As filed with the Securities and Exchange Commission on January 16, 1996
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (fee required)
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1995 OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (no fee required)
For the transition period from ________ to ________
Commission file number 1-4604
HEICO CORPORATION
(Exact name of registrant as specified in its charter)
FLORIDA 65-0341002
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3000 TAFT STREET, HOLLYWOOD, FLORIDA 33021
(Address of principal executive offices) (Zip Code)
(954) 987-6101
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b)of the Act:
COMMON STOCK,
PAR VALUE $.01 PER SHARE AMERICAN STOCK EXCHANGE
(Title of Each Class) (Name of Each Exchange On Which Registered)
Securities registered pursuant to Section 12(g) of the Act:
PREFERRED STOCK PURCHASE RIGHTS
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by nonaffiliates of the
registrant as of December 31, 1995 was $26,866,000 based on the closing price of
$19.00 on December 31, 1995 as reported by the American Stock Exchange and after
subtracting from the number of shares outstanding on that date the number of
shares held by affiliates of the Registrant.
The number of shares outstanding of each of the registrant's classes of common
stock, as of the latest practicable date:
COMMON STOCK, $.01 PAR VALUE 2,550,340 SHARES
(Class) (Outstanding at January 5, 1996 before 10% stock
dividend payable February 8, 1996)
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the proxy statement for the 1996 Annual Meeting of Shareholders are
incorporated by reference into Part III. See Item 14(a)(3) on page 49 for a
listing of exhibits.
<PAGE>
PART I
ITEM 1. BUSINESS
HEICO Corporation (the Company) is principally engaged in two business segments:
the manufacture and sale of aerospace products and services through HEICO
Aerospace Corporation (HEICO Aerospace), a wholly-owned subsidiary of the
Company and the acquisition, development, and operation of high technology
medical diagnostic imaging facilities through MediTek Health Corporation
(MediTek), also a wholly-owned subsidiary of the Company. References in this
Annual Report on Form 10-K to the "Company" include each of the Company's
subsidiaries unless otherwise required by the context.
Financial information concerning the Company's operations in its two
principal industry segments for the three years ended October 31, 1995 appears
in Note 12 to the Consolidated Financial Statements. For a description of the
general development of these businesses, see the narrative below.
The Company was organized in 1993 creating a new holding company known
as HEICO Corporation and renaming the former holding company (formerly known as
HEICO Corporation, organized in 1957) as HEICO Aerospace Corporation. The
reorganization, which was completed in 1993, did not result in any change in the
business of the Company, its consolidated assets or liabilities or the relative
interests of its shareholders.
AEROSPACE PRODUCTS AND SERVICES
PRODUCTS AND DISTRIBUTION
The Company's Aerospace Products and Services business is operated through HEICO
Aerospace and is composed principally of Jet Avion Corporation (Jet Avion), LPI
Industries Corporation (LPI), and Aircraft Technology, Inc. (Aircraft
Technology), all of which are wholly-owned subsidiaries.
JET AVION CORPORATION - Jet Avion, a Florida corporation, is engaged in the
development and sale of certain replacement parts for commercial jet aircraft
engines, principally combustion chambers, combustion chamber parts and other
engine components for Pratt & Whitney JT8D engines, which are used in Boeing 727
and 737 and McDonnell Douglas DC-9 and MD-80 commercial aircraft. In 1991, Jet
Avion commenced an expanded program to obtain additional Federal Aviation
Administration ("FAA") approval to manufacture and sell other replacement parts.
In the last three years, Jet Avion has obtained and is continuing to obtain FAA
approvals on additional replacement parts for: JT8D engines; JT9D engines, which
are used in Boeing 747 and 767, Airbus A300 and A310 and McDonnell Douglas DC-10
aircraft; PW2000 engines, which are utilized in Boeing 757 aircraft; and PW4000
engines which are utilized in Boeing 747 and 767, Airbus A300, A310 and A330 and
McDonnell Douglas MD-11 aircraft.
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Jet Avion sells its jet engine replacement parts principally to
domestic and foreign commercial air carriers and aircraft repair (airmotive)
companies through Jet Avion's sales force.
Jet Avion holds Parts Manufacturing Approvals (PMA) from the FAA for
the JT8D and JT3D combustion chambers and certain other component parts of the
JT3D, JT8D, JT9D, PW2000, and PW4000 engines. With PMA certification, Jet Avion
may manufacture and sell approved replacement parts as FAA certified. This
approval is obtained by submitting to the FAA a data package concerning
replacement parts intended to be manufactured by the Company, and, if the FAA
finds such parts qualify as original part replacements, PMA certification is
then granted. For information regarding pending litigation relating to certain
of Jet Avion's sales, see Item 3 to Part I of this Form 10-K.
LPI INDUSTRIES CORPORATION - LPI, a Florida corporation, is engaged in the
production of a variety of component parts for the aerospace and defense
industry. LPI manufactures and sells these component parts principally to
original equipment manufacturers as a subcontractor and to the U.S. Government
as a replacement parts supplier through LPI's sales force. Orders are obtained
through competitive bidding and generally have contract terms from one to three
years. Currently, orders extending beyond one year are not significant.
Effective in fiscal 1996, LPI became responsible for a substantial
portion of the manufacturing of Jet Avion's products in addition to the LPI
products. This consolidation of manufacturing has allowed the Company to remain
a high quality and cost effective competitor as aerospace and defense industry
customers face prospects of long-term reduction in defense spending and delays
in new airframe deliveries, as well as increased foreign sourcing of jet engine
component production.
AIRCRAFT TECHNOLOGY, INC. - Aircraft Technology is engaged primarily
in the overhaul and repair of certain of JT8D and JT3D jet engine
components and markets its services principally through Jet Avion's
sales force.
ATI Heat Treat, a subsidiary of Aircraft Technology, provides
commercial heat treating and brazing services to various manufacturing companies
including the other HEICO Aerospace subsidiaries.
PRINCIPAL PRODUCTS AND CUSTOMERS
JT8D engine products and services accounted for approximately 51% of the
Company's total consolidated sales in fiscal 1995, 40% in fiscal 1994 and 50% in
fiscal 1993. No one aerospace customer accounted for sales of 10% or more of
consolidated sales during any of the last three fiscal years. Military sales
were less than 1% of the Company's consolidated sales in fiscal 1995.
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<PAGE>
COMPETITION
With respect to sales of jet engine replacement parts, the Company competes
mainly with Pratt & Whitney, a division of United Technologies Corporation. The
competition is based on price, service and ability to meet delivery commitments
inasmuch as the Company's parts are interchangeable with the parts produced by
Pratt & Whitney. The Company believes that it supplies a substantial portion of
the market for certain JT8D engine parts for which it holds a PMA from the FAA,
with Pratt & Whitney controlling the balance.
With respect to other aerospace products and services, the Company
competes with a large number of machining, fabrication and repair companies,
some of which have greater financial resources than the Company. Competition is
based mainly on price, quality, service and technical capability.
BACKLOG
The backlog of unshipped orders for aerospace products and services as of
October 31, 1995 was $23 million as compared to $14.3 million as of October 31,
1994 and $10.8 million as of October 31, 1993. The backlog includes amounts
based on estimated quantities provided by customers pursuant to certain
contracts aggregating approximately $14 million at October 31, 1995.
Substantially all of this backlog of orders as of October 31, 1995 are expected
to be delivered during fiscal 1996. For additional information regarding the
Company's backlog, see Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Backlogs."
RESEARCH, DEVELOPMENT AND PRODUCT IMPROVEMENT ACTIVITIES
The Company has developed expanded engineering capabilities to manufacture and
distribute additional jet engine parts as discussed above. In fiscal 1995, 1994
and 1993, the cost of such activities amounted to approximately $1,800,000,
$1,200,000 and $1,000,000, respectively.
PATENTS, TRADEMARKS, ETC.
As discussed under "Products and distribution" above, the Company's PMAs from
the FAA are material to the Company's aerospace business. The Company does not
have any patents and believes that the loss of any of its trademarks or licenses
would not materially adversely affect the Company.
RAW MATERIALS
The principal materials used in the manufacture of combustion chambers and
combustion chamber parts are high temperature alloy sheet metal and castings.
The alloy sheet metal and castings, as well as other raw materials, parts and
components used by the Company's aerospace operations, are generally available
from a number of sources and in sufficient quantities to meet current
requirements subject to normal lead times.
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<PAGE>
HEALTHCARE SERVICES
SERVICES RENDERED
MediTek, through its wholly-owned subsidiaries and investment partnerships in
which such subsidiaries serve as the managing partner, is engaged in the
acquisition, development and operation of high technology medical diagnostic
imaging facilities which specialize in magnetic resonance imaging (MRI),
computed axial tomography (CT), ultrasound, and other state-of-the-art
diagnostic technologies. MediTek offers its operation and management services to
hospitals, physician groups and other health care providers. As of the end of
fiscal 1995, MediTek operated a total of twelve high technology medical
diagnostic facilities (centers). In addition, during fiscal 1995, MediTek
entered into agreements to open its thirteenth and fourteenth centers in fiscal
1996, one in affiliation with a hospital in Newark, New Jersey and another
center in the Birmingham, Alabama area.
The health care industry has expanded rapidly throughout the United
States. This expansion is fueled by the demand for increased levels of patient
care and an increased reliance on high-technology diagnostic and treatment
equipment to support the industry's emphasis on wellness and prevention. Medical
diagnostic imaging systems facilitate the diagnosis of disease and disorders at
an early stage, often minimizing the amount and cost of care needed to stabilize
or cure the patient and frequently obviating the need for invasive diagnostic
procedures, such as exploratory surgery. Diagnostic imaging systems are based on
the ability of energy waves to generate images of the body which can be
displayed either on film or on a video monitor. Imaging systems have evolved
from conventional x-ray to the advanced technologies of MRI, CT, nuclear
medicine and ultrasound.
New regulatory and cost containment controls introduced by the
government, insurance carriers and managed care organizations have also caused
health care providers to pursue new approaches to delivering quality services to
meet patient and physician demands while remaining both competitive and
profitable.
MediTek offers the advantage of minimizing the health care provider's
exposure to risk by matching the provider's needs with the appropriate
technology and at the same time offering a full range of services in connection
with purchasing equipment, constructing or remodeling facilities, patient
billing and collection, training technical and support staff and overall
marketing and management services.
MEDICAL REIMBURSEMENT PROGRAMS
Most patients rely upon reimbursement by third parties (such as insurance
carriers, health maintenance and similar organizations, and government health
care programs) to pay for medical services. Because of the high cost of such
procedures, the amount and availability of reimbursement for procedures
performed by MRI, CT and other high technology health care systems impact the
use and revenues of such systems. The Company believes that, due to the
continuing national concern with rising health care costs, the amount of
reimbursement for
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<PAGE>
healthcare services, including imaging services, is likely to be reduced. In
addition, efforts to control health care costs could result in increased
limitations on the use of expensive medical technology, including imaging
services. Any significant reduction in reimbursements for imaging services or in
utilization of such services could adversely affect MediTek's business.
Private insurance carriers generally reimburse service providers only
the "reasonable and customary" amounts for medically necessary services.
Reimbursement to MediTek by health maintenance or similar organizations is
generally pursuant to a contractual arrangement involving a substantial price
discount from standard prices. In most cases, the volume of work under such
arrangements compensates for the discounted prices.
Medically necessary services provided to participants in the federal
Medicare program are reimbursed only (i) if such services have been approved for
reimbursement by the Health Care Financing Administration ("HCFA"), and (ii) in
the amount authorized by Medicare intermediaries (generally insurance companies)
on a geographical basis. The medical services currently provided by MediTek have
been approved for reimbursement by HCFA. There are significant differences in
the Medicare reimbursement rates for services in different locations. Medicare
reimbursement rates are generally, but not always, lower than the reimbursement
rates of third-party insurance carriers.
ACQUISITIONS AND NEW CENTER DEVELOPMENT
During fiscal 1995, MediTek opened two new centers: one in affiliation with a
hospital in St. Petersburg, Florida, the Palms of Pasadena MRI Center and the
second as a free standing center in the Atlanta, Georgia area, the Pinnacle
Imaging Center. In addition, MediTek contracted to open new centers in Newark,
New Jersey, the United MRI Center and in the Birmingham, Alabama area, the
Greystone Imaging Center.
MediTek plans to take advantage of opportunities for growth within the
high technology medical diagnostic services market by continuing to expand its
operations to areas within the United States principally through acquiring and
opening new centers in underserved markets.
See Management's Discussion and Analysis of Financial Condition and
Results of Operations and Note 2 to the Consolidated Financial Statements for a
description of the Company's acquisitions during the past three years.
IMAGING CENTERS, OWNERSHIP AND MODALITIES
The following table sets forth certain information concerning the centers
owned/operated by MediTek as of October 31, 1995. The centers that are not owned
by MediTek, either directly or through a wholly-owned subsidiary, are owned by
partnerships of which MediTek is a general partner. MediTek provides management
services to all of these centers and, accordingly, generally receives a
management services fee ranging from 5% to 16% of center revenues.
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<PAGE>
<TABLE>
<CAPTION>
ACQUIRED/
LOCATION NAME OPENED OWNERSHIP MODALITY(1)
- ----------- --------------- ------------ --------- -----------
<S> <C> <C> <C> <C>
Atlanta, GA Premier Imaging October 1993 100% MR
No. 1 (Premier North)
Atlanta, GA Premier Imaging March 1994 100% MR
No. 2 (Premier South)
Duluth, GA Pinnacle Imaging August 1995 51% MR
Center
Chatham, NJ Chatham MRI, Inc. October 1992 100% MR,CT
Clearwater, FL Sun Coast Imaging March 1993 100% MR
Center
Tarpon Springs, Helen Ellis MRI March 1994 65% MR
FL Center
Orlando, FL Imaging Center of September 1991 50% MR,CT,U,
Orlando M,X
Palm Beach Palm Beach Gardens February 1992 100% MR,CT,NM,
Gardens, FL Imaging Center M,X,U (2)
St. Petersburg, Palms of Pasadena March 1995 100% MR
FL MRI Center
Tampa, FL Imaging Center of July 1993 100% MR,CT,U,
Tampa NM,X
Wellington, FL MRI of Wellington December 1991 49.5% MR
Winter Park, FL Winter Park MRI September 1991 42% MR
Newark, NJ United MRI Center (3) 100% MR
Shelby County, AL Greystone Imaging (4) 100% MR,CT,U,
Center M,X
</TABLE>
- ---------------------------
(1)Modalities are magnetic resonance imaging (MR), computed axial tomography
(CT), ultrasound (U), nuclear medicine (NM), mammography (M) and general
x-ray (X).
(2)MR was added at the center in January 1996.
(3)Center is under construction and is expected to open in May 1996.
(4)Center is under construction and is expected to open in April 1996.
MediTek obtains its medical equipment and supplies from various
manufacturers and is not dependent on any one supplier. The volume of equipment
and supply acquisitions allows MediTek to negotiate what it believes are
competitive terms. Acquisition costs for new equipment can vary significantly
depending upon the model and peripheral equipment acquired. Currently,
acquisition costs typically range between $400,000 and $2 million for MRI
equipment, between $125,000 and $1 million for CT equipment and between $30,000
and $250,000 for ultrasound equipment. MediTek, its wholly-owned centers and its
managed partnerships either lease their equipment and facilities under operating
or capital leases or utilize debt financing for their acquisitions.
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<PAGE>
COMPETITION
The health care industry in general, and the market for diagnostic imaging
services in particular, are highly competitive. At present, diagnostic imaging
is performed in hospitals, private physician's offices, clinics operated by
group practices of physicians and independent imaging centers. Competition
focuses on physician referrals at the local market level. Principal competitors
of the Company are hospitals and physician-affiliated imaging centers, some of
which have greater resources than the Company. In competing for customers
requiring the opening of a new diagnostic imaging center, such as hospitals or
clinics, MediTek competes with numerous equipment manufacturers, leasing
companies, physician groups and other providers of medical imaging services.
Many of these competitors also have substantially greater resources than the
Company.
In marketing its services to hospitals, physicians, managed care
organizations and other health care providers, MediTek emphasizes its commitment
to quality and the dependability of its service.
GOVERNMENT REGULATION
The health care industry is highly regulated. MediTek currently operates in
Florida, Georgia and New Jersey and is subject to various federal and state laws
and regulations concerning such matters as licensing of facilities and
personnel, physician referrals, construction of new health care facilities and
the acquisition of major medical equipment by health care facilities. The
Company believes that MediTek's operations currently comply with all applicable
laws and regulations and will continue to monitor federal and state activities
in enforcing and enacting legislation and regulations which affect its business
to determine what action, if any, may be necessary to comply with pending
legislation or new interpretations of existing laws. However, there can be no
assurance that subsequent laws, changes in present laws or interpretations of
laws will not adversely affect the Company's high technology medical services
business.
The establishment, marketing and operation of MediTek's operations are
subject to state laws prohibiting the practice of medicine by non-physicians and
the rebate or division of fees between physicians and non-physicians. Such laws
may also limit the manner in which patients may be solicited. Any determination
that MediTek is engaged in the unauthorized practice of medicine could have a
materially adverse effect by prohibiting MediTek's subsidiaries or partnerships
from continuing their current procedures for conducting business. Management
believes that its operations do not involve the practice of medicine because all
professional medical services relating to its operations, such as the reading of
the scans and related diagnosis, are separately provided by licensed physicians.
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<PAGE>
All of MediTek's subsidiaries and partnerships are subject to the
federal Medicare and Medicaid anti-kickback laws which prohibit the offer,
payment, solicitation or receipt of any form of remuneration in return for
referring Medicare or Medicaid patients or purchasing, leasing, ordering or
arranging for any item or service that is covered by Medicare or Medicaid. The
law provides severe penalties for engaging in prohibited acts, including
criminal sanctions and exclusion from the Medicare and Medicaid programs. The
exclusion from participation in the Medicare-Medicaid programs would materially
adversely affect the Company's high technology medical services business.
In July 1991, the Department of Health and Human Services (HHS) issued
"safe harbor" regulations that set forth provisions which, if met, will assure a
partnership that distributions of profits to its partners who refer patients to
or provide services for the partnership will be deemed not to violate the
federal Medicare-Medicaid fraud and abuse statutes. The Company believes that
none of MediTek's partnerships violates such statutes.
In 1993, Congress enacted legislation within the Federal Omnibus Budget
Reconciliation Act of 1993 which generally prohibits physicians from referring
Medicare or Medicaid patients to any entity which provides any of a broad range
of health services (including diagnostic imaging services) if the physician has
(i) an ownership or investment interest in the entity providing such health care
service, or (ii) otherwise receives compensation (broadly defined in the
legislation) from the entity. Further, the entity may not bill for any service
furnished to patients pursuant to a prohibited referral. The legislative
prohibitions became effective January 1, 1995. The Company does not believe that
this legislation will materially adversely affect the structure of its
operations because physician participation in ownership through existing MediTek
partnerships terminated prior to 1995. Further, this legislation could assist
MediTek's operations through increasing MediTek's opportunities to acquire
existing centers at favorable prices if physicians choose to divest themselves
of their ownership to ensure compliance.
Current discussions within the Federal government regarding national
health care reform are emphasizing containment of health care costs as well as
expansion of the number of eligible parties. The Company believes that because
of its emphasis on cost-effective, quality health care, it is well-positioned to
take advantage of the reformed delivery system. However, there can be no
assurance that the Company will be able to achieve its goal of maintaining and
increasing its business as a result of such reform.
The States of Florida, New Jersey and Georgia have each enacted laws
that restrict or prohibit physicians from referring patients to health care
facilities in which such physicians have a financial interest. The Florida law
applicable to diagnostic imaging centers became effective October 1994 and
referring physician participation in ownership of existing MediTek partnerships
terminated prior to the legislation's effective date. Although the Company does
not believe that these laws will have a material adverse effect on its
operations in these states, there can be no assurance that these laws will not
be interpreted or applied in such a way as to create such a material adverse
effect, or that these states, or other states in which the Company does
business, will not adopt similar or more restrictive laws or regulations that
could have such a material adverse effect.
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The above referenced Florida legislation also imposed, with certain
exceptions, a cap on the fees charged by all providers of designated health
services (including diagnostic imaging services) equal to 115% of the Medicare
limiting charge for such service (the "Fee Cap"). The Fee Cap was subsequently
found to be unconstitutional and has never been enforced. The new legislation
provided administrative penalties for each violation of these Fee Cap
provisions. As enacted, the legislation contained a provision which exempted
group practices and hospitals from the Fee Cap.
In June 1994, the Second Judicial Circuit Court of Florida, in and for
Leon County (the "State Court") in a lawsuit in which MediTek was a co-plaintiff
ruled that the Fee Caps passed by the State of Florida's legislature violated
the Constitution of the State and, therefore, are unenforceable. In February
1995, the State Court issued an order granting final summary judgment that the
Fee Caps were unconstitutional for providers of diagnostic imaging services. The
State Court's ruling was upheld on appeal.
As a result of the State Court's decision, MediTek is not subject to
the Fee Caps. Although MediTek, the State Court and the State District Court of
Appeals believe that the Fee Caps violate the Florida Constitution, there can be
no assurance that the State Court's decision will not be reversed, or that the
Fee Caps will ultimately be found to be unconstitutional or that the Fee Caps
would not be reinstated retroactively to the initial effective date. Imposition
of Fee Caps could have a materially adverse impact upon MediTek's operations
within Florida, which contributed approximately 51% of MediTek's income from
operations for fiscal 1995.
Many states, including New Jersey and Georgia, have programs
(frequently referred to as "certificate of need" or "CON" programs) that control
and regulate the construction of health care facilities and the acquisition by
health care facilities of major medical equipment. Although such programs vary,
a CON generally is required before constructing a "health care facility" and
before a health care facility acquires capital intensive medical equipment or
services. Some states require a CON for any purchase or lease of major medical
equipment, such as an MRI or CT system, regardless of whether a health care
facility is involved. The CON application process may be lengthy and costly.
MediTek evaluates each opportunity for a new project separately and does not
necessarily reject a potential project simply because it necessitates a CON,
although the time and expense required to obtain a CON would be a factor in
determining whether to proceed.
INSURANCE
MediTek maintains workers' compensation, general liability, commercial property
and professional liability insurance in amounts deemed adequate by management.
There is no assurance, however, that claims will not exceed the amount of the
insurance coverage obtained or that the claims may not be excluded from coverage
under the policies.
BACKLOG
Backlog is not a material aspect of MediTek's business.
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RESEARCH AND DEVELOPMENT
MediTek does not engage in any material research and development activities.
PATENTS, TRADEMARKS, ETC.
The Company believes that its healthcare services business is not dependent upon
any patents, trademarks, licenses, franchises or concessions.
RAW MATERIALS
The Company believes that the chemicals and other materials and supplies used in
its healthcare services business are readily available from a number of sources.
GENERAL
EMPLOYEES
At the end of fiscal 1995, the Company and its subsidiaries employed
approximately 310 persons, of which 195 were employed within the aerospace
products and services segment and 110 were employed within the healthcare
services segment.
ENVIRONMENTAL REGULATION
Compliance with federal, state and local provisions relating to the protection
of the environment has not had and is not expected to have a material effect
upon the capital expenditures, earnings or competitive position of the Company.
SEASONALITY
The Company believes that its business activities are not seasonal.
FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
SALES
The Company has no operations located outside of the United States. See Note 12
to the Consolidated Financial Statements for additional information regarding
the Company's export sales.
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ITEM 2. PROPERTIES
The Company's headquarters is located at 3000 Taft Street, Hollywood, Florida
and occupies approximately 5,000 square feet of office space at this location.
HEICO Aerospace and its subsidiaries occupy the remainder of this 140,000 square
foot facility, which is owned by HEICO Aerospace.
MediTek occupies 4,600 square feet for its home office in Miami,
Florida, under a lease expiring in 1996 with a renewable one year term. In
addition, MediTek owns two medical condominium suites utilized for one of its
medical imaging centers aggregating approximately 4,300 square feet. MediTek's
six other centers, excluding five centers owned through partnerships, occupy
facilities ranging in size from approximately 1,000 to 4,100 square feet,
containing approximately 19,000 square feet of space in the aggregate. Center
leases expire between September 1997 and August 2005 and, in certain instances,
contain options to renew.
The Company and its subsidiaries have adequate capacity to handle their
anticipated needs for the foreseeable future. The real property owned by the
Company is subject to mortgages. See Notes 6 and 7 to the Consolidated Financial
Statements.
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ITEM 3. LEGAL PROCEEDINGS
In November 1989, HEICO Aerospace and Jet Avion were named defendants in a
complaint filed by United Technologies Corporation (United) in the United States
District court for the Southern District of Florida. The complaint, as amended
in fiscal 1995, alleges infringement of a patent, misappropriation of trade
secrets and unfair competition relating to certain jet engine parts and coatings
sold by Jet Avion in competition with Pratt & Whitney, a division of United.
United seeks approximately $10 million in damages for the patent infringement
and approximately $30 million in damages for the misappropriation of trade
secrets and the unfair competition claims. The aggregate damages referred to in
the preceding sentence do not exceed approximately $30 million because a portion
of the misappropriation and unfair competition damages duplicate the $10 million
patent infringement damages. The complaint also seeks, among other things,
pre-judgment interest and treble damages.
In July and November 1995, the Company filed its answers to United's
complaint denying the allegations. In addition, the Company filed counterclaims
against United for, among other things, malicious prosecution, trade
disparagement, tortious interference, unfair competition and antitrust
violations. The Company is seeking treble, compensatory and punitive damages in
amounts to be determined at trial. United filed its answer denying certain
counterclaims and moved to dismiss other counterclaims. No trial date has been
set.
Based on currently known facts, the Company's legal counsel has advised
that it believes that the Company should be able to successfully defend the
patent infringement claims alleged in United's complaint. With respect to the
misappropriation and unfair competition claims, legal counsel to the Company has
advised that it believes the likelihood that United will be able to prove a case
regarding such claims within the statute of limitations is remote. Further, the
Company intends to vigorously pursue its counterclaims against United. The
ultimate outcome of this litigation is not certain at this time and no provision
for gain or loss, if any, has been made in the accompanying consolidated
financial statements.
The Company is involved in various other legal actions arising in the
normal course of business. After taking into consideration legal counsel's
evaluation of such actions, management is of the opinion that the outcome of
these other matters will not have a significant effect on the Company's
consolidated financial statements.
See also the reference to plaintiff litigation in Item 1.
Business - Healthcare Services, "Government regulation."
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
There were no matters submitted to a vote of securities holders during the
fourth quarter of fiscal 1995.
EXECUTIVE OFFICERS OF THE REGISTRANT
The Executive Officers are elected by the Board of Directors at the first
meeting following the annual meeting of shareholders and serve at the discretion
of the Board. The names and ages of, and offices held by, the executive officers
of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE OFFICE
---- --- ------
<S> <C> <C>
Laurans A. Mendelson 57 Chairman of the Board, President
and Chief Executive Officer of
the Company and MediTek Health
Corporation
Thomas S. Irwin 49 Executive Vice President and
Chief Financial Officer of the
Company
Eric A. Mendelson 30 Director, Vice President of
Aerospace Operations of the
Company; President of HEICO
Aerospace Corporation
Victor H. Mendelson 28 Vice President of Healthcare
Operations and General Counsel of
the Company; Executive Vice
President and Chief Operating
Officer of MediTek Health
Corporation
Joseph A. Paul 38 Vice President of Corporate
Development of the Company;
Executive Vice President of
MediTek Health Corporation; and
President of MediTek Healthcare
Management, Inc.
Lawrence H. Wheeler 40 Controller and Treasurer of the
Company
</TABLE>
Mr. Laurans Mendelson has served as Chairman of the Board of the
Company since December 1990 and as Co-Chairman of the Board of the
Company from January 1990 until December 1990. Mr. Mendelson has also
served as Chief Executive Officer of the Company since February 1990,
President of the Company since September 1991 and President of MediTek
Health Corporation since May 1994. He has been Chairman of the Board
of Ambassador Square, Inc. (a Miami, Florida real estate development
and management company) since 1980 and President of that company since
1988. He has been Chairman of Columbia Ventures, Inc. (a private
investment company) since 1985 and President of that company since
1988. Mr. Mendelson is a Certified Public Accountant.
-14-
<PAGE>
Mr. Irwin has served as Executive Vice President of the Company since September
1991 and served as Senior Vice President of the Company since June 1986 and as
Vice President and Treasurer since 1982. He also served as Acting President and
Chief Operating Officer of the Company from December 1989 to September 1991 and
as Acting President of Jet Avion from March 1990 to April 1993. Mr. Irwin is a
Certified Public Accountant.
Mr. Eric Mendelson has served on the Company's Board of Directors since July
1992. He has served as President of HEICO Aerospace Corporation since April 1993
and as Vice President of Aerospace Operations since March 1992. He served as
Director of Planning and Operations of the Company and Executive Vice President
of Jet Avion Corporation from 1990 to March 1992. Eric Mendelson is the son of
Laurans Mendelson.
Mr. Victor Mendelson has served as General Counsel of the Company since 1993 and
Executive Vice President of MediTek Health Corporation since 1994 and its Chief
Operating Officer since 1995. He was the Company's Associate General Counsel
from 1992 until 1993. From 1990 until 1992, he worked on a consulting basis with
the Company and MediTek developing and analyzing various strategic
opportunities. He is a member of the American Bar Association and the Florida
Bar. Victor Mendelson is the son of Laurans Mendelson.
Mr. Paul joined the Company as Vice President of the Company and
Executive Vice President of MediTek Health Corporation in September
1991 and has served as President of MediTek Healthcare Management,
Inc. and each of MediTek Health Corporation's operating subsidiaries
since May 1994. Since January 1996, he has served as Vice President
of Corporate Development of the Company. He has been Vice President
of Ambassador Square, Inc. (a real estate development and management
company) since 1981 and has been Vice President of Columbia Ventures,
Inc. (a private investment company) since 1988. Mr. Paul is a
Certified Public Accountant.
Mr. Wheeler has served as Controller of the Company since March 1986
and as Treasurer since March 1991. He served as Assistant Treasurer
from March 1986 to March 1991. Mr. Wheeler is a Certified Public
Accountant.
-15-
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
The Company's common stock is traded on the American Stock Exchange under the
Symbol "HEI". The following table sets forth the quarterly high and low sales
prices for the common stock on the American Stock Exchange and the amounts of
cash dividends paid per share during the last two fiscal years. In July 1995,
the Company paid a 10% stock dividend in addition to its semi-annual cash
dividend. In December 1995, the Company declared a second 10% stock dividend and
a semi-annual cash dividend of $.075 per share, both payable February 8, 1996 to
shareholders of record on January 16, 1996. The quarterly sales prices and cash
dividend amounts set forth below have been retroactively adjusted for the stock
dividends.
1995 1994
-------------------- ------------------------
FISCAL DIVIDENDS DIVIDENDS
QUARTER HIGH LOW PER SHARE HIGH LOW PER SHARE
--------------------------------------------------------------
First 8.78 7.44 $.062 12.19 9.40 $.062
Second 12.40 8.68 -- 10.33 8.78 --
Third 15.46 11.67 $.068 8.99 7.54 $.062
Fourth 17.95 13.52 -- 8.78 7.75 --
The Company had approximately 1,300 shareholders of record as of December 31,
1995.
-16-
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- -------
(in thousands of dollars, except per share data)
<S> <C> <C> <C> <C> <C>
OPERATING DATA
Net sales $ 40,379 $ 32,393 $ 25,882 $ 21,729 $ 25,368
========== ========== ========== ========== ==========
Gross profit from sales $ 12,504 $ 9,673 $ 6,777 $ 6,682 $ 8,590
========== ========== ========== ========== ==========
Selling, general and
administrative expenses $ 7,967 $ 7,279 $ 6,263 $ 6,121 $ 5,462
========== ========== ========== ========== ==========
Litigation costs (net of
insurance recovery in
1993 and 1992) $ --- $ --- $ (190) $ (350) $ 758
========== ========== ========== ========== ==========
Non-recurring charges $ --- $ --- $ --- $ 1,900(1) $ ---
========== ========== ========== ========== ==========
Interest expense $ 375 $ 199 $ 339 $ 218 $ 170
========== ========== ========== ========== ==========
Income (loss) from continuing
operations before cumulative
effect of change in accounting
principle $ 2,695 $ 1,470 $ 534 $ (580) $ 2,363
=========== ========== ========== ========== ==========
Income from
discontinued operations $ --- $ --- $ 450(2) $ --- $ ---
=========== ========== ========== ========== ==========
Cumulative effect on prior years
of change in accounting principle $ --- $ 381 $ --- $ --- $ ---
=========== ========== ========== ========== ==========
Net income (loss) $ 2,695 $ 1,851 $ 984 $ (580) $ 2,363
=========== ========== ========== ========== ==========
Weighted average number of common
and common equivalent shares (3) 2,921,416 2,779,594 2,859,612 2,739,107 3,011,700
=========== ========== ========== ========== ==========
Income (loss) per share from
continuing operations before
cumulative effect of change
in accounting principle (3) $ .92 $ .53 $ .19 $ (.21) $ .78
====== ====== ====== ====== ======
Cumulative effect per share
of change in accounting
principle (3) $ --- $ .14 $ --- $ --- $ ---
====== ====== ====== ====== =====
Net income (loss) per share (3) $ .92 $ .67 $ .34 $ (.21) $ .78
====== ====== ====== ====== ======
Cash dividends per share (3) $ .13 $ .124 $ .124 $ .124 $ .083
====== ======= ======= ======= =======
BALANCE SHEET DATA
Working capital $ 14,755 $ 12,691 $ 12,517 $ 14,633 $ 20,672
=========== ========== ========== ========== ==========
Net property, plant and equipment $ 9,296 $ 8,608 $ 7,734 $ 8,478 $ 7,564
=========== ========== ========== ========== ==========
Total assets $ 47,401 $ 39,020 $ 33,738 $ 46,425 $ 37,534
=========== ========== ========== ========== ==========
Long-term debt $ 7,076 $ 4,402 $ 2,864 $ 3,092 $ 2,006
=========== ========== ========== ========== ==========
Shareholders' equity $ 30,146 $ 27,061 $ 25,513 $ 25,556 $ 28,832
=========== ========== ========== ========== ==========
</TABLE>
(1)Represents a non-recurring charge for the restructuring of the aerospace
products and services segment.
(2)Represents a reversal of a portion of reserves for costs related to the
laboratory products segment disposed of in 1990, which were determined not to
be required.
(3)Information has been adjusted to reflect a 10% stock dividend paid in July
1995 and a second 10% stock dividend declared in December 1995.
-17-
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
Net sales in fiscal 1995 totaled $40,379,000, up 25% when compared to net sales
of $32,393,000 in fiscal 1994 and up 56% when compared to net sales of
$25,882,000 in fiscal 1993. The Company's net sales exclude revenues of $5.8
million in fiscal 1995, $6.4 million in fiscal 1994 and $6.5 million in fiscal
1993 from three medical diagnostic imaging centers, in which the Company's
partnership investments are accounted for under the equity method.
The Company's net income totaled $2,695,000, or $.92 per share, in
fiscal 1995, improving significantly from net income of $1,851,000, or $.67 per
share, in fiscal 1994 and $984,000, or $.34 per share, in fiscal 1993. The
Company paid a 10% stock dividend in July 1995 and declared a second 10% stock
dividend in December 1995. All earnings per share, dividends per share and
common stock outstanding information has been adjusted to give effect to these
stock dividends for all years presented.
Net income for fiscal 1994 included $381,000, or $.14 per share, from
the cumulative effect on prior years of a change in accounting for income taxes.
Net income for fiscal 1993 included $450,000, or $.16 per share, related to the
disposal of a discontinued operation in fiscal 1990. Net income from continuing
operations, which excludes both these items, increased from $.19 per share in
fiscal 1993 and $.53 per share in fiscal 1994 to $.92 per share in fiscal 1995.
The increase in fiscal 1995 sales over fiscal 1994 sales reflects a 33%
increase in revenues of the Company's aerospace products and services segment
(HEICO Aerospace) and a 12% increase in revenues of the Company's healthcare
services segment (MediTek).
Net sales of HEICO Aerospace totaled $25,613,000, $19,212,000 and
$19,856,000 in fiscal years 1995, 1994 and 1993, respectively. The increase in
HEICO Aerospace sales from fiscal 1994 to fiscal 1995 is principally due to an
increase in the sales volumes of jet engine parts. HEICO Aerospace sales in
fiscal 1994 remained relatively flat when compared to sales in fiscal 1993
primarily due to the increases in sales volumes of jet engine parts being offset
by selling price reductions on certain products.
MediTek's net sales, excluding the net sales of the unconsolidated
partnerships, totaled $14,766,000, $13,181,000 and $6,026,000 in fiscal years
1995, 1994 and 1993, respectively. These gains result principally from
acquisitions of three medical diagnostic imaging centers and the opening of four
new medical diagnostic imaging centers since the beginning of fiscal 1993. For
further information regarding the acquisitions, see Note 2 to the Consolidated
Financial Statements.
The net income improvement in fiscal 1995, fiscal 1994 and fiscal 1993
reflects the improved earnings of both HEICO Aerospace and MediTek as further
discussed below.
-18-
<PAGE>
RESULTS OF CONTINUING OPERATIONS
BACKLOGS
The Company's order backlog for HEICO Aerospace products as of the end of fiscal
1995 totaled $23 million including $14 million representing forecasted fiscal
1996 shipments for certain contracts (the "Contracts") pursuant to which
customers provide estimated annual usage. The fiscal 1995 backlog levels,
excluding amounts relating to the Contracts, remained level with the prior year.
The backlog relating to the Contracts increased from $6 million as of the end of
fiscal 1994 principally as a result of increased demand and sales incentives
offered by the Company. MediTek's order backlog is insignificant due to the
nature of its operations.
GROSS MARGINS AND OPERATING EXPENSES
Gross profit margins of HEICO Aerospace averaged 31.7% in fiscal 1995 as
compared to 30.4% in fiscal 1994 and 25.8% in fiscal 1993. The improvement in
HEICO Aerospace margins in fiscal years 1995 and 1994 reflect volume increases
in sales of higher margin products, volume decreases in sales of lower margin
products and manufacturing cost reductions.
Gross profit margins of MediTek averaged 29.7% in fiscal 1995 as
compared to 29.1% in fiscal 1994 and 27.5% in fiscal 1993. The higher margins in
the current year are due principally to improved performance at certain centers
resulting primarily from higher sales volumes and efforts to lower service
costs. The increase in margins in fiscal 1994 is due principally to the addition
of new centers with greater operating margins.
Selling, general and administrative (SG&A) expenses were $8.0 million
in fiscal 1995, $7.3 million in fiscal 1994 and $6.3 million in 1993. As a
percentage of net sales, SG&A expenses declined from 24.2% in fiscal 1993 to
22.5% in fiscal 1994 and 19.7% in fiscal 1995, reflecting continuing efforts to
control costs. The $700,000 increase from fiscal 1994 to fiscal 1995 is due
principally to increased general corporate expenses and increased HEICO
Aerospace selling expenses, partially offset by the effects of expense reduction
programs at MediTek. The $1 million increase in SG&A expenses from fiscal 1993
to fiscal 1994 is due principally to the growth of MediTek's operations, an
increase in HEICO Aerospace's sales efforts and an increase in general corporate
expenses.
The equity in the loss of unconsolidated partnerships during the past
three fiscal years is primarily attributable to losses at one center. This
center was merged into a new unconsolidated partnership with another previously
unrelated center in August 1995. The merger has significantly improved
operations of this center and resulted in a decrease in the Company's equity in
loss of unconsolidated partnerships from fiscal 1994 to fiscal 1995. The equity
in loss of unconsolidated partnerships includes costs representing the
management services fee income included in consolidated net sales as part of
healthcare services sales. This income totaled $526,000 in fiscal 1995, $661,000
in fiscal 1994 and $666,000 in fiscal 1993.
-19-
<PAGE>
Fiscal 1993 operating expenses also include benefits from insurance
recoveries of certain litigation defense costs in the amount of $190,000. The
Company is also seeking reimbursement for additional previously incurred and
expensed costs. However, no additional recovery, if any, has yet to be recorded.
INCOME FROM OPERATIONS
Fiscal 1995 income from operations of $4,206,000 increased $2.3 million, or
115%, over that of fiscal 1994. Current year income from operations includes
operating income from HEICO Aerospace of $4,907,000, representing a $2.0
million, or 67%, increase over that of fiscal 1994, and operating income from
MediTek of $2,495,000, representing an $880,000, or 54%, increase over that of
fiscal 1994. MediTek's operating income includes the equity in the loss of
unconsolidated partnerships. These improvements in operating income at HEICO
Aerospace and MediTek are due primarily to the increases in sales and gross
margins discussed above.
Fiscal 1994 income from operations of $1,955,000, which represents an
increase of $1.6 million over that of fiscal 1993, reflects operating income
from HEICO Aerospace of $2,938,000 and operating income from MediTek of
$1,615,000. The HEICO Aerospace and MediTek fiscal 1994 income from operations
increased $450,000 and $1,677,000, respectively, over fiscal 1993 amounts due
primarily to the improved gross profit margins at HEICO Aerospace and improved
sales and gross profit margins at MediTek discussed above.
Fiscal 1993 income from operations of $397,000 reflects operating
income from HEICO Aerospace of $2,488,000 offset by an operating loss of $62,000
at MediTek. MediTek, which started operations in September 1991, began to
operate profitably during the second half of fiscal 1993.
INTEREST EXPENSE
Fiscal 1995 interest expense increased by $176,000 over fiscal 1994 interest
expense due primarily to increases in long-term debt associated with equipment
financing and the late fiscal 1994 borrowing from the Company's term loan credit
facility to partially finance MediTek's fiscal 1994 acquisitions (see Note 6 to
the Consolidated Financial Statements).
Interest expense decreased $140,000 in fiscal 1994 from fiscal 1993
principally due to the January 1993 repayment of $10,000,000 of debt borrowed
under a revolving loan during fiscal 1993.
INTEREST AND OTHER INCOME
Interest and other income in fiscal 1995 increased $212,000 over that of fiscal
1994 due principally to an increase in market interest rates, an increase in
invested cash and profits from the sale of certain excess equipment of HEICO
Aerospace.
Fiscal 1994 interest and other income declined by $146,000 from that of
fiscal 1993 due to a decrease in invested cash primarily attributable to the
repayment of the $10 million revolving loan and cash used in acquisitions by
MediTek.
-20-
<PAGE>
INCOME TAXES
The Company's effective tax rate in fiscal 1995 was greater than that of fiscal
1994 and fiscal 1993 due principally to the reduced impact of tax benefits on
export sales and investment income as a result of the higher level of income
from operations.
The Company's fiscal 1994 and 1993 effective income tax rates were less
than the statutory rate primarily due to tax benefits on export sales and
investment income, and the reversal of excess tax provisions upon completion of
tax audits. For a detailed analysis of the provisions for income taxes and a
discussion of new income tax accounting standards adopted in fiscal 1994, see
Notes 1 and 8 to the Consolidated Financial Statements.
INCOME FROM CONTINUING OPERATIONS BEFORE CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE
Fiscal 1995 income from continuing operations before cumulative effect of change
in accounting principle totaled $2,695,000 and increased $1,225,000, or 83%,
over that of fiscal 1994, which increased $936,000, or 175%, over that of fiscal
1993. Both increases were due principally to the aforementioned improvements in
fiscal 1995 and 1994 income from operations.
INFLATION
The Company has generally experienced increases in its costs of labor, materials
and services consistent with overall rates of inflation. The impact of such
increases on the Company's income from continuing operations has been generally
minimized by efforts to lower costs through manufacturing and service
efficiencies and cost reductions.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash flow from operations aggregated $13.6 million over the last
three years, including $7.1 million in fiscal 1995. The Company's current ratio
remained strong at 3 to 1 as of October 31, 1995 and working capital increased
by $2.1 million in fiscal 1995.
During the past three years, the Company's principal investing
activities were the use of an aggregate of $7.8 million in connection with
acquisitions by MediTek, including $2.1 million in fiscal 1995, the purchase of
$2.9 million of short-term investments during fiscal 1995 as well as purchases
of property, plant and equipment aggregating $3 million which were made
primarily by the aerospace operations.
The Company's principal financing activities during the same three year
period were the use of an aggregate of $12.6 million for the payment of funds
for scheduled payments on short-term debt, long-term debt and capital leases,
including the fiscal 1993 repayment of a $10 million revolving loan. In
addition, the Company received funds from the issuance of long-term debt
aggregating $1.7 million and used funds for the open market purchase of an
aggregate of 96,900 shares of its stock for cash consideration totaling $1.0
million.
-21-
<PAGE>
In June 1995, the Company increased the amount available under its
existing credit facility by $2 million to $7 million and improved certain other
terms and conditions of the facility. See Note 6 to the Consolidated Financial
Statements for further information.
Funds necessary for future capital expenditures, debt and capital lease
payments, contingent notes payable related to acquisitions and working capital
requirements are expected to be derived primarily from current cash resources
and internally generated funds.
-22-
<PAGE>
<TABLE>
<CAPTION>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HEICO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
October 31, 1995 and 1994
ASSETS
1995 1994
----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents.................... $ 4,664,000 $ 5,030,000
Short-term investments....................... 2,939,000 --
Accounts receivable, net..................... 6,709,000 5,720,000
Inventories.................................. 5,359,000 5,261,000
Prepaid expenses and other current assets.... 1,373,000 1,329,000
Deferred income taxes........................ 1,593,000 1,251,000
----------- -----------
Total current assets................... 22,637,000 18,591,000
Property, plant and equipment, net............. 9,296,000 8,608,000
Intangible assets, net......................... 12,445,000 10,169,000
Investments in and advances to
unconsolidated partnerships.................. 2,094,000 1,152,000
Other assets................................... 929,000 500,000
----------- -----------
Total assets........................... $47,401,000 $39,020,000
=========== ===========
</TABLE>
See notes to consolidated financial statements.
-23-
<PAGE>
<TABLE>
<CAPTION>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HEICO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
October 31, 1995 and 1994
LIABILITIES AND SHAREHOLDERS' EQUITY
1995 1994
----------- -----------
<S> <C> <C>
Current liabilities:
Current maturities of long-term debt and capital
leases......................................... $ 794,000 $ 1,054,000
Trade accounts payable........................... 1,499,000 1,048,000
Accrued expenses and other current liabilities... 5,046,000 3,597,000
Income taxes payable............................. 543,000 201,000
----------- -----------
Total current liabilities.................. 7,882,000 5,900,000
Long-term debt and capital leases, net of
current maturities............................... 7,076,000 4,402,000
Deferred income taxes.............................. 1,720,000 1,623,000
Other non-current liabilities...................... 470,000 --
----------- -----------
Total liabilities.......................... 17,148,000 11,925,000
----------- -----------
Minority interests................................. 107,000 34,000
----------- -----------
Commitments and contingencies
Shareholders' equity:
Preferred stock, par value $.01 per share;
Authorized - 10,000,000 shares issuable
in series, 50,000 designated as Series A
Junior Participating Preferred Stock,
none issued.................................... -- --
Common stock, $.01 par value; Authorized -
20,000,000 shares; Issued - 2,796,299 shares
in 1995 (including 254,209 shares to be issued
on February 8, 1996 as a stock dividend)
and 2,266,646 in 1994.......................... 28,000 23,000
Capital in excess of par value................... 8,371,000 22,000
Retained earnings................................ 25,439,000 30,994,000
----------- -----------
33,838,000 31,039,000
Less: Note receivable from employee savings and
investment plan ......................... (3,692,000) (3,978,000)
----------- -----------
Total shareholders' equity................. 30,146,000 27,061,000
----------- -----------
Total liabilities and shareholders' equity. $47,401,000 $39,020,000
=========== ===========
</TABLE>
See notes to consolidated financial statements.
-24-
<PAGE>
<TABLE>
<CAPTION>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HEICO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended October 31, 1995, 1994 and 1993
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Aerospace products and services,
net of returns and allowances.......... $25,613,000 $19,212,000 $19,856,000
Healthcare services, net of
allowances............................. 14,766,000 13,181,000 6,026,000
----------- ----------- -----------
Net sales................................ 40,379,000 32,393,000 25,882,000
----------- ----------- -----------
Operating costs and expenses:
Cost of aerospace products and
services (Note 14)..................... 17,497,000 13,377,000 14,737,000
Cost of healthcare services.............. 10,378,000 9,343,000 4,368,000
Selling, general and administrative
expenses............................... 7,967,000 7,279,000 6,263,000
Equity in loss of unconsolidated
partnerships (Note 14)................. 331,000 439,000 307,000
Insurance recovery (net of litigation
costs) (Note 14)....................... -- -- (190,000)
----------- ----------- -----------
Total operating costs and expenses....... 36,173,000 30,438,000 25,485,000
----------- ----------- -----------
Income from operations................... 4,206,000 1,955,000 397,000
Interest expense......................... (375,000) (199,000) (339,000)
Interest and other income................ 673,000 461,000 607,000
Minority interests in consolidated
partnerships........................... (144,000) (34,000) --
----------- ----------- -----------
Income from continuing operations
before income taxes and cumulative
effect of change in accounting
principle.............................. 4,360,000 2,183,000 665,000
Income tax expense ...................... 1,665,000 713,000 131,000
----------- ----------- -----------
Income from continuing operations
before cumulative effect of
change in accounting principle......... 2,695,000 1,470,000 534,000
Income from discontinued operations
(Note 14).............................. -- -- 450,000
Cumulative effect on prior years of
change in accounting principle......... -- 381,000 --
----------- ----------- -----------
Net income .............................. $ 2,695,000 $ 1,851,000 $ 984,000
=========== =========== ===========
Income per share from continuing
operations before cumulative effect
of change in accounting principle...... $0.92 $0.53 $0.19
===== ===== =====
Cumulative effect per share of change in
accounting principle................... $ -- $0.14 $ --
===== ===== ====
Net income per share..................... $0.92 $0.67 $0.34
===== ===== =====
Weighted average number of common and
common equivalent shares outstanding... 2,921,416 2,779,594 2,859,612
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
-25-
<PAGE>
<TABLE>
<CAPTION>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HEICO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the years ended October 31, 1995, 1994 and 1993
CAPITAL IN
COMMON EXCESS OF RETAINED NOTE
STOCK PAR VALUE EARNINGS RECEIVABLE TOTAL
---------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Balances, October 31, 1992................ $ 23,000 $ -0- $29,764,000 $ (4,231,000) $25,556,000
Repurchases and retirements of 67,600
shares of common stock.................. -- -- (678,000) -- (678,000)
Cash dividends ($.124 per share).......... -- -- (349,000) -- (349,000)
Net income for the year................... -- -- 984,000 -- 984,000
---------- ----------- ----------- ------------ -----------
Balances, October 31, 1993................ 23,000 -0- 29,721,000 (4,231,000) 25,513,000
Exercise of stock options (2,200
shares)................................. -- 22,000 -- -- 22,000
Payment on note receivable from employee
savings and investment plan............. -- -- -- 253,000 253,000
Repurchases and retirements of 16,300
shares of common stock.................. -- -- (238,000) -- (238,000)
Cash dividends ($.124 per share).......... -- -- (340,000) -- (340,000)
Net income for the year................... -- -- 1,851,000 -- 1,851,000
---------- ----------- ----------- ------------ -----------
Balances, October 31, 1994................ 23,000 22,000 30,994,000 (3,978,000) 27,061,000
Exercise of stock options (59,095
shares)................................. 1,000 589,000 -- -- 590,000
Payment on note receivable from employee
savings and investment plan............. -- -- -- 286,000 286,000
Repurchases and retirements of 13,000
shares of common stock.................. -- (117,000) -- -- (117,000)
Cash dividends ($.13 per share)........... -- -- (369,000) -- (369,000)
10% common stock dividend paid
(229,349 shares)........................ 2,000 3,240,000 (3,242,000) -- --
10% common stock dividend payable
February 8, 1996 (254,209 shares)....... 2,000 4,637,000 (4,639,000) -- --
Net income for the year................... -- -- 2,695,000 -- 2,695,000
---------- ----------- ----------- ------------ -----------
Balances, October 31, 1995................ $ 28,000 $ 8,371,000 $25,439,000 $ (3,692,000) $30,146,000
========== =========== =========== ============ ===========
</TABLE>
See notes to consolidated financial statements.
-26-
<PAGE>
<TABLE>
<CAPTION>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HEICO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended October 31, 1995, 1994 and 1993
1995 1994 1993
----------- ----------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income......................................... $ 2,695,000 $ 1,851,000 $ 984,000
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization.................... 2,638,000 2,000,000 1,582,000
Loss from unconsolidated partnerships............ 590,000 724,000 519,000
Minority interest in consolidated partnerships... 144,000 34,000 --
Deferred income taxes............................ (245,000) 171,000 517,000
Deferred financing costs......................... (56,000) (255,000) --
Cumulative effect of change in accounting
principle...................................... -- (381,000) --
Income from discontinued operations.............. -- -- (450,000)
Change in assets and liabilities:
(Increase) in accounts receivable.............. (967,000) (717,000) (104,000)
(Increase) decrease in inventories............. (98,000) (588,000) 1,527,000
(Increase) in prepaid expenses and
other current assets......................... (147,000) (190,000) (632,000)
Increase (decrease) in trade payables, accrued
expenses and other current liabilities....... 2,111,000 1,014,000 (986,000)
Increase (decrease) in income taxes payable
and deferred income taxes.................... 488,000 10,000 (124,000)
Other.......................................... (97,000) -- --
----------- ----------- -----------
Net cash provided by operating activities.......... 7,056,000 3,673,000 2,833,000
----------- ----------- -----------
Cash flows from investing activities:
Purchase of short-term investments................. (2,939,000) -- --
Acquisitions:
Contingent note payments......................... (1,945,000) (1,560,000) (36,000)
Other............................................ (154,000) (1,518,000) (2,611,000)
Advances to unconsolidated partnerships............ (480,000) (114,000) (1,040,000)
Purchases of property, plant and equipment......... (800,000) (1,165,000) (1,024,000)
Payments for deferred organization costs........... (358,000) (120,000) --
Payment received from employee savings and
investment plan note receivable.................. 286,000 253,000 --
Proceeds from the sale of property, plant
and equipment.................................... 324,000 21,000 --
Other.............................................. 87,000 (189,000) (210,000)
----------- ----------- -----------
Net cash (used in) investing activities............ (5,979,000) (4,392,000) (4,921,000)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from the issuance of long-term debt....... 201,000 1,418,000 120,000
Proceeds from the exercise of stock options........ 570,000 22,000 --
Repurchases of common stock ....................... (117,000) (238,000) (678,000)
Principle payments on short-term debt, long-term
debt and capital leases.......................... (1,715,000) (594,000) (10,309,000)
Cash dividends paid................................ (369,000) (340,000) (349,000)
Other.............................................. (13,000) -- (33,000)
------------ ----------- -----------
Net cash provided by (used in) financing
activities....................................... (1,443,000) 268,000 (11,249,000)
----------- ----------- -----------
Net (decrease) in cash and cash
equivalents...................................... (366,000) (451,000) (13,337,000)
Cash and cash equivalents at beginning of year..... 5,030,000 5,481,000 18,818,000
----------- ----------- -----------
Cash and cash equivalents at end of year........... $ 4,664,000 $ 5,030,000 $ 5,481,000
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
-27-
<PAGE>
HEICO CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
for the years ended October 31, 1995, 1994 and 1993
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company, its
wholly-owned subsidiaries, HEICO Aerospace Corporation (HEICO Aerospace),
including its wholly-owned subsidiaries, Jet Avion Corporation (Jet Avion), LPI
Industries Corporation (LPI), and Aircraft Technology, Inc. (Aircraft
Technology), and MediTek Health Corporation (82% owned prior to fiscal 1994) and
its wholly-owned or majority owned subsidiaries and controlled partnerships
(MediTek). MediTek's investments in uncontrolled entities are accounted for
under the equity method. All significant intercompany balances and transactions
are eliminated.
CASH AND CASH EQUIVALENTS
For purposes of the consolidated financial statements, the Company considers all
highly liquid investments purchased with an original maturity of three months or
less to be cash equivalents.
SHORT-TERM INVESTMENTS
Investments with a maturity of less than one year that are not readily
convertible to cash before their maturity have been classified as short-term
investments. Short-term investments are stated at their fair value (see Note 4).
INVENTORIES
Portions of HEICO Aerospace inventories are stated at the lower of cost or
market, with cost being determined on the first-in, first-out basis. The
remaining portions of these inventories are stated at the lower of cost or
market, on a per contract basis, with estimated total contract costs being
allocated ratably to all units. The effects of changes in estimated total
contract costs are recognized in the period determined. Losses, if any, are
recognized fully when identified. Inventory amounts set forth in the
accompanying consolidated balance sheets do not include any material amounts
related to long-term contracts. MediTek inventories are not material.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost. Depreciation and amortization
is provided mainly on the straight-line method over the estimated useful lives
of the various assets, including assets recorded under capital leases which are
amortized over the shorter of their useful lives or the term of the related
leases. Property, plant and equipment useful lives are as follows:
Buildings and components............. 7 to 55 years
Building improvements................ 3 to 15 years
Machinery and equipment.............. 3 to 20 years
The costs of major renewals and betterments are capitalized.
Repairs and maintenance are charged to operations as incurred. Upon
disposition, the cost and related accumulated depreciation are removed
-28-
<PAGE>
from the accounts and any related gain or loss is reflected in
earnings.
INTANGIBLE ASSETS
Intangible assets include the excess of cost over the fair value of net assets
acquired, trademarks and deferred charges which are amortized on the
straight-line method over their legal or estimated useful lives, whichever is
shorter, as follows:
Excess of cost, including con-
tingent consideration as paid,
over the fair market value
of net assets acquired............. 29 to 40 years
Trademarks........................... 7 years
Deferred charges..................... 3 to 20 years
The Company continually evaluates the periods of intangible asset
amortization to determine whether events and circumstances subsequent to the
origination dates of such assets warrant revised estimates of useful lives. In
addition, the Company periodically reviews the excess of cost over the fair
value of net assets acquired (goodwill) to assess recoverability based upon
expectations of undiscounted cash flows and operating income of each
consolidated entity having a material goodwill balance. An impairment would be
recognized in operating results, based upon the difference between each
consolidated entities' respective present value of future cash flows and the
carrying value of the goodwill, if a permanent diminution in value were to
occur. There have not been any significant revised estimates nor recognition of
goodwill impairment during the three years ended October 31, 1995.
REVENUE RECOGNITION
Revenues are recognized on an accrual basis, primarily upon shipment of products
and the rendering of services. MediTek's patient revenues are reduced by
contractual allowances for services billed to third party reimbursement sources
in addition to allowances for doubtful accounts. Revenue and receivable amounts
do not include any material amounts related to long-term contracts.
INCOME TAXES
In fiscal 1994 the Company adopted, effective November 1, 1993, Statement of
Financial Accounting Standard (SFAS) No. 109 "Accounting for Income Taxes,"
which requires the use of the liability method of accounting for deferred income
taxes. The cumulative effect of this change in accounting for income taxes is a
$381,000 benefit ($.14 per share) and is reported separately in the Consolidated
Statements of Operations for the year ended October 31, 1994. The provision for
income taxes includes Federal, state and local income taxes currently payable
and those deferred because of temporary differences between the financial
statement and tax basis of assets and liabilities.
In fiscal 1993 deferred income taxes are provided for timing
differences between financial and taxable income in accordance with Accounting
Principals Board Opinion No. 11.
INCOME PER SHARE
Income per share is calculated on the basis of the weighted average
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<PAGE>
number of shares outstanding plus common share equivalents arising from the
assumed exercise of stock options, if dilutive, and has been adjusted for the
effect of any stock dividends (see Note 3).
NOTE 2 - ACQUISITIONS AND INVESTMENTS
FISCAL 1994 ACQUISITIONS
In March 1994, the Company, through MediTek, acquired effective as of February
1, 1994 the net assets and business of Premier Imaging Associates No. 2, L.P.
(Premier No. 2) for $1,196,000 in cash, a $1,693,000 8% note which is payable
over the period ending June 30, 1996 and is contingent upon the level of future
earnings of the center and a $750,000 non-interest bearing note which is payable
over the period ending June 30, 1996 and is also contingent upon the level of
future earnings of the center. Through October 31, 1995, a total of $1,161,000,
including interest, has been paid on the $1,693,000 and $750,000 contingent
notes. Additional payments on these notes may be made during fiscal year 1996.
In addition, MediTek assumed capital lease obligations for equipment with a
present value aggregating approximately $250,000. The $1,693,000 note is secured
by collateral representing the assets of Premier No. 2. The collateralized
property has a carrying value of approximately $525,000 at October 31, 1995.
Premier No. 2 owns and operates a high technology medical diagnostic imaging
center located in Atlanta, Georgia, which offers Magnetic Resonance Imaging
(MRI) services. As part of the acquisition, MediTek also purchased substantially
all the assets of Imaging Consultants, Inc. (Imaging Consultants), excluding its
rights as the corporate General Partner of Premier No. 2, and all the assets of
Health Services, Inc. (Health Services). Imaging Consultants and Health Services
provided management and equipment maintenance services at the Premier No. 2
center and were affiliated companies. The former corporate General Partner of
Premier No. 2 was also the corporate General Partner of a center purchased
during fiscal 1993 (see Fiscal 1993 acquisitions).
The acquisition of Premier No. 2 has been accounted for as a purchase
and the purchase price (exclusive of contingent consideration) has been assigned
to the net assets acquired based on the fair value of such assets and
liabilities at the date of acquisition. The excess of the purchase price over
the fair value of the identifiable net assets acquired amounted to $900,000.
Contingent note payments, as paid, are recorded as goodwill. The results of
operations of the Premier No. 2 center are included in the consolidated
statements of operations from February 1, 1994.
The following table presents unaudited proforma operating results as if
the acquisition of Premier No. 2 had occurred at the beginning of fiscal 1993.
The proforma operating results do not purport to present actual operating
results had the acquisition been made at the beginning of fiscal 1993, or
results which may occur in the future.
-30-
<PAGE>
<TABLE>
<CAPTION>
1994 1993
------------- -------------
<S> <C> <C>
Net sales.................................. $ 32,905,000 $ 27,912,000
============= =============
Income from continuing operations
before cumulative effect of
change in accounting principle.......... $ 1,570,000 $ 991,000
============= =============
Net income................................. $ 1,951,000 $ 1,441,000
============= =============
Net income per share from continuing
operations before cumulative effect
of change in accounting principle....... $ .56 $ .35
============= =============
Net income per share....................... $ .70 $ .50
============= =============
</TABLE>
FISCAL 1993 ACQUISITIONS
As of October 1, 1993, the Company, through MediTek, acquired the net assets and
business of Premier Imaging Associates, L.P. (Premier No. 1) and certain
contract rights for $2,304,000 cash consideration, a $3,263,000 8% note which is
payable over the period ending June 30, 1996 and is contingent upon the level of
future earnings of the center and a $750,000 non-interest bearing note which is
payable over the period ending June 30, 1996 and is also contingent upon the
level of future earnings of the center. Through October 31, 1995, a total of
$2,220,000, including interest, has been paid on the $3,263,000 and $750,000
contingent notes. Additional payments on these notes may be made during fiscal
year 1996. The $3,263,000 note is secured by collateral representing the assets
of Premier No. 1. The collateralized property has a carrying value of
approximately $957,000 at October 31, 1995. Premier No. 1 owns and operates a
high technology medical diagnostic imaging center located in Atlanta, Georgia,
which offers MRI services.
The acquisition of Premier No. 1 has been accounted for as a purchase
and the purchase price (exclusive of contingent consideration) has been assigned
to the net assets acquired based on the fair value of such assets and
liabilities at the date of acquisition. The excess of the purchase price over
the fair value of the identifiable net assets acquired amounted to $1.7 million.
Contingent note payments, as paid, are recorded as goodwill. The results of
operations of the Premier No. 1 center are included in the consolidated
statements of operations from October 1, 1993.
The following table represents unaudited proforma consolidated
operating results as if the acquisition of the Premier No. 1 center had occurred
at the beginning of fiscal 1993. The proforma consolidated operating results do
not purport to present actual operating results had the acquisition been made at
the beginning of fiscal 1993, or results which may occur in the future.
1993
-----------
Net sales.................................... $28,670,000
===========
Income from continuing operations............ $ 1,377,000
===========
Net income................................... $ 1,827,000
===========
Income per share from continuing operations.. $.48
===========
Net income per share......................... $.64
===========
-31-
<PAGE>
In July 1993, the Company, through MediTek, purchased the net assets
and business of the Buffalo Diagnostic Center, which was renamed the Imaging
Center of Tampa (ICOT), for $140,000 cash consideration, a $500,000 8% note
which is payable over the period ending October 1, 1996 and is contingent upon
the level of future earnings of the center and the assumption of equipment lease
liabilities totaling $88,000. Through October 31, 1995, a total of $58,000,
including interest, has been paid on the $500,000 contingent note. Additional
payments on this note may be made during fiscal year 1996. This facility offers
MRI, computed axial tomography, nuclear medicine, x-ray and ultrasound
diagnostic services.
The acquisition has been accounted for as a purchase and the purchase
price (exclusive of contingent consideration) has been assigned to the net
assets acquired based on the fair market value of such assets and liabilities at
the date of acquisition. The excess of the purchase price over the fair value of
the identifiable net assets acquired was insignificant. Contingent note
payments, as paid, are recorded as goodwill. ICOT's results of operations are
included in the consolidated results effective as of the purchase date.
Had ICOT been acquired as of the beginning of fiscal 1993, the proforma
consolidated operating results would not have been materially different from the
reported results.
INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED PARTNERSHIPS
Condensed unaudited balance sheet and unaudited statements of
operations information for the Company's unconsolidated partnerships at and for
the years ended October 31, 1995, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
Balance sheet information:
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Current assets............... $ 1,379,000 $ 2,479,000 $ 2,415,000
Other assets, principally
property and equipment..... $ 3,338,000 $ 6,276,000 $ 7,012,000
Current liabilities.......... $ 1,316,000 $ 2,634,000 $ 1,803,000
Long-term debt (excluding
advances from MediTek)..... $ 2,765,000 $ 6,135,000 $ 6,610,000
Advances from MediTek........ $ 345,000 $ 2,886,000 $ 2,590,000
Statements of operations information:
1995 1994 1993
----------- ----------- -----------
Revenues..................... $ 5,756,000 $ 6,444,000 $ 6,473,000
Operating expenses........... (6,214,000) (6,950,000) (7,292,000)
----------- ----------- -----------
Loss before income taxes... $ (458,000) $ (506,000) $ (819,000)
=========== =========== ===========
</TABLE>
The Company has recorded income for management services rendered to the
unconsolidated partnerships during fiscal 1995, 1994 and 1993 in the amounts of
$526,000, $661,000 and $666,000, respectively.
In October 1994, MediTek acquired a portion of the minority interests
of the limited partners in one of the partnerships through which it operated two
centers as a co-general partner for $124,000, increasing MediTek's ownership in
one center from 25% to 40.5% and 50% to 95% in a second center. In November
1994, MediTek increased its ownership in the first of these two centers from
40.5% to 42% for $136,000. In August 1995, the second of these two centers was
merged
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<PAGE>
with a previously unrelated medical imaging business to form a new partnership.
MediTek operates this center as a 50% co-general partner for which it
contributed $140,000. In October 1994, MediTek acquired a portion of the
minority interests of the limited partners in a third partnership it operates as
the general partner for $88,000, increasing MediTek's ownership from 37% to
49.5%. In December 1992, MediTek had increased its ownership in this third
partnership from 25% to 37% for $75,000. The Company accounted for these
acquisitions using the purchase method. The excess of the total acquisition cost
of these purchases over the fair market value of the assets acquired was not
significant.
In connection with MediTek's general partnership interest in one of its
unconsolidated partnerships, MediTek indemnified the seller of this general
partnership interest from liability relating to a guarantee and security
agreement for a $1.4 million mortgage on one of the partnership's centers.
NOTE 3 - STOCK DIVIDENDS
In May 1995, the Company's Board of Directors declared a 10% stock dividend that
was paid July 28, 1995. On December 15, 1995, the Company's Board of Directors
declared a second 10% stock dividend payable on February 8, 1996 to shareholders
of record January 16, 1996. These transactions were valued based on the closing
market prices of the Company's stock as of their respective declaration dates.
Retained earnings was charged $7,881,000 as a result of the issuance of a
combined total of 483,558 shares of the Company's common stock. All income per
share, dividend per share and common shares outstanding information has been
retroactively restated to reflect these stock dividends.
NOTE 4 - INVESTMENT IN FINANCIAL INSTRUMENTS
In the fourth quarter of fiscal 1995, the Company entered into transactions in
which it simultaneously purchased and sold call options on an industry sector
index of equity securities (the Index Options) expiring in November 1995. The
Index Options were purchased with temporary surplus funds of approximately $2.9
million for investment purposes. Prior to the end of fiscal 1995, the Company
traded substantially all of the purchase option position and entered into a
similar purchase option position having the same November 1995 expiration date.
The gain realized in fiscal 1995 fully utilized the Company's $4.6 million
capital loss carryover which was otherwise scheduled to expire. As of October
31, 1995, the investments in the purchased and sold call option contracts are
netted because the terms of the Index Option contracts provide for a right of
offset. The net investment as of October 31, 1995 in the amount of $2.9 million
is recorded at fair market value as represented by the net cash proceeds
realized upon termination of the option contracts in November 1995 and is
included in short-term investments. Upon termination of the option contracts in
November 1995, the Company recognized a $4.6 million capital loss which will be
available for carryover of a five year period. For financial statement purposes,
the transactions did not result in any material gain or loss.
-33-
<PAGE>
NOTE 5 - SALE OF ACCOUNTS RECEIVABLE
In May 1994, the Company, through MediTek, entered into an agreement with an
unaffiliated third party whereby it can sell certain MediTek accounts receivable
with recourse. The aggregate proceeds of purchased receivables that remain
uncollected can not exceed $3,000,000 at any point in time. The proceeds from
the sale of receivables during fiscal 1995 and 1994 totaled $8,626,000 and
$3,187,000, respectively. As of October 31, 1995, the Company was contingently
liable for the repurchase of $1,992,000 of sold accounts receivables that
remained uncollected. The Company has an accrual of $1,916,000, including
$950,000 for contractual allowances, which management believes is an adequate
provision against any such uncollected receivables. The fees related to the sale
of receivables have been included in cost of healthcare services.
NOTE 6 - CREDIT FACILITIES, LONG-TERM DEBT AND CAPITAL LEASES
Long-term debt and capital leases consist of:
OCTOBER 31,
------------------------------------
1995 1994
---------- ----------
Industrial development revenue bonds.. $1,980,000 $1,980,000
Term loan borrowing................... 633,000 950,000
Equipment loans....................... 430,000 303,000
Mortgage note payable................. 497,000 511,000
Other long-term debt.................. 518,000 524,000
Capital leases (See Note 7)........... 3,812,000 1,188,000
---------- ----------
7,870,000 5,456,000
Less current maturities............... (794,000) (1,054,000)
---------- ----------
$7,076,000 $4,402,000
========== ==========
The amount of long-term debt maturing in each of the next five years is
$794,000 in fiscal 1996, $826,000 in fiscal 1997, $542,000 in fiscal 1998,
$997,000 in fiscal 1999 and $527,000 in fiscal 2000.
INDUSTRIAL DEVELOPMENT REVENUE BONDS
The industrial development revenue bonds represent bonds issued by Broward
County, Florida. The bonds are due April 2008 and bear interest at a variable
rate calculated weekly (4.05% at October 31, 1995). The bonds are secured by a
letter of credit expiring in February 1999 and a mortgage on the related
properties pledged as collateral. The pledged properties have a carrying value
of approximately $1,614,000 at October 31, 1995.
REVOLVING CREDIT FACILITY
The Company has a $7 million credit facility available for funding acquisitions,
working capital and general corporate requirements. Borrowings under this credit
facility bear interest at 1/4% over the bank's prime rate, adjusted daily, and
are convertible to term loans that bear interest, at the Company's option, at
1/4% over the bank's
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<PAGE>
prime rate, adjusted daily, or a fixed interest rate of 200 basis points over
the bank's prime rate in effect on the day of the conversion. Term loan
borrowings under the credit facility are payable in 36 to 48 monthly
installments. The credit facility is secured by substantially all the assets of
HEICO Aerospace and its subsidiaries and the guarantee of MediTek. The revolving
portion of the facility expires in April 1997 and may be renewed annually by
mutual agreement. This credit facility and the letter of credit securing the
industrial development revenue bonds contain covenants which, among other
things, restrict borrowings, capital expenditures and cash dividends, require
the maintenance of certain net worth, working capital and debt service amounts
and ratios, require the continued employment of the current Chairman, President
and Chief Executive Officer and require that he and his affiliates maintain a
specified ownership position in the Company.
In October 1994, the Company borrowed $950,000 from the $7 million
credit facility, of which $633,000 is outstanding as of October 31, 1995 with
interest accruing at 9%.
EQUIPMENT LOAN FACILITY
In March 1994, a bank committed to advance up to $1,900,000, as amended in
fiscal 1995, for the purpose of purchasing equipment to be used in the Company's
operations. Each term loan is limited to 80% of the purchase price of the
related equipment and is repayable up to a maximum of 60 months with interest at
a rate equal to the bank's prime rate. The term loans are secured by collateral
representing the related purchased equipment, which has a carrying value of
approximately $559,000 at October 31, 1995. As of October 31, 1995, the Company
has $1,389,000 available for future equipment loans under this commitment. This
commitment expires in August 1996.
OTHER LONG-TERM AND SHORT-TERM DEBT
The mortgage note is payable in monthly installments ($4,748 as of October 31,
1995), including interest at a variable rate calculated every 36 months (8.625%
at October 31, 1995), maturing in January 1999. The mortgage note payable is
secured by collateral representing the real property of PBGIC. The
collateralized property has a carrying value of approximately $735,000 at
October 31, 1995.
A promissory note with an equipment provider is payable in monthly
installments of $8,865, including interest at 12% per annum, maturing in June
2001.
During 1993, the Company repaid $10 million of debt borrowed in 1992
under a previous revolving credit arrangement.
There were no other significant borrowings under short-term lines of
credit during the past three fiscal years.
NOTE 7 - LEASE COMMITMENTS
Included in property, plant and equipment in the accompanying consolidated
balance sheets are the following assets held under capital leases:
OCTOBER 31,
-----------------------------------
1995 1994
---------- -------
Machinery and equipment............... $3,491,000 $1,243,000
Less accumulated amortization......... (717,000) (129,000)
---------- ----------
Assets under capital lease, net....... $2,774,000 $1,114,000
========== ==========
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<PAGE>
Capital lease obligations, all of which are obligations of subsidiaries of
MediTek not guaranteed by HEICO Corporation or MediTek, are summarized as
follows:
OCTOBER 31,
-----------------------------------
1995 1994
---------- -------
Leases (eight) of medical imaging
equipment, with various ex-
piration dates from 1995 to 2003,
at various interest rates
of 10.625% to 12.03%............... $3,812,000 $1,188,000
Less current installments............. (224,000) (234,000)
---------- ----------
Obligations under capital leases,
less current installments.......... $3,588,000 $ 954,000
========== ==========
The Company also leases certain property and equipment, including
medical and office facilities, diagnostic medical imaging equipment and office
equipment under operating leases. Some of these leases provide the Company with
the option after the initial lease term either to purchase the property at the
then fair market value or renew its lease at the then fair rental value.
Generally, management expects that leases will be renewed or replaced by other
leases in the normal course of business.
Minimum payments for capital and operating leases having initial or
remaining noncancelable terms in excess of one year are as follows:
Year ending October 31, CAPITAL OPERATING
---------- ---------
1996............................... $ 710,000 $1,985,000
1997............................... 684,000 1,762,000
1998............................... 682,000 1,456,000
1999............................... 682,000 946,000
2000............................... 434,000 182,000
Thereafter......................... 1,224,000 327,000
---------- ----------
Total minimum lease commitments.... 4,416,000 $6,658,000
==========
Less amounts representing interest. (604,000)
----------
Present value of minimum lease
payments......................... $3,812,000
==========
Total rent expense for all operating leases in fiscal 1995, fiscal 1994
and fiscal 1993 amounted to $1,836,000, $1,507,000 and $758,000, respectively.
NOTE 8 - INCOME TAXES
The provision (benefit) for income taxes for continuing operations for the three
years ended October 31, 1995 is as follows:
1995 1994 1993
---------- ---------- -------
Currently payable (refundable):
Federal..................... $1,592,000 $ 407,000 $ (377,000)
State....................... 318,000 135,000 (9,000)
---------- ---------- ---------
1,910,000 542,000 (386,000)
Deferred...................... (245,000) 171,000 517,000
---------- ---------- ----------
Income tax expense ........... $1,665,000 $ 713,000 $ 131,000
========== ========== ==========
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<PAGE>
The following table reconciles the federal statutory tax rate to the
Company's effective rate:
1995 1994 1993
---------- ---------- -------
Federal statutory tax
rate...................... 34.0% 34.0% 34.0%
State taxes, less applicable
federal income tax
reduction................. 4.0 4.5 6.7
Tax benefits on export
sales..................... (3.2) (5.1) (9.8)
Tax benefits from tax free
investments............... (.1) (.4) (9.4)
Tax benefits from dividend
income.................... -- (.1) (1.0)
Nondeductible amortization
of intangible assets...... 1.1 2.3 7.3
Reversal of excess
income tax provisions upon
completion of tax audit... -- (2.7) (9.9)
Other, net................. 2.4 .2 1.7
---------- ---------- -------
Effective tax rate......... 38.2% 32.7% 19.6%
========== ========== ========
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Significant
components of the Company's deferred tax assets and liabilities as of October
31, 1995 and 1994 are as follows:
OCTOBER 31,
------------------------------
1995 1994
----------- -----------
Deferred tax assets:
Inventory ................................ $ 412,000 $ 306,000
Bad debt allowances ...................... 436,000 261,000
Retirement accruals ...................... 102,000 76,000
Vacation pay ............................. 112,000 115,000
Customer rebates and credits ............. 371,000 279,000
Alternative minimum tax credit ........... 13,000 147,000
Capital loss carryforward ................ -- 1,560,000
Other .................................... 147,000 67,000
----------- -----------
1,593,000 2,811,000
Valuation allowance ...................... -- (1,560,000)
----------- -----------
Total deferred tax assets ................ 1,593,000 1,251,000
----------- -----------
Deferred tax liabilities:
Accelerated depreciation ................. 1,208,000 948,000
Intangible asset amortization ............ 545,000 280,000
Equity in losses of partnerships ......... (35,000) 387,000
Other .................................... 2,000 8,000
----------- -----------
Total deferred tax liabilities ........... 1,720,000 1,623,000
----------- -----------
Net deferred tax liability ............... $ 127,000 $ 372,000
=========== ===========
During fiscal 1995, the Company's investment in the Index Options
referred to in Note 4 resulted in the utilization of the $4.6 million
($1,560,000 tax effected) capital loss carryforward which had a 100% valuation
allowance as of October 31, 1994.
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<PAGE>
The components of deferred income tax (benefit) expense on continuing
operations in fiscal 1995, 1994 and 1993 are as follows:
1995 1994 1993
---------- ---------- ---------
Reduction of tax
over book depreciation .............. $(169,000) $ (8,000) $ (26,000)
(Increases) reductions in pro-
visions for inventory
losses .............................. (126,000) (41,000) 12,000
(Increase) in provisions
for bad debt losses ................. (136,000) (134,000) (37,000)
Excess of calendar year (tax)
partnership loss over
fiscal year losses .................. 95,000 240,000 163,000
Excess of tax over book
intangible asset amortization ....... 238,000 206,000 14,000
(Increase) decrease of accrued
customer rebates and credits ........ (148,000) (76,000) 8,000
(Increase) decrease of accrued
retirement expenses ................. (23,000) 74,000 (78,000)
Income recognition of
acquired cash basis
receivables ......................... -- (34,000) (67,000)
Insurance recoveries of
litigation defense costs ............ -- (92,000) 10,000
Deductions for
non-recurring accruals .............. -- -- 501,000
Other, net ........................... 24,000 36,000 17,000
--------- --------- ---------
Deferred tax expense ................. $(245,000) $ 171,000 $ 517,000
========= ========= =========
NOTE 9 - PREFERRED STOCK PURCHASE RIGHTS PLAN
In November 1993, pursuant to a plan adopted by the Board of Directors on such
date, the Board declared a distribution of one Preferred Stock Purchase Right
(the Rights) for each outstanding share of common stock, par value $.01 per
share, of the Company. The Rights trade with the common stock and are not
exercisable or transferable apart from the common stock until after a person or
group either acquires 15% or more of the outstanding common stock or commences
or announces an intention to commence a tender offer for 30% or more of the
outstanding common stock. Absent either of the aforementioned events
transpiring, the Rights will expire at the close of business on November 2,
2003.
The Rights have certain anti-takeover effects and, therefore, will
cause substantial dilution to a person or group who attempts to acquire the
Company on terms not approved by the Company's Board of Directors or who
acquires 15% or more of the outstanding common stock without approval of the
Company's Board of Directors. The Rights should not interfere with any merger or
other business combination approved by the Board since they may be redeemed by
the Company at $.01 per Right at any time until the close of business on the
tenth day after a person or group has obtained beneficial ownership of 15% or
more of the outstanding common stock or until a person commences or announces an
intention to commence a tender offer for 30% or more of the outstanding common
stock.
-38-
<PAGE>
NOTE 10 - STOCK OPTIONS
The Company currently has two stock option plans, the 1993 Stock Option Plan
(1993 Plan) and the Non-Qualified Stock Option Plan (NQSOP). A third plan, the
Combined Stock Option Plan expired in February 1993 and was replaced by the 1993
Plan. Under the terms of the plans, a total of 840,651 shares of the Company's
stock has been reserved for issuance to directors, officers and key employees.
Options issued under the 1993 Plan may be designated incentive stock options
(ISO) or non-qualified stock options (NQSO). ISOs are granted at not less than
100% of the fair market value at the date of grant (110% thereof in certain
cases) and are exercisable in percentages specified at date of grant over a
period up to ten years. Only employees are eligible to receive ISOs. NQSOs may
be granted at less than fair market value and may be immediately exercisable.
Options granted under the NQSOP may be granted to directors, officers and
employees at no less than the fair market value at the date of grant and are
generally exercisable in four equal annual installments commencing one year from
date of grant.
Information concerning stock option transactions for the three years
ended October 31, 1995 follows:
SHARES UNDER OPTION
SHARES ---------------------------
AVAILABLE PRICE
FOR OPTION SHARES PER SHARE
---------- -------- ----------------
Outstanding,
October 31, 1992 283,712 695,784 $ 5.95 - $16.23
Expired Combined
Stock Option Plan... (186,613) -- --
Inception of the 1993
Stock Option Plan... 186,613 -- --
Granted............... (52,891) 52,891 $ 5.95 - $10.85
Cancelled............. -- (31,443) $ 5.95 - $14.81
------- ------- ----------------
Outstanding,
October 31, 1993 230,821 717,232 $ 5.95 - $16.23
Granted............... (95,590) 95,590 $ 8.58 - $ 9.92
Cancelled............. 2,420 (34,809) $ 8.37 - $14.81
Exercised............. -- (2,662) $ 8.37
------- ------- ----------------
Outstanding,
October 31, 1994 137,651 775,351 $ 5.95 - $16.23
Granted............... (106,905) 106,905 $ 7.85 - $15.68
Cancelled............. 31,913 (34,334) $ 7.95 - $14.81
Exercised............. -- (69,930) $ 6.31 - $14.81
------- ------- ----------------
Outstanding,
October 31, 1995 62,659 777,992 $ 5.95 - $16.23
======= ======= ================
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<PAGE>
All of the above options were granted at the fair market value of the
stock on the date of grant except for 11,751 shares granted in fiscal 1993 at a
below market rate of $5.95 as replacement for equivalent expiring options. As of
October 31, 1995, options for 722,967 shares were exercisable at a weighted
average option price of $10.41. If there were a change in control of the
Company, options for an additional 55,025 shares would become immediately
exercisable. The weighted average option price for all options outstanding as of
October 31, 1995 is $10.49. All stock option share and price per share
information has been retroactively restated for stock dividends.
NOTE 11 - RETIREMENT PLANS
The Company has a qualified defined contribution retirement plan (the Plan)
under which eligible employees of the Company and its participating subsidiaries
may contribute up to 10% of their annual compensation, as defined, and the
Company will contribute specified percentages ranging from 25% to 50% of
employee contributions up to 3% of annual pay in Company stock or cash, as
determined by the Company. The Plan also provides that the Company may
contribute additional amounts in its common stock or cash at the discretion of
the Board of Directors.
Concurrent with establishing the Plan, the Company sold to the Plan
181,500 shares of treasury stock in exchange for a $1,588,000 note payable to
the Company, which represented the then fair market value of such stock. This
note was fully paid during fiscal 1991. During fiscal 1990, the Company loaned
the Plan $519,000 (the 1990 Note Receivable) to fund the termination
distribution made to the employees of a discontinued business segment completed
in 1990. The 1990 Note Receivable originally had 67,772 shares of the Company's
stock pledged as collateral. These shares of stock became available as
collateral within the Plan to the extent terminated employees elected to receive
a cash distribution in lieu of the Company's stock. In September 1992, the
Company sold 363,000 additional shares of the Company's stock to the Plan for an
aggregate price of $4,122,000 entirely financed through a promissory note with
the Company (the 1992 Note Receivable). The 1992 Note Receivable also includes
$109,000 as the refinanced principal and accrued interest from the 1990 Note
Receivable. The 1992 Note Receivable is payable in nine equal annual
installments, inclusive of principal and interest at the rate of 8% per annum,
of $655,000 each and a final installment of $640,000. The 1992 Note Receivable
is prepayable in full or in part without penalty at any time.
Participants receive 100% vesting in employee contributions. Vesting in
Company contributions is based on number of years of service. Contributions to
the Plan charged to income from continuing operations for fiscal 1995, 1994 and
1993 totaled $351,000, $212,000 and $190,000, respectively, net of interest
income earned on the note received from the Plan of $299,000 in fiscal 1995,
$331,000 in fiscal 1994 and $355,000 in fiscal 1993.
In May 1991, the Company established a Directors Retirement Plan
covering its then current directors. The net assets of this plan as of October
31, 1995 are not material to the financial position of the Company. During
fiscal 1995, 1994 and 1993, $75,000, $73,000 and $73,000, respectively, was
expensed for this plan.
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<PAGE>
NOTE 12 - BUSINESS SEGMENT INFORMATION
The principal products of the aerospace products and services segment include
replacement parts for certain commercial aircraft engines, other component parts
for the aviation and defense industry and the repair and overhaul of certain
aircraft engine parts. Sales from the healthcare services segment (previously
referred to as medical services) result principally from the operation and
management of medical diagnostic imaging facilities.
Other information concerning certain of the Company's operating and
investing activities for its two principal industry segments at and for the
years ended October 31, 1995, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------------- ------------- -------------
<S> <C> <C> <C>
Sales, net of returns and allowances:
Aerospace products and services................. $ 25,613,000 $ 19,212,000 $ 19,856,000
Healthcare services................................ 14,766,000 13,181,000 6,026,000
-------------- ------------- -------------
Net sales.................................... $ 40,379,000 $ 32,393,000 $ 25,882,000
============== ============= =============
Operating income:
Aerospace products and services................. $ 4,907,000 $ 2,938,000 $ 2,488,000
Healthcare services................................ 2,495,000 1,615,000 (62,000)
-------------- ------------- -------------
Segment operating income..................... 7,402,000 4,553,000 2,426,000
Corporate expenses, net of insurance
recovery of $190,000 in 1993.............. (3,196,000) (2,598,000) (2,029,000)
Interest expense............................... (375,000) (199,000) (339,000)
Interest and other income...................... 673,000 461,000 607,000
Minority interests in consolidated
partnerships.............................. (144,000) (34,000) --
-------------- ------------- -------------
Income before income taxes................... $ 4,360,000 $ 2,183,000 $ 665,000
============== ============= =============
Identifiable assets:
Aerospace products and services................. $ 17,220,000 $ 18,507,000 $ 18,318,000
Healthcare services................................ 19,581,000 14,517,000 10,710,000
Investment in and advances to
unconsolidated partnerships.................. 2,094,000 1,152,000 1,524,000
Corporate....................................... 8,506,000 4,844,000 3,186,000
-------------- ------------- -------------
Total assets................................. $ 47,401,000 $ 39,020,000 $ 33,738,000
============== ============= =============
Depreciation and amortization:
Aerospace products and services................. $ 1,238,000 $ 1,260,000 $ 1,230,000
Healthcare services................................ 1,275,000 683,000 316,000
Corporate....................................... 125,000 57,000 36,000
-------------- ------------- -------------
Total depreciation and amortization.......... $ 2,638,000 $ 2,000,000 $ 1,582,000
============== ============= =============
Capital expenditures:
Aerospace products and services................. $ 571,000 $ 642,000 $ 823,000
Healthcare services................................ 216,000 520,000 181,000
Corporate....................................... 13,000 3,000 20,000
-------------- ------------- -------------
Total capital expenditures................... $ 800,000 $ 1,165,000 $ 1,024,000
============== ============= =============
</TABLE>
The Company's unconsolidated partnerships are integrated vertically
with the Company's healthcare services operations.
Segment operating income is operating revenue less operating expenses
(including equity in losses of unconsolidated partnerships) and excludes
interest and general corporate expenses. There are no significant inter-segment
sales or transfers.
Net sales of the unconsolidated partnerships, which are excluded from
the healthcare services segment sales set forth above, totaled $5,756,000 in
fiscal 1995, $6,444,000 in fiscal 1994 and $6,473,000 in fiscal 1993.
Identifiable assets by segment include both assets directly identified
with those operations and allocable amounts of significant jointly used assets.
Corporate assets consist primarily of cash, cash equivalents and short-term
investments.
-41-
<PAGE>
Export sales were $5,762,000 in fiscal 1995, $3,678,000 in fiscal 1994
and $3,468,000 in fiscal 1993.
No one customer accounted for sales of 10% or more of consolidated
sales during the last three fiscal years.
NOTE 13 - QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
----------- ----------- ----------- ----------
Net sales:
1995.......... $ 8,933,000 $10,345,000 $10,447,000 $10,654,000
1994.......... $ 6,909,000 $ 7,801,000 $ 8,702,000 $ 8,981,000
Gross profit:
1995.......... $ 2,963,000 $ 3,310,000 $ 3,163,000 $ 3,068,000
1994.......... $ 1,809,000 $ 2,411,000 $ 2,765,000 $ 2,688,000
Income before
cumulative effect
of change in account-
ing principle:
1995.......... $ 569,000 $ 652,000 $ 721,000 $ 753,000
1994......... $ 119,000 $ 371,000 $ 448,000 $ 532,000
Net income:
1995......... $ 569,000 $ 652,000 $ 721,000 $ 753,000
1994.......... $ 500,000 $ 371,000 $ 448,000 $ 532,000
Income per share
before cumulative
effect of change in
accounting principle:
1995.......... $ .20 $ .23 $ .24 $ .25
1994.......... $ .04 $ .13 $ .16 $ .19
Net income
per share:
1995.......... $ .20 $ .23 $ .24 $ .25
1994.......... $ .18 $ .13 $ .16 $ .19
The cumulative effect on prior years of the change in accounting for
income taxes discussed in Note 1 increased the fiscal 1994 first quarter net
income by $381,000 ($.14 per share).
Due to changes in the average number of common shares outstanding, net
income per share for the full fiscal year does not equal the sum of the four
individual quarters.
-42-
<PAGE>
NOTE 14 - OTHER CONSOLIDATED BALANCE SHEETS, STATEMENTS OF OPERATIONS
AND STATEMENTS OF CASH FLOWS INFORMATION
Accounts receivable are composed of the following:
BALANCE AT OCTOBER 31,
------------------------------
1995 1994
----------- -----------
Accounts receivable ...................... $ 9,531,000 $ 7,284,000
Less contractual allowances .............. (1,648,000) (716,000)
Less allowance for doubtful
accounts ............................... (1,174,000) (848,000)
----------- -----------
Accounts receivable, net ................. $ 6,709,000 $ 5,720,000
=========== ===========
Inventories are composed of the following:
BALANCE AT OCTOBER 31,
----------------------------
1995 1994
----------- ---------
Finished products ............................ $2,534,000 $1,916,000
Work in process .............................. 1,721,000 1,784,000
Materials, parts, assemblies and
supplies ................................... 1,104,000 1,561,000
---------- ----------
Total inventories ............................ $5,359,000 $5,261,000
========== ==========
Property, plant and equipment, including
capital leases, are composed
of the following:
BALANCE AT OCTOBER 31,
------------------------------
1995 1994
------------ ------------
Land ....................................... $ 131,000 $ 131,000
Buildings and improvements ................. 6,026,000 5,867,000
Machinery and equipment .................... 18,040,000 15,910,000
------------ ------------
24,197,000 21,908,000
Less accumulated depreciation .............. (14,901,000) (13,300,000)
------------ ------------
Property, plant and equipment, net ......... $ 9,296,000 $ 8,608,000
============ ============
Intangible assets are composed of
the following:
BALANCE AT OCTOBER 31,
------------------------------
1995 1994
------------ ------------
Excess of cost over the fair value
of net assets acquired ................... $ 12,324,000 $ 10,235,000
Trademarks and deferred charges ............ 1,473,000 762,000
Other ...................................... 25,000 25,000
------------ ------------
13,822,000 11,022,000
Less accumulated amortization .............. (1,377,000) (853,000)
------------ ------------
Intangible assets, net ..................... $ 12,445,000 $ 10,169,000
============ ============
Accrued expenses and other current
liabilities are composed of
the following:
BALANCE AT OCTOBER 31,
---------------------------
1995 1994
---------- ----------
Accrued employee compensation ................ $1,711,000 $1,010,000
Accrued customer discounts ................... 1,378,000 729,000
Accrued property taxes ....................... 505,000 435,000
Other ........................................ 1,452,000 1,423,000
---------- ----------
Total accrued expenses and other
current liabilities ........................ $5,046,000 $3,597,000
========== ==========
-43-
<PAGE>
RESEARCH AND DEVELOPMENT EXPENSES
Fiscal 1995, 1994 and 1993 costs of products and services sold include
approximately $1,800,000, $1,200,000 and $1,000,000, respectively, of new
product research and development expenses pertaining to the aerospace products
and services segment.
INSURANCE RECOVERIES
In the fourth quarter of fiscal 1993, the Company recorded insurance recoveries
of certain litigation defense costs previously incurred and expensed by the
Company. The Company is also seeking reimbursement for other previously incurred
and expensed defense costs related to this litigation. However, no additional
recovery has yet to be recorded for these other previously incurred costs.
The amounts recovered to date have been recorded in the accompanying
Consolidated Statements of Operations net of the defense costs incurred. The
insurance recoveries, net of the defense costs incurred, increased fiscal 1993
net income by $119,000 ($.04 per share).
EQUITY IN LOSS OF UNCONSOLIDATED PARTNERSHIPS
The equity in loss of unconsolidated partnerships reported in the Consolidated
Statements of Operations has been reduced by interest income on cash advances to
the unconsolidated partnerships of $259,000 in 1995, $285,000 in 1994 and
$212,000 in 1993.
INCOME FROM DISCONTINUED OPERATIONS
In the first quarter of fiscal 1993, the Company recorded income from
discontinued operations of $450,000 ($.16 per share) resulting from the reversal
of a portion of reserves for costs relating to operations disposed of in 1990,
which were determined not to be required. There is no income tax charge related
to this income since such costs resulted in a capital loss carryforward.
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION ARE AS FOLLOWS:
Cash paid for interest was $386,000, $193,000 and $407,000 in 1995, 1994 and
1993, respectively. Cash paid for income taxes was $1,400,000, $881,000 and
$89,000 in 1995, 1994 and 1993, respectively.
-44-
<PAGE>
Non-cash investing and financing activities related to the acquisitions
and contingent note payments during fiscal 1995, 1994 and 1993 were as follows:
1995 1994 1993
----------- ----------- -----------
Fair value of assets acquired:
Intangible assets ............. $ 1,945,000 $ 2,632,000 $ 2,115,000
Property,plant
and equipment ............... -- 249,000 212,000
Other assets .................. 154,000 446,000 408,000
Cash paid, including
contingent note
payments ........................ (2,099,000) (3,078,000) (2,647,000)
----------- ----------- -----------
Liabilities assumed ............... $ -- $ 249,000 $ 88,000
=========== =========== ===========
Non-cash investing and financing activities related to purchases of
property, plant and equipment financed by capital leases during fiscal 1995 and
1994 amounted to $2,257,000 and $1,044,000, respectively. There were no
significant non-cash investing and financing activities related to purchases of
property, plant and equipment during fiscal 1993. Non-cash investing and
financing activities during fiscal 1995 also included purchases of property,
plant and equipment of $2,269,000, investments in and advances to unconsolidated
partnerships of $862,000, deferred charges of $461,000 and other assets of
$139,000 which were financed by capital leases assumed, issuance of a note
payable and distributions from an unconsolidated partnership during fiscal 1995.
Additionally, retained earnings was charged $7,881,000 as a result of the two
10% stock dividends described in Note 3 above.
NOTE 15 - PENDING LITIGATION
In November 1989, HEICO Aerospace and Jet Avion were named defendants in a
complaint filed by United Technologies Corporation (United) in the United States
District court for the Southern District of Florida. The complaint, as amended
in fiscal 1995, alleges infringement of a patent, misappropriation of trade
secrets and unfair competition relating to certain jet engine parts and coatings
sold by Jet Avion in competition with Pratt & Whitney, a division of United.
United seeks approximately $10 million in damages for the patent infringement
and approximately $30 million in damages for the misappropriation of trade
secrets and the unfair competition claims. The aggregate damages referred to in
the preceding sentence do not exceed approximately $30 million because a portion
of the misappropriation and unfair competition damages duplicate the $10 million
patent infringement damages. The complaint also seeks, among other things,
pre-judgment interest and treble damages.
In July and November 1995, the Company filed its answers to United's
complaint denying the allegations. In addition, the Company filed counterclaims
against United for, among other things, malicious prosecution, trade
disparagement, tortious interference, unfair competition and antitrust
violations. The Company is seeking treble, compensatory and punitive damages in
amounts to be determined at trial. United filed its answer denying certain
counterclaims and moved to dismiss other counterclaims. No trial date has been
set.
-45-
<PAGE>
Based on currently known facts, the Company's legal counsel has advised
that it believes that the Company should be able to successfully defend the
patent infringement claims alleged in United's complaint. With respect to the
misappropriation and unfair competition claims, legal counsel to the Company has
advised that it believes the likelihood that United will be able to prove a case
regarding such claims within the statute of limitations is remote. Further, the
Company intends to vigorously pursue its counterclaims against United. The
ultimate outcome of this litigation is not certain at this time and no provision
for gain or loss, if any, has been made in the accompanying consolidated
financial statements.
The Company is involved in various other legal actions arising in the
normal course of business. After taking into consideration legal counsel's
evaluation of such actions, management is of the opinion that the outcome of
these other matters will not have a significant effect on the Company's
consolidated financial statements.
-46-
<PAGE>
HEICO Corporation and Subsidiaries
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and
Shareholders of HEICO Corporation
We have audited the accompanying consolidated balance sheets of HEICO
Corporation and subsidiaries (the "Company") as of October 31, 1995 and 1994,
and the related consolidated statements of operations, shareholders' equity and
cash flows for each of the three years in the period ended October 31, 1995.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of the Company as of October
31, 1995 and 1994, and the results of its operations and its cash flows for each
of the three years in the period ended October 31, 1995, in conformity with
generally accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, the
Company changed its method of accounting for income taxes effective November 1,
1993 to conform with Statement of Financial Accounting Standards No. 109.
DELOITTE & TOUCHE LLP
Miami, Florida
December 29, 1995
-47-
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning the Directors of the Company is incorporated by reference
to the Company's definitive proxy statement which will be filed with the
Securities and Exchange Commission (Commission) within 120 days after the close
of fiscal 1995.
Information concerning the executive officers of the Company is set
forth at Part I hereof under the caption "Executive Officers of the Registrant."
ITEM 11. EXECUTIVE COMPENSATION
Information concerning executive compensation is hereby incorporated by
reference to the Company's definitive proxy statement which will be filed with
the Commission within 120 days after the close of fiscal 1995.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Information concerning security ownership of certain beneficial owners and
management is hereby incorporated by reference to the Company's definitive proxy
statement which will be filed with the Commission within 120 days after the
close of fiscal 1995.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information concerning certain relationships and related transactions is hereby
incorporated by reference to the Company's definitive proxy statement which will
be filed with the Commission within 120 days after the close of fiscal 1995.
-48-
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K
(a)(1) Financial Statements:
The following consolidated financial statements of
the Company and subsidiaries are included in Part II,
Item 8:
PAGE
Consolidated Balance Sheets at October 31, 1995
and 1994....................................... 23
Consolidated Statements of Operations for the
years ended October 31, 1995, 1994 and 1993.... 25
Consolidated Statements of Shareholders' Equity
for the years ended October 31, 1995, 1994
and 1993....................................... 26
Consolidated Statements of Cash Flows for the
years ended October 31, 1995, 1994 and 1993.... 27
Notes to Consolidated Financial Statements....... 28
Report of Independent Auditors................... 47
(a)(2) Financial Statement Schedules:
No schedules have been submitted because they are not applicable or the
required information is included in the financial statements or notes thereto.
(a)(3) Exhibits
2.1 Amended and Restated Agreement of Merger and
Plan of Reorganization, dated as of March 22,
1993, by and among HEICO Corporation, HEICO
Industries, Corp. and New HEICO, Inc. is
incorporated by reference to Exhibit 2.1 to
the Company's Registration Statement on Form
S-4 (Registration No. 33-57624) Amendment No.
1 filed on March 19, 1993.
3.1 Articles of Incorporation of the Registrant
are incorporated by reference to Exhibit 3.1
to the Company's Registration Statement on
Form S-4 (Registration No. 33-57624) Amendment
No. 1 filed on March 19, 1993.
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<PAGE>
Item 14 (a) (3) Exhibits continued
3.2 Articles of Amendment of the Articles of Incorporation
of the Registrant, dated April 27, 1993 are
incorporated by reference to Exhibit 3.2 to the
Company's Registration Statement on Form 8-B dated
April 29, 1993.
3.3 Articles of Amendment of the Articles of Incorporation
of the Registrant, dated November 3, 1993 are
incorporated by reference to Exhibit 3.3 on Form 10-K
dated October 31, 1993.
3.4 Bylaws of the Registrant are incorporated by reference
to Exhibit 3.2 to the Registrant's Registration
Statement on Form S-4 (Registration No. 33-57624) dated
February 1, 1993.
4.0 The description and terms of Preferred Stock Purchase
Rights are set forth in a Rights Agreement between the
Company and SunBank, N.A., as Rights Agent, dated as of
November 2, 1993, incorporated by reference to Exhibit
1 to the Form 8-K dated November 2, 1993.
10.1 Loan Agreement dated March 1, 1988 between HEICO
Corporation and Broward County, Florida is incorporated
by reference to Exhibit 10.1 to the Form 10-K for the
year ended October 31, 1994.
10.2 SunBank Reimbursement Agreement dated February 28,
1994 between HEICO Aerospace Corporation and
SunBank/South Florida, N.A. is incorporated by
reference to Exhibit 10.2 to the Form 10-K for the year
ended October 31, 1994.
10.3 Amendment, dated March 1, 1995, to the SunBank
Reimbursement Agreement, dated February 28, 1995,
between HEICO Aerospace Corporation and SunBank/South
Florida, N.A.
10.4 Loan Agreement dated February 28, 1994 between HEICO
Corporation and SunBank/South Florida, N.A. is
incorporated by reference to Exhibit 10.3 to the Form
10-K for the year ended October 31, 1994.
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<PAGE>
Item 14 (a) (3) Exhibits continued
10.5 The First Amendment, dated October 13, 1994, to Loan
Agreement dated February 28, 1994 between HEICO
Corporation and SunBank/South Florida, N.A. is
incorporated by reference to Exhibit 10.4 to the Form
10-K for the year ended October 31, 1994.
10.6 Second Amendment, dated March 1, 1995, to the Loan
Agreement dated February 28, 1994 between HEICO
Corporation and SunBank/South Florida, N.A.
10.7 Loan Agreement dated March 31, 1994 between HEICO
Corporation and Eagle National Bank of Miami is
incorporated by reference to Exhibit 10.5 to the Form
10-K for the year ended October 31, 1994.
10.8 The First Amendment, dated May 31, 1994, to Loan
Agreement dated March 31, 1994 between HEICO
Corporation and Eagle National Bank of Miami is
incorporated by reference to Exhibit 10.6 to the Form
10-K for the year ended October 31, 1994.
10.9 The Second Amendment, dated August 9, 1995, to the
Loan Agreement dated March 31, 1994 between HEICO
Corporation and Eagle National Bank of Miami.
10.10 Healthcare Receivables Purchase Agreement dated
May 20, 1994 between Finance Funding Corporation,
Provider Funding Corporation and John Alden Asset
Management Company is incorporated by reference to
Exhibit 10.7 to the Form 10-K for the year ended
October 31, 1994.
10.11 Registrant's 1993 Stock Option Plan dated as of
March 17, 1993 is incorporated by reference to Exhibit
10.2 to the Company's Registration Statement on Form
S-4 (Registration No. 33- 57624) Amendment No. 1 filed
on March 19, 1993.
10.12 HEICO Savings and Investment Plan and Trust, as
amended and restated effective January 2, 1987 is
incorporated by reference to Exhibit 10.2 to the Form
10-K for the year ended October 31, 1987.
-51-
<PAGE>
Item 14 (a) (3) Exhibits continued
10.13 HEICO Savings and Investment Plan, as amended and
restated, dated December 19, 1994 is incorporated by
reference to Exhibit 10.11 to the Form 10-K for the
year ended October 31, 1994.
10.14 HEICO Corporation Combined Stock Option Plan dated
March 15, 1988 is incorporated by reference to Exhibit
10.3 to the Form 10-K for the year ended October 31,
1989.
10.15 Non-Qualified Stock Option Agreement for Directors,
Officers and Employees is incorporated by reference to
Exhibit 10.8 to the Form 10-K for the year ended
October 31, 1985.
10.16 HEICO Corporation Directors' Retirement Plan, as
amended, dated as of May 31, 1991 is incorporated by
reference to Exhibit 10.19 to the Form 10-K for the
year ended October 31, 1992.
10.17 Key Employee Termination Agreement dated as of
April 5, 1988, between HEICO Corporation and Thomas S.
Irwin is incorporated by reference to Exhibit 10.20 to
the Form 10-K for the year ended October 31, 1992.
10.18 Stock Repurchase and Termination of Employment
Agreement dated May 1, 1994 between MediTek Health
Corporation and Paul M. Stanley is incorporated by
reference to Exhibit 10.16 to the Form 10-K for the
year ended October 31, 1994.
10.19 Consulting Agreement dated August 1, 1994 between
MediTek Health Corporation and Paul M. Stanley is
incorporated by reference to Exhibit 10.17 to the Form
10-K for the year ended October 31, 1994.
10.20 Asset Purchase Agreement dated as of June 21, 1993
by and between MediTek - Premier, Inc., and Premier
Imaging Associates, L.P. is incorporated by reference
to Exhibit 1 to the Form 8-K dated October 18, 1993.
-52-
<PAGE>
Item 14 (a) (3) Exhibits continued
10.21 Assignment Agreement dated as of October 1, 1993 by
and between MediTek - Premier, Inc. and Andrew Zeldin,
Scientific Imaging Associates, L.P., Health Service,
Inc. and Principle Anesthesia, Inc. is incorporated by
reference to Exhibit 2 to the Form 8-K dated October
18, 1993.
10.22 Employment Agreement dated as of October 1, 1993 by
and between MediTek Health Corporation and Andrew
Zeldin is incorporated by reference to Exhibit 3 to the
Form 8-K dated October 18, 1993.
10.23 Asset Purchase Agreement dated as of June 21, 1993 by
and between MediTek Premier, Inc., and Premier Imaging
Associates II, L.P. is incorporated by reference to
Exhibit 1 to the Form 8-K dated March 18, 1994.
10.24 Assignment Agreement dated as of February 1, 1994 by
and between MediTek Premier, Inc., Andrew Zeldin,
Imaging Consultants, Inc. and Health Services, Inc. is
incorporated by reference to Exhibit 2 to the Form 8-K
dated March 18, 1994.
11 Computation of earnings per share.
21 Subsidiaries of the Company.
23.1 Consent of independent auditors.
23.2 Consent of independent auditors.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed by the Company during
the fourth quarter of fiscal 1995.
(c) Exhibits
See Item 14 (a) (3).
(d) Separate Financial Statements Required
Not applicable.
-53-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: January 15, 1996 BY:/S/ THOMAS S. IRWIN
---------------------------
THOMAS S. IRWIN
Executive Vice President
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
/S/ LAURANS A. MENDELSON Chairman, January 15, 1996
- ---------------------------- President, Chief
LAURANS A. MENDELSON Executive Officer
and Director (Principal
Executive Officer)
/S/ JACOB T. CARWILE Director January 15, 1996
- ----------------------------
JACOB T. CARWILE
/S/ SAMUEL L. HIGGINBOTTOM Director January 15, 1996
- ----------------------------
SAMUEL L. HIGGINBOTTOM
/S/ PAUL F. MANIERI Director January 15, 1996
- ----------------------------
PAUL F. MANIERI
/S/ ERIC A. MENDELSON Director January 15, 1996
- ----------------------------
ERIC A. MENDELSON
/S/ ALBERT MORRISON, JR. Director January 15, 1996
- ----------------------------
ALBERT MORRISON, JR.
/S/ ALAN SCHRIESHEIM Director January 15, 1996
- ----------------------------
ALAN SCHRIESHEIM
/S/ GUY C. SHAFER Director January 15, 1996
- ----------------------------
GUY C. SHAFER
-54-
EXHIBIT 10.3
AMENDMENT
TO
SUNBANK REIMBURSEMENT AGREEMENT
This Amendment to SunBank Reimbursement Agreement, dated as of the 1st
day of March, 1995, by and between HEICO AEROSPACE CORPORATION, a Florida
corporation, f/k/a HEICO CORPORATION, a Florida corporation (the "Company"), and
SUNBANK/SOUTH FLORIDA, NATIONAL ASSOCIATION (the "Bank").
W I T N E S S E T H:
WHEREAS, the Company and the Bank executed that certain SunBank
Reimbursement Agreement dated as of the 28th day of February, 1994 (the
"Agreement"); and
WHEREAS, the parties have agreed to certain modifications to the
Agreement, as hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the parties hereto agree as follows:
1. All capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to them in the Agreement.
2. Section 1, DEFINITIONS, is amended as follows:
(A) The definition of "GUARANTORS" shall be deleted and the
following inserted in its place:
"GUARANTORS" means (collectively) JET AVION
CORPORATION, a Florida corporation, JET AVION HEAT TREAT
CORPORATION, a Florida corporation, LPI INDUSTRIES
CORPORATION, a Florida corporation, AIRCRAFT TECHNOLOGY, INC.,
a Florida corporation, MEDITEK HEALTH CORPORATION, a Florida
corporation, MEDITEK INDUSTRIES, INC., a Florida corporation,
HEICO CORPORATION, a Florida corporation, and HEICO-NEWCO,
INC., a Florida corporation.
(B) The definition of "MORTGAGE" shall be deleted and the
following inserted in its place:
"MORTGAGE" means the Mortgage and Security Agreement
dated as of March 1, 1988, executed by the Company in favor of
Broward County, Florida, and NCNB National Bank of North
1
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Carolina, in accordance with the Indenture and Loan Agreement,
and recorded on March 30, 1988, in Official Records Book
15307, Page 520, Broward County's interest being assigned to
Mellon Bank, N.A., by Broward County, Florida, by instrument
dated March 1, 1988, and recorded on March 30, 1988, in
Official Records Book 15307, Page 544, as assigned to Bank by
virtue of Assignment of Mortgage from NCNB dated February 28,
1994, as modified by a Mortgage Modification Agreement dated
February 28, 1994, recorded on March 3, 1994, in Official
Records Book 21825, Page 1 (all of the foregoing recording
information referring to the Public Records of Broward County,
Florida), and any further modifications thereto."
(C) The definition of "PLEDGE AGREEMENT" shall be deleted and
the following inserted in its place:
"PLEDGE AGREEMENT" means the Pledge and Security
Agreement dated as of March 1, 1988 by and among the Company,
the Custodian, and NationsBank, as assigned by NationsBank to
the Bank pursuant to an Assignment dated as of February 28,
1994, as amended by an Amendment to Pledge and Security
Agreement dated as of February 28, 1994, as further amended by
a Second Amendment to Pledge and Security Agreement dated as
of March 1, 1995, and any further amendments and modifications
thereto, which provides that Pledged Bonds shall be released
only upon delivery of a notice of reinstatement to the
Custodian."
(D) The definition of "REMARKETING AGREEMENT" shall be deleted
and the following inserted in its place:
"REMARKETING AGREEMENT" means the Remarketing
Agreement dated as of March 1, 1988, as amended by an
Amendment to Remarketing Agreement dated as of February 28,
1994, and any further amendments and modifications thereto,
among the Issuer, the Company, and the Remarketing Agent."
(E) The definition of "SECOND MORTGAGE" shall be deleted and
the following inserted in its place:
"SECOND MORTGAGE" means the Second Mortgage Deed and
Security Agreement dated as of February 28, 1994, executed by
the Company in favor of the Bank in the amount of
$2,000,000.00 which is a second lien on the Property, recorded
on March 3, 1994, in Official Records Book 21825, Page 121, of
the Public Records of Broward County, Florida, as modified by
that certain
2
<PAGE>
Mortgage Modification Agreement (Second Mortgage) executed by
the Company and the Bank, dated as of March 1, 1995, and any
further modifications thereto."
(F) The following definition of "SECURITY AGREEMENTS" is
hereby added:
"SECURITY AGREEMENTS" means the Security Agreements
dated February 28, 1994, from the Company and each of the
Guarantors (other than HEICO-Newco, Inc.) to the Bank, and the
Security Agreement dated as of March 1, 1995 from HEICO-Newco,
Inc. to the Bank, as the same may be modified or reaffirmed
from time to time."
(G) The definition of "SUNBANK LOAN AGREEMENT" shall be
deleted and the following inserted in its place:
"SUNBANK LOAN AGREEMENT" collectively means the Loan
Agreement between the Bank, Heico Corporation and the Company,
dated as of February 28, 1994, as amended by a First Amendment
to Loan Agreement and Reaffirmation Agreement dated as of
October 13, 1994, and a Second Amendment to Loan Agreement
dated as of March 1, 1995, and any further modifications
thereto."
3. Subparagraph (c)(ix) of Section 2, APPLICATION, REIMBURSEMENT
AND OTHER PAYMENTS, shall be deleted and the following shall be inserted in its
place:
"(ix) on each anniversary date of this Agreement (the
"Anniversary Date"), a fee equal to 1.25% of the excess, if
any, of the stated amount of the Letter of Credit over the
balance in the Yield Restricted Account on the Anniversary
Date;
4. Subparagraph (b) of Section 25, SECURITY AND CASH COLLATERAL
ACCOUNT, shall be deleted and the following inserted in its place:
"(b) Company agrees to deposit into the Cash
Collateral Account the sum of Sixteen Thousand, Five Hundred
Dollars ($16,500.00) on the 28th day of February, 1994, and on
like date each month thereafter until the 28th day of June,
1995. Commencing on the 28th day of July, 1995, the Company
agrees to deposit into the Cash Collateral Account the sum of
Eight Thousand, Two Hundred Fifty Dollars ($8,250.00) and
further agrees to deposit like amount on the 28th day of each
month thereafter until the Letter of Credit is terminated and
all Payment Obligations to the Bank are paid in full."
3
<PAGE>
5. Except as hereinabove amended, the Agreement shall continue
in full force and effect.
6. AS A MATERIAL INDUCEMENT FOR THE BANK TO AMEND THE AGREEMENT
PURSUANT TO THIS AMENDMENT, THE COMPANY COVENANTS WITH AND WARRANTS UNTO THE
BANK, AND ITS AFFILIATES AND ASSIGNS, THAT THERE EXIST NO CLAIMS, COUNTERCLAIMS,
DEFENSES, OBJECTIONS, OFFSETS OR CLAIMS OF OFFSETS AGAINST THE BANK RELATING IN
ANY WAY TO THE INDENTURE, THE AGREEMENT OR OTHER ASSOCIATED LOAN DOCUMENTS,
THROUGH THE DATE HEREOF, OR THE OBLIGATION OF THE COMPANY TO PAY OR PERFORM ALL
OBLIGATIONS TO THE BANK EVIDENCED BY THE AGREEMENT OR OTHERWISE.
7. AS A MATERIAL INDUCEMENT FOR THE BANK TO AMEND THE AGREEMENT
PURSUANT TO THIS AMENDMENT, THE COMPANY DOES HEREBY RELEASE, WAIVE, DISCHARGE,
COVENANT NOT TO SUE, ACQUIT, SATISFY AND FOREVER DISCHARGE THE BANK, ITS
OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS AND AGENTS AND ITS AFFILIATES AND
ASSIGNS FROM ANY AND ALL LIABILITY, CLAIMS, COUNTERCLAIMS, DEFENSES, ACTIONS,
CAUSES OF ACTION, SUITS, CONTROVERSIES, AGREEMENTS, PROMISES AND DEMANDS
WHATSOEVER, IN LAW OR IN EQUITY, WHICH THE COMPANY EVER HAD, NOW HAS OR WHICH
ANY PERSONAL REPRESENTATIVE, SUCCESSOR, HEIR OR ASSIGN OF THE COMPANY HEREAFTER
CAN, SHALL OR MAY HAVE AGAINST THE BANK, ITS OFFICERS, DIRECTORS, EMPLOYEES,
ATTORNEYS AND AGENTS, AND ITS AFFILIATES AND ASSIGNS, FOR, UPON OR BY REASON OF
ANY MATTER, CAUSE OR THING WHATSOEVER RELATING IN ANY WAY TO THE INDENTURE, THE
AGREEMENT AND OTHER ASSOCIATED LOAN DOCUMENTS, THROUGH THE DATE HEREOF. THE
COMPANY FURTHER EXPRESSLY AGREES THAT THE FOREGOING RELEASE AND WAIVER AGREEMENT
IS INTENDED TO BE AS BROAD AND INCLUSIVE AS IS PERMITTED BY THE LAWS OF THE
STATE OF FLORIDA.
8. THE BANK AND THE COMPANY HEREBY MUTUALLY, KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT TO
ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THE
AGREEMENT AND ANY AGREEMENT CONTEMPLATED OR TO BE EXECUTED IN CONJUNCTION
THEREWITH, UNDER ANY ASSOCIATED LOAN DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE
OF DEALING STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF ANY PARTY. THE
COMPANY ACKNOWLEDGES THAT THIS WAIVER OF JURY TRIAL IS A MATERIAL INDUCEMENT TO
THE BANK IN ACCEPTING THIS AMENDMENT, AND THAT THE BANK WOULD NOT HAVE ACCEPTED
THIS AMENDMENT WITHOUT THIS JURY TRIAL WAIVER. THE COMPANY ACKNOWLEDGES THAT THE
COMPANY HAS BEEN REPRESENTED BY AN ATTORNEY OR HAS HAD AN OPPORTUNITY TO CONSULT
WITH AN ATTORNEY REGARDING THIS JURY TRIAL WAIVER, AND UNDERSTANDS THE LEGAL
EFFECT
4
<PAGE>
OF THIS JURY TRIAL WAIVER. THE WAIVER CONTAINED HEREIN IS IRREVOCABLE,
CONSTITUTES A KNOWING AND VOLUNTARY WAIVER, AND SHALL BE SUBJECT TO NO
EXCEPTIONS. THE BANK HAS IN NO WAY AGREED WITH OR REPRESENTED TO THE COMPANY OR
ANY OTHER PARTY THAT THE PROVISIONS OF THIS JURY TRIAL WAIVER WILL NOT BE FULLY
ENFORCED IN ALL INSTANCES.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective officers and authorized
representatives thereunto duly authorized as of the date first above written.
Signed, sealed and delivered
in the presence of: HEICO AEROSPACE CORPORATION, a
Florida corporation f/k/a HEICO
CORPORATION, a Florida
corporation
______________________________ By /S/ THOMAS S. IRWIN
------------------------------
Its: VICE CHAIRMAN AND TREASURER
______________________________
(SEAL)
SUNBANK/SOUTH FLORIDA, NATIONAL
ASSOCIATION
______________________________ By: /S/ DORMAN C. PARRISH
------------------------------
Its: VICE PRESIDENT
_______________________________
5
EXHIBIT 10.6
SECOND AMENDMENT TO LOAN AGREEMENT
THIS SECOND AMENDMENT TO LOAN AGREEMENT is made and entered into as of
the 1st day of March, 1995, by and among HEICO CORPORATION, a Florida
corporation ("Heico"), HEICO AEROSPACE CORPORATION, a Florida corporation, f/k/a
HEICO CORPORATION, a Florida corporation ("Aerospace"; collectively with Heico,
"Borrower"), and SUNBANK/SOUTH FLORIDA, NATIONAL ASSOCIATION ("Lender").
RECITALS
WHEREAS, Borrower and Lender have previously entered into that certain
Loan Agreement dated February 28, 1994, as previously amended by that certain
First Amendment to Loan Agreement and Reaffirmation Agreement dated as of
October 13, 1994 (collectively, the "Loan Agreement"), pursuant to which Heico
obtained extensions of credit of up to Four Million Nine Hundred Ninety Thousand
Dollars ($4,990,000.00) for the purposes specified in the Loan Agreement;
WHEREAS, Borrower and Lender wish to increase and modify the loan from
Lender to Heico, such that the loan shall hereafter consist of a revolving line
of credit in the amount of Seven Million Dollars ($7,000,000.00) (the "Loan"),
which shall be used by Borrower and HEICO-NEWCO, INC., a Florida corporation
("Newco"), to acquire companies engaged in businesses similar to that of
Aerospace or its subsidiaries; shall be used by MEDITEK HEALTH CORPORATION, a
Florida corporation ("Meditek"), to acquire medical centers which are engaged in
any business activity which would not represent a material change from the kind
of business activity currently engaged in by Meditek or its subidiaries; and
shall additionally be used by Borrower, Newco and Meditek for working capital
and other general corporate purposes, subject to the terms and conditions set
forth in the Loan Agreement, as modified herein; and
WHEREAS, Borrower and Lender now wish to modify the Loan Agreement as
hereinafter provided.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in consideration of the loans
or extensions of credit heretofore, now or hereafter made or to be made for the
benefit of Borrower by Lender, the parties do hereby agree as follows:
1. The foregoing recitals are hereby acknowledged to be true
and correct and are incorporated herein by reference.
2. All capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to them in the Loan Agreement.
3. From and after the date hereof, all references in the Loan
Agreement to the Loan shall mean and refer to the Loan (as defined herein).
1
<PAGE>
4. Subsection 1.2(a) of the Loan Amendment is hereby amended and
restated so that, from and after the date hereof, such Subsection shall read in
its entirety as follows:
(a) "ADVANCE": A disbursement by a Lender of a portion of the
Loan proceeds to be funded to Heico, in accordance with the terms and
provisions of this Agreement, to be utilized as provided in this
Agreement.
5. Subsection 1.2(k) of the Loan Agreement is hereby amended and
restated so that, from and after the date hereof, such Subsection shall read in
its entirety as follows:
(k) "CASH COLLATERAL ACCOUNT": A Yield Restricted Cash
Collateral Account pledged by Aerospace in favor of Lender under the
terms and provisions of the Reimbursement Agreement as security for the
Reimbursement Agreement into which the sum of (i) Sixteen Thousand Five
Hundred ($16,500.00) Dollars (through June 28, 1995) and (ii) Eight
Thousand Two Hundred Fifty ($8,250.00) Dollars (after June 28, 1995)
per month shall be funded, said monthly payments to be funded at the
time of Closing and monthly thereafter, until the earlier of such time
as the sum of One Million Nine Hundred Eighty Thousand ($1,980,000.00)
Dollars has been funded into the Cash Collateral Account or until the
expiration of the Letter of Credit.
6. Subsection 1.2(v) of the Loan Agreement is hereby amended and
restated so that, from and after the date hereof, such Subsection shall read in
its entirety as follows:
(v) "GUARANTOR(S)": Individually and collectively, JET AVION
CORPORATION, a Florida corporation, JET AVION HEAT TREAT CORPORATION, a
Florida corporation, LPI INDUSTRIES CORPORATION, a Florida corporation,
AIRCRAFT TECHNOLOGY, INC., a Florida corporation, MEDITEK, MEDITEK
INDUSTRIES, INC., a Florida corporation, and HEICO-NEWCO, INC., a
Florida corporation, as to the Loan, the Reimbursement Agreement and
all obligations associated therewith, and, in connection with
guaranteeing repayment of the Reimbursement Agreement and all
obligations associated therewith - Heico, and, in connection with
guaranteeing repayment of the Loan and all obligations associated
therewith - Aerospace. All of the above Guarantors shall jointly and
severally guarantee repayment and performance of the Loan, the
Reimbursement Agreement and all obligations of each Borrower to Lender
associated therewith.
7. Subsection 1.2(w) of the Loan Agreement is hereby amended and
restated so that, from and after the date hereof, such Subsection shall read in
its entirety as follows:
(w) "GUARANTYS": Collectively, the Absolute Unconditional and
Continuing Guarantys executed by each Guarantor in favor of Lender, as
modified and/or reaffirmed from time to time, guaranteeing repayment of
the Loan, the Reimbursement Agreement and all obligations of each
Borrower associated therewith.
2
<PAGE>
8. Subsection 1.2(dd) of the Loan Agreement is hereby amended and
restated so that, from and after the date hereof, such Subsection shall read in
its entirety as follows:
(dd) "MATURITY DATE": As to the Loan, April 30, 1997,
unless extended pursuant to Section 2.6 hereof. As to the Letter of
Credit, five (5) years from the date of the issuance of the Letter of
Credit.
9. Subsection 1.2(ee) of the Loan Agreement is hereby amended and
restated so that, from and after the date hereof, such Subsection shall read in
its entirety as follows:
(ee) "MORTGAGE DOCUMENTS": Collectively, that certain Mortgage
and Security Agreement dated as of the 1st day of March 1988, executed
by Aerospace, formerly known as Heico Corporation, a Florida
corporation, as mortgagor, and Broward County, Florida and NCNB, as
mortgagees, recorded in Official Records Book 15307, Page 520, Broward
County's interest being assigned to Mellon Bank, N.A. by Broward
County, Florida by instrument dated March 1, 1988, and recorded on
March 30, 1988 in Official Records Book 15307, Page 544, as assigned to
Assignee by virtue of Assignment of Mortgage from NCNB dated February
28, 1994, as modified by Mortgage Modification Agreement dated February
28, 1994, and recorded on March 3, 1994 in Official Records Book 21825,
Page 1 (collectively, the "First Mortgage"), together with a Second
Mortgage Deed and Security Agreement dated as of February 28, 1994, in
the amount of Two Million ($2,000,000.00) Dollars executed by Aerospace
in favor of Lender, and recorded on March 3, 1994, in Official Records
Book 21825, Page 12, as modified by Mortgage Modification Agreement
(Second Mortgage) dated as of March 1, 1995 (collectively, the "Second
Mortgage"), both mortgages, as modified, being recorded in the Public
Records of Broward County, Florida and encumbering the property located
at 3000 Taft Street, Hollywood, Florida 33021 (the "Property"), said
Second Mortgage executed as security for Aerospace's Guaranty of the
Loan, together with an Assignment of Rents, Leases and Deposits and
UCC-1 Financing Statements executed in connection therewith.
10. Subsection 1.2(ff) of the Loan Agreement is hereby amended and
restated so that, from and after the date hereof, such Subsection shall read in
its entirety as follows:
(ff) "NOTE": A Consolidation Master Revolving Promissory Note
in the principal amount of Seven Million Dollars ($7,000,000.00) from
Heico to Lender dated June 29, 1995, and any modifications, amendments
or renewals thereof, evidencing the Loan, which Note consolidates (i)
that certain Master Revolving Promissory Note in the principal amount
of Two Million Ten Thousand Dollars ($2,010,000.00) from Heico to
Lender dated June 29, 1995, and (ii) that certain Modification Master
Revolving Promissory Note in the principal amount of Four Million Nine
Hundred Ninety Thousand Dollars ($4,990,000.00) from Heico to Lender
dated June 29, 1995 (which in turn modifies that certain Modification
Master Revolving Promissory Note in the principal amount of Four
Million Nine Hundred Ninety Thousand Dollars ($4,990,000.00) from Heico
to Lender dated October 13, 1994, which modified that certain Master
Revolving
3
<PAGE>
Promissory Note in the principal amount of Four Million Nine Hundred
Ninety Thousand Dollars ($4,990,000.00) from Heico to Lender dated
February 28, 1994).
11. Subsection 1.2(ll) of the Loan Agreement is hereby amended and
restated so that, from and after the date hereof, such Subsection shall read in
its entirety as follows:
(ll) "SECURITY AGREEMENTS": Security Agreements, as modified
and/or reaffirmed from time to time, from each Borrower and each
Guarantor (other than Meditek and Meditek Industries, Inc.) to Lender
securing the Note, the Loan Agreement and the Guarantys, as applicable,
which shall provide valid first liens (subject to the "Permitted Liens"
as set forth herein) on the personal property identified in the
Security Agreements.
12. The following Subsection 1.2(tt) is hereby added to the Loan
Agreement, effective from and after the date hereof:
(tt) "ELIGIBLE RECEIVABLES": Those accounts receivable of
Aerospace and Newco arising in the normal and ordinary course of
business which are no more than ninety (90) days old, or one hundred
and fifty (150) days old (in the case of accounts receivable with
ninety (90) day terms only), from the original invoice date, according
to the original terms of sale and the payment of which is not in
dispute and in which the Lender has a first priority security interest.
The Lender may treat any account receivable or any portion thereof, as
ineligible: (i) if any warranty contained in this or any related
agreement is breached with respect thereto; (ii) if the customer or
account debtor has filed a petition for bankruptcy or any other
application for relief under the Bankruptcy Act, assigned for the
benefit of creditors, or if any petition or any other application for
relief under the Bankruptcy Act has been filed against the said
customer or account debtor, or if the customer or account debtor has
failed, suspended business, become insolvent, or had or suffered a
receiver or trustee to be appointed for any of its assets or affairs;
(iii) if the customer or account debtor is located outside the United
States; provided, however, that up to ten percent (10%) of Eligible
Receivables may consist of accounts receivable from account debtors
located in Canada; (iv) if more than twenty percent (20%) of the
customer's or account debtor's account receivables are more than one
hundred and twenty (120) days old from the date of the original invoice
representing the account receivable, then all of such customer's or
account debtor's account receivables shall be ineligible; (v) to the
extent any portion of the account receivable represents finance and
service charges due and owing to Aerospace or Newco from said account
debtor; (vi) if the account receivable represents sums due and owing
for work and/or service currently being rendered by Aerospace but not
yet completed by Aerospace; (vii) if the account receivable is due and
owing from an affiliate corporation or related entity of Aerospace or
Newco or represents an intercompany account; (viii) if the account
receivable represents a consignment sale or warranty work; (ix) if the
account receivable represents sums due and owing from an employee of
Aerospace or Newco; (x) if the account receivable represents retainage
under and owing to Aerospace or Newco; (xi) if the account receivable
represents the billing for inventory which has not been delivered to
said account debtor;
4
<PAGE>
(xii) if the account receivable represents a Bill and Hold Invoice for
items which have been billed and are not yet due and payable; or (xiii)
if the Lender believes, in its credit judgement in Lender's reasonable
discretion, that collection of such account receivable is insecure or
that it may not be paid by reason of financial inability to pay or
otherwise or that such account receivable is not suitable for use as
collateral hereunder.
13. The following Subsection 1.2(uu) is hereby added to the Loan
Agreement, effective from and after the date hereof:
(uu) "ELIGIBLE INVENTORY": All inventory of raw materials and
finished goods then owned by Aerospace and Newco and held for sale in
the ordinary course of business as then conducted. However, Eligible
Inventory shall not include any item of inventory that: (i) is not in
good condition or of merchantable quality; (ii) is defective or does
not meet the established specifications of Aerospace or Newco, as
applicable, for its type; (iii) is obsolete or infrequently sold
(unless the subject of a current purchase order); (iv) is held by any
person other than Aerospace, Newco or a party to a bailment agreement
with the Lender (in such form and substance as may be acceptable to the
Lender); (v) is located at any location other than Aerospace's or
Newco's principal place of business; (vi) is located on any leased
premises where the landlord is not a party to a waiver and access
agreement with the Lender (in such form as may be acceptable to the
Lender); (vii) is located at any location outside the United States of
America; (viii) is subject to any prior lien, encumbrance or claim so
that the Lender does not hold a perfected first priority security
interest in the inventory; (ix) is the subject of any financing
statement, lien or other encumbrance other than in favor of the Lender;
or (x) is the subject of any other person's claim of ownership, whether
legal, beneficial or otherwise. Eligible Inventory shall exclude any
inventory on which the Lender, for any reason, does not hold a
perfected security interest subject to no prior liens or claims. In
addition, Lender has the right to deem any inventory as ineligible for
lending purposes if it is not in the Lender's reasonable judgment
adequately documented by Aerospace's books and records.
14. The following Subsection 1.2(vv) is hereby added to the Loan
Agreement, effective from and after the date hereof:
(vv) "THREE YEAR ADVANCE": An Advance of the Loan proceeds
utilized for the acquisition of a medical center which is engaged in
any business activity which would not represent a material change from
the kind of business activity currently engaged in by Meditek or its
subidiaries, or for the acquisition of a company engaged in a business
similar to that of Aerospace or its subsidiaries, and the purchase
agreement for which provides for installment payments of the purchase
price over a period of less than four (4) years.
15. The following Subsection 1.2(ww) is hereby added to the Loan
Agreement, effective from and after the date hereof:
5
<PAGE>
(ww) "FOUR YEAR ADVANCE": An Advance of the Loan proceeds
utilized for the acquisition of a medical center which is engaged in
any business activity which would not represent a material change from
the kind of business activity currently engaged in by Meditek or its
subidiaries, or for the acquisition of a company engaged in a business
similar to that of Aerospace or its subsidiaries, and the purchase
agreement for which provides for installment payments of the purchase
price over a period of four (4) or more years.
16. From the date hereof through JUNE 29, 1995, Section 2.1 of the Loan
Agreement shall remain as provided in the Loan Agreement. On JUNE 30, 1995,
Section 2.1 of the Loan Agreement shall be amended and restated so that, from
and after such date, such Section shall read in its entirety as follows:
2.1 Provided there does not exist an Event of Default, and no
event with which notice or lapse of time or both would become such an
Event of Default, and does not exist an event which would otherwise
constitute an Event of Default but for the terms and conditions set
forth in Article 14.17 herein, and subject to the terms and provisions
of this Agreement, Lender will under the Note, lend or advance for the
account of Borrower from time to time through the Maturity Date, and
Borrower may borrow, repay and re-borrow, such amounts as may be
required for the purpose of providing acquisition financing to Borrower
or on behalf of Newco to purchase companies engaged in businesses
similar to that of Aerospace or its subsidiaries; to provide
acquisition financing on behalf of Meditek to acquire medical centers
which are not engaged in any business activity which would represent a
material change from the kind of business activity currently engaged in
by Meditek or its subidiaries; and for working capital and other
general corporate purposes of Borrower, Newco and Meditek. Advances
under the Loan will be funded to Borrower. All Advances under the Loan
will be secured by all collateral set forth in the Guarantys, the
Second Mortgage, the Security Agreements, this Agreement and all other
Loan Documents (other than the First Mortgage). Advances shall bear
interest and be repayable as provided in the Note. The aggregate amount
advanced under the Loan outstanding shall not at any time be less than
One Thousand Dollars ($1,000.00) or exceed the lesser of: (i) Seven
Million Dollars ($7,000,000.00); or (ii) the value of Margined Asset
Values (which shall mean the aggregate of (A) eighty percent (80%) of
Eligible Receivables plus (B) fifty percent (50%) of the value of
Eligible Inventory, as determined at the lower of cost or fair market
value plus (C) ninety percent (90%) of the orderly liquidation value of
Aerospace's and Newco's machinery and equipment plus (D) seventy-five
percent (75%) of the appraised value (as determined by the most recent
appraisal delivered to Lender) of the Property less (aa) the current
stated amount of the Letter of Credit plus (bb) the balance in the Cash
Collateral Account). In the event the amount outstanding under the Note
at any time exceeds the permitted amount, said excess shall bear
interest at the rate set forth in the Note and shall be due and payable
in full UPON DEMAND. Borrower shall deliver to Lender within sixty (60)
days after the end of each fiscal quarter, a report in the form
attached hereto as Exhibit "A" (each an "Asset Report") itemizing the
Margined Asset Values at the end of such fiscal quarter, and the
acquisitions made by
6
<PAGE>
Meditek and/or Aerospace during said fiscal quarter, together with a
Certificate of Complaince and No Default in the form attached hereto as
Exhibit "B" (each a "Compliance Certificate").
17. The following Section 2.5 is hereby added to the Loan
Agreement, effective from and after the date hereof:
2.5 In connection with the Loan, a fee in arrears shall be due
and owing from Borrower to Lender beginning on September 30, 1995, and
on the last day of each fiscal quarter thereafter, in an amount equal
to one-quarter of one percent (0.25%) per annum of the maximum
principal amount of the Loan less the average outstanding principal
balance of the Note, and an additional loan fee shall be due and owing
from Borrower to Lender in an amount equal to one-quarter of one
percent (0.25%) of the amount of each Advance under the Note which is
converted to a term loan, payable at the time such Advance is so
converted.
18. The following Section 2.6 is hereby added to the Loan
Agreement, effective from and after the date hereof:
2.6 On or before April 30 in each year, commencing on April
30, 1996, Lender shall determine, in its sole and absolute discretion,
whether to extend the Maturity Date of the Loan for one (1) additional
year. If Lender elects to make any such extensions of the Maturity
Date, and assuming Borrower elects to accept such extensions, Borrower
shall execute such amendments to the Loan Agreement and other documents
as shall be reasonably required by Lender in connection with each such
extension. Nothing contained herein shall obligate Lender to make any
such extension of the Maturity Date, or obligate Borrower to accept any
such extension.
19. Section 3.1 of the Loan Agreement is hereby amended and restated so
that, from and after the date hereof, such Section shall read in its entirety as
follows:
3.1 Each Advance to the Borrower under the Loan shall be made
by the Lender upon written request of the Borrower stating the date on
which the Advance is to be made (the "Borrowing Date"), the estimated
purpose of the Advance (i.e., for acquisitions or working capital) and
the principal amount of the Advance requested, said Advance Request to
be delivered at least two (2) business days prior to the date of the
Advance. In the event of any disagreement between Borrower and Lender
as to whether an Advance constitutes a working capital advance or an
acquisition advance, the reasonable determination of Lender shall
control and be binding. The above set forth written request forms may
be sent via facsimile, to be immediately followed by delivery of the
original forms to Lender. Borrower shall be entitled to obtain no more
than six (6) Advances during each loan year (i.e., from the first day
of May through the last day of April, and shall not be entitled to
obtain any Advances after the Maturity Date.
7
<PAGE>
20. Section 3.3 of the Loan Agreement is hereby amended and restated so
that, from and after the date hereof, such Section shall read in its entirety as
follows:
INTENTIONALLY DELETED
21. The first sentence of Article 6 of the Loan Agreement is hereby
amended and restated so that, from and after the date hereof, such sentence
shall read in its entirety as follows:
The proceeds of the Loan shall be used by Borrower and Newco to acquire
companies engaged in businesses similar to that of Aerospace or its
subsidiaries; shall be used by Meditek to acquire medical centers which
are engaged in any business activity which would not represent a
material change from the kind of business activity currently engaged in
by Meditek or its subsidiaries; and shall additionally be used by
Borrower, Newco and Meditek for working capital and other general
corporate purposes.
22. Section 8.19 of the Loan Agreement is hereby amended and restated
so that, from and after the date hereof, such Section shall read in its entirety
as follows:
8.19 In connection with each Advance which is converted to a
term loan under the Loan, Borrower shall provide to Lender such
documentation and information as Lender shall reasonably request in
order for Lender to perform an analysis of the Medical Center or other
acquisition funded with the Advance and/or to evaluate the value of
Margined Asset Values.
23. The following language is hereby added to the end of Section
8.23 of the Loan Agreement, effective from and after the date hereof:
Borrower and Lender specifically acknowledge and agree that Newco shall
be allowed to transfer assets to Meditek or any of its subsidiaries;
provided, however that such transfers shall not exceed One Hundred
Thousand and 00/100 Dollars ($100,000.00) in the aggregate during any
fiscal year of Newco. In addition, Borrower and Lender acknowledge and
agree that Aerospace shall be permitted to transfer certain (but not
substantially all) of its assets to Newco.
24. Section 8.24 of the Loan Agreement is hereby amended and restated
so that, from and after the date hereof, such Section shall read in its entirety
as follows:
8.24 Borrower and the Guarantors on a consolidated basis shall
maintain a minimum tangible net worth of Thirteen Million
($13,000,000.00) Dollars at all times during the term of the Loan.
8
<PAGE>
25. Section 8.32 of the Loan Agreement is hereby amended and restated
so that, from and after the date hereof, such Section shall read in its entirety
as follows:
8.32 Provided that no Event of Default hereunder has occurred
and is continuing, and no event with which notice or lapse of time or
both would become such an Event of Default, and that Borrower is
otherwise in compliance with the terms and provisions of this
Agreement, additional negotiated debt, lease obligations and guaranties
of Borrower and all Guarantors shall not be limited. However, Borrower
and the Guarantors shall provide notice to Lender of any recourse
obligations, any negotiated debt or guaranties in excess of Two Hundred
Fifty Thousand ($250,000.00) Dollars and in increments of One Hundred
Thousand ($100,000.00) Dollars thereafter.
26. The following language is hereby added to the end of Section
8.35 of the Loan Agreement, effective from and after the date hereof:
Notwithstanding the foregoing, Aerospace shall be permitted to transfer
certain (but not substantially all) of its assets to Newco.
27. Section 8.36 of the Loan Agreement is hereby amended and restated
so that, from and after the date hereof, such Section shall read in its entirety
as follows:
INTENTIONALLY DELETED
28. Section 8.37 of the Loan Agreement is hereby amended and restated
so that, from and after the date hereof, such Section shall read in its entirety
as follows:
8.37 There shall be no subordinate financing of the property
included in the collateral encumbered by the Loan Documents. Borrower
shall, however, be permitted to provide a purchase money security
interest in new equipment purchased by Borrower (it being acknowledged
that for purposes of this Agreement, a purchase money security interest
shall be deemed to include a security interest provided to Eagle
National Bank ("Eagle") in connection with advances effectuated under a
$1,600,000.00 line of credit, which advances reimburse the applicable
borrower for the purchase of a specific piece of new equipment, and,
for which advance Eagle files a UCC-1 Financing Statement encumbering
the particular piece of new equipment financed by Eagle), provided that
Borrower shall provide Lender with not less than thirty (30) days prior
written notice of a purchase of new equipment, which will replace
existing equipment in which Lender has a first priority security
interest.
29. The following Section 8.41 is hereby added to the Loan
Agreement, effective from and after the date hereof:
8.41 Borrower shall at all times maintain a ratio of Total
Funded Debt divided by Earnings Before Interest Expense and Taxes plus
Depreciation and Amortization
9
<PAGE>
(EBITDA) of less than 4.0 to 1. The foregoing ratio shall be calculated
on an annualized rolling four quarter basis at the end of each fiscal
quarter. For purposes of this section, "Funded Debt" shall mean all
indebtedness for money borrowed, purchase money mortgages, capitalized
leases, conditional sales contracts and similar title retention debt
instruments, including any current maturities of such indebtedness,
which by its terms matures more than one year from the date of any
calculation thereof and/or which is renewable or extendable at the
option of the obligor to a date beyond one year from such date. The
calculation of "Total Funded Debt" shall include (i) all Funded Debt of
the Borrower and its subsidiaries, plus all Funded Debt of other
entities or persons, other than subsidiaries, which has been guaranteed
by the Borrower or any subsidiary or which is supported by a letter of
credit issued for the account of the Borrower or any subsidiary, and
(ii) the redemption amount with respect to any stock of the Borrower or
its subsidiaries required to be redeemed within the next twelve months.
30. The following Section 8.42 is hereby added to the Loan
Agreement, effective from and after the date hereof:
8.42 The Borrower shall at all times maintain a ratio of
Earnings Before Interest Expense and Taxes (EBIT) and Operating Lease
Expense divided by Interest Expense and Operating Lease Expense of
greater than 1.75 to 1. The foregoing ratio shall be calculated on an
annualized rolling four quarter basis at the end of each fiscal
quarter.
31. The following Section 8.43 is hereby added to the Loan
Agreement, effective from and after the date hereof:
8.43 Heico shall at all times maintain a controlling interest
(voting and equity), which also represents an ownership interest of not
less than fifty-one percent (51%), in Meditek.
32. The following Section 8.44 is hereby added to the Loan
Agreement, effective from and after the date hereof:
8.44 Borrower shall provide to Lender on a monthly basis,
within thirty (30) days after the end of each month, a breakdown of the
contribution by each Medical Center to Meditek's gross revenue and net
income.
33. The following Section 8.45 is hereby added to the Loan
Agreement, effective from and after the date hereof:
8.45 Borrower shall provide to Lender an Asset Report within
sixty (60) days (or, upon reasonable notice from lender, within
forty-five (45) days) after the end of each fiscal quarter in each
fiscal year of Borrower.
10
<PAGE>
34. Heico and Lender acknowledge that subsequent to the execution of
this Amendment, Heico may change the name of its subsidiary, HEICO-Newco, Inc.,
a Florida corporation ("Newco"). Within ten (10) business days after the filing
of Articles of Amendment amending the Articles of Incorporation of Newco to
effectuate such name change, Heico shall provide a filed copy of such Articles
of Amendment to Lender, and shall cause Newco to execute such UCC-3 Statements
of Change, amendments and reaffirmations to security agreements and guaranties,
and such other documents as Lender shall reasonably require to continue
perfection of Lender's security interests and Newco's obligations under all Loan
Documents executed by it. The failure of Heico and Newco to fully comply with
the requirements of this paragraph within thirty (30) days after the date of
filing of the Articles of Amendment for Newco shall be and constitute an Event
of Default under the Loan Agreement.
35. Borrower warrants and represents that all representations and
warranties contained in the Loan Agreement are true and correct on the date
hereof as if made on the date hereof, and that Borrower is not in default on the
date hereof under any of the terms of the Loan Agreement or any of the Loan
Documents to which it is a party.
36. In the event of any inconsistencies between the terms of the Loan
Agreement and the terms of this Amendment, the terms and provisions of this
Amendment shall supersede and control. Except as modified herein, the terms and
provisions of the Loan Agreement are hereby ratified and confirmed in all
respects and shall remain unchanged and in full force and effect from and after
the date hereof.
37. AS A MATERIAL INDUCEMENT FOR LENDER TO AMEND THE LOAN AGREEMENT
PURSUANT TO THIS AMENDMENT, BORROWER COVENANTS WITH AND WARRANTS UNTO LENDER,
AND ITS AFFILIATES AND ASSIGNS, THAT THERE EXIST NO CLAIMS, COUNTERCLAIMS,
DEFENSES, OBJECTIONS, OFFSETS OR CLAIMS OF OFFSETS AGAINST LENDER RELATING IN
ANY WAY TO THE NOTE, THE LOAN AGREEMENT OR OTHER ASSOCIATED LOAN DOCUMENTS,
THROUGH THE DATE HEREOF, OR THE OBLIGATION OF BORROWER TO PAY THE INDEBTEDNESS
TO THE LENDER EVIDENCED BY THE NOTE OR OTHERWISE.
38. AS A MATERIAL INDUCEMENT FOR LENDER TO AMEND THE LOAN AGREEMENT
PURSUANT TO THIS AMENDMENT, BORROWER DOES HEREBY RELEASE, WAIVE, DISCHARGE,
COVENANT NOT TO SUE, ACQUIT, SATISFY AND FOREVER DISCHARGE LENDER, ITS OFFICERS,
DIRECTORS, EMPLOYEES, ATTORNEYS AND AGENTS AND ITS AFFILIATES AND ASSIGNS FROM
ANY AND ALL LIABILITY, CLAIMS, COUNTERCLAIMS, DEFENSES, ACTIONS, CAUSES OF
ACTION, SUITS, CONTROVERSIES, AGREEMENTS, PROMISES AND DEMANDS WHATSOEVER, IN
LAW OR IN EQUITY, WHICH BORROWER EVER HAD, NOW HAS OR WHICH ANY PERSONAL
REPRESENTATIVE, SUCCESSOR, HEIR OR ASSIGN OF BORROWER HEREAFTER CAN, SHALL OR
MAY HAVE AGAINST LENDER, ITS OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS AND
AGENTS, AND ITS AFFILIATES AND ASSIGNS, FOR, UPON OR BY REASON OF ANY MATTER,
CAUSE OR THING
11
<PAGE>
WHATSOEVER RELATING IN ANY WAY TO THE NOTE, THE LOAN AGREEMENT AND OTHER
ASSOCIATED LOAN DOCUMENTS, THROUGH THE DATE HEREOF. BORROWER FURTHER EXPRESSLY
AGREES THAT THE FOREGOING RELEASE AND WAIVER AGREEMENT IS INTENDED TO BE AS
BROAD AND INCLUSIVE AS IS PERMITTED BY THE LAWS OF THE STATE OF FLORIDA.
39. LENDER AND BORROWER HEREBY MUTUALLY, KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT TO
ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THE
LOAN AGREEMENT AND ANY AGREEMENT CONTEMPLATED OR TO BE EXECUTED IN CONJUNCTION
THEREWITH, UNDER ANY OF THE LOAN DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF ANY PARTY.
BORROWER ACKNOWLEDGES THAT THIS WAIVER OF JURY TRIAL IS A MATERIAL INDUCEMENT TO
LENDER IN ACCEPTING THIS AMENDMENT, AND THAT LENDER WOULD NOT HAVE ACCEPTED THIS
AMENDMENT WITHOUT THIS JURY TRIAL WAIVER. BORROWER ACKNOWLEDGES THAT BORROWER
HAS BEEN REPRESENTED BY AN ATTORNEY OR HAS HAD AN OPPORTUNITY TO CONSULT WITH AN
ATTORNEY REGARDING THIS JURY TRIAL WAIVER, AND UNDERSTANDS THE LEGAL EFFECT OF
THIS JURY TRIAL WAIVER. THE WAIVER CONTAINED HEREIN IS IRREVOCABLE, CONSTITUTES
A KNOWING AND VOLUNTARY WAIVER, AND SHALL BE SUBJECT TO NO EXCEPTIONS. LENDER
HAS IN NO WAY AGREED WITH OR REPRESENTED TO BORROWER OR ANY OTHER PARTY THAT THE
PROVISIONS OF THIS JURY TRIAL WAIVER WILL NOT BE FULLY ENFORCED IN ALL
INSTANCES.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
Signed, sealed and delivered in BORROWER:
the presence of:
HEICO CORPORATION,
a Florida corporation
______________________________ By: /S/ THOMAS S. IRWIN
-----------------------------
Its EXECUTIVE VICE PRESIDENT
______________________________
(Corporate Seal)
12
<PAGE>
HEICO AEROSPACE CORPORATION,
a Florida corporation,
f/k/a HEICO CORPORATION,
a Florida corporation
______________________________ By: /S/ THOMAS S. IRWIN
------------------------------
Its VICE CHAIRMAN AND TREASURER
______________________________
(Corporate Seal)
LENDER:
SUNBANK/SOUTH FLORIDA,
NATIONAL ASSOCIATION
______________________________ By: /S/ DORMAN C. PARRISH
------------------------------
Its VICE PRESIDENT
______________________________
13
EXHIBIT 10.9
LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement (the "Agreement") is made and entered
into this 9TH day of AUGUST, 1995 by and among Eagle National Bank of Miami, a
national banking association with its principal place of business at c/o Daniel
Acevedo, Jr., 1550 Biscayne Boulevard, Miami, Florida 33132-1488 ("Lender"), and
HEICO Corporation, HEICO Aerospace Corporation, Jet Avion Corporation, Jet Avion
Heat Treat Corporation, LPI Industries Corporation, Aircraft Technology, Inc.,
and MediTek Industries, Inc., each a Florida corporation (collectively the
"Original Borrower") MediTek Health Corporation, a Florida corporation (the
"Guarantor"), and MediTek-Chatham Industries, Inc., MediTek-Palm Beach Gardens,
Inc. MediTek-ICOT, Inc., each a Florida corporation (the "Additional Borrowers";
the Original Borrowers and the Additional Borrowers are hereinafter collectively
referred to as the "Borrowers" and individually, a "Borrower").
W I T N E S S E T H
WHEREAS, Lender, the Original Borrowers and the Guarantor entered into
that certain Loan Agreement dated as of March 31, 1994, as amended by that
certain First Amendment to Loan Agreement dated as of May 31, 1994 by and among
the Original Borrowers, the Additional Borrowers, the Guarantor and the Lender
(collectively, the "Loan Agreement") pursuant to which Lender provided the
Borrowers a credit facility in the aggregate principal amount of One Million,
Six Hundred Thousand Dollars ($1,600,000.00) (the "Credit Facility") for the
purpose of making loans to the Borrowers for purchasing or refinancing equipment
to be used in Borrowers' business operations; and
WHEREAS, Borrowers have requested and Lender has agreed to a
modification of the terms and conditions of the Loan Agreement, in accordance
with the terms and conditions of this Agreement (this Agreement and the Loan
Agreement shall hereafter be referred to as the "Modified Agreement");
NOW, THEREFORE, in consideration of the premises, the mutual covenants
set forth below and the sum of $10.00, and other good and valuable consideration
the receipt and sufficiency of which are hereby acknowledge, Borrowers and
Lender agree as follows:
TERMS
1. REAFFIRMATION OF LOAN AGREEMENT. Except as modified
hereby, all of the terms and conditions of the Loan Agreement, as well as all
other documents and instruments executed and delivered by Borrowers to Lender in
connection therewith, are hereby ratified, affirmed and approved in all respects
and shall remain in full force and effect.
<PAGE>
2. DEFINITIONS. Unless otherwise defined all capitalized terms
in this Agreement shall have the same meaning as in the Loan Agreement.
3. THE CREDIT FACILITY. Lender agrees, pursuant to the terms of
this Agreement, to extend the period of time the Credit Facility will be
available to Borrowers and to increase the aggregate principal amount extended
thereunder. Pursuant to the terms and conditions of the Modified Agreement
Lender shall make separate term loans in U.S. Dollars to Borrower or Borrowers
(as applicable) on a non-revolving basis in such amounts as Parent shall
request, provided that the aggregate principal amount extended under the Credit
Facility shall not exceed $1,900,000.00. Each separate loan to a Borrower under
this Agreement shall be referred to as an "Equipment Loan" and all such loans
shall be collectively referred to as the "Equipment Loans". The Credit Facility
shall be permanently reduced by the amount of each Equipment Loan made
hereunder. The Credit Facility shall be available for an additional period of
one year commencing with the date of this Agreement and expiring on the earlier
of the date the aggregate principal amount of the Equipment Loans equals
$1,900,000.00 or August 1, 1996 (the "Termination Date"). The terms for each
Equipment Loan shall remain as set forth in the Loan Agreement.
4. CREDIT FACILITY FEE. Borrowers agree to pay Lender a non-
refundable credit facility fee in the amount of Eight Thousand Dollars
($8,000.00) upon the execution of this Agreement. The facility fee is paid to
Lender as compensation for committing to make funds available to Borrowers under
the Credit Facility, as set forth in paragraph 3 above, and is not paid as
compensation for the Credit Facility or for any other purpose.
5. CONFLICT. The provisions of this Agreement shall control in
the event of any conflict between it and any of the Loan Documents, except that
the provisions of the Notes and security agreements (given pursuant to paragraph
2.3 of the Loan Agreement, the "Security Agreements") shall control in the event
of any conflict between the Notes or the Security Agreements and this Agreement.
6. TIME. Time is of the essence with respect to all matters
set forth herein.
7. WAIVER, MODIFICATION OR CANCELLATION. Any waiver, alteration
or modification of any of the provisions of this Agreement shall not be valid
unless in writing and signed by the parties hereto.
-2-
<PAGE>
8. WAIVER OF JURY TRIAL. ALL PARTIES TO THIS AGREEMENT HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THEIR RESPECTIVE RIGHTS TO
A TRIAL BY JURY IN ANY LAWSUIT, PROCEEDING, OR COUNTERCLAIM BASED UPON, OR
ARISING OUT OF THIS AGREEMENT, THE EQUIPMENT LOANS, THE LOAN DOCUMENTS AND ANY
AGREEMENT EXECUTED IN CONJUNCTION HEREWITH OR THEREWITH, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS
OR OMISSIONS OF EITHER PARTY. THIS PROVISION FOR WAIVER OF A JURY TRIAL IS A
MATERIAL INDUCEMENT FOR LENDER TO ENTER INTO THIS AGREEMENT AND TO MAKE THE
EQUIPMENT LOANS.
9. FURTHER ASSURANCES. At all times following the date of this
Agreement, Borrowers agree to execute and deliver, or to cause to be executed
and delivered, such documents and to do, or cause to be done, such other acts
and things as might be reasonably requested by Lender to effectuate the terms
and provisions of this Agreement and the transactions contemplated herein to
assure that the benefits of this Agreement are realized by the parties hereto.
IN WITNESS WHEREOF, Borrowers (Parent and Subsidiaries) and Lender have
hereunto caused these presents to be executed on this date first above written.
WITNESSES: PARENT:
HEICO CORPORATION, a Florida
corporation
/S/ELIZABETH R. LETENDRE By: /S/THOMAS S. IRWIN
- ------------------------- ------------------------------
Name: THOMAS S. IRWIN
/S/GENEVIEVE A. YOUNG Title: EXECUTIVE VICE PRESIDENT
- -------------------------
[CORPORATE SEAL]
LENDER:
EAGLE NATIONAL BANK OF MIAMI, a
National banking association
__________________________ By: /S/DANIEL ACEVEDO, JR.
-------------------------------
Name: DANIEL ACEVEDO, JR.
Title: ASSISTANT VICE PRESIDENT
(Signatures Continue on the Following Pages)
-3-
<PAGE>
SUBSIDIARIES:
WITNESSES: JET AVION CORPORATION, a Florida
corporation
/S/ELIZABETH R. LETENDRE By: /S/THOMAS S. IRWIN
- ------------------------------ -------------------------------
Name: THOMAS S. IRWIN
/S/GENEVIEVE A. YOUNG Title: TREASURER
- ------------------------------
[CORPORATE SEAL]
WITNESSES: HEICO AEROSPACE CORPORATION, a
Florida corporation
/S/ELIZABETH R. LETENDRE By: /S/THOMAS S. IRWIN
- ------------------------------ -------------------------------
Name: THOMAS S. IRWIN
/S/GENEVIEVE A. YOUNG Title: VICE CHAIRMAN AND TREASURER
- ------------------------------
[CORPORATE SEAL]
WITNESSES: JET AVION HEAT TREAT CORPORATION, a
Florida corporation
/S/ELIZABETH R. LETENDRE By: /S/THOMAS S. IRWIN
- ------------------------------ -------------------------------
Name: THOMAS S. IRWIN
/S/GENEVIEVE A. YOUNG Title: TREASURER
- ------------------------------
[CORPORATE SEAL]
WITNESSES: LPI INDUSTRIES CORPORATION, a
Florida corporation
/S/ELIZABETH R. LETENDRE By: /S/THOMAS S. IRWIN
- ------------------------------ -------------------------------
Name: THOMAS S. IRWIN
/S/GENEVIEVE A. YOUNG Title: TREASURER
- ------------------------------
[CORPORATE SEAL]
WITNESSES: MEDITEK HEALTH CORPORATION, a
Florida corporation
/S/ELIZABETH R. LETENDRE By: /S/THOMAS S. IRWIN
- ------------------------------ -------------------------------
Name: THOMAS S. IRWIN
/S/GENEVIEVE A. YOUNG Title: EVP AND TREASURER
- ------------------------------
[CORPORATE SEAL]
(Signatures Continue on the Following Pages)
-4-
<PAGE>
WITNESSES: AIRCRAFT TECHNOLOGY, INC., a Florida
corporation
/S/ELIZABETH R. LETENDRE By: /S/THOMAS S. IRWIN
- ------------------------------ -------------------------------
Name: THOMAS S. IRWIN
/S/GENEVIEVE A. YOUNG Title: TREASURER
- ------------------------------
[CORPORATE SEAL]
WITNESSES: MEDITEK INDUSTRIES, INC., a Florida
corporation
/S/ELIZABETH R. LETENDRE By: /S/THOMAS S. IRWIN
- ------------------------------ -------------------------------
Name: THOMAS S. IRWIN
/S/GENEVIEVE A. YOUNG Title: EVP AND TREASURER
- ------------------------------
[CORPORATE SEAL]
-5-
EXHIBIT 11
<TABLE>
<CAPTION>
HEICO CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
Following are details of the computation of earnings per share:
YEAR ENDED OCTOBER 31,
----------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
------------------- ------------------ ------------------- ------------------ ------------------
FULLY FULLY FULLY FULLY
PRIMARY DILUTED PRIMARY DILUTED PRIMARY DILUTED PRIMARY DILUTED PRIMARY DILUTED
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Weighted average
number of common
shares outstanding 2,768,866 2,768,866 2,744,811 2,744,811 2,816,265 2,816,265 2,662,645 2,662,645 2,976,604 2,976,604
Common stock
equivalents arising
from dilutive stock
options (1) 152,550 193,403 34,783 34,783 43,347 69,980 76,462 86,411 35,096 41,439
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
2,921,416 2,962,269 2,779,594 2,779,594 2,859,612 2,886,245 2,739,107 2,749,056 3,011,700 3,018,043
========= ========= ========= ========= ========= ========= ========= ========= ========= =========
Income per share
from continuing
operations before
cumulative effect
of change in
accounting
principle $.92 $.91 $.53 $.53 $.19 $.19 ($.21) ($.21) $.78 $.78
==== ==== ==== ==== ==== ==== ==== ==== ==== ====
Cumulative effect
of change in
accounting
principle $--- $--- $.14 $.14 $--- $--- $--- $--- $--- $---
==== ==== ==== ==== ==== ==== ==== ==== ==== ====
Net income
per share $.92 $.91 $.67 $.67 $.34 $.34 ($.21) ($.21) $.78 $.78
==== ==== ==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
(1) Computed under the "treasury stock" method using the average market
price for the primary computation and using the higher of average or
ending market prices for the fully diluted computation.
EXHIBIT 21
HEICO CORPORATION AND SUBSIDIARIES
SUBSIDIARIES OF COMPANY
NAME STATE OF INCORPORATION
- ---- ----------------------
HEICO Aerospace Corporation Florida
Jet Avion Corporation Florida
LPI Industries Corporation Florida
Aircraft Technology, Inc. Florida
ATI Heat Treat Corporation Florida
Jet Avion Heat Treat Corporation Florida
(Inactive)
HEICO International Corporation U.S. Virgin Islands
HEICO East Corporation Florida
HEICO-NEWCO, Inc. Florida
MediTek Health Corporation Florida
MediTek Industries, Inc. Florida
MediTek Health Care Management, Inc. Florida
MediTek-Winter Park, Inc. Florida
MediTek-Wellington, Inc. Florida
MediTek Palm Beach Gardens, Inc. Florida
MediTek PBG MRI, Inc. Florida
MediTek-Chatham Industries, Inc. Florida
Chatham MRI, Inc. New Jersey
MediTek-Sun Coast, Inc. Florida
MediTek-Premier, Inc. Florida
MediTek-Premier North, Inc. Florida
MediTek-ICOT, Inc. Florida
<PAGE>
MediTek Therapy, Inc. Florida
MediTek-HE, Inc. Florida
MediTek Capital Corp. Florida
MediTek-Palms, Inc. Florida
MediTek Anesthesia, Inc. Florida
MediTek-Gwinnet, Inc. Florida
Finance Funding Corp. Florida
Medical Imaging Equipment Leasing, Inc. Florida
Kaley Imaging, Inc. Florida
MediTek-Greystone, Inc. Florida
MediTek-Newark, Inc. Florida
First Choice Networks, Inc. Florida
Subsidiaries of the Company, all of which are directly or indirectly
wholly-owned, are included in the Company's consolidated financial statements.
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-62156 of HEICO Corporation on Form S-8 of our report dated December 29, 1995,
appearing in this Annual Report on Form 10-K of HEICO Corporation and
subsidiaries for the year ended October 31, 1995.
DELOITTE & TOUCHE LLP
Miami, Florida
January 12, 1996
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-4945 of HEICO Corporation on Form S-8 of our report dated December 29, 1995,
appearing in this Annual Report on Form 10-K of HEICO Corporation and
subsidiaries for the year ended October 31, 1995.
DELOITTE & TOUCHE LLP
Miami, Florida
January 12, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<CASH> 4,664,000
<SECURITIES> 2,939,000
<RECEIVABLES> 9,531,000
<ALLOWANCES> (2,822,000)
<INVENTORY> 5,359,000
<CURRENT-ASSETS> 22,637,000
<PP&E> 24,197,000
<DEPRECIATION> (14,901,000)
<TOTAL-ASSETS> 47,401,000
<CURRENT-LIABILITIES> 7,882,000
<BONDS> 7,076,000
0
0
<COMMON> 28,000
<OTHER-SE> 30,118,000
<TOTAL-LIABILITY-AND-EQUITY> 47,401,000
<SALES> 25,613,000
<TOTAL-REVENUES> 40,379,000
<CGS> 17,497,000
<TOTAL-COSTS> 27,875,000
<OTHER-EXPENSES> 8,298,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 375,000
<INCOME-PRETAX> 4,360,000
<INCOME-TAX> 1,665,000
<INCOME-CONTINUING> 2,695,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,695,000
<EPS-PRIMARY> .92
<EPS-DILUTED> .91
</TABLE>
