-----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, Oz1fB94JZmcmpKChyy8lj0SDCzDJSOElahENbflpZEzL5ExAmWO/mcx6hds3DMnw lS44AifMq41JJx1wzD1WxA== 0000861361-95-000018.txt : 19951011 0000861361-95-000018.hdr.sgml : 19951011 ACCESSION NUMBER: 0000861361-95-000018 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950826 FILED AS OF DATE: 19951010 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: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-18348 FILM NUMBER: 95579541 BUSINESS ADDRESS: STREET 1: 1400 CORPORATE CENTER WAY 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 August 26, 1995 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) (407) 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 16,215,814 shares were outstanding as of October 2, 1995. BE AEROSPACE, INC. Item 1. Financial Statements. CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except share data) August 26, February 25, 1995 1995 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 7,490 $ 8,319 Receivables - trade, less allowance for doubtful accounts of $3,853 (August 26, 1995) and $4,034 (February 25, 1995) 44,249 48,915 Inventories, net 91,885 71,347 Deferred income taxes 5,779 6,502 Other current assets 7,608 7,434 Total current assets 157,011 142,517 PROPERTY AND EQUIPMENT, net 64,466 60,304 INTANGIBLES AND OTHER ASSETS, net 173,372 177,133 $ 394,849 $ 379,954 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 38,614 $ 35,164 Accrued expenses 20,939 24,481 Income taxes payable 385 1,642 Current portion of long-term debt 5,090 4,667 Total current liabilities 65,028 65,954 LONG-TERM DEBT 188,435 172,693 DEFERRED INCOME TAXES 10,953 11,212 OTHER LIABILITIES 4,234 4,764 STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value; 1,000,000 shares authorized; no shares outstanding Common Stock, $.01 par value; 30,000,000 shares authorized; 16,179,345 (August 26, 1995) 16,095,790 (February 25, 1995) issued 161 160 Additional paid-in capital 119,719 119,209 Retained earnings 7,045 7,418 Cumulative foreign exchange translation adjustment (726) (1,456) Total stockholders' equity 126,199 125,331 $ 394,849 $ 379,954 ========= =========
- 2 - BE AEROSPACE, INC. CONSOLIDATED STATEMENTS OF EARNINGS (Dollars in thousands, except per share data) Three Months Ended August 26, August 27, 1995 1994 NET SALES $ 57,451 $ 55,197 COST OF SALES 38,878 36,789 GROSS PROFIT 18,573 18,408 OPERATING EXPENSES: Selling, general and administrative 8,443 7,902 Research and development 4,433 2,711 Amortization expense 2,360 2,637 Total operating expenses 15,236 13,250 OPERATING EARNINGS 3,337 5,158 INTEREST EXPENSE, net 3,961 3,629 EARNINGS (LOSS) BEFORE INCOME TAXES (624) 1,529 INCOME TAXES (BENEFIT) (228) 565 NET EARNINGS (LOSS) $ (396) $ 964 NET EARNINGS (LOSS) PER COMMON SHARE $ (.02) $ .06 COMMON AND COMMON EQUIVALENT SHARES 16,118 16,097 ========= =========
- 3 - BE AEROSPACE, INC. CONSOLIDATED STATEMENTS OF EARNINGS (Dollars in thousands, except per share data) Six Months Ended August 26, August 27, 1995 1994 NET SALES $ 113,045 $ 112,764 COST OF SALES 76,071 75,469 GROSS PROFIT 36,974 37,295 OPERATING EXPENSES: Selling, general and administrative 16,743 15,976 Research and development 7,980 5,553 Amortization expense 4,693 5,209 Total operating expenses 29,416 26,738 OPERATING EARNINGS 7,558 10,557 INTEREST EXPENSE, net 8,149 7,322 EARNINGS (LOSS) BEFORE INCOME TAXES (591) 3,235 INCOME TAXES (216) 1,197 NET EARNINGS (LOSS) $ (375) $ 2,038 NET EARNINGS PER COMMON SHARE $ (.02) $ .13 COMMON AND COMMON EQUIVALENT SHARES 16,108 16,060 ========= =========
- 4 - BE AEROSPACE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) August 26, August 27, 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ (375) $ 2,038 Adjustments to reconcile net earnings to net cash flows provided by operating activities: Depreciation and Amortization 8,413 7,447 Deferred income taxes 948 820 Non cash employee benefit plan contributions 683 182 Changes in operating assets and liabilities: Accounts receivable 4,306 5,257 Inventories (20,634) (13,530) Income tax refund receivable 1,934 Other current assets 120 (683) Accounts payable 3,555 711 Income taxes payable (1,055) 1,149 Other liabilities (4,257) (1,037) Net cash flows used in operating activities (8,296) 4,288 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (8,168) (5,345) Change in other assets - net (2,095) (4,212) Change in other liabilities (1,023) Net cash flows used in investing activities (10,263) (10,580) CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings under revolving lines of credit 17,818 1,813 Repayments of long-term debt (1,235) Net cash flows provided by financing activities 17,818 578 Effect of exchange rate changes on cash flows (88) 159 Net decrease in cash and cash equivalents (829) (5,555) Cash and cash equivalents, beginning of period 8,319 13,738 Cash and cash equivalents, end of period $ 7,490 $ 8,183 Supplemental disclosures of cash flow information: Cash paid during period for interest $ 8,510 $ 7,459 Cash paid during period for income taxes, net 702
- 5 - BE AEROSPACE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SIX MONTHS ENDED AUGUST 26, 1995 AND AUGUST 27, 1994 (Dollars in thousands, except share and per share data) Note 1. Basis of Presentation: The information set forth in these consolidated financial statements as of August 26, 1995 and for the three month periods ended August 26, 1995 and August 27, 1994 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 BE Aerospace, Inc. (the "Company" or "BEA") for the periods indicated. Results of operations for the interim period ended August 26, 1995 are not necessarily indicative of the 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 25, 1995, as amended. The accompanying consolidated financial statements consolidate all of the Company's subsidiaries. All significant intercompany transactions have been eliminated. Certain amounts in the prior years' 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. Contingencies The U.S. Departments of Commerce and Justice are jointly conducting an investigation into the Company's 1992 and 1993 sales of passenger seats for installation on commercial aircraft owned by Iran Air. The Company applied for and received an export license from the Department of Commerce for these transactions, which aggregated approximately $3.1 million. The investigation appears to center on whether the terms of the export license were strictly adhered to. The Company is cooperating with government officials, and is conducting a parallel internal investigation and is determined to resolve this matter as expeditiously as possible. - 6 - BE AEROSPACE, INC. (Dollars in thousands, except per share data) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis addresses the results of the Company's operations for the three and six months ended August 26, 1995, as compared to the Company's results of operations for the three and six months ended August 27, 1994 respectively. The discussion and analysis then addresses the liquidity and financial condition of the Company. THREE MONTHS ENDED AUGUST 26, 1995, AS COMPARED TO THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED AUGUST 27, 1994. Sales for the three months ended August 26, 1995 were $57,451 or $2,254 (4%) greater than sales of $55,197 for the comparable period in the prior year. The increase in sales year over year is due to slightly higher volume of products shipped. At August 26, 1995 the Company's backlog stood at $345 million, up from $331 million at February 25, 1995. The Company's revenues are not expected to increase appreciably until either the level of spending by the airlines for refurbishment of their existing fleets increases, the Company begins substantial deliveries of its MDDS interactive entertainment systems in connection with airline upgrade programs on their existing airline fleets or new aircraft deliveries increase. Gross profit was $18,573 or 32% of sales for the three months ended August 26, 1995 and was $165 greater than the comparable period in the prior year of $18,408, which represented 33% of sales. The increase in gross profit is due to the slightly higher volume of units shipped, offset somewhat by the 1% decline in gross margin to 32% as a result of the mix of products sold during the period. Selling, general and administrative expenses were $8,443 (15% of sales) for the three months ended August 26, 1995. This was $541 higher than the comparable period in the prior year of $7,902 (14% of sales) and is due to marginally higher selling costs, including commissions. Research and development expense was $4,433 or 8% of sales for the three months ended August 26, 1995. For the comparable period in the prior year, research and development expense was $2,711 or 5% of sales. The increase in expense is the result of a substantial increase in the level of activity during the quarter, principally associated with In-Flight Entertainment products and also with Seating products. Amortization expense for the quarter ended August 26, 1995 of $2,360 was $277 lower than the amount recorded in the first quarter of fiscal 1994 as a result of the lower level of intangible assets amortized in the current period. While revenues and backlog have increased as compared to the prior year levels, operating earnings for the three month period ended August 26, 1995 have suffered largely due to higher research and development spending. Net interest expense was $3,961 for the three months ended August 26, 1995, or $332 higher than the net interest expense of $3,629 recorded for the comparable period in the prior year, and is due to the increase in the Company's long-term debt outstanding during the current period, along with an increase in interest rates. - 7 - BE AEROSPACE, INC. THREE MONTHS ENDED AUGUST 26, 1995, AS COMPARED TO THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED AUGUST 27, 1994 (Continued) Loss before income taxes of $(624) for the quarter ended August 26, 1995 was $2,153 less than the earnings of the prior year, primarily as a result of higher research and development and interest expense incurred during the current quarter. Income tax expense benefit for the quarter ended August 26, 1995 was $228 as compared to a tax provision of $565 (37%) in the same period last year. Net loss was $(396) or $(.02) per share for the three months ended August 26, 1995, as compared to $964 or $.06 per share for the comparable period in the prior year. SIX MONTHS ENDED AUGUST 26, 1995, AS COMPARED TO THE RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED AUGUST 27, 1994. Sales for the six months ended August 26, 1995 were $113,045 or $281 higher than sales of $112,764 for the comparable period in the prior year. Gross profit was $36,974 or 33% of sales for the six months ended August 26, 1995 and was $321 lower than the comparable period in the prior year of $37,295, which represented 33% of sales. The decrease in gross profit is the result of the mix of products sold during the period. Selling, general and administrative expenses were $16,743 (15% of sales) for the six months ended August 26, 1995. This was $767 higher than the comparable period in the prior year of $15,976 (14% of sales), principally due to higher seller costs, including commissions. Research and development expenses were $7,980 or 7% of sales for the six months ended August 26, 1995. For the comparable period in the prior year, research and development expense was $5,553 or 5% of sales. The increase in expense during the current year is the result of an increase in the level of activity in on-going research and development programs, principally associated with In-Flight Entertainment products and also with Seating products. Amortization expense for the six months ended August 26, 1995 of $4,693 was $516 less than the amount recorded in the first half of fiscal 1995 as a result of the lower level of intangible assets amortized in the current period. While revenues and backlog have increased as compared to the prior year levels, operating earnings for the six month period ended August 26, 1995 have suffered largely due to higher research and development spending. Net interest expense was $8,149 for the six months ended August 26, 1995, or $827 higher than the net interest expense of $7,322 recorded for the comparable period in the prior year, and is due to the increase in the Company's long-term outstanding debt during the current period, along with an increase in rates. The loss before income taxes of ($591) for the six months ended August 26, 1995 was $1,788 less than the earnings of the prior year, primarily as a result of higher interest and research and development expense incurred during the current year. Income tax benefit for the six months ended August 26, 1995 was ($216) or 37% of loss before income taxes, as compared to a tax rate of 37% in the first half of fiscal 1995. - 8 - BE AEROSPACE, INC. The net loss of $375 or $(.02) per share for the six months ended August 26, 1995 as compared to earnings of $2,038 or $ .13 per share for the comparable period in the prior year. The decrease in earnings per share reflects the impact of higher research and development and interest expense during the period. LIQUIDITY AND CAPITAL RESOURCES The Company's primary requirements for working capital are directly related to its accounts receivable and inventory levels, as well as costs associated with the design and development of its MDDS interactive video system, and improvements to its property and equipment. The Company's working capital was $91,983 as of August 26, 1995 compared to $76,563 as of February 25, 1995. In October 1993, the Company obtained Credit Facilities aggregating $85,000. The credit facilities are comprised of two revolving lines of credit, initially aggregating $40,000 and $45,000. The $40,000 revolving line of credit is collateralized by the stock of a wholly owned subsidiary and may be borrowed and repaid in $1,000 increments and has decreasing availability through November 1998. The $45,000 revolving line of credit may be borrowed in $1,000 increments, is subject to borrowing base calculation set forth in the credit facility agreement, is collateralized by substantially all the Company's assets and is due and payable in full in November 1998. The credit facilities bear interest at prime plus .50% or at the Company's option, LIBOR plus 1.75%. As of August 26, 1995, the availability under the $40,000 revolving line of credit had been reduced to $29,500, resulting in a total credit facility aggregating $74,500, of which $52,000 was outstanding. The Company believes that cash on hand, cash flow from operations and available bank borrowings will be sufficient to meet its working capital requirements for the foreseeable future. - 9 - BE AEROSPACE, INC. PART II -- OTHER INFORMATION Item 1. Legal Proceedings. The U.S. Departments of Commerce and Justice are jointly conducting an investigation into the Company's 1992 and 1993 sales of passenger seats for installation on commercial aircraft owned by Iran Air. The Company applied for and received an export license from the Department of Commerce for these transactions, which aggregated approximately $3.1 million. The investigation appears to center on whether the terms of the export license were strictly adhered to. The Company is cooperating with government officials, and is conducting a parrallel internal investigation and is determined to resolve this matter as expeditiously as possible. 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. On July 26, 1995, the following actions were taken at the Company's Annual Meeting of Stockholders: a. Mr. Jim C. Cowart was elected as a Class I Director of the Company to serve until the 1998 Annual Meeting 12,767,373 shares voting in favor and 1,199,216 shares withheld. Mr. Brian Rowe was elected as a Class I Director of the Company to serve until the 1998 Annual Meeting 12,767,905 shares voting in favor and 1,198,684 shares withheld. b. The Company's Amended and Restated 1989 Stock Option Plan was amended to increase the aggregate number of shares available for grant there- under with 7,871,807 shares voting in favor 5,950,455 shares opposed and 144,327 shares abstaining. c. A proposal to adopt the MacBride Principles submitted by New York City Comptroller Alan G. Hewesi on behalf of the New York City Employees' Retirement System, the New York City Teachers' Retirement System, the New York City Police Pension Fund and the New York City Fire Department Pension Fund was not adopted with 633,283 shares voting in favor, 10,128,372 shares opposed, 782,474 shares abstaining, and 2,392,460 shares not voting. Item 5. Other Information. None. Item 6. Exhibits and Reports on Form 8-K. None. - 10 - BE 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. BE AEROSPACE, INC. Date: October 4, 1995 By: /s/ Amin J. Khoury Chairman of the Board and Chief Executive Officer Date: October 4, 1995 By: /s/ Thomas P. McCaffrey Vice President & Chief Financial Officer - 11 - EX-27 2 ARTICLE 5 FDS FOR 3RD QUARTER 10-Q
5 6-MOS FEB-25-1995 AUG-26-1995 7,490 0 48,102 (3,853) 91,885 157,011 88,095 (23,629) 394,849 65,028 0 161 0 0 126,038 394,849 113,045 113,045 76,071 105,487 29,416 0 8,149 (591) (216) (375) 0 0 0 (375) (.02) (.02)
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