4.30.13 Form 10-Q
Index

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 April 30, 2013
 
 
 
 
 
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
incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
 
3000 Taft Street, Hollywood, Florida
 
33021
(Address of principal executive offices)
 
(Zip Code)
(954) 987-4000
(Registrant’s telephone number, including area code)

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 ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The number of shares outstanding of each of the registrant’s classes of common stock as of May 23, 2013 is as follows:
Common Stock, $.01 par value
21,421,447

shares
Class A Common Stock, $.01 par value
31,651,929

shares

Index

HEICO CORPORATION
INDEX TO QUARTERLY REPORT ON FORM 10-Q
 
 
 
 
 
Page
Part I.
 
Financial Information
 
 
 
 
 
 
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
 
 
 
 
 
 
Item 3.
 
 
 
 
 
 
 
 
 
Item 4.
 
 
 
 
 
 
 
Part II.
 
Other Information
 
 
 
 
 
 
 
 
 
 
Item 6.
 
 
 
 
 
 
 
 
 




1
Index

PART I. FINANCIAL INFORMATION; Item 1. FINANCIAL STATEMENTS

HEICO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED
(in thousands, except per share data)
 
 
April 30, 2013
 
October 31, 2012
ASSETS
Current assets:
 
 
 
 
Cash and cash equivalents
 

$16,878

 

$21,451

Accounts receivable, net
 
126,856

 
122,214

Inventories, net
 
199,501

 
189,704

Prepaid expenses and other current assets
 
9,365

 
6,997

Deferred income taxes
 
27,513

 
27,545

Total current assets
 
380,113

 
367,911

 
 
 
 
 
Property, plant and equipment, net
 
82,509

 
80,518

Goodwill
 
542,236

 
542,114

Intangible assets, net
 
145,658

 
154,324

Deferred income taxes
 
2,500

 
2,492

Other assets
 
56,199

 
45,487

Total assets
 

$1,209,215

 

$1,192,846

 
 
 
 
 
LIABILITIES AND EQUITY
Current liabilities:
 
 
 
 
Current maturities of long-term debt
 

$614

 

$626

Trade accounts payable
 
41,944

 
50,083

Accrued expenses and other current liabilities
 
68,788

 
76,241

Income taxes payable
 
7,078

 
4,564

Total current liabilities
 
118,424

 
131,514

 
 
 
 
 
Long-term debt, net of current maturities
 
227,932

 
131,194

Deferred income taxes
 
89,658

 
90,436

Other long-term liabilities
 
63,301

 
52,777

Total liabilities
 
499,315

 
405,921

 
 
 
 
 
Commitments and contingencies (Note 13)
 


 


 
 
 
 
 
Redeemable noncontrolling interests (Note 10)
 
51,218

 
67,166

 
 
 
 
 
Shareholders’ equity:
 
 
 
 
Preferred Stock, $.01 par value per share; 10,000 shares authorized; 300 shares designated as Series B Junior Participating Preferred Stock and 300 shares designated as Series C Junior Participating Preferred Stock; none issued
 
—

 
—

Common Stock, $.01 par value per share; 75,000 shares authorized; 21,411 and 21,346 shares issued and outstanding
 
214

 
213

Class A Common Stock, $.01 par value per share; 75,000 shares authorized; 31,640 and 31,517 shares issued and outstanding
 
316

 
315

Capital in excess of par value
 
251,043

 
244,632

Deferred compensation obligation
 
928

 
823

HEICO stock held by irrevocable trust
 
(928
)
 
(823
)
Accumulated other comprehensive loss
 
(3,327
)
 
(3,572
)
Retained earnings
 
301,088

 
375,085

Total HEICO shareholders’ equity
 
549,334

 
616,673

Noncontrolling interests
 
109,348

 
103,086

Total shareholders’ equity
 
658,682

 
719,759

Total liabilities and equity
 

$1,209,215

 

$1,192,846

The accompanying notes are an integral part of these condensed consolidated financial statements.


2
Index

HEICO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS – UNAUDITED
(in thousands, except per share data)
 
Six months ended April 30,
 
Three months ended April 30,
 
2013
 
2012
 
2013
 
2012
 
 
 
 
 
 
 
 
Net sales

$454,198

 

$428,969

 

$237,708

 

$216,314

 
 
 
 
 
 
 
 
Operating costs and expenses:
 
 
 
 
 
 
 
Cost of sales
287,161

 
275,523

 
148,260

 
141,116

Selling, general and administrative expenses
87,410

 
78,213

 
44,760

 
37,597

 
 
 
 
 
 
 
 
Total operating costs and expenses
374,571

 
353,736

 
193,020

 
178,713

 
 
 
 
 
 
 
 
Operating income
79,627

 
75,233

 
44,688

 
37,601

 
 
 
 
 
 
 
 
Interest expense
(1,443
)
 
(1,264
)
 
(803
)
 
(654
)
Other income
446

 
321

 
161

 
177

 
 
 
 
 
 
 
 
Income before income taxes and noncontrolling
interests
78,630

 
74,290

 
44,046

 
37,124

 
 
 
 
 
 
 
 
Income tax expense
24,600

 
25,600

 
15,000

 
12,900

 
 
 
 
 
 
 
 
Net income from consolidated operations
54,030

 
48,690

 
29,046

 
24,224

 
 
 
 
 
 
 
 
Less: Net income attributable to noncontrolling
interests
10,372

 
10,462

 
5,346

 
5,181

 
 
 
 
 
 
 
 
Net income attributable to HEICO

$43,658

 

$38,228

 

$23,700

 

$19,043

 
 
 
 
 
 
 
 
Net income per share attributable to HEICO
shareholders:
 
 
 
 
 
 
 
Basic

$.82

 

$.73

 

$.45

 

$.36

Diluted

$.82

 

$.72

 

$.44

 

$.36

 
 
 
 
 
 
 
 
Weighted average number of common shares
outstanding:
 
 
 
 
 
 
 
Basic
52,993

 
52,630

 
53,035

 
52,648

Diluted
53,468

 
53,290

 
53,498

 
53,296

 
 
 
 
 
 
 
 
Cash dividends per share

$2.200

 

$.048

 

$—

 

$—

The accompanying notes are an integral part of these condensed consolidated financial statements.



3
Index

HEICO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME – UNAUDITED
(in thousands)
 
Six months ended April 30,
 
Three months ended April 30,
 
2013
 
2012
 
2013
 
2012
 
 
 
 
 
 
 
 
Net income from consolidated operations

$54,030

 

$48,690

 

$29,046

 

$24,224

Other comprehensive income (loss):
 
 
 
 
 
 
 
Foreign currency translation adjustments
244

 
(4,236
)
 
(2,990
)
 
1,192

Total other comprehensive income (loss)
244

 
(4,236
)
 
(2,990
)
 
1,192

Comprehensive income from consolidated
operations
54,274

 
44,454

 
26,056

 
25,416

Less: Comprehensive income attributable to
noncontrolling interests
10,372

 
10,462

 
5,346

 
5,181

Comprehensive income attributable to HEICO

$43,902

 

$33,992

 

$20,710

 

$20,235

The accompanying notes are an integral part of these condensed consolidated financial statements.





4
Index

HEICO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY - UNAUDITED
(in thousands, except per share data)
 
 
 
HEICO Shareholders' Equity
 
 
 
 
 
Redeemable Noncontrolling Interests
 
Common Stock
 
Class A Common Stock
 
Capital in Excess of Par Value
 
Deferred Compensation Obligation
 
HEICO Stock Held by Irrevocable Trust
 
Accumulated Other Comprehensive Income (Loss)
 
Retained Earnings
 
Noncontrolling Interests
 
Total Shareholders' Equity
Balances as of October 31, 2012

$67,166

 

$213

 

$315

 

$244,632

 

$823

 

($823
)
 

($3,572
)
 

$375,085

 

$103,086

 

$719,759

Comprehensive income
4,109

 
—

 
—

 
—

 
—

 
—

 
244

 
43,658

 
6,263

 
50,165

Cash dividends ($2.200 per share)
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(116,645
)
 
—

 
(116,645
)
Issuance of common stock to HEICO Savings and Investment Plan
—

 
—

 
—

 
1,159

 
—

 
—

 
—

 
—

 
—

 
1,159

Tax benefit from stock option exercises
—

 
—

 
—

 
5,177

 
—

 
—

 
—

 
—

 
—

 
5,177

Stock option compensation expense
—

 
—

 
—

 
2,154

 
—

 
—

 
—

 
—

 
—

 
2,154

Proceeds from stock option exercises
—

 
1

 
1

 
284

 
—

 
—

 
—

 
—

 
—

 
286

Redemptions of common stock related to stock option exercises
—

 
—

 
—

 
(2,364
)
 
—

 
—

 
—

 
—

 
—

 
(2,364
)
Acquisitions of noncontrolling interests
(16,610
)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Distributions to noncontrolling interests
(4,457
)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Adjustments to redemption amount of redeemable noncontrolling interests
1,010

 
—

 
—

 
—

 
—

 
—

 
—

 
(1,010
)
 
—

 
(1,010
)
Deferred compensation obligation
—

 
—

 
—

 
—

 
105

 
(105
)
 
—

 
—

 
—

 
—

Other
—

 
—

 
—

 
1

 
—

 
—

 
1

 
—

 
(1
)
 
1

Balances as of April 30, 2013

$51,218

 

$214

 

$316

 

$251,043

 

$928

 

($928
)
 

($3,327
)
 

$301,088

 

$109,348

 

$658,682


 
 
 
HEICO Shareholders' Equity
 
 
 
 
 
Redeemable Noncontrolling Interests
 
Common Stock
 
Class A Common Stock
 
Capital in Excess of Par Value
 
Deferred Compensation Obligation
 
HEICO Stock Held by Irrevocable Trust
 
Accumulated Other Comprehensive Income (Loss)
 
Retained Earnings
 
Noncontrolling Interests
 
Total Shareholders' Equity
Balances as of October 31, 2011

$65,430

 

$171

 

$250

 

$226,120

 

$522

 

($522
)
 

$3,033

 

$299,497

 

$91,083

 

$620,154

Comprehensive income
4,586

 
—

 
—

 
—

 
—

 
—

 
(4,236
)
 
38,228

 
5,876

 
39,868

Cash dividends ($.048 per share)
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(2,526
)
 
—

 
(2,526
)
Five-for-four common stock split
—

 
42

 
63

 
(105
)
 
—

 
—

 
—

 
(16
)
 
—

 
(16
)
Tax benefit from stock option exercises
—

 
—

 
—

 
13,148

 
—

 
—

 
—

 
—

 
—

 
13,148

Stock option compensation expense
—

 
—

 
—

 
1,883

 
—

 
—

 
—

 
—

 
—

 
1,883

Proceeds from stock option exercises
—

 
—

 
—

 
275

 
—

 
—

 
—

 
—

 
—

 
275

Acquisitions of noncontrolling interests
(7,616
)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Distributions to noncontrolling interests
(5,050
)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Redemptions of common stock related to stock option exercises
—

 
—

 
—

 
(127
)
 
—

 
—

 
—

 
—

 
—

 
(127
)
Adjustments to redemption amount of redeemable noncontrolling interests
522

 
—

 
—

 
—

 
—

 
—

 
—

 
(522
)
 
—

 
(522
)
Other
1,224

 
—

 
—

 
(1
)
 
—

 
—

 
(148
)
 
(79
)
 
—

 
(228
)
Balances as of April 30, 2012

$59,096

 

$213

 

$313

 

$241,193

 

$522

 

($522
)
 

($1,351
)
 

$334,582

 

$96,959

 

$671,909

The accompanying notes are an integral part of these condensed consolidated financial statements.



5
Index

HEICO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(in thousands)
 
 
Six months ended April 30,
 
 
2013
 
2012
Operating Activities:
 
 
 
 
Net income from consolidated operations
 

$54,030

 

$48,690

Adjustments to reconcile net income from consolidated operations to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
16,405

 
14,438

Tax benefit from stock option exercises
 
5,177

 
13,148

Excess tax benefit from stock option exercises
 
(5,112
)
 
(12,095
)
Stock option compensation expense
 
2,154

 
1,883

Decrease in value of contingent consideration
 
(1,203
)
 
—

Issuance of common stock to HEICO Savings and Investment Plan
 
1,159

 
—

Deferred income tax benefit
 
(856
)
 
(1,057
)
Changes in operating assets and liabilities, net of acquisitions:
 
 
 
 
(Increase) decrease in accounts receivable
 
(4,673
)
 
777

Increase in inventories
 
(9,696
)
 
(6,981
)
Increase in prepaid expenses and other current assets
 
(2,618
)
 
(2,725
)
Decrease in trade accounts payable
 
(8,154
)
 
(2,005
)
Decrease in accrued expenses and other current liabilities
 
(4,700
)
 
(13,695
)
Increase in income taxes payable
 
2,189

 
4,929

Other
 
430

 
39

Net cash provided by operating activities
 
44,532

 
45,346

 
 
 
 
 
Investing Activities:
 
 
 
 
Acquisitions, net of cash acquired
 
(1,242
)
 
(161,357
)
Capital expenditures
 
(9,265
)
 
(8,148
)
Other
 
(6
)
 
(136
)
Net cash used in investing activities
 
(10,513
)
 
(169,641
)
 
 
 
 
 
Financing Activities:
 
 
 
 
Borrowings on revolving credit facility
 
145,000

 
163,000

Payments on revolving credit facility
 
(48,000
)
 
(28,000
)
Cash dividends paid
 
(116,645
)
 
(2,526
)
Acquisitions of noncontrolling interests
 
(16,610
)
 
(7,616
)
Excess tax benefit from stock option exercises
 
5,112

 
12,095

Distributions to noncontrolling interests
 
(4,457
)
 
(5,050
)
Redemptions of common stock related to stock option exercises
 
(2,364
)
 
(127
)
Revolving credit facility issuance costs
 
(570
)
 
(3,028
)
Proceeds from stock option exercises
 
286

 
275

Other
 
(325
)
 
297

Net cash (used in) provided by financing activities
 
(38,573
)
 
129,320

 
 
 
 
 
Effect of exchange rate changes on cash
 
(19
)
 
(263
)
 
 
 
 
 
Net (decrease) increase in cash and cash equivalents
 
(4,573
)
 
4,762

Cash and cash equivalents at beginning of year
 
21,451

 
17,500

Cash and cash equivalents at end of period
 

$16,878

 

$22,262

The accompanying notes are an integral part of these condensed consolidated financial statements.



6
Index

HEICO CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of HEICO Corporation and its subsidiaries (collectively, “HEICO,” or the “Company”) have been prepared in conformity with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions to Form 10-Q. Therefore, the condensed consolidated financial statements 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 Annual Report on Form 10-K for the year ended October 31, 2012. The October 31, 2012 Condensed Consolidated Balance Sheet has been derived from the Company’s audited consolidated financial statements. In the opinion of management, the unaudited condensed consolidated financial statements contain all adjustments (consisting principally of normal recurring accruals) necessary for a fair presentation of the condensed consolidated balance sheets, statements of operations, statements of comprehensive income, statements of shareholders' equity and statements of cash flows for such interim periods presented. The results of operations for the six months ended April 30, 2013 are not necessarily indicative of the results which may be expected for the entire fiscal year.

New Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2011-05, “Presentation of Comprehensive Income,” which requires the presentation of total comprehensive income, the components of net income and the components of other comprehensive income in either a single continuous statement of comprehensive income or in two separate, but consecutive statements. ASU 2011-05 eliminates the option to present other comprehensive income and its components in the statement of shareholders’ equity. The Company adopted ASU 2011-05 in the first quarter of fiscal 2013 and elected to make the presentation in two separate, but consecutive statements, which had no impact on the Company's consolidated results of operations, financial position or cash flows.

In September 2011, the FASB issued ASU 2011-08, “Testing Goodwill for Impairment,” which is intended to reduce the complexity and cost of performing a quantitative test for impairment of goodwill by permitting an entity the option to perform a qualitative evaluation about the likelihood of goodwill impairment in order to determine whether it should calculate the fair value of a reporting unit. The update also improves previous guidance by expanding upon the examples of events and circumstances that an entity should consider between annual impairment tests in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, or in



7
Index

fiscal 2013 for HEICO's annual impairment test. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company's consolidated results of operations, financial position or cash flows.

In February 2013, the FASB issued ASU 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income,” which requires disclosure about changes in and amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement of operations or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income, but only if the amount reclassified is required to be reclassified to net income in its entirety in the same reporting period. For amounts that are not required to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures that provide additional detail about those amounts. ASU 2013-02 is effective prospectively for fiscal years and interim periods within those fiscal years beginning after December 15, 2012, or in fiscal 2014 for HEICO. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company's consolidated results of operations, financial position or cash flows.

In March 2013, the FASB issued ASU 2013-05, “Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity,” which clarifies the applicable guidance for the release of any cumulative translation adjustments into net earnings. ASU 2013-05 specifies that the entire amount of cumulative translation adjustments should be released into earnings when an entity ceases to have a controlling financial interest in a subsidiary or group of assets within a consolidated foreign entity and the sale or transfer results in the complete or substantially complete liquidation of the investment in the foreign entity. ASU 2013-05 is effective prospectively for fiscal years and interim reporting periods within those years beginning after December 15, 2013, or in fiscal 2015 for HEICO. Early adoption is permitted. The Company is currently evaluating the effect, if any, the adoption of this guidance will have on its consolidated results of operations, financial position or cash flows.

2.    ACQUISITIONS

Additional Purchase Consideration

Pursuant to the terms of the purchase agreements related to certain fiscal 2012 acquisitions, the Company was obligated to pay additional purchase consideration representing the difference between the actual net assets of the acquired entity as of the acquisition date and the amount estimated in the purchase agreement. During the first quarter of fiscal 2013, the Company paid $1.2 million of such additional purchase consideration, which was accrued as of October 31, 2012.



8
Index

3.    SELECTED FINANCIAL STATEMENT INFORMATION

Accounts Receivable
(in thousands)
 
April 30, 2013
 
October 31, 2012
Accounts receivable
 

$129,457

 

$124,548

Less: Allowance for doubtful accounts
 
(2,601
)
 
(2,334
)
Accounts receivable, net
 

$126,856

 

$122,214


Costs and Estimated Earnings on Uncompleted Percentage-of-Completion Contracts
(in thousands)
 
April 30, 2013
 
October 31, 2012
Costs incurred on uncompleted contracts
 

$7,995

 

$6,673

Estimated earnings
 
7,413

 
6,235

 
 
15,408

 
12,908

Less: Billings to date
 
(10,222
)
 
(7,426
)
 
 

$5,186

 

$5,482

Included in the accompanying Condensed Consolidated
Balance Sheets under the following captions:
 


 


Accounts receivable, net (costs and estimated earnings
in excess of billings)
 

$5,313

 

$5,482

Accrued expenses and other current liabilities (billings
in excess of costs and estimated earnings)
 
(127
)
 
—

 
 

$5,186

 

$5,482


The percentage of the Company’s net sales recognized under the percentage-of-completion method was not material for the six and three months ended April 30, 2013 and 2012. Changes in estimates pertaining to percentage-of-completion contracts did not have a material effect on net income from consolidated operations for the six and three months ended April 30, 2013 and 2012.

Inventories
(in thousands)
 
April 30, 2013
 
October 31, 2012
Finished products
 

$101,742

 

$93,873

Work in process
 
20,344

 
18,887

Materials, parts, assemblies and supplies
 
70,015

 
69,042

Contracts in process
 
8,472

 
8,299

Less: Billings to date
 
(1,072
)
 
(397
)
Inventories, net of valuation reserves
 

$199,501

 

$189,704


Contracts in process represents accumulated capitalized costs associated with fixed price contracts for which revenue is recognized on the completed-contract method. Related progress



9
Index

billings and customer advances (“billings to date”) are classified as a reduction to contracts in process, if any, and any excess is included in accrued expenses and other liabilities.

Property, Plant and Equipment
(in thousands)
 
April 30, 2013
 
October 31, 2012
Land
 

$4,506

 

$4,505

Buildings and improvements
 
55,271

 
54,322

Machinery, equipment and tooling
 
116,745

 
109,041

Construction in progress
 
5,554

 
5,599

 
 
182,076

 
173,467

Less: Accumulated depreciation and amortization
 
(99,567
)
 
(92,949
)
Property, plant and equipment, net
 

$82,509

 

$80,518

Accrued Customer Rebates and Credits

The aggregate amount of accrued customer rebates and credits included within accrued expenses and other current liabilities in the accompanying Condensed Consolidated Balance Sheets was $12.7 million and $10.8 million as of April 30, 2013 and October 31, 2012, respectively. The total customer rebates and credits deducted within net sales for the six months ended April 30, 2013 and 2012 was $3.5 million and $1.1 million, respectively. The total customer rebates and credits deducted within net sales for the three months ended April 30, 2013 and 2012 was $2.1 million and $.7 million, respectively. The increase in customer rebates and credits is principally due to the fact that the first six months and second quarter of fiscal 2012 reflected a reduction in the net sales volume of certain customers eligible for rebates as well as a reduction in associated rebate percentages.


4.    GOODWILL AND OTHER INTANGIBLE ASSETS

The Company has two operating segments: the Flight Support Group (“FSG”) and the Electronic Technologies Group (“ETG”). Changes in the carrying amount of goodwill by operating segment for the six months ended April 30, 2013 are as follows (in thousands):
 
 
Segment
 
Consolidated Totals
 
 
FSG
 
ETG
 
Balances as of October 31, 2012
 

$203,539

 

$338,575

 

$542,114

Adjustments to goodwill
 
(108
)
 
—

 
(108
)
Foreign currency translation adjustments
 
—

 
230

 
230

Balances as of April 30, 2013
 

$203,431

 

$338,805

 

$542,236


The adjustments to goodwill during fiscal 2013 represent immaterial measurement period adjustments to the purchase price allocations of certain fiscal 2012 acquisitions.




10
Index

Identifiable intangible assets consist of the following (in thousands):
 
 
As of April 30, 2013
 
As of October 31, 2012
 
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
Amortizing Assets:
 
 
 
 
 
 
 
 
 
 
 
 
Customer relationships
 

$101,391

 

($29,756
)
 

$71,635

 

$102,172

 

($24,038
)
 

$78,134

Intellectual property
 
43,185

 
(7,831
)
 
35,354

 
43,093

 
(5,738
)
 
37,355

Licenses
 
2,900

 
(1,249
)
 
1,651

 
2,900

 
(1,117
)
 
1,783

Non-compete agreements
 
1,234

 
(1,234
)
 
—

 
1,339

 
(1,320
)
 
19

Patents
 
633

 
(332
)
 
301

 
589

 
(309
)
 
280

Trade names
 
566

 
(392
)
 
174

 
566

 
(336
)
 
230

 
 
149,909

 
(40,794
)
 
109,115

 
150,659

 
(32,858
)
 
117,801

Non-Amortizing Assets:
 
 
 
 
 
 
 
 
 
 
 
 
Trade names
 
36,543

 
—

 
36,543

 
36,523

 
—

 
36,523

 
 

$186,452

 

($40,794
)
 

$145,658

 

$187,182

 

($32,858
)
 

$154,324

Amortization expense related to intangible assets for the six months ended April 30, 2013 and 2012 was $8.9 million and $7.5 million, respectively. Amortization expense related to intangible assets for the three months ended April 30, 2013 and 2012 was $4.4 million and $4.0 million, respectively. Amortization expense related to intangible assets for the remainder of fiscal 2013 is estimated to be $8.8 million. Amortization expense for each of the next five fiscal years and thereafter is estimated to be $17.0 million in fiscal 2014, $15.5 million in fiscal 2015, $14.0 million in fiscal 2016, $13.4 million in fiscal 2017, $11.8 million in fiscal 2018 and $28.6 million thereafter.


5.    LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
 
 
April 30, 2013
 
October 31, 2012
Borrowings under revolving credit facility
 

$224,000

 

$127,000

Capital leases and notes payable
 
4,546

 
4,820

 
 
228,546

 
131,820

Less: Current maturities of long-term debt
 
(614
)
 
(626
)
 
 

$227,932

 

$131,194


As of April 30, 2013 and October 31, 2012, the weighted average interest rate on borrowings under the Company’s revolving credit facility was 1.3% and 1.2%, respectively. The revolving credit facility contains both financial and non-financial covenants. As of April 30, 2013, the Company was in compliance with all such covenants.




11
Index

In December 2012, the Company entered into an amendment to extend the maturity date of its revolving credit facility by one year to December 2017. The Company also amended certain covenants contained within the revolving credit facility agreement to accommodate payment of a special and extraordinary cash dividend paid in December 2012. See Note 8, Shareholders' Equity, for additional information. Costs aggregating $.6 million were incurred in connection with the amendments and are included in other assets within the Company's Condensed Consolidated Balance Sheets, and are being amortized to selling, general and administrative expenses within the Company's Condensed Consolidated Statements of Operations over the remaining term of the revolving credit facility.


6.    INCOME TAXES
As of April 30, 2013, the Company’s liability for gross unrecognized tax benefits related to uncertain tax positions was $2.0 million of which $1.3 million would decrease the Company’s income tax expense and effective income tax rate if the tax benefits were recognized. A reconciliation of the activity related to the liability for gross unrecognized tax benefits for the six months ended April 30, 2013 is as follows (in thousands):
Balance as of October 31, 2012
 

$2,527

Settlements
 
(570
)
Decreases related to prior year tax positions
 
(151
)
Increases related to current year tax positions
 
149

Balance as of April 30, 2013
 

$1,955


The settlements and decreases related to prior year tax positions pertain to a state income tax position regarding nexus that was originally recognized in fiscal 2012 and resolved through the filing of state income tax returns in fiscal 2013. The accrual of interest and penalties related to unrecognized tax benefits was not material for the six months ended April 30, 2013. Further, the Company does not expect the total amount of unrecognized tax benefits to materially change in the next twelve months.

The Company's effective tax rate for the first six months of fiscal 2013 decreased to 31.3% from 34.5% for the first six months of fiscal 2012. The decrease is principally due to an income tax credit for qualified research and development activities for the last ten months of fiscal 2012 that was recognized in the first quarter of fiscal 2013 pursuant to the retroactive extension of Section 41 of the Internal Revenue Code, "Credit for Increasing Research Activities," in January 2013 to cover a two-year period from January 1, 2012 to December 31, 2013. As a result, the Company recognized an additional $1.6 million of research and development tax credits in the first quarter of fiscal 2013 compared to the first quarter of fiscal 2012. The decrease in the effective tax rate was also attributed to an income tax deduction under Section 404(k) of the Internal Revenue Code for the one-time special and extraordinary cash dividend paid in December 2012 to participants of the HEICO Savings and Investment Plan holding HEICO common stock. See Note 8, Shareholders' Equity, for additional information.




12
Index

The Company's effective tax rate in the second quarter of fiscal 2013 decreased to 34.1% from 34.7% in the second quarter of fiscal 2012. The decrease is principally due to the aforementioned income tax deduction under Section 404(k) of the Internal Revenue Code for the one-time special and extraordinary cash dividend paid in December 2012 to participants of the HEICO Savings and Investment Plan holding HEICO common stock. Additionally, the effective tax rate for the second quarter of fiscal 2013 reflects a benefit resulting from the retroactive extension of the research and development tax credit.


7.    FAIR VALUE MEASUREMENTS

The following tables set forth by level within the fair value hierarchy, the Company’s assets and liabilities that were measured at fair value on a recurring basis (in thousands):
 
 
As of April 30, 2013
 
 
Quoted Prices
in Active Markets for Identical Assets (Level 1)
 
Significant
Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
 
Total
Assets:
 
 
 
 
 
 
 
 
Deferred compensation plans:
 
 
 
 
 
 
 
 
Corporate owned life insurance
 

$—

 

$47,068

 

$—

 

$47,068

Money market funds and cash
 
1,524

 
—

 
—

 
1,524

Equity securities
 
1,294

 
—

 
—

 
1,294

Mutual funds
 
1,285

 
—

 
—

 
1,285

Other
 
—

 
483

 
—

 
483

Total assets
 

$4,103

 

$47,551

 

$—

 

$51,654

 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
Contingent consideration
 

$—

 

$—

 

$9,694

 

$9,694





13
Index

 
 
As of October 31, 2012
 
 
Quoted Prices
in Active Markets for Identical Assets (Level 1)
 
Significant
Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
 
Total
Assets:
 
 
 
 
 
 
 
 
Deferred compensation plans:
 
 
 
 
 
 
 
 
Corporate owned life insurance
 

$—

 

$37,086

 

$—

 

$37,086

Money market funds and cash
 
1,122

 
—

 
—

 
1,122

Equity securities
 
991

 
—

 
—

 
991

Mutual funds
 
1,154

 
—

 
—

 
1,154

Other
 
—

 
442

 
538

 
980

Total assets
 

$3,267

 

$37,528

 

$538

 

$41,333

 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
Contingent consideration
 

$—

 

$—

 

$10,897

 

$10,897


The Company maintains two non-qualified deferred compensation plans. The assets of the HEICO Corporation Leadership Compensation Plan (the “LCP”) represent cash surrender values of life insurance policies, which derive their fair values from investments in mutual funds that are managed by an insurance company and are classified within Level 2 and valued using a market approach. The assets of the Company’s other deferred compensation plan are invested in equity securities, mutual funds and money market funds that are classified within Level 1. The assets of both plans are held within irrevocable trusts and classified within other assets in the Company’s Condensed Consolidated Balance Sheets and have an aggregate value of $51.7 million as of April 30, 2013 and $41.3 million as of October 31, 2012, of which the LCP related assets were $47.1 million and $37.1 million as of April 30, 2013 and October 31, 2012, respectively. The related liabilities of the two deferred compensation plans are included within other long-term liabilities in the Company’s Condensed Consolidated Balance Sheets and have an aggregate value of $51.0 million as of April 30, 2013 and $40.8 million as of October 31, 2012, of which the LCP related liability was $46.4 million and $36.5 million as of April 30, 2013 and October 31, 2012, respectively.

As part of the agreement to acquire a subsidiary by the ETG in fiscal 2012, the Company may be obligated to pay contingent consideration of up to $14.6 million in aggregate should the acquired entity meet certain earnings objectives during each of the first five years following the the acquisition. The estimated fair value of the contingent consideration as of April 30, 2013 is $9.7 million and classified within Level 3, of which $.6 million is included in accrued expenses and other current liabilities and the remaining $9.1 million is included in other long-term liabilities in the Company's Condensed Consolidated Balance Sheet. The $.6 million included in current liabilities represents the amount of contingent consideration payable based on the actual earnings of the acquired entity during the first year following the acquisition and is expected to be paid in the third quarter of fiscal 2013. The $9.1 million estimated fair value of the contingent consideration included in long-term liabilities was determined using a probability-based scenario analysis approach. Under this method, a set of discrete potential future subsidiary earnings was



14
Index

determined using internal estimates based on various revenue growth rate assumptions for each scenario that ranged from a compound annual growth rate of negative 4% to positive 20%. A probability of likelihood was assigned to each discrete potential future earnings estimate and a corresponding contingent consideration was calculated. The resulting probability-weighted contingent consideration amounts were discounted using a weighted average discount rate of 2.75% reflecting the credit risk of a market participant. Significant changes to either the revenue growth rates, related earnings or the discount rate could result in a material change to the amount of contingent consideration accrued and such changes will be recorded in the Company's consolidated statements of operations. The $1.2 million decrease in the fair value of the contingent consideration since October 31, 2012 is principally attributed to lower year one actual earnings and year two forecasted earnings of the subsidiary due to reductions in United States defense spending and was recorded to selling, general and administrative expenses in the Company's Condensed Consolidated Statement of Operations.

Changes in the Company’s assets and liabilities measured at fair value on a recurring basis using unobservable inputs (Level 3) for the six months ended April 30, 2013 are as follows (in thousands):
 
 
Assets
 
Liabilities
Balances as of October 31, 2012
 

$538

 

$10,897

Decrease in value of contingent consideration
 
—

 
(1,203
)
Total realized gains
 
48

 
—

Sales
 
(586
)
 
—

Balances as of April 30, 2013
 

$—

 

$9,694


The Company did not have any transfers between Level 1 and Level 2 fair value measurements during the six months ended April 30, 2013.
The carrying amounts of the Company’s cash and cash equivalents, accounts receivable, trade accounts payable and accrued expenses and other current liabilities approximate fair value as of April 30, 2013 due to the relatively short maturity of the respective instruments. The carrying amount of long-term debt approximates fair value due to its variable interest rates.


8.    SHAREHOLDERS' EQUITY

During the six months ended April 30, 2013, the Company repurchased an aggregate 29,083 shares of Common Stock at a total cost of $1.3 million and an aggregate 31,972 shares of Class A Common Stock at a total cost of $1.1 million. The transactions occurred as settlement for employee taxes due pertaining to exercises of non-qualified stock options and did not impact the number of shares authorized for future purchase under the Company’s share repurchase program.

In December 2012, the Company paid a special and extraordinary $2.14 per share cash dividend on both classes of HEICO common stock as well as a regular semi-annual $.06 per



15
Index

share cash dividend that was accelerated from January 2013. The dividends, which aggregated $116.6 million, were funded from borrowings under the Company's revolving credit facility.


9.    RESEARCH AND DEVELOPMENT EXPENSES

Cost of sales for the six months ended April 30, 2013 and 2012 includes approximately $15.0 million and $14.9 million, respectively, of new product research and development expenses. Cost of sales for the three months ended April 30, 2013 and 2012 includes approximately $7.7 million and $8.4 million, respectively, of new product research and development expenses.


10.    REDEEMABLE NONCONTROLLING INTERESTS

The holders of equity interests in certain of the Company’s subsidiaries have rights (“Put Rights”) that may be exercised on varying dates causing the Company to purchase their equity interests through fiscal 2022. The Put Rights, all of which relate either to common shares or membership interests in limited liability companies, provide that the cash consideration to be paid for their equity interests (the “Redemption Amount”) be at fair value or at a formula that management intended to reasonably approximate fair value based solely on a multiple of future earnings over a measurement period. As of April 30, 2013, management’s estimate of the aggregate Redemption Amount of all Put Rights that the Company would be required to pay is approximately $51 million. The actual Redemption Amount will likely be different. The aggregate Redemption Amount of all Put Rights was determined using probability adjusted internal estimates of future earnings of the Company’s subsidiaries with Put Rights while considering the earliest exercise date, the measurement period and any applicable fair value adjustments. The portion of the estimated Redemption Amount as of April 30, 2013 redeemable at fair value is approximately $42 million and the portion redeemable based solely on a multiple of future earnings is approximately $9 million. Adjustments to Redemption Amounts based on fair value will have no affect on net income per share attributable to HEICO shareholders whereas the portion of periodic adjustments to the carrying amount of redeemable noncontrolling interests based solely on a multiple of future earnings that reflect a redemption amount in excess of fair value will affect net income per share attributable to HEICO shareholders.

In December 2012, the Company, through its HEICO Aerospace Holdings Corp. ("HEICO Aerospace") subsidiary, acquired the remaining 13.3% interest in one of its subsidiaries. The purchase price of the redeemable noncontrolling interest acquired was paid using proceeds from the Company's revolving credit facility.



16
Index

11.    NET INCOME PER SHARE ATTRIBUTABLE TO HEICO SHAREHOLDERS

The computation of basic and diluted net income per share attributable to HEICO shareholders is as follows (in thousands, except per share data):
 
 
Six months ended April 30,
 
Three months ended April 30,
 
 
2013
 
2012
 
2013
 
2012
Numerator:
 
 
 
 
 
 
 
 
Net income attributable to HEICO
 

$43,658

 

$38,228

 

$23,700

 

$19,043

 
 
 
 
 
 
 
 
 
Denominator:
 
 
 
 
 
 
 
 
Weighted average common shares
outstanding-basic
 
52,993

 
52,630

 
53,035

 
52,648

Effect of dilutive stock options
 
475

 
660

 
463

 
648

Weighted average common shares
outstanding-diluted
 
53,468

 
53,290

 
53,498

 
53,296

 
 
 
 
 
 
 
 
 
Net income per share attributable to
HEICO shareholders:
 
 
 
 
 
 
 
 
Basic
 

$.82

 

$.73

 

$.45

 

$.36

Diluted
 

$.82

 

$.72

 

$.44

 

$.36

 
 
 
 
 
 
 
 
 
Anti-dilutive stock options excluded
 
672

 
641

 
598

 
645


No portion of the adjustments to the redemption amount of redeemable noncontrolling interests of $1.0 million and $.5 million for the six months ended April 30, 2013 and 2012, respectively, and $.2 million and ($.5) million for the three months ended April 30, 2013 and 2012, respectively, reflect a redemption amount in excess of fair value and therefore no portion of the adjustments affect basic or diluted net income per share attributable to HEICO shareholders.



17
Index

12.    OPERATING SEGMENTS
Information on the Company’s two operating segments, the Flight Support Group ("FSG"), consisting of HEICO Aerospace and HEICO Flight Support Corp. and their collective subsidiaries; and the Electronic Technologies Group ("ETG"), consisting of HEICO Electronic Technologies Corp. and its subsidiaries, for the six and three months ended April 30, 2013 and 2012, respectively, is as follows (in thousands):
 
 
 
 
 
 
Other,
Primarily Corporate and
Intersegment
 
Consolidated
Totals
 
 
Segment
 
 
 
 
FSG
 
ETG
 
 
Six months ended April 30, 2013:
 
 
 
 
 
 
 
 
Net sales
 

$294,229

 

$162,778

 

($2,809
)
 

$454,198

Depreciation and amortization
 
5,703

 
10,316

 
386

 
16,405

Operating income
 
54,541

 
35,795

 
(10,709
)
 
79,627

Capital expenditures
 
5,298

 
3,825

 
142

 
9,265

 
 
 
 
 
 
 
 
 
Six months ended April 30, 2012:
 
 
 
 
 
 
 
 
Net sales
 

$279,893

 

$150,743

 

($1,667
)
 

$428,969

Depreciation and amortization
 
5,141

 
8,847

 
450

 
14,438

Operating income
 
52,141

 
31,522

 
(8,430
)
 
75,233

Capital expenditures
 
3,218

 
4,062

 
868

 
8,148

 
 
 
 
 
 
 
 
 
Three months ended April 30, 2013:
 
 
 
 
 
 
 
 
Net sales
 

$155,231

 

$83,937

 

($1,460
)
 

$237,708

Depreciation and amortization
 
2,868

 
5,203

 
194

 
8,265

Operating income
 
30,296

 
20,249

 
(5,857
)
 
44,688

Capital expenditures
 
2,911

 
1,790

 
98

 
4,799

 
 
 
 
 
 
 
 
 
Three months ended April 30, 2012:
 
 
 
 
 
 
 
 
Net sales
 

$141,026

 

$76,272

 

($984
)
 

$216,314

Depreciation and amortization
 
2,455

 
4,816

 
192

 
7,463

Operating income
 
26,634

 
15,317

 
(4,350
)
 
37,601

Capital expenditures
 
1,563

 
1,984

 
813

 
4,360


Total assets by operating segment as of April 30, 2013 and October 31, 2012 are as follows (in thousands):
 
 
Segment
 
Other,
Primarily Corporate
 
Consolidated
Totals
 
 
FSG
 
ETG
 
 
Total assets as of April 30, 2013
 

$498,507

 

$628,745

 

$81,963

 

$1,209,215

Total assets as of October 31, 2012
 
487,188

 
636,660

 
68,998

 
1,192,846




18
Index

13.    COMMITMENTS AND CONTINGENCIES

Guarantees

The Company has arranged for a standby letter of credit in the amount of $1.5 million to meet the security requirement of its insurance company for potential workers’ compensation claims, which is supported by the Company’s revolving credit facility.

Product Warranty

Changes in the Company’s product warranty liability for the six months ended April 30, 2013 and 2012, respectively, are as follows (in thousands):
 
 
Six months ended April 30,
 
 
2013
 
2012
Balances as of beginning of fiscal year
 

$2,571

 

$2,231

Accruals for warranties
 
(220
)
 
779

Warranty claims settled
 
(622
)
 
(611
)
Balances as of April 30
 

$1,729

 

$2,399


The decrease in the Company's warranty accrual for the six months ended April 30, 2013 is principally attributed to the partial reversal of a previous accrual for which potential warranty claims did not materialize.

Litigation

The Company is involved in various legal actions arising in the normal course of business. Based upon the Company’s and its legal counsel’s evaluations of any claims or assessments, management is of the opinion that the outcome of these matters will not have a material adverse effect on the Company’s results of operations, financial position or cash flows.


14.    SUBSEQUENT EVENT
    
In May 2013, the Company announced that its HEICO Flight Support Corp. subsidiary had entered into an agreement to effectively acquire all of the outstanding stock of Reinhold Industries, Inc. (“Reinhold”) for approximately $130 million in a transaction that will be carried out by means of a merger. Closing, which is subject to governmental approval and standard closing conditions, is expected to occur in the third quarter of fiscal 2013. Reinhold is a leading manufacturer of advanced niche components and complex composite assemblies for commercial aviation, defense and space applications. The purchase price of this acquisition is expected to be paid in cash, principally using proceeds from the Company's revolving credit facility.





19
Index

Item 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview

This discussion of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and notes thereto included herein. The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates if different assumptions were used or different events ultimately transpire.

Our critical accounting policies, which require management to make judgments about matters that are inherently uncertain, are described in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” under the heading “Critical Accounting Policies” in our Annual Report on Form 10-K for the year ended October 31, 2012. There have been no material changes to our critical accounting policies during the six months ended April 30, 2013.

Our business is comprised of two operating segments: the Flight Support Group (“FSG”), consisting of HEICO Aerospace Holdings Corp. (“HEICO Aerospace”) and HEICO Flight Support Corp. and their collective subsidiaries, and the Electronic Technologies Group (“ETG”), consisting of HEICO Electronic Technologies Corp. (“HEICO Electronic”) and its subsidiaries.

Our results of operations for the six and three months ended April 30, 2013 have been affected by the fiscal 2012 acquisitions as further detailed in Note 2, Acquisitions, of the Notes to the Consolidated Financial Statements of our Annual Report on Form 10-K for the year ended October 31, 2012.

    




20
Index

Results of Operations

The following table sets forth the results of our operations, net sales and operating income by segment and the percentage of net sales represented by the respective items in our Condensed Consolidated Statements of Operations (in thousands).
 
 
Six months ended April 30,
 
Three months ended April 30,
 
 
2013
 
2012
 
2013
 
2012
Net sales
 

$454,198

 

$428,969

 

$237,708

 

$216,314

Cost of sales
 
287,161

 
275,523

 
148,260

 
141,116

Selling, general and administrative expenses
 
87,410

 
78,213

 
44,760

 
37,597

Total operating costs and expenses
 
374,571

 
353,736

 
193,020

 
178,713

Operating income
 

$79,627

 

$75,233

 

$44,688

 

$37,601

 
 
 
 
 
 
 
 
 
Net sales by segment:
 
 
 
 
 
 
 
 
Flight Support Group
 

$294,229

 

$279,893

 

$155,231

 

$141,026

Electronic Technologies Group
 
162,778

 
150,743

 
83,937

 
76,272

Intersegment sales
 
(2,809
)
 
(1,667
)
 
(1,460
)
 
(984
)
 
 

$454,198

 

$428,969

 

$237,708

 

$216,314

 
 
 
 
 
 
 
 
 
Operating income by segment:
 
 
 
 
 
 
 
 
Flight Support Group
 

$54,541

 

$52,141

 

$30,296

 

$26,634

Electronic Technologies Group
 
35,795

 
31,522

 
20,249

 
15,317

Other, primarily corporate
 
(10,709
)
 
(8,430
)
 
(5,857
)
 
(4,350
)
 
 

$79,627

 

$75,233

 

$44,688

 

$37,601

 
 
 
 
 
 
 
 
 
Net sales
 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
Gross profit
 
36.8
%
 
35.8
%
 
37.6
%
 
34.8
%
Selling, general and administrative expenses
 
19.2
%
 
18.2
%
 
18.8
%
 
17.4
%
Operating income
 
17.5
%
 
17.5
%
 
18.8
%
 
17.4
%
Interest expense
 
.3
%
 
.3
%
 
.3
%
 
.3
%
Other income
 
.1
%
 
.1
%
 
.1
%
 
.1
%
Income tax expense
 
5.4
%
 
6.0
%
 
6.3
%
 
6.0
%
Net income attributable to noncontrolling interests
 
2.3
%
 
2.4
%
 
2.2
%
 
2.4
%
Net income attributable to HEICO
 
9.6
%
 
8.9
%
 
10.0
%
 
8.8
%



21
Index

Comparison of First Six Months of Fiscal 2013 to First Six Months of Fiscal 2012

Net Sales