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, 1997
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 July 25, 1997 (the "Stock Purchase
Agreement"), the Registrant, through a wholly-owned subsidiary, acquired on
September 16, 1997, effective as of September 1, 1997, all of the outstanding
capital stock of Northwings Accessories Corporation ("Northwings"), from all of
the shareholders of Northwings. In consideration of this acquisition, the
Registrant paid $6,956,502 in cash and 154,907 shares of the Registrant's common
stock, having an aggregate fair value of $3,543,498, which purchase price was
determined through arms-length negotiations. This acquisition is being accounted
for using the purchase method of accounting.
Northwings is a Federal Aviation Administration authorized overhaul and repair
facility servicing aircraft engine components and airframe accessories.
In connection with this acquisition, the Registrant entered into an employment
agreement with Mr. Ramon Portela, a former shareholder of Northwings.
The source of the cash portion of the purchase price was the proceeds of the
sale, by the Registrant, of a $10 million note receivable from US Diagnostic
Inc., which the Registrant received in connection with the sale of its medical
diagnostic imaging business in July 1996. The Registrant sold the note to a
third party for the $10 million par value of the note, plus accrued interest.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of businesses acquired
The financial statements of Northwings Accessories Corporation 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,
1997 (page 4).
Unaudited pro forma consolidated condensed statement of operations for
the nine months ended July 31, 1997 (page 5).
Unaudited pro forma consolidated condensed statement of operations For
the year ended October 31, 1996 (page 6).
1
(c) Exhibits
2. Stock Purchase Agreement dated July 25, 1997, among HEICO
Corporation, N.A.C. Acquisition Corporation, Northwings
Accessories Corporation, Ramon Portela and Otto Neuman (without
schedules).
10.1 Registration Rights Agreement dated September 16, 1997.
10.2 Employment and Non-compete Agreement dated September 16, 1997, by
and between Northwings Accessories Corporation and Ramon Portela.
10.3 Assignment of Promissory Note by and between HEICO Corporation and
Forum Capital Markets, L.P.
10.4 Second Amendment to the 6 1/2% Convertible Note, dated September
10, 1997, by and among US Diagnostic Inc., and HEICO Corporation.
99.1 Financial statements of Northwings Accessories Corporation for the
six months ended June 30, 1997.
99.2 Financial statements of Northwings Accessories Corporation for the
year ended December 31, 1996.
2
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, 1997, and for
the nine months then ended and for the year ended October 31, 1996. 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, 1997, assumes that the Company's acquisition of all of the
outstanding capital stock of Northwings Accessories Corporation had
been consummated as of that date.
/Bullet/ The unaudited pro forma consolidated condensed statement of operations
for the nine months ended July 31, 1997, assumes that the Company's
acquisition of all of the outstanding capital stock of Northwings
Accessories Corporation had been consummated as of the beginning of the
nine-month period ended July 31, 1997.
/Bullet/ The unaudited pro forma consolidated condensed statement of operations
for the year ended October 31, 1996, assumes that the Company's
acquisition of all of the outstanding capital stock of Northwings
Accessories Corporation had been consummated as of the beginning of the
year ended October 31, 1996.
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.
3
HEICO CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
as of July 31, 1997
(unaudited)
Northwings
HEICO Accessories Pro Forma Pro Forma
Corporation (1) Corporation (2) Adjustments Combined
--------------- --------------- --------------- --------
ASSETS
Current assets:
Cash and cash equivalents $ 10,330,000 $ 598,000 $2,643,000 (3) $ 13,571,000
Accounts receivable, net 8,374,000 1,702,000 (100,000) (4) 9,976,000
Inventories 17,282,000 441,000 100,000 (4) 17,823,000
Prepaid expenses and other current assets 1,582,000 14,000 -- 1,596,000
Deferred income taxes 2,062,000 -- 39,000 (4) 2,101,000
----------- ---------- ---------------- ------------
Total current assets 39,630,000 2,755,000 2,682,000 45,067,000
Note receivable 10,000,000 -- (10,000,000) (5) --
Property, plant and equipment, net 7,734,000 399,000 -- 8,133,000
Intangible assets, net 5,156,000 -- 8,904,000 (4) 14,060,000
Unexpended bond proceeds 5,361,000 -- -- 5,361,000
Other assets 2,939,000 3,000 -- 2,942,000
----------- ---------- ---------------- ------------
Total assets $70,820,000 $3,157,000 $1,586,000 $ 75,563,000
=========== ========== ================ =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $342,000 $55,000 -- $ 397,000
Trade accounts payable 3,780,000 168,000 -- 3,948,000
Accrued expenses and other
current liabilities 5,622,000 165,000 $ 50,000 (4) 5,837,000
Income taxes payable 132,000 445,000 -- 577,000
Deferred income taxes payable -- 98,000 -- 98,000
----------- ---------- ---------------- -------------
Total current liabilities 9,876,000 931,000 50,000 10,857,000
----------- ---------- ---------------- -------------
Long-term debt 10,546,000 169,000 -- 10,715,000
----------- ---------- ---------------- --------------
Deferred income taxes 796,000 -- -- 796,000
----------- ---------- ---------------- --------------
Other non-current liabilities 2,290,000 -- 50,000 (4) 2,340,000
----------- ---------- ---------------- --------------
Commitments and contingencies:
Shareholders' equity:
Preferred stock, none issued -- -- -- --
Common stock 54,000 125,000 (124,000) (6) 55,000
Capital in excess of par value 31,929,000 -- 3,542,000 (6) 35,471,000
Retained earnings 18,271,000 1,932,000 (1,932,000) (6) 18,271,000
----------- ---------- ---------------- --------------
50,254,000 2,057,000 1,486,000 53,797,000
Less: Note receivable from employee
savings and investment plan (2,942,000) -- -- (2,942,000)
----------- ---------- ---------------- ---------------
Total shareholders' equity 47,312,000 2,057,000 1,486,000 50,855,000
----------- ---------- ---------------- ---------------
Total liabilities and
shareholders' equity $70,820,000 $3,157,000 $1,586,000 $75,563,000
=========== ========== ================ ===============
See accompanying notes to unaudited pro forma consolidated financial statements
4
HEICO CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
For the nine months ended July 31, 1997
(unaudited)
NORTHWINGS
HEICO ACCESSORIES PRO FORMA PRO FORMA
CORPORATION (1) CORPORATION (7) ADJUSTMENTS COMBINED
------------ ------------ ------------- ------------
Net sales $ 44,535,000 $ 6,410,000 -- $ 50,945,000
------------ ------------ ------------- ------------
Operating costs and expenses:
Cost of sales 30,389,000 3,321,000 * -- 33,710,000
Selling, general and administrative expenses 7,777,000 1,141,000 * $ 48,000 (8) 8,966,000
------------ ------------ ------------- ------------
Total operating costs and expenses 38,166,000 4,462,000 48,000 42,676,000
------------ ------------ ------------- ------------
Income from operations 6,369,000 1,948,000 (48,000) 8,269,000
Interest expense (319,000) (20,000) -- (339,000)
Interest and other income 1,300,000 28,000 (361,000)(9) 967,000
------------ ------------ ------------- ------------
Income before income taxes 7,350,000 1,956,000 (409,000) 8,897,000
Income tax expense (2,404,000) (749,000) 23,000 (10) (3,130,000)
------------ ------------ ------------- ------------
Net income $ 4,946,000 $ 1,207,000 ($ 386,000) $ 5,767,000
============ ============ ============= ============
Net income per share $ 0.78 -- -- $ 0.89
============ ============ ============= ============
Weighted average number of common and
common equivalent shares outstanding 6,343,216 -- 154,907 (11) 6,498,123
============ ============ ============ ============
See accompanying notes to unaudited pro forma consolidated financial statements
<FN>
* Amounts have been reclassified to conform to classifications within HEICO
Corporation's Consolidated Condensed Statement of Operations
</FN>
5
HEICO CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
For the year ended October 31, 1996
(unaudited)
NORTHWINGS
HEICO ACCESSORIES PRO FORMA PRO FORMA
CORPORATION (12) CORPORATION (13) ADJUSTMENTS COMBINED
----------- ----------- ----------- -----------
Net sales $34,565,000 $4,707,000 -- $39,272,000
----------- ---------- --------- -----------
Operating costs and expenses:
Cost of sales 22,396,000 2,798,000 * -- 25,194,000
Selling, general and administrative expenses 7,657,000 1,137,000 * $ 37,000 (8) 8,831,000
----------- ---------- --------- -----------
Total operating costs and expenses 30,053,000 3,935,000 37,000 34,025,000
----------- ---------- --------- -----------
Income from operations 4,512,000 772,000 (37,000) 5,247,000
Interest expense (185,000) (26,000) -- (211,000)
Interest and other income 1,058,000 26,000 (400,000)(9) 684,000
----------- ---------- --------- -----------
Income from continuing operations
before taxes 5,385,000 772,000 (437,000) 5,720,000
Income tax expense (1,720,000) (288,000) (13,000)(10) (2,021,000)
----------- ---------- --------- -----------
Net income from continuing operations 3,665,000 484,000 (450,000) 3,699,000
Net income from discontinued operations 963,000 -- -- 963,000
Gain on sale of health care operations 5,264,000 -- -- 5,264,000
----------- ---------- --------- -----------
Net income $9,892,000 $ 484,000 ($450,000) $9,926,000
=========== ========== ========= =============
Net income per share:
From continuing operations $0.62 -- -- $0.61
From discontinued operations 0.17 -- -- 0.16
From gain on sale of health care operations 0.89 -- -- 0.87
----------- ---------- --------- -------------
Net income per share $1.68 -- -- $1.64
=========== ========== ========= =============
Weighted average number of common and
common equivalent shares outstanding 5,903,151 -- 154,907 (11) 6,058,058
=========== ========== ========= =============
See accompanying notes to unaudited pro forma consolidated financial statements
<FN>
* Amounts have been reclassified to conform to classifications within HEICO
Corporation's Consolidated Condensed Statement of Operations
</FN>
6
HEICO CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(1) As reported in the Company's Form 10-Q as of and for the nine-month period
ended July 31, 1997.
(2) Represents Northwings Accessories Corporation's balance sheet as of June
30, 1997.
(3) Represents the $2.6 million increase in cash resulting from the cash
proceeds from the sale of the $10 million note receivable (see note 5), net
of the cash portion of the purchase price, including acquisition costs.
(4) Represents the decrease in accounts receivable and increases in inventory,
deferred income taxes, current liabilities and non-current liabilities,
which are to record allowances and reserves utilizing the Company's
methodology, as well as 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 $6,957,000
HEICO Corporation common stock issued (154,907 shares) 3,543,000
Estimated acquisition costs 400,000
-----------
Total purchase costs $10,900,000
===========
Allocation of purchase costs:
Cash and cash equivalents $598,000
Accounts receivable 1,602,000
Inventories 541,000
Other current assets 14,000
Deferred income taxes 39,000
Property, plant & equipment 399,000
Other assets 3,000
Liabilities assumed (1,200,000)
-----------
Subtotal 1,996,000
Excess of costs over the fair value of
net assets acquired 8,904,000
----------
Total allocation of purchase costs $10,900,000
===========
(5) Represents the sale of the $10 million note receivable from US Diagnostic
Inc., to a third party, the proceeds of which were partially used to fund
the acquisition.
(6) Represents the issuance of 154,907 additional HEICO Corporation common
shares as a portion of the purchase price, net of the elimination of
Northwings Accessories Corporation's common stock and retained earnings.
(7) Represents Northwings Accessories Corporation's statement of operations for
the nine months ended June 30, 1997, which includes the three months ended
December, 1996.
7
(8) Represents the amortization of the excess of costs over the fair value of
net assets acquired over 20 years, net of the elimination of non-recurring
shareholder expenses as follows:
NINE MONTHS
ENDED YEAR ENDED
JULY 31, 1997 OCTOBER 31, 1996
------------- ----------------
Amortization of excess of costs
over the fair value of net assets
acquired $334,000 $445,000
Elimination of non-recurring
shareholder expenses (286,000) (408,000)
------------- ---------------
$ 48,000 $ 37,000
============= ===============
(9) Represents the elimination of investment income from the $7.4 million cash
used for the acquisition.
(10) Represents the incremental Federal and state income taxes associated with
the increase in pre-tax income from the acquisition.
(11) Represents increase in common shares outstanding as a result of shares
issued as part of the acquisition cost.
(12) As reported in the Company's Form 10-K for the fiscal year ended October
31, 1996.
(13) Represents Northwings Accessories Corporation's statement of operations for
the year ended December 31, 1996.
8
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 thereunto duly authorized.
HEICO CORPORATION
Date: September 30, 1997 BY: /s/ THOMAS S. IRWIN
---------------------------------
Thomas S. Irwin
Executive Vice President
Chief Financial Officer
9
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
(c) Exhibits
2. Stock Purchase Agreement dated July 25, 1997, among HEICO
Corporation, N.A.C. Acquisition Corporation, Northwings Accessories
Corporation, Ramon Portela and Otto Neuman (without schedules).
10.1 Registration Rights Agreement dated September 16, 1997.
10.2 Employment and Non-compete Agreement dated September 16, 1997, by
and between Northwings Accessories Corporation and Ramon Portela.
10.3 Assignment of Promissory Note by and betweem HEICO Corporation and
Forum Capital Markets, L.P.
10.4 Second Amendment to the 6 1/2% Convertible Note, dated September
10, 1997, by and among US Diagnostic Inc., and HEICO Corporation.
99.1 Financial statements of Northwings Accessories Corporation for the
six months ended June 30, 1997.
99.2 Financial statements of Northwings Accessories Corporation for the
year ended December 31, 1996.