B/E Aerospace Announces Program Wins Initially Valued at Over $100 Million, Comments on Earnings Expectations.

Business Editors/Travel Writers

WELLINGTON, Fla.--(BUSINESS WIRE)--Jan. 29, 2004

B/E Aerospace, Inc. (Nasdaq:BEAV) announced today that it has been selected to provide aircraft cabin interior equipment under both retrofit and new aircraft programs with a total estimated value of over $100 million. The total dollar value could increase to as much as $140 million if customers exercise options under these agreements. The program awards will be more fully discussed in news releases to be issued by B/E later today. The company also announced that the fourth quarter 2004 financial results will be lower than previous expectations.

PREMIUM SEATING FOR ASIAN AIRLINES 

Under the larger seating programs announced today, Thai Airways International, Korean Air and China Southern Airlines selected B/E lie-flat business class seats for a number of wide-body aircraft. Thai Airways also selected B/E to equip its international super first class accommodations.

"These awards demonstrate the continuing trend towards the use of lie-flat seating in international business class," said Mr. Robert J. Khoury, President and Chief Executive Officer of B/E. "A total of eight major airlines have now selected our lie-flat seats for their next generation business class cabins, and we are pleased to have been selected by this broad range of successful and innovative carriers."

COACH CLASS: SPECTRUM(TM) SEAT WINS NEW BUSINESS

Other programs announced today include coach class seating awards from British Airways, the world's largest international carrier; RBS Aviation Capital (formerly Lombard Aviation Capital, a subsidiary of the Royal Bank of Scotland); Irish airline, Aer Lingus; Italian airline, Air One; low-cost U.S. carrier, Independence Air (currently known as Atlantic Coast Airlines), and three airlines based in mainland China. All have selected variations of B/E's next-generation Spectrum(TM) seat platform.

In total, 30 customers have selected versions of Spectrum(TM) since B/E launched it one year ago, including International Lease Finance Corporation, the world's largest aircraft leasing company. The seat is designed for both standard single-aisle and regional jets, offering passengers improved comfort and living space and airlines advantages in spare parts, purchasing and maintenance.

TIMING OF SHIPMENTS

While product shipments under these programs begin in 2004, the lion's share of the programs announced today are expected to be shipped during 2005 and 2006.

Approximately $55 million of the $100 million aggregate amount announced today will be included in B/E's backlog as of December 31, 2003. The balance of over $45 million will be added to backlog as B/E receives the related purchase orders.

As customers exercise options under these programs, B/E could receive $40 million of incremental business beyond the $100 million figure announced today. Bookings in 2003 were up by more than 25% over the prior year resulting in backlog at December 31, 2003 of approximately $503 million, up nearly 15% over the prior year.

"Our recent success in winning new business, together with the successful implementation of our cost reduction programs, gives us confidence that the 2004 financial results will be dramatically improved," Mr. Khoury said. "Importantly, we believe the recently awarded programs will significantly aid our turnaround to solid profitability in 2005 and beyond."

DRIVERS OF REDUCED GUIDANCE

"Worsening conditions in the business jet industry, charges related thereto and weakness in the U.S. dollar are the primary reasons for the projected shortfall in our fourth quarter 2003 financial results," Mr. Khoury said.

The reduced earnings expectations for the fourth quarter of 2003 are largely due to further deterioration of the business jet sector, which was the principal cause of the following non-cash charges to be recorded in the fourth quarter:

-- about $8 million (non-cash) for impaired inventories,

reflecting the significantly lower level of planned aircraft

deliveries and projected changes in new aircraft types,

-- approximately $1 million (non-cash) primarily related to

properties sold during B/E's consolidation effort,

-- non-cash costs of about $1 million associated with the

downsizing of B/E's bank credit facility, which was reduced to

$50 million following the October 2003 issuance of senior

notes.

In addition, cash consolidation costs totaling $2 - 3 million will also be recorded in the fourth quarter.

Commenting on the reduced earnings expectations, Mr. Khoury stated: "Fourth quarter revenues for our business jet segment were lower than previously expected, and are projected to be down about 30 percent compared to the fourth quarter of last year. As we have stated in the past, the business jet segment is experiencing a steep decline in demand, due primarily to the significantly lower level of business jet deliveries. Business jet deliveries are off approximately 33% compared to last year and almost 50% compared to calendar year 2001."

"Our commercial aircraft products and fastener distribution segments are performing in line with our expectations, excluding foreign currency fluctuations," he said. "The weakness in the U.S. dollar adversely affected our fourth quarter results. Reflecting the weakened dollar and the difficult business jet industry conditions, our consolidated operating results excluding the above mentioned charges were somewhat less than our prior guidance."

The U.S. dollar exchange rate has dropped sharply from about $1.60 per British pound in September 2003 to approximately $1.83 currently. B/E's exposure to currency fluctuations is due to shipments from B/E's European plants which aggregated over $200 million during 2003. B/E's exposure to currency fluctuations arises from labor, material and overhead costs for goods produced in the company's Holland, England and Ireland production facilities, which are generally denominated in British pounds or Euros, while B/E's revenues are mostly dollar-denominated. While the company's operational results in 2004 are expected to be consistent with prior guidance, the weakness in the U.S. dollar will have a negative impact on earnings and cash flow in the $7 - 10 million range.

FINANCIAL GUIDANCE

Financial guidance is now as follows:

-- For the quarter ended December 31, 2003, B/E's net loss before

charges is expected to be somewhat greater than the $9.1

million reported for the immediately preceding quarter ended

September 30, 2003.

-- For calendar year 2004, the changes in financial guidance

announced today are entirely related to the impact of changes

in the U.S. dollar exchange rate. B/E now expects its 2004

EBITDA to be up approximately 85% vs. 2003 and to be close to

cash flow neutral for 2004, with EBITDA modestly below the

total of interest, capital expenditures and taxes.

-- Management expects backlog to continue to grow throughout

2004.

-- Despite difficult business jet industry conditions and adverse

currency impacts on overseas operations, B/E expects to report

solidly positive financial comparisons each quarter for the

next 4 to 8 quarters, beginning this year.

-- Looking further ahead, B/E expects its turnaround to result in

solid profitability in 2005, with over 40% additional growth

in EBITDA during 2005, based on the successful cost reduction

and product development initiatives implemented in 2002-2003,

recently announced program awards, ongoing lean manufacturing 

initiatives and an improved outlook for the airline industry

in 2004.

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements involve risks and uncertainties. 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, and a leading aftermarket distributor of aerospace fasteners. With a global organization selling directly to the world's airlines, B/E designs, develops and manufactures a broad product line for both commercial aircraft and business jets and provides cabin interior design, reconfiguration and conversion services. Products for the existing aircraft fleet -- the aftermarket -- provide about 60 percent of sales. For more information, visit B/E's website at www.beaerospace.com.