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Heico Annual Report, Year Ended Oct 31, 2002

Filing Date
Filed January 22, 2003
Period End
October 31, 2002
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.

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01—Abstract

Summary

Summary of the 10-K filed January 22, 2003. Cited figures are marked; the original filing is the authoritative source.

HEICO Corporation's fiscal 2002 Form 10-K (year ended October 31, 2002) reports net sales of $172.1 milliona, up slightly from $171.3 million in fiscal 2001, while operating income fell to $22.4 million from $31.0 million and net income declined to $15.2 million, or $.68 per diluted share, from $15.8 million, or $.71 per diluted share.

The Flight Support Group (FSG), which makes FAA-approved jet engine replacement parts and provides repair and overhaul services, accounted for $120.1 millionb of sales, down from $132.5 million, with operating income falling to $15.8 million from $27.5 million, reflecting weakness in commercial aviation after the September 11, 2001 attacks. The Electronic Technologies Group (ETG) grew sales to $52.5 million from $38.8 million, largely through acquisitions, and raised operating income to $11.9 million from $7.8 million. Net income was helped by a $2.1 million recovery of taxes paid in prior years, which lowered the effective tax rate to 23.0% from 38.1%.

Balance sheet and cash flow data show total assets of $336.3 millionc, total debt of $56.0 million, shareholders' equity of $207.1 million, and cash flow from operations of $23.3 million. Management stated that it expects sales and earnings to improve in fiscal 2003 relative to fiscal 2002 levels, while acknowledging that near-term uncertainty in commercial aviation makes short-term forecasting difficult. The company's $120 million revolving Credit Facility expires in July 2003, and management plans to renew or replace it.

02—Key points

Key Highlights

  1. Net sales of $172.1 million in fiscal 2002, up slightly from $171.3 million in fiscal 2001.
  2. Operating income declined to $22.4 million from $31.0 million, with operating margin falling to 13.0% from 18.1%.
  3. Net income of $15.2 million, or $.68 per diluted share, versus $15.8 million, or $.71 per diluted share, in fiscal 2001; results include a $2.1 million tax recovery.
  4. The Flight Support Group's sales fell to $120.1 million from $132.5 million and its operating income fell to $15.8 million from $27.5 million, attributed to the post-September 11, 2001 decline in commercial aerospace demand.
  5. The Electronic Technologies Group's sales rose 35% to $52.5 million, and its operating income rose to $11.9 million from $7.8 million, driven mainly by acquisitions.
  6. Cash flow from operations was $23.3 million, and total debt was reduced to $56.0 million from $67.0 million.
  7. Backlog totaled $36.3 million at October 31, 2002, down from $47.0 million a year earlier.

03—Questions

Frequently Asked Questions

  1. How did HEICO's revenue and profitability change in fiscal 2002?

    Net sales were essentially flat at $172.1 million versus $171.3 million, but operating income dropped to $22.4 million from $31.0 million and net income fell to $15.2 million from $15.8 million. The decline reflects lower sales and gross margins in the Flight Support Group, partly offset by higher Electronic Technologies Group results and a tax recovery.

  2. What caused the weakness in the Flight Support Group?

    The filing attributes lower FSG sales primarily to reduced commercial aftermarket parts and services sales following the September 11, 2001 terrorist attacks and continued weakness in commercial aviation. Sales of JT8D PMA replacement parts declined directly, and new product research and development expenses also increased by $1.9 million over fiscal 2001.

  3. Did the tax recovery affect the results?

    Yes. The recovery of taxes paid in prior years, resulting from a settlement with the IRS, increased net income by $2.1 million, or $.09 per diluted share, and reduced the effective tax rate to 23.0% from 38.1% in fiscal 2001.

  4. What is management's outlook for fiscal 2003?

    Management believes that sales and earnings will improve in fiscal 2003 relative to fiscal 2002 levels, though it notes that uncertainties in the commercial aviation industry and the domestic economy make short-term sales and earnings difficult to predict.

  5. How is HEICO's balance sheet and financing position?

    Total assets were $336.3 million and shareholders' equity was $207.1 million at October 31, 2002. Total debt declined to $56.0 million, and the company's $120 million revolving Credit Facility, which expires in July 2003, is planned to be renewed or replaced.

04—Continue

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