BE Aerospace changes accounting method, forecasts profit turnaround, announces major seating order and record backlog, delivers MDDS interactive entertainment system to second major airline.

WELLINGTON, Fla.--(BUSINESS WIRE)--April 17, 1996--BE Aerospace Inc. (Nasdaq-NMS: BEAV) announced today that it will change its method of accounting for engineering expenditures associated with customer orders.

These expenditures, which have been carried in inventory for amortization over future deliveries, will now be expensed as incurred, even though the related benefit will be realized in future periods. This change will be reflected in the company's financial statements as of the beginning of the company's 1996 fiscal year, which ended on Feb. 24, 1996. The total impact of this change in accounting principles is expected to be a charge of approximately $60 million for fiscal 1996. Substantially all of the costs associated with the change in accounting are related to the development of the company's MDDS interactive entertainment system.

BEA chairman Amin J. Khoury stated, "We have determined it preferable to change our method of accounting for customer program-related engineering expenditures. While this change will negatively affect our financial results for the year just ended, we believe that it is appropriate to change to an accounting method which more closely matches the timing of the cash expenditures with the related expenses. This accounting alternative is applied by a number of other leading aerospace companies."

The company also announced that it had received a $24-million order from Malaysia Airlines to equip 25 new Boeing 777 and 747 widebody aircraft with both Business and Coach Class seating products. The order, scheduled for delivery over a three-year period beginning in December 1996, includes Skyluxe II Business Class seats complete with electric leg rests and Model 990 Tourist Class seats.

Khoury continued, "The company's backlog, including the Malaysian Airlines order, has risen to a record $475 million, which has set the stage for a turnaround in profitability at BEA beginning in the current March to May quarter."

As announced previously, British Airways has had a Boeing 747-400 in commercial operation with the company's MDDS since November 1995. The interactive features, which are expected to be put into commercial service by BA in May, have already been ground tested in excess of 1,000 hours by the airline's system integrator, British Telecom, and have performed up to all expectations. The complete British Airways system includes a full spectrum of interactive capabilities, including a full range of both PC-based and Nintendo video games, casino-type gaming, "Video-on-Demand," pay-per-view, shopping, information menus, international and in-cabin phone distribution, and communication with the flight attendants. The system will also be capable of receiving live television transmissions on appropriately equipped aircraft. The company believes the future prospects for MDDS are very good and anticipates an increasing demand for MDDS following the successful installation on the British Airways fleet.

Separately, the company announced that another major international carrier's Boeing 747 aircraft equipped with the company's B/E 4000 MDDS interactive in-seat entertainment system has also been put into commercial operation. BEA's premier interactive MDDS system, installed in the airline's B747-400's First and Business Classes, incorporates the aerospace industry's only fully featured "Video-on-Demand" (VoD) capability. Each passenger will initially have access to more than 45 hours of video capacity (equal to more than 30 movies, depending upon length), accompanied by superb high-fidelity stereo sound with multi-language capability. This is the first MDDS installation for the airline's B747 and B767 widebody fleets, which are slated to receive BEA's industry-leading entertainment systems.

This press release contains forward-looking statements. Any such statements are subject to risks and uncertainties that could cause actual results to vary materially from those anticipated; among these are the company's dependence upon conditions in the airline industry, the company's financial leverage, the size and resources of many of the company's competitors and the need for the company to continue to effectively integrate acquired businesses and successfully manufacture and deliver technologically advanced products. Additional information with respect to these and other factors which could materially affect the company is included in the company's filings with the Securities and Exchange Commission, including its most recent proxy statement and 10-K, its 10-Q for the fiscal quarter ended Nov. 25, 1995 and the prospectus relating to the company's 9 7/8% Series B Senior Subordinated Notes due 2006.

BE Aerospace Inc. designs, manufactures, sells and services a broad line of commercial aircraft cabin interior products, including seating products, passenger entertainment and service systems, and galley structures and inserts. BE Aerospace is the world's leading supplier of cabin interior products and services, serving virtually all the world's airlines.

CONTACT: Jay Jacobson, New York 

Financial Relations, 212/889-6362