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 May 27, 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 16,154,235 shares were outstanding as of June 28, 1995. Page 1 of 9 BE AEROSPACE, INC. Item 1. Financial Statements. CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except share data) 	 May 27,	 February 25, 1995	 1995 ASSETS	 	 		 CURRENT ASSETS:		 Cash and cash equivalents	 $ 3,169 	 $ 8,319 Receivables - trade, less allowance for doubtful		 accounts of $3,862 (May 27, 1995) and $4,034 (February 25, 1995),	 46,735	 48,915 Inventories, net	 83,398 	71,347 Deferred income taxes	 5,948 	6,502 Other current assets	 7,037	 7,434 		 Total current assets	 146,287	 142,517 		 PROPERTY AND EQUIPMENT, net 	60,156 	60,304 		 INTANGIBLES AND OTHER ASSETS, net	 178,256	 177,133 	$ 384,699 	$ 379,954 LIABILITIES AND STOCKHOLDERS' EQUITY		 		 CURRENT LIABILITIES:		 Accounts payable 	$ 36,367 	$ 35,164 Accrued liabilities	 19,598 	24,481 Income taxes payable	 2,303 	1,642 Current portion of long-term debt	 5,811	 4,667 		 Total current liabilities	 64,079	 65,954 		 LONG-TERM DEBT 	178,899 	172,693 		 DEFERRED INCOME TAXES 	10,969 	11,212 		 OTHER LIABILITIES 	4,534 	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; 16,117,161 (May 27, 1995) 16,095,790 (February 25, 1995) issued 	160 	160 Additional paid-in capital	 119,379 	119,209 Retained earnings	 7,439 	7,418 Cumulative foreign exchange translation adjustment	 (760) (1,456) Total stockholders' equity	 126,218	 125,331 	 $ 384,699 	$ 379,954 - 2 - BE AEROSPACE, INC. CONSOLIDATED STATEMENTS OF EARNINGS (Dollars in thousands, except per share data) 							 Three Months Ended 										 May 27, 	 May 28, 	 1995	 1994 		 NET SALES	 $ 55,594	 $ 57,567 		 COST OF SALES	 37,193	 38,680 		 GROSS PROFIT 	18,401 	18,887 		 OPERATING EXPENSES:		 		 Selling, general and administrative 	8,300 	8,074 Research and development 	3,547 	2,842 Amortization expense 	 2,333	 2,572 		 Total operating expenses 	 14,180	 13,488 		 OPERATING EARNINGS 	4,221 	5,399 		 INTEREST EXPENSE, net	 4,188	 3,693 		 EARNINGS BEFORE INCOME TAXES 	33 	1,706 		 INCOME TAXES	 12	 632 		 NET EARNINGS 	$ 21	 $ 1,074 		 		 NET EARNINGS PER COMMON SHARE 	 $ .00	 $ .07 		 COMMON AND COMMON EQUIVALENT SHARES	 16,097 	 16,059 		 - 3 - BE AEROSPACE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) 		 Three Months Ended May 27,	 May 28, 	 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES:		 Net earnings 	$ 21 	$ 1,074 Adjustments to reconcile net earnings to net cash flows 	 provided by operating activities:	 Depreciation 	1,753 	1,169 Amortization 	2,333 	2,572 Deferred income taxes 	330 	67 Non cash employee benefit plan contributions 	169 Changes in operating assets and liabilities: Accounts receivable 	2,519 	998 Inventories 	(11,819) 	(7,558) Other current assets 	427 	1,941 Accounts payable 	1,043 	(363) Income taxes payable 	663 	725 Other liabilities 	(5,101) 	(4,113) Net cash flows used in operating activities 	(7,662) 	(3,488) 		 CASH FLOWS FROM INVESTING ACTIVITIES:		 Capital expenditures 	(1,187) 	(2,409) Change in other assets - net 	(3,992)	 (611) Net cash flows used in investing activities 	(5,179) 	(3,020) 		 CASH FLOWS FROM FINANCING ACTIVITIES:		 Net borrowings under revolving lines of credit 	7,646 Repayments of long-term debt 	_____	 (1,235) Net cash flows provided by (used in) financing activities	7,646 	 (1,235) 		 Effect of exchange rate changes on cash flows	 45	 51 Net decrease in cash and cash equivalents 	(5,150) 	(7,692) 		 Cash and cash equivalents, beginning of period 	8,319	 13,738 		 Cash and cash equivalents, end of period 	$ 3,169 	$ 6,046 		 Supplemental disclosures of cash flow information:		 Cash paid during period for interest	 $ 7,250	 $ 6,687 Cash paid during period for income taxes, net 	$ (1,102)		 		 - 4 -	 BE AEROSPACE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MAY 27, 1995 AND MAY 28, 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 May 27, 1995 and for the three month periods ended May 27, 1995 and May 28, 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 May 27, 1995 are not necessarily indicative of 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 financial statements has been condensed or omitted in accordance with the rules and regulations of the Securities and Exchange Commission. [Remainder of page intentionally left blank] - 5 - 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 months ended May 27, 1995, as compared to the Company's results of operations for the three months ended May 28, 1994. The discussion and analysis then addresses the liquidity and financial condition of the Company. THREE MONTHS ENDED MAY 27, 1995, AS COMPARED TO THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MAY 28, 1994. Sales for the three months ended May 27, 1995 were $55,594 or $1,973 (3%) lower than sales of $57,567 for the comparable period in the prior year. The decrease in sales year over year is due to slightly lower volume of products shipped. At May 27, 1995 the Company's backlog stood at $350 million up from $331 million at February 25, 1995. The Company's revenues are not expected to increase appreciably until the level of spending by the airlines for refurbishment of their existing fleets increases, or unless the Company begins substantial deliveries of its MDDS interactive entertainment systems in connection with airline upgrade programs on their existing airline fleets or unless new aircraft deliveries increase. Gross profit was $18,401 or 33% of sales for the three months ended May 27, 1995 and was $486 lower than the comparable period in the prior year of $18,887, which represented 33% of sales. The decrease in gross profit for the quarter ended May 27, 1995 is attributable to slightly lower volume of products sold. Selling, general and administrative expenses were $8,300 (15% of sales) for the three months ended May 27, 1995. This was $226 higher than the comparable period in the prior year of $8,074 (14% of sales) is due to marginally higher selling costs. Research and development expense was $3,547 or 6% of sales for the three months ended May 27, 1995. For the comparable period in the prior year, research and development expense was $2,842 or 5% of sales. The increase in expense is the result of a substantial increase in the level of activity during the quarter. Amortization expense for the quarter ended May 27, 1995 of $2,333 was $239 lower than the amount recorded in the first quarter of fiscal 1994. The decrease in amortization expense is due to certain intangible assets which were written off in fiscal 1995. Net interest expense was $4,188 for the three months ended May 27, 1995, or $495 higher than the net interest expense of $3,693 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. - 6 - BE AEROSPACE, INC. THREE MONTHS ENDED MAY 27, 1995, AS COMPARED TO THE RESULTS OF OPERATION FOR THE THREE MONTHS ENDED MAY 28, 1994 (Continued) Earnings before income taxes of $33 for the quarter ended May 27, 1995 were $1,673 less than the prior year primarily as a result of higher research and development and interest expense incurred during the current quarter. Income tax expense for the quarter ended May 27, 1995 was $12 or 36% of earnings before income taxes, as compared to a tax rate of 37% in the first quarter of fiscal 1994. Net earnings were $21 or $.00 per share for the three months ended May 27, 1995 as compared to $1,074 or $.07 per share for the comparable period in the prior year. 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 $82,208 as of May 27, 1995 compared to $76,563 as of February 25, 1995. In October 1993, the Company obtained new 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 Acurex 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 calculations set forth in the credit facility agreement, is collateralized by substantially all the Company's assets and is all 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 May 27, 1995, the availability under the $40,000 revolving line of credit had been reduced to $31,000, resulting in a total credit facility aggregating $76,000 of which $43,000 was outstanding. The Company believes that cash on hand, cash flow from operations and funds available under its credit facilities will be sufficient to meet its working capital requirements for the foreseeable future. [Remainder of page intentionally left blank] - 7 - BE 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. None. 		 [Remainder of page intentionally left blank] - 8 - 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: July 7, 1995					 By: /s/ Amin J. Khoury 							 Amin J. Khoury 							 Chairman of the Board and 							 Chief Executive Officer Date: July 7, 1995					 By: /s/ Thomas P. McCaffrey 							 Thomas P. McCaffrey 							 Vice President & Chief Financial Officer - 9 -