  customers around the world. In fiscal 1998,  approximately  92%
and 8%,  respectively,  of the Company's  total revenues were derived from major
airlines and airframe  manufacturers.  Approximately  61% of B/E's  revenues for
fiscal 1998 were derived from refurbishment and upgrade orders.

         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 and a complete line of general aviation seating  products.  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  and  refrigeration   equipment.  In
addition,  the  Company  manufactures  a broad  range  of  interior  structures,
including galleys, lavatories, sidewalls, credenzas, and closets. The Company is
also a worldwide leader in the manufacture of oxygen delivery systems, passenger
service units, air valves, lighting and switches, and is a major manufacturer of
passenger  entertainment  and service systems,  including  individual  passenger
in-flight   entertainment   systems.   The  Company   believes  that   in-flight
entertainment  systems,  including the emerging live broadcast television market
for domestic narrow-body aircraft,  will be one of the fastest growing and among
the  largest  product  categories  in the  commercial  aircraft  cabin  interior
products industry.

         B/E has  substantially  expanded  the  size,  scope  and  nature of its
business as a result of a number of  acquisitions.  Since 1989,  the Company has
completed 15 acquisitions for an aggregate  purchase price of approximately $680
million in order to increase its cabin interior  product and service  offerings,
to expand its activities from the commercial to the general  aviation market and
to position B/E as the preferred global supplier to its customers.  Acquisitions
have  also  enabled  the  Company  to  reduce  costs,  principally  through  the
integration  of  manufacturing  facilities,  and  to  leverage  its  established
customer  relationships  by selling more products  through its integrated  sales
force.  The largest of the six  transactions the Company has completed in fiscal
1999 was the  acquisition  of SMR, a leader in  providing  design,  integration,
installation and certification  services for commercial aircraft passenger cabin
interiors, for a total aggregate purchase price of approximately $142.0 million.
Management  believes that the acquisition of SMR complements the Company's cabin
interior  product  manufacturing  capabilities  and  positions  B/E as the  only
company  in the  industry  able to offer its  customers  the  complete  range of
products and services  required for major cabin  interior  reconfigurations  and
modifications,  from the  conceptualization  and engineering design of new cabin
interiors,  to the supply of cabin interior products,  through the management of
the integration, final installation and certification processes.

Industry Overview

         The commercial and general aircraft cabin interior products  industries
encompass a broad range of products and  services,  including  not only aircraft
seating products, passenger entertainment and service systems, food and beverage
preparation  and  storage  systems,   and  oxygen  delivery  systems,  but  also
lavatories,  lighting systems, evacuation equipment, overhead bins, as well as a
wide variety of engineering design, integration,  installation and certification
services and maintenance, upgrade and repair services. Management estimates that
the industry had annual sales in excess of $1.6 billion  dollars  during  fiscal
1998.


                                      -21-

<PAGE>



         Historically,  revenues in the airline cabin interior products industry
have been derived from five  sources:  (i) retrofit  programs in which  airlines
purchase new components to overhaul completely the interiors of aircraft already
in service;  (ii) refurbishment  programs in which airlines purchase  components
and  services to improve  the  appearance  and  functionality  of certain  cabin
interior equipment;  (iii) new installation  programs in which airlines purchase
new equipment to outfit a newly delivered  aircraft;  (iv) spare parts;  and (v)
equipment to upgrade the  functionality or appearance of the aircraft  interior.
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 last 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.

         Historically,  revenues in the general aviation cabin interior products
industry  have been derived from four  sources:  (i) retrofit and  refurbishment
programs in which the interior  components  of the  aircraft  are  substantially
overhauled to improve the appearance and  functionality;  (ii) new  installation
programs  to outfit  newly  delivered  aircraft;  (iii)  spare  parts;  and (iv)
equipment to upgrade the functionality or appearance of the aircraft interior.

         The  various  product  and  service  categories  in which  the  Company
currently participates include:

         Seating  Products.  This is the largest single product  category in the
         industry and includes first class,  business  class,  tourist class and
         commuter  seats.  Management  estimates  that the aggregate size of the
         worldwide  aircraft seat market  (including  spare parts) during fiscal
         1998  was in  excess  of  $570  million.  Approximately  ten  companies
         worldwide,  including the Company,  supply aircraft seats, although the
         Company (which has an  approximately  50% market share) and three 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 units
         ("PCUs") and related wiring and harness  assemblies  and  sophisticated
         interactive  telecommunications and entertainment  systems.  Management
         estimates  that the  aggregate  size of the  worldwide  PESS market was
         approximately $325 million during fiscal 1998.  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 aircraft and, with the further  development of live broadcast
         television,  many  narrow-body  aircraft.  PESS  products are currently
         supplied by approximately five companies  worldwide.  The Company has a
         market share of  approximately  35% in individual  passenger  in-flight
         entertainment systems, as of August 29, 1998.

         Interior  Systems  Products.  This product category  includes  interior
         systems for both  narrow-body  and  wide-body  commercial  aircraft and
         general aviation/VIP aircraft, including a wide selection of coffee and
         beverage makers, water boilers, ovens, liquid containers, air chillers,
         wine  coolers  and  other  refrigeration  equipment,   oxygen  delivery
         systems, air valves,  lighting and switches, and other interior systems
         components.  The Company  believes it is the only  manufacturer  with a
         complete line of interior  systems  products and the only supplier with
         the capability to fully integrate overhead passenger service units with
         either chemical or gaseous oxygen equipment.

         General  Aviation and VIP  Products.  The Company  entered this line of
         business with its  acquisition of AMP in April 1998. By combining AMP's
         substantial  presence in the general  aviation and VIP  aircraft  cabin
         interior  products industry with that of PBASCO and ALC, B/E has become
         the  industry's  leading   manufacturer  with  a  broad  product  line,
         including  a complete  line of  executive  aircraft  seating  products,
         flourescent lighting, air valves and oxygen delivery systems as well as
         sidewalls,    bulkheads,   credenzas,   closets,   galley   structures,
         lavatories,  tables  and  sofas.  B/E has  the  capability  to  provide
         complete interior packages, including all design services, all interior
         components  and program  management  services  for  executive  aircraft
         interiors.  B/E is the  preferred  supplier  of  seating  products  and
         fluorescent    lighting   systems   of   essentially    every   general
         aviation-airframe manufacturer.

                                      -22-

<PAGE>



         Engineering/Integration  and Maintenance/Support  Services. The Company
         entered  the  engineering   design,   integration,   installation   and
         certification  services market through the acquisition of SMR in August
         1998. The Company has also historically  been an active  participant in
         the growing market for upgrade, maintenance and repair services through
         its  Services  Group.  Historically,  the  airlines  have relied on the
         airframe  manufacturers  or in-house  engineering  resources to provide
         engineering design and integration services, as well as maintenance and
         repair  services.   As  cabin  interior   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.  Through
         the  recent   acquisition   of  SMR,  the  Company   provides   design,
         integration,  installation  and  certification  services for commercial
         aircraft  passengers cabin interiors,  offering its customers  in-house
         capabilities  to design,  project manage,  integrate,  test and certify
         reconfigurations  and modifications for commercial  aircraft  passenger
         cabin  interiors  and  to  manufacture   related  products,   including
         engineering kits and interface components.  Through its Services Group,
         B/E also  provides  upgrade,  maintenance  and repair  services for the
         products which it  manufactures  as well as for those supplied by other
         manufacturers.

         Through  August  29,  1998,  the  Company  operated  primarily  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 30, 1997 and August 29,
1998 and for the fiscal years ended February  1996,  1997 and 1998 are presented
below (dollars in millions):


<TABLE>
<CAPTION>
                                                Fiscal Year Ended          Six Months Ended
                                         ----------------------------   -----------------------
                                         Feb. 24,  Feb. 22,  Feb. 28,   August 30,   August 29,
                                           1996      1997      1998        1997         1998
                                           ----      ----      ----     ----------   --------
                                                                            (Unaudited)
<S>                                       <C>        <C>        <C>        <C>        <C> 
Seating products ..................       $ 97       $217       $252       $127       $129
Interior systems products .........         79        101        126         66         80
Passenger entertainment and service
   systems ........................         33         52         81         26         44
Engineering/Integration and
   Services .......................         23         42         29         15         19
General aviation and VIP products .        --         --         --         --          24
                                          ----       ----       ----       ----       ----
Total revenues ....................       $232       $412       $488       $234       $296
                                          ====       ====       ====       ====       ====
</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  year 1994,  and  achieved  record  operating  earnings  during
calendar  years 1995 through  1997.  During this period,  the domestic  airlines
substantially   restored  their  balance  sheets  through  cash  generated  from
operations  and debt and equity  placements.  This  improvement in the airlines'
profitability  and liquidity has, in turn,  led to an increase in  refurbishment
and  retrofit   programs  which,   coupled  with  spares   revenues,   generated
approximately 61% of the Company's revenues in fiscal 1998. Further,  throughout
calendar 1997, the aircraft manufacturers  continued to experience 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 Current Market Outlook
         published by the Boeing Commercial  Airplane Group in 1998 (the "Boeing
         Report"),  the world commercial  passenger  aircraft fleet consisted of
         10,845  aircraft as of the end of 1997,  including  3,102 aircraft with
         fewer than 120 seats, 4,824 aircraft with between 120 and 240 seats and
         2,919  aircraft with more than 240 seats.  Based on such fleet numbers,
         management  estimates  that  the  total  worldwide  installed  base  of
         commercial  and general  aviation  aircraft  cabin  interior  products,
         valued at replacement  prices,  was approximately  $14.7 billion at the
         end of 1997. This existing installed base will

                                      -23-

<PAGE>



         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 five percent per
         year over the next 10 years,  increasing annual revenue passenger miles
         from  approximately  1.7 trillion in 1997 to approximately 4.4 trillion
         by 2017  (according  to the July 1998 Airline  Monitor).  Airlines have
         recently been  purchasing a  significant  number of new aircraft due in
         part to the  current  high load  factors  and the  projected  growth in
         worldwide  air travel.  According to the Boeing  Report,  the worldwide
         fleet of  commercial  passenger  aircraft is  projected  to expand from
         approximately  10,845 at the end of 1997 to approximately 23,500 by the
         end of 2017. In 1997,  Boeing  shipped 375 aircraft  versus 269 in 1996
         (as adjusted to include  McDonnell  Douglas  deliveries).  In addition,
         Boeing has stated plans to ship  approximately  550 aircraft in each of
         calendar  years 1998 and 1999.  According  to Airbus  Industrie  Global
         Market  Forecast   published  in  April  1998  (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
         1.7 million  passenger  seats at the end of 1997 to  approximately  4.1
         million  passenger  seats at the end of 2017.  The expanding  worldwide
         fleet will generate additional revenues from new installation programs,
         while 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 February 1998 Airline Monitor, the percentage of Boeing aircraft
         deliveries  projected to be wide-body aircraft for 1998 through 2002 is
         42%, as compared to 37% for the  five-year  period  ended  December 31,
         1997.  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 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  and general  aircraft cabin
         interior products  industries are engaged in intensive  development and
         marketing efforts for a number of new products, including full electric
         "sleeper seats," convertible seats,  interactive  individual  passenger
         entertainment systems, live broadcast television,  crew masks, advanced
         telecommunications  equipment,  protective breathing equipment,  oxygen
         generating   systems  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.  Live TV(TM),  a new product  line being  developed by a
         joint venture between the Company and Harris Corporation,  will provide
         live broadcast  television via satellite to passenger aircraft allowing
         passengers  the  capability  to view  up to 48  different  channels  of
         television  service.  New cabin  interior  products  will  generate new
         installation  and retrofit  revenues as well as service  revenues  from
         equipment maintenance, inspection and repair.

                                      -24-

<PAGE>




         Growing  Services  Markets.  Historically,  the airlines have relied on
         airframe  manufacturers or their own in-house engineering  resources to
         provide engineering,  design, integration and installation services, as
         well as services  related to  repairing  or  replacing  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: (i) engineering
         design,  integration,  installation and certification  services,  which
         will entail  providing  the  capabilities  to design,  project  manage,
         integrate,  test and certify  reconfigurations  and  modifications  for
         commercial  aircraft and to  manufacture  related  products,  including
         engineering  kits and interface  components;  and (ii) 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

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

         Leading  Market  Shares  and  Significant  Installed  Base.  Management
         believes that the Company has achieved  leading global market positions
         in each of its major product categories, with market shares, based upon
         industry sources,  of approximately  50% in commercial  aircraft seats,
         60%  in  executive  aircraft  seats,  90%  in  coffee  makers,  90%  in
         refrigeration  equipment,  90% in air  valves,  50% in oxygen  delivery
         systems,  50%  in  ovens  and  35%  in  individual-passenger  in-flight
         entertainment systems. 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 $4.9 billion  installed base of
         cabin interior equipment (valued at replacement prices as of August 29,
         1998),  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.

         Combination of Manufacturing  and Cabin Interior Design  Services.  The
         Company has  continued to expand its products and  services,  believing
         that the airline industry increasingly will seek an integrated approach
         to the  design,  development,  integration,  installation,  testing and
         sourcing of aircraft cabin  interiors.  The Company believes that it is
         the only manufacturer of a broad technologically-advanced line of cabin
         interior  products  with  interior  design  capabilities.  Based on its
         established  reputation  for  quality,  service and product  innovation
         among the world's commercial airlines,  the Company believes that it is
         well  positioned  to provide "one stop  shopping"  to these  customers,
         thereby  maximizing sales  opportunities for the Company and increasing
         the convenience and value of the service provided to its customers.

         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
         approximately  725 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 play a  leading  role in  developing  and
         introducing  innovative  products to meet emerging  industry trends and
         needs and thereby gain early entrant  advantages and substantial market
         shares.  Examples of such product development include: the introduction
         of  several  premium  and main cabin  class  seats,  which the  Company
         believes  provide greater comfort and are lighter in weight as a result
         of their ergonomic design

                                      -25-

<PAGE>



         and pre-engineered individual passenger comfort features; 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.  The Company has developed  two  individual  in-flight
         entertainment   systems   that  are   designed   to  meet  the  varying
         technological  and price  specifications  of the airlines and has a new
         interactive  entertainment  system in the final development  stage. The
         Company also has a joint venture with Harris Corporation to develop and
         deliver live broadcast television  (LiveTV(TM)) to domestic narrow body
         commercial aircraft.

         Proven  Track  Record  of  Acquisition  Integration.  The  Company  has
         demonstrated   the   ability  to  make   strategic   acquisitions   and
         successfully   integrate   such  acquired   businesses  by  identifying
         opportunities to consolidate  engineering,  manufacturing and marketing
         activities,  as well as rationalizing  product lines.  Between 1989 and
         January  1996,  B/E acquired  nine  companies  and has  integrated  the
         acquisitions by eliminating 11 operating  facilities and  consolidating
         personnel at the acquired businesses, resulting in headcount reductions
         of approximately 1,300 employees. B/E's integration activities, coupled
         with its  re-engineering  program,  have positively  impacted gross and
         operating margins (before non-recurring expenses), which have increased
         by 369 and 245 basis points, respectively,  during the five-year period
         ended February 28, 1998.  During fiscal 1999, the Company  acquired six
         additional  companies,  including  ASI,  PBASCO,  AMP,  ALC, SMR and CF
         Taylor,  to broaden its product lines. The aggregate  purchase price of
         all acquisitions made by B/E since 1989 is approximately  $680 million.
         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.

Growth Opportunities

         B/E believes that it has benefitted from four major growth trends.

         Increase  in  Refurbishment  and  Upgrade  Orders.   B/E's  substantial
         installed base provides significant ongoing revenues from replacements,
         upgrades,  repairs and the sale of spare  parts.  Approximately  61% of
         B/E's  revenues for the year ended  February 28, 1998 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  calendar  years  1995  through  1997.  Deterioration  of  cabin
         interior  product  functionality  and  aesthetics  occurred  within the
         commercial  airline  fleets  during the  industry  downturn  because of
         maintenance  deferrals.  Since the turnaround  began, the airlines have
         experienced  greater  utilization  resulting  from higher load factors,
         which 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.  A significant  portion of the
         Company's recent growth in backlog, revenues and operating earnings has
         been from refurbishment and upgrade programs,  and the Company has been
         experiencing a high level of new order quote  activity  related to such
         programs.

         Expansion  of  Worldwide  Fleet and Shift  Toward  Wide-Body  Aircraft.
         Airlines have been  purchasing a significant  number of new aircraft in
         part due to  current  high load  factors  and the  projected  growth in
         worldwide  air travel.  According to the Boeing  Report,  worldwide air
         travel  growth is  projected  to  average  5% per year over the next 10
         years and the  worldwide  fleet of  commercial  passenger  aircraft  is
         projected  to expand  from  approximately  10,845 at the end of 1997 to
         approximately  15,900 by the end of 2007 and to more than 23,500 by the
         end of 2017.  Related  growth in aircraft  interior  product  shipments
         associated with new aircraft  deliveries began during calendar 1996. In
         1997,  Boeing  shipped 375 aircraft  versus 269 in 1996 (as adjusted to
         include  McDonnell Douglas  deliveries).  In addition Boeing has stated
         plans to ship approximately 550 aircraft in each of calendar

                                      -26-

<PAGE>



         years 1998 and 1999. The Company  generally  receives orders related to
         new aircraft  deliveries  approximately  six months before the delivery
         date. Furthermore,  according to the February 1998 Airline Monitor, the
         percentage of new Boeing aircraft deliveries  projected to be wide-body
         aircraft  for  1998  through  2002  is 42% as  compared  to 37% for the
         five-year  period ended December 31, 1997. This shift toward  wide-body
         aircraft is significant to the Company since these aircraft  require as
         much as seven  times the dollar  value of cabin  interior  products  as
         narrow-body  aircraft,   including  substantially  more  seats,  galley
         equipment and in-flight entertainment products.

         General  Aviation and VIP Aircraft Fleet Expansion and Related Retrofit
         Opportunities.  General  aviation  and VIP airframe  manufacturers  are
         experiencing  a  surge  in new  aircraft  deliveries  similar  to  that
         occurring in the commercial  aircraft  industry.  According to industry
         sources,  executive  aircraft  deliveries  amounted  to  241  units  in
         calendar 1996 and were  approximately  348 in calendar  1997.  Industry
         sources indicate that executive aircraft  deliveries are expected to be
         approximately 450 in calendar 1998 and should reach 545 per year by the
         year 2000.  Several  new  aircraft  models,  including  the  Visionaire
         Vantage, Cessna Citation Excel, the Boeing Business Jet, Global Express
         and Airbus  Business  Jet,  have been or are expected to be  introduced
         over the next  several  years.  The overall  strength  of the U.S.  and
         European  economies,  advances in engine  technology  and  avionics and
         emergence  of  fractional  ownership  of  executive  aircraft  are  all
         important  growth factors.  In addition,  the general  aviation and VIP
         aircraft  fleet  consists  of  approximately  10,000  aircraft  with an
         average age of  approximately  15 years.  As aircraft  age or ownership
         changes,  operators retrofit and upgrade the cabin interior,  including
         seats,  sofas and tables,  sidewalls,  headliners,  structures  such as
         closets,  lavatories  and  galleys,  and  related  equipment  including
         lighting and oxygen  delivery  systems.  The  installed  value of a new
         interior  can range  from $1  million  for  smaller  models to up to $7
         million for a long haul  aircraft.  In  addition,  operators  generally
         reupholster  or replace  seats  every five to seven  years.  Management
         believes  the Company is well  positioned  to benefit from the retrofit
         opportunities  due to (i) the 15-year  average age of the executive jet
         fleet; (ii) operators who have historically  reupholstered  their seats
         are now more inclined to replace these seats with lighter weight,  more
         modern and 16G-compliant  seating models; and (iii) the belief that the
         Company is the only manufacturer with the capability for cabin interior
         design  services,  a broad  product  line  for  essentially  all  cabin
         interior products and program management  services,  for true "one-stop
         shopping."

         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. In June 1997, the Company announced a joint venture with
         Harris  Corporation  to develop and deliver live  broadcast  television
         (LiveTV(TM)) to domestic narrow-body  commercial aircraft.  The Company
         expects  that  in-flight  entertainment  systems,   including  the  new
         technology  designed to deliver live  broadcast  television on domestic
         narrow-body aircraft,  will be one of the fastest growing and among the
         largest  product  categories in the commercial  aircraft cabin interior
         products industry.

         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
         two current  systems are (i) the B/E 2000,  with an  installed  base of
         approximately   21,000   units,   which  is  a  system  that   provides
         non-interactive  video  programming  and  (ii) the B/E  2000M,  with an
         installed  base of  approximately  11,000 units,  which offers  similar
         functionality  to the B/E 2000  but can be  upgraded  to the  Company's
         Multimedia  Digital  Distribution  System  ("MDDS")  product.  The MDDS
         product,   which  is  in  its  final  development  stage,  is  a  fully
         interactive entertainment system with the capacity to provide movies on
         demand, telecommunications, gaming and other

                                      -27-

<PAGE>



         services. The Company has completed the initial development and testing
         of the MDDS product and  delivered the first MDDS product to its launch
         customer,  Japan  Airlines  ("JAL"),  in April 1998.  The Company  also
         completed the engineering  necessary to enable installation of the MDDS
         as a line fit option on Boeing aircraft in 1998. As of August 29, 1998,
         B/E had an in-flight entertainment systems backlog of approximately $86
         million.

         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
         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.  Accordingly,  the Company may monetize all or a
         portion of its investment in its in-flight entertainment business.

Business Strategy

         The Company's business strategy is to maintain its leadership  position
and best serve its  customers by (i)  offering the broadest and most  integrated
product lines and services in the  industry,  including not only new product and
follow-on  product  sales,  but  also  design,  integration,   installation  and
certification services as well as maintenance, upgrade and repair services; (ii)
pursuing a worldwide  marketing approach focused by airline and general aviation
airframe  manufacturer and encompassing the Company's entire product line; (iii)
pursuing the highest level of quality in every facet of its operations, from the
factory floor to customer support;  (iv) remaining the  technological  leader in
its industry, as well as significantly growing its installed base of products in
the  developing  in-flight  individual  passenger   entertainment   market;  (v)
enhancing  its  position in the growing  upgrade,  maintenance,  inspection  and
repair services market;  and (vi) pursuing selective  strategic  acquisitions in
the commercial aircraft and general aviation cabin interior products industries.

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 manufactured and 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.  The Company estimates that as of August 29, 1998 the Company had an
aggregate  installed  base of more  than  1,000,000  aircraft  seats,  valued at
replacement prices, of approximately $2.1 billion.

         Tourist Class.  The Company is the leading  worldwide  manufacturer  of
         tourist  class  seats.  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. Based upon major airlines program selection
         and orders on hand, the Company is the leading  worldwide  manufacturer
         of  premium-class  seats.  First  class and  business  class  seats are
         generally  larger,  heavier  and more  complicated  in design,  and are
         substantially  more expensive than tourist class  aircraft  seats.  The
         Company's first class seats and certain of its business class seats are
         equipped  with   articulating   bottom  cushion   suspension   systems,
         sophisticated hydraulic leg-rests,  lumbar massage devices,  adjustable
         thigh  support  cushions,  reading  lights,  adjustable  head  and neck
         supports and large tables.

         Convertible  Seats.  The Company has developed two types of seats which
         can be converted from tourist class  triple-row seats to business class
         double-row seats 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.


                                      -28-

<PAGE>



Passenger Entertainment and Service Systems ("PESS")

         Management estimates that the Company has the largest installed base of
PESS products in the world,  which as of August 29, 1998,  valued at replacement
prices, is approximately $470 million.  The Company has the leading share of the
market for  passenger  control  units  ("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 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 B/E 2000,  introduced  in 1992,  is one of the Company's
         first-generation   individual   inflight   video   systems  and  offers
         centralized electronic  distribution of a limited range of programming.
         Since its introduction,  the Company has installed approximately 21,000
         units of the B/E 2000 and earlier generation individual passenger video
         systems with 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:

              o   B/E  2000M  -- The B/E  2000M  is an  in-flight  entertainment
                  system that offers similar  functionality  to the 2000 but can
                  be upgraded to the Company's fully interactive MDDS. Since its
                  introduction in 1994, the Company has installed  approximately
                  11,000 units.

              o   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(TM),   Sega(TM)   and
                  PC-based games,  in-flight  shopping and, in the future,  live
                  television,  among other  services.  The Company has completed
                  the initial  development  and testing of the MDDS  product and
                  delivered the first MDDS product to its launch customer,  JAL,
                  in April 1998.  The Company  also  completed  the  engineering
                  necessary  to  enable  installation  of the MDDS as a line fit
                  option  on  Boeing  aircraft  in  conjunction   with  the  JAL
                  delivery.

         LiveTV(TM).  In June 1997,  the Company  announced a joint venture with
         Harris  Corporation  to develop  and  market a system  which will allow
         airline  passengers to receive  in-flight,  live  broadcast  television
         aboard  narrow-body  commercial  aircraft at each individual  passenger
         seat. The Company  controls a 51 percent  voting  interest in the joint
         venture.  Under the  joint  venture  agreement,  B/E will  provide  its
         individual-seat  video  distribution  system as its part of the overall
         LiveTV(TM)  reception system, while Harris Corporation will provide the
         specialized  aircraft antenna and receiver system to enable  in-the-air
         reception.  The  Company  expects  to  be  in a  position  to  commence
         deliveries to a launch customer for LiveTV(TM) sometime in 1999.

         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.


                                      -29-

<PAGE>



Interior Systems Products

         The Company is the world's  largest  manufacturer  of interior  systems
products for both narrow and wide-body  aircraft,  offering a wide  selection of
structures, coffee and beverage makers, water boilers, ovens, liquid containers,
refrigeration equipment,  oxygen delivery systems,  passenger service units, air
valves,  lighting  and  switches,  and a variety of other  interior  components.
Management  estimates  that as of August 29, 1998 the  Company has an  aggregate
installed base of such equipment, valued at replacement prices, of approximately
$1.5 billion.

         Coffee  Makers.  The  Company is the leading  manufacturer  of aircraft
         coffee  makers,  with the Company's  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 both brew coffee and 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  the  leading  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' need 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 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.

         Oxygen Delivery System. The Company is a leading manufacturer of oxygen
         delivery  systems,  passenger  service units, air valves,  lighting and
         switches for both commercial and general aviation aircraft.  B/E is the
         only  manufacturer  with  the  capability  to fully  integrate  its own
         manufactured  components  with  overhead  passenger  service units with
         either chemical or gaseous oxygen  equipment.  The Company's oxygen and
         passenger  service  unit  equipment  has been  approved  for use on all
         Boeing and Airbus aircraft and is also found on essentially all general
         aviation and VIP aircraft.

General Aviation

          The Company  entered the market for general  aviation and VIP aircraft
products  with  its  acquisition  of AMP  in  April  1998.  By  combining  AMP's
substantial  presence in the general  aviation and VIP aircraft  cabin  interior
products  industry  with  that  of  PBASCO  and  ALC,  B/E  is now  the  leading
manufacturer  of a broad  product  line  including a complete  line of executive
aircraft seating products,  flourescent lighting, air valves and oxygen delivery
systems as well as sidewalls,  bulkheads, credenzas, closets, galley structures,
lavatories,  tables  and  sofas.  B/E has the  capability  to  provide  complete
interior packages,  including all design services,  all interior  components and
program  management  services  for  executive  aircraft  interiors.  B/E  is the
preferred  supplier of seating  products  and  flourescent  lighting  systems at
essentially every general aviation airframe manufacturer.


                                      -30-

<PAGE>



Services and Specialty Products

         The Company is an active participant in the growing services and custom
products  markets.  Management  believes that the Company's broad and integrated
product  line and close  relationships  with its airline  and leasing  customers
position the Company to become a leading service  provider in this market.  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.

         Engineering   Design,   Integration,   Installation  and  Certification
         Services.  Through  the  acquisition  of SMR in August  1998,  B/E is a
         leader in providing engineering design,  integration,  installation and
         certification   services  for  commercial   aircraft   passenger  cabin
         interiors,  offering its  customers  in-house  capabilities  to design,
         project  manage,  integrate,  test  and  certify  reconfigurations  and
         modifications  for  commercial  aircraft  and  to  manufacture  related
         products,  including  engineering  kits and interface  components.  The
         Company  provides a broad  range of interior  reconfiguration  services
         which 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.  B/E is also a leading supplier of
         structural  design  and  integration   services,   including   airframe
         modifications for passenger-to-freighter conversions.

         Upgrade,  Maintenance  and  Repair  Services.  The  Company  provides a
         comprehensive  range of services for cabin  interior  products on board
         aircraft either between flights or on an overnight  basis, or at one or
         more of eight service  centers in the worldwide  service  network.  The
         spectrum of services  includes  systems  check and  components  repair,
         parts inventory and management,  refurbishment of seating products,  on
         board surveys  regarding status and product  installations,  as well as
         data  support  functions  such as loading  and  updating  of  in-flight
         systems  entertainment  software,  direct satellite  broadcast  systems
         support and systems integration.

         Specialty  Products.   The  Company   manufacturers  several  specialty
         products  for the  commercial  airline  industry  including  crew  rest
         compartments,  flight  attendant  seats,  observer  seats,  and  custom
         products in the passenger seating area, as well as fire/smoke  barriers
         and cargo nets.  The Company  maintains a staff of  engineers to design
         and  certify  various  modules  and  kits  to  accommodate   individual
         passenger video and telecommunications modules in seat backs and center
         consoles which were originally not designed for such applications.  The
         Company believes it is able to provide products for unique applications
         more rapidly than original manufacturers.

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 $24.7 million,  $45.7 million,  and $37.1
million for the six months  ended August 29, 1998 and for the fiscal years ended
February 28, 1998, and February 22, 1997, respectively. The increase in expenses
during  fiscal 1998 is the result of the  substantial  completion  of the Boeing
Line Fit  certification  activities  for MDDS and  ongoing  product  development
activity  in the seating  and galley  products  groups.  B/E  currently  employs
approximately  725  professionals  in the  engineering  and product  development
areas.  As  part  of  its  engineering  design,  integration,  installation  and
certification  services  business  acquired in August  1998,  the Company  added
approximately  105  engineers.  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  and  commercial  and  general  aviation  aircraft
manufacturers. The Company markets its general aviation products directly to all
of the world's general aviation air frame  manufacturers,  modification  centers
and operators.  B/E has a sales and marketing organization of 138 persons, along
with 48 independent sales representatives. B/E's sales to non-U.S. airlines were
$137.0

                                      -31-

<PAGE>



million,  $232.7 million, and $203.4 million for the six months ended August 29,
1998 and for the fiscal  years ended  February  28, 1998 and  February 22, 1997,
respectively,  or  approximately  46%, 48% and 49%,  respectively,  of net sales
during such periods.

         Airlines select  manufacturers of cabin interior products  primarily on
the basis of custom design  capabilities,  product quality and  performance,  on
time  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   accounted  for
approximately 67% of the purchases of products manufactured by B/E during fiscal
1998. 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 to more efficiently
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.

         The Company markets its general  aviation  products  directly to all of
the world's general aviation airframe  manufacturers,  modification  centers and
operators.

         During the latter part of fiscal 1997, the Company  initiated a program
management  discipline  under  which a  program  manager  is  assigned  for each
significant contract.  The program manager is responsible for all aspects of the
specific  contract,  including  management of change orders and  negotiation  of
related  non-recurring  engineering  charges,  monitoring  the  progress  of the
contract  through  its  scheduled  delivery  dates,  and  overall  profitability
associated  with the  contract.  The Company  believes that it and its customers
derive  substantial  benefit  from its program  management  approach,  including
better on-time delivery and higher service levels. The Company also believes its
program management  approach results in better customer  satisfaction and higher
profitability over the life of the contract.

         During the six months  ended  August 29,  1998 and for the fiscal  year
ended February 28, 1998, one customer  accounted for  approximately 17% and 18%,
respectively,  of the Company's total revenues,  and no other customer accounted
for more than 10% of such revenues. There were no major customers in fiscal 1997
or 1996. Because of differing schedules of various airlines for purchases of new
aircraft and for retrofit and refurbishment of existing aircraft, the 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  29,  1998  was
approximately $700 million, approximately 57% of which management believes to be
deliverable in the 12 month following  August 29, 1998,  compared with a backlog
of $560  million and $420  million on February  28, 1998 and  February 22, 1997,
respectively  (as  adjusted to exclude  certain  backlog  which was  debooked in
August 1997). See "Management's  Discussion and Analysis of Financial  Condition
and Results of Operations -- Bookings and Backlog Information."


                                      -32-

<PAGE>



Customer Service

         The Company  believes  that it provides  the highest  level of customer
service and product support 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,  proposal requests 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  onsite  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 ten  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;  and
revisions of such reserves are  recognized in the period in which such revisions
are determined.

         The Company  also  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 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 and Rockwell Collins.  The Company's primary competitors
for  galley  products  are  JAMCO  Limited,   Britax  PLC,  Scott  Aviation  and
Intertechnique.  The Company's market for general aviation products and services
is highly fragmented, consisting of numerous competitors.

Manufacturing and Raw Materials

         The  Company's  manufacturing  operations  consist of both the in-house
manufacturing of component parts and  sub-assemblies 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.   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.


                                      -33-

<PAGE>



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 U.S. 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 eight service centers throughout the
world.

         In March 1992, the FAA adopted Technical  Standard Order C127 requiring
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.  At August 29, 1998, the Company had developed
15 different seat models which meet these new seat safety regulations.

Patents

         B/E  currently  holds 67 United  States  patents  and 28  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 Company.

Employees

         As  of  August  29,  1998,  B/E  had  approximately   5,600  employees.
Approximately  73% of these  employees  are  engaged  in  manufacturing,  13% in
engineering,  research and  development,  and 14% in sales,  marketing,  product
support and  general  administration.  Approximately  12% of the  employees  are
represented  by unions.  On April 25, 1997, the Company  completed  negotiations
with  one of its  two  domestic  unions  which  represents  8% of the  Company's
employees.  This contract, which covers a period of three years, was ratified by
the  members  of the union on April 26,  1997.  The  contract  at the only other
domestic union which represents approximately 2% of the Company's employees runs
to the year 2003. B/E considers its employee relations to be good.

Property

         As of August 29, 1998, B/E had 27 principal  facilities,  comprising an
aggregate of approximately 1.8 million square feet of space. The following table
describes  the  principal  facilities  and  indicates  the  location,  function,
approximate size and ownership status of each location, including SMR and ALC:


<TABLE>
<CAPTION>
                                                                                           Facility
                                                                                             Size
                 Location                           Products and Function                  (Sq. Feet)       Ownership
                 --------                           ---------------------                  ----------       ---------
<S>                                   <C>                                                   <C>               <C>
Corporate
Wellington, Florida.................. Corporate headquarters, finance,  marketing            17,700           Owned
                                      sales
Seating Products
Litchfield, Connecticut.............. Manufacturing, service and warehousing                147,700           Owned
Winston-Salem, North Carolina........ Manufacturing, research and development,              264,800           Owned
                                      finance, marketing and sales; Seating
                                      Products Group Headquarters
</TABLE>


                                      -34-

<PAGE>



<TABLE>
<CAPTION>
                                                                                           Facility
                                                                                             Size
                 Location                           Products and Function                  (Sq. Feet)       Ownership
                 --------                           ---------------------                  ----------       ---------
<S>                                   <C>                                                   <C>              <C>
Leighton Buzzard, England............ Manufacturing, service, research and                  114,000          Owned(a)
                                      development, sales support, finance and
                                      warehousing
Kilkeel, Northern Ireland............ Manufacturing, sales support and warehousing           38,500          Owned
Interior Systems                                                                                            
Anaheim, California.................. Manufacturing, service, research and                   57,100          Leased
                                      development, sales support, finance and                               
                                      warehousing                                                           
Delray Beach, Florida................ Manufacturing, service, research and                   52,000          Owned
                                      development, sales support, finance and                               
                                      warehousing; Interior Systems Group                                   
                                      Headquarters                                                          
Lenexa, Kansas....................... Manufacturing, service, engineering and                80,000          Leased
                                      warehousing                                                           
                                                                                                            
Nieuwegein, The Netherlands.......... Manufacturing, service, research and                   39,000          Leased 
                                      development, sales support, finance and                          
                                      warehousing
PESS Products
Irvine, California................... Manufacturing, service, research and                  106,700          Leased
                                      development, sales support, finance and                               
                                      warehousing; In-flight Entertainment Group                            
                                      Headquarters                                                          
General Aviation and VIP Products                                                                           
Miami, Florida....................... Manufacturing, service, research and                   84,300          Leased
                                      development, sales support, finance and                71,700          Owned
                                      warehousing; General Aviation Headquarters                            
Fountain Valley, California.......... Manufacturing, service, research and                   26,000          Owned
                                      development, sales support, finance and                               
                                      warehousing                                                           
Aerospace Lighting Corporation....... Manufacturing, service, research and                   20,115          Leased
                                      development, sales support, finance and                               
                                      warehousing                                                           
Services                                                                                                    
Orange, California................... Upgrade, maintenance, inspection and repair,          106,300          Leased
                                      finance, sales support and warehousing;                               
                                      Services Group Headquarters                                           
Longwood, Florida.................... Upgrade, maintenance, inspection and repair             5,300          Leased
Burnsville, Minnesota................ Upgrade, maintenance, inspection and repair             7,200          Leased
Woodville, Washington................ Upgrade, maintenance, inspection and repair            26,800          Leased
Chesham, England..................... Upgrade, maintenance, inspection and repair            34,000          Owned(a)
Toulouse, France..................... Upgrade, maintenance, inspection and repair               400          Leased
</TABLE>

                                      -35-

<PAGE>

<TABLE>
<CAPTION>
                                                                                           Facility
                                                                                             Size
                 Location                           Products and Function                  (Sq. Feet)       Ownership
                 --------                           ---------------------                  ----------       ---------
<S>                                    <C>                                                   <C>              <C>
Houston, Texas........................ Upgrade, maintenance, inspection and repair            45,000          Owned
Schiphol, The Netherlands............. Upgrade, maintenance, inspection and repair             3,600          Leased
SMR Technologies
Sharon Center, Ohio................... Service, research and development, sales               16,282          Owned
                                       support, finance and warehousing
Fenwick, West Virginia................ Manufacturing, service and warehousing                132,600          Owned
Flight Structure and Integration Group
Arlington, Washington................. Manufacturing, service, research and                  130,164          Leased
                                       development, sales support, finance and
                                       warehousing
Jacksonville, Florida................. Manufacturing, service, engineering, and               75,000          Owned
                                       warehousing

Wokingham, England.................... Manufacturing, service, research and                   70,000          Leased
                                       development, sales support, finance and
                                       warehousing

Wales, England........................ Manufacturing, service and warehousing                 80,000          Owned
</TABLE>

- ----------

     (a) B/E's owned properties in England are mortgaged to Barclays Bank plc to
         collateralize   credit  facilities  of  BE  Aerospace  (U.K.)  Ltd.  in
         aggregate amounts of up to approximately (pound)5.0 million.

         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 "-- Industry  Overview" and "-- 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.

Legal Proceedings

         The Company is not a party to  litigation  or other  legal  proceedings
which the  Company  believes  could  reasonably  be  expected to have a material
adverse  effect on the Company's  business,  financial  condition and results of
operations.

         In January  1998,  the Company  entered into a settlement  related to a
long-running dispute with the U.S. Government over export sales between 1992 and
1995 to Iran Air.  The dispute  centered  on  shipments  of  aircraft  seats and
related  spare parts for five civilian  aircraft  operated by Iran Air. Iran Air
purchased  the  seats  in  1992  and  arranged  for  them to be  installed  by a
contractor  in France.  At the time,  Iran was not the  subject of a U.S.  trade
embargo.  In connection  with its sale of seats to Iran Air, B/E applied for and
was granted a validated  export license by the U.S.  Department of Commerce (the
"DOC").  The dispute  with the U.S.  Government  centered on whether  seats were
delivered  to Iran Air  before the formal  license  was issued by the DOC,  some
seven months after B/E first applied for the license.  The  settlement  resolved
all disputes  between B/E Aerospace and the Department of Justice as well as the
DOC's Bureau of Export Enforcement.  As part of the settlement, B/E plead guilty
to a violation of the International Economic Emergency Powers Act and was placed
on probation for a three-year  period.  In addition,  B/E entered into a consent
order with the DOC under which the DOC has agreed to suspend the imposition of a
three-year export denial order on PTC Aerospace,  a member of B/E's U.S. Seating
Products  Group,  provided no further  violations of the export laws occur.  The
consent order issued by the DOC applies solely to PTC Aerospace  ("PTC"), a unit
of  the  Company's  Seating  Products  Group.  PTC  is  located  in  Litchfield,
Connecticut.  Under the terms of the consent  order,  if PTC were to violate any
federal  export laws during the three year period ending in January  2001,  PTC,
not B/E,  would be  subject to an order  denying  export  privileges.  Under the
Company's  current  organization,  the Company believes that it is unlikely that
PTC would be in a position to

                                      -36-

<PAGE>



engage in any export  transactions  that are not reviewed and  controlled at the
Seating  Products Group level. As part of the plea agreement that was negotiated
with the Office of the United States  Attorney for the District of  Connecticut,
B/E is subject to a three year term of corporate probation that began in January
1998. The probation is unsupervised and thus B/E is not subject to monitoring or
other  conditions that impede or affect its ability to conduct  business.  Under
the  probation,  the Company must refrain from  violating any federal laws.  The
Company has taken steps to implement a legal  compliance  program to prevent and
detect any  violations of law. The Company  recorded a charge of $4.7 million in
its fourth  quarter of fiscal 1998,  which ended  February 28, 1998,  related to
fines, civil penalties and associated legal fees arising from the settlement.



                                      -37-

<PAGE>



                                 USE OF PROCEEDS

         Except as provided by the SMR Acquisition  Agreement,  the Company will
not receive any of the  proceeds  from the sale of the Shares of Common Stock by
the Selling Stockholders.  See "Selling Stockholders." Any net proceeds received
by the Company will be used for general  corporate  purposes,  including working
capital  requirements to support  increased sales,  and possible  investments in
strategic acquisitions.

                              SELLING STOCKHOLDERS

General

         B/E  has  recently  made  several  acquisitions  and,  pursuant  to the
provisions of the agreements governing such acquisitions, B/E agreed to register
shares of Common Stock issued as consideration in such acquisitions. Each of the
Selling  Stockholders  received  the Shares of Common  Stock  offered  hereby in
connection with either the acquisition of ASI, ALC or SMR.

         The  following  are  brief  summaries  of  certain  provisions  of  the
agreements  governing the Company's  recent  acquisitions  of ASI, ALC, and SMR.
Such  summaries  do not  purport  to be  complete  and are  subject  to, and are
qualified in their entirety by reference to, such agreements which will be filed
as exhibits to the Registration Statement.  Capitalized terms are defined in the
respective agreements unless otherwise defined herein. Whenever any term therein
is referred to, such definition is incorporated herein by reference.

The ASI Acquisition

         On March 27, 1998,  pursuant to the terms of an  Agreement  and Plan of
Reorganization  and Merger  dated as of March 27,  1998,  by and among  B/E,  BE
Acquisition  Corp., ASI, the Gregory and Deborah Fodell  Partnership,  Ltd. (the
"Fodell  Partnership  I"), the Gregory and Deborah Fodell  Partnership  II, Ltd.
(the "Fodell Partnership II" and collectively with the Fodell Partnership I, the
"ASI Sellers") and Gregory N. Fodell (the "ASI Merger Agreement"),  B/E acquired
from the ASI Sellers  all of the  outstanding  stock of ASI, a company  based in
Houston,  Texas that services,  cleans and repairs  aircraft  interior parts and
products.  In exchange,  the ASI Sellers  received a total of 201,895  shares of
Common  Stock,  representing  a purchase  price of  approximately  $5.6 million.
Pursuant to the terms of the ASI Merger  Agreement,  B/E agreed to register  the
shares of Common Stock received by the ASI Sellers.

         The  shares  of  Common  Stock  offered  by the  ASI  Sellers  by  this
Prospectus were initially  issued to the ASI Sellers  pursuant to the ASI Merger
Agreement. Gregory N. Fodell is a general partner and limited partner of each of
the ASI  Sellers  and is  currently  a Vice  President  - Major  Accounts of B/E
Aerospace Services, Inc., a wholly-owned subsidiary of the Company.  Immediately
following the closing under the ASI Merger Agreement,  the Fodell  Partnership I
beneficially  owned 18,354 shares of Common Stock and the Fodell  Partnership II
beneficially  owned  183,541  shares  of  Common  Stock.  The B/E  Common  Stock
beneficially  owned by the ASI  Sellers  represented  approximately  0.7% of the
shares of the Company's Common Stock outstanding on September 9, 1998.

The ALC Acquisition

         On July 30,  1998,  pursuant to the terms of an  Agreement  and Plan of
Reorganization  and  Merger  dated as of July 30,  1998,  by and among  B/E,  BE
Aerospace  Acquisition Corp,  Aerospace  Lighting Corp., and Louis J. Francisco,
Elsie M. Francisco,  Michael J. Tenzyk,  Judith D. Tenzyk,  Trustee U/A Gertrude
Brown dated  1/7/92 and Trustee U/A William  Brown dated 1/7/92  (together,  the
"ALC Sellers") (the "ALC Merger  Agreement"),  B/E acquired from the ALC Sellers
all of the  outstanding  stock of  Aerospace  Lighting  Corporation  ("ALC"),  a
company based in Holbrook, New York, that produces interior fluorescent lighting
systems for business and corporate jet  aircraft.  In exchange,  the ALC Sellers
received  a total of 964,780  shares of Common  Stock,  representing  a purchase
price of  approximately  $28.1 million.  Pursuant to the terms of the ALC Merger
Agreement, B/E agreed to register the shares of Common Stock received by the ALC
Sellers.


                                      -38-

<PAGE>



         The  Shares  of  Common  Stock  offered  by the  ALC  Sellers  by  this
Prospectus were originally  issued to the ALC Sellers pursuant to the ALC Merger
Agreement.  Immediately  following the closing  under the ALC Merger  Agreement,
Louis J.  Francisco  owned 260,198  shares of Common Stock,  Elsie M.  Francisco
owned 61,395 shares of Common Stock,  Michael J. Tenzyk owned 160,797  shares of
Common Stock, Judith D. Tenzyk owned 160,797 shares of Common Stock, Trustee U/A
Gertrude Brown dated 1/7/92 owned 78,936 shares of Common Stock and Trustees U/A
William  Brown Dated 1/7/92 owned  242,657  shares of Common  Stock.  The Common
Stock  received  by the  ALC  Sellers  pursuant  to  the  ALC  Merger  Agreement
constitute all of the shares of the Company's Common Stock held by them. The B/E
Common  Stock owned by the ALC  Sellers  represented  approximately  3.3% of the
shares of the Company's Common Stock outstanding on September 9, 1998.

The SMR Acquisition

         On August 7, 1998,  pursuant to the terms of an  Acquisition  Agreement
dated as of July 21, 1998, by and among B/E,  Oscar J. Mifsud,  Patrick L. Ryan,
David B. Smith,  the Oscar J. Mifsud  Trust - 1998,  the Patrick L. Ryan Trust -
1998 and the David B. Smith Trust - 1998 (the several Trusts together,  the "SMR
Sellers"  and,  collectively  with  the ASI  Sellers  and the ALC  Sellers,  the
"Selling  Stockholders") (the "SMR Acquisition Agreement" and, together with the
ASI Merger Agreement and the ALC Merger Agreement, the "Merger Agreements"), B/E
acquired  from the SMR Sellers all of the  outstanding  stock of SMR  Aerospace,
Inc., all of the outstanding membership interests of SMR Developers LLC, and all
of the outstanding partnership interests of SMR Associates for a total aggregate
purchase price of approximately $120.0 million,  subject to adjustment (the "SMR
Purchase Price).  Pursuant to the SMR Acquisition Agreement,  the Company issued
4,000,000  shares of Common  Stock to the SMR  Sellers  and paid the SMR Sellers
$2.0 million in cash. The Company also paid $22.0 million in cash to the ESOP of
FSI, a subsidiary of SMR Aerospace,  Inc., pursuant to a separate Stock Purchase
Agreement  between the ESOP and B/E, to purchase the minority equity interest in
FSI held by the ESOP,  bringing the total  aggregate  purchase price paid by B/E
for SMR to  approximately  $142.0  million.  To the extent the Net  Proceeds (as
defined in the SMR  Acquisition  Agreement),  which includes the $2.0 million in
cash already received by the SMR Sellers,  from the sale of the 4,000,000 shares
of Common Stock is less than the SMR Purchase  Price,  the Company will pay such
difference  to the SMR Sellers with funds drawn under the Bank Credit  Facility.
B/E's  obligations  to the SMR Sellers under the SMR  Acquisition  Agreement are
secured by an  irrevocable  stand-by  letter of credit from The Chase  Manhattan
Bank in favor of the SMR Sellers.  If such Net Proceeds  exceed the SMR Purchase
Price,  the SMR Sellers will remit such excess to the  Company.  Pursuant to the
terms of the SMR  Acquisition  Agreement,  B/E agreed to register  the shares of
Common Stock received by the SMR Sellers.

         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 which 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 to  facilitate
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.

         The  shares  of  Common  Stock  offered  by the  SMR  Sellers  by  this
Prospectus  were  originally  issued  to the  SMR  Sellers  pursuant  to the SMR
Acquisition Agreement. The Common Stock issued to the SMR Sellers constitute all
of the shares of Common Stock that are beneficially owned by the SMR Sellers and
represent  approximately  13.7% of the  shares  of the  Company's  Common  Stock
outstanding on September 9, 1998.

         Set forth below are the names of each Selling  Stockholder,  the number
of shares of Common  Stock  beneficially  owned as of  September 9, 1998 by each
Selling Stockholder,  the number of Shares that may be offered and sold by or on
behalf of each Selling  Stockholder  hereunder and the amount of Common Stock to
be owned by each Selling  Stockholder upon the completion of the Offering if all
Shares offered by such Selling  Stockholder are sold. Except as set forth below,
as of September 9, 1998, none of the Selling Stockholders beneficially owns more
than 1% of the  outstanding  Common Stock and, to the  knowledge of the Company,
except for  Gregory  Fodell,  who is an  employee  of the  Company,  none of the
Selling  Stockholders  has had  any  material  relationships  with  the  Company
subsequent to the closings of the respective acquisitions

                                      -39-

<PAGE>



of ASI,  ALC and SMR.  Any and all of the Shares  listed below under the heading
"Shares  Offered"  may be  offered  for  sale  by or on  behalf  of the  Selling
Stockholders.  Except as provided by the Share Disposition Agreement (as defined
herein) and the Merger Agreements,  the Selling Stockholders may sell the Shares
of Common Stock offered  hereby from time to time and, as a result,  no estimate
can be given as of the date  hereof as to the  amount of Shares of Common  Stock
that will actually be offered for sale by the Selling  Stockholders or as to the
amount  of  Common  Stock  that will be held by the  Selling  Stockholders  upon
termination of such offering. See "Plan of Distribution." Additional information
as to the number and percentage of Shares beneficially owned before the offering
by the Selling  Stockholders,  the number of Shares to be sold and the number of
Shares   beneficially  owned  after  the  offering  will  be  set  forth  in  an
accompanying Prospectus Supplement, to the extent necessary.


<TABLE>
<CAPTION>
                                                              Shares Beneficially
                                                                     Owned                               Shares Beneficially
                                                               Prior to Offering         Shares         Owned After Offering
                  Selling Stockholders                       Number        Percent       Offered        Number        Percent
                  --------------------                       ------        -------       -------        ------        -------
ASI Sellers:
<S>                                                              <C>         <C>           <C>            <C>           <C>
     Gregory and Deborah  Fodell Partnership, Ltd.               18,354       *              18,354       --            --
     Gregory and Deborah  Fodell Partnership II, Ltd.           183,541       *             183,541       --            --
ALC Sellers:
     Elise M. Francisco                                          61,395       *              61,395       --            --
     Louis J. Francisco                                         260,198       *             260,198       --            --
     Judith D. Tenzyk                                           160,797       *             160,797       --            --
     Michael J. Tenzyk                                          160,797       *             160,797       --            --
     Trustees U/A Gertrude Brown dated 1/7/92                    78,936       *              78,936       --            --
     Trustees U/A William Brown dated 1/7/92                    242,657       *             242,657       --            --
SMR Sellers:
     Oscar J. Mifsud Trust - 1998                             1,333,334      4.56         1,333,334       --            --
     Patrick L. Ryan Trust - 1998                             1,333,333      4.56         1,333,333       --            --
     David B. Smith Trust - 1998                              1,333,333      4.56         1,333,333       --            --
</TABLE>

- ---------------
*  The percentage of shares of Common Stock  beneficially  owned does not exceed
   one percent of the  outstanding  shares of Common  Stock as of  September  9,
   1998.



                                      -40-

<PAGE>



                              PLAN OF DISTRIBUTION

         The SMR Sellers may sell the shares of Common Stock offered hereby from
time to time subject to the terms of the SMR Acquisition Agreement and the Share
Disposition Agreement (the "Share Disposition Agreement") by and between B/E and
the SMR Sellers dated July 21, 1998, pursuant to which the SMR Sellers agreed to
sell the SMR  Shares  only on such  terms and  conditions,  and at such times as
directed  and  approved  by B/E.  The ASI  Sellers  and the ALC Sellers may sell
shares of Common Stock offered  hereby from time to time subject to the terms of
the ASI Merger Agreement and the ALC Merger Agreement, respectively. The Company
has been advised by each of the Selling  Stockholders that sales by such Selling
Stockholders of the Shares of Common Stock offered hereby may be offered or sold
by or for the  account  of such  Selling  Stockholders,  from  time to time,  to
purchasers directly, or through brokers in brokerage  transactions on the Nasdaq
National Market, or to underwriters or dealers in negotiated  transactions or in
a combination of such methods of sale, at fixed prices which may be changed,  at
market  prices  prevailing  at the  time of  sale,  at  prices  related  to such
prevailing market prices or at negotiated prices.  The Selling  Stockholders may
be deemed to be underwriters within the meaning of the Securities Act. Where any
Selling  Stockholder  effects such  transactions by selling to or through one or
more broker-dealers, such broker-dealers may receive compensation in the form of
underwriting   discounts,   concessions   or   commissions   from  the   Selling
Stockholders.  The Selling  Stockholders and any broker-dealers that participate
in the distribution may under certain circumstances be deemed to be underwriters
within the meaning of the Securities Act, and any  commissions  received by such
broker-dealers  and any profits  realized on the resale of shares by them may be
deemed to be underwriting  discounts and  commissions  under the Securities Act.
Alternatively, where the Selling Stockholders from time to time offer the Shares
through underwriters,  brokers,  dealers or agents, such underwriters,  brokers,
dealers  or  agents  may  receive  compensation  in  the  form  of  underwriting
discounts,  commissions or concessions from the Selling  Stockholders and/or the
purchasers  of the Shares for whom they act as an agent.  The Merger  Agreements
provide that the Company  indemnify  the Selling  Stockholders  against  certain
liabilities,   including  liabilities  under  the  Securities  Act.  The  Merger
Agreements  also provide for the  indemnification  of the Company by the Selling
Stockholders for certain liabilities, including liabilities under the Securities
Act.

         To the  extent  required  under  the  Securities  Act,  a  supplemental
prospectus  will be filed,  disclosing (a) the name of any Selling  Stockholder;
(b) the name of any  underwriters,  brokers,  dealers  or agents  effecting  the
transaction  on  behalf of the  Selling  Stockholder;  (c) the  number of shares
involved; (d) the price at which such shares are to be sold; (e) the commissions
paid or discounts or concessions allowed to such underwriters,  brokers, dealers
or agents,  where applicable;  (f) that such underwriters,  brokers,  dealers or
agents did not conduct any  investigation  to verify the  information set out or
incorporated by reference in this Prospectus, as supplemented, where applicable;
and (g) other facts material to the transaction.

         Pursuant  to the  Merger  Agreements,  the  Company  has  agreed to pay
substantially  all  fees  and  expenses  incident  to the  preparation,  filing,
amending  and  supplementing  of  the  Registration   Statement  of  which  this
Prospectus is a part and any registration,  filing, qualification and other fees
and expenses of complying with state Blue Sky or securities law. In addition, in
connection  with the  acquisition  of SMR,  the  Company  has  agreed to pay all
applicable stock transfer taxes, brokerage  commissions,  underwriting discounts
or commissions and any fees of the SMR Sellers' counsel.  In connection with the
acquisitions  of ASI and ALC,  the ASI Sellers and the ALC Sellers  will pay all
applicable stock transfer taxes, brokerage  commissions,  underwriting discounts
or commissions and any fees of such Selling Stockholders' counsel.

         Pursuant to the Merger Agreements,  and subject to certain  conditions,
the  Company  has  agreed to keep the  Registration  Statement  relating  to the
offering  and sale by the  Selling  Stockholders  of the shares of Common  Stock
continuously  effective  until a fixed date following the  effectiveness  of the
Registration  Statement  or such  earlier  date as of which all shares of Common
Stock registered hereunder have been disposed of.

         In addition to  offering  the shares from time to time  pursuant to the
Registration  Statement  (the "shelf portion of the  offering"),  certain of the
Shares  may be sold in a  potential  underwritten  offering  (the  "underwritten
portion  of the  offering").  Pursuant  to the SMR  Acquisition  Agreement,  the
Company has agreed to use commercially reasonable efforts to try to effectuate a
fully underwritten public offering of Common Stock which will include the Shares
issued  to the SMR  Sellers.  While  the  Company  has no  obligation  to try to
effectuate  such an  underwritten  offering on behalf of the ASI or ALC Sellers,
the ASI and ALC Sellers could elect to participate,  in whole or in part, in any
such underwritten offering, subject to certain

                                      -41-

<PAGE>



exceptions,   pursuant  to  their  respective  "piggyback"  registration  rights
contained in the Merger Agreements.  In the event that not all of the Shares are
sold in any such underwritten portion of the offering,  or to the extent certain
Selling  Stockholders choose not to participate in any such underwritten portion
of the offering,  such unsold Shares may be offered by the Selling  Stockholders
as otherwise  described herein in the shelf portion of the offering.  Sales of a
substantial number of shares of Common Stock in the public market, either in the
shelf  portion of the  offering or the  underwritten  portion of the offering or
otherwise,  could  adversely  effect the market  price of the Common  Stock.  In
addition,  there is no  assurance  that  purchasers  who buy Common Stock in the
shelf  portion of the  offering,  either  before or after any such  underwritten
portion of the offering,  will receive such shares on similar terms as those who
receive shares in the underwritten portion of the offering.  The public offering
price for Shares  offered in any  underwritten  portion of the offering  will be
determined through  negotiations  between the Company,  any Selling Stockholders
and the underwriters participating in such offering and may not be indicative of
the market price of the Common Stock following any such underwritten  portion of
the offering or during the shelf portion of the offering.



                                      -42-

<PAGE>



                          DESCRIPTION OF CAPITAL STOCK

Common Stock

         The Company is authorized to issue  50,000,000  shares of Common Stock,
$0.01 par value, of which 28,309,929 shares were outstanding as of September 22,
1998, and held by approximately  721  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 9 7/8% Notes and 8% 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  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.


                                      -43-

<PAGE>



         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 the 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
Boston EquiServe L.P., Canton, Massachusetts 02021.

                                  LEGAL MATTERS

         Certain  legal  matters  with  respect to the validity of the Shares of
Common  Stock  offered  hereby will be passed upon for the Company by Shearman &
Sterling, New York, New York.

                                     EXPERTS

         The  consolidated  financial  statements  and  schedule  of the Company
appearing in its annual  report on Form 10-K for the fiscal year ended  February
28, 1998, have been audited by Deloitte & Touche LLP, independent  auditors,  as
stated in their reports included  therein and incorporated  herein by reference.
Such consolidated  financial  statements and schedule are incorporated herein by
reference in reliance upon such reports given upon the authority of such firm as
experts in accounting and auditing.

         The  consolidated  financial  statements of SMR as of December 31, 1997
and 1996 and for the years ended  December 31, 1997 and 1996,  have been audited
by Zalick,  Torok,  Kirgesner,  Cook & Co., independent  auditors,  as stated in
their reports  incorporated  herein by reference.  Such  consolidated  financial
statements  are  incorporated  herein by reference in reliance upon such reports
given upon the authority of such firm as experts in accounting and auditing.



                                      -44-

<PAGE>


================================================================================


  No  person  has  been  authorized  to give  any  information  or to  make  any
representations  other than those contained in this Prospectus or any Prospectus
Supplement and, if given or made, such information or  representations  must not
be relied upon as having been  authorized.  This  Prospectus  and any Prospectus
Supplement does not constitute an offer to sell or the  solicitation of an offer
to buy any securities  other than the securities to which it relates or an offer
to  sell  or  the  solicitation  of an  offer  to  buy  such  securities  in any
circumstances  in which such offer or  solicitation  is  unlawful.  Neither  the
delivery  of this  Prospectus  or any  Prospectus  Supplement  nor any sale made
hereunder or thereunder shall, under any  circumstances,  create any implication
that  there has been no  change in the  affairs  of the  Company  since the date
hereof or thereof or that the information contained herein or therein is correct
as of any time subsequent to the date of such information.

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

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

                                   Prospectus

Available Information.........................................................2
Incorporation of Certain Documents
    by Reference..............................................................2
The Company...................................................................3
Risk Factors..................................................................5
Management's Discussion and Analysis
    of Financial Condition and Results
    of Operations............................................................11
Cautionary Statement Regarding
    Forward-Looking Statements...............................................20
Business.....................................................................21
Use of Proceeds..............................................................38
Selling Stockholders.........................................................38
Plan of Distribution.........................................................41
Description of Capital Stock.................................................43
Legal Matters................................................................44
Experts......................................................................44

================================================================================

================================================================================





                               BE Aerospace, Inc.


                                     [Logo]

                        5,166,675 Shares of Common Stock




                                   ----------
                                   PROSPECTUS
                                   ----------






                                     , 1998


================================================================================
<PAGE>



                                     PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS


Item 14.  Other Expenses of Issuance and Distribution
         Securities and Exchange Commission registration fee.......... $ 49,955
         Printing.....................................................    **
         Legal fees and expenses......................................    **
         Nasdaq National Market Additional Listing Fee................   39,038
         Accounting fees and expenses.................................    **
         Miscellaneous................................................    **
                                                                       --------
                  Total............................................... $  **
                                                                       ========
- ---------------
*    Estimated
**   To be provided by amendment

Item 15.  Indemnification of Directors and Officers

         Section  145  of the  Delaware  General  Corporation  Law,  as  amended
("DGCL")  provides that a  corporation  may indemnify any person who was or is a
party  or is  threatened  to be  made a  party  to any  threatened,  pending  or
completed action,  suit or proceeding  whether civil,  criminal or investigative
(other  than an action by or in the right of the  corporation)  by reason of the
fact  that  he  is or  was  a  director,  officer,  employee  or  agent  of  the
corporation,  or is or was  serving  at the  request  of  the  corporation  as a
director, officer, employee or agent of another corporation,  partnership, joint
venture,  trust or other  enterprise,  against  expenses  (including  attorneys'
fees),  judgments,  fines and amount paid in settlement  actually and reasonably
incurred by him in connection  with such action,  suit or proceeding if he acted
in good faith and in a manner he reasonably  believed to be in or not opposed to
the best  interests  of the  corporation,  and,  with  respect  to any action or
proceeding, had no reasonable cause to believe his conduct was unlawful. Section
145 further provides that a corporation  similarly may indemnify any such person
serving in any such capacity who was or is a party or is threatened to be made a
party to any threatened,  pending or completed action or suit by or in the right
of the corporation to procure a judgment in its favor, against expenses actually
and  reasonably  incurred in  connection  with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably  believed
to be in or not opposed to the best interests of the corporation and except that
no indemnification  shall be made in respect of any claim, issue or matter as to
which such  person  shall  have been  adjudged  to be liable to the  corporation
unless and only to the extent that the Delaware  Court of Chancery or such other
court in which such action or suit was brought shall determine upon  application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.

         Section  102(b)(7) of the DGCL permits a corporation  to include in its
certificate of  incorporation  a provision  eliminating or limiting the personal
liability  of a director to the  corporation  or its  stockholders  for monetary
damages for breach of fiduciary duty as a director, provided that such provision
shall not eliminate or limit the liability of a director:  (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders,  (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing  violation  of law,  (iii) under  Section 174 of the DGCL  (relating  to
unlawful  payment of dividends and unlawful  stock  purchase and  redemption) or
(iv) for any transaction  from which the director  derived an improper  personal
benefit.

         The   Registrant's   Restated   Certificate   of   Incorporation   (the
"Certificate")  provides  that the  Company's  Directors  shall be liable to the
Registrant or its stockholders for monetary damages for breach of fiduciary duty
as a director  except to the extent that  exculpation  from  liabilities  is not
permitted  under the DGCL as in effect at the time such liability is determined.
The  Registrant's   Certificate  further  provides  that  the  Registrant  shall
indemnify  its  directors  and officers to the fullest  extent  permitted by the
DGCL.

                                      II-1

<PAGE>



         The directors and officers of the Company are covered under  directors'
and officer's liability insurance policies maintained by the Company.

Item 16.  Exhibits and Financial Statement Schedules

Exhibit
Number                     Description
- ------                     -----------

Exhibit 3                  Articles of Incorporation and By-Laws
3.1                        Amended and Restated Certificate of Incorporation*
3.2                        Certificate or Amendment of the Restated Certificate
                           of Incorporation*
3.3                        Amended and Restated By-Laws*
Exhibit 4                  Instruments defining the rights of security
                           holders, including debentures
4.1                        Specimen Common Stock Certificate*
4.2                        Form of Note for the Registrant's Series B 9-7/8%
                           Senior Subordinated Notes*
4.3                        Indenture dated January 24, 1996 between Fleet
                           National Bank, as trustee, and the Registrant
                           relating to the Registrant's 9-7/8% Senior
                           Subordinated Notes and Series B 9-7/8% Senior
                           Subordinated Notes*
4.4                        Indenture dated February 13, 1998 for the
                           Registrant's issue of 8% Senior Subordinated Notes*
4.5                        Form of Note for the Registrant's 8% Senior
                           Subordinated Notes*
4.6                        Form of Stockholders' Agreement by and among the
                           Registrant, Summit Ventures II, L.P., Summit
                           Investors II, L.P. and Wedbush Capital Partners*
Exhibit 5
5.1                        Opinion of Shearman & Sterling*
Exhibit 10(i)              Material Contracts
10.1                       Supply Agreement dated as of April 17, 1990 between
                           the Registrant and Applied Extrusion Technologies,
                           Inc.*
10.2                       Amended and Restated Credit Agreement (the "Chase
                           Credit Agreement"), dated as of May 18, 1994 among
                           the Registrant, the banks named therein and The Chase
                           Manhattan Bank, N.A. as Agent*
10.3                       Amendment No. 1 dated May 18, 1994 to the Chase
                           Credit Agreement*
10.4                       Second Amended and Restated Chase Credit Agreement
                           dated January 19, 1996*
10.5                       Third Amended and Restated Chase Credit Agreement
                           dated May 29, 1997*
10.6                       Fourth Amended and Restated Chase Credit Agreement
                           dated April 3, 1998*
10.6(a)                    Fifth Amended and Restated Credit Agreement dated
                           August 7, 1998*
10.7                       Receivables Sales Agreement dated January 24, 1996
                           among the Registrant, First Trust of Illinois, N.A.
                           and Centrally Held Eagle Receivables Program, Inc.*
10.8                       Escrow Agreement dated January 24, 1996 among the
                           Registrant, Eagle Industrial Product Corporation and
                           First Trust of Illinois, N.A. as Escrow Agent*
10.9                       Acquisition Agreement dated as of December 14, 1995
                           by and among the Registrant, Eagle Industrial
                           Products Corporation, Eagle Industries, Inc. and
                           Great American Management and Investment, Inc.*
10.10                      Asset Purchase Agreement dated as of April 16, 1998
                           by and between Stanford Aerospace Group, Inc. and the
                           Registrant*
10.11                      Stock Purchase Agreement dated as of March 31, 1998
                           by and between the Registrant and Puritan Bennet
                           Corporation*
10.12                      Acquisition Agreement dated July 21, 1998 among the
                           Registrant and Sellers named therein*
Exhibit 10(ii)             Leases
10.13                      Lease dated May 15, 1992 between McDonnell Douglas
                           Company, as lessor, and the Registrant, as lessee,
                           relating to the Irvine, California property*
10.14                      Lease dated September 1, 1992 relating to the
                           Wellington, Florida property*

                                      II-2

<PAGE>



10.15                      Chesham, England Lease dated October 1, 1973 between
                           Drawheath Limited and the Peninsular and Oriental
                           Steam Navigation Company (assigned in February 1985)*
10.16                      Utrecht, The Netherlands Lease dated December 15,
                           1988 between the Pension Fund Foundation for Food
                           Supply Commodity Boards and Inventum*
10.17                      Utrecht, The Netherlands Lease dated January 31, 1992
                           between G.W. van de Grift Onroerend Goed B.V. and
                           Inventum*
10.18                      Lease dated October 25, 1993 relating to the property
                           in Longwood, Florida*
Exhibit 10(iii)            Executive Compensation Plans and Arrangements
10.19                      Amended and Restated 1989 Stock Option Plan
10.20                      Directors' 1991 Stock Option Plan*
10.21                      1990 Stock Option Agreement with Richard G.
                           Hamermesh*
10.22                      1990 Stock Option Agreement with B. Martha Cassidy
10.23                      1990 Stock Option Agreement with Jim C. Cowart*
10.24                      1990 Stock Option Agreement with Petros A.
                           Palandjian*
10.25                      1990 Stock Option Agreement with Hansjorg Wyss*
10.26                      1991 Stock Option Agreement with Amin J. Khoury*
10.27                      1991 Stock Option Agreement with Jim C. Cowart*
10.28                      1992 Stock Option Agreement with Amin J. Khoury*
10.29                      1992 Stock Option Agreement with Jim C. Cowart*
10.30                      1992 Stock Option Agreement with Paul W. Marshall*
10.31                      1992 Stock Option Agreement with David Lahar*
10.32                      United Kingdom 1992 Employee Share Option Scheme*
10.33                      1994 Employee Stock Purchase Plan*
10.34                      Amended and Restated Employment Agreement dated as of
                           May 29, 1998 between the Registrant and Amin J.
                           Khoury*
10.35                      Amended and Restated Employment Agreement dated as of
                           May 29, 1998 between the Registrant and Robert J.
                           Khoury*
10.36                      Employment Agreement dated as of March 1, 1992
                           between the Registrant and Marco Lanza (the "Lanza
                           Agreement")*
10.37                      Amendment No. 1 dated as of January 1, 1996 to the
                           Lanza Agreement*
10.38                      Employment Agreement dated as of April 1, 1992
                           between the Registrant and G. Bernard Jewell* 
10.39                      Amended and Restated Employment Agreement dated as of
                           May 29, 1998 between the Registrant and Thomas P.
                           McCaffrey*
10.40                      Amended and Restated Employment Agreement dated as of
                           May 29, 1998 between the Registrant and Paul E.
                           Fulchino*
10.41                      BE Aerospace, Inc. Savings and Profit Sharing Plan
                           and Trust-- Financial Statements for the Ten Months
                           Ended December 31, 1995 and the Year Ended February
                           28, 1995, Supplemental Schedules and Independent
                           Auditors' Report*
10.42                      BE Aerospace, Inc. 1994 Employee Stock Purchase Plan
                           Financial Statements as of February 29, 1996 and
                           February 26, 1995; and for the Year Ended February
                           29, 1996 and the period from May 15, 1994 (inception)
                           to February 28, 1995 and Independent Auditors'
                           Report*
Exhibit 23                 Consent of Experts and Counsel
23.1                       Consent of Independent Accountants-- Deloitte &
                           Touche LLP
23.2                       Consent of Shearman & Sterling (Included in Exhibit
                           5.1)
23.3                       Consent of Independent Accountants-- Zalick, Torok,
                           Kirgesner, Cook & Co.
Exhibit 24                 Power of Attorney
24.1                       Power of Attorney (Included on page II-6)
Exhibit 99
99.1                       Agreement and Plan of Reorganization and Merger dated
                           March 27, 1998 by and among the Registrant, BE
                           Acquisition Corp., Aerospace Interiors, Inc., Gregory
                           and Deborah Fodell Partnership, Ltd., Gregory and
                           Deborah Fodell Partnership II, Ltd. and Gregory N.
                           Fodell*

                                      II-3

<PAGE>



99.2                       Agreement and Plan of Reorganization and Merger dated
                           as of July 30, 1998 by and among the Registrant, BE
                           Aerospace Acquisition Corp., Aerospace Lighting
                           Corp., and Louis J. Francisco, Elsie M. Francisco,
                           Michael J. Tenzyk, Judith D. Tenzyk, Trustees U/A
                           Gertrude Brown dated 1/7/92 and Trustee U/A William
                           Brown dated 1/7/92.*

- -------------------
*   Previously filed and incorporated by reference herein.  See Exhibit Index.


Item 17.  Undertakings

         The undersigned Company hereby undertakes:

         (1) To file, during any period in which offers or sales are being made,
a post-effective amendment to registration statement:

                  (i) To include any prospectus  required by Section 10(a)(3) of
         the Securities Act,  unless the information  required to be included in
         such  post-effective  amendment is contained in a periodic report filed
         by the  Registrant  pursuant  to  Section  13 or  Section  15(d) of the
         Exchange Act and incorporated herein by reference;

                  (ii) To reflect in the  prospectus any facts or events arising
         after the  effective  date of the  registration  statement (or the most
         recent post-effective amendment thereof) which,  individually or in the
         aggregate,  represent a fundamental change in the information set forth
         in the registration  statement,  unless the information  required to be
         included in such  post-effective  amendment  is contained in a periodic
         report filed by the Registrant  pursuant to Section 13 or Section 15(d)
         of  the   Exchange   Act  and   incorporated   herein   by   reference.
         Notwithstanding  the  foregoing,  any increase or decrease in volume of
         securities  offered (if the total  dollar value of  securities  offered
         would not exceed that which was  registered) and any deviation from the
         low  or  high  and of  the  estimated  maximum  offering  range  may be
         reflected in the form of prospectus filed with the Commission  pursuant
         to Rule  424(b) if, in the  aggregate,  the changes in volume and price
         represent  no more  than 20  percent  change in the  maximum  aggregate
         offering price set forth in the "Calculation of Registration Fee" table
         in the effective registration statement;

                  (iii) To include any material  information with respect to the
         plan of  distribution  not  previously  disclosed  in the  registration
         statement  or  any  material   change  to  such   information   in  the
         registration statement.

         (2) That  for the  purpose  of  determining  any  liability  under  the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new  registration  statement  relating to the securities
offered  therein,  and the  offering  of such  securities  at that time shall be
deemed to be the initial bona fide offering thereof.

         (3) To remove from registration by means of a post-effective  amendment
any securities  being  registered  which remain unsold at the termination of the
offering.

         (4) The undersigned  registrant hereby undertakes that, for purposes of
determining  any  liability  under  the  Securities  Act,  each  filing  of  the
registrant's  Annual  Report  pursuant to Section 13(a) or 15(d) of the Exchange
Act that is  incorporated  by reference in the  registration  statement shall be
deemed to be a new  registration  statement  relating to the securities  offered
therein,  and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

         (5) The undersigned registrant hereby undertakes to deliver or cause to
be delivered with the prospectus,  to each person to whom the prospectus is sent
or given,  the latest annual report to security  holders that is incorporated by
reference  in  the  prospectus  and  furnished   pursuant  to  and  meeting  the
requirements  of Rule 14a-3 or Rule 14c-3 under the  Exchange  Act;  and,  where
interim  financial  information  is  required  to be  presented  by Article 3 of
Regulation S-X is not set forth in the  prospectus,  to deliver,  or cause to be
delivered  to each person to whom the  prospectus  is sent or given,  the latest
quarterly  report  that  is  specifically   incorporated  by  reference  in  the
prospectus to provide such financial information.

                                      II-4

<PAGE>



         (6)  Insofar  as  indemnification  for  liabilities  arising  under the
Securities Act may be permitted to directors,  officers and controlling  persons
of the registrant pursuant to the provisions described in Item 15, or otherwise,
the  registrant  has been  advised  that in the opinion of the  Commission  such
indemnification  is  against  public  policy  as  expressed  in the  Act and is,
therefore,  unenforceable. In the event that a claim for indemnification against
such liabilities  (other than the payment by the registrant of expenses incurred
or paid by a director,  officer or  controlling  person of the registrant in the
successful  defense of any  action,  suit or  proceeding)  is  asserted  by such
director, officer or controlling person or controlling person in connection with
the securities being  registered,  the registrant will, unless in the opinion of
its counsel the matter has been settled by  controlling  precedent,  submit to a
court of appropriate  jurisdiction the question whether such  indemnification by
it is against  public policy as expressed in the Act and will be governed by the
final adjudication of such issue.



                                      II-5

<PAGE>



                                   SIGNATURES

         Pursuant to the  requirements  of the  Securities  Act, the Company has
duly caused  this  Amendment  to the  Registration  Statement  on Form S-3 to be
signed on its behalf by the undersigned,  thereunto duly authorized, in the City
of Wellington and the State of Florida, on the 25th day of September, 1998.

                                  BE AEROSPACE,  INC.


                                  By:                      *
                                        ------------------------------------
                                  Title:  Chairman of the Board of Directors


         Pursuant to the  requirements  of the Securities Act, this Amendment to
the  Registration  Statement  has been  signed by the  following  persons in the
capacities indicated below on the 25th day of September, 1998.


Signature                   Title
- ---------                   -----
        *                   Chairman of the Board of Directors
- ------------------------
Amin J. Khoury

        *                   Vice Chairman of the Board of Directors and Chief
- ------------------------    Executive Officer (principal executive officer)
Robert J. Khoury            

        *                   President, Chief Operating Officer and Director
- ------------------------
Paul E. Fulchino

        *                   Corporate Senior Vice President of Administration,
- ------------------------    Chief Financial Officer and Assistant Secretary
Thomas P. McCaffrey         (principal financial and accounting officer)   
                                                                           
        *                   Director
- ------------------------
Jim C. Cowart

        *                   Director
- ------------------------
Richard G. Hamermesh

        *                   Director
- ------------------------
Brian H. Rowe

        *                   Director
- ------------------------
Hansjorg Wyss

*By: /s/ Thomas P. McCaffrey
     ------------------------
Thomas P. McCaffrey
Attorney-in-fact


                                      II-6

<PAGE>



                                  Exhibit Index


Exhibit
Number                     Description
- ------                     -----------

Exhibit 3                  Articles of Incorporation and By-Laws
3.1                        Amended and Restated Certificate of Incorporation(1)
3.2                        Certificate or Amendment of the Restated Certificate
                           of Incorporation(2)
3.3                        Amended and Restated By-Laws(14)
Exhibit 4                  Instruments defining the rights of security
                           holders, including debentures
4.1                        Specimen Common Stock Certificate(1)
4.2                        Form of Note for the Registrant's Series B 9-7/8%
                           Senior Subordinated Notes(3) 
4.3                        Indenture dated January 24, 1996 between Fleet
                           National Bank, as trustee, and the Registrant
                           relating to the Registrant's 9-7/8% Senior
                           Subordinated Notes and Series B 9-7/8% Senior
                           Subordinated Notes(3)
4.4                        Indenture dated February 13, 1998 for the
                           Registrant's issue of 8% Senior Subordinated Notes(4)
4.5                        Form of Note for the Registrant's 8% Senior
                           Subordinated Notes(4)
4.6                        Form of Stockholders' Agreement by and among the
                           Registrant, Summit Ventures II, L.P., Summit
                           Investors II, L.P. and Wedbush Capital Partners(5)

Exhibit 5
5.1                        Opinion of Shearman & Sterling*
Exhibit 10(i)              Material Contracts
10.1                       Supply Agreement dated as of April 17, 1990 between
                           the Registrant and Applied Extrusion Technologies,
                           Inc.(1)
10.2                       Amended and Restated Credit Agreement (the "Chase
                           Credit Agreement"), dated as of May 18, 1994 among
                           the Registrant, the banks named therein and The Chase
                           Manhattan Bank, N.A. as Agent(6)
10.3                       Amendment No. 1 dated May 18, 1994 to the Chase
                           Credit Agreement(7)
10.4                       Second Amended and Restated Chase Credit Agreement
                           dated January 19, 1996(3)
10.5                       Third Amended and Restated Chase Credit Agreement
                           dated May 29, 1997(4)
10.6                       Fourth Amended and Restated Chase Credit Agreement
                           dated April 3, 1998(4)
10.6(a)                    Fifth Amended and Restated Credit Agreement dated
                           August 7,1998*
10.7                       Receivables Sales Agreement dated January 24, 1996
                           among the Registrant, First Trust of Illinois, N.A.
                           and Centrally Held Eagle Receivables Program, Inc.(3)
10.8                       Escrow Agreement dated January 24, 1996 among the
                           Registrant, Eagle Industrial Product Corporation and
                           First Trust of Illinois, N.A. as Escrow Agent(3)
10.9                       Acquisition Agreement dated as of December 14, 1995
                           by and among the Registrant, Eagle Industrial
                           Products Corporation, Eagle Industries, Inc. and
                           Great American Management and Investment, Inc.(8)
10.10                      Asset Purchase Agreement dated as of April 16, 1998
                           by and between Stanford Aerospace Group, Inc. and the
                           Registrant(9)

                                        i

<PAGE>



10.11                      Stock Purchase Agreement dated as of March 31, 1998
                           by and between the Registrant and Puritan Bennet
                           Corporation(10)
10.12                      Acquisition Agreement dated July 21, 1998 among the
                           Registrant and Sellers named therein(16)
Exhibit 10(ii)             Leases
10.13                      Lease dated May 15, 1992 between McDonnell Douglas
                           Company, as lessor, and the Registrant, as lessee,
                           relating to the Irvine, California property(2)
10.14                      Lease dated September 1, 1992 relating to the
                           Wellington, Florida property(2) 
10.15                      Chesham, England Lease dated October 1, 1973 between
                           Drawheath Limited and the Peninsular and Oriental
                           Steam Navigation Company (assigned in February
                           1985)(14)
10.16                      Utrecht, The Netherlands Lease dated December 15,
                           1988 between the Pension Fund Foundation for Food
                           Supply Commodity Boards and Inventum(14)
10.17                      Utrecht, The Netherlands Lease dated January 31, 1992
                           between G.W. van de Grift Onroerend Goed B.V. and
                           Inventum(14)
10.18                      Lease dated October 25, 1993 relating to the property
                           in Longwood, Florida(6)
Exhibit 10(iii)            Executive Compensation Plans and Arrangements
10.19                      Amended and Restated 1989 Stock Option Plan(11)
10.20                      Directors' 1991 Stock Option Plan(11)
10.21                      1990 Stock Option Agreement with Richard G.
                           Hamermesh(11)
10.22                      1990 Stock Option Agreement with B. Martha
                           Cassidy(11)
10.23                      1990 Stock Option Agreement with Jim C. Cowart(11)
10.24                      1990 Stock Option Agreement with Petros A.
                           Palandjian(11)
10.25                      1990 Stock Option Agreement with Hansjorg Wyss(11)
10.26                      1991 Stock Option Agreement with Amin J. Khoury(11)
10.27                      1991 Stock Option Agreement with Jim C. Cowart(11)
10.28                      1992 Stock Option Agreement with Amin J. Khoury(11)
10.29                      1992 Stock Option Agreement with Jim C. Cowart(11)
10.30                      1992 Stock Option Agreement with Paul W. Marshall(11)
10.31                      1992 Stock Option Agreement with David Lahar(11)
10.32                      United Kingdom 1992 Employee Share Option Scheme(2)
10.33                      1994 Employee Stock Purchase Plan(12)
10.34                      Amended and Restated Employment Agreement dated as of
                           May 29, 1998 between the Registrant and Amin J.
                           Khoury(15)
10.35                      Amended and Restated Employment Agreement dated as of
                           May 29, 1998 between the Registrant and Robert J.
                           Khoury(15)
10.36                      Employment Agreement dated as of March 1, 1992
                           between the Registrant and Marco Lanza (the "Lanza
                           Agreement")(14)
10.37                      Amendment No. 1 dated as of January 1, 1996 to the
                           Lanza Agreemen(13)
10.38                      Employment Agreement dated as of April 1, 1992
                           between the Registrant and G. Bernard Jewell(14)
10.39                      Amended and Restated Employment Agreement dated as of
                           May 29, 1998 between the Registrant and Thomas P.
                           McCaffrey(15)

                                       ii

<PAGE>



10.40                      Amended and Restated Employment Agreement dated as of
                           May 29, 1998 between the Registrant and Paul E.
                           Fulchino(15)
10.41                      BE Aerospace, Inc. Savings and Profit Sharing Plan
                           and Trust-- Financial Statements for the Ten Months
                           Ended December 31, 1995 and the Year Ended February
                           28, 1995, Supplemental Schedules and Independent
                           Auditors' Report(14)
10.42                      BE Aerospace, Inc. 1994 Employee Stock Purchase Plan
                           Financial Statements as of February 29, 1996 and
                           February 26, 1995; and for the Year Ended February
                           29, 1996 and the period from May 15, 1994 (inception)
                           to February 28, 1995 and Independent Auditors'
                           Report(14)
Exhibit 23                 Consent of Experts and Counsel
23.1                       Consent of Independent Accountants -- Deloitte &
                           Touche LLP**
23.2                       Consent of Shearman & Sterling (Included in Exhibit
                           5.1)
23.3                       Consent of Independent Accountants -- Zalik, Torok,
                           Kirgesner, Cook & Co.**
Exhibit 24                 Power of Attorney
24.1                       Power of Attorney (Included on page II-6)
Exhibit 99
99.1                       Agreement and Plan of Reorganization and Merger dated
                           March 27, 1998 by and among the Registrant, BE
                           Acquisition Corp., Aerospace Interiors, Inc., Gregory
                           and Deborah Fodell Partnership, Ltd., Gregory and
                           Deborah Fodell Partnership II, Ltd. and Gregory N.
                           Fodell*
99.2                       Agreement and Plan of Reorganization and Merger dated
                           as of July 30, 1998 by and among the Registrant, BE
                           Aerospace Acquisition Corp., Aerospace Lighting
                           Corp., and Louis J. Francisco, Elsie M. Francisco,
                           Michael J. Tenzyk, Judith D. Tenzyk, Trustees U/A
                           Gertrude Brown dated 1/7/92 and Trustee U/A William
                           Brown dated 1/7/92.*



- -------------------
*        Previously filed.
**       Filed herein.
(1)      Incorporated  by reference to the Company's  Registration  Statement on
         Form S-1, as amended (No. 33-33689), filed with the Commission on March
         7, 1990.
(2)      Incorporated  by reference to the Company's  Registration  Statement on
         Form S-1,  as amended  (No.  33-54146),  filed with the  Commission  on
         November 3, 1992.
(3)      Incorporated  by reference to the Company's  Registration  Statement on
         Form S-4 (No.  333- 00433),  filed with the  Commission  on January 26,
         1996.
(4)      Incorporated  by reference to the Company's  Registration  Statement on
         Form S-4 (No. 333- 47649), filed with the Commission on March 10, 1998.
(5)      Incorporated  by reference to the Company's  Registration  Statement on
         Form S-2 (No. 33-66490), filed with the Commission on July 23, 1993.
(6)      Incorporated  by reference to the Company's  Annual Report on Form 10-K
         as amended for the Fiscal year ended February 26, 1994,  filed with the
         Commission on May 25, 1994.
(7)      Incorporated  by reference to the Company's  Annual Report on Form 10-K
         as amended for the Fiscal year ended February 25, 1995,  filed with the
         Commission on May 26, 1995.
(8)      Incorporated  by reference to the Company's  Current Report on Form 8-K
         dated  December 14,  1995,  filed with the  Commission  on December 28,
         1995.

                                       iii

<PAGE>


(9)      Incorporated  by reference to the Company's  Current Report on Form 8-K
         dated May 8, 1998, filed with the Commission on May 8, 1998.
(10)     Incorporated  by reference to the Company's  Current Report on Form 8-K
         dated March 31, 1998, filed with the Commission on April 27, 1998.
(11)     Incorporated  by reference to the Company's  Registration  Statement on
         Form S-8 (No. 33-48119), filed with the Commission on May 26, 1992.
(12)     Incorporated  by reference to the Company's  Registration  Statement on
         Form S-8 (No. 33-82894), filed with the Commission on August 16, 1994.
(13)     Incorporated  by reference to the Company's  Current Report on Form 8-K
         dated March 26, 1996, filed with the Commission on April 5, 1996.
(14)     Incorporated  by reference to the Company's  Annual Report on Form 10-K
         as amended for the Fiscal year ended February 28, 1998,  filed with the
         Commission on May 29, 1998.
(15)     Incorporated  by reference to the  Company's  Quarterly  Report on Form
         10-Q for the quarter ended May 30, 1998,  filed with the  Commission on
         July 14, 1998.
(16)     Incorporated  by reference to the Company's  Current Report on Form 8-K
         dated August 24, 1998, filed with the Commission on August 24, 1998.




                                                                  Conformed Copy
                                                                    Exhibit 23.1


                          INDEPENDENT AUDITOR'S CONSENT

We consent to the incorporation by reference in this Amendment No. 2 to
Registration Statement No. 333-60209 of B/E Aerospace, Inc. on Form S-3 of our
report dated April 15, 1998, appearing in and incorporated by reference in the
Annual Report on Form 10-K of B/E Aerospace, Inc. for the year ended February
28, 1998 and to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.

/s/ DELOITTE & TOUCHE LLP

Costa Mesa, California
September 24, 1998



                                                                  Conformed Copy
                                                                    Exhibit 23.3


                         CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the incorporation by reference in this Registration
Statement on Form-3 of our report dated February 7, 1998, except for Note 20, as
to which the date is August 7, 1998, relating to the consolidated and combined
financial statements of SMR Aerospace, Inc. (an S Corporation), its affiliates,
and subsidiaries, which appears in the Form 8-K of B/E Aerospace, Inc. dated
August 7, 1998 and to the reference to our Firm under the caption "Experts" in
the Form S-3.

/s/ Zalik, Torok, Kirgesner, Cook & Co.

Cleveland, Ohio
September 24, 1998




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