B/E Aerospace Acquires Three Companies, Upgrades Earnings Outlook; Strengthens Aircraft Reconfiguration, Passenger/Freighter Conversion Businesses.

Business Editors/Hi Tech Writers

WELLINGTON, Fla.--(BUSINESS WIRE)--March 5, 2001

B/E Aerospace, Inc. (Nasdaq:BEAV) today announced that it has completed the acquisition of three highly-regarded companies that specialize in manufacturing precision-machined components and assemblies for the aerospace industry.

The acquisitions are strategically focused on:

-- enhancing B/E's capabilities in reconfiguring passenger aircraft and
converting passenger aircraft to freighter use,

-- leveraging the acquired firms' best practices to improve B/E's manufacturing
operations company-wide, and

-- capitalizing on trends towards consolidation of the component manufacturing
supplier base and the outsourcing of manufacturing and assembly by the airframe
manufacturers.

These acquisitions are expected to be modestly accretive to earnings for fiscal 2002. Including the acquisitions, B/E expects earnings per share to grow in excess of 40 percent per year for both fiscal 2002 and 2003. B/E's fiscal 2002 ends on February 23, 2002.

In connection with the acquisitions, B/E has issued approximately 2.5 million shares of B/E common stock and will retire or assume approximately $11 million of the acquired companies' debt. The combined purchase price, including debt retired or assumed, covenants not to compete and transaction-related expenses, totals approximately $65 million.

LEVERAGING BEST PRACTICES

Of the companies which B/E has acquired, one, T.L. Windust Machine, Inc., has a Gold supplier rating from Boeing, while another, Alson Industries, Inc., has the coveted Silver rating. The third, DMGI, Inc., also has a strong reputation for quality and customer service and sells approximately 50% of its products in the aftermarket. The Gold and Silver ratings from Boeing place the newly-acquired companies in the highest echelon of aerospace suppliers. Among the approximately 20,000 suppliers to The Boeing Company, only one percent have ratings of Silver or better, and fewer than one tenth of one percent have Gold ratings.

"By leveraging the newly-acquired companies' best practices, we plan to take our manufacturing operations to a new level of excellence company-wide," said Mr. Robert J. Khoury, Vice Chairman and Chief Executive Officer of B/E. "These companies can help us to both raise quality and compress cycle time, contributing to our continuing efforts to lower manufacturing cost and expand margins. In fact, one of the companies which we have acquired will be a lead firm in Boeing TAC's new "model-based definition" prototype program, which moves the entire design-to-production process into electronic form."

GROWTH OPPORTUNITY IN PASSENGER/FREIGHTER CONVERSIONS

"These acquisitions give us the capability to manufacture the large machined components and assemblies used to reconfigure passenger aircraft and convert commercial airliners to freighters," said Mr. Khoury. "We already have the capability to handle the engineering, certification and program management aspects of such programs. By strengthening our core manufacturing expertise, we can become an integrated supplier of conversions and reconfigurations. Our goal is to position B/E to become the outsourcing partner of choice for large-scale programs."

The reconfiguration and conversion area has the best growth potential of any business in which B/E is currently involved. Industry sources project that air cargo traffic will grow by 6 percent to 7 percent annually over the next twenty years, approximately double the forecasted economic growth rate. The number of freighter aircraft is projected to nearly double over the same period, adding nearly 2,600 aircraft. Almost 70 percent of the increase in the freighter fleet is expected to come from converting commercial passenger jets to freighter use.

B/E has already completed certification for conversions of the Boeing 747-200 Combi and Airbus A300B4 aircraft to freighter use. The company has also completed a major program on the conversion of the Boeing 767. Excluding the acquired companies, B/E has over 100 engineers dedicated to reconfigurations and conversions, including interior design, certification and program management. The newly-acquired companies, which currently supply cargo door components, floor and sidewall beams, fuselage components, major wing box structural elements and other component parts, extend B/E's capabilities to include manufacture of the components which comprise the conversion kit.

Also fueling the growth of this business are major aircraft interior reconfigurations routinely undertaken by the airlines. In each case, detailed design and engineering analysis is needed and structural components must be designed and produced.

ACQUISITIONS ARE STRATEGICALLY FOCUSED

"These acquisitions enable us to grow by capitalizing on two other important trends in our industry," Mr. Khoury said. "Major aerospace manufacturers have embarked on a strategy of streamlining their businesses by dealing with fewer suppliers. This trend is driving a consolidation among aerospace suppliers and motivating smaller firms to team up with larger ones.

"Airframe manufacturers are also moving aggressively to outsource the manufacturing of components and subassemblies," said Mr. Khoury. "As a result, there is a very significant growth opportunity to capture the vast amount of manufacturing business that will be outsourced to a shrinking supplier base."

B/E expects the outsourced component manufacturing sector of the commercial aerospace industry to grow substantially faster than the industry as a whole. These acquisitions position B/E to participate in that growth opportunity.

$65 MILLION PURCHASE PRICE

B/E has completed the acquisitions at purchase prices ranging from 5 to 6 times the acquired companies' historical EBITDA (earnings before interest, taxes, depreciation and amortization) for the last twelve months. In connection with the acquisitions, B/E has issued approximately 2.5 million shares of its common stock, and will retire or assume approximately $11 million of the acquired companies' debt. The combined purchase price, including debt retired or assumed, covenants not to compete and transaction-related expenses, totals approximately $65 million. These transactions will be accounted for under the purchase accounting method.

UPGRADING THE EARNINGS OUTLOOK

"The acquisitions which we announce today are expected to be modestly accretive to earnings for fiscal 2002," said Mr. Khoury. "Including the acquisitions, we expect B/E's earnings per share to grow in excess of 40 percent per year for both fiscal 2002 and fiscal 2003."

For fiscal 2002, B/E expects to achieve earnings of approximately $1.50 per share. Earnings growth will be driven primarily by higher sales and margins, as well as modest accretion from the acquisitions (approximately $0.03 to $0.05 per share).

Throughout fiscal 2002, quarterly earnings comparisons with prior-year results should be excellent, with the second half substantially stronger than the first half due to the timing of orders received in the last half of fiscal 2001 and scheduled product deliveries related thereto.

Expected earnings growth in fiscal 2003 reflects a projected double-digit percentage increase in sales driven by a 29 percent increase in expected deliveries of new wide-body aircraft.

As in the past, B/E expects its cash basis earnings to be substantially greater than reported net earnings under existing accounting rules. Cash basis earnings exclude amortization expense, a non-cash expense which current accounting rules require B/E to record to systematically write off goodwill and other intangible assets.

NEW RULE WOULD INCREASE EARNINGS

The Financial Accounting Standards Board (FASB) is proposing an accounting rule change which would eliminate amortization expense associated with goodwill. Under current accounting rules, B/E has been recording a significant amount of goodwill amortization expense in connection with past acquisitions. If enacted as proposed, the rule change would increase B/E's annual earnings by $0.50 to $0.70 per share. This benefit is not factored into the projected 40-plus percent earnings per share growth rate for fiscal 2002 and 2003. As proposed by the FASB, the new rule would become effective for the third quarter of B/E's fiscal year 2002.

This news release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve risks and uncertainties, and B/E's actual experience may differ materially from that anticipated in such statements. Factors that might cause such a difference include those discussed in B/E's filings with the Securities and Exchange Commission, including but not limited to its most recent proxy statement, Form 10-K and Form 10-Q. For more information, see the section entitled "Forward-Looking Statements" contained in B/E's Form 10-K and in other filings.

B/E Aerospace, Inc. is the world's leading manufacturer of aircraft cabin interior products, serving virtually all the world's airlines and aircraft manufacturers. B/E designs, develops, manufactures, sells and services a broad line of passenger cabin interior products for both commercial and business/VIP aircraft and provides interior design, reconfiguration and conversion services to its customers throughout the world. Information on B/E is available on the World Wide Web at www.beaerospace.com.