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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, 2004
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 December 15, 2004, HEICO Corporation issued a press release announcing
its financial results for the fourth quarter and full year of fiscal 2004. 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 December 15, 2004, titled "HEICO
Reports Significantly Increased Fiscal 2004 Fourth Quarter
and Full Year Results."
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, 2004 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, 2004, titled "HEICO
Reports Significantly Increased Fiscal 2004 Fourth Quarter
and Full Year Results."
4
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
December 15, 2004
Thomas S. Irwin (954) 987-4000 ext. 7560
Victor H. Mendelson (305) 374-1745 ext. 7590
HEICO REPORTS SIGNIFICANTLY INCREASED
FISCAL 2004 FOURTH QUARTER AND FULL YEAR RESULTS
69% Increase in Full Year Net Income and Continued Strong Cash Flow;
41% Increase in Full Year Operating Income on 22% Increase in Net Sales;
Fourth Quarter Net Income up 46% on 28% Increase in Net Sales and
51% Increase in Operating Income
HOLLYWOOD, FL and MIAMI, FL -- HEICO CORPORATION (NYSE: HEI.A and HEI) today
reported that net income for the fiscal year ended October 31, 2004 increased
69% to $20,630,000, or 80 cents per diluted share, compared to net income of
$12,222,000, or 50 cents per diluted share, for the fiscal year ended October
31, 2003. For the fourth quarter of fiscal 2004, net income increased 46% to
$5,166,000, or 20 cents per diluted share, from $3,540,000, or 14 cents per
diluted share, in the fourth quarter of fiscal 2003.
(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.)
Operating income increased 41% to $32,619,000 for the fiscal year ended October
31, 2004 from $23,205,000 for the fiscal year ended October 31, 2003 and
increased 51% to $10,004,000 for the fourth quarter of fiscal 2004 from
$6,644,000 for the fourth quarter of fiscal 2003.
Net sales increased 22% to $215,744,000 in the fiscal year ended October 31,
2004 from $176,453,000 in the fiscal year ended October 31, 2003. Net sales for
the fourth quarter of fiscal 2004 were up 28% to $60,980,000 from $47,662,000 in
the fourth quarter of fiscal 2003.
Net income for the fiscal year ended October 31, 2004 includes $4.0 million in
proceeds (net of the minority interest's share of the income) received in the
third quarter from a key-person life insurance policy maintained by a subsidiary
of the Company's Flight Support Group. In the attached Condensed Consolidated
Statements of Operations, the life insurance proceeds are excluded from the
computation of operating income and reported after operating income.
- more -
Included in operating income for the fiscal year ended October 31, 2004 are
$850,000 of pre-tax restructuring expenses within certain subsidiaries of the
Flight Support Group that provide repair and overhaul services and $410,000 of
pre-tax legal and other costs related to litigation brought by a subsidiary of
the Company's Electronic Technologies Group. The net impact of the life
insurance proceeds reduced by the restructuring expenses and litigation-related
expenses increased net income by $3.3 million, or $.13 per diluted share, for
the fiscal year ended October 31, 2004.
Cash flow from operating activities for the fiscal year ended October 31, 2004
increased 58% to $44.1 million, including $5.0 million from the life insurance
proceeds, from $27.9 million in the fiscal year ended October 31, 2003 and
equaled 214% of the Company's net income. Capital expenditures totaled $4.8
million in the fiscal year ended October 31, 2004.
Laurans A. Mendelson, HEICO's Chairman, President & Chief Executive Officer,
remarked, "In reviewing our operating results for fiscal 2004, we are extremely
pleased with the progress we made. Both our Flight Support Group and our
Electronic Technologies Group reported significantly improved sales and
operating income. Our organic sales growth approximated 22% in the fourth
quarter of fiscal 2004 versus the fourth quarter of fiscal 2003 and our PMA
aftermarket sales reached an all time quarterly and yearly high.
Operating margins within our Flight Support Group continued to show
year-over-year improvement despite the restructuring expenses and operating
margins within our Electronic Technologies Group continued at a strong level.
The restructuring efforts within our Flight Support Group, which included
consolidation of two West Coast repair and overhaul facilities, are now
substantially complete.
We are also pleased to note that cash flow continued very strong. Cash flow from
operating activities in the fourth quarter of fiscal 2004 and full year totaled
$11.4 million and $44.1 million, respectively, allowing us to reduce borrowings
under our revolving credit facility by $18.0 million in the fourth quarter.
As we look forward to fiscal 2005 and beyond, we will continue to focus on new
products, further market penetration, additional acquisitions and maintaining
our financial strength. Based on current market conditions, we believe that the
Flight Support Group's operating margins can continue to show year over year
improvement while maintaining the strong operating margins in the Electronic
Technologies Group. Including the results of our recent acquisition,
Connectronics Corp., we are targeting fiscal 2005 net sales growth in the range
of 10% to 13% over fiscal 2004 and fiscal 2005 diluted earnings per share in the
range of $.83 - $.85. This earnings target compares very favorably with the $.80
per diluted share net income reported in fiscal 2004 since the fiscal 2004
results include the $.13 per diluted share net income impact of the life
insurance proceeds reduced by the restructuring and litigation-related expenses.
The Company does not give guidance on quarterly sales or earnings.
Fiscal 2005 cash flow from operating activities should approximate $40 million
and our capital expenditure budget for fiscal 2005 approximates $11 million.
We remain confident our focused business model will provide substantial
potential for sustainable growth."
- more -
For the fiscal year ended October 31, 2004, net sales of the Flight Support
Group increased 19% to $153,238,000 from $128,277,000 for the fiscal year ended
October 31, 2003. For the fourth quarter of fiscal 2004, net sales of the Flight
Support Group increased 24% to $41,185,000 from $33,273,000 for the fourth
quarter of fiscal 2003. The increase in net sales for the fiscal year and fourth
quarter ended October 31, 2004 versus the respective fiscal 2003 periods
resulted primarily from improved demand for the Company's replacement parts and
repair and overhaul services, which reflects continuing recovery in the
commercial airline industry, as well as increased sales of new products.
Substantially all of the sales growth of the Flight Support Group in fiscal year
2004 was organic growth.
Operating income of the Flight Support Group increased 26% to $24,251,000 for
the fiscal year ended October 31, 2004 from $19,187,000 for the fiscal year
ended October 31, 2003 and increased 42% to $6,907,000 for the fourth quarter of
fiscal 2004 from $4,851,000 for the fourth quarter of fiscal 2003. The increase
in operating income for the fiscal year and the fourth quarter ended October 31,
2004 reflects the higher net sales resulting from increased sales volumes and
higher margins resulting from improved operating efficiencies within the Flight
Support Group.
Net sales of the Electronic Technologies Group increased 29% to $62,648,000 for
the fiscal year ended October 31, 2004 from $48,597,000 for the fiscal year
ended October 31, 2003 and increased 37% to $19,823,000 for the fourth quarter
of fiscal 2004 from $14,495,000 for the fourth quarter of fiscal 2003. The
increase in net sales for the fiscal year and the fourth quarter ended October
31, 2004 reflects the acquisition of Sierra Microwave Technology in December
2003 and full-year organic sales growth of approximately 6%.
Operating income of the Electronic Technologies Group increased 80% to
$15,259,000 for the fiscal year ended October 31, 2004 from $8,497,000 for the
fiscal year ended October 31, 2003 and increased 81% to $5,644,000 for the
fourth quarter of fiscal 2004 from $3,123,000 for the fourth quarter of fiscal
2003. The increase in operating income for the fiscal year and the fourth
quarter ended October 31, 2004 reflects the acquisition of Sierra and the
organic sales growth.
The 41% increase in total operating income for the fiscal year ended October 31,
2004 and the 51% increase in total operating income for the fourth quarter over
the comparable periods of fiscal 2003 reflect the increased net sales and higher
margins within both the Flight Support Group and the Electronic Technologies
Group.
There are currently approximately 14.4 million shares of HEICO's Class A Common
Stock (HEI.A) outstanding and 9.9 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.
- more -
As previously announced, HEICO will hold a conference call on Thursday, December
16, 2004 at 8:30 a.m. Eastern Standard Time to discuss its fourth quarter
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 VM442019. 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 442019#.
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 assumptions. HEICO's actual
results could 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; and 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. 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.
- more -
HEICO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
TWELVE MONTHS ENDED OCTOBER 31,
-----------------------------------------
2004 2003
-------------- --------------
Net sales $ 215,744,000 $ 176,453,000
Cost of sales 139,932,000 118,349,000
Selling, general and administrative expenses 43,193,000 34,899,000
-------------- --------------
Operating income 32,619,000 /(1)/ 23,205,000
Interest expense (1,090,000) (1,189,000)
Interest and other income 26,000 93,000
Life insurance proceeds 5,000,000 /(2)/ --
-------------- --------------
Income before income taxes and minority interests 36,555,000 22,109,000
Income tax expense 10,948,000 7,872,000
-------------- --------------
Income before minority interests 25,607,000 14,237,000
Minority interests' share of income 4,977,000 2,015,000
-------------- --------------
Net income $ 20,630,000 /(1)//(2)/ $ 12,222,000
============== ==============
Net income per share:
Basic $ .86 /(1)//(2)/ $ .53
Diluted $ .80 /(1)//(2)/ $ .50
Weighted average number of common shares outstanding:
Basic 24,036,980 23,236,841
Diluted 25,754,598 24,531,280
TWELVE MONTHS ENDED OCTOBER 31,
--------------------------------------
2004 2003
-------------- --------------
Operating segment information: -
Net sales:
Flight Support Group $ 153,238,000 $ 128,277,000
Electronic Technologies Group 62,648,000 48,597,000
Intersegment sales (142,000) (421,000)
-------------- --------------
$ 215,744,000 $ 176,453,000
============== ==============
Operating income:
Flight Support Group $ 24,251,000 /(1)/ $ 19,187,000
Electronic Technologies Group 15,259,000 /(1)/ 8,497,000
Other, primarily corporate (6,891,000)/(3)/ (4,479,000)
-------------- --------------
$ 32,619,000 $ 23,205,000
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- more -
HEICO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
THREE MONTHS ENDED OCTOBER 31,
-------------------------------------
2004 2003
-------------- --------------
Net sales $ 60,980,000 $ 47,662,000
Cost of sales 39,034,000 32,371,000
Selling, general and administrative expenses 11,942,000 8,647,000
-------------- --------------
Operating income 10,004,000 6,644,000
Interest expense (208,000) (252,000)
Interest and other income (expense) (69,000) (13,000)
-------------- --------------
Income before income taxes and minority interests 9,727,000 6,379,000
Income tax expense 3,501,000 2,267,000
-------------- --------------
Income before minority interests 6,226,000 4,112,000
Minority interests' share of income 1,060,000 572,000
-------------- --------------
Net income $ 5,166,000 $ 3,540,000
============== ==============
Net income per share:
Basic $ .21 $ .15
Diluted $ .20 $ .14
Weighted average number of common shares outstanding:
Basic 24,188,977 23,506,242
Diluted 25,888,860 24,897,325
THREE MONTHS ENDED OCTOBER 31,
-------------------------------------
2004 2003
-------------- --------------
Operating segment information: -
Net sales:
Flight Support Group $ 41,185,000 $ 33,273,000
Electronic Technologies Group 19,823,000 14,495,000
Intersegment sales (28,000) (106,000)
-------------- --------------
$ 60,980,000 $ 47,662,000
============== ==============
Operating income:
Flight Support Group $ 6,907,000 $ 4,851,000
Electronic Technologies Group 5,644,000 3,123,000
Other, primarily corporate (2,547,000)/(3)/ (1,330,000)
-------------- --------------
$ 10,004,000 $ 6,644,000
============== ==============
- more -
HEICO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
OCTOBER 31, 2004 OCTOBER 31, 2003
---------------- ----------------
Cash and cash equivalents $ 214,000 $ 4,321,000
Accounts receivable, net 36,798,000 28,820,000
Inventories 48,020,000 51,240,000
Prepaid expenses and other current assets 8,880,000 10,103,000
---------------- ----------------
Total current assets 93,912,000 94,484,000
Property, plant and equipment, net 36,906,000 35,537,000
Goodwill 216,674,000 188,700,000
Other assets 16,763,000 14,523,000
---------------- ----------------
Total assets $ 364,255,000 $ 333,244,000
================ ================
Current maturities of long-term debt $ 58,000 $ 29,000
Other current liabilities 31,984,000 22,657,000
---------------- ----------------
Total current liabilities 32,042,000 22,686,000
Long-term debt, net of current maturities 18,071,000 31,984,000
Other non-current liabilities 22,096,000 16,479,000
---------------- ----------------
Total liabilities 72,209,000 71,149,000
Minority interests in consolidated subsidiaries 44,644,000 40,577,000
Shareholders' equity 247,402,000 221,518,000
---------------- ----------------
Total liabilities and shareholders' equity $ 364,255,000 $ 333,244,000
================ ================
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
TWELVE MONTHS ENDED OCTOBER 31,
--------------------------------------
2004 2003
---------------- ----------------
Operating Activities:
Net income $ 20,630,000 $ 12,222,000
Depreciation and amortization 6,779,000 6,720,000
Deferred income tax provision 4,125,000 3,520,000
Minority interests' share of income 4,977,000 2,015,000
Increase in accounts receivable (6,193,000) (101,000)
Decrease in inventories 3,576,000 3,705,000
Other 10,156,000 (202,000)
---------------- ----------------
Net cash provided by operating activities 44,050,000 27,879,000
---------------- ----------------
Investing Activities:
Capital expenditures (4,782,000) (3,771,000)
Acquisitions and related costs, net of cash acquired (28,099,000) (1,554,000)
Other (1,290,000) 118,000
---------------- ----------------
Net cash used in investing activities (34,171,000) (5,207,000)
---------------- ----------------
Financing Activities:
Payments on revolving credit facility, net (14,000,000) (24,000,000)
Cash dividends paid (1,201,000) (1,055,000)
Other 1,215,000 2,165,000
---------------- ----------------
Net cash used in financing activities (13,986,000) (22,890,000)
---------------- ----------------
Net decrease in cash and cash equivalents (4,107,000) (218,000)
Cash and cash equivalents at beginning of year 4,321,000 4,539,000
---------------- ----------------
Cash and cash equivalents at end of year $ 214,000 $ 4,321,000
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- more -
HEICO CORPORATION
FOOTNOTES TO CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
- ----------
(1) Fiscal 2004 operating income was reduced by an aggregate of $850,000 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 $500,000 recorded in selling, general and
administrative expenses. The restructuring expenses decreased fiscal 2004
net income by $427,000, or $.02 per basic and diluted share. Fiscal 2004
operating income was also reduced by an aggregate of $410,000 of legal and
other costs related to litigation brought by a subsidiary of the Electronic
Technologies Group. The litigation-related expenses decreased fiscal 2004
net income by $257,000, 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) Includes employee performance awards expense of $1.4 million in fiscal
2004, including $1.1 million recorded in the fourth quarter of fiscal 2004.