BE AEROSPACE, INC.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended November 28, 1998
Commission File No. 0-18348
BE AEROSPACE, INC.
(Exact name of registrant as specified in its charter)
Delaware 06-1209796
(State of Incorporation) (I.R.S. Employer Identification No.)
1400 Corporate Center Way
Wellington, Florida 33414
(Address of principal executive offices)
(561) 791-5000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES[X] NO[ ]
The registrant has one class of common stock, $.01 par value, of which
24,458,814 shares were outstanding as of January 8, 1998.
<PAGE>
Item 1. Financial Statements
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands, except share data)
November 28, February 28,
1998 1998
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 34,548 $ 164,685
Accounts receivable - trade, less allowance for doubtful
accounts of $4,857 (November 28, 1998)
and $2,190 (February 28, 1998) 136,119 87,931
Inventories, net 205,466 121,728
Other current assets 11,559 7,869
------------- --------------
Total current assets 387,692 382,213
------------- --------------
PROPERTY AND EQUIPMENT, net 144,661 103,821
INTANGIBLES AND OTHER ASSETS, net 449,887 195,723
------------- --------------
$ 982,240 $ 681,757
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 70,426 $ 47,858
Accrued liabilities 79,843 38,566
Current portion of long-term debt 11,689 33,285
------------- --------------
Total current liabilities 161,958 119,709
------------- --------------
LONG-TERM DEBT 630,592 349,557
DEFERRED INCOME TAXES 1,148 1,207
OTHER LIABILITIES 31,128 14,509
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 1,000,000 shares
authorized; no shares outstanding - -
Common stock, $.01 par value; 50,000,000 shares
authorized; 24,447,463 (November 28, 1998) and
22,891,918 (February 28, 1998) issued and outstanding 244 229
Additional paid-in capital 243,993 240,289
Accumulated deficit (83,613) (40,724)
Cumulative foreign exchange translation adjustment (3,210) (3,019)
-------------- ---------------
Total stockholders' equity 157,414 196,775
------------- --------------
$ 982,240 $ 681,757
============= ==============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(Dollars in thousands, except per share data)
Three Months Ended
----------------------------------
November 28, November 29,
1998 1997
<S> <C> <C>
NET SALES $ 195,751 $ 128,998
COST OF SALES 120,141 82,348
------------ -----------
GROSS PROFIT 75,610 46,650
OPERATING EXPENSES:
Selling, general and administrative 21,674 15,082
Research, development and engineering 16,085 12,438
Amortization 6,624 2,666
------------ -----------
Total operating expenses 44,383 30,186
------------ -----------
OPERATING EARNINGS 31,227 16,464
INTEREST EXPENSE, net 11,370 5,368
------------ -----------
EARNINGS BEFORE INCOME TAXES 19,857 11,096
INCOME TAXES 3,376 1,664
------------ -----------
NET EARNINGS $ 16,481 $ 9,432
============ ==========
BASIC NET EARNINGS PER COMMON SHARE $ .61 $ .41
============ ===========
DILUTED NET EARNINGS PER COMMON SHARE $ .59 $ .40
============ ===========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in thousands, except per share data)
Nine Months Ended
-----------------------------------
November 28, November 29,
1998 1997
<S> <C> <C>
NET SALES $ 492,094 $ 362,687
COST OF SALES 305,004 230,825
----------- -----------
GROSS PROFIT 187,090 131,862
OPERATING EXPENSES:
Selling, general and administrative 58,715 43,017
Research, development and engineering 40,827 34,988
Amortization 16,038 8,195
In-process research and development and
acquisition-related expenses 79,155 -
----------- -----------
Total operating expenses 194,735 86,200
----------- -----------
OPERATING EARNINGS (LOSS) (7,645) 45,662
INTEREST EXPENSE, net 27,816 16,899
----------- -----------
EARNINGS (LOSS) BEFORE INCOME TAXES (35,461) 28,763
INCOME TAXES 7,428 4,311
----------- -----------
NET EARNINGS (LOSS) $ (42,889) $ 24,452
============ ===========
BASIC NET EARNINGS (LOSS) PER COMMON SHARE $ (1.72) $ 1.10
============ ===========
DILUTED NET EARNINGS (LOSS) PER COMMON SHARE $ (1.72) $ 1.04
============ ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
Nine Months Ended
----------------------------------
November 28, November 29,
1998 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ (42,889) $ 24,452
Adjustments to reconcile net earnings (loss) to net cash flows
provided by operating activities:
In-process research and development and acquisition-
related expenses 79,155 -
Depreciation and amortization 29,278 18,482
Deferred income taxes (73) (413)
Non-cash employee benefit plan contributions 1,701 1,251
Changes in operating assets and liabilities,
net of effects from acquisitions:
Accounts receivable (8,815) (5,886)
Inventories (57,511) (19,785)
Other current assets 2,201 (4,168)
Accounts payable 14,981 13,638
Accrued and other liabilities (10,680) 221
------------- -----------
Net cash flows provided by operating activities 7,348 27,792
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (27,786) (21,099)
Change in intangible and other assets (16,185) (3,836)
Acquisitions, net of cash acquired (351,647) -
------------- ------------
Net cash flows used in investing activities (395,618) (24,935)
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under bank credit facilities 83,270 2,518
Proceeds from issuance of long-term debt 200,000 -
Principal payments on long-term debt (30,097) -
Proceeds from issuances of stock, net of expenses 4,453 8,647
------------ -----------
Net cash flows provided by financing activities 257,626 11,165
------------ -----------
Effect of exchange rate changes on cash flows 507 50
------------ -----------
Net (decrease) increase in cash and cash equivalents (130,137) 14,072
Cash and cash equivalents, beginning of period 164,685 44,149
------------ -----------
Cash and cash equivalents, end of period $ 34,548 $ 58,221
============ ===========
Supplemental disclosures of cash flow information: Cash paid during period for:
Interest $ 19,937 $ 17,716
Income taxes, net $ 2,017 $ 1,871
Schedule of non-cash transactions:
Fair market value of assets acquired in acquisitions $ 414,854 $ -
Cash paid for businesses acquired in acquisitions $ 353,583 $ -
Liabilities assumed and accrued acquisition costs $ 61,271 $ -
incurred in connection with acquisitions
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 28, 1998 AND NOVEMBER 29, 1997
(Unaudited - Dollars in thousands, except per share data)
Note 1. Basis of Presentation
The condensed consolidated financial statements of BE Aerospace,
Inc., its wholly-owned and majority-owned subsidiaries (the "Company"
or "B/E") have been prepared by the Company and are unaudited
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information related to the Company's
organization, significant accounting policies and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted. In the opinion of management, these unaudited
condensed consolidated financial statements reflect all material
adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the results of operations and
statements of financial position for the interim periods presented.
These results are not necessarily indicative of a full year's results
of operations.
Although the Company believes that the disclosures provided are
adequate to make the information presented not misleading, these
unaudited interim condensed consolidated financial statements should
be read in conjunction with the audited consolidated financial
statements and notes thereto included in the Company's Annual Report
on Form 10-K/A 2 for the fiscal year ended February 28, 1998.
Note 2. Fiscal 1999 Acquisitions
On April 13, 1998, the Company completed its acquisition of Puritan
Bennett Aero Systems Co. ("PBASCO") for approximately $69,700 in cash
and the assumption of approximately $9,400 of liabilities, including
related acquisition costs and certain liabilities arising from the
acquisition. PBASCO is the leading manufacturer of commercial
aircraft oxygen delivery systems and "WEMAC" air valve components and
in addition supplies overhead lights and switches, crew masks and
protective breathing devices for both commercial and general aviation
aircraft. During the first quarter of fiscal 1999, the Company
recorded a charge of $13,000 associated with the PBASCO transaction,
for the write-off of in-process research and development and
acquisition-related expenses.
On April 21, 1998, the Company acquired substantially all of the
assets of Aircraft Modular Products ("AMP") for approximately
$117,300 in cash and the assumption of approximately $9,200 of
liabilities, including related acquisition costs and certain
liabilities arising from the acquisition. AMP is a leading
manufacturer of cabin interior products for general aviation
(business jet) and commercial-type VIP aircraft, providing a broad
line of products including seating, sidewalls, bulkheads, credenzas,
<PAGE>
closets, galley structures, lavatories, tables and sofas; along with
related spare parts. During the first quarter of fiscal 1999, the
Company recorded a charge of approximately $19,255 associated with
the AMP transaction, for the write-off of in-process research and
development and acquisition-related expenses.
On August 7, 1998, the Company acquired all of the capital stock of
SMR Aerospace, Inc. and its affiliates, SMR Developers LLC and SMR
Associates (together "SMR") for an aggregate purchase price of
approximately $141,500 cash and the assumption of approximately
$25,300 of liabilities, including related acquisition costs and
certain liabilities arising from the acquisition. The Company paid
for the acquisition of SMR by issuing four million shares (the "SMR
Shares") of Company stock (then valued at approximately $30 per
share) to the former stockholders of SMR and paying them $2,000 in
cash. The Company also paid $22,000 in cash to the employee stock
ownership plan of a subsidiary of SMR Aerospace to purchase the
minority equity interest in such subsidiary held by the ESOP. The
Company agreed to register for sale with the Securities and Exchange
Commission the SMR Shares. If the net proceeds from the sale of the
shares, which included the $2,000 in cash already paid, was less
than $120,000, the Company agreed to pay such difference to the
selling stockholders in cash. Because of the market price for the
Company's common stock and the Company's payment obligation to the
selling stockholders described above, the Company decided to
repurchase the SMR Shares with approximately $118,000 of the
proceeds from the sale of 9 1/2% Senior Subordinated Notes instead
of registering them for sale (the $118,000 payment represents the
net proceeds of $120,000 the Company was obligated to pay the
selling stockholders, less the $2,000 in cash the Company already
paid them).
SMR is a leader in providing design, integration, installation, and
certification services for commercial aircraft passenger cabin
interiors. SMR provides a broad range of interior reconfiguration
services that allow airlines to change the size of certain classes of
service, modify and upgrade the seating, install telecommunications
or entertainment options, relocate galleys, lavatories, and overhead
bins and install crew rest compartments. SMR is also a supplier of
structural design and integration services, including airframe
modifications for passenger-to-freighter conversions. In addition,
SMR provides a variety of niche products and components that are used
for reconfigurations and conversions. SMR's services are performed
primarily on an aftermarket basis and its customers include major
airlines such as United Airlines, Japan Airlines, British Airways,
Air France, Cathay Pacific and Qantas, as well as Boeing, Airborne
Express and Federal Express. During the second quarter of fiscal
1999, the Company recorded a charge of approximately $46,900
associated with the SMR transaction, for the write-off of in-process
research and development and acquisition-related expenses.
On September 3, 1998, the Company acquired substantially all of the
galley equipment assets and certain property and assumed related
<PAGE>
liabilities of C F Taylor Interiors Limited and acquired the common
stock of C F Taylor (Wales) Limited (collectively "C F Taylor"), both
wholly owned subsidiaries of EIS Group PLC, for a total cash purchase
price of approximately G.B.P.14,900 (approximately $25,100, based
upon the exchange rate in effect on September 3, 1998), subject to
adjustments, and the assumption of approximately $17,400 of
liabilities, including related acquisition costs and certain
liabilities arising from the acquisition. C F Taylor is a
manufacturer of galley equipment for both narrow- and wide-body
aircraft, including galley structures, crew rests and related spare
parts. The Company engaged consultants to assist in the allocation of
the purchase price of C F Taylor. Based upon the results of their
work, the Company did not allocate any of the purchase price of C F
Taylor to in-process research and development.
As a result of the acquisitions of PBASCO, AMP and SMR, the Company
has recorded a charge aggregating $79,155 for the write-off of
acquired in-process research and development and acquisition-related
expenses associated with these and other transactions. In-process
research and development expenses arose from new product development
projects that were in various stages of completion at the respective
acquired enterprises at the date of acquisition. In-process research
and development expenses for products under development at the date
of acquisition that had not established technological feasibility and
for which no alternative use was identified were written off. The
in-process research and development projects have been valued based
on expected net cash flows over the product life, costs to complete,
the stage of completion of the projects, the result of which has been
discounted to reflect the inherent risk associated with the
completion of the projects, and the realization of the efforts
expended.
New product development projects underway at PBASCO at the date of
acquisition included, among others, modular drop boxes, passenger
and flight crew oxygen masks, oxygen regulators and generators,
protective breathing equipment, on board oxygen generating systems,
reading lights, passenger service units, external viewing systems
for executive and commercial aircraft and cabin monitoring systems.
In-process research and development and acquisition-related
expenses associated with PBASCO were approximately $13,000. The
Company has determined that these projects were approximately 28%
complete at the date of acquisition, and estimates that the cost to
complete these projects will aggregate approximately $11,800, and
will be incurred over a four year period.
New product development projects underway at AMP at the date of
acquisition included, among others, executive aircraft interior
products for the Bombardier Global Express, Boeing Business Jet,
Airbus Corporate Jet, Cessna Citation 560XL, Cessna Citation 560
Ultra, Visionaire Vantage and Lear 60, as well as other specific
executive aircraft seating products. In-process research and
development and acquisition-related expenses associated with AMP were
approximately $19,255. The Company has determined that these projects
were approximately 25% complete at the date of acquisition, and
estimates that the cost to complete these projects will aggregate
approximately $4,800, and will be incurred over a two year period.
<PAGE>
New product development projects underway at SMR at the date of
acquisition included, among others, pneumatic and electrical deicing
systems for the substantial majority of all executive and commuter
aircraft types, crew rest modules for selected wide-body aircraft,
passenger to freighter and combi to freighter conversion kits for
selected wide-body aircraft, hovercraft skirting devices, cargo nets,
and smoke barriers. In-process research and development and
acquisition-related expenses associated with SMR were approximately
$46,900. The Company has determined that these projects were
approximately 60% complete at the date of acquisition, and estimates
that the cost to complete these projects will aggregate approximately
$2,700, and will be incurred over a two year period.
Uncertainties that could impede progress to a developed technology
include (i) availability of financial resources to complete the
development, (ii) regulatory approval (FAA, CAA, etc.) required for
each product before it can be installed on an aircraft, (iii)
continued economic feasibility of developed technologies, (iv)
customer acceptance and (v) general competitive conditions in the
industry. There can be no assurance that the in-process research and
development projects will be successfully completed and commercially
introduced.
Note 3. Comprehensive Income
In the first quarter of fiscal 1999, the Company adopted Statement of
Financial Accounting Standards ("SFAS" or "Statement") No. 130,
"Reporting Comprehensive Income," which establishes standards for the
reporting and display of comprehensive income. Comprehensive income
is defined as all changes in a company's net assets except changes
resulting from transactions with shareholders. It differs from net
income in that certain items currently recorded to equity would be a
part of comprehensive income. The following table sets forth the
computation of comprehensive income for the periods presented:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------------- ----------------------------
November 28, November 29, November 28, November 29,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net earnings (loss) $ 16,481 $ 9,432 $ (42,889) $ 24,452
Other comprehensive income:
Foreign exchange translation adjustment (606) (2,852) (191) 110
---------- ----------- ----------- ----------
Comprehensive income (loss) $ 15,875 $ 6,580 $ (43,080) $ 24,562
=========== ========== ========== ============
</TABLE>
<PAGE>
Note 4. Segment Information
In June 1997, the Financial Accounting Standards Board issued SFAS
No. 131, "Disclosures about Segments of an Enterprise and Related
Information." SFAS No. 131 redefines how operating segments are
operating segments are determined and requires disclosure of
certain financial and descriptive information about a company's
operating segments. The Company believes the required segment
information disclosure under SFAS No. 131 will be more
comprehensive than previously provided, including expanded
disclosure of income statement and balance sheet items. The
Statement is effective for fiscal years beginning after December
15, 1997; however, application is not required for interim periods
in the initial year of its application. The Company adopted the
Statement effective March 1, 1998.
Note 5. Long-Term Debt
Credit Facilities - In August 1998, the Company amended its credit
facilities with The Chase Manhattan Bank (the "Bank Credit
Facility"). The Bank Credit Facility consists of a $100,000 revolving
credit facility (of which $50,000 may be utilized for acquisitions)
and an acquisition facility of $86,000. The revolving credit facility
expires in August 2004 and the acquisition facility is amortizable
over five years beginning in August 1999. The Bank Credit Facility is
collateralized by the Company's accounts receivable, inventories and
by substantially all of its other personal property. The Bank Credit
Facility contains customary affirmative covenants, negative covenants
and conditions of borrowing, all of which were met by the Company as
of November 28, 1998. At November 28, 1998, indebtedness under the
existing Bank Credit Facility consisted of letters of credit
aggregating approximately $3,900 and outstanding borrowings under the
acquisition facility aggregating $86,000 (bearing interest at LIBOR
plus 1.50%, as defined).
8% Senior Subordinated Notes - In February 1998, the Company sold
$250,000 of 8% Senior Subordinated Notes, priced to yield 8.02% (the
"8% Notes"). In conjunction with the sale of the 8% Notes, the
Company initiated a tender offer for 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 $101,808
of the 9 3/4% Notes were retired, (ii) to call the remaining $23,192
of the 9 3/4% Notes on March 16, 1998 and (iii) together with the
proceeds from the Bank Credit Facility, to fund the acquisitions of
PBASCO and AMP.
9 1/2% Senior Subordinated Notes - In November 1998, the Company sold
$200,000 of 9 1/2% Senior Subordinated Notes due 2008 (the "9 1/2%
Notes"). The net proceeds from the sale of the 9 1/2% Notes were
approximately $193,700, of which approximately $118,000 were used to
fulfill the Company's obligations associated with the SMR
acquisition; the remaining proceeds were used to repay approximately
$75,000 of outstanding borrowings under the Company's Bank Credit
Facility.
<PAGE>
The 9 1/2% Notes are unsecured senior subordinated obligations and
are subordinated to all senior indebtedness of the Company and mature
on November 1, 2008. Interest on the 9 1/2% Notes is payable
semiannually in arrears May 1 and November 1 of each year. The 9 1/2%
Notes are redeemable at the option of the Company, in whole or in
part, at any time after November 1, 2003 at predetermined redemption
prices together with accrued and unpaid interest through the date of
redemption. Upon a change of control (as defined), each holder of the
9 1/2% Notes may require the Company to repurchase such holder's 9
1/2% Notes at 101% of the principal amount thereof, plus accrued and
unpaid interest to the date of such purchase. The 9 1/2% Notes
contain certain restrictive covenants, all of which were met by the
Company as of November 28, 1998, including limitations on future
indebtedness, restricted payments, transactions with affiliates,
liens, dividends, mergers and transfers of assets.
<PAGE>
Note 6. Earnings (Loss) Per Share
The following table sets forth the computation of basic and diluted
earnings (loss) per share for the three months and nine months ended
November 28, 1998 and November 29, 1997.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
-------------------------- -----------------------------
November 28, November 29, November 28, November 29,
1998 1997 1998 1997
----
<S> <C> <C> <C> <C>
Numerator - Net earnings (loss) $ 16,481 $ 9,432 $ (42,889) $ 24,452
=========== ======== ========= ========
Denominator:
Denominator for basic earnings (loss) per
share -
Weighted average shares 27,195 22,760 24,946 22,316
Effect of dilutive securities -
Employee stock options 571 1,048 - 1,223
----------- ---------- ---------- ----------
Denominator for diluted earnings (loss)
per share -
Adjusted weighted average shares 27,766 23,808 24,946 23,539
=========== ========== =========== =========
Basic earnings (loss) per share $ .61 $ .41 $ (1.72) $ 1.10
=========== ========== =========== ==========
Diluted earnings (loss) per share $ .59 $ .40 $ (1.72) $ 1.04
=========== ========== =========== ==========
</TABLE>
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Dollars in thousands, except per share data)
The following discussion and analysis addresses the results of the
Company's operations for the three months ended November 28, 1998, as
compared to the Company's results of operations for the three months
ended November 29, 1997. The discussion and analysis then addresses the
results of the Company's operations for the nine months ended November
28, 1998, as compared to the Company's results of operations for the nine
months ended November 29, 1997. The discussion and analysis then
addresses the liquidity and financial condition of the Company and other
matters. The Company recently consulted with the SEC staff regarding the
allocation of purchase price of its fiscal 1999 acquisitions to
in-process research and development and the write-off of such amounts. On
the basis of these discussions, the Company restated its financial
statements for the three months ended May 30, 1998 to reduce the amount
of the in-process research and development charge by $66,000 resulting
from the acquisitions of PBASCO and AMP during April 1998. Similarly, the
Company restated its financial statements for the six months ended August
29, 1998 to reduce the amount of the in-process research and development
charge by $90,000 resulting from the acquisitions of PBASCO and AMP
during April 1998 and SMR in August 1998. This change had no impact on
cash operating profits.
On April 13, 1998, the Company completed its acquisition of Puritan
Bennett Aero Systems Co. ("PBASCO") for approximately $69,700 in cash and
the assumption of approximately $9,400 of liabilities, including related
acquisition costs and certain liabilities arising from the acquisition.
PBASCO is the leading manufacturer of commercial aircraft oxygen delivery
systems and "WEMAC" air valve components and in addition supplies
overhead lights and switches, crew masks and protective breathing devices
for both commercial and general aviation aircraft.
On April 21, 1998, the Company acquired substantially all of the assets
of Aircraft Modular Products ("AMP") for approximately $117,300 in cash
and the assumption of approximately $9,200 of liabilities, including
related acquisition costs and certain liabilities arising from the
acquisition. AMP is a leading manufacturer of cabin interior products for
general aviation (business jet) and commercial - type VIP aircraft,
providing a broad line of products including seating, sidewalls,
bulkheads, credenzas, closets, galley structures, lavatories, tables and
sofas; along with related spare parts.
On August 7, 1998, the Company acquired all of the capital stock of SMR
Aerospace, Inc. and its affiliates, SMR Developers LLC and SMR Associates
(together "SMR") for an aggregate purchase price of approximately
$141,500 cash and the assumption of approximately $25,300 of liabilities,
including related acquisition costs and certain liabilities arising from
the acquisition. SMR is a leader in providing design, integration,
installation and certification services for commercial aircraft passenger
<PAGE>
cabin interiors. SMR provides a broad range of interior reconfiguration
services that allow airlines to change the size of certain classes of
service, modify and upgrade the seating, install telecommunications or
entertainment options, relocate galleys, lavatories, and overhead bins
and install crew rest compartments. SMR is also a supplier of structural
design and integration services, including airframe modifications for
passenger-to-freighter conversions. In addition, SMR provides a variety
of niche products and components that are used for reconfigurations and
conversions. SMR's services are performed primarily on an aftermarket
basis and its customers include major airlines such as United Airlines,
Japan Airlines, British Airways, Air France, Cathay Pacific and Qantas,
as well as Boeing, Airborne Express and Federal Express.
On September 3, 1998, the Company acquired substantially all of the
galley equipment assets and certain property and assumed related
liabilities of C F Taylor Interiors Limited and acquired the common
stock of C F Taylor (Wales) Limited, both wholly owned subsidiaries of
EIS Group PLC, for a total cash purchase price of approximately
G.B.P. 14,900 (approximately $25,100, based upon the exchange rate in
effect on September 3, 1998), subject to adjustments, and the
assumption of approximately $17,400 of liabilities, including related
acquisition costs and certain liabilities arising from the acquisition.
C F Taylor is a manufacturer of galley equipment for both narrow- and
wide- body aircraft, including galley structures, crew rests and
related spare parts. The Company engaged consultants to assist in the
allocation of the purchase price of C F Taylor. Based upon the results
of their work, the Company did not allocate any of the purchase price
of C F Taylor to in-process research and development.
As a result of the acquisitions of PBASCO, AMP and SMR, the Company has
recorded a charge of $79,155 for the write-off of acquired in-process
research and development and acquisition-related expenses associated with
these and other transactions. In-process research and development
expenses arose from new product development projects that were in various
stages of completion at the respective acquired enterprises at the dates
of acquisitions. In-process research and development expenses for
products under development at the date of acquisition that had not
established technological feasibility and for which no alternative use
was identified were written off. The in-process research and development
projects have been valued based on expected net cash flows over the
product life, costs to complete, the stage of completion of the projects,
the result of which has been discounted to reflect the inherent risk
associated with the completion of the projects, and the realization of
the efforts expended.
New product development projects underway at PBASCO at the date of
acquisition included, among others, modular drop boxes, passenger and
flight crew oxygen masks, oxygen regulators and generators, protective
breathing equipment, on board oxygen generating systems, reading lights,
passenger service units, external viewing systems for executive and
commercial aircraft and cabin monitoring systems. In-process research and
development and acquisition-related expenses associated with PBASCO were
approximately $13,000. The Company has determined that these projects
were approximately 28% complete at the date of acquisition, and estimates
that the cost to complete these projects will aggregate approximately
$11,800, and will be incurred over a four year period.
<PAGE>
New product development projects underway at AMP at the date of
acquisition included, among others, executive aircraft interior products
for the Bombardier Global Express, Boeing Business Jet, Airbus Corporate
Jet, Cessna Citation 560XL, Cessna Citation 560 Ultra, Visionaire Vantage
and Lear 60, as well as other specific executive aircraft seating
products. In-process research and development and acquisition-related
expenses associated with AMP were approximately $19,250. The Company has
determined that these projects were approximately 25% complete at the
date of acquisition, and estimates that the cost to complete these
projects will aggregate approximately $4,800, and will be incurred over a
two year period.
New product development projects underway at SMR at the date of
acquisition included, among others, pneumatic and electrical deicing
systems for the substantial majority of all executive and commuter
aircraft types, crew rest modules for selected wide-body aircraft,
passenger to freighter and combi to freighter conversion kits for
selected wide-body aircraft, hovercraft skirting devices, cargo nets, and
smoke barriers. In-process research and development and
acquisition-related expenses associated with SMR were approximately
$46,900. The Company has determined that these projects were
approximately 60% complete at the date of acquisition, and estimates that
the cost to complete these projects will aggregate approximately $2,700,
and will be incurred over a two year period.
Uncertainties that could impede progress to a developed technology
include (i) availability of financial resources to complete the
development, (ii) regulatory approval (FAA, CAA, etc.) required for each
product before it can be installed on an aircraft, (iii) continued
economic feasibility of developed technologies, (iv) customer acceptance
and (v) general competitive conditions in the industry. There can be no
assurance that the in-process research and development projects will be
successfully completed and commercially introduced.
The acquisition of PBASCO, AMP, SMR and C F Taylor are collectively
referred to as the "Acquisitions." The Acquisitions have been accounted
for using purchase accounting.
Recently, Rockwell Collins has entered the in-flight entertainment
industry by purchasing Hughes Avicom, and in doing so has changed the
competitive landscape for this line of business. The Company has
evaluated the impact of the changing market conditions, and has
determined that the long-term success of this line of business may be
enhanced by teaming with a partner with substantial economic and
technology resources. In connection therewith, the Company may monetize a
portion, or if no suitable partner can be found, all of its investment in
its in-flight entertainment business.
<PAGE>
THREE MONTHS ENDED NOVEMBER 28, 1998, AS COMPARED TO THE RESULTS OF
OPERATIONS FOR THE THREE MONTHS ENDED NOVEMBER 29, 1997
Net sales for the fiscal 1999 three-month period were $195,751, or
$66,753 (52%) greater than sales of $128,998 for the comparable period in
the prior year. The Company's Seating Products and Interior Products
Groups, which together accounted for 54% of revenues in the current
quarter, realized a 14% (or $13,156) increase in revenues year over year,
exclusive of revenues attributable to the Acquisitions. Revenues from the
In-Flight Entertainment Group were approximately $7,700 lower than the
prior year, primarily due to unusually high shipments in the prior year.
The Acquisitions accounted for $60,199 of the revenue increase during the
current quarter.
Gross profit was $75,610 (38.6% of sales) for the three months ended
November 28, 1998. This was $28,960, or 62%, greater than the comparable
period in the prior year of $46,650, which represented 36.2% of sales.
The primary reasons for the improvement in gross margins include: (i)
shift in product mix 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 $21,674 (11.1% of
sales) for the three months ended November 28, 1998. This was $6,592, or
44%, greater than the comparable period in the prior year of $15,082
(11.7% of sales). The increase in selling, general and administrative
expenses was primarily due to inclusion of the relevant expenses from the
Acquisitions along with increases associated with internal growth.
Research, development and engineering expenses were $16,085 (8.2% of
sales) for the three months ended November 28, 1998, an increase of
$3,647 over the comparable period in the prior year of $12,438 (9.6% of
sales). The increase in research, development and engineering expense in
the current period is primarily attributable to the inclusion of expenses
from the Acquisitions along with on-going new product development
activities.
Amortization expense for the quarter ended November 28, 1998 of $6,624,
was $3,958 greater than the amount recorded in the second quarter of
fiscal 1998 due to the Acquisitions.
The Company generated operating earnings of $31,227, as compared to
operating earnings of $16,464 during the comparable period in the prior
year.
Interest expense, net was $11,370 for the three months ended November 28,
1998, or $6,002 greater than interest expense of $5,368 for the
comparable period in the prior year. The increase in interest expense is
due to the increase in the Company's long-term debt.
Earnings before income taxes in the current quarter were $19,857, as
compared to earnings before incomes taxes of $11,096 in the prior year's
comparable period. Income tax expense for the quarter ended November 28,
1998 was $3,376, as compared to $1,664 in the prior year's comparable
period.
The net earnings for the quarter ended November 28, 1998 were $16,481, or
$.59 per share (diluted), as compared to net earnings of $9,432, or $.40
per share (diluted), for the comparable period in the prior year.
<PAGE>
NINE MONTHS ENDED NOVEMBER 28, 1998, AS COMPARED TO THE RESULTS OF
OPERATIONS FOR THE NINE MONTHS ENDED NOVEMBER 29, 1997
Net sales for the fiscal 1999 nine-month period were $492,094, an
increase of $129,407, or 36% over the comparable period in the prior
year. Internal growth during the nine-month period was low due to uneven
airline scheduling requirements. The Company's Seating Products and
Interior Systems Groups, which together generated approximately 58% of
total revenues during the current nine month period, realized an 8%
($20,310) increase in revenues, exclusive of revenues attributable to the
Acquisitions. The Acquisitions accounted for $108,065 of the increase in
revenues during this period.
Gross profit was $187,090 (38.0% of sales) for the nine months ended
November 28, 1998. This was $55,228, or 42%, greater than the comparable
period in the prior year of $131,862, which represented 36.4% of sales.
The primary reasons for the improvement in gross margins include: (i)
shift in product mix 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 $58,715 (11.9% of
sales) for the nine months ended November 28, 1998. This was $15,698, or
36%, greater than the comparable period in the prior year of $43,017
(11.9% 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 $40,827 (8.3% of
sales) for the nine months ended November 29, 1998, an increase of $5,839
over the comparable period in the prior year. The increase in research,
development and engineering expense in the current period is primarily
attributable to on-going new product development activities.
Amortization expense for the nine months ended November 28, 1998 of
$16,038 was $7,843 greater than the amount recorded in the comparable
period in the prior year.
Based on management's assumptions, a portion of the Acquisitions'
purchase price was allocated to purchased research and development that
had not reached technological feasibility and had no future alternative
use. During the first nine months of fiscal 1999, the Company recorded a
charge of $79,155 for the write-off of the acquired in-process research
and development and acquisition-related expenses. Management estimates
that the research and development cost to complete the in-process
research and development related to projects underway at PBASCO, AMP and
SMR will aggregate approximately $19,300, which will be incurred over a
four year period.
<PAGE>
Due, in part, to the acquisition-related charges of $79,155 during the
nine months ended November 28, 1998, the Company incurred an operating
loss of $(7,645), as compared to operating earnings of $45,662 in the
prior year. Operating earnings excluding the acquisition-related charges
were $71,510.
Interest expense, net was $27,816 for the nine months ended November 28,
1998, or $10,917 greater than interest expense of $16,899 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 $(35,461), (which
includes in-process research and development and acquisition-related
expenses of $79,155) as compared to
earnings before income taxes of $28,763 in the prior year's comparable
period. Earnings before income taxes excluding the acquisition-related
charges were $43,694. Income tax expense for the nine months ended
November 28, 1998 was $7,428, as compared to $4,311 in the prior year's
comparable period.
The net loss for the nine months ended November 28, 1998 was $(42,889),
or $(1.72) per share (diluted), as compared to net earnings of $24,452,
or $1.04 per share (diluted), for the comparable period in the prior
year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity requirements consist of working capital needs,
ongoing capital expenditures and scheduled payments of interest and
principal on its indebtedness. B/E's primary requirements for working
capital have been directly related to increased accounts receivable and
inventory levels as a result of both acquisitions and revenue growth.
B/E's working capital was $225,734 as of November 28, 1998, as compared
to $262,504 as of February 28,1998.
At November 28, 1998, the Company's cash and cash equivalents were
$34,548, as compared to $164,685 at February 28, 1998. Cash provided from
operating activities was $7,348 for the nine months ended November 28,
1998. The primary source of cash during the nine months ended November
28, 1998 was the net loss of $(42,889) offset by non-cash charges for
in-process research and development, depreciation, amortization and
acquisition-related expenses of $108,433, increases in accounts payable
of $14,981, offset by a use of cash of $57,511 related to increases in
inventories, $10,680 related to a decrease in accrued and other
liabilities, and an $8,815 increase in accounts receivable. The primary
use of cash during the nine month period was $351,647 for the
Acquisitions.
The Company's capital expenditures were $27,786 and $21,099 during the
nine months ended November 28, 1998 and November 29, 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 Company anticipates
on-going 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.
<PAGE>
In August 1998, the Company amended its credit facilities with The Chase
Manhattan Bank. The Bank Credit Facility consists of a $100,000 revolving
credit facility (of which $50,000 may be utilized for acquisitions) and
an acquisition facility of $86,000. The revolving credit facility expires
in August 2004 and the acquisition facility is amortizable over five
years beginning in August 1999. Current maturities associated with the
Bank Credit Facility aggregate approximately $5,700. 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 November 28, 1998. At November 28, 1998, indebtedness under
the existing Bank Credit Facility consisted of letters of credit
aggregating approximately $3,900 and outstanding borrowings under the
acquisition facility aggregating $86,000 (bearing interest at LIBOR plus
1.50%, as defined).
In February 1998, the Company sold $250,000 of 8% Senior Subordinated
Notes, priced to yield 8.02% (the "8% Notes"). In conjunction with the
sale of the 8% Notes, the Company initiated a tender offer for the
$125,000 of 9 3/4% Senior Notes due 2003 (the "9 3/4% Notes"). The net
proceeds from the offering of approximately $240,419 were used (i) for
the tender offer (which expired on February 25, 1998) in which
approximately $101,800 of the 9 3/4% Notes were retired, (ii) to call the
remaining 9 3/4% Notes on March 16, 1998 and (iii) together with the
proceeds from the Bank Credit Facility, to fund the acquisitions of
PBASCO and AMP.
In November 1998, the Company sold $200,000 of 9 1/2% Senior Subordinated
Notes due 2008 (the "9 1/2% Notes"). The net proceeds from the sale of
the 9 1/2% Notes were approximately $193,700, of which approximately
$118,000 were used to fulfill the Company's obligations associated with
the SMR acquisition; the remaining proceeds were used to repay
approximately $75,000 of outstanding borrowings under the Company's Bank
Credit Facility.
The 9 1/2% Notes are unsecured senior subordinated obligations and are
subordinated to all senior indebtedness of the Company and mature on
November 1, 2008. Interest on the 9 1/2% Notes is payable semiannually in
arrears May 1 and November 1 of each year. The 9 1/2% Notes are
redeemable at the option of the Company, in whole or in part, at any time
after November 1, 2003 at predetermined redemption prices together with
accrued and unpaid interest through the date of redemption. Upon a change
of control (as defined), each holder of the 9 1/2% Notes may require the
Company to repurchase such holder's 9 1/2% Notes at 101% of the principal
amount thereof, plus accrued and unpaid interest to the date of such
purchase. The 9 1/2% Notes contain certain restrictive covenants, all of
which were met by the Company as of November 28, 1998, including
limitations on future indebtedness, restricted payments, transactions
with affiliates, liens, dividends, mergers and transfers of assets.
Long-term debt consists of the Bank Credit Facility, 9 7/8% Senior
Subordinated Notes ("9 7/8% Notes"), 8% Notes and 9 1/2% Notes. The 9
7/8% Notes and 8% Notes mature on February 1, 2006 and March 1, 2008,
respectively.
<PAGE>
The Company believes that the cash flow from operations and availability
under the Bank Credit Facility will provide adequate funds for its
working capital needs, planned capital expenditures and debt service
requirements through the term of the Bank Credit Facility. The Company
believes that it will be able to refinance the Bank Credit Facility prior
to its termination, although there can be no assurance that it will be
able to do so. The Company's ability to fund its operations, make planned
capital expenditures, make scheduled payments and refinance its
indebtedness depends on its future operating performance and cash flow,
which, in turn, are subject to prevailing economic conditions and to
financial, business and other factors, some of which are beyond its
control.
Deferred Tax Assets
The Company has established a valuation allowance related to the
utilization of its deferred tax assets because of uncertainties that
preclude it from determining that it is more likely than not that it will
be able to generate taxable income to realize such assets during the
operating loss carryforward period, which expires in 2012. Such
uncertainties include recent cumulative losses by the Company, the highly
cyclical nature of the industry in which it operates, economic conditions
in Asia which is impacting the airframe manufacturers and the airlines,
the Company's high degree of financial leverage and risks associated with
the integration of acquisitions. The Company monitors these as well as
other positive and negative factors that may arise in the future, as it
assesses the necessity for a valuation allowance for its deferred tax
assets.
Year 2000 Costs
The "Year 2000" issue is the result of computer programs using two digits
rather than four to define the applicable year. Because of this
programming convention, software, hardware or firmware may recognize a
date using "00" as the year 1900 rather than the year 2000. Use of
non-Year 2000 compliant programs could result in system failures,
miscalculations or errors causing disruptions of operations or other
business problems, including, among others, a temporary inability to
process transactions and invoices or engage in similar normal business
activities.
B/E Technology Initiatives Program - The Company has experienced
substantial growth as a result of having completed 15 acquisitions since
1989. Essentially all of the acquired businesses were operating on a
separate information system, using different hardware and software
platforms. In fiscal 1997, the Company undertook to examine its systems,
both pre-existing and acquired for Year 2000 compliance with a view to
replacing non-compliant systems and creating an integrated Year 2000
compliant system. In addition, the Company has undertaken a comprehensive
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
<PAGE>
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 database onto which all the Company's individual systems
will be migrated. In relation thereto, the Company has signed contracts
with substantially all of its significant hardware, software and other
equipment vendors and third party network service providers related to
Year 2000 compliance.
Remediation and Testing Phase - In implementing the ERP system, the
Company undertook and has completed a remediation and testing phase of
all internal systems, LANs, WANs and PBXs. These phases were intended to
address potential Year 2000 problems of the ERP system in relation to
both information technology, non-information technology systems and then
to demonstrate that the ERP software was Year 2000 compliant. ERP system
software was selected and applications implemented by a team of internal
users, outside system integrator specialists and ERP application experts.
The ERP system was tested between June 1997 to 1998 by this team of
experts. To date, four locations have been fully implemented on the ERP
system. This Company-wide solution is being deployed to all other B/E
sites in a manner that is designed to meet full implementation for all
non-Year 2000 compliant sites by the year 2000.
Program to Assess and Monitor Progress of Third Parties - As noted above,
B/E has also undertaken an action plan to assess and monitor the progress
of third party vendors in resolving Year 2000 issues. To date, the
Company has (i) obtained guidance from outside counsel to ensure legal
compliance, (ii) generated correspondence to each of its third party
vendors to assess their Y2K readiness, (iii) contracted a `Vendor 2K'
fully automated tracking program to track all correspondence to/from
vendors to track timely responses via an automatic computer generated
`trigger,' to provide an electronic folder for easy reference and
retention and to specifically track internally identified `critical'
vendors. The Company is also currently in the midst of developing an
internal consolidated database of enterprise wide vendors. Future actions
that the Company expects to take in connection with the monitoring of its
third party vendors include a target mailing of correspondence to vendors
scheduled for mid-January 1999. Replies from these vendors will be
requested to be returned within 20 days. The Company intends to continue
follow up with any vendors who indicate any material problems in their
replies. The Company believes that the majority of the required
compliance will be completed by the end of the first quarter of 1999.
<PAGE>
Contingency Plans - The Company has begun to analyze contingency plans to
handle worse case Year 2000 scenarios that the Company believes
reasonably could occur and, if necessary, intends to develop a timetable
for completing such contingency plans.
Costs Related to the Year 2000 Issue - Through November 28, 1998, the
Company has incurred approximately $19,000 in costs related to the
implementation of the ERP system. The Company currently estimates that
total ERP implementation will cost approximately $30,000 and a portion of
the costs have and will be capitalized to the extent permitted under
generally accepted accounting principles. The Company expects that it
will incur approximately $8,000 related to this program during calendar
1998 and an additional $7,000 during calendar 1999.
Risks Related to the Year 2000 Issue - Although the Company's efforts to
be Year 2000 compliant are intended to minimize the adverse effects of
the Year 2000 issue on the Company's business and operations, the actual
effects of the issue will not be known until 2000. Difficulties in
implementing the ERP system or failure by the Company to fully implement
the ERP system or the failure of its major vendors, third party network
service providers, and other material service providers and customers to
adequately address their respective Year 2000 issues in a timely manner
would have a material adverse effect on the Company's business, results
of operations, and financial condition. The Company's capital
requirements may differ materially from the foregoing estimate as a
result of regulatory, technological and competitive developments
(including market developments and new opportunities) in the Company's
industry.
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 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
by delaying purchases of new aircraft. This led to a significant
contraction in the commercial aircraft cabin interior products industry
and a decline in our business and profitability. 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. This financial turnaround has, in part, been
driven by record load factors, rising fare prices and declining fuel
costs. The airlines have substantially improved their balance sheets
through cash generated from operations and the sale of debt and equity
securities. 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 and the current general economic and financial
turbulence, the current profitability of the airline industry may not
continue and the airlines may not be able to maintain or increase
expenditures on cabin interior products for refurbishments or new
aircraft.
<PAGE>
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 our revenues
and margins.
Recently, turbulence in the financial and currency markets of many Asian
countries has led to uncertainty as to the economic outlook for these
countries. As of November 28, 1998, the Company's backlog was
approximately $725,000. Approximately $27,300 of backlog related to Asian
carriers is deliverable in fiscal 1999 and a further approximate $118,200
is deliverable in subsequent fiscal years. Of such Asian carrier backlog,
approximately $52,200 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, including
non-Asian carriers that have substantial Asian routes, could cancel or
defer their existing orders and future orders from airlines in these
countries may be adversely affected. In addition, Boeing has recently
announced that in light of the continued severe economic conditions in
Asia, it will be substantially scaling back production of a number of
aircraft types, including particularly wide-body aircraft which require
proportionately more of the Company's products.
This report includes forward-looking statements that involve risks and
uncertainties. The Company's actual experience may differ materially from
that anticipated in such statements. Factors that might cause such a
difference include, but are not limited to, those discussed in "Risk
Factors" contained in Exhibit 99.1 of the Company's Annual Report on Form
10-K/A for the fiscal year ended February 28, 1998, and in the Company's
Form S-3 dated December 24, 1998, Forms S-3/A dated September 28, 1998,
September 30, 1998 and December 21, 1998 and Form S-4 dated January 8,
1999, and Form S-4/A dated January 7, 1999, as well as future events that
have the effect of reducing the Company's available cash balances, such
as unexpected operating losses, delays in the integration of the
Company's acquired businesses, conditions in the airline industry,
delivery of the Company's MDDS interactive video system, delays in the
implementation of the Company's Year 2000 readiness program, customer
delivery requirements, new or expected refurbishments or cash
expenditures related to possible future acquisitions.
<PAGE>
Item 1. Legal Proceedings Not applicable.
Item 2. Changes in Securities Not applicable.
Item 3. Defaults Upon Senior Securities Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders Not applicable.
Item 5. Other Information None.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
1. Exhibit 27. Financial Data Schedule for the nine months ended
November 28, 1998
b. Reports on Form 8-K
1. November 18, 1998 Stock Rights Plan
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BE AEROSPACE, INC.
Date: January 11, 1998 By: /s/ Robert J. Khoury
----------------------------
Vice Chairman and
Chief Executive Officer
Date: January 11, 1998 By: /s/ Thomas P. McCaffrey
-----------------------------
Corporate Senior Vice President of
Administration and Chief
Financial Officer
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<PERIOD-END> NOV-28-1998
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