UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 1998
OR
[ ]TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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)
NOT APPLICABLE
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
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 (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
The number of shares outstanding of the issuer's common stock, $.01 par value,
is 8,289,991 shares as of February 28, 1998.
<PAGE>
HEICO CORPORATION
INDEX
PAGE NO.
--------
Part I. Financial information:
Consolidated Condensed Balance Sheets as of
January 31, 1998 (unaudited) and October 31, 1997............... 2
Consolidated Condensed Statements of Operations (unaudited) for
the three months ended January 31, 1998 and 1997................ 3
Consolidated Condensed Statements of Cash Flows (unaudited) for
the three months ended January 31, 1998 and 1997................ 4
Notes to Consolidated Condensed Financial Statements (unaudited).. 5
Management's Discussion and Analysis of Financial
Condition and Results of Operations............................. 8
Part II. Other Information:
Item 1. Legal Proceedings....................................... 10
Item 6. Exhibits and Reports on Form 8-K........................ 10
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<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
HEICO CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS
JANUARY 31, OCTOBER 31,
1998 1997
------------ ------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 26,222,000 $ 24,199,000
Accounts receivable, net 12,301,000 12,560,000
Inventories 20,586,000 18,359,000
Prepaid expenses and other current assets 1,724,000 1,500,000
Deferred income taxes 1,206,000 1,098,000
------------ ------------
Total current assets 62,039,000 57,716,000
------------ ------------
Property, plant and equipment 24,046,000 23,363,000
Less accumulated depreciation (15,218,000) (14,820,000)
------------ ------------
Property, plant and equipment, net 8,828,000 8,543,000
------------ ------------
Intangible assets less accumulated amortization of
$1,344,000 in 1998 and $1,186,000 in 1997 13,130,000 13,258,000
------------ ------------
Unexpended bond proceeds 4,995,000 5,437,000
------------ ------------
Deferred income taxes 575,000 857,000
------------ ------------
Other assets 3,673,000 2,828,000
------------ ------------
Total assets $ 93,240,000 $ 88,639,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 377,000 $ 342,000
Trade accounts payable 4,973,000 4,180,000
Accrued expenses and other current liabilities 6,505,000 6,680,000
Income taxes payable 2,344,000 1,383,000
------------ ------------
Total current liabilities 14,199,000 12,585,000
------------ ------------
Long-term debt and capital leases 10,427,000 10,458,000
------------ ------------
Deferred income taxes -- 463,000
------------ ------------
Other non-current liabilities 2,929,000 2,414,000
------------ ------------
Total liabilities 27,555,000 25,920,000
------------ ------------
Minority interest in consolidated subsidiary 3,791,000 3,273,000
------------ ------------
Commitments and contingencies
Shareholders' equity:
Preferred stock, par value $.01 per share;
Authorized - 10,000,000 shares issuable
in series; 200,000 designated as
Series A Junior Participating
Preferred Stock, none issued -- --
Common stock, $.01 par value; Authorized -
20,000,000 shares; Issued - 8,289,659 shares
in 1998 and 8,283,493 shares in 1997 83,000 83,000
Capital in excess of par value 35,571,000 35,533,000
Retained earnings 28,738,000 26,772,000
------------ ------------
64,392,000 62,388,000
Less: Note receivable from employee savings and
investment plan (2,498,000) (2,942,000)
------------ ------------
Total shareholders' equity 61,894,000 59,446,000
------------ ------------
Total liabilities and shareholders' equity $ 93,240,000 $ 88,639,000
============ ============
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
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HEICO CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS - UNAUDITED
THREE MONTHS ENDED JANUARY 31,
------------------------------
1998 1997
------------ ------------
Net sales $ 19,783,000 $ 14,267,000
------------ ------------
Operating costs and expenses:
Cost of sales 12,479,000 9,526,000
Selling, general and administrative expenses 3,483,000 2,707,000
------------ ------------
Total operating costs and expenses 15,962,000 12,233,000
------------ ------------
Income from operations 3,821,000 2,034,000
Interest expense (129,000) (95,000)
Interest and other income 514,000 409,000
------------ ------------
Income before income taxes
and minority interest 4,206,000 2,348,000
Income tax expense 1,406,000 754,000
------------ ------------
Net income before minority interest 2,800,000 1,594,000
Minority interest 518,000 --
------------ ------------
Net income $ 2,282,000 $ 1,594,000
============ ============
Net income per share:
Basic $ .28 $ .20
============ ============
Diluted $ .22 $ .17
============ ============
Weighted average number of common
shares outstanding:
Basic 8,289,377 7,930,070
============ ============
Diluted 10,206,517 9,413,488
============ ============
Cash dividends per share $ .037 $ .033
============ ============
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
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<TABLE>
<CAPTION>
HEICO CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS - UNAUDITED
THREE MONTHS ENDED
JANUARY 31,
-----------------------------
1998 1997
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,282,000 $ 1,594,000
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 589,000 387,000
Deferred financing costs (21,000) --
Minority interest in consolidated subsidiary 518,000 --
Deferred income taxes (289,000) (373,000)
Change in assets and liabilities:
Decrease in accounts receivable 259,000 263,000
(Increase) in inventories (2,227,000) (919,000)
(Increase) in prepaid expenses and other
current assets (224,000) (145,000)
Increase (decrease) in trade payables, accrued
expenses and other current liabilities 618,000 (1,028,000)
Increase in income taxes payable 961,000 535,000
Increase in other non-current liabilities -- 76,000
Other (58,000) (22,000)
------------ ------------
Net cash provided by operating activities 2,408,000 368,000
------------ ------------
Cash flows from investing activities:
Purchases of property, plant and equipment (717,000) (1,165,000)
Change in other long-term assets (78,000) --
Payment received from employee savings and
investment plan note receivable 444,000 393,000
Other (253,000) (335,000)
------------ ------------
Net cash (used in) investing activities (604,000) (1,107,000)
------------ ------------
Cash flows from financing activities:
Proceeds from the issuance of long-term debt 603,000 680,000
Proceeds from the exercise of stock options 38,000 425,000
Payments on long-term debt and capital leases (106,000) (154,000)
Cash dividends paid (316,000) (282,000)
Other -- 1,000
------------ ------------
Net cash provided by financing activities 219,000 670,000
------------ ------------
Net increase (decrease) in cash and cash equivalents 2,023,000 (69,000)
Cash and cash equivalents at beginning of year 24,199,000 11,025,000
------------ ------------
Cash and cash equivalents at end of period $ 26,222,000 $ 10,956,000
============ ============
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
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<PAGE>
HEICO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - UNAUDITED
January 31, 1998
1. The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with the instructions to Form 10-Q and therefore do
not include all information and footnotes normally included in annual
consolidated financial statements and should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
latest Annual Report on Form 10-K/A, Amendment No. 1, for the year ended October
31, 1997. In the opinion of management, the unaudited consolidated condensed
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary for a fair presentation of the Consolidated
Condensed Balance Sheets and Consolidated Condensed Statements of Operations and
Cash Flows for such interim periods presented. The results of operations for the
three months ended January 31, 1998 are not necessarily indicative of the
results which may be expected for the entire fiscal year.
2. Accounts receivable are composed of the following:
<TABLE>
<CAPTION>
JANUARY 31, 1998 OCTOBER 31, 1997
------------------ ----------------
<S> <C> <C>
Accounts receivable.............................. $ 12,682,000 $ 12,922,000
Less allowance for doubtful accounts............. (381,000) (362,000)
------------------ ----------------
Accounts receivable, net......................... $ 12,301,000 $ 12,560,000
================== ================
Inventories are comprised of the following:
JANUARY 31, 1998 OCTOBER 31, 1997
------------------ ----------------
Finished products................................ $ 5,231,000 $ 4,329,000
Work in process.................................. 7,509,000 7,359,000
Materials, parts, assemblies and supplies........ 7,846,000 6,671,000
------------------ ----------------
Total inventories................................ $ 20,586,000 $ 18,359,000
================== ================
</TABLE>
The accompanying consolidated condensed financial statements do not include any
material revenue amounts in excess of billings or any material billings in
excess of costs and profits related to long-term contracts.
Inventories related to long-term contracts as of January 31, 1998 and October
31, 1997 were not significant.
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<TABLE>
<CAPTION>
3. Long-term debt and capital leases consist of:
JANUARY 31, 1998 OCTOBER 31, 1997
------------------ ----------------
<S> <C> <C>
Industrial Development Revenue
Bonds - Series 1997A......................... $ 3,000,000 $ 3,000,000
Industrial Development Revenue
Bonds - Series 1997C......................... 995,000 1,000,000
Industrial Development Revenue
Bonds - Series 1996.......................... 3,500,000 3,500,000
Industrial Development Revenue
Refunding Bonds - Series 1988................ 1,980,000 1,980,000
Equipment loans................................ 1,235,000 1,320,000
Capital leases................................. 94,000 ---
Term loan borrowing under revolving
credit facility.............................. --- ---
------------------ ----------------
10,804,000 10,800,000
Less current maturities........................ (377,000) (342,000)
------------------ ----------------
$ 10,427,000 $ 10,458,000
================== ================
</TABLE>
The industrial development revenue bonds represent bonds issued by
Broward County, Florida in 1996 (Series 1996 bonds) and in 1988 (Series 1988
bonds), and bonds issued by Manatee County, Florida in 1997 (Series 1997A and
Series 1997C bonds).
As of January 31, 1998, unexpended proceeds of the Series 1997A and
1997C bonds of $3,586,000, including investment earnings, are held by the
trustee and are available for future qualified expenditures. The Series 1997A
and 1997C bonds bear interest at 3.65% at January 31, 1998.
The Series 1996 and Series 1988 bonds bear interest as of January 31,
1998, at 3.70% and 3.45%, respectively.
As of January 31, 1998, unexpended proceeds of the Series 1996 bonds of
$1,409,000, including investment earnings, are held by the trustee and are
available for future qualified expenditures.
Equipment loans bear interest at rates ranging from 8.50% to 9.00% as
of January 31, 1998.
Included in property, plant and equipment in the accompanying balance
sheets is an asset held under a capital lease as summarized below:
JANUARY 31,
----------------------
1998 1997
-------- ------
Machinery and equipment (lease expires
in 2000; interest rate of 14.3%) $141,000 ---
Less accumulated amortization (47,000) ---
-------- -----
Assets under capital lease, net $ 94,000 ---
======== =====
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<PAGE>
In February 1998, the Company's $7 million revolving credit facility
was extended to March 31, 1998.
4. Research and development expenses for the first quarter of fiscal 1998 and
1997 totaled $268,000 and $638,000, respectively. The expenses for the first
three months of 1998 are net of $628,000 received from Lufthansa Technik AG
(Lufthansa) pursuant to a research and development cooperation agreement entered
into on October 30, 1997.
5. Basic net income per share is calculated on the basis of the weighted average
number of shares outstanding during the period, excluding dilution. Diluted net
income per share is computed on the basis of the weighted average number of
shares outstanding during the period plus common share equivalents arising from
the assumed exercise of stock options, if dilutive. Per share information for
fiscal 1997 has been restated in accordance with Statement of Financial
Accounting Standard No. 128, "Earnings Per Share." All net income per share
figures have been adjusted for the effect of any stock dividends and stock
splits.
6. As of January 31, 1998, the Company has outstanding 8,289,659 shares of $.01
par value per share common stock and options to purchase 2,604,043 shares of
common stock. Each share of common stock is entitled to one vote per share.
Holders of the Company's common stock are entitled to receive when, as and if
declared by the Board of Directors dividends and other distributions payable in
cash, property, stock, or otherwise. In the event of liquidation, after payment
of debts and other liabilities of the Company, and after making provision for
the holders of preferred stock, if any, the remaining assets of the Company will
be distributable ratably among the holders of common stock. Stock options issued
for the Company's common stock had an average exercise price of $6.57 at January
31, 1998. The term of each option is determined by the Stock Option Committee
but shall never exceed ten years. Since the end of fiscal year 1997, 6,166
shares of common stock were issued upon exercise of stock options.
7. Supplemental disclosures of cash flow information for the three months ended
January 31, 1998 and 1997 are as follows:
Cash paid for interest was $129,000 and $95,000 in 1998 and 1997
respectively. Cash paid for income taxes was $666,000 and $592,000 in 1998 and
1997, respectively.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
For the three months ended January 31, 1998 and 1997
RESULTS OF OPERATIONS
Fiscal 1998 first quarter net income of $2,282,000 ($.22 per share) increased
43% over fiscal 1997 first quarter net income of $1,594,000 ($.17 per share).
The per share amounts shown here have been calculated on a diluted basis and
represent a 29% increase over the first quarter of last year.
For the first three months of fiscal 1998, consolidated net sales totaled
$19,783,000, representing a 39% increase over net sales of $14,267,000 in the
first three months of fiscal 1997.
The improved fiscal 1998 earnings are primarily attributable to increased sales
as discussed below.
Net sales of the Company's Flight Support operations totaled $13,930,000 in the
first quarter of fiscal 1998 as compared to $8,786,000 in the same period of
fiscal 1997. The $5,144,000, or 59%, increase from fiscal 1997 to fiscal 1998 is
principally due to the inclusion of sales of Northwings Accessories Corp.
(Northwings), a business acquired in September 1997, and increased sales volumes
of jet engine replacement parts to the Company's commercial airline industry
customers.
Net sales of the Company's Ground Support operations totaled $5,853,000 for the
first quarter of fiscal 1998, a 7% increase over net sales of $5,481,000 for the
first quarter of fiscal 1997. The increase reflects principally increased demand
for the Company's products.
The Company's Flight Support operations had a backlog of approximately $28
million at January 31, 1998, $24 million as of October 31, 1997, and $14 million
as of January 31, 1997. This backlog includes approximately $18 million as of
January 31, 1998 and $17 million as of October 31, 1997 representing forecasted
shipments over the next 12 months for certain contracts of the Flight Support
operations pursuant to which customers provide estimated annual usage. The
increase in the current backlog from that of January 31, 1997, is principally
due to certain customers entering into longer term contracts, which replaced
shorter term purchase orders.
The Company's Ground Support operations had a backlog totalling $12 million at
January 31, 1998 and October 31, 1997 and $14 million as of January 31, 1997.
The Company's gross profit margins averaged 36.9% in the first quarter of fiscal
1998, which increased 11% over the 33.2% average
-8-
<PAGE>
gross profit margins in the first quarter of fiscal 1997. This reflects an
improvement in gross margins in the Flight Support operations, partially offset
lower margins due to product mix within the Ground Support operations. The
improvement in margins in the Flight Support operations reflects the higher
gross profit margins of the newly-acquired Northwings' operations and a margin
increase due to the reimbursement of research and development costs from
Lufthansa. (See Note 4 to Consolidated Condensed Financial Statements)
Selling, general and administrative (SG&A) expenses in the first quarter of
fiscal 1998 increased $776,000 over amounts in the first quarter of fiscal 1997.
The increase from fiscal 1997 is due principally to the SG&A expenses of
Northwings. As a percentage of sales, however, SG&A expenses improved to 17.6%
of consolidated net sales in the first quarter of fiscal 1998, down from 19.0%
in the first quarter of fiscal 1997.
Income from operations, which totaled $3,821,000 for the first quarter of fiscal
1998, increased $1,787,000, or 88%, over the same period of last year. This
increase is principally attributable to the increase in sales and gross margins
of the Flight Support operations and the acquisition of Northwings as discussed
above.
Interest and other income in the first quarter of fiscal 1998 increased $105,000
over the first quarter of fiscal 1997, principally due to interest income on the
unexpended proceeds of industrial development revenue bonds and the investment
of cash received from the sale of a 20% minority interest in a consolidated
subsidiary to Lufthansa in October 1997.
The Company's effective tax rate totaled 33.5% for the first quarter of 1998 and
32.1% in the first quarter of 1997. The increase is primarily attributable to
non-deductible amortization of goodwill related to the acquisition of
Northwings.
LIQUIDITY AND CAPITAL RESOURCES
During the first three months of fiscal 1998, net cash provided by operating
activities totaled $2,408,000 reflecting primarily higher net income before
minority interest.
The Company's principal investing activities during the first quarter of fiscal
1998 were purchases of property, plant and equipment of $.7 million principally
related to industrial revenue bond projects.
The Company's principal financing activities during the first quarter of fiscal
1998 were $.6 million in proceeds of long-term debt primarily representing
reimbursements for qualified expenditures from unexpended proceeds of industrial
revenue bonds.
There have been no other material changes in the liquidity or the capital
resources of the Company since the end of fiscal 1997.
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<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There have been no material developments in previously reported
litigation involving the Company and its subsidiaries.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 10.1 - Third Loan Modification Agreement, dated
February 6, 1998, between HEICO Corporation and Eagle National
Bank of Miami.
Exhibit 11 - Computation of earnings per share.
Exhibit 27 - Financial Data Schedule
(c) There were no reports on Form 8-K filed during the three
months ended January 31, 1998.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
HEICO CORPORATION
-----------------
(Registrant)
MARCH 13, 1998 BY /s/THOMAS S. IRWIN
Date ---------------------
Thomas S. Irwin, Executive Vice
President and Chief Financial Officer
(Principal Financial and Accounting
Officer)
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<PAGE>
EXHIBIT INDEX
EXHIBITS DESCRIPTION
- -------- -----------
10.1 Third Loan Modification Agreement, dated
February 6, 1998, between NEICO Corporation and Eagle
National Bank
11 Computation of earnings per share.
27 Financial Data Schedule
EXHIBIT 10.1
THIRD LOAN MODIFICATION AGREEMENT
This Second Loan Modification Agreement (the "Agreement") is made and entered
into this 6th day February, 1998, effective December 31, 1997 (the "Effective
Date"), by and among Eagle Bank of Miami, a national banking association with
its principal place of business at c/o Ada Cabrera-Tekse, 701 Brickell Avenue,
Suite 1250, Miami, Florida 33131 ("Lender"), and HEICO Corporation, Heico
Aerospace Corporation, Jet Avion Corporation, Jet Avion Heat Treat /
Corporation, LPI Industries Corporation, and Aircraft Technology, Inc., each a
Florida corporation (collectively the "Original Borrowers"), Trilectron
Industries, Inc., a New York corporation, Heico Aviation Products Corp. and
Northwings Accessories Corp. 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")
WITNESSETH
WHEREAS, on or about March 31, 1994 Lender and Original Borrowers
entered into that certain Loan Agreement (the "Loan Agreement") pursuant to
which Lender provided 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 term loans to Borrowers for purchasing or
refinancing equipment to be used in Borrowers' business operations; and
WHEREAS, Original Borrowers requested and Lender agreed to a
modification of the terms and conditions of the Loan Agreement, in accordance
with the terms and conditions of that certain Loan Modification Agreement dated
August 9, 1995 (the "First Modification"); and
WHEREAS, Borrowers requested and Lender agreed to a modification of the
terms and conditions of the Loan Agreement and First Modification Agreement, in
accordance with the terms and conditions of that certain Second Loan
Modification Agreement dated February 27, 1997 (the "Second Modification"); and
WHEREAS, Borrowers have requested and Lender has agreed to a
modification of the terms and conditions of the Loan Agreement, the First
Modification, and the Second Modification in accordance with the terms and
conditions of this Agreement (this Agreement, the Loan Agreement, the First
Modification, and the Second Modification 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 acknowledged, Borrowers and
Lender agree as follows:
TERMS
1. AFFIRMATION OF LOAN AGREEMENT. Except as modified hereby, all of the
terms and conditions of the Loan Agreement and the First Modification 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.
2. DEFINITIONS. Unless otherwise defined all capitalized terms of this
Agreement shall have the same meaning as in the Loan Agreement.
<PAGE>
3. THE CREDIT FACILITY. Lender agrees, pursuant to the terms of this
Agreement, to extend the period of time the Credit Facility to March 1, 1999
(the "Termination Date"). The terms for each Equipment Loan shall remain as set
forth in the Loan Agreement, except to the extent modified by this Agreement.
4. CREDIT FACILITY FEE. Borrowers agree to pay Lender a non-refundable
credit facility fee in the amount of Four Thousand and 00/100 Dollars
($4,000.00) 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. COMMITMENT. Paragraph 1.1 of the Loan Agreement is hereby modified
to read as follows:
"1.1 The proceeds of each Equipment Loan shall be used exclusively for
the purpose of purchasing equipment to be used in the applicable Borrower's
business or to refinance existing equipment purchased not earlier than September
1, 1996 and used in the applicable Borrower's business."
6. CONDITIONS PRECEDENT TO EQUIPMENT LOAN. Paragraph 2.4 of the Loan
Agreement is hereby modified to read as follows:
"2.4 The Lender shall have received from SUNTRUST BANK, N.A. (formerly
known as SUNBANK/SOUTH FLORIDA, N.A.), ("Suntrust") or First Union National Bank
of Florida ("First Union"), a Subordination Agreement in form and substance
satisfactory to Lender and its counsel substantially in the form of Exhibit "C"
attached hereto and made a part hereof whereby Suntrust or First Union shall
fully subordinate its interest in equipment purchased or refinanced with the
proceeds of the proposed Equipment Loan.
7. 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.
8. TIME. Time is of the essence with respect to all matters set forth
herein.
9. 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.
10. WAIVER OF CLAIMS OR DEFENSES. Borrowers hereby covenant that they
have no claims or defenses against Lender that could give rise to any defense,
off-set or counterclaim in connection with the enforcement of the Loan
Agreement, as modified hereby or any Equipment Loans.
<PAGE>
11. 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 A JURY TRIAL IS A
MATERIAL INDUCEMENT FOR LENDER TO ENTER INTO THIS AGREEMENT AND TO MAKE THE
EQUIPMENT LOANS.
12. 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: LENDER:
_____________________________ EAGLE NATIONAL BANK OF MIAMI, a
National banking association
_____________________________ By: ___________________________
Print Name:___________________________
Title: ___________________________
WITNESSES: PARENT:
______________________________ HEICO CORPORATION, a Florida
corporation
______________________________ By: ___________________________
Print Name:___________________________
Title: ___________________________
WITNESSES: SUBSIDIARIES:
______________________________ JET AVION CORPORATION,
a Florida corporation
______________________________ By: ___________________________
Print Name:___________________________
Title: ___________________________
<PAGE>
______________________________ HEICO AEROSPACE
CORPORATION, a
______________________________ Florida corporation
By: ____________________________
Print Name:____________________________
Title: ____________________________
______________________________ JET AVION HEAT TREAT
CORPORATION, a Florida
______________________________ corporation
By: ___________________________
Print Name:___________________________
Title: ___________________________
______________________________ LPI INDUSTRIES
CORPORATION,
______________________________ a Florida corporation
By: ___________________________
Print Name:___________________________
Title: ___________________________
______________________________ AIRCRAFT TECHNOLOGY,
INC., a Florida corporation
______________________________ By: ___________________________
Print Name:___________________________
Title: ___________________________
______________________________ TRILECTRON INDUSTRIES,
INC., a New York corporation
By: ___________________________
Print Name:___________________________
Title: ___________________________
______________________________ HEICO AVIATION PRODUCTS CORPORATION,
a Florida corporation
______________________________ By: ___________________________
Print Name:___________________________
Title: ___________________________
______________________________ NORTHWINGS ACCESSORIES CORPORATION,
a Florida corporation
______________________________ By: ___________________________
Print Name:___________________________
Title: ___________________________
<TABLE>
<CAPTION>
EXHIBIT 11
HEICO CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
1998 1997
----------------------- ------------------------
BASIC DILUTED BASIC DILUTED
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Three months ended January 31:
Weighted average number of common
shares outstanding 8,289,377 8,289,377 7,930,070 7,930,070
Common Stock equivalents arising from
dilutive stock options (1) -- 1,917,140 -- 1,483,418
---------- ---------- ---------- ----------
8,289,377 10,206,517 7,930,070 9,413,488
========== ========== ========== ==========
Net income per share $ .28 $ .22 $ .20 $ .17
========== ========== ========== ==========
<FN>
- ----------
(1) Computed under the "treasury stock" method using the average market price.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1998
<PERIOD-END> JAN-31-1998
<CASH> 26,222,000
<SECURITIES> 0
<RECEIVABLES> 12,682,000
<ALLOWANCES> (381,000)
<INVENTORY> 20,586,000
<CURRENT-ASSETS> 62,039,000
<PP&E> 24,046,000
<DEPRECIATION> (15,218,000)
<TOTAL-ASSETS> 93,240,000
<CURRENT-LIABILITIES> 14,199,000
<BONDS> 10,427,000
83,000
0
<COMMON> 0
<OTHER-SE> 61,894,000
<TOTAL-LIABILITY-AND-EQUITY> 93,240,000
<SALES> 19,783,000
<TOTAL-REVENUES> 19,783,000
<CGS> 12,479,000
<TOTAL-COSTS> 12,479,000
<OTHER-EXPENSES> 3,483,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 129,000
<INCOME-PRETAX> 4,206,000
<INCOME-TAX> 1,406,000
<INCOME-CONTINUING> 2,282,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,282,000
<EPS-PRIMARY> 0.28
<EPS-DILUTED> 0.22
</TABLE>
