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UNITED STATES
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): August 29, 2005
HEICO CORPORATION
(Exact name of registrant as specified in its charter)
Florida 1-4604 65-0341002
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) file number) Identification No.)
3000 Taft Street, Hollywood, Florida 33021
(Address of principal executive offices) (Zip Code)
(954) 987-4000
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On August 29, 2005, HEICO Corporation issued a press release announcing its
financial results for the third quarter of fiscal 2005. A copy of the press
release is furnished as Exhibit 99.1 to this report.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(c) EXHIBITS
EXHIBIT NO. DESCRIPTION
----------- ------------------------------------------------------------
99.1 Press release, dated August 29, 2005, titled "HEICO Reports
Record Quarterly Sales and Operating Income in Third
Quarter."
2
SIGNATURE
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.
HEICO CORPORATION
(Registrant)
Date: August 29, 2005 By: /s/ Thomas S. Irwin
----------------------------
Thomas S. Irwin
Executive Vice President
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
3
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
August 29, 2005
Thomas S. Irwin (954) 987-4000 ext. 7560
Victor H. Mendelson (305) 374-1745 ext. 7590
HEICO REPORTS RECORD QUARTERLY SALES AND OPERATING INCOME
IN THIRD QUARTER
49% Increase in Operating Income on 24% Increase in Net Sales
HOLLYWOOD, FL and MIAMI, FL -- HEICO CORPORATION (NYSE: HEI.A) (NYSE: HEI) today
reported net sales for the third quarter of fiscal 2005 increased 24% to
$69,169,000 from $55,820,000 in the third quarter of fiscal 2004 and increased
25% to $193,123,000 in the first nine months of fiscal 2005 from $154,764,000 in
the first nine months of fiscal 2004.
Operating income was up 49% to a record $11,749,000 for the third quarter of
fiscal 2005 from $7,870,000 for the third quarter of fiscal 2004 and up 41% to a
record $31,843,000 for the first nine months of fiscal 2005 from $22,615,000 for
the first nine months of fiscal 2004.
Net income for the third quarter of fiscal 2005 was $6,046,000, or 23 cents per
diluted share, versus $8,115,000, or 32 cents per diluted share, in the third
quarter of fiscal 2004. Fiscal 2004 third quarter net income included one-time
income of $4.0 million (16 cents per diluted share) in proceeds from a
key-person life insurance policy. Net income for the first nine months of fiscal
2005 increased 5% to $16,187,000, or 62 cents per diluted share, from
$15,464,000, or 60 cents per diluted share, in the first nine months of fiscal
2004, which included the one-time $4.0 million (16 cents per diluted share) in
life insurance proceeds.
(NOTE: HEICO has two classes of common stock traded on the NYSE. Both classes,
the Class A Common Stock (HEI.A) and the Common Stock (HEI), are virtually
identical in all economic respects. The only difference between the share
classes is the voting rights. The Class A Common Stock (HEI.A) receives 1/10
vote per share and the Common Stock (HEI) receives one vote per share.)
Laurans A. Mendelson, HEICO's Chairman, President & Chief Executive Officer,
remarked, "We are extremely pleased to report record quarterly net sales and
operating income for the second consecutive quarter. Both our Flight Support
Group and our Electronic Technologies Group reported increased net sales of 25%
and 21%, respectively, over the third quarter of fiscal 2004.
- more -
All the sales increase within the Flight Support Group was organic growth,
reflecting the continued recovery in aftermarket demand within the commercial
airline industry, as well as our continued success in the development of new
products and services for our customers. The sales increase within our
Electronic Technologies Group principally reflects strong results from two
strategic acquisitions made earlier in fiscal 2005.
Operating income of our Flight Support Group increased 74% to $10.5 million for
the third quarter of fiscal 2005 up from $6.0 million for the third quarter of
fiscal 2004 and increased 55% to $26.9 million for the first nine months of
fiscal 2005 up from $17.3 million for the first nine months of fiscal 2004. The
increase in operating income of the Flight Support Group for the third quarter
of fiscal 2005 and the first nine months of fiscal 2005 reflects both the
increase in net sales and higher operating margins resulting principally from
improved operating efficiencies. Operating margins of the Flight Support Group
improved to 20.8% in the third quarter of fiscal 2005 from 15.0% in the third
quarter of fiscal 2004 and improved to 19.4% in the first nine months of fiscal
2005 from 15.5% for the first nine months of fiscal 2004.
Operating income of our Electronic Technologies Group increased 11% to
$3.8 million for the third quarter of fiscal 2005 up from $3.4 million for the
third quarter of fiscal 2004 and increased 9% to $10.5 million for the first
nine months of fiscal 2005 up from $9.6 million for the first nine months of
fiscal 2004. Operating margins of the Electronic Technologies Group were 20.1%
in the third quarter of fiscal 2005 and 19.2% in the first nine months of fiscal
2005, down slightly from 21.8% in the third quarter of fiscal 2004 and 22.5% for
the first nine months of fiscal 2004, due principally to a less favorable
product sales mix. Based on the current backlog within our Electronic
Technologies Group, we expect operating margins for the full fiscal 2005 year to
approximate 20%.
Our consolidated operating margins improved to 17.0% in the third quarter of
fiscal 2005 from 14.1% in the third quarter of fiscal 2004 and to 16.5% for the
first nine months of fiscal 2005 from 14.6% for the first nine months of fiscal
2004.
Cash flow from operating activities for the first nine months of fiscal 2005
totaled $21.0 million versus $32.6 million in the first nine months of fiscal
2004 principally due to a higher investment in inventories required to meet
increased sales demand and longer lead times for certain raw materials, as well
as increased accounts receivable due to the higher sales levels. In light of
these required investments in working capital, we are revising our fiscal 2005
targeted cash flow from operating activities to a range of $30 to $35 million.
Our net capital expenditure budget for fiscal 2005 remains in the range of $6 to
$8 million, net of $3.5 million in proceeds we received from the sale of an
excess facility.
Based on current market conditions, we continue to target fiscal 2005
consolidated sales of approximately $255 to $260 million and diluted net income
per share in the range of $.84 to $.86. The net sales and earnings targets
exclude the impact of additional acquisitions, if any.
As we look to the remainder of fiscal 2005, fiscal 2006 and beyond, we believe
the increasing product demand from the commercial airline industry, our
commitment to develop new products
- more -
and services, our strong financial position and select acquisition opportunities
provide the foundation for long-term growth in sales and earnings."
As previously announced, HEICO will hold a conference call on Tuesday,
August 30, 2005 at 9:00 a.m. Eastern Daylight Time to discuss its third quarter
results. Individuals wishing to participate in the conference call should dial:
U.S./Canada/International/Local 785-832-1508, wait for the conference operator
and provide the operator with the "Verbal" Passcode/Conference ID 7HEICO. A
digital replay will be available one hour after the completion of the conference
for 14 days. To access, dial: U.S./Canada/International/Local 402-220-2569 and
enter Passcode/Conference ID 7HEICO.
There are currently approximately 14.5 million shares of HEICO's Class A Common
Stock (HEI.A) outstanding and 10.1 million shares of HEICO's Common Stock (HEI)
outstanding. The stock symbols for HEICO's two classes of common stock on most
web sites are HEI.A and HEI. However, some web sites change HEICO's Class A
Common Stock stock symbol (HEI.A) to HEI/A or HEIa.
HEICO Corporation is engaged primarily in certain niche segments of the
aviation, defense, space and electronics industries through its Hollywood,
FL-based HEICO Aerospace Holdings Corp. subsidiary and its Miami, FL-based HEICO
Electronic Technologies Corp. subsidiary. HEICO's customers include a majority
of the world's airlines and airmotives as well as numerous defense and space
contractors and military agencies worldwide in addition to telecommunications,
electronics and medical equipment manufacturers. For more information about
HEICO, please visit our web site at http://www.heico.com.
Certain statements in this press release constitute forward-looking statements,
which are subject to risks, uncertainties and contingencies. HEICO's actual
results may differ materially from those expressed in or implied by those
forward-looking statements as a result of factors including, but not limited to:
lower demand for commercial air travel or airline fleet changes, which could
cause lower demand for our goods and services; product specification costs and
requirements, which could cause an increase to our costs to complete contracts;
governmental and regulatory demands, export policies and restrictions,
reductions in defense or space spending by U.S. and/or foreign customers, or
competition from existing and new competitors, which could reduce our sales;
HEICO's ability to introduce new products and product pricing levels, which
could reduce our sales or sales growth; HEICO's ability to make acquisitions and
achieve operating synergies from acquired businesses, customer credit risk,
interest rates and economic conditions within and outside of the aviation,
defense, space and electronics industries, which could negatively impact our
costs and revenues; and HEICO's ability to maintain effective internal controls,
which could adversely affect our business and the market price of our common
stock. Parties receiving this material are encouraged to review all of HEICO's
filings with the Securities and Exchange Commission, including, but not limited
to filings on Form 10-K, Form 10-Q and Form 8-K. We undertake no obligation to
publicly update or revise any forward-looking statement, whether as a result of
new information, future events or otherwise.
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HEICO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
THREE MONTHS ENDED JULY 31,
-------------------------------------
2005 2004
--------------- ---------------
Net sales $ 69,169,000 $ 55,820,000
Cost of sales 43,170,000 36,204,000
Selling, general and administrative expenses 14,250,000 11,746,000
--------------- ---------------
Operating income 11,749,000 7,870,000 (1)
Interest expense (252,000) (250,000)
Interest and other income 341,000 93,000
Life insurance proceeds -- 5,000,000 (2)
--------------- ---------------
Income before income taxes and minority interests 11,838,000 12,713,000
Income tax expense 4,294,000 2,591,000
--------------- ---------------
Income before minority interests 7,544,000 10,122,000
Minority interests' share of income 1,498,000 2,007,000
--------------- ---------------
Net income $ 6,046,000 $ 8,115,000 (1)(2)
=============== ===============
Net income per share:
Basic $ .25 $ .34 (1)(2)
Diluted $ .23 $ .32 (1)(2)
Weighted average number of common shares outstanding:
Basic 24,500,372 24,165,595
Diluted 26,368,520 25,755,455
THREE MONTHS ENDED JULY 31,
-------------------------------------
2005 2004
--------------- ---------------
Operating segment information: -
Net sales:
Flight Support Group $ 50,146,000 $ 40,086,000
Electronic Technologies Group 19,047,000 15,743,000
Intersegment sales (24,000) (9,000)
--------------- ---------------
$ 69,169,000 $ 55,820,000
=============== ===============
Operating income:
Flight Support Group $ 10,454,000 $ 6,006,000 (1)
Electronic Technologies Group 3,820,000 3,428,000
Other, primarily corporate (2,525,000)(3) (1,564,000)
--------------- ---------------
$ 11,749,000 $ 7,870,000
=============== ===============
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HEICO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
NINE MONTHS ENDED JULY 31,
-------------------------------------
2005 2004
--------------- ---------------
Net sales $ 193,123,000 $ 154,764,000
Cost of sales 121,799,000 100,898,000
Selling, general and administrative expenses 39,481,000 31,251,000
--------------- ---------------
Operating income 31,843,000 22,615,000 (1)
Interest expense (785,000) (882,000)
Interest and other income 421,000 95,000
Life insurance proceeds -- 5,000,000 (2)
--------------- ---------------
Income before income taxes and minority interests 31,479,000 26,828,000
Income tax expense 11,430,000 7,447,000
--------------- ---------------
Income before minority interests 20,049,000 19,381,000
Minority interests' share of income 3,862,000 3,917,000
--------------- ---------------
Net income $ 16,187,000 $ 15,464,000 (1)(2)
=============== ===============
Net income per share:
Basic $ .66 $ .64 (1)(2)
Diluted $ .62 $ .60 (1)(2)
Weighted average number of common shares outstanding:
Basic 24,425,235 23,986,315
Diluted 26,280,695 25,709,844
NINE MONTHS ENDED JULY 31,
-------------------------------------
2005 2004
--------------- ---------------
Operating segment information: -
Net sales:
Flight Support Group $ 138,462,000 $ 112,053,000
Electronic Technologies Group 54,808,000 42,825,000
Intersegment sales (147,000) (114,000)
--------------- ---------------
$ 193,123,000 $ 154,764,000
=============== ===============
Operating income:
Flight Support Group $ 26,921,000 $ 17,344,000 (1)
Electronic Technologies Group 10,501,000 9,615,000
Other, primarily corporate (5,579,000)(3) (4,344,000)
--------------- ---------------
$ 31,843,000 $ 22,615,000
=============== ===============
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HEICO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
JULY 31, 2005 OCTOBER 31, 2004
------------------ ------------------
Cash and cash equivalents $ 2,635,000 $ 214,000
Accounts receivable, net 41,666,000 36,798,000
Inventories 58,873,000 48,020,000
Prepaid expenses, deferred taxes and other current assets 9,991,000 8,880,000
------------------ ------------------
Total current assets 113,165,000 93,912,000
Property, plant and equipment, net 42,482,000 40,558,000
Goodwill 232,349,000 216,674,000
Other assets 11,000,000 13,111,000
------------------ ------------------
Total assets $ 398,996,000 $ 364,255,000
================== ==================
Current maturities of long-term debt $ 58,000 $ 58,000
Other current liabilities 35,751,000 31,984,000
------------------ ------------------
Total current liabilities 35,809,000 32,042,000
Long-term debt, net of current maturities 22,028,000 18,071,000
Deferred income taxes 19,923,000 16,262,000
Other non-current liabilities 6,672,000 5,834,000
------------------ ------------------
Total liabilities 84,432,000 72,209,000
Minority interests in consolidated subsidiaries 48,033,000 44,644,000
Shareholders' equity 266,531,000 247,402,000
------------------ ------------------
Total liabilities and shareholders' equity $ 398,996,000 $ 364,255,000
================== ==================
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
NINE MONTHS ENDED JULY 31,
---------------------------------------
2005 2004
------------------ ------------------
Operating Activities:
Net income $ 16,187,000 $ 15,464,000
Depreciation and amortization 5,267,000 5,126,000
Deferred income tax provision 2,914,000 3,654,000
Minority interests' share of income 3,862,000 3,917,000
Tax benefit from stock option exercises 2,826,000 1,252,000
Increase in accounts receivable (2,760,000) (897,000)
(Increase) decrease in inventories (8,833,000) 2,459,000
Other 1,501,000 1,629,000
------------------ ------------------
Net cash provided by operating activities 20,964,000 32,604,000
------------------ ------------------
Investing Activities:
Acquisitions and related costs, net of cash acquired (19,043,000) (28,064,000)
Capital expenditures (6,804,000) (4,253,000)
Proceeds from sale of building held for sale 3,520,000 -
Other 224,000 (348,000)
------------------ ------------------
Net cash used in investing activities (22,103,000) (32,665,000)
------------------ ------------------
Financing Activities:
Borrowings on revolving credit facility, net 4,000,000 4,000,000
Cash dividends paid (1,224,000) (1,201,000)
Proceeds from stock option exercises 1,338,000 712,000
Other (554,000) 499,000
------------------ ------------------
Net cash provided by financing activities 3,560,000 4,010,000
------------------ ------------------
Net increase in cash and cash equivalents 2,421,000 3,949,000
Cash and cash equivalents at beginning of year 214,000 4,321,000
------------------ ------------------
Cash and cash equivalents at end of period $ 2,635,000 $ 8,270,000
================== ==================
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HEICO CORPORATION
FOOTNOTES TO CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
- ----------
(1) Operating income was reduced in fiscal 2004 by an aggregate of $600,000 in
restructuring expenses recorded by certain subsidiaries of the Flight
Support Group that provide repair and overhaul services including $350,000
recorded in cost of sales and $250,000 recorded in selling, general and
administrative expenses. The restructuring expenses decreased net income by
$301,000, or $.01 per basic and diluted share.
(2) Represents proceeds from a $5.0 million key-person life insurance policy
maintained by a subsidiary of the Flight Support Group. The minority
interest's share of this income totaled $1.0 million, which is reported as
a component of minority interests' share of income. Accordingly, the life
insurance proceeds increased fiscal 2004 net income by $4.0 million, or
$.17 per basic and $.16 per diluted share.
(3) Fiscal 2005 results reflect increased costs to comply with the
Sarbanes-Oxley Act of 2002 and higher accrued performance awards.