HEI 04.30.2015 10Q
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, 2015
 
 
 
 
 
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 20, 2015 is as follows:
Common Stock, $.01 par value
26,890,107

shares
Class A Common Stock, $.01 par value
39,915,823

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, 2015
 
October 31, 2014
ASSETS
Current assets:
 
 
 
 
Cash and cash equivalents
 

$20,679

 

$20,229

Accounts receivable, net
 
152,663

 
149,669

Inventories, net
 
231,035

 
218,042

Prepaid expenses and other current assets
 
15,099

 
8,868

Deferred income taxes
 
33,011

 
34,485

Total current assets
 
452,487

 
431,293

 
 
 
 
 
Property, plant and equipment, net
 
104,493

 
93,865

Goodwill
 
712,043

 
686,271

Intangible assets, net
 
223,304

 
200,810

Deferred income taxes
 
1,207

 
1,063

Other assets
 
87,060

 
75,912

Total assets
 

$1,580,594

 

$1,489,214

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

$346

 

$418

Trade accounts payable
 
56,092

 
57,157

Accrued expenses and other current liabilities
 
82,090

 
92,578

Income taxes payable
 
2,464

 
2,067

Total current liabilities
 
140,992

 
152,220

 
 
 
 
 
Long-term debt, net of current maturities
 
326,471

 
328,691

Deferred income taxes
 
115,288

 
111,429

Other long-term liabilities
 
105,528

 
82,289

Total liabilities
 
688,279

 
674,629

 
 
 
 
 
Commitments and contingencies (Note 10)
 

 

 
 
 
 
 
Redeemable noncontrolling interests (Note 3)
 
63,914

 
39,966

 
 
 
 
 
Shareholders’ equity:
 
 
 
 
Common Stock, $.01 par value per share; 75,000 shares authorized; 26,890 and 26,847 shares issued and outstanding
 
269

 
268

Class A Common Stock, $.01 par value per share; 75,000 shares authorized; 39,911 and 39,699 shares issued and outstanding
 
399

 
397

Capital in excess of par value
 
280,608

 
269,351

Deferred compensation obligation
 
1,296

 
1,138

HEICO stock held by irrevocable trust
 
(1,296
)
 
(1,138
)
Accumulated other comprehensive loss
 
(19,214
)
 
(8,289
)
Retained earnings
 
486,534

 
437,757

Total HEICO shareholders’ equity
 
748,596

 
699,484

Noncontrolling interests
 
79,805

 
75,135

Total shareholders’ equity
 
828,401

 
774,619

Total liabilities and equity
 

$1,580,594

 

$1,489,214

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,
 
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
Net sales
 

$559,606

 

$549,058

 

$291,421

 

$282,232

 
 
 
 
 
 
 
 
 
Operating costs and expenses:
 
 
 
 
 
 
 
 
Cost of sales
 
360,315

 
357,019

 
185,927

 
182,310

Selling, general and administrative expenses
 
97,097

 
92,483

 
49,706

 
50,751

 
 
 
 
 
 
 
 
 
Total operating costs and expenses
 
457,412

 
449,502

 
235,633

 
233,061

 
 
 
 
 
 
 
 
 
Operating income
 
102,194

 
99,556

 
55,788

 
49,171

 
 
 
 
 
 
 
 
 
Interest expense
 
(2,258
)
 
(2,722
)
 
(1,146
)
 
(1,441
)
Other income
 
559

 
508

 
362

 
350

 
 
 
 
 
 
 
 
 
Income before income taxes and noncontrolling interests
 
100,495

 
97,342

 
55,004

 
48,080

 
 
 
 
 
 
 
 
 
Income tax expense
 
29,900

 
32,000

 
16,500

 
15,300

 
 
 
 
 
 
 
 
 
Net income from consolidated operations
 
70,595

 
65,342

 
38,504

 
32,780

 
 
 
 
 
 
 
 
 
Less: Net income attributable to noncontrolling interests
 
9,850

 
9,520

 
5,399

 
4,413

 
 
 
 
 
 
 
 
 
Net income attributable to HEICO
 

$60,745

 

$55,822

 

$33,105

 

$28,367

 
 
 
 
 
 
 
 
 
Net income per share attributable to HEICO shareholders:
 
 
 
 
 
 
 
 
Basic
 

$.91

 

$.84

 

$.50

 

$.43

Diluted
 

$.90

 

$.83

 

$.49

 

$.42

 
 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding:
 
 
 
 
 
 
 
 
Basic
 
66,653

 
66,415

 
66,711

 
66,437

Diluted
 
67,735

 
67,403

 
67,801

 
67,455

 
 
 
 
 
 
 
 
 
Cash dividends per share
 

$.07

 

$.41

 

$—

 

$—

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,
 
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
Net income from consolidated operations
 

$70,595

 

$65,342

 

$38,504

 

$32,780

Other comprehensive (loss) income:
 
 
 
 
 
 
 
 
Foreign currency translation adjustments
 
(11,735
)
 
(651
)
 
3

 
1,811

Total other comprehensive (loss) income
 
(11,735
)
 
(651
)
 
3

 
1,811

Comprehensive income from consolidated operations
 
58,860

 
64,691

 
38,507

 
34,591

Less: Net income attributable to noncontrolling interests
 
9,850

 
9,520

 
5,399

 
4,413

Less: Foreign currency translation adjustments attributable to noncontrolling interests
 
(810
)
 
—

 
(353
)
 
—

Comprehensive income attributable to noncontrolling interests
 
9,040

 
9,520

 
5,046

 
4,413

Comprehensive income attributable to HEICO
 

$49,820

 

$55,171

 

$33,461

 

$30,178

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, 2014

$39,966

 

$268

 

$397

 

$269,351

 

$1,138

 

($1,138
)
 

($8,289
)
 

$437,757

 

$75,135

 

$774,619

Comprehensive income (loss)
2,288

 
—

 
—

 
—

 
—

 
—

 
(10,925
)
 
60,745

 
6,752

 
56,572

Cash dividends ($.07 per share)
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(4,666
)
 
—

 
(4,666
)
Issuance of common stock to HEICO Savings and Investment Plan
—

 
1

 
—

 
4,127

 
—

 
—

 
—

 
—

 
—

 
4,128

Share-based compensation expense
—

 
—

 
—

 
2,778

 
—

 
—

 
—

 
—

 
—

 
2,778

Proceeds from stock option exercises
—

 
—

 
2

 
2,952

 
—

 
—

 
—

 
—

 
—

 
2,954

Tax benefit from stock option exercises
—

 
—

 
—

 
1,405

 
—

 
—

 
—

 
—

 
—

 
1,405

Redemptions of common stock related to share-based compensation
—

 
—

 
—

 
(5
)
 
—

 
—

 
—

 
—

 
—

 
(5
)
Noncontrolling interests assumed related to acquisitions
17,007

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Distributions to noncontrolling interests
(2,651
)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(2,082
)
 
(2,082
)
Adjustments to redemption amount of redeemable noncontrolling interests
7,304

 
—

 
—

 
—

 
—

 
—

 
—

 
(7,304
)
 
—

 
(7,304
)
Deferred compensation obligation
—

 
—

 
—

 
—

 
158

 
(158
)
 
—

 
—

 
—

 
—

Other
—

 
—

 
—

 
—

 
—

 
—

 
—

 
2

 
—

 
2

Balances as of April 30, 2015

$63,914

 

$269

 

$399

 

$280,608

 

$1,296

 

($1,296
)
 

($19,214
)
 

$486,534

 

$79,805

 

$828,401

 
 
 
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, 2013

$59,218

 

$268

 

$396

 

$255,889

 

$1,138

 

($1,138
)
 

$144

 

$349,649

 

$116,889

 

$723,235

Comprehensive income (loss)
3,583

 
—

 
—

 
—

 
—

 
—

 
(651
)
 
55,822

 
5,937

 
61,108

Cash dividends ($.41 per share)
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(27,225
)
 
—

 
(27,225
)
Issuance of common stock to HEICO Savings and Investment Plan
—

 
—

 
—

 
3,071

 
—

 
—

 
—

 
—

 
—

 
3,071

Share-based compensation expense
—

 
—

 
—

 
4,189

 
—

 
—

 
—

 
—

 
—

 
4,189

Proceeds from stock option exercises
—

 
—

 
—

 
400

 
—

 
—

 
—

 
—

 
—

 
400

Tax benefit from stock option exercises
—

 
—

 
—

 
93

 
—

 
—

 
—

 
—

 
—

 
93

Redemptions of common stock related to share-based compensation
—

 
—

 
—

 
(273
)
 
—

 
—

 
—

 
—

 
—

 
(273
)
Distributions to noncontrolling interests
(3,712
)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(67,400
)
 
(67,400
)
Acquisitions of noncontrolling interests
(1,243
)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Reclassification of redeemable noncontrolling interests to noncontrolling interests
(19,383
)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
19,383

 
19,383

Adjustments to redemption amount of redeemable noncontrolling interests
(630
)
 
—

 
—

 
—

 
—

 
—

 
—

 
630

 
—

 
630

Other
—

 
—

 
1

 
5

 
—

 
—

 
—

 
(1
)
 
1

 
6

Balances as of April 30, 2014

$37,833

 

$268

 

$397

 

$263,374

 

$1,138

 

($1,138
)
 

($507
)
 

$378,875

 

$74,810

 

$717,217

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




5

HEICO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(in thousands)
 
Six months ended April 30,
 
2015
 
2014
Operating Activities:
 
 
 
Net income from consolidated operations

$70,595

 

$65,342

Adjustments to reconcile net income from consolidated operations to net cash provided by operating activities:
 
 
 
Depreciation and amortization
23,141

 
24,139

Share-based compensation expense
2,778

 
4,189

Employer contributions to HEICO Savings and Investment Plan
2,596

 
3,071

Deferred income tax benefit
(1,851
)
 
(3,146
)
Tax benefit from stock option exercises
1,405

 
93

Excess tax benefit from stock option exercises
(1,405
)
 
(93
)
Decrease in accrued contingent consideration
(1,058
)
 
(9,295
)
Foreign currency transaction adjustments, net
(2,247
)
 
—

Changes in operating assets and liabilities, net of acquisitions:
 
 
 
Decrease (increase) in accounts receivable
2,039

 
(8,113
)
Increase in inventories
(4,962
)
 
(6,199
)
Increase in prepaid expenses and other current assets
(5,622
)
 
(4,336
)
(Decrease) increase in trade accounts payable
(3,699
)
 
1,507

Decrease in accrued expenses and other current liabilities
(16,300
)
 
(18,152
)
Increase in income taxes payable
173

 
—

Other long-term assets and liabilities, net
(778
)
 
5,994

Net cash provided by operating activities
64,805

 
55,001

 
 
 
 
Investing Activities:
 
 
 
Acquisitions, net of cash acquired
(49,482
)
 
(569
)
Capital expenditures
(9,460
)
 
(7,485
)
Other
86

 
(8
)
Net cash used in investing activities
(58,856
)
 
(8,062
)
 
 
 
 
Financing Activities:
 
 
 
Borrowings on revolving credit facility
61,696

 
105,000

Payments on revolving credit facility
(61,000
)
 
(45,000
)
Distributions to noncontrolling interests
(4,733
)
 
(71,112
)
Cash dividends paid
(4,666
)
 
(27,225
)
Acquisitions of noncontrolling interests
—

 
(1,243
)
Revolving credit facility issuance costs
—

 
(767
)
Redemptions of common stock related to share-based compensation
(5
)
 
(273
)
Proceeds from stock option exercises
2,954

 
400

Excess tax benefit from stock option exercises
1,405

 
93

Other
(201
)
 
(936
)
Net cash used in financing activities
(4,550
)
 
(41,063
)
 
 
 
 
Effect of exchange rate changes on cash
(949
)
 
27

 
 
 
 
Net increase in cash and cash equivalents
450

 
5,903

Cash and cash equivalents at beginning of year
20,229

 
15,499

Cash and cash equivalents at end of period

$20,679

 

$21,402

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, 2014. The October 31, 2014 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, 2015 are not necessarily indicative of the results which may be expected for the entire fiscal year.

The Company has 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.

New Accounting Pronouncements

In March 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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. The Company adopted ASU 2013-05 in the first quarter of fiscal 2015, resulting in no impact on the Company's consolidated results of operations, financial position or cash flows.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” which provides a comprehensive new revenue recognition model that will supersede



7
Index

nearly all existing revenue recognition guidance. Under ASU 2014-09, an entity will recognize revenue when it transfers promised goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. ASU 2014-09 is effective for fiscal years and interim reporting periods within those years beginning after December 15, 2016, or in fiscal 2018 for HEICO. Early adoption is not permitted. ASU 2014-09 shall be applied either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. The Company is currently evaluating which transition method it will elect and the effect the adoption of this guidance will have on its consolidated results of operations, financial position or cash flows.


2.     ACQUISITIONS

In January 2015, the Company, through its HEICO Flight Support Corp. subsidiary, acquired 80% of the equity of Aeroworks International Holdings, B.V. (“Aeroworks”). Aeroworks, which is headquartered in The Netherlands and maintains significant production facilities in Thailand and Laos, is a manufacturer of both composite and metal parts used primarily in aircraft interior applications, including seating, galleys, lavatories, doors, and overhead bins. The remaining 20% interest continues to be owned by a certain member of Aeroworks' management team (see Note 3, Selected Financial Statement Information, for additional information). The total consideration includes an accrual representing the fair value of contingent consideration that the Company may be obligated to pay should Aeroworks meet certain earnings objectives during each of the first four years following the acquisition. See Note 7, Fair Value Measurements, for additional information regarding the Company’s contingent consideration obligation.

In January 2015, the Company, through its HEICO Flight Support Corp. subsidiary, acquired 80.1% of the equity of Harter Aerospace, LLC ("Harter"). Harter is a globally recognized component and accessory maintenance, repair, and overhaul (MRO) station specializing in commercial aircraft accessories, including thrust reverse actuation systems and pneumatics, and electromechanical components. The remaining 19.9% interest continues to be owned by certain members of Harter's management team (see Note 3, Selected Financial Statement Information, for additional information).

In May 2015, the Company, through its HEICO Flight Support Corp. subsidiary, acquired all of the stock of Thermal Energy Products, Inc. (“TEP”). TEP engineers, designs and manufactures removable/reusable insulation systems for industrial, commercial, aerospace and defense applications.

The purchase prices of the fiscal 2015 acquisitions were paid in cash principally using proceeds from the Company’s revolving credit facility and the total consideration for the acquisitions is not material or significant to the Company's condensed consolidated financial



8
Index

statements. The allocation of the total consideration to the tangible and identifiable intangible assets acquired and liabilities and noncontrolling interests assumed for the Aeroworks and Harter acquisitions is preliminary until the Company obtains final information regarding their fair values.

The operating results of Aeroworks and Harter were included in the Company’s results of operations from the effective acquisition dates. The amount of net sales and earnings of Aeroworks and Harter included in the Condensed Consolidated Statements of Operations is not material. Had the Aeroworks and Harter acquisitions been consummated as of November 1, 2013, net sales, net income from consolidated operations, net income attributable to HEICO, and basic and diluted net income per share attributable to HEICO shareholders on a pro forma basis for the six and three months ended April 30, 2015 and April 30, 2014 would not have been materially different than the reported amounts.

    
3.     SELECTED FINANCIAL STATEMENT INFORMATION

Accounts Receivable
(in thousands)
 
April 30, 2015
 
October 31, 2014
Accounts receivable
 

$154,807

 

$151,812

Less: Allowance for doubtful accounts
 
(2,144
)
 
(2,143
)
Accounts receivable, net
 

$152,663

 

$149,669


Costs and Estimated Earnings on Uncompleted Percentage-of-Completion Contracts
(in thousands)
 
April 30, 2015
 
October 31, 2014
Costs incurred on uncompleted contracts
 

$16,866

 

$24,437

Estimated earnings
 
8,510

 
11,747

 
 
25,376

 
36,184

Less: Billings to date
 
(22,769
)
 
(29,829
)


 

$2,607

 

$6,355

Included in the accompanying Condensed Consolidated Balance Sheets under the following captions:
 
 
 
 
Accounts receivable, net (costs and estimated earnings in excess of billings)
 

$5,052

 

$8,161

Accrued expenses and other current liabilities (billings in excess of costs and estimated earnings)
 
(2,445
)
 
(1,806
)
 
 

$2,607

 

$6,355


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, 2015 and 2014.




9
Index

Inventories
(in thousands)
 
April 30, 2015
 
October 31, 2014
Finished products
 

$109,914

 

$106,229

Work in process
 
31,051

 
30,056

Materials, parts, assemblies and supplies
 
87,267

 
79,163

Contracts in process
 
4,997

 
2,594

Less: Billings to date
 
(2,194
)
 
—

Inventories, net of valuation reserves
 

$231,035

 

$218,042


Contracts in process represents accumulated capitalized costs associated with fixed price contracts. Related progress 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, 2015
 
October 31, 2014
Land
 

$4,963

 

$4,501

Buildings and improvements
 
67,117

 
60,332

Machinery, equipment and tooling
 
149,249

 
139,963

Construction in progress
 
8,898

 
6,905

 
 
230,227

 
211,701

Less: Accumulated depreciation and amortization
 
(125,734
)
 
(117,836
)
Property, plant and equipment, net
 

$104,493

 

$93,865


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 $7.7 million and $10.9 million as of April 30, 2015 and October 31, 2014, respectively. The total customer rebates and credits deducted within net sales for the six months ended April 30, 2015 and 2014 was $2.9 million and $3.4 million, respectively. The total customer rebates and credits deducted within net sales for the three months ended April 30, 2015 and 2014 was $1.3 million and $1.7 million, respectively. The decrease in the amount of accrued customer rebates and credits since October 31, 2014 principally reflects payments made during the second quarter of fiscal 2015.




10
Index

Employee Retirement Plan

The components of net pension income for the six and three months ended April 30, 2015 and 2014 that were recorded within the Company's Condensed Consolidated Statements of Operations are as follows (in thousands):
 
 
Six months ended April 30,
 
Three months ended April 30,
 
 
2015
 
2014
 
2015
 
2014
Expected return on plan assets
 

$370

 

$370

 

$185

 

$185

Interest cost
 
280

 
306

 
140

 
153

Net pension income
 

$90

 

$64

 

$45

 

$32


Research and Development Expenses

The amount of new product research and development ("R&D") expenses included in cost of sales for the six and three months ended April 30, 2015 and 2014 is as follows (in thousands):
 
 
Six months ended April 30,
 
Three months ended April 30,
 
 
2015
 
2014
 
2015
 
2014
R&D expenses
 

$19,439

 

$18,416

 

$10,137

 

$9,300


Redeemable Noncontrolling Interests

The holders of equity interests in certain of the Company's subsidiaries have put rights that may be exercised on varying dates causing the Company to give cash consideration to purchase their equity interests based on fair value or a formula that management intended to reasonably approximate fair value based solely on a multiple of future earnings over a measurement period. Management's estimate of the aggregate redemption amount of all put rights (inclusive of the fiscal 2015 transactions described below) that the Company could be required to pay at varying dates through fiscal 2023 is as follows (in thousands):
 
 
April 30, 2015
 
October 31, 2014
Redeemable at fair value
 

$51,614

 

$27,666

Redeemable based on a multiple of future earnings
 
12,300

 
12,300

Redeemable noncontrolling interests
 

$63,914

 

$39,966


As discussed in Note 2, Acquisitions, the Company, through the FSG, acquired interests of 80% and 80.1% in Aeroworks and Harter, respectively, in January 2015. As part of the Aeroworks purchase agreement, the Company has the right to purchase the noncontrolling interest over a four-year period beginning in fiscal 2019, or sooner under certain conditions, and the noncontrolling interest holder has the right to cause the Company to purchase the same equity interest over the same period. As part of the Harter purchase agreement, the Company has the right to purchase the noncontrolling interests over a four-year period beginning in fiscal 2020, or sooner under certain conditions, and the noncontrolling interest holders have the right to cause the Company to purchase the same equity interests over the same period.



11
Index

Accumulated Other Comprehensive Loss

Changes in the components of accumulated other comprehensive loss for the six months ended April 30, 2015 are as follows (in thousands):
 
 
Foreign Currency Translation
 
Pension Benefit Obligation
 
Accumulated
Other Comprehensive
Loss
Balances as of October 31, 2014
 

($8,348
)
 

$59

 

($8,289
)
Unrealized loss, net
 
(10,925
)
 
—

 
(10,925
)
Balances as of April 30, 2015
 

($19,273
)
 

$59

 

($19,214
)


4.     GOODWILL AND OTHER INTANGIBLE ASSETS

Changes in the carrying amount of goodwill by operating segment for the six months ended April 30, 2015 are as follows (in thousands):
 
 
Segment
 
Consolidated Totals
 
 
FSG
 
ETG
 
Balances as of October 31, 2014
 

$282,407

 

$403,864

 

$686,271

Goodwill acquired
 
33,624

 
—

 
33,624

Foreign currency translation adjustments
 
(1,597
)
 
(6,255
)
 
(7,852
)
Balances as of April 30, 2015
 

$314,434

 

$397,609

 

$712,043


The goodwill acquired pertains to the fiscal 2015 acquisitions described in Note 2, Acquisitions, and represents the residual value after the allocation of the total consideration to the tangible and identifiable intangible assets acquired and liabilities and noncontrolling interests assumed. The Company estimates that approximately $7 million of the goodwill acquired in fiscal 2015 will be deductible for income tax purposes.




12
Index

Identifiable intangible assets consist of the following (in thousands):
 
 
As of April 30, 2015
 
As of October 31, 2014
 
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
Amortizing Assets:
 
 
 
 
 
 
 
 
 
 
 
 
Customer relationships
 

$160,753

 

($55,908
)
 

$104,845

 

$144,478

 

($55,393
)
 

$89,085

Intellectual property
 
73,892

 
(18,860
)
 
55,032

 
73,005

 
(17,620
)
 
55,385

Licenses
 
2,900

 
(1,758
)
 
1,142

 
2,900

 
(1,645
)
 
1,255

Non-compete agreements
 
927

 
(927
)
 
—

 
1,020

 
(1,020
)
 
—

Patents
 
715

 
(419
)
 
296

 
712

 
(405
)
 
307

Trade names
 
166

 
(28
)
 
138

 
166

 
(17
)
 
149

 
 
239,353

 
(77,900
)
 
161,453

 
222,281

 
(76,100
)
 
146,181

Non-Amortizing Assets:
 
 
 
 
 
 
 
 
 
 
 
 
Trade names
 
61,851

 
—

 
61,851

 
54,629

 
—

 
54,629

 
 

$301,204

 

($77,900
)
 

$223,304

 

$276,910

 

($76,100
)
 

$200,810


The increase in the gross carrying amount of customer relationships, non-amortizing trade names and intellectual property as of April 30, 2015 compared to October 31, 2014 principally relates to such intangible assets recognized in connection with the fiscal 2015 acquisitions (see Note 2, Acquisitions). The weighted-average amortization period of the customer relationships and intellectual property acquired during fiscal 2015 is 9 and 10 years, respectively.

Amortization expense related to intangible assets for the six months ended April 30, 2015 and 2014 was $13.1 million and $14.1 million, respectively. Amortization expense related to intangible assets for the three months ended April 30, 2015 and 2014 was $7.0 million. Amortization expense related to intangible assets for the remainder of fiscal 2015 is estimated to be $13.0 million. Amortization expense for each of the next five fiscal years and thereafter is estimated to be $25.2 million in fiscal 2016, $24.3 million in fiscal 2017, $22.4 million in fiscal 2018, $20.5 million in fiscal 2019, $18.0 million in fiscal 2020, and $38.1 million thereafter.


5.     LONG-TERM DEBT

Long-term debt consists of the following (in thousands):
 
 
April 30, 2015
 
October 31, 2014
Borrowings under revolving credit facility
 

$324,289

 

$326,000

Capital leases
 
2,528

 
3,109

 
 
326,817

 
329,109

Less: Current maturities of long-term debt
 
(346
)
 
(418
)
 
 

$326,471

 

$328,691





13
Index

During the first quarter of fiscal 2015, the Company elected to borrow €32 million under its revolving credit facility, which allows for borrowings made in foreign currencies up to a $50 million sublimit. The funds were used to facilitate an acquisition made during the same fiscal quarter. As of April 30, 2015, the United States ("U.S.") dollar equivalent of the Company's Euro borrowing was $35.3 million.

As of April 30, 2015 and October 31, 2014, the weighted average interest rate on borrowings under the Company’s revolving credit facility was 1.3%. The revolving credit facility contains both financial and non-financial covenants. As of April 30, 2015, the Company was in compliance with all such covenants.


6.     INCOME TAXES

As of April 30, 2015, the Company’s liability for gross unrecognized tax benefits related to uncertain tax positions was $1.0 million of which $.7 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, 2015 is as follows (in thousands):
Balance as of October 31, 2014
 

$879

Increases related to current year tax positions
 
76

Increases related to prior year tax positions
 
14

Balance as of April 30, 2015
 

$969


There were no material changes in the liability for unrecognized tax positions resulting from tax positions taken during the current or a prior year, settlements with other taxing authorities or a lapse of applicable statutes of limitations. The accrual of interest and penalties related to the unrecognized tax benefits was not material for the six months ended April 30, 2015. 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 in the first six months of fiscal 2015 decreased to 29.8% from 32.9% in the first six months of fiscal 2014. The decrease is principally due to an income tax credit for qualified R&D activities for the last ten months of fiscal 2014 that was recognized in the first quarter of fiscal 2015 resulting from the retroactive extension of the U.S. federal R&D tax credit in December 2014 to cover calendar year 2014. Additionally, the decrease in the effective tax rate reflects the benefit of recognizing additional foreign tax credits related to R&D activities at one of the Company's foreign subsidiaries inclusive of a prior year tax return amendment. These decreases were partially offset by the impact of a larger reduction in accrued contingent consideration in the first six months of fiscal 2014 compared to fiscal 2015 associated with a prior year acquisition acquired by means of a nontaxable stock transaction.

The Company’s effective tax rate in the second quarter of fiscal 2015 decreased to 30.0% from 31.8% in the second quarter of fiscal 2014. The decrease is principally attributed to the



14
Index

benefit of recognizing additional foreign tax credits related to R&D activities at one of the Company's foreign subsidiaries inclusive of a prior year tax return amendment. The decrease in the effective tax rate also reflects no provision for U.S. income taxes on the undistributed earnings of a fiscal 2015 foreign acquisition located in a lower tax rate jurisdiction. These decreases were partially offset by the impact of a larger reduction in accrued contingent consideration in the first six months of fiscal 2014 compared to fiscal 2015 associated with a prior year acquisition acquired by means of a nontaxable stock transaction.

The Company has not made a provision for U.S. income taxes on the undistributed earnings of a fiscal 2015 foreign acquisition as such earnings are considered permanently reinvested outside of the U.S. The amount of undistributed earnings is not material to the Company's condensed consolidated financial statements.


7.     FAIR VALUE MEASUREMENTS

The Company's assets and liabilities that were measured at fair value on a recurring basis are set forth by level within the fair value hierarchy in the following tables (in thousands):
 
 
As of April 30, 2015
 
 
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
 

$—

 

$76,506

 

$—

 

$76,506

Equity securities
 
2,382

 
—

 
—

 
2,382

Mutual funds
 
1,800

 
—

 
—

 
1,800

Money market funds
 
979

 
—

 
—

 
979

Other
 
905

 
50

 
—

 
955

Total assets
 

$6,066

 

$76,556

 

$—

 

$82,622

 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
Contingent consideration
 

$—

 

$—

 

$20,118

 

$20,118




15
Index

 
 
As of October 31, 2014
 
 
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
 

$—

 

$61,958

 

$—

 

$61,958

Equity securities
 
2,225

 
—

 
—

 
2,225

Mutual funds
 
1,903

 
—

 
—

 
1,903

Money market funds
 
3,974

 
—

 
—

 
3,974

Other
 
1,339

 
50

 
—

 
1,389

Total assets
 

$9,441

 

$62,008

 

$—

 

$71,449

 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
Contingent consideration
 

$—

 

$—

 

$1,184

 

$1,184


The Company maintains two non-qualified deferred compensation plans. The assets of the HEICO Corporation Leadership Compensation Plan (the “LCP”) principally 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. Certain other assets of the LCP represent investments in money market funds that are classified within Level 1. The assets of the Company’s other deferred compensation plan are principally invested in equity securities and mutual 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 $82.6 million as of April 30, 2015 and $71.4 million as of October 31, 2014, of which the LCP related assets were $77.5 million and $65.9 million as of April 30, 2015 and October 31, 2014, 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 $81.6 million as of April 30, 2015 and $70.5 million as of October 31, 2014, of which the LCP related liability was $76.5 million and $65.0 million as of April 30, 2015 and October 31, 2014, respectively.

As part of the agreement to acquire a subsidiary by the FSG in the first quarter of fiscal 2015, the Company may be obligated to pay contingent consideration of up to €24.4 million in aggregate, which translates to approximately $26.9 million based on the April 30, 2015 exchange rate, should the acquired entity meet certain earnings objectives during each of the first four years following the acquisition. As of April 30, 2015, the estimated fair value of the contingent consideration was $20.1 million.

As part of the agreement to acquire a subsidiary by the ETG in fiscal 2013, the Company may be obligated to pay contingent consideration of up to $30.0 million should the acquired entity meet certain earnings objectives during calendar years 2014 and 2015. The $1.2 million estimated fair value of the contingent consideration as of October 31, 2014 was recorded as a



16
Index

reduction to selling, general and administrative expenses in the Company's Condensed Consolidated Statement of Operations in the second quarter of fiscal 2015. The decrease in the fair value of the contingent consideration is principally attributed to revised earnings estimates that reflect less favorable projected market conditions during the earnout period.

The estimated fair value of the fiscal 2015 contingent consideration arrangement described above is classified within Level 3 and was determined using a probability-based scenario analysis approach. Under this method, a set of discrete potential future subsidiary earnings was determined using internal estimates based on various revenue growth rate assumptions for each scenario. A probability of likelihood was assigned to each discrete potential future earnings estimate and the resultant contingent consideration was calculated. The resulting probability-weighted contingent consideration amount was discounted using a weighted average discount rate reflecting the credit risk of a market participant. Changes in 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 condensed consolidated statements of operations.

The Level 3 inputs used to derive the estimated fair value of the Company's contingent consideration liability as of April 30, 2015 were as follows:
 
 
Fiscal 2015 Subsidiary
Compound annual revenue growth rate range
 
(7
%)
-
12%
Weighted average discount rate
 
2.2%

Changes in the Company’s contingent consideration liability measured at fair value on a recurring basis using unobservable inputs (Level 3) for the six months ended April 30, 2015 are as follows (in thousands):
 
 
 
Balance as of October 31, 2014
 

$1,184

Contingent consideration related to acquisition
 
21,355

Decrease in accrued contingent consideration
 
(1,058
)
Foreign currency translation adjustments
 
(1,363
)
Balance as of April 30, 2015
 

$20,118

 
 
 
Included in the accompanying Condensed Consolidated Balance Sheet
under the following captions:
 
 
Accrued expenses and other current liabilities
 

$5,963

Other long-term liabilities
 
14,155

 
 

$20,118


The Company did not have any transfers between Level 1 and Level 2 fair value measurements during the six months ended April 30, 2015.




17
Index

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, 2015 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.     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,
 
 
2015
 
2014
 
2015
 
2014
Numerator:
 
 
 
 
 
 
 
 
Net income attributable to HEICO
 

$60,745

 

$55,822

 

$33,105

 

$28,367

 
 
 
 
 
 
 
 
 
Denominator:
 
 
 
 
 
 
 
 
Weighted average common shares outstanding - basic
 
66,653

 
66,415

 
66,711

 
66,437

Effect of dilutive stock options
 
1,082

 
988

 
1,090

 
1,018

Weighted average common shares outstanding - diluted
 
67,735

 
67,403

 
67,801

 
67,455

 
 
 
 
 
 
 
 
 
Net income per share attributable to HEICO shareholders:
 
 
 
 
 
 
 
 
Basic
 

$.91

 

$.84

 

$.50

 

$.43

Diluted
 

$.90

 

$.83

 

$.49

 

$.42

 
 
 
 
 
 
 
 
 
Anti-dilutive stock options excluded
 
305

 
425

 
305

 
305






18
Index

9.    OPERATING SEGMENTS

Information on the Company’s two operating segments, the FSG and ETG, for the six and three months ended April 30, 2015 and 2014, respectively, is as follows (in thousands):
 
 
 
 
 
 
Other,
Primarily Corporate and
Intersegment
 
Consolidated
Totals
 
 
Segment
 
 
 
 
FSG
 
ETG
 
 
Six months ended April 30, 2015:
 
 
 
 
 
 
 
 
Net sales
 

$384,832

 

$180,216

 

($5,442
)
 

$559,606

Depreciation and amortization
 
11,161

 
11,578

 
402

 
23,141

Operating income
 
68,248

 
41,624

 
(7,678
)
 
102,194

Capital expenditures
 
6,477

 
2,857

 
126

 
9,460

 
 
 
 
 
 
 
 
 
Six months ended April 30, 2014:
 
 
 
 
 
 
 
 
Net sales
 

$376,477

 

$177,233

 

($4,652
)
 

$549,058

Depreciation and amortization
 
9,863

 
13,871

 
405

 
24,139

Operating income
 
69,089

 
41,040

 
(10,573
)
 
99,556

Capital expenditures
 
4,256

 
2,759

 
470

 
7,485

 
 
 
 
 
 
 
 
 
Three months ended April 30, 2015:
 
 
 
 
 
 
 
 
Net sales
 

$202,775

 

$90,995

 

($2,349
)
 

$291,421

Depreciation and amortization
 
6,349

 
5,686

 
202

 
12,237

Operating income
 
37,545

 
22,206

 
(3,963
)
 
55,788

Capital expenditures
 
3,863

 
1,226

 
117

 
5,206

 
 
 
 
 
 
 
 
 
Three months ended April 30, 2014:
 
 
 
 
 
 
 
 
Net sales
 

$194,892

 

$89,741

 

($2,401
)
 

$282,232

Depreciation and amortization
 
4,943

 
6,946

 
200

 
12,089

Operating income
 
36,886

 
18,136

 
(5,851
)
 
49,171

Capital expenditures
 
2,231

 
1,051

 
213

 
3,495


Total assets by operating segment as of April 30, 2015 and October 31, 2014 are as follows (in thousands):
 
 
 
 
 
 
Other,
Primarily Corporate
 
Consolidated
Totals
 
 
Segment
 
 
 
 
FSG
 
ETG
 
 
Total assets as of April 30, 2015
 

$779,920

 

$679,534

 

$121,140

 

$1,580,594

Total assets as of October 31, 2014
 
676,824

 
703,144

 
109,246

 
1,489,214






19
Index

10. COMMITMENTS AND CONTINGENCIES
Guarantees
As of April 30, 2015, the Company has arranged for standby letters of credit aggregating $2.3 million, which are supported by its revolving credit facility. One letter of credit in the amount of $1.5 million is to satisfy the security requirement of the Company's insurance company for potential workers' compensation claims and the remainder pertain to performance guarantees related to customer contracts entered into by certain of the Company's subsidiaries.
Product Warranty
Changes in the Company’s product warranty liability for the six months ended April 30, 2015 and 2014, respectively, are as follows (in thousands):
 
 
Six months ended April 30,
 
 
2015
 
2014
Balances as of beginning of fiscal year
 

$4,079

 

$3,233

Accruals for warranties
 
436

 
1,125

Acquired warranty liabilities
 
35

 
—

Warranty claims settled
 
(1,078
)
 
(941
)
Balances as of April 30
 

$3,472

 

$3,417


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.





20
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, 2014. There have been no material changes to our critical accounting policies during the six months ended April 30, 2015.

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, 2015 have been affected by the fiscal 2015 acquisitions as further detailed in Note 2, Acquisitions, of the Notes to Condensed Consolidated Financial Statements of this quarterly report.





21
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,
 
 
2015
 
2014
 
2015
 
2014
Net sales
 

$559,606

 

$549,058

 

$291,421

 

$282,232

Cost of sales
 
360,315

 
357,019

 
185,927

 
182,310

Selling, general and administrative expenses
 
97,097

 
92,483

 
49,706

 
50,751

Total operating costs and expenses
 
457,412

 
449,502

 
235,633

 
233,061

Operating income
 

$102,194

 

$99,556

 

$55,788

 

$49,171

 
 
 
 
 
 
 
 
 
Net sales by segment:
 
 
 
 
 
 
 
 
Flight Support Group
 

$384,832

 

$376,477

 

$202,775

 

$194,892

Electronic Technologies Group
 
180,216

 
177,233

 
90,995

 
89,741

Intersegment sales
 
(5,442
)
 
(4,652
)
 
(2,349
)
 
(2,401
)
 
 

$559,606

 

$549,058

 

$291,421

 

$282,232

 
 
 
 
 
 
 
 
 
Operating income by segment: