B/E Aerospace to Acquire TSI Group, Inc.

B/E Aerospace (Nasdaq:BEAV), the world’s leading manufacturer of aircraft cabin interior products and the world’s leading distributor of aerospace fasteners and consumables, today announced that it has signed a definitive acquisition agreement with the shareholders of TSI Group, Inc. (TSI). TSI is the market leader in the design, engineering and manufacturing of customized, fully integrated, thermal management and interconnect solutions that address complex power management requirements of OEMs in the aerospace and defense industries.

By leveraging TSI’s unique combination of deep, experienced engineering staff and extensive high quality production capabilities, TSI has created differentiated solutions for both its defense industry and commercial aerospace customers. Acute demand for thermal management was first required and developed for power management on military sub-systems for aircraft, helicopters, ground systems, and a broad array of additional applications that require extensive electrical and computing power in small lightweight footprints which require controlled but rapid dissipation of heat. The technology has begun a significant migration into the commercial aerospace market.

“Demand for aerospace thermal management products and systems is expected to grow at a healthy rate over the next decade as a result of changing electronics technologies at both the component and system level as well as the continued introduction of More Electric Aircraft (MEA), such as the Boeing B787 and B747-8 and the Airbus A350. Power management products have become critical components for the newer MEA, and demand for truly innovative power management solutions is growing as power and computing requirements increase, as space becomes more limited, and as heat dissipation and payload weight become more critical. In addition, there is also greater emphasis on control of EMI/RFI emissions from aircraft power equipment, requiring efficient, electrically quiet designs,” said Amin J. Khoury, Chairman and Chief Executive Officer of B/E Aerospace.

Mr. Khoury continued, “Through organic growth and strategic acquisitions, TSI has built the best franchise in the growing thermal management sector and as a result, has captured positions on attractive platforms and programs. Over 70 percent of TSI’s revenues are derived from long-term, sole source agreements with numerous premier customers on over 125 platforms. The majority of TSI’s business is currently derived from long-lived viable and growing military platforms. Commercial applications currently represent about 20 percent of TSI’s revenues. TSI does have a solid and growing position on the Boeing B787.”

Mr. Khoury stated, “TSI presents B/E Aerospace with a strategic business opportunity to develop a complementary platform for growth, and is expected to significantly expand market opportunities in commercial aerospace. TSI’s deep technological and manufacturing capability will enhance B/E’s aircraft cabin interior strategic position by enabling B/E to provide more advanced, integrated electronics packaging for aircraft cabin interior products including; seating, in-flight entertainment systems, LED lighting, food and beverage preparation and storage equipment, and oxygen systems. Essentially all of the products which B/E Aerospace provides in the cabin are driven by power systems. Our ability to integrate advanced power management technology coupled with industry-leading thermal packaging designs into current and future cabin interior products and systems uniquely positions B/E Aerospace to solve the growing demand for sophisticated power management solutions in aircraft cabin interior products.”

Mr. Khoury concluded, “TSI is well-positioned to leverage its market leadership position in the growing thermal management market and is expected to benefit from the continuing shift towards increasingly complex power management solutions required by expanding computing capacity and larger power supplies in smaller packages. Combining TSI’s thermal management capabilities with B/E’s internally developed thermal management technologies and B/E’s excellent reputation in the integration, program management and certification of aircraft interiors, together with B/E Aerospace’s strong relationships with its commercial aerospace customers is expected to further expand TSI’s presence in the commercial aerospace industry. This product line expansion should enhance our ability to serve our OEM and global airline customers in the commercial aerospace industry and is expected to create significant value for our shareholders. In summary, TSI is the market leader with more than 50 percent share in a growing niche market and generates an EBITDA margin of approximately 20 percent. They have been growing organically at about an 8 percent compound annual growth rate for the last several years. Their program wins on the Boeing B787 and the Joint Strike Fighter will increase that growth rate over the next several years. TSI’s growth will further accelerate as B/E provides access to its commercial aerospace OEM and global airline customer base. Finally, TSI’s technology will help facilitate important strategic differentiation for B/E Aerospace in the passenger cabin.”

The transaction is expected to close in the fourth quarter of 2010 and is subject to customary regulatory approvals. The purchase price of approximately $310 million in cash represents a multiple of approximately 2.0 times TSI’s expected current year revenues and approximately 9.5 times TSI’s current year estimated earnings before interest, taxes, depreciation and amortization. The acquisition is expected to be neutral to B/E Aerospace 2011 net earnings, and accretive to net earnings thereafter. B/E Aerospace intends to update its 2010 full year outlook and issue its initial 2011 full year guidance when the company announces its third quarter 2010 results on Monday, October 25, 2010 after the market closes.

B/E Aerospace will host a conference call tomorrow, Tuesday, October 5, 2010, at 9:00 a.m. (Eastern Time) to discuss the acquisition of TSI. Investors can call 877-675-4751 (domestic) or 719-325-4823 (international), with the access code 8284124. A live audio webcast of the conference call will be available on the investor relations page of the company’s website at www.beaerospace.com. A replay of the call will be available beginning at 11:00 a.m. (Eastern Time) on Tuesday, October 5, 2010 until Sunday, October 10, 2010 at 888-203-1112 (domestic) or 719-457-0820 (international), with the access code 8284124. The replay will also be available on the company’s website www.beaerospace.com.

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 Aerospace’s actual experience and results may differ materially from the experience and results anticipated in such statements. Factors that might cause such a difference include those related to the completion of, and the expected benefits from, the TSI acquisition, changes in market and industry conditions and those discussed in B/E Aerospace’s filings with the Securities and Exchange Commission, which include its Proxy Statement, Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. For more information, see the section entitled “Forward-Looking Statements” contained in B/E Aerospace’s Annual Report on Form 10-K and in other filings. The forward-looking statements included in this news release are made only as of the date of this news release and, except as required by federal securities laws, we do not intend to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances.

About B/E Aerospace

B/E Aerospace is the world’s leading manufacturer of aircraft cabin interior products and the world’s leading distributor of aerospace fasteners and consumables. B/E Aerospace designs, develops and manufactures a broad range of products for both commercial aircraft and business jets. B/E Aerospace manufactured products include aircraft cabin seating, lighting, oxygen systems, food and beverage preparation/storage equipment, and water and vacuum waste systems. The company also provides cabin interior design, reconfiguration and passenger-to-freighter conversion services. Products for the existing aircraft fleet - the aftermarket - generate approximately 50 percent of sales. B/E Aerospace sells and supports its products through its own global direct sales and product support organization. For more information, visit the B/E Aerospace website at www.beaerospace.com.

B/E Aerospace, Inc. (NASDAQ:BEAV)
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