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 25, 2000
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 33414-2105
(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
25,516,017 shares were outstanding as of January 3, 2001.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
<TABLE>
<CAPTION>
November 25, February 26,
2000 2000
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 44,230 $ 37,363
Accounts receivable - trade, less allowance for doubtful
accounts of $3,240 (November 25, 2000)
and $3,883 (February 26, 2000) 90,152 103,719
Inventories, net 120,833 127,230
Other current assets 47,772 35,291
------------ ------------
Total current assets 302,987 303,603
------------ ------------
Property and equipment, net 149,366 152,350
Intangibles and other assets, net 384,668 425,836
------------ ------------
$ 837,021 $ 881,789
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 63,943 $ 60,824
Accrued liabilities 71,884 109,143
Current portion of long-term debt 4,771 3,723
------------ ------------
Total current liabilities 140,598 173,690
------------ ------------
Long-term debt 602,469 618,202
Other liabilities 25,452 25,400
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;
25,480,441 (November 25, 2000) and 24,931,307
(February 25, 2000) shares issued and outstanding 255 249
Additional paid-in capital 254,421 249,682
Accumulated deficit (157,788) (174,874)
Accumulated other comprehensive loss (28,386) (10,560)
------------ ------------
Total stockholders' equity 68,502 64,497
------------ ------------
$ 837,021 $ 881,789
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
November 25, November 27, November 25, November 27,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Net sales $ 167,410 $ 164,578 $ 500,651 $ 541,505
Cost of sales 103,862 166,586 314,792 406,589
----------- ----------- ----------- -----------
Gross profit (loss) 63,548 (2,008) 185,859 134,916
Operating expenses:
Selling, general and administrative 23,177 27,253 71,159 70,576
Research, development and engineering 12,054 16,740 37,263 40,265
Amortization 5,820 6,147 17,535 17,699
----------- ----------- ----------- -----------
Total operating expenses 41,051 50,140 125,957 128,540
----------- ----------- ----------- -----------
Operating earnings (loss) 22,497 (52,148) 59,902 6,376
Equity in losses of unconsolidated subsidiary - - - 1,289
Interest expense, net 13,698 13,890 40,917 39,707
----------- ----------- ----------- -----------
Earnings (loss) before income taxes 8,799 (66,038) 18,985 (34,620)
Income taxes 880 - 1,899 6,283
----------- ----------- ----------- -----------
Net earnings (loss) $ 7,919 $ (66,038) $ 17,086 $ (40,903)
=========== =========== =========== ===========
Basic net earnings (loss) per common share $ 0.31 $ (2.66) $ 0.68 $ (1.65)
=========== =========== =========== ===========
Diluted net earnings (loss) per common share $ 0.30 $ (2.66) $ 0.67 $ (1.65)
=========== =========== =========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
November 25, November 27,
2000 1999
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 17,086 $ (40,903)
Adjustments to reconcile net earnings (loss) to net cash flows
provided by operating activities:
Depreciation and amortization 32,078 31,863
Deferred income taxes - (172)
Non-cash employee benefit plan contributions 1,535 1,586
Changes in operating working capital, net of dispositions:
Accounts receivable 10,139 19,041
Inventories 615 (17,307)
Other current assets (12,487) (3,547)
Accounts payable 4,469 5,481
Accrued liabilities (24,677) 9,097
------------ ------------
Net cash flows provided by operating activities 28,758 5,139
------------ ------------
Cash flows from investing activities:
Capital expenditures (15,399) (27,457)
Change in intangible and other assets 15,718 (6,622)
------------ ------------
Net cash flows provided by (used in) investing activities 319 (34,079)
------------ ------------
Cash flows from financing activities:
Net (repayments) borrowings under bank credit facilities (23,538) 20,341
Proceeds from issuances of stock, net of expenses 3,210 1,759
------------ ------------
Net cash flows (used in) provided by financing activities (20,328) 22,100
------------ ------------
Effect of exchange rate changes on cash flows (1,882) (231)
------------ ------------
Net increase (decrease) in cash and cash equivalents 6,867 (7,071)
Cash and cash equivalents, beginning of period 37,363 39,500
------------ ------------
Cash and cash equivalents, end of period $ 44,230 $ 32,429
============ ============
Supplemental disclosures of cash flow information:
Cash paid during period for:
Interest, net $ 49,616 $ 46,078
Income taxes, net $ 1,851 $ 2,163
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
Notes to Condensed Consolidated Financial Statements November 25, 2000 and
November 27, 1999 (Unaudited - Dollars in thousands, except per share data)
Note 1. Basis of Presentation
The condensed consolidated financial statements of BE
Aerospace, Inc. and its wholly-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 accounting principles generally accepted in the
United States of America 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.
Certain reclassifications have been made to the prior year financial
statements to conform to the November 25, 2000 presentation.
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 for the fiscal year ended February 26, 2000.
Note 2. Comprehensive Earnings (Loss)
Comprehensive earnings (loss) is defined as all changes in a
company's net assets except changes resulting from transactions with
shareholders. It differs from net earnings (loss) in that certain
items currently recorded to equity would be a part of comprehensive
earnings (loss). The following table sets forth the computation of
comprehensive earnings (loss) for the periods presented:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
November 25, November 27, November 25, November 27,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Net earnings (loss) $ 7,919 $ (66,038) $ 17,086 $ (40,903)
Other comprehensive earnings:
Foreign exchange translation adjustment (7,085) 385 (17,826) (2,069)
----------- ----------- ------------ -----------
Comprehensive earnings (loss) $ 834 $ (66,653) $ (740) $ (42,972)
=========== =========== =========== ===========
</TABLE>
<PAGE>
Note 3. Segment Reporting
The Company is organized based on customer-focused lines of
business operating in a single segment. Each operation reports its
results of operations and makes requests for capital expenditures and
acquisition funding to the Company's chief operations decision-making
group. This group is presently comprised of the Chairman, the Vice
Chairman and Chief Executive Officer, and the Corporate Senior Vice
President of Administration and Chief Financial Officer. Under this
organizational structure, the Company's operations are aggregated
into one reportable segment -- the Aircraft Cabin Interior Products
and Services segment ("ACIPS"). The ACIPS is comprised of five lines
of business: Seating Products, Interior Systems Products, Cabin
Interior Structures, Engineering Services and Business Jet and VIP
Products, each of which have separate management teams and
infrastructures dedicated to providing a full range of products and
services to their commercial and general aviation operator customers.
Each of these lines of business demonstrates similar economic
performance and utilizes similar distribution methods and
manufacturing processes. The Company sold a 51% interest in its
In-Flight Entertainment ("IFE") subsidiary on February 25, 1999 and
its remaining 49% interest in IFE on October 5, 1999.
IFE was a separate, reportable segment.
Note 4. Earnings Per Common Share
Basic net earnings per common share is computed using the
weighted average common shares outstanding during the period. Diluted
net earnings per common share is computed by using the average share
price during the period when calculating the dilutive effect of stock
options. Shares outstanding for the periods presented were as
follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
November 25, November 27, November 25, November 27,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Weighted average common shares outstanding 25,437 24,835 25,236 24,757
Dilutive effect of employee stock options 944 - 352 -
----------- ----------- ----------- -----------
Diluted shares outstanding 26,381 24,835 25,588 24,757
=========== =========== =========== ===========
</TABLE>
Note 5. New Accounting Pronouncements
In March 2000, the Financial Accounting Standards Board
("FASB") issued Interpretation No. 44, "Accounting for Certain
Transactions Involving Stock Compensation--an interpretation of APB
Opinion No. 25" ("FIN 44"). FIN 44 clarifies the application of
Accounting Principles Board ("APB") Opinion No. 25 and among other
issues clarifies the following: the definition of an employee for
purposes of applying APB Opinion No. 25; the criteria for determining
whether a plan qualifies as a noncompensatory plan; the accounting
consequence of various modifications to the terms of previously fixed
stock options or awards; and the accounting for an exchange of stock
compensation awards in a business combination. FIN 44 is effective
July 1, 2000, but certain conclusions in FIN 44 cover specific events
that occurred after either December 15, 1998 or January 12, 2000. FIN
44 did not have a material impact on the Company's financial position
or results of operations.
In December 1999, the SEC staff issued Staff Accounting
Bulletin ("SAB") No. 101, Revenue Recognition in Financial
Statements. SAB 101 summarizes the SEC staff's views in applying
generally accepted accounting principles to revenue recognition in
financial statements. SAB 101 will be effective for the Company's
fourth quarter beginning November 26, 2000. The Company does not
expect its implementation will have an effect on its revenue
recognition policy.
<PAGE>
In September 1998, the FASB issued Statement No. 133,
"Accounting for Derivative Instruments and Hedging Activities", which
is required to be adopted in years beginning after June 15, 2000.
Because of the Company's minimal use of derivatives, management does
not anticipate that the adoption of the new Statement will have a
significant effect on the Company's financial position or results of
operations.
[Remainder of page intentionally left blank]
<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 25,
2000, as compared to the Company's results of operations for the
three months ended November 27, 1999. The discussion and analysis
then addresses the results of the Company's operations for the nine
months ended November 25, 2000, as compared to the Company's results
of operations for the nine months ended November 27, 1999. The
discussion and analysis then addresses the liquidity and financial
condition of the Company and other matters.
Three Months Ended November 25, 2000, as Compared to the Results of
Operations for the Three Months Ended November 27, 1999
Net sales for the three-month period ended November 25, 2000
of $167,410 were 1.7% higher than net sales of $164,578 for the
comparable period in the prior year. The year over year increase in
net sales is primarily attributable to an increase in revenues
attributable to retrofit programs and new product introductions,
offset by lower shipments of seating products and galley structures.
The year over year reduction in seating and galley revenues is a
result of both a reduction in new aircraft deliveries and last year's
seat manufacturing problems, which have since been resolved.
Gross profit was $63,548 or 38.0% of net sales for the three
months ended November 25, 2000 as compared to $(2,008) or (1.2)% of
net sales in the comparable period in the prior year. Our prior
year's results were adversely impacted by the significant
manufacturing problems we encountered in our seating business. The
Company's gross margin improved to 38.0% in the third quarter, up
from 36.4% in the first quarter and 37.0% in the second quarter of
this fiscal year. This gross margin improvement was due to the
turnaround in the seating business together with the positive impact
of the Company's lean manufacturing and continuous improvement
programs, which have been substantially aided by information
technology investments. Lean manufacturing and continuous improvement
programs are enabling the Company to reduce costs, improve quality
and productivity and accelerate the order fulfillment cycle.
Selling, general and administrative expenses were $23,177 or
13.8% of net sales for the three months ended November 25, 2000 as
compared to $27,253 or 16.6% of net sales in the comparable period in
the prior year. The year over year decrease in selling, general and
administrative expenses was primarily attributable to substantial
headcount reductions, elimination of expenses associated with last
year's problems in the seating business and a continued focus on cost
management.
Research, development and engineering expenses were $12,054 or
7.2% of net sales for the three months ended November 25, 2000, as
compared with $16,740 or 10.2% of sales for the comparable period in
the prior year. The year over year decrease in research, development
and engineering expenses was primarily the result of substantial
headcount reductions, particularly in the seating and galley
structures businesses. Research, development and engineering
expenses, on a quarter over quarter basis, declined primarily as a
result of cost controls and a lower level of controllable spending.
Amortization expense for the quarter ended November 25, 2000
was $5,820 as compared to $6,147 in the comparable period in the
prior year.
The Company generated operating earnings of $22,497 or 13.4%
of net sales as compared to operating loss of $(52,148) or (31.7)% of
net sales during the comparable period in the prior year. The prior
year's operating loss was the result of seat manufacturing problems,
which have since been resolved.
<PAGE>
Three Months Ended November 25, 2000, as Compared to the Results of
Operations for the Three Months Ended November 27, 1999 (continued)
Interest expense, net was $13,698 for the three months ended
November 25, 2000, or $192 lower than interest expense of $13,890 for
the comparable period in the prior year. The decrease in interest
expense is due to the year over year decrease in bank borrowings
offset by the impact of higher interest rates on the Company's bank
borrowings.
Earnings before income taxes in the current quarter were
$8,799, as compared to the loss before income taxes of $(66,038) in
the prior year's comparable period. Income tax expense for the
quarter ended November 25, 2000 was $880.
Net earnings were $7,919 or $.30 per share (diluted) for the
three months ended November 25, 2000, as compared to $(66,038) or
$(2.66) per share (diluted) for the comparable period in the prior
year.
Nine Months Ended November 25, 2000, as Compared to the
Results of Operations for the Nine Months Ended November 27, 1999
Net sales for the fiscal 2001 nine-month period were $500,651,
a decrease of $40,854 or 7.5% over the comparable period in the prior
year. The year over year decrease in sales is primarily attributable
to lower shipments of seating products, galley structures and
discontinued product service revenues. The lower level of seating and
galley structures revenues is due to both a lower level of new
aircraft deliveries this year vs. last year and last year's problems
in our seating business, which have since been resolved.
Gross profit was $185,859 or 37.1% of net sales for the nine
months ended November 25, 2000, which was $50,943 or 37.8%, higher
than the comparable period in the prior year of $134,916 or 24.9% of
net sales. The Company's gross margin increased by 1,220 basis points
over the gross margin the Company recorded in the prior nine month
period which was negatively impacted by manufacturing problems in its
seating operations. The current period gross margin improvement was
due to the turnaround in the seating business together with the
positive impact of the Company's lean manufacturing and continuous
improvement programs, which have been substantially aided by
information technology investments. Lean manufacturing and continuous
improvement programs are enabling the Company to reduce costs,
improve quality and productivity and accelerate the order fulfillment
cycle.
Selling, general and administrative expenses were $71,159 or
14.2% of net sales for the nine months ended November 25, 2000, as
compared to $70,576 or 13.0% of net sales in the prior year. The year
over year increase in selling, general and administrative expenses
was primarily attributable to costs associated with the
implementation of lean manufacturing at the Company's principal
manufacturing facilities and increased costs, including depreciation
expense, associated with the Company's new Enterprise Resource
Planning system offset by substantial headcount reductions and
elimination of expenses associated with last year's problems in the
seating business.
Research, development and engineering expenses for the current
nine month period were $37,263 or 7.4% of net sales or $3,002 lower
than the prior year of $40,265 or 7.4% of net sales. The year over
year decrease is primarily due to substantial headcount reductions in
our seating and galley operations.
<PAGE>
Nine Months Ended November 25, 2000, as Compared to the Results of
Operations for the Nine Months Ended November 27, 1999 (continued)
Amortization expense for the nine months ended November 25,
2000 was $17,535 as compared to $17,699 in the prior year.
The Company generated operating earnings of $59,902 or 12% of
net sales in the current period, as compared to operating earnings of
$6,376 or 1.2% of net sales in the prior year.
Interest expense for the nine months ended November 25, 2000
was $40,917 or $1,210 greater than interest expense of $39,707 in the
prior year. The increase is primarily due to higher interest rates on
the Company's bank borrowings.
Earnings before income taxes in the current nine month period
were $18,985, as compared to $(34,620) in the comparable period in
the prior year. Income tax expense in the current period was $1,899
as compared to $6,283 in the prior year.
Net earnings were $17,086 or $.67 per share (diluted) for the
nine months ended November 25, 2000, as compared to a net loss of
$(40,903) or $(1.65) (diluted) for the comparable period in the prior
year.
[Remainder of page intentionally left blank]
<PAGE>
Liquidity and Capital Resources
The Company's liquidity requirements consist of working
capital needs, on-going capital expenditures and scheduled payments
of interest and principal on indebtedness. B/E's primary requirements
for working capital have been related to the reduction of accrued
liabilities, including interest, accrued penalties incurred in
connection with the fiscal 2000 seating manufacturing problems,
incentive compensation, warranty obligations and accrued severance.
B/E's working capital was $162,389 as of November 25, 2000, as
compared to $129,913 as of February 26, 2000.
At November 2000, the Company's cash and cash equivalents were
$44,230, as compared to $37,363 at February 26, 2000. Cash provided
from operating activities was $28,758 for the nine months ended
November 25, 2000. The primary source of cash during the nine months
ended November 25, 2000 was net earnings, depreciation and
amortization of $49,164, a $10,754 decrease in accounts receivable
and inventories, a $4,469 increase in accounts payable offset by a
$12,487 increase in other current assets and a $24,677 decrease in
accrued liabilities.
The Company's capital expenditures were $15,399 and $27,457
during the nine months ended November 25, 2000 and November 27, 1999,
respectively. The year over year decrease in capital expenditures is
primarily attributable to significant expenditures in the prior year
for management information system enhancements and expenditures for
plant modernization. The Company anticipates on-going annual capital
expenditures of approximately $20,000 for the next several years.
The Company believes that the cash flow from operations and
availability under the Company's 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 in August
2004, 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.
In August, the Company announced that its wholly-owned
subsidiary Advanced Thermal Sciences, Inc. ("ATS") filed a
registration statement to effect an initial public offering of 4
million newly-issued shares at an estimated price range of $9-$11 per
share. Following this offering, the Company will own the remaining 10
million shares of ATS stock, assuming no exercise of the
underwriters' over-allotment option, and expects to receive a $15
million payment from ATS. These proceeds will be used to reduce the
Company's debt. There can be no assurance as to the completion of the
proposed public offering or the benefits derived from the expected
initial public offering of ATS, and the reduction in debt.
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 begins to
expire in 2011. 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 impact of rising fuel
prices on the Company's airline customers, the impact of labor
disputes involving our airline customers, the Company's high degree
of financial leverage, risks associated with the implementation of
its integrated management information system, risks associated with
its seat manufacturing operations and risks associated with the
integration of acquisitions. The Company monitors these
uncertainties, 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.
<PAGE>
New Accounting Pronouncements
See footnote 5 of the related financial statements.
Dependence upon Conditions in the Airline Industry
The Company's principal customers are the world's commercial
airlines. As a result, our 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 1998. This financial turnaround was, in part, driven by
record load factors, rising fare prices and declining fuel costs.
Airline company balance sheets have been substantially strengthened
and their liquidity enhanced as a result of their record
profitability, debt and equity financings and a closely managed fleet
expansion. Recent increases in fuel prices have not had a material
impact on the airline industry to-date. However, should fuel prices
continue at or above the current level for a prolonged period, we
would expect to see the airline industry's profitability impacted and
discretionary airline spending may be more closely monitored or even
reduced.
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.
[Remainder of page intentionally left blank]
<PAGE>
Forward Looking Statements
This report contains forward-looking statements, including
statements regarding the future benefits of corrective actions in the
Company's seating business, implementation and expected benefits of
lean manufacturing and continuous improvement programs, the Company's
dealings with customers and partners, the consolidation of
facilities, productivity improvements from recent information
technology investments, the roll-out of the Company's e-commerce
system, ongoing capital expenditures, the adequacy of funds to meet
the Company's capital requirements, the ability to refinance the Bank
Credit Facility if necessary, completion of and benefits derived from
the expected initial public offering of Advanced Thermal Sciences,
Inc., and the reduction of debt. These forward-looking statements
include risks and uncertainties, and the Company's actual experience
may differ materially from that anticipated in such statements.
Factors that might cause such a difference include those discussed in
the Company's filings with the Securities and Exchange Commission,
including its most recent proxy statement and Form 10-K, as well as
future events that may have the effect of reducing the Company's
available operating income and cash balances, such as unexpected
operating losses, the impact of rising fuel prices on our airline
customers, delays in, or unexpected costs associated with, the
integration of our acquired businesses, conditions in the airline
industry, problems meeting customer delivery requirements, the
Company's success in winning new or expected refurbishment contracts
from customers, capital expenditures, cash expenditures related to
possible future acquisitions, further remediation of our Seating
Products operating problems, labor disputes involving us, our
significant customers or airframe manufacturers, the possibility of a
write-down of intangible assets, delays or inefficiencies in the
introduction of new products or fluctuations in currency exchange
rates.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Company is exposed to a variety of risks, including
foreign currency fluctuations and changes in interest rates affecting
the cost of its debt.
Foreign Currency
The Company has subsidiary operations primarily in the United
Kingdom and Holland and accordingly, the Company is exposed to
transaction gains and losses that could result from changes in
foreign currency exchange rates. The Company uses the local currency
(Pound Sterling and Dutch Guilder, respectively) as the functional
currency for its subsidiaries. Translation adjustments resulting from
the process of translating foreign currency financial statements into
U.S. dollars have grown primarily due to the strengthening of the
U.S. Dollar. Translation adjustments were $(17,826) for the nine
months ending November 25, 2000 and $(4,455) for the year ending
February 26, 2000 and are recorded as adjustments to accumulated
other comprehensive loss in the Company's financial statements. The
Company actively monitors its foreign exchange exposure and, should
circumstances change, intends to implement strategies to reduce its
risk at such time that it determines that the benefits of such
strategies outweigh the associated costs. There can be no assurance
that management's efforts to reduce foreign exchange exposure will be
successful.
<PAGE>
PART II - OTHER INFORMATION
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 None.
<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 3, 2001 By: /s/ Robert J. Khoury
----------------------------------
Robert J. Khoury
Vice Chairman and
Chief Executive Officer
Date: January 3, 2001 By: /s/ Thomas P. McCaffrey
----------------------------------
Thomas P. McCaffrey
Corporate Senior Vice President of
Administration and Chief
Financial Officer
