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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): May 24, 2004
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 May 24, 2004, HEICO Corporation issued a press release announcing its
financial results for the second quarter of fiscal 2004. 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: May 24, 2004 By: /s/ Thomas S. Irwin
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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 May 24, 2004, titled "HEICO Reports
Significantly Improved 2nd Qtr Results."
4
Exhibit 99.1
FOR IMMEDIATE RELEASE
May 24, 2004
Thomas S. Irwin (954) 987-4000 ext. 7560
Victor H. Mendelson (305) 374-1745 ext. 7590
HEICO REPORTS SIGNIFICANTLY
IMPROVED 2ND QTR RESULTS
58% Increase In Net Income & 66% Increase in Operating Income
On 27% Increase in Net Sales; Continued Strong Cash Flow
HOLLYWOOD, FL and MIAMI, FL -- HEICO CORPORATION (NYSE: HEI.A and HEI) today
reported that net income for the second quarter of 2004 increased 58% to
$4,108,000, or 16 cents per diluted share, compared to net income of $2,608,000,
or 11 cents per diluted share, for the second quarter of fiscal 2003.
Net sales for the second quarter of fiscal 2004 were up 27% to $52,793,000 from
$41,591,000 in the second quarter of fiscal 2003.
For the first six months of fiscal 2004, net income increased 35% to $7,349,000,
or 29 cents per diluted share, from $5,442,000, or 22 cents per diluted share,
in the first six months of fiscal 2003. Net sales increased 19% to $98,944,000
in the first six months of fiscal 2004 from $83,379,000 in the first six months
of fiscal 2003.
Cash flow from operating activities for the first half of fiscal 2004 increased
24% to $16.7 million from $13.5 million in the first six months of fiscal 2003
and equaled 228% of the Company's net income. Capital expenditures totaled $2.2
million in the first half of fiscal 2004.
All per share and share information has been adjusted retroactively to give
effect to a 10% stock dividend paid in January 2004.
Operating income increased 66% to $8,172,000 for the second quarter of fiscal
2004 from $4,931,000 for the second quarter of fiscal 2003 and increased 41% to
$14,745,000 for the first six months of fiscal 2004 from $10,460,000 for the
first six months of fiscal 2003. The increase in operating income for the second
quarter and the first six months of fiscal 2004 reflects increased sales and
higher margins within each of the Company's two operating segments, the Flight
Support Group (FSG) and the Electronic Technologies Group (ETG).
- more -
For the second quarter of fiscal 2004, sales of the FSG increased 24% to
$37,710,000 from $30,376,000 for the second quarter of fiscal 2003. For the
first six months of fiscal 2004, FSG sales increased 16% to $71,967,000 from
$62,262,000 for the first six months of fiscal 2003. The increase in revenues
for the second quarter and first six months of fiscal 2004 resulted primarily
from improved demand for the Company's replacement parts and repair and overhaul
services, which reflects continuing recovery in aftermarket demand from the
commercial airline industry, as well as increased sales of new products.
Operating income of the FSG increased 44% to $6,012,000 for the second quarter
of fiscal 2004 from $4,162,000 for the second quarter of fiscal 2003 and
increased 19% to $11,338,000 for the first six months of fiscal 2004 from
$9,539,000 for the first six months of fiscal 2003. The increase in operating
income for the second quarter and first six months of fiscal 2004 reflects the
higher sales and improved margins within the FSG.
Sales of the ETG increased 34% to $15,143,000 for the second quarter of fiscal
2004 from $11,288,000 for the second quarter of fiscal 2003 and increased 27% to
$27,082,000 for the first six months of fiscal 2004 from $21,288,000 for the
first six months of fiscal 2003. The increase in sales for the second quarter
and the first six months of fiscal 2004 is primarily due to the acquisition of
Sierra Microwave Technology in December 2003.
Operating income of the ETG increased 94% to $3,703,000 for the second quarter
of fiscal 2004 from $1,904,000 for the second quarter of fiscal 2003 and
increased 132% to $6,187,000 for the first six months of fiscal 2004 from
$2,672,000 for the first six months of fiscal 2003. The increase in operating
income for the second quarter and the first six months of fiscal 2004 reflects
the acquisition of Sierra and sales of higher margin products.
Laurans A. Mendelson, HEICO's Chairman, President & Chief Executive Officer,
remarked, "We are pleased to report both increased sales and improved margins in
each of our business segments, reflecting both organic growth and growth through
acquiring profitable, well-managed businesses. We also believe that our ongoing
new product development efforts and strategic relationships with some of the
world's major airlines within the Flight Support Group contributed to our
improved operating results. With our recently announced strategic relationship
with Japan Airlines, we now have six unique partner positions with major
international airlines.
As we continue to add new products and further penetrate our markets, we expect
the Flight Support Group's operating margins to continue to improve during the
balance of fiscal 2004, while maintaining our strong operating margins in our
Electronic Technologies Group.
We are also pleased to note continued strong cash flow. Cash flow from operating
activities in the second quarter of fiscal 2004 totaled $9 million, allowing us
to reduce borrowings under our revolving credit facility by $10 million in the
quarter.
As we look forward to the second half of fiscal 2004, we expect further
improvements in our sales and operating results. Based on current market
conditions, we continue to target fiscal 2004 sales and earnings growth of at
least 15% and 30%, respectively, over fiscal 2003. The Company does not give
guidance on quarterly sales and earnings."
- more -
The Company 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. 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.
As previously announced, HEICO will hold a conference call on May 25, 2004 at
8:30 a.m. Eastern Daylight Time to discuss its second 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 VM221973. 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 221973#.
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; 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 statement, whether
as a result of new information, future events or otherwise.
-more-
HEICO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
THREE MONTHS ENDED APRIL 30,
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2004 2003
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Net sales $ 52,793,000 $ 41,591,000
Cost of sales 34,079,000 27,690,000
Selling, general and administrative expenses 10,542,000 8,970,000
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Operating income 8,172,000 4,931,000
Interest expense (301,000) (285,000)
Interest and other income 4,000 8,000
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Income before income taxes and minority interests 7,875,000 4,654,000
Income tax expense 2,701,000 1,641,000
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Income before minority interests 5,174,000 3,013,000
Minority interests' share of income 1,066,000 405,000
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Net income $ 4,108,000 $ 2,608,000
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Net income per share:/(1)/
Basic $ .17 $ .11
Diluted $ .16 $ .11
Weighted average number of common shares outstanding:/(1)/
Basic 24,048,105 23,120,139
Diluted 25,741,078 24,293,619
THREE MONTHS ENDED APRIL 30,
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2004 2003
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Operating segment information: -
Net sales:
Flight Support Group $ 37,710,000 $ 30,376,000
Electronic Technologies Group 15,143,000 11,288,000
Intersegment sales (60,000) (73,000)
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$ 52,793,000 $ 41,591,000
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Operating income:
Flight Support Group $ 6,012,000 $ 4,162,000
Electronic Technologies Group 3,703,000 1,904,000
Other, primarily corporate (1,543,000) (1,135,000)
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$ 8,172,000 $ 4,931,000
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/(1)/ All per share and share information has been adjusted retroactively to
give effect to a 10% stock dividend paid in January 2004.
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HEICO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
SIX MONTHS ENDED APRIL 30,
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2004 2003
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Net sales $ 98,944,000 $ 83,379,000
Cost of sales 64,694,000 55,702,000
Selling, general and administrative expenses 19,505,000 17,217,000
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Operating income 14,745,000 10,460,000
Interest expense (632,000) (630,000)
Interest and other income 2,000 89,000
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Income before income taxes and minority interests 14,115,000 9,919,000
Income tax expense 4,856,000 3,498,000
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Income before minority interests 9,259,000 6,421,000
Minority interests' share of income 1,910,000 979,000
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Net income $ 7,349,000 $ 5,442,000
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Net income per share:/(1)/
Basic $ .31 $ .24
Diluted $ .29 $ .22
Weighted average number of common shares outstanding:/(1)/
Basic 23,896,675 23,103,219
Diluted 25,687,039 24,382,028
SIX MONTHS ENDED APRIL 30,
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2004 2003
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Operating segment information: -
Net sales:
Flight Support Group $ 71,967,000 $ 62,262,000
Electronic Technologies Group 27,082,000 21,288,000
Intersegment sales (105,000) (171,000)
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$ 98,944,000 $ 83,379,000
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Operating income:
Flight Support Group $ 11,338,000 $ 9,539,000
Electronic Technologies Group 6,187,000 2,672,000
Other, primarily corporate (2,780,000) (1,751,000)
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$ 14,745,000 $ 10,460,000
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/(1)/ All per share and share information has been adjusted retroactively to
give effect to a 10% stock dividend paid in January 2004.
- more -
HEICO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
APRIL 30, 2004 OCTOBER 31, 2003
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Cash and cash equivalents $ 3,445,000 $ 4,321,000
Accounts receivable, net 31,803,000 28,820,000
Inventories 49,367,000 51,240,000
Prepaid expenses and other current assets 10,310,000 10,103,000
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Total current assets 94,925,000 94,484,000
Property, plant and equipment, net 36,649,000 35,537,000
Goodwill 216,317,000 188,700,000
Other assets 15,507,000 14,523,000
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Total assets $ 363,398,000 $ 333,244,000
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Current maturities of long-term debt $ 57,000 $ 29,000
Other current liabilities 23,954,000 22,657,000
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Total current liabilities 24,011,000 22,686,000
Long-term debt, net of current maturities 44,100,000 31,984,000
Other non-current liabilities 18,709,000 16,479,000
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Total liabilities 86,820,000 71,149,000
Minority interests in consolidated subsidiaries 42,129,000 40,577,000
Shareholders' equity 234,449,000 221,518,000
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Total liabilities and shareholders' equity $ 363,398,000 $ 333,244,000
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
SIX MONTHS ENDED APRIL 30,
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2004 2003
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Cash flows from operating activities:
Net income $ 7,349,000 $ 5,442,000
Depreciation and amortization 3,415,000 3,272,000
Deferred income tax provision 1,716,000 1,922,000
Minority interests' share of income 1,910,000 979,000
(Increase) decrease in accounts receivable (1,198,000) 3,245,000
Decrease in inventories 2,418,000 172,000
Other 1,135,000 (1,532,000)
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Net cash provided by operating activities 16,745,000 13,500,000
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Cash flows from investing activities:
Capital expenditures (2,220,000) (2,343,000)
Acquisitions and related costs, net of cash acquired (27,581,000) (83,000)
Other (740,000) 468,000
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Net cash used in investing activities (30,541,000) (1,958,000)
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Cash flows from financing activities:
Borrowings (payments) on revolving credit facilities, net 12,000,000 (8,000,000)
Other 920,000 (419,000)
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Net cash provided by (used in) financing activities 12,920,000 (8,419,000)
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Net (decrease) increase in cash and cash equivalents (876,000) 3,123,000
Cash and cash equivalents at beginning of year 4,321,000 4,539,000
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Cash and cash equivalents at end of period $ 3,445,000 $ 7,662,000
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