SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of Earliest Event Reported): February 25, 1999
BE AEROSPACE, INC.
(Exact name of registrant as specified in charter)
DELAWARE 0-18348 06-1209796
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
1400 Corporate Center Way, Wellington, Florida 33414
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (561) 791-5000
Exhibit Index Appears on page 12.
Item 2. Acquisition or Disposition of Assets.
On February 25, 1999, BE Aerospace, Inc., a Delaware corporation (the
"Company"), completed the sale (the "Sale") of a 51% membership interest (the
"Membership Interest") in In-Flight Entertainment, LLC, a Delaware limited
liability company ("IFE"), to Sextant Avionique, Inc., a Florida corporation
("Sextant"), a wholly owned subsidiary of Sextant Avionique, S.A., pursuant to a
Purchase Agreement, dated January 25, 1999 (the "Agreement") between the Company
and Sextant. A copy of the Agreement is attached to this report as Exhibit 2.1.
Prior to the completion of the Sale, IFE was wholly owned by the Company and its
wholly owned subsidiaries. The Company and its wholly owned subsidiaries
continue to own a 49% membership interest in IFE.
The purchase price paid by Sextant to the Company for the Membership
Interest was $62,000,000 in cash. The terms of the Agreement provide for the
final price for the 51% interest to be determined on the basis of operating
results for IFE over the two-year period ending February 28, 2000. Depending on
the operating results during that period, the final purchase price could range
from $47,000,000 to $87,000,000. The Company used the proceeds from the Sale to
repay a portion of its bank line of credit.
In connection with the Sale, the Company and Sextant have entered into
an Amended and Restated Limited Liability Company Agreement (the "LLC
Agreement") governing the rights of the members of IFE. A copy of the LLC
Agreement is included in Exhibit 2.1 hereto. As of the closing of the Sale, the
name of IFE was changed to "Sextant In-Flight Systems, LLC".
Item 7. Financial Statements and Exhibits
(a) Not applicable
(b) Pro forma Financial Information
The following unaudited pro forma combined financial statements and
notes thereto are attached hereto at pages PF-1 through PF-7:
(i) Pro forma combined statements of operations for the year ended
February 28, 1998
(ii) Notes to pro forma combined statements of operations for the
year ended February 28, 1998
(iii) Pro forma combined statements of operations for the nine
months ended November 28, 1998
(iv) Notes to pro forma combined statements of operations for the
nine months ended November 28, 1998
(v) Pro forma combined balance sheet as of November 28, 1998
(vi) Notes to pro forma combined balance sheet as of November 28,
1998
(c) Exhibits.
Exhibit No. Description
----------- -----------
2.1 Purchase Agreement dated as of January 25, 1999
between BE Aerospace, Inc. and Sextant Avionique,
Inc. together with the exhibits thereto.
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 hereunto duly authorized.
BE AEROSPACE, INC.
By: /s/ Thomas P. McCaffrey
--------------------------------------
Name: Thomas P. McCaffrey
Title: Corporate Senior Vice President
of Administration and Chief
Financial Officer
UNAUDITED PRO FORMA COMBINED
FINANCIAL INFORMATION OF BE AEROSPACE, INC.
AND ITS CONSOLIDATED SUBSIDIARIES
The following unaudited pro forma combined statements of
operations and unaudited combined balance sheet give effect to the Sale by the
Company of a 51% membership interest in In-Flight Entertainment, LLC ("IFE") to
Sextant Avionique, Inc. ("Sextant"), a wholly owned subsidiary of Sextant
Avionique, S.A., as discussed in Item 2, and the use of the proceeds from the
Sale to repay a portion of the Company's bank line of credit. Prior to the
completion of the Sale, IFE was wholly owned by the Company and its wholly owned
subsidiaries.
The pro forma combined statements of operations for the year
ended February 28, 1998 and the nine months ended November 28, 1998 assume that
the Sale and the use of the net proceeds to repay the Company's bank line of
credit occurred on February 23, 1997. The pro forma combined statements of
operations for the year ended February 28, 1998 excludes the non-recurring gain
on the Sale.
The pro forma combined statements of operations for the year
ended February 28, 1998 and the nine months ended November 28, 1998 reflect the
deconsolidation of IFE, the use of the equity method of accounting for the
Company's 49% interest in IFE and certain other adjustments related to cost
allocations and interest expense arising from the Sale and application of the
net proceeds.
The pro forma combined balance sheet as of November 28, 1998
assumes that the Sale of the 51% interest in IFE to Sextant occurred on November
28, 1998. The pro forma combined statements of operations and balance sheet do
not purport to represent the results of operations or financial position of the
Company had the transactions and events assumed therein occurred on the dates
specified, nor are they necessarily indicative of the results of operations that
may be achieved in the future.
The pro forma combined financial information is based on
assumptions and adjustments described in the notes to the pro forma financial
statements. The Company has not included the non-recurring net gain on the Sale
of the 51% interest in IFE in the accompanying pro forma financial statements.
The pro forma financial information should be read in conjunction with the
Company's historical financial statements, including notes thereto, which are
incorporated herein by reference.
PF-1
BE Aerospace, Inc.
Pro Forma Combined Statements of Operations (Unaudited)
Year Ended February 28, 1998
(Dollars in thousands, except per share data)
Other
B/E Adjustment(a) Adjustments As Adjusted
--------- ------------- ----------- -----------
Net Sales $ 487,999 $ (81,094) $ -- $ 406,905
Cost of sales 309,094 (39,391) -- 269,703
--------- --------- --------- ---------
Gross Profit 178,905 (41,703) -- 137,202
Operating expenses:
Selling, general and administrative 58,622 (9,522) 2,152 (b) 51,252
Research, development and engineering 45,685 (21,426) -- 24,259
Amortization expense 11,265 (382) -- 10,883
Other expenses 4,664 -- -- 4,664
--------- --------- --------- ---------
Total operating expenses 120,236 (31,330) 2,152 91,058
--------- --------- --------- ---------
Operating earnings 58,669 (10,373) (2,152) 46,144
Interest expense, net 22,765 (1,562) (5,371)(c) 15,832
Equity in earnings of In-Flight Entertainment -- -- 4,312 (d) 4,312
--------- --------- --------- ---------
Earnings before income taxes
and extraordinary item 35,904 (8,811) 7,531 34,624
Income taxes 5,386 -- (192)(e) 5,194
--------- --------- --------- ---------
Earnings before extraordinary item 30,518 (8,811) 7,723 29,430
Extraordinary item 8,956 -- -- 8,956
--------- --------- --------- ---------
Net earnings $ 21,562 $ (8,811) $ 7,723 $ 20,474
========= ========= ========= =========
Basic earnings per share:
Earnings before extraordinary item $ 1.36 $ 1.31
Extraordinary item (0.40) (0.40)
--------- ---------
Net earnings $ 0.96 $ 0.91
========= =========
Weighted average common shares 22,442 22,442
Diluted earnings per share:
Earnings before extraordinary item $ 1.30 $ 1.25
Extraordinary item (0.38) (0.38)
--------- ---------
Net earnings $ 0.92 $ 0.87
========= =========
Weighted average common shares 23,430 23,430
See accompanying notes to Pro Forma Combined Statements of Operations for the
Year Ended February 28, 1998.
PF-2
BE Aerospace, Inc.
Notes to Pro Forma Combined Statements of Operations
Year ended February 28, 1998
(a) To deconsolidate IFE from the Company's consolidated results.
(b) Represents actual B/E corporate allocations to IFE that would have been
allocated to other facilities had the Sale taken place on February 23,
1997.
(c) Represents the reduction in the Company's interest expense that would
have been realized had the Sale and use of the net proceeds from the Sale
to repay a portion of the Company's bank line of credit occurred on
February 23, 1997.
(d) To record B/E's equity earnings in its 49% investment in IFE.
(e) To adjust income tax expense to the Company's effective tax rate.
PF-3
BE Aerospace, Inc.
Pro Forma Combined Statements of Operations (Unaudited)
Nine Months Ended November 28, 1998
(Dollars in thousands, except per share data)
Other
B/E Adjustment(a) Adjustments As Adjusted
-------- ------------- ----------- -----------
Net Sales $ 492,094 $ (59,529) $ -- $ 432,565
Cost of sales 305,004 (35,976) -- 269,028
--------- --------- --------- ---------
Gross Profit 187,090 (23,553) 163,537
Operating expenses:
Selling, general and administrative 58,715 (9,825) 2,515 (b) 51,405
Research, development and engineering 40,827 (10,743) -- 30,084
Amortization expense 16,038 (1,115) -- 14,923
In-process research and development and
acquisition-related expenses 79,155 (7,540) -- 71,615
--------- --------- --------- ---------
Total operating expenses 194,735 (29,223) 2,515 168,027
--------- --------- --------- ---------
Operating losses (7,645) 5,670 (2,515) (4,490)
Interest expense, net 27,816 (3,114) (4,028)(c) 20,674
Equity in loss of In-Flight Entertainment -- -- (4,274)(d) (4,274)
--------- --------- --------- ---------
Loss before income taxes (35,461) 8,784 (2,761) (29,438)
Income taxes 7,428 -- (258)(e) 7,170
--------- --------- --------- ---------
Net Loss $ (42,889) $ 8,784 $ (2,503) (36,608)
========= ========= ========= =========
Basic loss per share:
Net loss $ (1.72) $ (1.47)
========= =========
Weighted average common shares 24,946 24,946
Diluted loss per share:
Net loss $ (1.72) $ (1.47)
========= =========
Weighted average common shares 24,946 24,946
See accompanying notes to Pro Forma Combined Statements of Operations for
the Year Ended February 28, 1998.
PF-4
BE Aerospace, Inc.
Notes to Pro Forma Combined Statements of Operations
Nine Months Ended November 28, 1998
(a) To deconsolidate IFE from the Company's consolidated results.
(b) Represents actual B/E corporate allocations to IFE that would have been
allocated to other facilities had the Sale taken place on February 23, 1997.
(c) Represents the reduction in the Company's interest expense that would have
been realized had the Sale and use of the net proceeds from the Sale to
repay a portion of the Company's bank line of credit occurred on February
23, 1997.
(d) To record B/E's equity earnings in its 49% investment in IFE.
(e) To adjust income tax expense to the Company's effective tax rate.
PF-5
BE Aerospace, Inc.
Pro Forma Consolidated Balance Sheet (Unaudited)
November 28, 1998
(Dollars in thousands)
Other
B/E Adjustment(a) Adjustments As Adjusted
-------- ------------- ----------- -----------
Assets:
Current assets:
Cash and cash equivalents $ 34,548 $ (8) $ 59,675 (b) $ 34,540
(59,675)(c)
Account receivable - trade, net 136,119 (9,703) -- 126,416
Inventories, net 205,466 (32,393) -- 173,073
Other current assets 11,559 (276) -- 11,283
--------- --------- --------- ---------
Total current assets 387,692 (42,380) -- 345,312
Property and equipment, net 144,661 (8,454) -- 136,207
Intangibles & other assets, net 449,887 (17,116) -- 432,771
Investment in unconsolidated subsidiary -- 35,923 (18,321)(b) 17,602
--------- --------- --------- ---------
$ 982,240 $ (32,027) $ (18,321) $ 931,892
========= ========= ========= =========
Liabilities & Stockholders' Equity
Current liabilities
Accounts payable $ 70,426 $ (15,454) $ -- $ 54,972
Accrued liabilities 79,843 (6,213) -- 73,630
Current portion of long-term debt 11,689 -- -- 11,689
--------- --------- --------- ---------
Total current liabilities 161,958 (21,667) -- 140,291
Long-term debt 630,592 -- (59,675)(c) 570,917
Deferred income taxes 1,148 -- -- 1,148
Other liabilities 31,128 (10,360) 15,000 (b) 35,768
--------- --------- --------- ---------
Total liabilities 824,826 (32,027) (44,675) 748,124
--------- --------- --------- ---------
Stockholders' equity
Common stock 244 -- -- 244
Additional paid-in capital 243,993 -- -- 243,993
Accumulated deficit (83,613) 26,354 (b) (57,259)
Cumulative foreign exchange
translation adjustment (3,210) -- -- (3,210)
--------- --------- --------- ---------
Total stockholders' equity 157,414 -- 26,354 183,768
--------- --------- --------- ---------
$ 982,240 $ (32,027) (18,321) 931,892
========= ========= ========= =========
See accompanying notes to Pro Forma Combined Statements of Operations for
the Year Ended February 28, 1998.
PF-6
BE Aerospace, Inc
Notes to Pro Forma Combined Balance Sheet
November 28, 1998
(a) To deconsolidate IFE from B/E's consolidated balance sheet.
(b) To record the estimated net proceeds, non-recurring net gain and the
Company's 49% interest in IFE resulting from the Sale ($15 million of the
estimated net proceeds of the Sale are deferred in accordance with
generally accepted accounting principles.
(c) Reflects the repayment of a portion of the Company's line of credit.
PF-7
EXHIBIT INDEX
Exhibit No. Description of Exhibits Page
----------- ----------------------- ----
2.1 Purchase Agreement dated as of January 25, 13
1999 between BE Aerospace, Inc. and Sextant
Avionique, S.A.