x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSACTION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
|
Florida
|
65-0341002
|
(State
or other jurisdiction of
|
(I.R.S.
Employer Identification No.)
|
incorporation
or organization)
|
|
3000
Taft Street, Hollywood, Florida
|
33021
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Common
Stock, $.01 par value
|
13,126,005
shares
|
Class
A Common Stock, $.01 par value
|
19,817,872
shares
|
Page
|
|||
Part
I.
|
Financial
Information:
|
||
|
|||
Part
II.
|
Other
Information:
|
||
July
31, 2010
|
October
31, 2009
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 11,037,000 | $ | 7,167,000 | ||||
Accounts
receivable, net
|
84,078,000 | 77,864,000 | ||||||
Inventories,
net
|
140,712,000 | 137,585,000 | ||||||
Prepaid
expenses and other current assets
|
5,364,000 | 4,290,000 | ||||||
Deferred
income taxes
|
18,534,000 | 16,671,000 | ||||||
Total
current assets
|
259,725,000 | 243,577,000 | ||||||
|
||||||||
Property,
plant and equipment, net
|
59,803,000 | 60,528,000 | ||||||
Goodwill
|
380,709,000 | 365,243,000 | ||||||
Intangible
assets, net
|
51,949,000 | 41,588,000 | ||||||
Other
assets
|
25,853,000 | 21,974,000 | ||||||
Total
assets
|
$ | 778,039,000 | $ | 732,910,000 | ||||
LIABILITIES
AND EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Current
maturities of long-term debt
|
$ | 199,000 | $ | 237,000 | ||||
Trade
accounts payable
|
28,290,000 | 26,978,000 | ||||||
Accrued
expenses and other current liabilities
|
38,292,000 | 36,978,000 | ||||||
Income
taxes payable
|
1,196,000 | 1,320,000 | ||||||
Total
current liabilities
|
67,977,000 | 65,513,000 | ||||||
Long-term
debt, net of current maturities
|
47,093,000 | 55,194,000 | ||||||
Deferred
income taxes
|
43,126,000 | 41,340,000 | ||||||
Other
long-term liabilities
|
27,836,000 | 23,268,000 | ||||||
Total
liabilities
|
186,032,000 | 185,315,000 | ||||||
Commitments
and contingencies (Note 11)
|
||||||||
Redeemable
noncontrolling interests (Note 12)
|
56,053,000 | 56,937,000 | ||||||
Shareholders’
equity:
|
||||||||
Preferred
Stock, $.01 par value per share; 10,000,000 shares
|
||||||||
authorized;
300,000 shares designated as Series B Junior
|
||||||||
Participating
Preferred Stock and 300,000 shares designated
|
||||||||
as
Series C Junior Participating Preferred Stock; none issued
|
¾ | ¾ | ||||||
Common
Stock, $.01 par value per share; 30,000,000 shares
authorized
|
||||||||
13,126,005
and 13,011,426 shares issued and outstanding, respectively
|
131,000 | 104,000 | ||||||
Class
A Common Stock, $.01 par value per share; 30,000,000
|
||||||||
shares
authorized; 19,815,122 and 19,641,543 shares issued
|
||||||||
and
outstanding, respectively
|
198,000 | 157,000 | ||||||
Capital
in excess of par value
|
227,215,000 | 224,625,000 | ||||||
Accumulated
other comprehensive loss
|
(498,000 | ) | (1,381,000 | ) | ||||
Retained
earnings
|
225,206,000 | 189,485,000 | ||||||
Total
HEICO shareholders’ equity
|
452,252,000 | 412,990,000 | ||||||
Noncontrolling
interests
|
83,702,000 | 77,668,000 | ||||||
Total
shareholders’ equity
|
535,954,000 | 490,658,000 | ||||||
Total
liabilities and equity
|
$ | 778,039,000 | $ | 732,910,000 |
Nine
months ended July 31,
|
Three
months ended July 31,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Net
sales
|
$ | 447,650,000 | $ | 394,689,000 | $ | 158,270,000 | $ | 134,086,000 | ||||||||
Operating
costs and expenses:
|
||||||||||||||||
Cost
of sales
|
286,351,000 | 262,456,000 | 100,717,000 | 88,275,000 | ||||||||||||
Selling,
general and administrative expenses
|
81,805,000 | 68,039,000 | 28,560,000 | 24,389,000 | ||||||||||||
Total
operating costs and expenses
|
368,156,000 | 330,495,000 | 129,277,000 | 112,664,000 | ||||||||||||
Operating
income
|
79,494,000 | 64,194,000 | 28,993,000 | 21,422,000 | ||||||||||||
Interest
expense
|
(422,000 | ) | (484,000 | ) | (136,000 | ) | (177,000 | ) | ||||||||
Other
income (expense)
|
392,000 | 186,000 | (31,000 | ) | 184,000 | |||||||||||
Income
before income taxes and noncontrolling
|
||||||||||||||||
interests
|
79,464,000 | 63,896,000 | 28,826,000 | 21,429,000 | ||||||||||||
Income
tax expense
|
27,000,000 | 19,331,000 | 9,300,000 | 6,511,000 | ||||||||||||
Net
income from consolidated operations
|
52,464,000 | 44,565,000 | 19,526,000 | 14,918,000 | ||||||||||||
Less:
Net income attributable to noncontrolling
|
||||||||||||||||
interests
|
13,168,000 | 11,575,000 | 4,596,000 | 3,786,000 | ||||||||||||
Net
income attributable to HEICO
|
$ | 39,296,000 | $ | 32,990,000 | $ | 14,930,000 | $ | 11,132,000 | ||||||||
Net
income per share attributable to HEICO
|
||||||||||||||||
shareholders:
|
||||||||||||||||
Basic
|
$ | 1.20 | $ | 1.01 | $ | .45 | $ | .34 | ||||||||
Diluted
|
$ | 1.16 | $ | .98 | $ | .44 | $ | .33 | ||||||||
|
||||||||||||||||
Weighted
average number of common shares
|
||||||||||||||||
outstanding:
|
||||||||||||||||
Basic
|
32,793,137 | 32,799,101 | 32,917,530 | 32,603,643 | ||||||||||||
Diluted
|
33,753,414 | 33,816,980 | 33,797,471 | 33,632,863 | ||||||||||||
|
||||||||||||||||
Cash
dividends per share
|
$ | .108 | $ | .096 | $ | .060 | $ | .048 |
HEICO
Shareholders' Equity
|
||||||||||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||||||||||
Redeemable
|
Class
A
|
Capital
in
|
Other
|
Total
|
||||||||||||||||||||||||||||
Noncontrolling
|
Common
|
Common
|
Excess
of
|
Comprehensive
|
Retained
|
Noncontrolling
|
Shareholders'
|
|||||||||||||||||||||||||
Interests
|
Stock
|
Stock
|
Par
Value
|
Loss
|
Earnings
|
Interests
|
Equity
|
|||||||||||||||||||||||||
Balances
as of October 31, 2009
|
||||||||||||||||||||||||||||||||
(as
previously reported)
|
$ | ― | $ | 104,000 | $ | 157,000 | $ | 224,625,000 | $ | (1,381,000 | ) | $ | 234,348,000 | $ | ― | $ | 457,853,000 | |||||||||||||||
Retrospective
adjustments related to
|
||||||||||||||||||||||||||||||||
adoption
of accounting guidance for
|
||||||||||||||||||||||||||||||||
noncontrolling
interests
|
56,937,000 | — | — | — | — | (44,863,000 | ) | 77,668,000 | 32,805,000 | |||||||||||||||||||||||
Balances
as of October 31, 2009
|
||||||||||||||||||||||||||||||||
(as
adjusted)
|
56,937,000 | 104,000 | 157,000 | 224,625,000 | (1,381,000 | ) | 189,485,000 | 77,668,000 | 490,658,000 | |||||||||||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||||||
Net
income
|
7,134,000 | — | — | — | — | 39,296,000 | 6,034,000 | 45,330,000 | ||||||||||||||||||||||||
Foreign
currency translation adjustments
|
— | — | — | — | 877,000 | — | — | 877,000 | ||||||||||||||||||||||||
Total
comprehensive income
|
7,134,000 | — | — | — | 877,000 | 39,296,000 | 6,034,000 | 46,207,000 | ||||||||||||||||||||||||
Cash
dividends ($.108 per share)
|
— | — | — | — | — | (3,546,000 | ) | — | (3,546,000 | ) | ||||||||||||||||||||||
Five-for-four
common stock split
|
— | 26,000 | 40,000 | (66,000 | ) | — | (68,000 | ) | — | (68,000 | ) | |||||||||||||||||||||
Proceeds
from stock option exercises
|
— | 1,000 | 1,000 | 1,465,000 | — | — | — | 1,467,000 | ||||||||||||||||||||||||
Tax
benefit from stock option exercises
|
— | — | — | 951,000 | — | — | — | 951,000 | ||||||||||||||||||||||||
Stock
option compensation expense
|
— | — | — | 921,000 | — | — | — | 921,000 | ||||||||||||||||||||||||
Distributions
to noncontrolling interests
|
(7,184,000 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||
Acquisitions
of noncontrolling interests
|
(795,000 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||
Redemptions
of common stock related to
|
||||||||||||||||||||||||||||||||
stock
option exercises
|
— | — | — | (681,000 | ) | — | — | — | (681,000 | ) | ||||||||||||||||||||||
Adjustments
to redemption amount of
|
||||||||||||||||||||||||||||||||
redeemable
noncontrolling interests
|
(39,000 | ) | — | — | — | — | 39,000 | — | 39,000 | |||||||||||||||||||||||
Other
|
— | — | — | — | 6,000 | — | — | 6,000 | ||||||||||||||||||||||||
Balances
as of July 31, 2010
|
$ | 56,053,000 | $ | 131,000 | $ | 198,000 | $ | 227,215,000 | $ | (498,000 | ) | $ | 225,206,000 | $ | 83,702,000 | $ | 535,954,000 |
HEICO
Shareholders' Equity
|
||||||||||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||||||||||
Redeemable
|
Class
A
|
Capital
in
|
Other
|
Total
|
||||||||||||||||||||||||||||
Noncontrolling
|
Common
|
Common
|
Excess
of
|
Comprehensive
|
Retained
|
Noncontrolling
|
Shareholders'
|
|||||||||||||||||||||||||
Interests
|
Stock
|
Stock
|
Par
Value
|
Loss
|
Earnings
|
Interests
|
Equity
|
|||||||||||||||||||||||||
Balances
as of October 31, 2008
|
||||||||||||||||||||||||||||||||
(as
previously reported)
|
$ | ― | $ | 106,000 | $ | 158,000 | $ | 229,443,000 | $ | (4,819,000 | ) | $ | 192,872,000 | $ | ― | $ | 417,760,000 | |||||||||||||||
Retrospective
adjustments related to
|
||||||||||||||||||||||||||||||||
adoption
of accounting guidance for
|
||||||||||||||||||||||||||||||||
noncontrolling
interests
|
48,736,000 | — | — | — | — | (35,896,000 | ) | 71,138,000 | 35,242,000 | |||||||||||||||||||||||
Balances
as of October 31, 2008
|
||||||||||||||||||||||||||||||||
(as
adjusted)
|
48,736,000 | 106,000 | 158,000 | 229,443,000 | (4,819,000 | ) | 156,976,000 | 71,138,000 | 453,002,000 | |||||||||||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||||||
Net
income
|
5,938,000 | — | — | — | — | 32,990,000 | 5,637,000 | 38,627,000 | ||||||||||||||||||||||||
Foreign
currency translation adjustments
|
— | — | — | — | 2,859,000 | — | — | 2,859,000 | ||||||||||||||||||||||||
Total
comprehensive income
|
5,938,000 | — | — | — | 2,859,000 | 32,990,000 | 5,637,000 | 41,486,000 | ||||||||||||||||||||||||
Repurchases
of common stock
|
— | (2,000 | ) | (2,000 | ) | (8,094,000 | ) | — | — | — | (8,098,000 | ) | ||||||||||||||||||||
Cash
dividends ($.096 per share)
|
— | — | — | — | — | (3,150,000 | ) | — | (3,150,000 | ) | ||||||||||||||||||||||
Proceeds
from stock option exercises
|
— | — | 1,000 | 821,000 | — | — | — | 822,000 | ||||||||||||||||||||||||
Tax
benefit from stock option exercises
|
— | — | — | 1,889,000 | — | — | — | 1,889,000 | ||||||||||||||||||||||||
Stock
option compensation expense
|
— | — | — | 15,000 | — | — | — | 15,000 | ||||||||||||||||||||||||
Distributions
to noncontrolling interests
|
(5,533,000 | ) | — | — | — | — | — | (461,000 | ) | (461,000 | ) | |||||||||||||||||||||
Acquisitions
of noncontrolling interests
|
(10,015,000 | ) | — | — | — | — | 6,845,000 | — | 6,845,000 | |||||||||||||||||||||||
Noncontrolling
interests assumed
|
||||||||||||||||||||||||||||||||
related
to acquistion
|
7,505,000 | — | — | — | — | (4,202,000 | ) | — | (4,202,000 | ) | ||||||||||||||||||||||
Adjustments
to redemption amount of
|
||||||||||||||||||||||||||||||||
redeemable
noncontrolling interests
|
971,000 | — | — | — | — | (971,000 | ) | — | (971,000 | ) | ||||||||||||||||||||||
Other
|
— | — | — | — | 164,000 | 1,000 | — | 165,000 | ||||||||||||||||||||||||
Balances
as of July 31, 2009
|
$ | 47,602,000 | $ | 104,000 | $ | 157,000 | $ | 224,074,000 | $ | (1,796,000 | ) | $ | 188,489,000 | $ | 76,314,000 | $ | 487,342,000 |
Nine
months ended July 31,
|
||||||||
2010
|
2009
|
|||||||
Operating
Activities:
|
||||||||
Net
income from consolidated operations
|
$ | 52,464,000 | $ | 44,565,000 | ||||
Adjustments
to reconcile net income from consolidated operations
|
||||||||
to
net cash provided by operating activities:
|
||||||||
Depreciation
and amortization
|
13,578,000 | 10,951,000 | ||||||
Impairment
of intangible assets
|
281,000 | — | ||||||
Deferred
income tax benefit
|
(80,000 | ) | (1,376,000 | ) | ||||
Tax
benefit from stock option exercises
|
951,000 | 1,889,000 | ||||||
Excess
tax benefit from stock option exercises
|
(669,000 | ) | (1,572,000 | ) | ||||
Stock
option compensation expense
|
921,000 | 15,000 | ||||||
Changes
in operating assets and liabilities, net of acquisitions:
|
||||||||
(Increase)
decrease in accounts receivable
|
(2,988,000 | ) | 20,207,000 | |||||
Decrease
(increase) in inventories
|
3,625,000 | (9,282,000 | ) | |||||
Increase
in prepaid expenses and other current assets
|
(1,051,000 | ) | (2,271,000 | ) | ||||
Decrease
in trade accounts payable
|
(177,000 | ) | (2,995,000 | ) | ||||
Increase
(decrease) in accrued expenses and other current
liabilities
|
1,744,000 | (15,776,000 | ) | |||||
Decrease
in income taxes payable
|
(794,000 | ) | (1,080,000 | ) | ||||
Other
|
116,000 | 444,000 | ||||||
Net
cash provided by operating activities
|
67,921,000 | 43,719,000 | ||||||
|
||||||||
Investing
Activities:
|
||||||||
Acquisitions,
net of cash acquired
|
(39,061,000 | ) | (34,562,000 | ) | ||||
Capital
expenditures
|
(6,743,000 | ) | (7,784,000 | ) | ||||
Other
|
(18,000 | ) | 73,000 | |||||
Net
cash used in investing activities
|
(45,822,000 | ) | (42,273,000 | ) | ||||
|
||||||||
Financing
Activities:
|
||||||||
Payments
on revolving credit facility
|
(45,000,000 | ) | (49,000,000 | ) | ||||
Borrowings
on revolving credit facility
|
37,000,000 | 68,000,000 | ||||||
Acquisitions
of noncontrolling interests
|
(795,000 | ) | (11,268,000 | ) | ||||
Repurchases
of common stock
|
— | (8,098,000 | ) | |||||
Distributions
to noncontrolling interests
|
(7,184,000 | ) | (5,994,000 | ) | ||||
Cash
dividends paid
|
(3,614,000 | ) | (3,150,000 | ) | ||||
Redemptions
of common stock related to stock option exercises
|
(681,000 | ) | — | |||||
Proceeds
from stock option exercises
|
1,467,000 | 822,000 | ||||||
Excess
tax benefit from stock option exercises
|
669,000 | 1,572,000 | ||||||
Other
|
(152,000 | ) | (158,000 | ) | ||||
Net
cash used in financing activities
|
(18,290,000 | ) | (7,274,000 | ) | ||||
|
||||||||
Effect
of exchange rate changes on cash
|
61,000 | 214,000 | ||||||
Net
increase (decrease) in cash and cash equivalents
|
3,870,000 | (5,614,000 | ) | |||||
Cash
and cash equivalents at beginning of year
|
7,167,000 | 12,562,000 | ||||||
Cash
and cash equivalents at end of period
|
$ | 11,037,000 | $ | 6,948,000 |
Nine
months ended
|
Three
months ended
|
|||||||
July
31, 2009
|
July
31, 2009
|
|||||||
Net
sales
|
$ | 412,717,000 | $ | 139,023,000 | ||||
Net
income from consolidated operations
|
$ | 45,882,000 | $ | 14,969,000 | ||||
Net
income attributable to HEICO
|
$ | 34,307,000 | $ | 11,183,000 | ||||
Net
income per share attributable
|
||||||||
to
HEICO shareholders:
|
||||||||
Basic
|
$ | 1.05 | $ | .34 | ||||
Diluted
|
$ | 1.01 | $ | .33 |
July
31, 2010
|
October
31, 2009
|
|||||||
Accounts
receivable
|
$ | 86,962,000 | $ | 80,399,000 | ||||
Less: Allowance
for doubtful accounts
|
(2,884,000 | ) | (2,535,000 | ) | ||||
Accounts
receivable, net
|
$ | 84,078,000 | $ | 77,864,000 |
July
31, 2010
|
October
31, 2009
|
|||||||
Costs
incurred on uncompleted contracts
|
$ | 4,548,000 | $ | 10,280,000 | ||||
Estimated
earnings
|
5,480,000 | 8,070,000 | ||||||
10,028,000 | 18,350,000 | |||||||
Less: Billings
to date
|
(7,251,000 | ) | (12,543,000 | ) | ||||
$ | 2,777,000 | $ | 5,807,000 | |||||
Included
in the accompanying Condensed Consolidated
|
||||||||
Balance
Sheets under the following captions:
|
||||||||
Accounts
receivable, net (costs and estimated
|
||||||||
earnings
in excess of billings)
|
$ | 2,958,000 | $ | 5,832,000 | ||||
Accrued
expenses and other current liabilities
|
||||||||
(billings
in excess of costs and estimated earnings)
|
(181,000 | ) | (25,000 | ) | ||||
$ | 2,777,000 | $ | 5,807,000 |
July
31, 2010
|
October
31, 2009
|
|||||||
Finished
products
|
$ | 74,609,000 | $ | 79,665,000 | ||||
Work
in process
|
18,814,000 | 14,279,000 | ||||||
Materials,
parts, assemblies and supplies
|
47,289,000 | 43,641,000 | ||||||
Inventories,
net
|
$ | 140,712,000 | $ | 137,585,000 |
July
31, 2010
|
October
31, 2009
|
|||||||
Land
|
$ | 3,656,000 | $ | 3,656,000 | ||||
Buildings
and improvements
|
38,750,000 | 38,091,000 | ||||||
Machinery,
equipment and tooling
|
86,276,000 | 80,697,000 | ||||||
Construction
in progress
|
6,028,000 | 5,331,000 | ||||||
134,710,000 | 127,775,000 | |||||||
Less: Accumulated
depreciation and amortization
|
(74,907,000 | ) | (67,247,000 | ) | ||||
Property,
plant and equipment, net
|
$ | 59,803,000 | $ | 60,528,000 |
Segment
|
Consolidated
|
|||||||||||
FSG
|
ETG
|
Totals
|
||||||||||
Balances
as of October 31, 2009
|
$ | 188,459,000 | $ | 176,784,000 | $ | 365,243,000 | ||||||
Acquired
goodwill
|
¾ | 12,920,000 | 12,920,000 | |||||||||
Adjustments
to goodwill
|
¾ | 1,960,000 | 1,960,000 | |||||||||
Foreign
currency translation adjustment
|
¾ | 586,000 | 586,000 | |||||||||
Balances
as of July 31, 2010
|
$ | 188,459,000 | $ | 192,250,000 | $ | 380,709,000 |
As
of July 31, 2010
|
As
of October 31, 2009
|
|||||||||||||||||||||||
Gross
|
Net
|
Gross
|
Net
|
|||||||||||||||||||||
Carrying
|
Accumulated
|
Carrying
|
Carrying
|
Accumulated
|
Carrying
|
|||||||||||||||||||
Amount
|
Amortization
|
Amount
|
Amount
|
Amortization
|
Amount
|
|||||||||||||||||||
Amortizing Assets:
|
||||||||||||||||||||||||
Customer
relationships
|
$ | 41,759,000 | $ | (14,360,000 | ) | $ | 27,399,000 | $ | 33,237,000 | $ | (9,944,000 | ) | $ | 23,293,000 | ||||||||||
Intellectual
property
|
7,303,000 | (1,247,000 | ) | 6,056,000 | 3,369,000 | (628,000 | ) | 2,741,000 | ||||||||||||||||
Licenses
|
1,000,000 | (603,000 | ) | 397,000 | 1,000,000 | (547,000 | ) | 453,000 | ||||||||||||||||
Non-compete
agreements
|
1,166,000 | (991,000 | ) | 175,000 | 1,221,000 | (969,000 | ) | 252,000 | ||||||||||||||||
Patents
|
558,000 | (261,000 | ) | 297,000 | 575,000 | (246,000 | ) | 329,000 | ||||||||||||||||
Trade
names
|
569,000 | (84,000 | ) | 485,000 | 569,000 | ¾ | 569,000 | |||||||||||||||||
52,355,000 | (17,546,000 | ) | 34,809,000 | 39,971,000 | (12,334,000 | ) | 27,637,000 | |||||||||||||||||
Non-Amortizing Assets:
|
||||||||||||||||||||||||
Trade
names
|
17,140,000 | ¾ | 17,140,000 | 13,951,000 | ¾ | 13,951,000 | ||||||||||||||||||
$ | 69,495,000 | $ | (17,546,000 | ) | $ | 51,949,000 | $ | 53,922,000 | $ | (12,334,000 | ) | $ | 41,588,000 |
July
31, 2010
|
October
31, 2009
|
|||||||
Borrowings
under revolving credit facility
|
$ | 47,000,000 | $ | 55,000,000 | ||||
Notes
payable, capital leases and equipment loans
|
292,000 | 431,000 | ||||||
47,292,000 | 55,431,000 | |||||||
Less:
Current maturities of long-term debt
|
(199,000 | ) | (237,000 | ) | ||||
$ | 47,093,000 | $ | 55,194,000 |
Balance
as of October 31, 2009
|
$ | 3,328,000 | ||
Decreases
related to prior year tax positions
|
(837,000 | ) | ||
Increases
related to current year tax positions
|
393,000 | |||
Lapse
of statutes of limitations
|
(288,000 | ) | ||
Balance
as of July 31, 2010
|
$ | 2,596,000 |
Level 1 —
|
Quoted
prices in active markets for identical assets or
liabilities;
|
Level 2 —
|
Inputs,
other than quoted prices included within Level 1, that are observable for
the asset or liability either directly or indirectly;
or
|
Level 3 —
|
Unobservable
inputs for the asset or liability where there is little or no market data,
requiring management to develop its own
assumptions.
|
As
of July 31, 2010
|
||||||||||||||||
Level
1
|
Level
2
|
Level
3
|
Total
|
|||||||||||||
Assets:
|
||||||||||||||||
Deferred
compensation plans:
|
||||||||||||||||
Corporate
owned life insurance
|
$ | — | $ | 20,672,000 | $ | — | $ | 20,672,000 | ||||||||
Equity
securities
|
964,000 | — | — | 964,000 | ||||||||||||
Mutual
funds
|
961,000 | — | — | 961,000 | ||||||||||||
Money
market funds and cash
|
832,000 | — | — | 832,000 | ||||||||||||
Other
|
— | 525,000 | — | 525,000 | ||||||||||||
Total
assets
|
$ | 2,757,000 | $ | 21,197,000 | $ | — | $ | 23,954,000 | ||||||||
|
||||||||||||||||
Liabilities:
|
||||||||||||||||
Contingent
consideration
|
$ | — | $ | — | $ | 1,150,000 | $ | 1,150,000 |
As
of October 31, 2009
|
||||||||||||||||
Level
1
|
Level
2
|
Level
3
|
Total
|
|||||||||||||
Assets:
|
||||||||||||||||
Deferred
compensation plans:
|
||||||||||||||||
Corporate
owned life insurance
|
$ | — | $ | 15,687,000 | $ | — | $ | 15,687,000 | ||||||||
Equity
securities
|
1,057,000 | — | — | 1,057,000 | ||||||||||||
Mutual
funds
|
614,000 | — | — | 614,000 | ||||||||||||
Money
market funds and cash
|
2,163,000 | — | — | 2,163,000 | ||||||||||||
Other
|
— | 243,000 | — | 243,000 | ||||||||||||
Total
assets
|
$ | 3,834,000 | $ | 15,930,000 | $ | — | $ | 19,764,000 | ||||||||
Liabilities
|
— | — | — | — |
Nine
months ended July 31,
|
Three
months ended July 31,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Numerator:
|
||||||||||||||||
Net
income attributable to HEICO
|
$ | 39,296,000 | $ | 32,990,000 | $ | 14,930,000 | $ | 11,132,000 | ||||||||
Denominator:
|
||||||||||||||||
Weighted
average common shares outstanding-basic
|
32,793,137 | 32,799,101 | 32,917,530 | 32,603,643 | ||||||||||||
Effect
of dilutive stock options
|
960,277 | 1,017,879 | 879,941 | 1,029,220 | ||||||||||||
Weighted
average common shares outstanding-diluted
|
33,753,414 | 33,816,980 | 33,797,471 | 33,632,863 | ||||||||||||
Net
income per share attributable to HEICO shareholders:
|
||||||||||||||||
Basic
|
$ | 1.20 | $ | 1.01 | $ | .45 | $ | .34 | ||||||||
Diluted
|
$ | 1.16 | $ | .98 | $ | .44 | $ | .33 | ||||||||
Anti-dilutive
stock options excluded
|
432,292 | 3,193 | 431,250 | 9,579 |
Other,
|
||||||||||||||||
Primarily
|
||||||||||||||||
Segment
|
Corporate
and
|
Consolidated
|
||||||||||||||
FSG
|
ETG
|
Intersegment
|
Totals
|
|||||||||||||
For the nine months ended July 31,
2010:
|
||||||||||||||||
Net
sales
|
$ | 301,145,000 | $ | 147,231,000 | $ | (726,000 | ) | $ | 447,650,000 | |||||||
Depreciation
and amortization
|
7,467,000 | 5,817,000 | 294,000 | 13,578,000 | ||||||||||||
Operating
income
|
50,332,000 | 39,961,000 | (10,799,000 | ) | 79,494,000 | |||||||||||
Capital
expenditures
|
5,513,000 | 1,214,000 | 16,000 | 6,743,000 | ||||||||||||
For the nine months ended July 31,
2009:
|
||||||||||||||||
Net
sales
|
$ | 297,543,000 | $ | 97,523,000 | $ | (377,000 | ) | $ | 394,689,000 | |||||||
Depreciation
and amortization
|
7,330,000 | 3,287,000 | 334,000 | 10,951,000 | ||||||||||||
Operating
income
|
46,297,000 | 26,508,000 | (8,611,000 | ) | 64,194,000 | |||||||||||
Capital
expenditures
|
6,644,000 | 1,075,000 | 65,000 | 7,784,000 | ||||||||||||
For the three months ended July 31,
2010:
|
||||||||||||||||
Net
sales
|
$ | 104,323,000 | $ | 54,107,000 | $ | (160,000 | ) | $ | 158,270,000 | |||||||
Depreciation
and amortization
|
2,493,000 | 2,111,000 | 96,000 | 4,700,000 | ||||||||||||
Operating
income
|
17,557,000 | 15,198,000 | (3,762,000 | ) | 28,993,000 | |||||||||||
Capital
expenditures
|
1,696,000 | 434,000 | 13,000 | 2,143,000 | ||||||||||||
For the three months ended July 31,
2009:
|
||||||||||||||||
Net
sales
|
$ | 97,236,000 | $ | 37,054,000 | $ | (204,000 | ) | $ | 134,086,000 | |||||||
Depreciation
and amortization
|
2,521,000 | 1,409,000 | 113,000 | 4,043,000 | ||||||||||||
Operating
income
|
14,759,000 | 9,935,000 | (3,272,000 | ) | 21,422,000 | |||||||||||
Capital
expenditures
|
1,867,000 | 466,000 | 54,000 | 2,387,000 |
Other,
|
||||||||||||||||
Segment
|
Primarily
|
Consolidated
|
||||||||||||||
FSG
|
ETG
|
Corporate
|
Totals
|
|||||||||||||
Total
assets as of July 31, 2010
|
$ | 413,551,000 | $ | 324,822,000 | $ | 39,666,000 | $ | 778,039,000 | ||||||||
Total
assets as of October 31, 2009
|
414,030,000 | 285,602,000 | 33,278,000 | 732,910,000 |
Nine
months ended July 31,
|
||||||||
2010
|
2009
|
|||||||
Balances
as of beginning of fiscal year
|
$ | 1,022,000 | $ | 671,000 | ||||
Accruals
for warranties
|
1,251,000 | 1,163,000 | ||||||
Warranty
claims settled
|
(855,000 | ) | (645,000 | ) | ||||
Acquired
warranty liabilities
|
80,000 | — | ||||||
Balances
as of July 31
|
$ | 1,498,000 | $ | 1,189,000 |
Item
2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
Nine
months ended July 31,
|
Three
months ended July 31,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Net
sales
|
$ | 447,650,000 | $ | 394,689,000 | $ | 158,270,000 | $ | 134,086,000 | ||||||||
Cost
of sales
|
286,351,000 | 262,456,000 | 100,717,000 | 88,275,000 | ||||||||||||
Selling,
general and administrative expenses
|
81,805,000 | 68,039,000 | 28,560,000 | 24,389,000 | ||||||||||||
Total
operating costs and expenses
|
368,156,000 | 330,495,000 | 129,277,000 | 112,664,000 | ||||||||||||
Operating
income
|
$ | 79,494,000 | $ | 64,194,000 | $ | 28,993,000 | $ | 21,422,000 | ||||||||
Net
sales by segment:
|
||||||||||||||||
Flight
Support Group
|
$ | 301,145,000 | $ | 297,543,000 | $ | 104,323,000 | $ | 97,236,000 | ||||||||
Electronic
Technologies Group
|
147,231,000 | 97,523,000 | 54,107,000 | 37,054,000 | ||||||||||||
Intersegment
sales
|
(726,000 | ) | (377,000 | ) | (160,000 | ) | (204,000 | ) | ||||||||
$ | 447,650,000 | $ | 394,689,000 | $ | 158,270,000 | $ | 134,086,000 | |||||||||
Operating
income by segment:
|
||||||||||||||||
Flight
Support Group
|
$ | 50,332,000 | $ | 46,297,000 | $ | 17,557,000 | $ | 14,759,000 | ||||||||
Electronic
Technologies Group
|
39,961,000 | 26,508,000 | 15,198,000 | 9,935,000 | ||||||||||||
Other,
primarily corporate
|
(10,799,000 | ) | (8,611,000 | ) | (3,762,000 | ) | (3,272,000 | ) | ||||||||
|
$ | 79,494,000 | $ | 64,194,000 | $ | 28,993,000 | $ | 21,422,000 | ||||||||
Net
sales
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Gross
profit
|
36.0 | % | 33.5 | % | 36.4 | % | 34.2 | % | ||||||||
Selling,
general and administrative expenses
|
18.3 | % | 17.2 | % | 18.0 | % | 18.2 | % | ||||||||
Operating
income
|
17.8 | % | 16.3 | % | 18.3 | % | 16.0 | % | ||||||||
Interest
expense
|
.1 | % | .1 | % | .1 | % | .1 | % | ||||||||
Other
income (expense)
|
.1 | % | — | — | .1 | % | ||||||||||
Income
tax expense
|
6.0 | % | 4.9 | % | 5.9 | % | 4.9 | % | ||||||||
Net
income attributable to noncontrolling
|
||||||||||||||||
interests
|
2.9 | % | 2.9 | % | 2.9 | % | 2.8 | % | ||||||||
Net
income attributable to HEICO
|
8.8 | % | 8.4 | % | 9.4 | % | 8.3 | % |
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
CONTROLS
AND PROCEDURES
|
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
|
Exhibit
|
Description
|
|
31.1
|
Rule 13a-14(a)/15d-14(a)
Certification of Chief Executive Officer. *
|
|
|
||
31.2
|
Rule 13a-14(a)/15d-14(a)
Certification of Chief Financial Officer. *
|
|
32.1
|
Section 1350 Certification of
Chief Executive Officer. **
|
|
32.2
|
Section 1350 Certification of
Chief Financial Officer. **
|
|
101.INS
|
XBRL Instance
Document.**
|
|
101.SCH
|
XBRL Taxonomy Extension Schema
Document.**
|
|
101.CAL
|
XBRL Taxonomy Extension
Calculation Linkbase Document.**
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
Document.**
|
|
101.LAB
|
XBRL Taxonomy Extension Labels
Linkbase Document.**
|
|
101.PRE
|
XBRL Taxonomy Extension
Presentation Linkbase
Document.**
|
|
*
|
Filed
herewith.
|
|
**
|
Furnished
herewith.
|
HEICO CORPORATION | |||
Date: September
1, 2010
|
By:
|
/s/ THOMAS S. IRWIN | |
Thomas S. Irwin | |||
Executive
Vice President and
Chief
Financial Officer
(Principal
Financial and
Accounting
Officer)
|
|||
|
Exhibit
|
Description
|
|
31.1
|
Rule 13a-14(a)/15d-14(a)
Certification of Chief Executive Officer. *
|
|
|
||
31.2
|
Rule 13a-14(a)/15d-14(a)
Certification of Chief Financial Officer. *
|
|
32.1
|
Section 1350 Certification of
Chief Executive Officer. **
|
|
32.2
|
Section 1350 Certification of
Chief Financial Officer. **
|
|
101.INS
|
XBRL Instance
Document.**
|
|
101.SCH
|
XBRL Taxonomy Extension Schema
Document.**
|
|
101.CAL
|
XBRL Taxonomy Extension
Calculation Linkbase Document.**
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
Document.**
|
|
101.LAB
|
XBRL Taxonomy Extension Labels
Linkbase Document.**
|
|
101.PRE
|
XBRL Taxonomy Extension
Presentation Linkbase
Document.**
|
(1)
|
I
have reviewed this quarterly report on Form 10-Q of HEICO
Corporation;
|
(2)
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
(3)
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
(4)
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
(5)
|
The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date September
1, 2010
|
/s/ LAURANS A. MENDELSON | |
Laurans A. Mendelson | ||
Chief Executive Officer | ||
(1)
|
I
have reviewed this quarterly report on Form 10-Q of HEICO
Corporation;
|
(2)
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
(3)
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
(4)
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
(5)
|
The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date September
1, 2010
|
/s/ THOMAS S. IRWIN | |
Thomas S. Irwin | ||
Chief Financial Officer | ||
(1)
|
The
Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934, as amended;
and
|
(2)
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|
Date September
1, 2010
|
/s/ LAURANS A. MENDELSON | |
Laurans A. Mendelson | ||
Chief Executive Officer | ||
(1)
|
The
Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934, as amended;
and
|
(2)
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|
Date September
1, 2010
|
/s/ THOMAS S. IRWIN | |
Thomas S. Irwin | ||
Chief Financial Officer | ||