How did HEICO's revenue and profitability change in fiscal 1997?

Net sales rose to $63,674,000 from $34,565,000, and net income from continuing operations rose to $7,019,000, or $.73 per share, from $3,665,000, or $.41 per share. Income from operations increased to $9,114,000 from $4,512,000. Growth reflected higher Flight Support Group sales, the Northwings acquisition, and twelve months of Trilectron sales compared with two months in fiscal 1996.

What is the Lufthansa Technik strategic alliance?

On October 30, 1997, Lufthansa Technik AG invested approximately $26 million in HEICO Aerospace: $10 million paid at closing for a 20% interest, and approximately $16 million to be paid over three years under a research and development cooperation agreement. The funds will partially finance accelerated development of additional FAA-approved jet engine replacement parts. The companies also agreed to cooperate on technical services and marketing support worldwide.

What is the status of the litigation with United Technologies?

UTC sued HEICO Aerospace and Jet Avion in 1989 over jet engine parts and coatings. In August 1997, the court granted summary judgment dismissing UTC's trade secret and unfair competition claims. UTC's motion for reconsideration was denied in October 1997, and UTC may appeal. The remaining claims are UTC's patent infringement claim on a patent that expired in 1992 and HEICO's counterclaims against UTC. The filing states the outcome is not certain and that no provision for gain or loss has been recorded.

How much of HEICO's business depends on JT8D engines?

Sales of products and services related to JT8D engines accounted for approximately 51% of net sales in fiscal 1997. The company also states that it supplies over 50% of the market for certain JT8D engine components for which it holds an FAA PMA, with Pratt & Whitney controlling the balance.

What major acquisitions did HEICO complete in the last two years?

In September 1997, HEICO acquired Northwings Accessories Corporation for approximately $7.0 million in cash and 232,360 shares of common stock. In September 1996, it acquired Trilectron Industries for $7.0 million in cash and the assumption of $2.3 million of debt. Both acquisitions were accounted for under the purchase method.

HEI/HEI-A 10-K FY1997 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed January 27, 1998. Cited figures are marked; the original filing is the authoritative source.

HEICO Corporation (AMEX: HEI) reported fiscal 1997 (year ended October 31, 1997) net sales of $63,674,000,^a up from $34,565,000 in fiscal 1996, driven by the Flight Support Group and a full year of Trilectron, the ground support equipment business acquired in September 1996.

Net income from continuing operations was $7,019,000,^b or $.73 per share, compared with $3,665,000, or $.41 per share, in fiscal 1996. Fiscal 1996 net income of $9,892,000 also included a $5,264,000 gain on the sale of the MediTek health care subsidiary. Income from operations rose to $9,114,000 from $4,512,000.

The most significant event of the year was the October 30, 1997 strategic alliance with Lufthansa Technik AG, under which Lufthansa invested approximately $26 million^c in HEICO Aerospace: $10 million paid at closing for a 20% minority interest, and approximately $16 million to be paid over three years under a research and development cooperation agreement. The company also acquired Northwings Accessories Corporation in September 1997 for approximately $7.0 million in cash and 232,360 shares of common stock. Total assets grew to $88,639,000 from $61,836,000, and shareholders' equity rose to $59,446,000.

Cash and cash equivalents increased to $24,199,000^d. The filing also discloses pending litigation with United Technologies Corporation, in which the company has obtained summary judgment dismissing UTC's trade secret and unfair competition claims, leaving a patent infringement claim on an expired patent and the company's counterclaims.

Management and counsel state that no provision for gain or loss has been recorded. Long-term debt increased to $10,458,000, and the company reported a backlog of $36 million as of October 31, 1997, up from $25 million a year earlier.

02—Key points

Key Highlights

Net sales of $63,674,000 in fiscal 1997, compared with $34,565,000 in fiscal 1996, with the Flight Support Group at about 65% of revenues and the Ground Support Group at about 35%.
Net income from continuing operations of $7,019,000, or $.73 per share, versus $3,665,000, or $.41 per share, in fiscal 1996; fiscal 1996 total net income of $9,892,000 included the MediTek sale gain of $5,264,000.
Lufthansa Technik AG invested approximately $26 million in HEICO Aerospace on October 30, 1997, including $10 million at closing for a 20% minority interest and approximately $16 million to be paid over three years for research and development.
Acquired Northwings Accessories Corporation in September 1997 for approximately $7.0 million in cash and 232,360 shares of common stock, valued at approximately $3.5 million.
Backlog of unshipped orders of $36 million at October 31, 1997, compared with $25 million a year earlier, with substantially all expected to be delivered in fiscal 1998.
Cash and cash equivalents rose to $24,199,000 from $11,025,000, and shareholders' equity increased to $59,446,000 from $41,488,000.
Pending UTC litigation: summary judgment dismissed UTC's trade secret and unfair competition claims in August 1997, leaving a patent infringement claim and HEICO's counterclaims; no provision for gain or loss has been recorded.

03—Questions

Frequently Asked Questions

How did HEICO's revenue and profitability change in fiscal 1997?
Net sales rose to $63,674,000 from $34,565,000, and net income from continuing operations rose to $7,019,000, or $.73 per share, from $3,665,000, or $.41 per share. Income from operations increased to $9,114,000 from $4,512,000. Growth reflected higher Flight Support Group sales, the Northwings acquisition, and twelve months of Trilectron sales compared with two months in fiscal 1996.
What is the Lufthansa Technik strategic alliance?
On October 30, 1997, Lufthansa Technik AG invested approximately $26 million in HEICO Aerospace: $10 million paid at closing for a 20% interest, and approximately $16 million to be paid over three years under a research and development cooperation agreement. The funds will partially finance accelerated development of additional FAA-approved jet engine replacement parts. The companies also agreed to cooperate on technical services and marketing support worldwide.
What is the status of the litigation with United Technologies?
UTC sued HEICO Aerospace and Jet Avion in 1989 over jet engine parts and coatings. In August 1997, the court granted summary judgment dismissing UTC's trade secret and unfair competition claims. UTC's motion for reconsideration was denied in October 1997, and UTC may appeal. The remaining claims are UTC's patent infringement claim on a patent that expired in 1992 and HEICO's counterclaims against UTC. The filing states the outcome is not certain and that no provision for gain or loss has been recorded.
How much of HEICO's business depends on JT8D engines?
Sales of products and services related to JT8D engines accounted for approximately 51% of net sales in fiscal 1997. The company also states that it supplies over 50% of the market for certain JT8D engine components for which it holds an FAA PMA, with Pratt & Whitney controlling the balance.
What major acquisitions did HEICO complete in the last two years?
In September 1997, HEICO acquired Northwings Accessories Corporation for approximately $7.0 million in cash and 232,360 shares of common stock. In September 1996, it acquired Trilectron Industries for $7.0 million in cash and the assumption of $2.3 million of debt. Both acquisitions were accounted for under the purchase method.

04—Continue

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