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Heico Annual Report (Amendment), Year Ended Oct 31, 2000

Filing Date
Filed August 13, 2001
Period End
October 31, 2000
Securities
HEIHEI-A
In the record · 2016–202610-K1010-Q338-K83

HEI filed 10 annual reports (10-K), 33 quarterly reports (10-Q) and 83 current reports (8-K) between 2016 and 2026.

  1. FY2018 annual report10-K · Dec ’18Dec ’18
  2. Leadership change8-K · Mar ’21Mar ’21
  3. Leadership change8-K · Sep ’25Sep ’25

01—Abstract

Summary

Summary of the 10-K/A filed August 13, 2001. Cited figures are marked; the original filing is the authoritative source.

HEICO Corporation (HEI) filed this Amendment No. 1 to its Form 10-K for the fiscal year ended October 31, 2000, solely to expand certain disclosures requested by the Securities and Exchange Commission; the filing states that previously reported financial results have not changed.

HEICO describes itself as believed to be the world's largest manufacturer of FAA-approved jet engine replacement parts, other than the OEMs and their subcontractors, and operates two segments: the Flight Support Group (59% of fiscal 2000 revenues) and the Electronic Technologies Group (41%). Net sales rose 44% to $202.9 milliona in fiscal 2000 from $141.3 million, with net income of $26.3 million, or $1.32 per diluted share, including a pretax gain of $17.3 million on the September 2000 sale of Trilectron Industries. Excluding the Trilectron gain and a $1.3 million receivable write-off, income from continuing operations was $17.8 million, or $.90 per diluted share.

Gross margin declined to 37.4% from 40.7%, mainly due to lower FSG margins, reflecting lower Lufthansa research and development reimbursements, softer aviation aftermarket demand and acquired-business margins. Interest expense rose to $5.6 millionb as acquisitions were financed with the credit facility, and total debt fell to $40.0 million at year end from $73.5 million after the Trilectron proceeds were applied to repay borrowings.

Cash flow from operations was $12.1 millionc, and the company stated that operating cash flow and available borrowings should fund requirements for the foreseeable future. The filing also details ongoing items for investors: Lufthansa Technik holds a 20% interest in the FSG, the Travelers insurance litigation is being challenged on appeal with the company stating no significant adverse effect is expected, and the JT8D engine parts exposure is noted, with factory-new JT8D parts at about 19% of fiscal 2000 net sales, down from 31% in fiscal 1999.

02—Key points

Key Highlights

  1. Fiscal 2000 net sales rose 44% to $202.9 million; FSG sales were $119.3 million and ETG sales were $83.6 million.
  2. Net income was $26.3 million, or $1.32 per diluted share, including a $17.3 million pretax gain on the sale of Trilectron Industries for $52.5 million in cash plus a $12.0 million note and $4.5 million purchase price adjustment.
  3. Excluding the Trilectron gain and a $1.3 million receivable write-off, income from continuing operations was $17.8 million, or $.90 per diluted share.
  4. Gross margin fell to 37.4% from 40.7%, primarily from lower FSG margins, lower Lufthansa R&D reimbursements, and softer aftermarket demand.
  5. Total debt was reduced to $40.0 million from $73.5 million, with the Trilectron proceeds used to pay down the Credit Facility; the company holds a $30 million interest rate swap at a fixed 6.59%.
  6. Cash flow from operations was $12.1 million, and the company states that operating cash flow and available borrowings should fund its cash requirements for the foreseeable future.
  7. Factory-new JT8D replacement parts were about 19% of fiscal 2000 net sales, down from 31% in fiscal 1999, and the company reports no material adverse effect from government regulation.

03—Questions

Frequently Asked Questions

  1. Why did reported earnings rise so sharply in fiscal 2000?

    Net income of $26.3 million included a $17.3 million pretax gain on the September 2000 sale of Trilectron Industries. Income from continuing operations excluding that gain and a $1.3 million receivable write-off was $17.8 million, or $.90 per diluted share, versus $16.3 million, or $.84, in fiscal 1999.

  2. What drove the decline in gross margin?

    Gross margin fell to 37.4% from 40.7%, primarily due to lower FSG gross margins from lower-margin acquired businesses, higher new product R&D expense as Lufthansa reimbursements declined, softer demand for higher-margin replacement parts, and less favorable pricing. The ETG margin improved, partially offsetting this.

  3. How is the balance sheet positioned after the Trilectron sale?

    Total debt fell to $40.0 million at October 31, 2000 from $73.5 million a year earlier, as the sale proceeds were used to pay down the Credit Facility. Shareholders' equity rose to $169.8 million from $139.3 million, and total assets were $281.7 million.

  4. What is the status of the Travelers and UTC litigation?

    The UTC litigation was settled in March 2000, with HEICO receiving a permanent license to make and sell the disputed parts. The Travelers lawsuit, which sought over $15 million in legal fees, was dismissed for lack of jurisdiction and Travelers is challenging the dismissal. Management believes the outcome will not have a significant adverse effect on the consolidated financial statements.

  5. What is the significance of the Lufthansa alliance?

    Lufthansa Technik owns a 20% minority interest in HEICO Aerospace (the FSG), and its investments have totaled approximately $50 million, including R&D funding. Lufthansa has the right to select 50% of the parts for which HEICO will seek PMAs, subject to technical and economic feasibility, and it is entitled to 20% of any FSG dividends.

04—Continue

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