-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Acl38OhSC75ywU9ay5fFfs27pT0ynHsfyWe8nirRhRhkzaeYLskGmg97FBHB6ssD SWasdak236nRTwn4vOvFBQ== 0000861361-97-000025.txt : 19971224 0000861361-97-000025.hdr.sgml : 19971224 ACCESSION NUMBER: 0000861361-97-000025 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971129 FILED AS OF DATE: 19971223 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BE AEROSPACE INC CENTRAL INDEX KEY: 0000861361 STANDARD INDUSTRIAL CLASSIFICATION: PUBLIC BUILDING AND RELATED FURNITURE [2531] IRS NUMBER: 061209796 STATE OF INCORPORATION: DE FISCAL YEAR END: 0222 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-18348 FILM NUMBER: 97743565 BUSINESS ADDRESS: STREET 1: 1400 CORPORATE CTR WY CITY: WELLINGTON STATE: FL ZIP: 33414 BUSINESS PHONE: 4077915000 MAIL ADDRESS: STREET 1: 1300 CORPORATE CENTER WAY STREET 2: 1300 CORPORATE CENTER WAY CITY: WELLINGTON STATE: FL ZIP: 33414 FORMER COMPANY: FORMER CONFORMED NAME: BE AVIONICS INC DATE OF NAME CHANGE: 19920608 10-Q 1 3RD QUARTER 10-Q 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 29, 1997 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 22,830,117 shares were outstanding as of December 18, 1997. B/E AEROSPACE, INC. Item 1. Financial Statements CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except share data)
November 29, February 22, 1997 1997 ASSETS CURRENT ASSETS: Cash and cash equivalents .................................... $ 58,221 $ 44,149 Accounts receivable - trade, less allowance for doubtful accounts of $2,696 (November 29,1997) and $4,864 (February 22, 1997) .......................... 79,970 73,489 Inventories, net ............................................. 113,869 92,900 Other current assets ......................................... 6,935 2,781 --------- --------- Total current assets ..................................... 258,995 213,319 ========= ========= PROPERTY AND EQUIPMENT, net ....................................... 98,753 87,888 INTANGIBLES AND OTHER ASSETS, net ................................. 188,963 189,882 $ 546,711 $ 491,089 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable ............................................. $ 55,913 $ 42,889 Accrued expenses ............................................. 42,578 43,837 Current portion of long-term debt ............................ 7,222 4,419 Total current liabilities ............................... 105,713 91,145 --------- --------- LONG-TERM DEBT .................................................... 225,339 225,402 DEFERRED INCOME TAXES ............................................. 1,310 1,667 OTHER LIABILITIES ................................................. 14,149 7,114 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; 22,792,892 (November 29, 1997) 21,893,392 (February 22, 1997) issued and outstanding 228 219 Additional paid-in capital 238,578 228,710 Accumulated deficit .......................................... (37,834) (62,286) Cumulative foreign exchange translation adjustment ........... (772) (882) ---------- ---------- Total stockholders' equity .............................. 200,200 165,761 --------- --------- $ 546,711 $ 491,089 ========= =========
B/E AEROSPACE, INC. CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (Dollars in thousands, except per share data)
Three Months Ended -------------------------------- November 29, November 30, 1997 1996 ---- ---- NET SALES ................................ $128,998 $107,823 COST OF SALES ............................ 82,348 71,313 -------- -------- GROSS PROFIT ............................. 46,650 36,510 OPERATING EXPENSES: Selling, general and administrative . 15,082 13,365 Research, development and engineering 12,438 8,602 Amortization of intangible assets ... 2,666 2,507 ------- -------- Total operating expenses ....... 30,186 24,474 OPERATING EARNINGS ....................... 16,464 12,036 INTEREST EXPENSE, net .................... 5,368 7,446 -------- -------- EARNINGS BEFORE INCOME TAXES ............. 11,096 4,590 INCOME TAXES ............................. 1,664 459 -------- -------- NET EARNINGS ............................. $ 9,432 $ 4,131 NET EARNINGS PER COMMON SHARE ............ $ 0.40 $ 0.23 ======== ======== COMMON AND COMMON EQUIVALENT SHARES ...... 23,807 18,295 ======== ========
BE AEROSPACE, INC. CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (Dollars in thousands, except per share data)
Nine Months Ended --------------------------- November 29, November 30, 1997 1996 ---- ---- NET SALES ................................ $362,687 $308,151 COST OF SALES ............................ 230,825 204,655 -------- -------- GROSS PROFIT ............................. 131,862 103,496 OPERATING EXPENSES: Selling, general and administrative . 43,017 37,619 Research, development and engineering 34,988 27,759 Amortization ........................ 8,195 8,021 -------- -------- Total operating expenses ....... 86,200 73,399 -------- -------- OPERATING EARNINGS ....................... 45,662 30,097 INTEREST EXPENSE, net .................... 16,899 21,845 EARNINGS BEFORE INCOME TAXES ............. 28,763 8,252 INCOME TAXES ............................. 4,311 825 NET EARNINGS ............................. $ 24,452 $ 7,427 ======== ======== EARNINGS PER COMMON SHARE: NET EARNINGS ............................. $ 1.04 $ 0.42 ======== ======== COMMON AND COMMON EQUIVALENT SHARES ...... 23,414 17,786 ======== ========
B/E AEROSPACE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands)
Nine Months Ended -------------------------------- November 29, November 30, 1997 1996 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings ............................................ $ 24,452 $ 7,427 Adjustments to reconcile net earnings to net cash flows provided by (used in) operating activities: Depreciation and amortization .................. 18,482 16,325 Deferred income taxes .......................... (413) 637 Non cash employee benefit plan contributions ... 1,251 783 Changes in operating assets and liabilities: Accounts receivable ....................... (5,886) Inventories ............................... (19,785) (15,106) Other current assets ...................... (4,168) 3,266 Accounts payable .......................... 13,638 1,370 Other liabilities ......................... 221 (9,683) ------- ------- Net cash flows provided by (used in) operating activities 27,792 (10,174) CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ................................... (21,099) (8,675) Change in other assets - net ........................... (3,836) (2,177) ------- ------- Net cash flows used in investing activities ............ (24,935) (10,852) CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings under revolving lines of credit .......... 2,518 7,903 Proceeds from issuances of stock ........................ 8,647 11,229 ------- ------- Net cash flows provided by financing activities ......... 11,165 19,132 Effect of exchange rate changes on cash flows ................ 50 188 Net increase (decrease) in cash and cash equivalents ......... 14,072 (1,706) Cash and cash equivalents, beginning of period ............... 44,149 15,376 Cash and cash equivalents, end of period ..................... $ 58,221 $ 13,670 ======== ======== Supplemental disclosures of cash flow information: Cash paid during period for interest .................... $ 17,716 $ 20,935 Cash paid during period for income taxes ................ $ 1,871 $ 1,183
B/E AEROSPACE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED NOVEMBER 29, 1997 AND NOVEMBER 30, 1996 Note 1. BASIS OF PRESENTATION: The information set forth in these consolidated financial statements as of November 29, 1997 and for the three and nine months ended November 29, 1997 and November 30, 1996 is unaudited and may be subject to normal year-end adjustments. In the opinion of management, the unaudited consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments necessary to present fairly the financial position of B/E Aerospace, Inc. (the "Company" or "B/E") for the periods indicated. Results of operations for the interim periods ended November 29, 1997 are not necessarily indicative of the results of operations for the full fiscal year. For further information, including information with regard to conditions in the airline industry and their possible impact on the Company, please refer to the Company's annual report on Form 10-K for the fiscal year ended February 22, 1997. The accompanying consolidated financial statements consolidate all of the Company's subsidiaries. All significant intercompany transactions have been eliminated. Certain amounts in the prior year's Consolidated Financial Statements have been reclassified to conform to the current fiscal year's presentation. Certain information normally included in footnote disclosures to the annual financial statements has been condensed or omitted in accordance with the rules and regulations of the Securities and Exchange Commission. Note 2. EARNINGS PER SHARE In February 1997, the FASB issued SFAS No. 128, Earnings Per Share which is effective for financial statements issued for periods ending after December 15, 1997. SFAS No. 128 requires the disclosure of basic and diluted earnings per share. Earnings per share, as reported and as would be reportable under SFAS No. 128 for the three and nine months ended November 29, 1997 and November 30, 1996 are as follows:
As Reported As Reported Three Months Ended Nine Months Ended ----------------------------- ----------------------------- November 29, November 30, November 29, November 30, 1997 1996 1997 1996 ---- ---- ---- ---- Primary earnings per share $ .40 $ .23 $ 1.04 $ 1.04
B/E AEROSPACE, INC.
Pro Forma Pro Forma Three Months Ended Nine Months Ended ----------------------------- ----------------------------- November 29, November 30, November 29, November 30, 1997 1996 1997 1996 ---- ---- ---- ---- Basic earnings per share $ .41 $ .24 $ 1.10 $ .44 Diluted earnings per share $ .40 $ .22 $ 1.04 $ .41
Note 3. New Accounting Pronouncements COMPREHENSIVE INCOME -- During 1997 the FASB issued SFAS No. 130, "Reporting Comprehensive Income," which established standards for the reporting and displaying 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. Comprehensive income must be reported in a financial statement with the cumulative total presented as a component of equity. This statement will be adopted by the Company in its fiscal 1999 quarterly financial statements. SEGMENT INFORMATION - In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 131, "Disclosures about Segments of an Enterprise and Related Information," which will be effective for the Company beginning March 1, 1998. SFAS No. 131 redefines how operating segments are determined and requires disclosure of certain financial and descriptive information about a company's operating segments. The Company believes the segment information required to be disclosed under SFAS No. 131 will be more comprehensive than previously provided, including expanded disclosure of income statement and balance sheet items. The Company has not yet completed its analysis of which operating segments it will report on. Note 4. Long-Term Debt In May 1997, the Company amended its existing credit facilities with The Chase Manhattan Bank by increasing the aggregate principal amount that may be borrowed thereunder to $125,000 (the ''Bank Credit Facility''). The Bank Credit Facility consists of a $25,000 Reducing Revolver and a $100,000 Revolving Facility. The amount of the Reducing Revolver will be reduced automatically by 12.5% on August 26, 2000 and on each of the seven succeeding quarterly anniversaries of such date. The Reducing Revolver is collateralized by all of the issued and outstanding capital stock of a wholly owned subsidiary and has a five-year maturity. The Revolving Facility is collateralized by all of the Company's accounts receivable, all of its inventory and substantially all of its other personal property and has a five-year maturity. The Bank Credit Facility contains customary affirmative B/E AEROSPACE, INC. covenants, negative covenants and conditions of borrowing. At November 29, 1997 indebtedness under the Bank Credit Facility were letters of credit amounting to approximately $4,572. The Company has approximately $120,428 available for subsequent borrowings under its Bank Credit Facility. B/E AEROSPACE, INC. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. (Dollars in thousands, except per share data) The following discussion and analysis addresses the results of the Company's operations for the three months ended November 29, 1997, as compared to the Company's results of operations for the three months ended November 30, 1996. he discussion then addresses the results of the Company's operations for the nine months ended November 29, 1997, as compared to the Company's results of operations for the nine months ended November 30, 1996. The discussion and analysis then addresses the liquidity and financial condition of the Company. THREE MONTHS ENDED NOVEMBER 29, 1997, AS COMPARED TO THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED NOVEMBER 30, 1996. Net sales for the fiscal 1998 three-month period were $128,998, or 20 percent higher than sales of $107,823, for the comparable period in the prior year and is attributable to substantially higher unit volume shipments of all the Company's products. Gross profit was $46,650 (36.2% of sales) for the three months ended November 29, 1997 and was $10,140 or 28% greater than the comparable period in the prior year of $36,510 which represented 33.9% of sales. The increase in gross profit, while primarily the result of the higher sales volume, was also positively impacted by the improved gross margin. Selling, general and administrative expenses were $15,082 (11.7% of sales) for the three months ended November 29, 1997. This was $1,717 or 13% higher than the comparable period in the prior year of $13,365 (12.4% of sales) and is primarily due to a higher level of sales and quotation activity as well as a higher level of customer service, product support and information technology activities. Research, development and engineering expense was $12,438 or 9.6% of sales for the three months ended November 29, 1997, an increase of $3,836 over the comparable period in the prior year. The increase in research, development and engineering expense in the current period is primarily attributable to activities associated with the Company's in-flight entertainment product group. Amortization expense for the quarter ended November 29, 1997 of $2,666 was $159 greater than the amount recorded in the third quarter of fiscal 1997. The increase in gross profit, offset by somewhat higher operating expenses resulted in operating earnings of $16,464 (12.8% of sales), an increase of $4,428 or 37% over the comparable period in the prior year of $12,036 (11.2% of sales). Interest expense, net was $5,368 for the three months ended November 29, 1997, or $2,078 lower than interest expense of $7,446 recorded for the comparable period in the prior year, and is due to the decrease in the Company's long-term debt as compared to the prior year. B/E AEROSPACE, INC. Earnings before income taxes of $11,096 for the three months ended November 29, 1997 was $6,506 or 142% greater than the earnings before taxes for the comparable period in the prior year. Income tax expense for the quarter ended November 29, 1997 was $1,664 or 15% of earnings before income taxes, as compared to $459, or 10% of earnings before income taxes in the prior year. Net earnings were $9,432 or $.40 per share for the three months ended November 30, 1997, as compared to net earnings of $4,131 or $.23 per share for the comparable period in the prior year. NINE MONTHS ENDED NOVEMBER 29, 1997, AS COMPARED TO THE NINE MONTHS ENDED NOVEMBER 30, 1996. Sales for the nine months ended November 29, 1997 were $362,687, or 18%, higher than sales of $308,151 for the comparable period in the prior year and reflected a 26 percent increase in product sales, offset by a $14,790 decline in service revenues. The increase in sales is attributable to substantially higher unit volume shipments of all the Company's products. Gross profit was $131,862 (36.4% of sales) for the nine months ended November 29, 1997 and was $28,366 or 27.4% greater than the comparable period in the prior year of $103,496, which represented 33.6% of sales. The increase in gross profit, which primarily is the result of the higher sales volume, was also positively impacted by the improved gross margin. Selling, general and administrative and other expenses were $43,017 or 11.9% of sales for the nine months ended November 29, 1997. This was $5,398 higher than selling, general and administrative expenses for the comparable period in the prior year of $37,619, or 12.2% of sales, and is primarily due to the higher level of sales and quotation activity as well as a higher level of customer service, product support and information technology activities. Research, development and engineering expenses were $34,988, or 9.6% of sales, for the nine months ended November 29, 1997. For the comparable period in the prior year, research and development expense was $27,759 or 9.0% of sales. Amortization expense of $8,195 for the nine months ended November 29, 1997 was $174 more than the amount recorded in the comparable period for fiscal 1996. Net interest expense was $16,899 for the nine months ended November 29, 1997, or $4,946 less than the net interest expense of $21,845 recorded for the comparable period in the prior year, and is due to the decrease in the Company's long-term debt. The increase in gross profit offset by somewhat higher operating expenses and lower interest expense in the current year resulted in earnings before income taxes of $28,763, an increase of $20,511 over the comparable period in the prior year. B/E AEROSPACE, INC. Income taxes for the nine months ended November 29, 1997 were $4,311, or 15% of earnings before income taxes as compared to $825 or 10% of earnings before income taxes in the prior year. LIQUIDITY AND CAPITAL RESOURCES Bookings and Backlog Information -- On September 15, 1997, British Airways ("BA") notified the Company of its decision not to conduct a flight trial of B/E's MDDS interactive video system. At that time, BA made a proposal to work with B/E using a version of the MDDS system, which is installed on one of BA's Boeing 747 aircraft to give B/E an opportunity to prove the reliability of a multi-channel upgradeable system. The testing of this MDDS system, which was reconfigured to be non-interactive on the aircraft, has proceeded on schedule, but the system's reliability to date has not performed up to the 99.5% reliability level of the Company's basic BE2000 system. As a result, the Company believes that BA will ultimately select a competitor's system for their in-flight entertainment equipment needs. As a result of BA's decision not to move forward with the interactive program, as of August 1997, the Company debooked approximately $155,000 of backlog related to the MDDS program. At November 1997, the Company's backlog stood at approximately $560,000, which represents a year-to-year increase of approximately $140,000 or 33% versus the Company's backlog at the end of its fiscal 1997 third quarter, as similarly adjusted to exclude the amount then attributable to the BA MDDS backlog. The Company's liquidity requirements consist primarily of working capital needs and scheduled payments of interest on its indebtedness. B/E's primary requirements for working capital have been directly related to increased accounts receivable and inventory levels as a result of revenue growth. B/E's working capital was $153,282 as of November 29, 1997, compared to $122,174 as of February 22, 1997. In May 1997, the Company amended its existing credit facilities with The Chase Manhattan Bank by increasing the aggregate principal amount that may be borrowed thereunder to $125,000 (the ''Bank Credit Facility''). The Bank Credit Facility consists of a $25,000 Reducing Revolver and a $100,000 Revolving Facility. The amount of the Reducing Revolver will be reduced automatically by 12.5% on August 26, 2000 and on each of the seven succeeding quarterly anniversaries of such date. The Reducing Revolver is collateralized by all of the issued and outstanding capital stock of a wholly owned subsidiary and has a five-year maturity. The Revolving Facility is collateralized by all of the Company's accounts receivable, all of its inventory and substantially all of its other personal property and has a five-year maturity. The Bank Credit Facility contains customary affirmative covenants, negative covenants and conditions of borrowing. At November 29, 1997 indebtedness under the Bank Credit Facility were letters of credit amounting to approximately $4,572. The Company has approximately $120,428 available for subsequent borrowings under its bank credit facility. Long-term debt consists of the Senior Notes and Senior Subordinated Notes which are due March 1, 2003 and February 1, 2006, respectively. B/E AEROSPACE, INC. At November 29, 1997, the Company's cash and cash equivalents were $58,221 as compared to $44,149 at February 22, 1997. Cash provided from operating activities during the nine months ended November 29, 1997 was $27,792 and cash used in operating activities in the nine months ended November 30, 1996 was $10,147. The primary source of cash during the nine months ended November 29, 1997 was net earnings of $24,452, non-cash charges for depreciation and amortization of $18,482 and increases in accounts payable of $13,638 offset by a use of cash of $25,671 related to increases in inventories and receivables and $4,360 related to net decreases in other assets and liabilities. The Company's capital expenditures were $21,099, and $8,675 during the nine months ended November 29, 1997, and November 30, 1996, respectively. The Company anticipates ongoing capital expenditures of approximately $25 million per year for the next several years. The Company believes that 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 obligations 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 and make planned capital expenditures, to make scheduled payments and to refinance its indebtedness depends on its future operating performance and cash flow, which, in turn, are subject to prevailing economic conditions and to financial, business and other factors, some of which are beyond its control. This report includes forward-looking statements which involve risks and uncertainties. The Company's actual experience may differ materially from that discussed above. Factors that might cause such a difference include, but are not limited to, those discussed in "Risk Factors" in the Company's Registration Statement on Form S-3 dated December 12, 1996, the Company's Form 10-K for the year ended February 22, 1997, as well as future events that have the effect of reducing the Company's available cash balances, such as unexpected operating losses or delays in the integration of acquired businesses or the delivery of the MDDS interactive video system or capital expenditures or cash expenditures related to possible future acquisitions. B/E AEROSPACE, INC. 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. a. Exhibits. None B/E AEROSPACE, INC. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. B/E AEROSPACE, INC. Date: December 23, 1997 By: /s/ Robert J. Khoury Vice Chairman and Chief Executive Officer Date: December 23, 1997 By: /s/ Thomas P. McCaffrey Corporate Senior Vice President, Administration and Chief Financial Officer EX-27 2 ARTICLE 5 FDS FOR 3RD QUARTER
5 9-MOS FEB-28-1998 NOV-29-1997 58,221 0 82,666 (2,696) 113,869 258,995 144,925 (46,172) 546,711 105,713 225,339 0 0 228 (38,606) 546,711 362,687 362,687 230,825 317,025 0 0 16,899 28,763 4,311 24,452 0 0 0 24,452 1.04 1.04
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