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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): December 15, 2003
HEICO CORPORATION
(Exact name of registrant as specified in its charter)
Florida 1-4604 65-0341002
(State or other jurisdiction (Commission file number) (I.R.S. Employer
of incorporation) 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)
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ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On December 15, 2003, HEICO Corporation issued a press release announcing
its financial results for the fourth quarter and full fiscal year ended October
31, 2003. A copy of the press release is furnished as Exhibit 99.1 to this
report.
The information in this report shall not be deemed "filed" for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or otherwise subject to the liability of that section, and shall not be
incorporated by reference into any registration statement or other document
filed under the Securities Act of 1933, as amended, or the Exchange Act, except
as shall be expressly set forth by specific reference in such filing.
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: December 15, 2003 By: /s/ Thomas S. Irwin
--------------------------------
Thomas S. Irwin
Executive Vice President
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
3
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
99.1 Press release, dated December 15, 2003, titled "HEICO
Corporation Reports Fiscal 2003 Fourth Quarter and Full Year
Results."
4
Exhibit 99.1
FOR IMMEDIATE RELEASE
December 15, 2003
Thomas S. Irwin (954) 987-4000 ext. 7560
Victor H. Mendelson (305) 374-1745 ext. 7590
HEICO CORPORATION REPORTS FISCAL 2003 FOURTH QUARTER
AND FULL YEAR RESULTS
Reports 17% Increase In Fiscal 2003 Fourth Quarter Operating Income
Over Prior Fourth Quarter
HOLLYWOOD, FL, and MIAMI, FL -- HEICO CORPORATION (NYSE: HEI and HEI.A), today
reported that net income for the fiscal year ended October 31, 2003 was
$12,222,000, or 55 cents per share. For the fiscal year ended October 31, 2002,
net income was $15,226,000, or 68 cents per share. Net income for fiscal 2002
included the recovery of a portion of taxes paid in prior years resulting from
an income tax audit completed in fiscal 2002 and an increase in the gain on sale
of a product line, which increased net income by an aggregate of $2,872,000, or
13 cents per share.
Net sales for fiscal 2003 were up 3% to $176,453,000 from $172,112,000 in fiscal
2002.
For the fourth quarter of fiscal 2003, net income totaled $3,540,000, or 16
cents per share, on sales of $47,662,000. Net income in the fourth quarter of
fiscal 2002 was $5,599,000, or 25 cents per share, on sales of $45,512,000. Net
income in the fourth quarter of fiscal 2002 included the recovery of a portion
of income taxes paid in prior years, which increased net income for the quarter
and full year by $2,107,000, or 9 cents per share, net of related expenses.
Net sales in the fourth quarter of fiscal 2003 represented a 5% increase over
net sales in the fourth quarter of fiscal 2002.
Adjusted on a pro forma basis retroactively for the 10% stock dividend announced
by the Company earlier today, which is to be paid on January 16, 2004, net
income for the fiscal years ended October 31, 2003 and 2002 would be 50 cents
per share and 62 cents per share, respectively, and net income in the fourth
quarters of fiscal 2003 and 2002 would be 14 cents per share and 23 cents per
share, respectively. On a pro forma basis (adjusted for the stock dividend), the
recovered income taxes and additional gain on sale of a product line increased
net income per share (pro forma) by 12 cents in fiscal 2002 and the recovered
income taxes increased net income per share (pro forma) by 9 cents in the fourth
quarter of fiscal 2002.
All per share information referenced above refers to net income per diluted
share.
-more-
Cash flow from operating activities for the fiscal year ended October 31, 2003
totaled $27.9 million, equal to approximately 225% of the Company's net income.
This was up $4.6 million from the fiscal year ended October 31, 2002. In the
fourth quarter of fiscal 2003, cash flow from operating activities totaled $9.8
million, up 13% from the fourth quarter of fiscal 2002.
For the fourth quarter of fiscal 2003, operating income was $6,644,000, or 17%
higher than the $5,681,000 reported in the fourth quarter of fiscal 2002.
Operating income increased 4% to $23,205,000 for the fiscal year ended October
31, 2003 from $22,400,000 for the fiscal year ended October 31, 2002. Operating
income for fiscal year 2003 reflects increased sales and earnings within the
Company's Flight Support Group (FSG) attributable to sales of new products and
services and strengthening demand within the commercial aerospace industry. The
higher sales and earnings within the FSG were partially offset by lower sales
and earnings within the Company's Electronic Technologies Group (ETG) for fiscal
2003 due principally to a decline in demand from certain foreign military
customers.
For the fiscal year ended October 31, 2003, the FSG's sales increased 7% to
$128,277,000 from $120,097,000 for the fiscal year ended October 31, 2002. Sales
within the FSG increased 5% to $33,273,000 in the fourth quarter of fiscal 2003
from $31,781,000 in the fourth quarter of fiscal 2002. The increase in revenues
within the FSG for fiscal 2003 and the fourth quarter reflects sales of new
FAA-approved replacement parts, stronger repair and overhaul sales and some
recent recovery within the commercial aerospace industry.
Operating income of the FSG increased 21% to $19,187,000 for the fiscal year
ended October 31, 2003 from $15,846,000 for the fiscal year ended October 31,
2002 and increased 17% to $4,851,000 in the fourth quarter of fiscal 2003 from
$4,163,000 in the fourth quarter of fiscal 2002. The higher sales levels in
fiscal 2003 and the fourth quarter contributed to an improvement in operating
margins and operating income.
Sales and operating income within the ETG were $48,597,000 and $8,497,000,
respectively for the fiscal year ended October 31, 2003 versus $52,510,000 and
$11,873,000, respectively, for the fiscal year ended October 31, 2002. The
decreases for the fiscal year primarily resulted from lower foreign military
sales. In addition, operating margins were somewhat lower in fiscal 2003 due to
a less favorable product mix.
In the fourth quarter of fiscal 2003, sales and operating income of the ETG
improved 5% and 1%, respectively, to $14,495,000 and $3,123,000 as compared to
$13,776,000 and $3,084,000, respectively, in the fourth quarter of fiscal 2002.
Laurans A. Mendelson, HEICO's Chairman, President & Chief Executive Officer,
remarked, "We are pleased to report increased sales and earnings in our Flight
Support Group (FSG) for fiscal 2003, despite the negative impact on the
commercial aviation industry of the military conflict in Iraq and SARs. The
increase in the FSG is primarily due to sales of new products as a result of our
continued investment in new product development, our strategic relationships
with several of the world's major airlines, as well as some improvement in
commercial aviation during the second half of our fiscal year.
-more-
"Our Electronic Technologies Group continued to show improvement in its sales
and earnings in the fourth quarter of fiscal 2003. The fourth quarter sales and
operating income were up 13% and 16% from the third quarter, respectively. The
increase is primarily due to strong product demand during the second half of our
fiscal year and the delivery of some products whose delivery was delayed in the
first half of the year.
"We are also pleased to note that our cash flow from operating activities
remained strong in fiscal 2003, allowing us to reduce our debt by $24 million in
fiscal 2003 and pay our 49th and 50th consecutive semi-annual cash dividends
since 1979.
"As we enter fiscal 2004, we expect continued improvement in our sales and
earnings based on current anticipation of improvement in the economy and our
recent acquisition within the satellite microwave component industry. Based on
current market conditions, we are targeting fiscal 2004 sales and earnings
growth of at least 15% and 30%, respectively, over fiscal 2003 results. The
Company will not be giving guidance on quarterly sales and earnings.
"We remain confident that HEICO's strong financial position, our commitment to
develop new products and services and additional acquisition opportunities will
provide substantial potential for long-term sustainable growth."
Mr. Mendelson added, "The Board's declaration of a 10% stock dividend reported
earlier today in addition to the regular cash dividend reflects its continuing
confidence in HEICO's growth strategies and its policy of rewarding shareholders
with stock dividends/splits in addition to cash dividends. Since 1994, HEICO has
declared three 3-for-2 stock splits and paid six other 10% stock dividends.
Further, by declaring the cash dividend on the shares being issued in the 10%
stock dividend, HEICO's Board has effectively increased the cash portion of the
regular dividend by 10%."
Shareholders are reminded that Common Stock and Class A Common Stock are
identical in all economic respects. The only difference between the shares is
the voting rights. The Common Stock receives 1 vote per share and the Class A
Common Stock receives 1/10 vote per share.
As previously announced, HEICO will hold a conference call on Tuesday, December
16, 2003 at 8:30 a.m. Eastern Standard Time to discuss its fourth quarter and
fiscal 2003 results. Individuals wishing to participate in the conference call
should dial: U.S./Canada/ International/Local 302-709-8328, wait for the
conference operator and provide the operator with the "Verbal"
Passcode/Conference ID VM963753. 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 402-220-2946 and enter Passcode/Conference ID
963753#.
HEICO Corporation is engaged primarily in certain niche segments of the
aerospace, defense 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 contractors
and military agencies worldwide in addition to communications, electronics and
medical equipment manufacturers. For more information about HEICO, please visit
our web site at http://www.heico.com.
-more-
The stock symbols for HEICO's two classes of common stock on most web sites are
HEI and HEI.A. However, some web sites change HEICO's Class A Common Stock stock
symbol (HEI.A) to HEI/A or HEIa.
Certain statements in this press release constitute forward-looking statements
which may involve risks and uncertainties. HEICO's actual experience may differ
materially from that discussed 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 our costs to complete contracts to
increase; governmental and regulatory demands, export policies and restrictions,
military program funding by U.S. and non-U.S. Government agencies or competition
on military programs, 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 aerospace, defense and electronics
industries, which could negatively impact our costs and revenues. 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 statements, whether as a result of new
information, future events or otherwise.
-more-
HEICO CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
Twelve Months Ended October 31,
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2003 2002
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Net sales $ 176,453,000 $ 172,112,000
Cost of sales 118,349,000 110,610,000
Selling, general and administrative expenses 34,899,000 39,102,000
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Operating income 23,205,000 22,400,000
Interest expense (1,189,000) (2,248,000)
Interest income and other income 93,000 97,000
Gain on sale of product line -- 1,230,000(1)
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Income before income taxes and minority interests 22,109,000 21,479,000
Income tax expense 7,872,000 4,930,000(2)
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Income before minority interests 14,237,000 16,549,000
Minority interests in consolidated subsidiaries 2,015,000 1,323,000
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Net income $ 12,222,000 $ 15,226,000(3)
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Net income per share:
Basic $ .58 $ .73(3)
Diluted $ .55 $ .68(3)
Weighted average number of common shares outstanding:
Basic 21,124,401 20,912,531
Diluted 22,301,164 22,484,254
Pro forma net income per share:(4)
Basic $ .53 $ .66(5)
Diluted $ .50 $ .62(5)
Pro forma weighted average number of common shares outstanding:(4)
Basic 23,236,841 23,003,784
Diluted 24,531,280 24,732,679
Twelve Months Ended October 31,
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2003 2002
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Operating segment information: -
Net sales:
Flight Support Group $ 128,277,000 $ 120,097,000
Electronic Technologies Group 48,597,000 52,510,000
Intersegment sales (421,000) (495,000)
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$ 176,453,000 $ 172,112,000
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Operating income:
Flight Support Group $ 19,187,000 $ 15,846,000
Electronic Technologies Group 8,497,000 11,873,000
Other, primarily corporate (4,479,000) (5,319,000)
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$ 23,205,000 $ 22,400,000
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-more-
(1) Represents an increase in the gain on sale of a product line sold in fiscal
2000 of $1,230,000 ($765,000, or $.04 per basic share and $.03 per diluted
share, net of tax) resulting from the elimination of certain reserves upon
expiration of indemnification provisions of the sale.
(2) Includes the recovery of a portion of taxes paid in prior years resulting
from an income tax audit, which increased net income by $2,107,000, or $.10
per basic share and $.09 per diluted share, net of related expenses.
(3) Includes the increase in the gain on sale of a product line (see Note (1)
above) and the recovery of taxes (see Note (2) above), which increased net
income in the aggregate by $2,872,000, or $.14 per basic share and $.13 per
diluted share.
(4) Represents net income per share and the weighted average number of common
shares outstanding as adjusted retroactively for a 10% stock dividend to be
paid January 16, 2004.
(5) The gain on sale of the product line and recovery of taxes (see Note (3)
above) increased pro forma net income per share in the aggregate by $.12
per basic and diluted share.
-more-
HEICO CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended October 31,
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2003 2002
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Net sales $ 47,662,000 $ 45,512,000
Cost of sales 32,371,000 29,155,000
Selling, general and administrative expenses 8,647,000 10,676,000
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Operating income 6,644,000 5,681,000
Interest expense (252,000) (513,000)
Interest income and other income (expense) (13,000) (7,000)
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Income before income taxes and minority interests 6,379,000 5,161,000
Income tax expense (benefit) 2,267,000 (742,000)(1)
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Income before minority interests 4,112,000 5,903,000
Minority interests in consolidated subsidiaries 572,000 304,000
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Net income $ 3,540,000 $ 5,599,000(1)
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Net income per share:
Basic $ .17 $ .27(1)
Diluted $ .16 $ .25(1)
Weighted average number of common shares outstanding:
Basic 21,369,311 20,977,745
Diluted 22,633,932 22,211,427
Pro forma net income per share:(2)
Basic $ .15 $ .24(3)
Diluted $ .14 $ .23(3)
Pro forma weighted average number of common shares outstanding:(2)
Basic 23,506,242 23,075,520
Diluted 24,897,325 24,432,570
Three Months Ended October 31,
-------------------------------
2003 2002
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Operating segment information: -
Net sales:
Flight Support Group $ 33,273,000 $ 31,781,000
Electronic Technologies Group 14,495,000 13,776,000
Intersegment sales (106,000) (45,000)
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$ 47,662,000 $ 45,512,000
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Operating income:
Flight Support Group $ 4,851,000 $ 4,163,000
Electronic Technologies Group 3,123,000 3,084,000
Other, primarily corporate (1,330,000) (1,566,000)
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$ 6,644,000 $ 5,681,000
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(1) Includes the recovery of a portion of taxes paid in prior years resulting
from an income tax audit, which increased net income by $2,107,000, or $.10
per basic share and $.09 per diluted share, net of related expenses.
(2) Represents net income per share and the weighted average number of shares
outstanding as adjusted retroactively for a 10% stock dividend to be paid
January 16, 2004.
(3) The recovery of taxes (see Note (1) above) increased pro forma net income
per share by $.09 per basic and diluted share.
-more-
HEICO CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)
October 31, 2003 October 31, 2002 (1)
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Cash and cash equivalents $ 4,321,000 $ 4,539,000
Accounts receivable, net 28,820,000 28,407,000
Inventories 51,240,000 54,514,000
Prepaid expenses and other current assets 10,103,000 11,106,000
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Total current assets 94,484,000 98,566,000
Property, plant and equipment, net 35,537,000 40,059,000
Goodwill, net 188,700,000 187,677,000
Other assets 14,523,000 10,030,000
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Total assets $ 333,244,000 $ 336,332,000
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Current maturities of long-term debt $ 29,000 $ 6,756,000
Other current liabilities 22,657,000 22,575,000
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Total current liabilities 22,686,000 29,331,000
Long-term debt, net of current maturities 31,984,000 49,230,000
Other non-current liabilities 16,479,000 12,394,000
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Total liabilities 71,149,000 90,955,000
Minority interests in consolidated subsidiaries 40,577,000 38,313,000
Shareholders' equity 221,518,000 207,064,000
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Total liabilities and shareholders' equity $ 333,244,000 $ 336,332,000
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(1) Certain amounts in the prior year's financial statements have been
reclassified to conform to the current year presentation.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
Twelve Months Ended October 31,
----------------------------------------
2003 2002
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Cash flows from operating activities:
Net income $ 12,222,000 $ 15,226,000
Depreciation and amortization 5,081,000 4,532,000
Gain on sale of product line -- (1,230,000)
(Increase) decrease in accounts receivable (101,000) 3,421,000
Decrease (increase) in inventories 3,705,000 (2,996,000)
Increase (decrease) in income taxes payable 820,000 (564,000)
Other 6,152,000 4,896,000
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Net cash provided by operating activities 27,879,000 23,285,000
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Cash flows from investing activities:
Capital expenditures (3,771,000) (5,853,000)
Acquisitions and related costs, net of cash acquired (1,554,000) (4,515,000)
Other 118,000 (1,016,000)
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Net cash used in investing activities (5,207,000) (11,384,000)
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Cash flows from financing activities:
Payments on revolving credit facilities, net (24,000,000) (11,000,000)
Other 1,110,000 (695,000)
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Net cash flows used in financing activities (22,890,000) (11,695,000)
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Net increase in cash and cash equivalents (218,000) 206,000
Cash and cash equivalents at beginning of year 4,539,000 4,333,000
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Cash and cash equivalents at end of year $ 4,321,000 $4,539,000
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