SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Act of 1934
Date of Report (Date of earliest event reported): September 16, 1996
HEICO CORPORATION
(Exact name of registrant as specified in its charter)
FLORIDA 1-4604 65-0341002
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
3000 TAFT STREET, HOLLYWOOD, FLORIDA 33021
(Address of principal offices)
Registrant's telephone number, including area code: 954/987-6101
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Pursuant to a Stock Purchase Agreement, dated as of September 16, 1996 (the
"Stock Purchase Agreement"), the Registrant acquired effective September 1,
1996, through a wholly-owned subsidiary, all of the outstanding capital stock of
Trilectron Industries, Inc. ("Trilectron"), from Sigmund Borax, Trilectron's
sole shareholder. In consideration of this acquisition, the Registrant paid
$6,200,000 in cash to the seller and an aggregate of $800,000 to certain key
executives of Trilectron, which purchase price was determined through
arms-length negotiations.
Trilectron is a manufacturer of ground power, air conditioning and air start
equipment for civil and military aircraft and a designer and manufacturer of
certain military electronics.
In connection with this acquisition, the Registrant guaranteed $2,264,000 of
Trilectron's bank indebtedness. The Registrant also entered into employment and
non-competition agreements with two of Trilectron's key executives.
The source of the cash purchase price was internally generated operating funds
of the Registrant and the proceeds of the recent sale by the Registrant of its
medical diagnostic imaging business.
ITEM 7. FINANCIAL STATEMENT, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of businesses acquired
The financial statements of Trilectron Industries, Inc. required by
Rule 3-05(b) of Regulation S-X are included as Exhibits 99.1 and 99.2.
(b) Pro forma financial information
The following unaudited pro forma consolidated condensed
financial information is furnished in accordance with Article
11 of Regulation S-X:
Introductory note to unaudited pro forma consolidated
condensed financial statements (page 3).
Unaudited pro forma consolidated condensed balance sheet as of
July 31, 1996 (page 4).
Unaudited pro forma consolidated condensed statement of
operations for the nine months ended July 31, 1996
(page 5).
Unaudited pro forma consolidated condensed statement of
operations for the year ended October 31, 1995 (page 6).
(c) Exhibits
2. Stock Purchase Agreement dated as of September 16, 1996 by and
between HEICO Corporation and Sigmund Borax (without
Schedules).
10.1 Employment and Non-compete Agreements dated as of September
16, 1996 by and between HEICO Corporation and Sigmund Borax.
10.2 Employment and Non-compete Agreements dated as of September
16, 1996 by and between HEICO Corporation and Charles Kott.
99.1 Financial statements of Trilectron Industries, Inc. for the
nine months ended July 31, 1996.
99.2 Financial statements of Trilectron Industries for the years
ended December 31, 1995 and 1994.
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HEICO CORPORATION AND SUBSIDIARIES
INTRODUCTORY NOTE TO UNAUDITED
PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma consolidated condensed balance sheet and
statements of operations utilize the historical financial condition and results
of operations of HEICO Corporation and subsidiaries as of July 31, 1996 and for
the nine months then ended and for the year ended October 31, 1995. The
unaudited pro forma consolidated condensed financial statements have been
prepared on the basis summarized below:
/BULLET/ The unaudited pro forma consolidated condensed balance sheet
as of July 31, 1996 assumes that the Company's acquisition of
all of the outstanding capital stock of Trilectron Industries,
Inc. had been consummated as of that date.
/BULLET/ The unaudited pro forma consolidated condensed statement of
operations for the nine months ended July 31, 1996 assumes
that the Company's acquisition of all of the outstanding
capital stock of Trilectron Industries, Inc. had been
consummated as of the beginning of the nine-month period ended
July 31, 1996.
/BULLET/ The unaudited pro forma consolidated condensed statement of
operations for the year ended October 31, 1995 assumes that
the Company's acquisition of all of the outstanding capital
stock of Trilectron Industries, Inc. had been consummated as
of the beginning of the year ended October 31, 1995.
The unaudited pro forma consolidated condensed statements of operations are not
necessarily indicative of actual operating results had the acquisition been made
at the beginning of the periods presented or of future results of operations.
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HEICO CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
as of July 31, 1996
(unaudited)
HEICO Trilectron Pro Forma Pro Forma
CORPORATION(1) INDUSTRIES,INC.(2) ADJUSTMENTS COMBINED
-------------- ------------------ ----------- ---------
ASSETS
Current assets:
Cash and cash equivalents $21,788,000 $75,000 ($7,400,000)(6) $14,463,000
Accounts receivable, net 5,126,000 2,746,000 (38,000)(7) 7,834,000
Inventories 6,583,000 7,090,000 (200,000)(7) 13,473,000
Prepaid expenses and othe
current assets 962,000 25,000 987,000
Deferred income taxes 1,621,000 --- 1,621,000
----------- ------------ ---------- -----------
Total current assets 36,080,000 9,936,000 (7,638,000) 38,378,000
Note receivable 10,000,000 --- 10,000,000
Property, plant and equipment, net 4,745,000 250,000 150,000(7) 5,145,000
Intangible assets, net 1,839,000 29,000 2,582,000(7) 4,450,000
Other assets 1,148,000 3,000 1,151,000
----------- ------------ ---------- -----------
Total assets $53,812,000 $10,218,000 ($4,906,000) $59,124,000
=========== ============ ========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $493,000 $2,007,000 $2,500,000
Trade accounts payable 1,723,000 2,335,000 4,058,000
Accrued expenses and other current
liabilities 4,550,000 852,000 ($52,000)(8) 5,350,000
Income taxes payable 2,194,000 --- 2,194,000
----------- ----------- ---------- -----------
Total current liabilities 8,960,000 5,194,000 (52,000) 14,102,000
Long-term debt 2,645,000 170,000 2,815,000
Deferred income taxes 1,062,000 --- 1,062,000
Other non-current liabilities 1,274,000 --- 1,274,000
----------- ----------- ---------- -----------
Total liabilities 13,941,000 5,364,000 (52,000) 19,253,000
----------- ----------- ---------- -----------
Commitments and contingencies
Shareholders' equity:
Preferred stock, none issued
Common stock 48,000 5,000 (5,000)(9) 48,000
Capital in excess of par value 20,524,000 8,000 (8,000)(9) 20,524,000
Retained earnings 22,638,000 4,841,000 (4,841,000)(8)(9) 22,638,000
----------- ----------- ----------- -----------
43,210,000 4,854,000 (4,854,000) 43,210,000
Less: Note receivable from employee
savings and investment plan (3,339,000) --- --- (3,339,000)
----------- ----------- ----------- -----------
Total shareholders' equity 39,871,000 4,854,000 (4,854,000) 39,871,000
----------- ----------- ----------- -----------
Total liabilities and
shareholders' equity $53,812,000 $10,218,000 ($4,906,000) $59,124,000
=========== =========== =========== ===========
See accompanying notes to unaudited pro forma consolidated condensed
financial statements.
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HEICO CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
For the nine months ended July 31, 1996
(unaudited)
HEICO Trilectron Pro Forma Pro Forma
CORPORATION(1) INDUSTRIES,INC.(3) ADJUSTMENTS COMBINED
----------- --------------- ----------- -----------
Net sales $22,979,000 $12,008,000 $34,987,000
----------- ----------- -----------
Operating costs and expenses:
Cost of sales 15,044,000 8,941,000 $16,000(10) 24,001,000
Selling, general and administrative
expenses 5,067,000 1,886,000 97,000(10) 7,050,000
----------- ----------- ----------- -----------
Total operating costs and expenses 20,111,000 10,827,000 113,000 31,051,000
----------- ----------- ----------- -----------
Income from operations 2,868,000 1,181,000 (113,000) 3,936,000
Interest expense (129,000) (92,000) (221,000)
Interest and other income 617,000 0 (275,000)(11) 342,000
----------- ----------- ----------- -----------
Income from continuing operations
before income taxes 3,356,000 1,089,000 (388,000) 4,057,000
Income tax expense 1,078,000 --- 218,000(12) 1,296,000
----------- ----------- ---------- -----------
Net income from continuing operations 2,278,000 1,089,000 (606,000) 2,761,000
Discontinued operations:
Net income from discontinued health
care operations, net of applicable
income taxes 963,000 --- --- 963,000
Gain on sale of health care operations,
net of applicable income taxes 5,264,000 --- --- 5,264,000
----------- ----------- ---------- -----------
Net income $8,505,000 $1,089,000 ($606,000) $8,988,000
=========== =========== ========== ===========
Net income per share:
From continuing operations $0.43 $0.52
From discontinued health care operations 0.18 0.18
From gain on sale of health care
operations 0.99 0.99
----------- -----------
Net income per share $1.60 $1.69
=========== ===========
Weighted average number of common and
common equivalent shares outstanding 5,315,859 5,315,859
=========== ===========
See accompanying notes to unaudited pro forma consolidated condensed
financial statements
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HEICO CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
For the year ended October 31, 1995
(unaudited)
HEICO Trilectron Pro Forma Pro Forma
CORPORATION(4) INDUSTRIES, INC.(5) ADJUSTMENTS COMBINED
----------- --------------- ----------- ------------
Net sales $25,613,000 $13,931,000 $39,544,000
----------- ----------- ------------
Operating costs and expenses:
Cost of sales 17,497,000 10,895,000 $21,000(10) 28,413,000
Selling, general and administrative
expenses 6,405,000 2,079,000 129,000(10) 8,613,000
----------- ----------- ----------- ------------
Total operating costs and expenses 23,902,000 12,974,000 150,000 37,026,000
----------- ----------- ----------- ------------
Income from operations 1,711,000 957,000 (150,000) 2,518,000
Interest expense (169,000) (82,000) (251,000)
Interest and other income 666,000 21,000 (355,000)(11) 332,000
----------- ----------- ----------- ------------
Income from continuing operations
before income taxes 2,208,000 896,000 (505,000) 2,599,000
Income tax expense 771,000 --- 143,000(12) 914,000
----------- ----------- ----------- ------------
Net income from continuing operations 1,437,000 896,000 (648,000) 1,685,000
Net income from discontinued
health care operations 1,258,000 --- --- 1,258,000
----------- ----------- ----------- ------------
Net income $2,695,000 $896,000 ($648,000) $2,943,000
=========== =========== =========== ============
Net income per share:
From continuing operations $0.30 $0.35
From discontinued health care operations 0.26 0.26
----------- ------------
Net income per share $0.56 $0.61
=========== ============
Weighted average number of common
and common equivalent shares
outstanding (13) 4,820,336 4,820,336
=========== ============
See accompanying notes to unaudited pro forma consolidated condensed
financial statements
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HEICO CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. As disclosed in the Company's Report on Form 10-Q as of and for the nine
months ended July 31, 1996.
2. Represents Trilectron Industries, Inc.'s unaudited balance sheet as of
July 31, 1996.
3. Represents Trilectron Industries, Inc.'s unaudited statement of operations
for the nine months ended July 31, 1996 that includes the two months ended
December 31, 1995. The two months ended December 31, 1995 have also been
included in the pro forma year ended October 31, 1995 due to the Company's
year end of October 31 and Trilectron's Industries, Inc.'s year end of
December 31. The effect of the difference in these reporting periods is
not reflected in the unaudited Pro Forma Consolidated Condensed Statements
of Operations and the Company believes this difference is not significant.
4. Represents the Company's consolidated statement of operations from the
report on Form 10-K for the year ended October 31, 1995, as adjusted to
reflect the operations of MediTek Health Corporation, which was sold in
July 1996, as a discontinued operation.
5. Represents Trilectron Industries, Inc.'s audited statement of operations
for the year ended December 31, 1995.
6. The $7.4 million decrease in cash resulting from the cash payments related
to the acquisition and estimated acquisition costs.
7. The decrease in accounts receivable and inventories, which are to record
allowances utilizing the Company's methodology, as well as the increase in
property, plant and equipment to reflect their fair market values and the
excess of cost over the fair value of net assets acquired from the
acquisition. The origins of the purchase cost and its allocation to assets
and liabilities is as follows:
Purchase costs:
Cash paid to seller............................... $6,200,000
Cash bonus obligations paid at closing............ 800,000
Estimated acquisition costs....................... 400,000
----------
Total purchase costs........................... $7,400,000
==========
Allocations of purchase costs:
Accounts receivable............................... $2,708,000
Inventories....................................... 6,890,000
Other current assets.............................. 100,000
Property, plant and equipment..................... 400,000
Other assets...................................... 3,000
Liabilities....................................... (5,312,000)
----------
Subtotal....................................... 4,789,000
Excess of costs over the fair value
of net assets acquired......................... 2,611,000
----------
Total allocation of purchase costs................ $7,400,000
==========
8. Represents an adjustment to accrued dividends payable to seller pursuant
to the terms of the Stock Purchase Agreement.
9. The elimination of Trilectron's common stock, capital in excess of par
value and retained earnings.
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10. The increase in depreciation and amortization expense to properly
reflect the allocation of the purchase costs as required per purchase
accounting. Property, plant and equipment is to be depreciated over 7
years under the straight-line method. Excess of costs over the fair
value of net assets acquired is to be amortized over 20 years.
11. The elimination of investment income from the $7.4 million cash used for
the acquisition.
12. The incremental Federal and state income taxes associated with the
increase in pre-tax income from the acquisition.
13. Weighted average number of common and common equivalent shares
outstanding have been adjusted from the originally reported amount to
reflect a three-for-two stock split paid in April 1996 and a 10% stock
dividend paid in July 1996.
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SIGNATURES
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 thereunto duly authorized.
HEICO CORPORATION
Date: SEPTEMBER 30, 1996 BY: /S/ THOMAS S. IRWIN
---------------------- --------------------
Thomas S. Irwin
Executive Vice President,
Chief Financial Officer
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