DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION - $ / shares | 6 Months Ended | |
Apr. 30, 2018 | May 29, 2018 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Apr. 30, 2018 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,018 | |
Entity Information [Line Items] | ||
Entity Registrant Name | HEICO CORPORATION | |
Address | 3000 Taft Street, Hollywood, Florida | |
State | Florida | |
Zip Code | 33,021 | |
Entity Central Index Key | 46,619 | |
Entity Tax Identification Number | 650,341,002 | |
Current Fiscal Year End Date | --10-31 | |
Entity Filer Category | Large Accelerated Filer | |
Trading Symbol | hei | |
Heico Common Stock [Member] | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 42,673,859 | |
Entity Common Stock Par Value | $ 0.01 | |
Common Class A [Member] | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 63,538,812 | |
Entity Common Stock Par Value | $ 0.01 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED - USD ($) $ in Thousands | Apr. 30, 2018 | Oct. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 48,227 | $ 52,066 |
Accounts receivable, net | 238,233 | 222,456 |
Inventories, net | 382,669 | 343,628 |
Prepaid expenses and other current assets | 25,597 | 13,742 |
Total current assets | 694,726 | 631,892 |
Property, plant and equipment, net | 148,114 | 129,883 |
Goodwill | 1,104,555 | 1,081,306 |
Intangible assets, net | 532,263 | 538,081 |
Other assets | 148,223 | 131,269 |
Total assets | 2,627,881 | 2,512,431 |
Current liabilities: | ||
Current maturities of long-term debt | 480 | 451 |
Trade accounts payable | 94,373 | 89,724 |
Accrued expenses and other current liabilities | 135,200 | 147,612 |
Income taxes payable | 0 | 11,650 |
Total current liabilities | 230,053 | 249,437 |
Long-term debt, net of current maturities | 683,362 | 673,528 |
Deferred income taxes | 46,875 | 59,026 |
Other long-term liabilities | 164,050 | 151,025 |
Total liabilities | 1,124,340 | 1,133,016 |
Commitments and contingencies | ||
Redeemable noncontrolling interests | 134,034 | 131,123 |
Shareholders' equity: | ||
Preferred Stock | 0 | 0 |
Common Stock | 427 | 338 |
Capital in excess of par value | 311,710 | 326,544 |
Deferred compensation obligation | 3,118 | 3,118 |
HEICO stock held by irrevocable trust | (3,118) | (3,118) |
Accumulated other comprehensive loss | (1,516) | (10,556) |
Retained earnings | 964,571 | 844,247 |
Total HEICO shareholders' equity | 1,275,827 | 1,161,080 |
Noncontrolling interests | 93,680 | 87,212 |
Total shareholders' equity | 1,369,507 | 1,248,292 |
Total liabilities and equity | 2,627,881 | 2,512,431 |
Class A Common Stock [Member] | ||
Shareholders' equity: | ||
Common Stock | $ 635 | $ 507 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED [PARENTHETICAL] - $ / shares shares in Thousands | Apr. 30, 2018 | Oct. 31, 2017 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 10,000 | 10,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 150,000 | 75,000 |
Common stock, shares issued | 42,665 | 42,221 |
Common stock, shares outstanding | 42,665 | 42,221 |
Class A Common Stock [Member] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 150,000 | 75,000 |
Common stock, shares issued | 63,523 | 63,381 |
Common stock, shares outstanding | 63,523 | 63,381 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2018 | Apr. 30, 2017 | Apr. 30, 2018 | Apr. 30, 2017 | |
Net sales | $ 430,602 | $ 368,657 | $ 835,012 | $ 712,089 |
Operating costs and expenses: | ||||
Cost of sales | 262,745 | 228,275 | 512,364 | 446,290 |
Selling, general and administrative expenses | 76,292 | 63,840 | 151,523 | 124,707 |
Total operating costs and expenses | 339,037 | 292,115 | 663,887 | 570,997 |
Operating income | 91,565 | 76,542 | 171,125 | 141,092 |
Interest expense | (4,904) | (1,960) | (9,629) | (3,929) |
Other income | (250) | 151 | 110 | 635 |
Income before income taxes and noncontrolling interests | 86,411 | 74,733 | 161,606 | 137,798 |
Income tax expense | 20,400 | 23,900 | 23,900 | 40,700 |
Net income from consolidated operations | 66,011 | 50,833 | 137,706 | 97,098 |
Less: Net income attributable to noncontrolling interests | 6,393 | 5,147 | 12,936 | 10,485 |
Net income attributable to HEICO | $ 59,618 | $ 45,686 | $ 124,770 | $ 86,613 |
Net income per share attributable to HEICO shareholders: | ||||
Basic (in dollars per share) | $ 0.56 | $ 0.43 | $ 1.18 | $ 0.82 |
Diluted (in dollars per share) | $ 0.55 | $ 0.42 | $ 1.14 | $ 0.80 |
Weighted average number of common shares outstanding: | ||||
Basic (in shares) | 105,940 | 105,276 | 105,789 | 105,227 |
Diluted (in shares) | 109,271 | 108,296 | 109,191 | 108,150 |
Cash dividends per share (in dollars per share) | $ 0 | $ 0 | $ 0.070 | $ 0.058 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2018 | Apr. 30, 2017 | Apr. 30, 2018 | Apr. 30, 2017 | |
Net income from consolidated operations | $ 66,011 | $ 50,833 | $ 137,706 | $ 97,098 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments | (6,573) | 1,758 | 9,390 | 234 |
Amortization of unrealized loss on defined benefit pension plan, net of tax | 2 | 8 | 6 | 15 |
Total other comprehensive income (loss) | (6,571) | 1,766 | 9,396 | 249 |
Comprehensive income from consolidated operations | 59,440 | 52,599 | 147,102 | 97,347 |
Less: Comprehensive income attributable to noncontrolling interests | 6,393 | 5,147 | 12,936 | 10,485 |
Less: Foreign currency translation adjustments attributable to noncontrolling interests | (417) | 221 | 577 | (75) |
Comprehensive income attributable to noncontrolling interests | 5,976 | 5,368 | 13,513 | 10,410 |
Comprehensive income attributable to HEICO | $ 53,464 | $ 47,231 | $ 133,589 | $ 86,937 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME - UNAUDITED - USD ($) $ in Thousands | Total | Redeemable Noncontrolling Interests [Member] | Common Stock [Member] | Common Stock [Member]Class A Common Stock [Member] | Capital In Excess Of Par Value [Member] | Deferred Compensation Obligation [Member] | HEICO Stock Held By Irrevocable Trust [Member] | AOCI Attributable to Parent [Member] | Retained Earnings [Member] | Noncontrolling Interest [Member] | Total Shareholders Equity [Member] |
Starting Balance at Oct. 31, 2016 | $ 1,047,705 | $ 270 | $ 403 | $ 306,328 | $ 2,460 | $ (2,460) | $ (25,326) | $ 681,704 | $ 84,326 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Comprehensive Income (Loss), Net of Tax, Attributable to Parent | 86,937 | 324 | 86,613 | ||||||||
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest | 10,410 | $ 5,151 | 5,259 | ||||||||
Comprehensive income | 97,347 | $ 92,196 | |||||||||
Cash dividends | (6,059) | (6,059) | |||||||||
Stock Issued During Period, Value, Stock Dividend | 68 | 101 | |||||||||
Adjustments to Additional Paid in Capital, Stock Split | (169) | ||||||||||
Five-for-Four Common Stock Split | (23) | (23) | |||||||||
Issuance of common stock to Savings and Investment Plan | 5,484 | 5,484 | |||||||||
Share-based compensation expense | 3,110 | 3,110 | |||||||||
Proceeds from stock option exercises | 2,297 | 1 | 2,296 | ||||||||
Distributions to noncontrolling interests | (3,544) | (353) | (353) | ||||||||
Acquisition of noncontrolling interests | (3,848) | ||||||||||
Adjustments to redemption amount of redeemable noncontrolling interests | 5,826 | (5,826) | (5,826) | ||||||||
Deferred compensation obligation | (140) | ||||||||||
Stock Issued During Period Value Deferred Compensation Obligation | 140 | ||||||||||
Other | (1) | 1 | |||||||||
Ending Balance at Apr. 30, 2017 | 1,138,531 | 338 | 506 | 317,049 | 2,320 | (2,320) | (25,002) | 756,408 | 89,232 | ||
Starting Balance, Redeemable Noncontrolling Interests at Oct. 31, 2016 | 99,512 | ||||||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||||||
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest | 10,410 | 5,151 | 5,259 | ||||||||
Distributions to noncontrolling interests | (3,544) | (353) | (353) | ||||||||
Adjustments to redemption amount of redeemable noncontrolling interests | 5,826 | (5,826) | (5,826) | ||||||||
Noncontrolling interests assumed related to acquisition | 22,035 | ||||||||||
Ending Balance, Redeemable Noncontrolling Interests at Apr. 30, 2017 | 125,132 | ||||||||||
Starting Balance at Oct. 31, 2017 | 1,248,292 | 338 | 507 | 326,544 | 3,118 | (3,118) | (10,556) | 844,247 | 87,212 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Comprehensive Income (Loss), Net of Tax, Attributable to Parent | 133,589 | 8,819 | 124,770 | ||||||||
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest | 13,513 | 6,636 | 6,877 | ||||||||
Comprehensive income | 147,102 | 140,466 | |||||||||
Cash dividends | (7,395) | (7,395) | |||||||||
Stock Issued During Period, Value, Stock Dividend | 84 | 127 | |||||||||
Adjustments to Additional Paid in Capital, Stock Split | (211) | ||||||||||
Issuance of common stock to Savings and Investment Plan | 4,548 | 1 | 4,547 | ||||||||
Share-based compensation expense | 4,459 | 4,459 | |||||||||
Proceeds from stock option exercises | 1,993 | 7 | 1 | 1,985 | |||||||
Redemption of common stock related to share-based compensation | (24,623) | (3) | (24,620) | ||||||||
Distributions to noncontrolling interests | (4,040) | (409) | (409) | ||||||||
Adjustments to redemption amount of redeemable noncontrolling interests | (3,170) | 3,170 | 3,170 | ||||||||
Other | (221) | (221) | |||||||||
Adjustments to Additional Paid in Capital, Other | (994) | (994) | |||||||||
Ending Balance at Apr. 30, 2018 | 1,369,507 | $ 427 | $ 635 | $ 311,710 | $ 3,118 | $ (3,118) | $ (1,516) | 964,571 | 93,680 | ||
Starting Balance, Redeemable Noncontrolling Interests at Oct. 31, 2017 | 131,123 | ||||||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||||||
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest | 13,513 | 6,636 | 6,877 | ||||||||
Distributions to noncontrolling interests | (4,040) | $ (409) | (409) | ||||||||
Adjustments to redemption amount of redeemable noncontrolling interests | $ (3,170) | $ 3,170 | $ 3,170 | ||||||||
Noncontrolling interests assumed related to acquisition | 2,491 | ||||||||||
Other | 994 | ||||||||||
Ending Balance, Redeemable Noncontrolling Interests at Apr. 30, 2018 | $ 134,034 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME - UNAUDITED [PARENTHETICAL] - $ / shares | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2018 | Apr. 30, 2017 | Apr. 30, 2018 | Apr. 30, 2017 | |
Cash dividends per share (in dollars per share) | $ 0 | $ 0 | $ 0.070 | $ 0.058 |
CONDENSED CONSOLIDATED STATEME8
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED - USD ($) $ in Thousands | 6 Months Ended | |
Apr. 30, 2018 | Apr. 30, 2017 | |
Operating Activities: | ||
Net income from consolidated operations | $ 137,706 | $ 97,098 |
Adjustments to reconcile net income from consolidated operations to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 38,089 | 30,501 |
Employer contributions to HEICO Savings and Investment Plan | 4,083 | 3,679 |
Share-based compensation expense | 4,459 | 3,110 |
Decrease in accrued contingent consideration | (3,412) | |
Increase in accrued contingent consideration | 1,148 | |
Foreign Currency Transaction Loss, before Tax | 117 | |
Foreign Currency Transaction Gain, before Tax | (280) | |
Deferred income tax provision (benefit) | (13,157) | (2,909) |
Changes in operating assets and liabilities, net of acquisitions: | ||
Change in accounts receivable | (14,337) | 1,358 |
Change in inventories | (29,814) | (14,251) |
Change in prepaid expenses and other current assets | (4,266) | (225) |
Change in trade accounts payable | 3,912 | (7,567) |
Change in accrued expenses and other current liabilities | (14,534) | (11,176) |
Change in income taxes payable | (14,714) | (2,023) |
Other | 868 | (750) |
Net cash provided by operating activities | 95,000 | 97,713 |
Investing Activities: | ||
Acquisitions, net of cash acquired | (39,364) | (80,838) |
Capital expenditures | (29,457) | (13,538) |
Other | (2,744) | (944) |
Net cash used in investing activities | (71,565) | (95,320) |
Financing Activities: | ||
Borrowings on revolving credit facility | 53,000 | 87,000 |
Payments on revolving credit facility | (43,000) | (84,000) |
Redemption of common stock related to stock option exercises | (24,623) | |
Cash dividends paid | (7,395) | (6,059) |
Distributions to noncontrolling interests | (4,449) | (3,897) |
Revolving credit facility issuance costs | (4,067) | (270) |
Acquisitions of noncontrolling interests | (3,848) | |
Payment of Contingent Consideration | (300) | |
Proceeds from stock option exercises | 1,993 | 2,297 |
Other | (232) | (371) |
Net cash (used in) provided by financing activities | (29,073) | (9,148) |
Effect of exchange rate changes on cash | 1,799 | 532 |
Net (decrease) increase in cash and cash equivalents | (3,839) | (6,223) |
Cash and cash equivalents at beginning of year | 52,066 | 42,955 |
Cash and cash equivalents at end of period | $ 48,227 | $ 36,732 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Apr. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies [Text Block] | 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, 2017. The October 31, 2017 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, 2018 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. and HEICO Flight Support Corp. and their respective subsidiaries; and the Electronic Technologies Group (“ETG”), consisting of HEICO Electronic Technologies Corp. (“HEICO Electronic”) and its subsidiaries. Stock Split In December 2017, the Company's Board of Directors declared a 5-for-4 stock split on both classes of the Company's common stock. The stock split was effected as of January 18, 2018 in the form of a 25% stock dividend distributed to shareholders of record as of January 3, 2018. All applicable share and per share information has been adjusted retrospectively to give effect to the 5-for-4 stock split. New Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, “Revenue from Contracts with Customers,” which provides a comprehensive new revenue recognition model that will supersede 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, as amended, is effective for fiscal years and interim reporting periods within those years beginning after December 15, 2017, or in fiscal 2019 for HEICO. Early adoption in the year preceding the effective date is permitted. ASU 2014-09 shall be applied either retrospectively to each prior reporting period presented (“full retrospective method”) or retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application (“modified retrospective method”). The Company expects to use the modified retrospective method. The Company is in the process of reviewing a representative sample of customer contracts across its identified revenue streams. Based on the work completed to-date, the Company foresees two types of contracts for which ASU 2014-09 will impact the timing of revenue recognition. For certain contracts under which it produces products with no alternative use and for which the Company has an enforceable right to payment during the production cycle and for certain other contracts under which the Company creates or enhances customer-owned assets while performing repair and overhaul services, ASU 2014-09 will require HEICO to recognize revenue using an over time recognition model as opposed to the Company’s current policy of recognizing revenue at the time of shipment. The Company has not yet determined the effect the adoption of this guidance will have on its consolidated results of operations, financial position and cash flows. In July 2015, the FASB issued ASU 2015-11, "Simplifying the Measurement of Inventory,” which requires entities to measure inventories at the lower of cost or net realizable value. Previously, inventories were measured at the lower of cost or market. The Company adopted ASU 2015-11 in the first quarter of fiscal 2018, resulting in no material effect on the Company's consolidated results of operations, financial position or cash flows. In February 2016, the FASB issued ASU 2016-02, “Leases," which requires recognition of lease assets and lease liabilities on the balance sheet of lessees. ASU 2016-02 is effective for fiscal years and interim reporting periods within those years beginning after December 15, 2018, or in fiscal 2020 for HEICO. Early adoption is permitted. ASU 2016-02 requires a modified retrospective transition approach and provides certain optional transition relief. The Company is currently evaluating the effect the adoption of this guidance will have on its consolidated results of operations, financial position and cash flows. In August 2016, the FASB issued ASU 2016-15, "Classification of Certain Cash Receipts and Cash Payments," which clarifies how certain cash receipts and cash payments are to be presented and classified in the statement of cash flows. ASU 2016-15 provides guidance on eight specific cash flow classification issues including contingent consideration payments made after a business combination, proceeds from corporate-owned life insurance policies and distributions received from equity method investees. ASU 2016-15 is effective for fiscal years and interim reporting periods within those years beginning after December 15, 2017, or in fiscal 2019 for HEICO. Early adoption is permitted. ASU 2016-15 requires a retrospective transition approach for all periods presented. The Company is currently evaluating the effect the adoption of this guidance will have on its consolidated statement of cash flows. In January 2017, the FASB issued ASU 2017-04, "Simplifying the Test for Goodwill Impairment," which is intended to simplify the current test for goodwill impairment by eliminating the second step in which the implied value of a reporting unit is calculated when the carrying value of the reporting unit exceeds its fair value. Under ASU 2017-04, goodwill impairment should be recognized for the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 must be applied prospectively and is effective for any annual or interim goodwill impairment test in fiscal years beginning after December 15, 2019, or in fiscal 2021 for HEICO. Early adoption is permitted. The Company is currently evaluating the effect the adoption of this guidance will have on its consolidated results of operations, financial position and cash flows. |
ACQUISITIONS
ACQUISITIONS | 6 Months Ended |
Apr. 30, 2018 | |
Business Combinations [Abstract] | |
Acquisitions [Text Block] | ACQUISITIONS In April 2018 , the Company, through a subsidiary of HEICO Electronic, acquired all of the assets and business of the Emergency Locator Transmitter Beacon product line ("ELT Product Line") of Instrumar Limited. The ELT Product Line designs and manufactures Emergency Locator Transmitter Beacons for the commercial aviation and defense markets, that upon activation, transmit a distress signal to alert search and rescue operations of the aircraft's location. The purchase price of this acquisition was paid using cash provided by operating activities. In February 2018 , the Company, through a subsidiary of HEICO Electronic, acquired 85% of the assets and business of Sensor Technology Engineering, Inc. ("Sensor Technology") . Sensor Technology designs and manufactures sophisticated nuclear radiation detectors for law enforcement, homeland security and military applications. The remaining 15% continues to be owned by certain members of Sensory Technology's management team. The purchase price of this acquisition was paid in cash, principally using proceeds from the Company's revolving credit facility. In November 2017 , the Company, through a subsidiary of HEICO Electronic, acquired all of the stock of Interface Displays & Controls, Inc. ("IDC") . IDC designs and manufactures electronic products for aviation, marine, military fighting vehicles, and embedded computing markets. The purchase price of this acquisition was paid using cash provided by operating activities. The total consideration for the fiscal 2018 acquisitions is not material or significant to the Company’s condensed consolidated financial statements and the related allocation to the tangible and identifiable intangible assets acquired and liabilities and noncontrolling interests assumed is preliminary until the Company obtains final information regarding their fair values. The operating results of the fiscal 2018 acquisitions were included in the Company’s results of operations from each of the effective acquisition dates. The amount of net sales and earnings of the fiscal 2018 acquisitions included in the Condensed Consolidated Statement of Operations for the six and three months ended April 30, 2018 is not material. Had the fiscal 2018 acquisitions been consummated as of November 1, 2016, 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, 2018 and 2017 would not have been materially different than the reported amounts. |
SELECTED FINANCIAL STATEMENT IN
SELECTED FINANCIAL STATEMENT INFORMATION | 6 Months Ended |
Apr. 30, 2018 | |
Selected Financial Statement Information [Abstract] | |
Selected Financial Statement Information [Text Block] | SELECTED FINANCIAL STATEMENT INFORMATION Accounts Receivable (in thousands) April 30, 2018 October 31, 2017 Accounts receivable $241,665 $225,462 Less: Allowance for doubtful accounts (3,432 ) (3,006 ) Accounts receivable, net $238,233 $222,456 Costs and Estimated Earnings on Uncompleted Percentage-of-Completion Contracts (in thousands) April 30, 2018 October 31, 2017 Costs incurred on uncompleted contracts $36,965 $29,491 Estimated earnings 20,980 19,902 57,945 49,393 Less: Billings to date (44,621 ) (41,262 ) $13,324 $8,131 Included in the accompanying Condensed Consolidated Balance Sheets under the following captions: Accounts receivable, net (costs and estimated earnings in excess of billings) $15,238 $9,377 Accrued expenses and other current liabilities (billings in excess of costs and estimated earnings) (1,914 ) (1,246 ) $13,324 $8,131 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, 2018 and 2017. Inventories (in thousands) April 30, 2018 October 31, 2017 Finished products $185,987 $173,559 Work in process 45,077 39,986 Materials, parts, assemblies and supplies 149,840 128,031 Contracts in process 2,037 2,415 Less: Billings to date (272 ) (363 ) Inventories, net of valuation reserves $382,669 $343,628 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, 2018 October 31, 2017 Land $5,887 $5,435 Buildings and improvements 94,262 91,916 Machinery, equipment and tooling 218,644 191,298 Construction in progress 4,775 5,553 323,568 294,202 Less: Accumulated depreciation and amortization (175,454 ) (164,319 ) Property, plant and equipment, net $148,114 $129,883 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 $13.4 million as of April 30, 2018 and $12.9 million as of October 31, 2017. The total customer rebates and credits deducted within net sales for the six months ended April 30, 2018 and 2017 was $5.2 million and $5.4 million , respectively. The total customer rebates and credits deducted within net sales for the three months ended April 30, 2018 and 2017 was $2.7 million and $3.0 million , respectively. 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, 2018 and 2017 is as follows (in thousands): Six months ended April 30, Three months ended April 30, 2018 2017 2018 2017 R&D expenses $26,660 $22,469 $13,953 $11,223 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 2025. 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 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 that the Company could be required to pay is as follows (in thousands): April 30, 2018 October 31, 2017 Redeemable at fair value $85,039 $82,128 Redeemable based on a multiple of future earnings 48,995 48,995 Redeemable noncontrolling interests $134,034 $131,123 As discussed in Note 2, Acquisitions, the Company, through a subsidiary of HEICO Electronic, acquired 85% of the assets and business of Sensor Technology in February 2018. As part of the Sensor Technology purchase agreement, the Company has the right to purchase the noncontrolling interest in fiscal 2021, or sooner under certain conditions, and the noncontrolling interest holders have the right to cause the Company to purchase the same equity interest at the same point in time. Accumulated Other Comprehensive Loss Changes in the components of accumulated other comprehensive loss for the six months ended April 30, 2018 are as follows (in thousands): Foreign Currency Translation Pension Benefit Obligation Accumulated Other Comprehensive Loss Balances as of October 31, 2017 ($9,533 ) ($1,023 ) ($10,556 ) Unrealized gain 8,813 221 9,034 Amortization of unrealized loss — 6 6 Balances as of April 30, 2018 ($720 ) ($796 ) ($1,516 ) |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 6 Months Ended |
Apr. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets Disclosure [Text Block] | GOODWILL AND OTHER INTANGIBLE ASSETS Changes in the carrying amount of goodwill by operating segment for the six months ended April 30, 2018 are as follows (in thousands): Segment Consolidated Totals FSG ETG Balances as of October 31, 2017 $388,606 $692,700 $1,081,306 Goodwill acquired — 21,535 21,535 Foreign currency translation adjustments 1,628 1,547 3,175 Adjustments to goodwill 972 (2,433 ) (1,461 ) Balances as of April 30, 2018 $391,206 $713,349 $1,104,555 The goodwill acquired pertains to the fiscal 2018 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 nearly all of the goodwill acquired in fiscal 2018 will be deductible for income tax purposes. Foreign currency translation adjustments are included in other comprehensive income (loss) in the Company's Condensed Consolidated Statements of Comprehensive Income. The adjustments to goodwill represent immaterial measurement period adjustments to the purchase price allocation of certain fiscal 2017 acquisitions. Identifiable intangible assets consist of the following (in thousands): As of April 30, 2018 As of October 31, 2017 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Amortizing Assets: Customer relationships $385,776 ($130,386 ) $255,390 $379,966 ($117,069 ) $262,897 Intellectual property 185,188 (49,573 ) 135,615 181,811 (44,861 ) 136,950 Licenses 6,559 (3,227 ) 3,332 6,559 (2,928 ) 3,631 Patents 921 (592 ) 329 870 (551 ) 319 Non-compete agreements 817 (817 ) — 817 (817 ) — Trade names 466 (138 ) 328 466 (118 ) 348 579,727 (184,733 ) 394,994 570,489 (166,344 ) 404,145 Non-Amortizing Assets: Trade names 137,269 — 137,269 133,936 — 133,936 $716,996 ($184,733 ) $532,263 $704,425 ($166,344 ) $538,081 The increase in the gross carrying amount of customer relationships, intellectual property and non-amortizing trade names as of April 30, 2018 compared to October 31, 2017 principally relates to such intangible assets recognized in connection with the fiscal 2018 acquisitions (see Note 2, Acquisitions). The weighted-average amortization period of the customer relationships and intellectual property acquired during fiscal 2018 is 7 and 11 years, respectively. Amortization expense related to intangible assets for the six months ended April 30, 2018 and 2017 was $24.8 million and $18.3 million , respectively. Amortization expense related to intangible assets for the three months ended April 30, 2018 and 2017 was $12.4 million and $9.1 million , respectively. Amortization expense related to intangible assets for the remainder of fiscal 2018 is estimated to be $25.2 million . Amortization expense for each of the next five fiscal years and thereafter is estimated to be $48.6 million in fiscal 2019, $45.7 million in fiscal 2020, $43.0 million in fiscal 2021, $36.8 million in fiscal 2022, $31.8 million in fiscal 2023, and $163.9 million thereafter. |
LONG-TERM DEBT
LONG-TERM DEBT | 6 Months Ended |
Apr. 30, 2018 | |
Debt Disclosure [Abstract] | |
Long-term Debt [Text Block] | LONG-TERM DEBT Long-term debt consists of the following (in thousands): April 30, 2018 October 31, 2017 Borrowings under revolving credit facility $681,000 $671,000 Capital leases and note payable 2,842 2,979 683,842 673,979 Less: Current maturities of long-term debt (480 ) (451 ) $683,362 $673,528 The Company's borrowings under its revolving credit facility mature in fiscal 2023. As of April 30, 2018 and October 31, 2017, the weighted average interest rate on borrowings under the Company’s revolving credit facility was 3.0% and 2.4% , respectively. The revolving credit facility contains both financial and non-financial covenants. As of April 30, 2018, the Company was in compliance with all such covenants. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Apr. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] | INCOME TAXES On December 22, 2017, the United States (U.S.) government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act contains significant changes to existing tax law including, among other things, a reduction in the U.S. federal statutory tax rate from 35% to 21% and the implementation of a territorial tax system resulting in a one-time transition tax on the unremitted earnings of the Company’s foreign subsidiaries. The Tax Act also contains additional provisions that will become effective for HEICO in fiscal 2019 including a new tax on Global Intangible Low-Taxed Income (“GILTI”), a new deduction for Foreign-Derived Intangible Income (“FDII”), the repeal of the domestic production activity deduction and increased limitations on the deductibility of certain executive compensation. The Company has not yet determined the impact of the provisions of the Tax Act which do not become effective for HEICO until fiscal 2019. The Securities and Exchange Commission issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on the accounting for the tax effects of the Tax Act. This guidance provides companies with a measurement period not to exceed one year from the enactment of the Tax Act to complete their accounting for the related tax effects. SAB 118 further states that during the measurement period, companies who are able to make reasonable estimates of the tax effects of the Tax Act should include those amounts in their financial statements as provisional amounts and reflect any adjustments in subsequent periods as they refine their estimates or complete their accounting of such tax effects. As a result of the Tax Act, the Company has revised its estimated annual effective federal statutory income tax rate to reflect a reduction in the rate from 35% to 21% effective January 1, 2018, which results in a blended rate of 23.3% for HEICO in fiscal 2018. Additionally, the Company remeasured its U.S. federal net deferred tax liabilities and recorded a provisional discrete tax benefit of $16.6 million in the first quarter of fiscal 2018. Further, the Company recorded a provisional discrete tax expense of $4.7 million in the first quarter of fiscal 2018 related to a one-time transition tax on the unremitted earnings of the Company's foreign subsidiaries. The Company intends to pay this tax over the eight-year period allowed for in the Tax Act. The Company’s effective tax rate in the first six months of fiscal 2018 decreased to 14.8% from 29.5% in the first six months of fiscal 2017. The decrease principally reflects the previously mentioned discrete tax benefit from the remeasurement of the Company’s U.S. federal net deferred tax liabilities and the benefit of a lower federal statutory income tax rate, which were partially offset by the aforementioned one-time transition tax expense. The Company's effective tax rate in the second quarter of fiscal 2018 decreased to 23.6% from 32.0% in the second quarter of fiscal 2017. The decrease principally reflects the previously mentioned benefit of a lower federal statutory income tax rate. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Apr. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Disclosures [Text Block] | 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, 2018 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 $— $126,979 $— $126,979 Money market funds 439 — — 439 Equity securities 3,108 — — 3,108 Mutual funds 1,624 — — 1,624 Other 1,289 — — 1,289 Total assets $6,460 $126,979 $— $133,439 Liabilities: Contingent consideration $— $— $24,428 $24,428 As of October 31, 2017 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 $— $113,220 $— $113,220 Money market funds 3,972 — — 3,972 Equity securities 2,895 — — 2,895 Mutual funds 1,541 — — 1,541 Other 1,246 — — 1,246 Total assets $9,654 $113,220 $— $122,874 Liabilities: Contingent consideration $— $— $27,573 $27,573 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 $133.4 million as of April 30, 2018 and $122.9 million as of October 31, 2017, of which the LCP related assets were $127.4 million and $117.2 million as of April 30, 2018 and October 31, 2017, 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 $132.3 million as of April 30, 2018 and $121.7 million as of October 31, 2017, of which the LCP related liability was $126.3 million and $116.0 million as of April 30, 2018 and October 31, 2017, respectively. As part of the agreement to acquire a subsidiary by the ETG in fiscal 2017, the Company may be obligated to pay contingent consideration of $20.0 million in fiscal 2023 should the acquired entity meet certain earnings objectives during the first six years following the acquisition. As of April 30, 2018, the estimated fair value of the contingent consideration was $13.4 million . As part of the agreement to acquire certain assets of a company by the ETG in fiscal 2016, the Company may be obligated to pay contingent consideration of up to $1.7 million in aggregate during the first four years following the first anniversary of the acquisition. As of October 31, 2017, the estimated fair value of the contingent consideration was $1.4 million . During fiscal 2018, the Company paid $.3 million of contingent consideration based on the actual financial performance of the acquired entity during the second year following the acquisition. As of April 30, 2018, the estimated fair value of the remaining contingent consideration was $1.1 million . As part of the agreement to acquire a subsidiary by the FSG in fiscal 2015, the Company may be obligated to pay contingent consideration of up to €6.1 million per year, or €12.2 million in aggregate, should the acquired entity meet certain earnings objectives during each of the first two years following the second anniversary of the acquisition. As of April 30, 2018, the estimated fair value of the contingent consideration was €8.2 million , or $9.9 million , as compared to €10.8 million , or $12.6 million , as of October 31, 2017. The decrease in the f air value of the contingent consideration is principally attributed to revised earnings estimates for the final year of the earnout period that reflect less favorable projected market conditions. The estimated fair value of the contingent consideration arrangements described above are classified within Level 3 and were 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 amounts were discounted using a weighted average discount rate reflecting the credit risk of HEICO. 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, 2018 were as follows: Fiscal 2017 Acquisition Fiscal 2016 Acquisition Fiscal 2015 Acquisition Compound annual revenue growth rate range (4 %) - 7% 4 % - 12% 8 % - 11% Weighted average discount rate 6.4% 5.6% .8% 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, 2018 are as follows (in thousands): Balance as of October 31, 2017 $27,573 Decrease in accrued contingent consideration, net (3,412 ) Payment of contingent consideration (300 ) Foreign currency transaction adjustments 567 Balance as of April 30, 2018 $24,428 Included in the accompanying Condensed Consolidated Balance Sheet under the following captions: Accrued expenses and other current liabilities $6,516 Other long-term liabilities 17,912 $24,428 The Company recorded the decrease in accrued contingent consideration and foreign currency transaction adjustments set forth in the table above within selling, general and administrative expenses in the Company's Condensed Consolidated Statement of Operations. The Company did not have any transfers between Level 1 and Level 2 fair value measurements during the six months ended April 30, 2018. 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, 2018 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. |
NET INCOME PER SHARE ATTRIBUTAB
NET INCOME PER SHARE ATTRIBUTABLE TO HEICO SHAREHOLDERS | 6 Months Ended |
Apr. 30, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share [Text Block] | 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, 2018 2017 2018 2017 Numerator: Net income attributable to HEICO $124,770 $86,613 $59,618 $45,686 Denominator: Weighted average common shares outstanding - basic 105,789 105,227 105,940 105,276 Effect of dilutive stock options 3,402 2,923 3,331 3,020 Weighted average common shares outstanding - diluted 109,191 108,150 109,271 108,296 Net income per share attributable to HEICO shareholders: Basic $1.18 $.82 $.56 $.43 Diluted $1.14 $.80 $.55 $.42 Anti-dilutive stock options excluded 492 395 369 577 |
OPERATING SEGMENTS
OPERATING SEGMENTS | 6 Months Ended |
Apr. 30, 2018 | |
Segment Reporting [Abstract] | |
Segment Reporting Disclosure [Text Block] | OPERATING SEGMENTS Information on the Company’s two operating segments, the FSG and the ETG, for the six and three months ended April 30, 2018 and 2017, respectively, is as follows (in thousands): Other, (1) Consolidated Segment FSG ETG Six months ended April 30, 2018: Net sales $522,557 $324,380 ($11,925 ) $835,012 Depreciation 6,582 4,584 186 11,352 Amortization 9,879 16,267 591 26,737 Operating income 97,357 91,350 (17,582 ) 171,125 Capital expenditures 6,206 3,985 19,266 29,457 Six months ended April 30, 2017: Net sales $452,710 $267,334 ($7,955 ) $712,089 Depreciation 6,276 4,136 106 10,518 Amortization 8,203 11,436 344 19,983 Operating income 86,107 67,910 (12,925 ) 141,092 Capital expenditures 8,560 4,834 144 13,538 Three months ended April 30, 2018: Net sales $267,836 $168,722 ($5,956 ) $430,602 Depreciation 3,290 2,310 124 5,724 Amortization 4,932 8,163 246 13,341 Operating income 51,488 48,130 (8,053 ) 91,565 Capital expenditures 3,909 2,242 15,729 21,880 Three months ended April 30, 2017: Net sales $231,809 $141,169 ($4,321 ) $368,657 Depreciation 3,128 2,093 53 5,274 Amortization 4,099 5,701 179 9,979 Operating income 44,744 38,826 (7,028 ) 76,542 Capital expenditures 4,688 2,330 98 7,116 (1) Intersegment activity principally consists of net sales from the ETG to the FSG. Total assets by operating segment as of April 30, 2018 and October 31, 2017 are as follows (in thousands): Other, Consolidated Segment FSG ETG Total assets as of April 30, 2018 $1,061,310 $1,391,902 $174,669 $2,627,881 Total assets as of October 31, 2017 1,042,925 1,339,363 130,143 2,512,431 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Apr. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] | COMMITMENTS AND CONTINGENCIES Guarantees As of April 30, 2018, the Company has arranged for standby letters of credit aggregating $4.3 million , which are supported by its revolving credit facility and pertain to payment guarantees related to potential workers' compensation claims and a facility lease as well as 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, 2018 and 2017, respectively, are as follows (in thousands): Six months ended April 30, 2018 2017 Balances as of beginning of fiscal year $2,921 $3,351 Accruals for warranties 1,466 1,107 Acquired warranty liabilities 300 — Warranty claims settled (1,431 ) (1,250 ) Balances as of April 30 $3,256 $3,208 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. |
SUMMARY OF SIGNIFICANT ACCOUN19
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Apr. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation [Text Block] | 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, 2017. The October 31, 2017 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, 2018 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. and HEICO Flight Support Corp. and their respective subsidiaries; and the Electronic Technologies Group (“ETG”), consisting of HEICO Electronic Technologies Corp. (“HEICO Electronic”) and its subsidiaries. |
Stockholders' Equity, Policy [Policy Text Block] | Stock Split In December 2017, the Company's Board of Directors declared a 5-for-4 stock split on both classes of the Company's common stock. The stock split was effected as of January 18, 2018 in the form of a 25% stock dividend distributed to shareholders of record as of January 3, 2018. All applicable share and per share information has been adjusted retrospectively to give effect to the 5-for-4 stock split. |
New Accounting Pronouncements [Text Block] | New Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, “Revenue from Contracts with Customers,” which provides a comprehensive new revenue recognition model that will supersede 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, as amended, is effective for fiscal years and interim reporting periods within those years beginning after December 15, 2017, or in fiscal 2019 for HEICO. Early adoption in the year preceding the effective date is permitted. ASU 2014-09 shall be applied either retrospectively to each prior reporting period presented (“full retrospective method”) or retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application (“modified retrospective method”). The Company expects to use the modified retrospective method. The Company is in the process of reviewing a representative sample of customer contracts across its identified revenue streams. Based on the work completed to-date, the Company foresees two types of contracts for which ASU 2014-09 will impact the timing of revenue recognition. For certain contracts under which it produces products with no alternative use and for which the Company has an enforceable right to payment during the production cycle and for certain other contracts under which the Company creates or enhances customer-owned assets while performing repair and overhaul services, ASU 2014-09 will require HEICO to recognize revenue using an over time recognition model as opposed to the Company’s current policy of recognizing revenue at the time of shipment. The Company has not yet determined the effect the adoption of this guidance will have on its consolidated results of operations, financial position and cash flows. In July 2015, the FASB issued ASU 2015-11, "Simplifying the Measurement of Inventory,” which requires entities to measure inventories at the lower of cost or net realizable value. Previously, inventories were measured at the lower of cost or market. The Company adopted ASU 2015-11 in the first quarter of fiscal 2018, resulting in no material effect on the Company's consolidated results of operations, financial position or cash flows. In February 2016, the FASB issued ASU 2016-02, “Leases," which requires recognition of lease assets and lease liabilities on the balance sheet of lessees. ASU 2016-02 is effective for fiscal years and interim reporting periods within those years beginning after December 15, 2018, or in fiscal 2020 for HEICO. Early adoption is permitted. ASU 2016-02 requires a modified retrospective transition approach and provides certain optional transition relief. The Company is currently evaluating the effect the adoption of this guidance will have on its consolidated results of operations, financial position and cash flows. In August 2016, the FASB issued ASU 2016-15, "Classification of Certain Cash Receipts and Cash Payments," which clarifies how certain cash receipts and cash payments are to be presented and classified in the statement of cash flows. ASU 2016-15 provides guidance on eight specific cash flow classification issues including contingent consideration payments made after a business combination, proceeds from corporate-owned life insurance policies and distributions received from equity method investees. ASU 2016-15 is effective for fiscal years and interim reporting periods within those years beginning after December 15, 2017, or in fiscal 2019 for HEICO. Early adoption is permitted. ASU 2016-15 requires a retrospective transition approach for all periods presented. The Company is currently evaluating the effect the adoption of this guidance will have on its consolidated statement of cash flows. In January 2017, the FASB issued ASU 2017-04, "Simplifying the Test for Goodwill Impairment," which is intended to simplify the current test for goodwill impairment by eliminating the second step in which the implied value of a reporting unit is calculated when the carrying value of the reporting unit exceeds its fair value. Under ASU 2017-04, goodwill impairment should be recognized for the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 must be applied prospectively and is effective for any annual or interim goodwill impairment test in fiscal years beginning after December 15, 2019, or in fiscal 2021 for HEICO. Early adoption is permitted. The Company is currently evaluating the effect the adoption of this guidance will have on its consolidated results of operations, financial position and cash flows. |
SELECTED FINANCIAL STATEMENT 20
SELECTED FINANCIAL STATEMENT INFORMATION (Tables) | 6 Months Ended |
Apr. 30, 2018 | |
Selected Financial Statement Information [Abstract] | |
Schedule of Accounts Receivable [Table Text Block] | Accounts Receivable (in thousands) April 30, 2018 October 31, 2017 Accounts receivable $241,665 $225,462 Less: Allowance for doubtful accounts (3,432 ) (3,006 ) Accounts receivable, net $238,233 $222,456 |
Schedule of Costs in Excess of Billings and Billings in Excess of Costs [Table Text Block] | Costs and Estimated Earnings on Uncompleted Percentage-of-Completion Contracts (in thousands) April 30, 2018 October 31, 2017 Costs incurred on uncompleted contracts $36,965 $29,491 Estimated earnings 20,980 19,902 57,945 49,393 Less: Billings to date (44,621 ) (41,262 ) $13,324 $8,131 Included in the accompanying Condensed Consolidated Balance Sheets under the following captions: Accounts receivable, net (costs and estimated earnings in excess of billings) $15,238 $9,377 Accrued expenses and other current liabilities (billings in excess of costs and estimated earnings) (1,914 ) (1,246 ) $13,324 $8,131 |
Schedule of Inventories [Table Text Block] | Inventories (in thousands) April 30, 2018 October 31, 2017 Finished products $185,987 $173,559 Work in process 45,077 39,986 Materials, parts, assemblies and supplies 149,840 128,031 Contracts in process 2,037 2,415 Less: Billings to date (272 ) (363 ) Inventories, net of valuation reserves $382,669 $343,628 |
Schedule of Property, Plant and Equipment [Table Text Block] | Property, Plant and Equipment (in thousands) April 30, 2018 October 31, 2017 Land $5,887 $5,435 Buildings and improvements 94,262 91,916 Machinery, equipment and tooling 218,644 191,298 Construction in progress 4,775 5,553 323,568 294,202 Less: Accumulated depreciation and amortization (175,454 ) (164,319 ) Property, plant and equipment, net $148,114 $129,883 |
Schedule of Research and Development Expenses [Table Text Block] | 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, 2018 and 2017 is as follows (in thousands): Six months ended April 30, Three months ended April 30, 2018 2017 2018 2017 R&D expenses $26,660 $22,469 $13,953 $11,223 |
Schedule of Redeemable Noncontrolling Interests [Table Text Block] | Management's estimate of the aggregate Redemption Amount of all Put Rights that the Company could be required to pay is as follows (in thousands): April 30, 2018 October 31, 2017 Redeemable at fair value $85,039 $82,128 Redeemable based on a multiple of future earnings 48,995 48,995 Redeemable noncontrolling interests $134,034 $131,123 |
Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] | Changes in the components of accumulated other comprehensive loss for the six months ended April 30, 2018 are as follows (in thousands): Foreign Currency Translation Pension Benefit Obligation Accumulated Other Comprehensive Loss Balances as of October 31, 2017 ($9,533 ) ($1,023 ) ($10,556 ) Unrealized gain 8,813 221 9,034 Amortization of unrealized loss — 6 6 Balances as of April 30, 2018 ($720 ) ($796 ) ($1,516 ) |
GOODWILL AND OTHER INTANGIBLE21
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Apr. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill [Table Text Block] | Changes in the carrying amount of goodwill by operating segment for the six months ended April 30, 2018 are as follows (in thousands): Segment Consolidated Totals FSG ETG Balances as of October 31, 2017 $388,606 $692,700 $1,081,306 Goodwill acquired — 21,535 21,535 Foreign currency translation adjustments 1,628 1,547 3,175 Adjustments to goodwill 972 (2,433 ) (1,461 ) Balances as of April 30, 2018 $391,206 $713,349 $1,104,555 |
Schedule Of Identifiable Intangible Assets [Table Text Block] | Identifiable intangible assets consist of the following (in thousands): As of April 30, 2018 As of October 31, 2017 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Amortizing Assets: Customer relationships $385,776 ($130,386 ) $255,390 $379,966 ($117,069 ) $262,897 Intellectual property 185,188 (49,573 ) 135,615 181,811 (44,861 ) 136,950 Licenses 6,559 (3,227 ) 3,332 6,559 (2,928 ) 3,631 Patents 921 (592 ) 329 870 (551 ) 319 Non-compete agreements 817 (817 ) — 817 (817 ) — Trade names 466 (138 ) 328 466 (118 ) 348 579,727 (184,733 ) 394,994 570,489 (166,344 ) 404,145 Non-Amortizing Assets: Trade names 137,269 — 137,269 133,936 — 133,936 $716,996 ($184,733 ) $532,263 $704,425 ($166,344 ) $538,081 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 6 Months Ended |
Apr. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments [Table Text Block] | Long-term debt consists of the following (in thousands): April 30, 2018 October 31, 2017 Borrowings under revolving credit facility $681,000 $671,000 Capital leases and note payable 2,842 2,979 683,842 673,979 Less: Current maturities of long-term debt (480 ) (451 ) $683,362 $673,528 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Apr. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] | 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, 2018 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 $— $126,979 $— $126,979 Money market funds 439 — — 439 Equity securities 3,108 — — 3,108 Mutual funds 1,624 — — 1,624 Other 1,289 — — 1,289 Total assets $6,460 $126,979 $— $133,439 Liabilities: Contingent consideration $— $— $24,428 $24,428 As of October 31, 2017 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 $— $113,220 $— $113,220 Money market funds 3,972 — — 3,972 Equity securities 2,895 — — 2,895 Mutual funds 1,541 — — 1,541 Other 1,246 — — 1,246 Total assets $9,654 $113,220 $— $122,874 Liabilities: Contingent consideration $— $— $27,573 $27,573 |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Table Text Block] | The Level 3 inputs used to derive the estimated fair value of the Company's contingent consideration liability as of April 30, 2018 were as follows: Fiscal 2017 Acquisition Fiscal 2016 Acquisition Fiscal 2015 Acquisition Compound annual revenue growth rate range (4 %) - 7% 4 % - 12% 8 % - 11% Weighted average discount rate 6.4% 5.6% .8% |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block] | 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, 2018 are as follows (in thousands): Balance as of October 31, 2017 $27,573 Decrease in accrued contingent consideration, net (3,412 ) Payment of contingent consideration (300 ) Foreign currency transaction adjustments 567 Balance as of April 30, 2018 $24,428 Included in the accompanying Condensed Consolidated Balance Sheet under the following captions: Accrued expenses and other current liabilities $6,516 Other long-term liabilities 17,912 $24,428 |
NET INCOME PER SHARE ATTRIBUT24
NET INCOME PER SHARE ATTRIBUTABLE TO HEICO SHAREHOLDERS (Tables) | 6 Months Ended |
Apr. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | 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, 2018 2017 2018 2017 Numerator: Net income attributable to HEICO $124,770 $86,613 $59,618 $45,686 Denominator: Weighted average common shares outstanding - basic 105,789 105,227 105,940 105,276 Effect of dilutive stock options 3,402 2,923 3,331 3,020 Weighted average common shares outstanding - diluted 109,191 108,150 109,271 108,296 Net income per share attributable to HEICO shareholders: Basic $1.18 $.82 $.56 $.43 Diluted $1.14 $.80 $.55 $.42 Anti-dilutive stock options excluded 492 395 369 577 |
OPERATING SEGMENTS (Tables)
OPERATING SEGMENTS (Tables) | 6 Months Ended |
Apr. 30, 2018 | |
Segment Reporting [Abstract] | |
Schedule Of Segment Reporting Information By Segment [Table Text Block] | Information on the Company’s two operating segments, the FSG and the ETG, for the six and three months ended April 30, 2018 and 2017, respectively, is as follows (in thousands): Other, (1) Consolidated Segment FSG ETG Six months ended April 30, 2018: Net sales $522,557 $324,380 ($11,925 ) $835,012 Depreciation 6,582 4,584 186 11,352 Amortization 9,879 16,267 591 26,737 Operating income 97,357 91,350 (17,582 ) 171,125 Capital expenditures 6,206 3,985 19,266 29,457 Six months ended April 30, 2017: Net sales $452,710 $267,334 ($7,955 ) $712,089 Depreciation 6,276 4,136 106 10,518 Amortization 8,203 11,436 344 19,983 Operating income 86,107 67,910 (12,925 ) 141,092 Capital expenditures 8,560 4,834 144 13,538 Three months ended April 30, 2018: Net sales $267,836 $168,722 ($5,956 ) $430,602 Depreciation 3,290 2,310 124 5,724 Amortization 4,932 8,163 246 13,341 Operating income 51,488 48,130 (8,053 ) 91,565 Capital expenditures 3,909 2,242 15,729 21,880 Three months ended April 30, 2017: Net sales $231,809 $141,169 ($4,321 ) $368,657 Depreciation 3,128 2,093 53 5,274 Amortization 4,099 5,701 179 9,979 Operating income 44,744 38,826 (7,028 ) 76,542 Capital expenditures 4,688 2,330 98 7,116 |
Reconciliation of Assets from Segment to Consolidated [Table Text Block] | Total assets by operating segment as of April 30, 2018 and October 31, 2017 are as follows (in thousands): Other, Consolidated Segment FSG ETG Total assets as of April 30, 2018 $1,061,310 $1,391,902 $174,669 $2,627,881 Total assets as of October 31, 2017 1,042,925 1,339,363 130,143 2,512,431 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
Apr. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Product Warranty Liability [Table Text Block] | Changes in the Company’s product warranty liability for the six months ended April 30, 2018 and 2017, respectively, are as follows (in thousands): Six months ended April 30, 2018 2017 Balances as of beginning of fiscal year $2,921 $3,351 Accruals for warranties 1,466 1,107 Acquired warranty liabilities 300 — Warranty claims settled (1,431 ) (1,250 ) Balances as of April 30 $3,256 $3,208 |
SUMMARY OF SIGNIFICANT ACCOUN27
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Textuals) | Apr. 30, 2018 |
Accounting Policies [Abstract] | |
Common Stock Dividend Percentage Rate | 25.00% |
ACQUISITIONS (Details Textuals)
ACQUISITIONS (Details Textuals) | 6 Months Ended |
Apr. 30, 2018 | |
Business Acquisition [Line Items] | |
Effective Date of Acquisition | Apr. 30, 2018 |
ELT [Member] | |
Business Acquisition [Line Items] | |
Description of Acquired Business | Emergency Locator Transmitter Beacon product line ("ELT Product Line") of Instrumar Limited. The ELT Product Line designs and manufactures Emergency Locator Transmitter Beacons for the commercial aviation and defense markets, that upon activation, transmit a distress signal to alert search and rescue operations of the aircraft's location. |
STE [Member] | |
Business Acquisition [Line Items] | |
Effective Date of Acquisition | Feb. 28, 2018 |
Name of Acquired Entity | Sensor Technology Engineering, Inc. ("Sensor Technology") |
Percentage of Voting Interests Acquired | 85.00% |
Description of Acquired Business | Sensor Technology designs and manufactures sophisticated nuclear radiation detectors for law enforcement, homeland security and military applications. |
Ownership Percentage by Noncontrolling Owners | 15.00% |
IDC [Member] | |
Business Acquisition [Line Items] | |
Effective Date of Acquisition | Nov. 30, 2017 |
Name of Acquired Entity | Interface Displays & Controls, Inc. ("IDC") |
Description of Acquired Business | IDC designs and manufactures electronic products for aviation, marine, military fighting vehicles, and embedded computing markets. |
SELECTED FINANCIAL STATEMENT 29
SELECTED FINANCIAL STATEMENT INFORMATION (Accounts Receivable) (Details) - USD ($) $ in Thousands | Apr. 30, 2018 | Oct. 31, 2017 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | $ 241,665 | $ 225,462 |
Less: Allowance for doubtful accounts | (3,432) | (3,006) |
Accounts receivable, net | $ 238,233 | $ 222,456 |
SELECTED FINANCIAL STATEMENT 30
SELECTED FINANCIAL STATEMENT INFORMATION (Costs and Estimated Earnings on Uncompleted POC Contracts) (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Apr. 30, 2018 | Oct. 31, 2017 | |
Costs incurred on uncompleted contracts | $ 36,965 | $ 29,491 |
Estimated Earnings | 20,980 | 19,902 |
Estimated Revenue on Completed Percentage-of-Completion Contracts | 57,945 | 49,393 |
Billed Contracts Receivable | (44,621) | (41,262) |
Billings in Excess of Cost and Estimated Earnings | 13,324 | 8,131 |
Included in the accompanying Condensed Consolidated Balance Sheets under the following captions: | ||
Accounts receivable, net (costs and estimated earnings in excess of billings) | 15,238 | 9,377 |
Accrued expenses and other current liabilities (billings in excess of costs and estimated earnings) | (1,914) | (1,246) |
Billings in Excess of Cost and Estimated Earnings | $ 13,324 | $ 8,131 |
SELECTED FINANCIAL STATEMENT 31
SELECTED FINANCIAL STATEMENT INFORMATION (Inventories) (Details) - USD ($) $ in Thousands | Apr. 30, 2018 | Oct. 31, 2017 |
Inventory [Line Items] | ||
Finished products | $ 185,987 | $ 173,559 |
Work in process | 45,077 | 39,986 |
Materials, parts, assemblies and supplies | 149,840 | 128,031 |
Contracts in process | 2,037 | 2,415 |
Less: Billings to date | (272) | (363) |
Inventories, net of valuation reserves | $ 382,669 | $ 343,628 |
SELECTED FINANCIAL STATEMENT 32
SELECTED FINANCIAL STATEMENT INFORMATION (Property, Plant and Equipment) (Details) - USD ($) $ in Thousands | Apr. 30, 2018 | Oct. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Land | $ 5,887 | $ 5,435 |
Buildings and improvements | 94,262 | 91,916 |
Machinery, equipment and tooling | 218,644 | 191,298 |
Construction in progress | 4,775 | 5,553 |
Property, plant and equipment, gross | 323,568 | 294,202 |
Less: Accumulated depreciation and amortization | (175,454) | (164,319) |
Property, plant and equipment, net | $ 148,114 | $ 129,883 |
SELECTED FINANCIAL STATEMENT 33
SELECTED FINANCIAL STATEMENT INFORMATION SELECTED FINANCIAL STATEMENT INFORMATION (Research and Development Expenses) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2018 | Apr. 30, 2017 | Apr. 30, 2018 | Apr. 30, 2017 | |
Selected Financial Statement Information (Details) [Abstract] | ||||
R&D expenses | $ 13,953 | $ 11,223 | $ 26,660 | $ 22,469 |
SELECTED FINANCIAL STATEMENT 34
SELECTED FINANCIAL STATEMENT INFORMATION SELECTED FINANCIAL STATEMENT INFORMATION (Redeemable Noncontrolling Interests) (Details) - USD ($) $ in Thousands | Apr. 30, 2018 | Oct. 31, 2017 | Apr. 30, 2017 | Oct. 31, 2016 |
Redeemable Noncontrolling Interest [Line Items] | ||||
Redeemable at fair value | $ 85,039 | $ 82,128 | ||
Redeemable based on a multiple of future earnings | 48,995 | 48,995 | ||
Redeemable noncontrolling interests | $ 134,034 | $ 131,123 | $ 125,132 | $ 99,512 |
SELECTED FINANCIAL STATEMENT 35
SELECTED FINANCIAL STATEMENT INFORMATION SELECTED FINANCIAL STATEMENT INFORMATION (Accumulated Other Comprehensive Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2018 | Apr. 30, 2017 | Apr. 30, 2018 | Apr. 30, 2017 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Starting accumulated other comprehensive loss | $ (10,556) | |||
Unrealized gain | 9,034 | |||
Amortization of unrealized loss on defined benefit pension plan, net of tax | $ 2 | $ 8 | 6 | $ 15 |
Ending accumulated other comprehensive loss | (1,516) | (1,516) | ||
Foreign Currency Translation [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Starting accumulated other comprehensive loss | (9,533) | |||
Unrealized gain | 8,813 | |||
Ending accumulated other comprehensive loss | (720) | (720) | ||
Pension Benefit Obligation [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Starting accumulated other comprehensive loss | (1,023) | |||
Unrealized gain | 221 | |||
Amortization of unrealized loss on defined benefit pension plan, net of tax | 6 | |||
Ending accumulated other comprehensive loss | $ (796) | $ (796) |
SELECTED FINANCIAL STATEMENT 36
SELECTED FINANCIAL STATEMENT INFORMATION (Details Textuals) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Apr. 30, 2018 | Apr. 30, 2017 | Apr. 30, 2018 | Apr. 30, 2017 | Oct. 31, 2017 | |
Selected Financial Statement Information (Details) [Abstract] | |||||
Accrued customer rebates and credits | $ 13.4 | $ 13.4 | $ 12.9 | ||
Total customer rebates and credits deducted within net sales | $ 2.7 | $ 3 | $ 5.2 | $ 5.4 | |
STE [Member] | |||||
Business Acquisition [Line Items] | |||||
Percentage of Voting Interests Acquired | 85.00% | 85.00% |
GOODWILL AND OTHER INTANGIBLE37
GOODWILL AND OTHER INTANGIBLE ASSETS (Goodwill) (Details) $ in Thousands | 6 Months Ended |
Apr. 30, 2018USD ($) | |
Goodwill [Line Items] | |
Opening Balance | $ 1,081,306 |
Goodwill acquired | 21,535 |
Foreign currency translation adjustments | (3,175) |
Adjustments to goodwill | (1,461) |
Ending Balance | 1,104,555 |
Flight Support Group [Member] | |
Goodwill [Line Items] | |
Opening Balance | 388,606 |
Goodwill acquired | 0 |
Foreign currency translation adjustments | (1,628) |
Adjustments to goodwill | 972 |
Ending Balance | 391,206 |
Electronic Technologies Group [Member] | |
Goodwill [Line Items] | |
Opening Balance | 692,700 |
Goodwill acquired | 21,535 |
Foreign currency translation adjustments | (1,547) |
Adjustments to goodwill | (2,433) |
Ending Balance | $ 713,349 |
GOODWILL AND OTHER INTANGIBLE38
GOODWILL AND OTHER INTANGIBLE ASSETS (Identifiable Intangible Assets) (Details) - USD ($) $ in Thousands | Apr. 30, 2018 | Oct. 31, 2017 |
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | $ 579,727 | $ 570,489 |
Accumulated Amortization | (184,733) | (166,344) |
Net Carrying Amount | 394,994 | 404,145 |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Intangible Asset Gross Carrying Amount | 716,996 | 704,425 |
Intangible Asset Net Carrying Amount | 532,263 | 538,081 |
Trade Names [Member] | ||
Indefinite-Lived Intangible Assets (Excluding Goodwill) [Abstract] | ||
Gross Carrying Amount | 137,269 | 133,936 |
Net Carrying Amount | 137,269 | 133,936 |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | 385,776 | 379,966 |
Accumulated Amortization | (130,386) | (117,069) |
Net Carrying Amount | 255,390 | 262,897 |
Intellectual Property [Member] | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | 185,188 | 181,811 |
Accumulated Amortization | (49,573) | (44,861) |
Net Carrying Amount | 135,615 | 136,950 |
Licensing Agreements [Member] | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | 6,559 | 6,559 |
Accumulated Amortization | (3,227) | (2,928) |
Net Carrying Amount | 3,332 | 3,631 |
Patents [Member] | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | 921 | 870 |
Accumulated Amortization | (592) | (551) |
Net Carrying Amount | 329 | 319 |
Noncompete Agreements [Member] | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | 817 | 817 |
Accumulated Amortization | (817) | (817) |
Net Carrying Amount | 0 | 0 |
Trade Names [Member] | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | 466 | 466 |
Accumulated Amortization | (138) | (118) |
Net Carrying Amount | $ 328 | $ 348 |
GOODWILL AND OTHER INTANGIBLE39
GOODWILL AND OTHER INTANGIBLE ASSETS (Details Textuals) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2018 | Apr. 30, 2017 | Apr. 30, 2018 | Apr. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense related to intangible assets | $ 12.4 | $ 9.1 | $ 24.8 | $ 18.3 |
Estimated Amortization Expense, remainder of fiscal year | 25.2 | 25.2 | ||
Estimated Amortization Expense, for fiscal 2019 | 48.6 | 48.6 | ||
Estimated Amortization Expense, for fiscal 2020 | 45.7 | 45.7 | ||
Estimated Amortization Expense, for fiscal 2021 | 43 | 43 | ||
Estimated Amortization Expense, for fiscal 2022 | 36.8 | 36.8 | ||
Estimated Amortization Expense, for fiscal 2023 | 31.8 | 31.8 | ||
Estimated Amortization Expense, thereafter | $ 163.9 | $ 163.9 | ||
Customer Relationships [Member] | ||||
Acquired Indefinite-lived Intangible Assets [Line Items] | ||||
Weighted Average Useful Life | 7 years | |||
Intellectual Property [Member] | ||||
Acquired Indefinite-lived Intangible Assets [Line Items] | ||||
Weighted Average Useful Life | 11 years |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) - USD ($) $ in Thousands | Apr. 30, 2018 | Oct. 31, 2017 |
Borrowings under revolving credit facility | $ 681,000 | $ 671,000 |
Capital leases | 2,842 | 2,979 |
Total debt and capital leases | 683,842 | 673,979 |
Less: Current maturities of long-term debt | (480) | (451) |
Long-term debt, net of current maturities | $ 683,362 | $ 673,528 |
LONG-TERM DEBT (Details Textual
LONG-TERM DEBT (Details Textuals) | Apr. 30, 2018 | Oct. 31, 2017 |
Revolving Credit Facility [Member] | ||
Debt Instrument [Line Items] | ||
Weighted average interest rate | 3.00% | 2.40% |
INCOME TAXES (Details Textuals)
INCOME TAXES (Details Textuals) - USD ($) $ in Millions | 1 Months Ended | 2 Months Ended | 3 Months Ended | 6 Months Ended | |||
Jan. 31, 2018 | Dec. 21, 2017 | Apr. 30, 2018 | Jan. 31, 2018 | Apr. 30, 2017 | Apr. 30, 2018 | Apr. 30, 2017 | |
Income Tax Disclosure [Abstract] | |||||||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | 35.00% | 23.30% | ||||
Remeasurement of Deferred Tax Liabilities for Change in Tax Rate | $ 16.6 | $ 16.6 | |||||
Transition Tax Expense from Unremitted Earnings from Foreign Subsidiaries | $ 4.7 | ||||||
Effective Income Tax Rate, Continuing Operations | 23.60% | 32.00% | 14.80% | 29.50% |
FAIR VALUE MEASUREMENTS (Fair V
FAIR VALUE MEASUREMENTS (Fair Value Hierarchy, by Category) (Details) - USD ($) $ in Thousands | Apr. 30, 2018 | Oct. 31, 2017 |
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | $ 133,439 | $ 122,874 |
Liabilities: | ||
Contingent consideration | 24,428 | 27,573 |
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 6,460 | 9,654 |
Liabilities: | ||
Contingent consideration | 0 | 0 |
Significant Other Observable Inputs (Level 2) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 126,979 | 113,220 |
Liabilities: | ||
Contingent consideration | 0 | 0 |
Significant Unobservable Inputs (Level 3) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 0 | 0 |
Liabilities: | ||
Contingent consideration | 24,428 | 27,573 |
Corporate Owned Life Insurance [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 126,979 | 113,220 |
Corporate Owned Life Insurance [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 0 | 0 |
Corporate Owned Life Insurance [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 126,979 | 113,220 |
Corporate Owned Life Insurance [Member] | Significant Unobservable Inputs (Level 3) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 0 | 0 |
Money Market Funds [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 439 | 3,972 |
Money Market Funds [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 439 | 3,972 |
Money Market Funds [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 0 | 0 |
Money Market Funds [Member] | Significant Unobservable Inputs (Level 3) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 0 | 0 |
Equity Securities [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 3,108 | 2,895 |
Equity Securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 3,108 | 2,895 |
Equity Securities [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 0 | 0 |
Equity Securities [Member] | Significant Unobservable Inputs (Level 3) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 0 | 0 |
Equity Funds [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 1,624 | 1,541 |
Equity Funds [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 1,624 | 1,541 |
Equity Funds [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 0 | 0 |
Equity Funds [Member] | Significant Unobservable Inputs (Level 3) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 0 | 0 |
Other Defined Deferred Compensation Plan [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 1,289 | 1,246 |
Other Defined Deferred Compensation Plan [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 1,289 | 1,246 |
Other Defined Deferred Compensation Plan [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 0 | 0 |
Other Defined Deferred Compensation Plan [Member] | Significant Unobservable Inputs (Level 3) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS FAIR VA
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS (Level 3 Valuation Inputs) (Details) - Fair Value, Inputs, Level 3 [Member] | 6 Months Ended |
Apr. 30, 2018 | |
FY 2017 Acquisition [Member] | |
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | |
Fair Value Inputs, Discount Rate | 6.40% |
FY 2017 Acquisition [Member] | Minimum [Member] | |
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | |
Negative Long-term Revenue Growth Rate | (4.00%) |
FY 2017 Acquisition [Member] | Maximum [Member] | |
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | |
Fair Value Inputs, Long-term Revenue Growth Rate | 7.00% |
FY 2016 Acquisition [Member] | |
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | |
Fair Value Inputs, Discount Rate | 5.60% |
FY 2016 Acquisition [Member] | Minimum [Member] | |
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | |
Fair Value Inputs, Long-term Revenue Growth Rate | 4.00% |
FY 2016 Acquisition [Member] | Maximum [Member] | |
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | |
Fair Value Inputs, Long-term Revenue Growth Rate | 12.00% |
FY 2015 Acquisition [Member] | |
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | |
Fair Value Inputs, Discount Rate | 0.80% |
FY 2015 Acquisition [Member] | Minimum [Member] | |
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | |
Fair Value Inputs, Long-term Revenue Growth Rate | 8.00% |
FY 2015 Acquisition [Member] | Maximum [Member] | |
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | |
Fair Value Inputs, Long-term Revenue Growth Rate | 11.00% |
FAIR VALUE MEASUREMENTS (Contin
FAIR VALUE MEASUREMENTS (Contingent Consideration Liability) (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Apr. 30, 2018 | Apr. 30, 2017 | Oct. 31, 2017 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Change in value of contingent consideration | $ 1,148 | ||
Liabilities [Abstract] | |||
Total liabilities | $ 24,428 | $ 27,573 | |
Significant Unobservable Inputs (Level 3) [Member] | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Opening balance, Liabilities | 27,573 | ||
Change in accrued contingent consideration | (3,412) | ||
Change in value of contingent consideration | (300) | ||
Ending balance, Liabilities | 24,428 | ||
Liabilities [Abstract] | |||
Accrued Liabilities, Current | 6,516 | ||
Other Liabilities, Noncurrent | 17,912 | ||
Total liabilities | 24,428 | $ 27,573 | |
Foreign Currency Gain (Loss) [Member] | Significant Unobservable Inputs (Level 3) [Member] | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Foreign currency transaction adjustments | $ 567 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details Textuals) $ in Thousands, € in Millions | 6 Months Ended | |||||
Apr. 30, 2018USD ($) | Apr. 30, 2017USD ($) | Apr. 30, 2018EUR (€) | Apr. 30, 2018USD ($) | Oct. 31, 2017EUR (€) | Oct. 31, 2017USD ($) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Total liabilities | $ 24,428 | $ 27,573 | ||||
Change in value of contingent consideration | $ 1,148 | |||||
Assets held within irrevocable trusts and classified within other assets | 133,439 | 122,874 | ||||
Related liabilities of deferred compensation plans, specified as other long-term liabilities | 132,300 | 121,700 | ||||
Aggregate LCP Assets [Member] | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Assets held within irrevocable trusts and classified within other assets | 127,400 | 117,200 | ||||
Significant Other Observable Inputs (Level 2) [Member] | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Total liabilities | 0 | 0 | ||||
Assets held within irrevocable trusts and classified within other assets | 126,979 | 113,220 | ||||
Significant Other Observable Inputs (Level 2) [Member] | Corporate Owned Life Insurance [Member] | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Related liabilities of deferred compensation plans, specified as other long-term liabilities | 126,300 | 116,000 | ||||
Significant Unobservable Inputs (Level 3) [Member] | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Total liabilities | 24,428 | 27,573 | ||||
Change in value of contingent consideration | $ (300) | |||||
Assets held within irrevocable trusts and classified within other assets | 0 | 0 | ||||
Business Combinations [Abstract] | ||||||
Accrued Liabilities, Current | 6,516 | |||||
Flight Support Group [Member] | FY 2015 Acquisition [Member] | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Total liabilities | 9,900 | 12,600 | ||||
Fair Value Assumptions, Expected Term | 2 years | |||||
Flight Support Group [Member] | Euro Member Countries, Euro | FY 2015 Acquisition [Member] | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Total liabilities | € | € 8.2 | € 10.8 | ||||
Contingent Consideration Arrangements, Per Year Amount | € | 6.1 | |||||
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High | € | € 12.2 | |||||
Electronic Technologies Group [Member] | FY 2017 Acquisition [Member] | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Total liabilities | 13,400 | |||||
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High | 20,000 | |||||
Fair Value Assumptions, Expected Term | 6 years | |||||
Electronic Technologies Group [Member] | FY 2016 Acquisition [Member] | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Total liabilities | 1,100 | $ 1,400 | ||||
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High | $ 1,700 | |||||
Change in value of contingent consideration | $ 300 |
NET INCOME PER SHARE ATTRIBUT47
NET INCOME PER SHARE ATTRIBUTABLE TO HEICO SHAREHOLDERS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2018 | Apr. 30, 2017 | Apr. 30, 2018 | Apr. 30, 2017 | |
Numerator: | ||||
Net income attributable to HEICO | $ 59,618 | $ 45,686 | $ 124,770 | $ 86,613 |
Denominator: | ||||
Weighted Average Number of Shares Outstanding, Basic | 105,940 | 105,276 | 105,789 | 105,227 |
Effect of dilutive stock options | 3,331 | 3,020 | 3,402 | 2,923 |
Weighted Average Number of Shares Outstanding, Diluted | 109,271 | 108,296 | 109,191 | 108,150 |
Earnings Per Share, Basic | $ 0.56 | $ 0.43 | $ 1.18 | $ 0.82 |
Earnings Per Share, Diluted | $ 0.55 | $ 0.42 | $ 1.14 | $ 0.80 |
Anti-dilutive stock options excluded | 369 | 577 | 492 | 395 |
OPERATING SEGMENTS (Details)
OPERATING SEGMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2018 | Apr. 30, 2017 | Apr. 30, 2018 | Apr. 30, 2017 | |
Segment Reporting Information [Line Items] | ||||
Revenues | $ 430,602 | $ 368,657 | $ 835,012 | $ 712,089 |
Depreciation | 5,724 | 5,274 | 11,352 | 10,518 |
Amortization | 13,341 | 9,979 | 26,737 | 19,983 |
Operating income | 91,565 | 76,542 | 171,125 | 141,092 |
Capital expenditures | 21,880 | 7,116 | 29,457 | 13,538 |
Corporate And Eliminations [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | (5,956) | (4,321) | (11,925) | (7,955) |
Depreciation | 124 | 53 | 186 | 106 |
Amortization | 246 | 179 | 591 | 344 |
Operating income | (8,053) | (7,028) | (17,582) | (12,925) |
Capital expenditures | 15,729 | 98 | 19,266 | 144 |
Flight Support Group [Member] | Operating Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 267,836 | 231,809 | 522,557 | 452,710 |
Depreciation | 3,290 | 3,128 | 6,582 | 6,276 |
Amortization | 4,932 | 4,099 | 9,879 | 8,203 |
Operating income | 51,488 | 44,744 | 97,357 | 86,107 |
Capital expenditures | 3,909 | 4,688 | 6,206 | 8,560 |
Electronic Technologies Group [Member] | Operating Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 168,722 | 141,169 | 324,380 | 267,334 |
Depreciation | 2,310 | 2,093 | 4,584 | 4,136 |
Amortization | 8,163 | 5,701 | 16,267 | 11,436 |
Operating income | 48,130 | 38,826 | 91,350 | 67,910 |
Capital expenditures | $ 2,242 | $ 2,330 | $ 3,985 | $ 4,834 |
OPERATING SEGMENTS (Details 1)
OPERATING SEGMENTS (Details 1) - USD ($) $ in Thousands | Apr. 30, 2018 | Oct. 31, 2017 |
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | $ 2,627,881 | $ 2,512,431 |
Other Primarily Corporate and Intersegment [Member] | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 174,669 | 130,143 |
Flight Support Group [Member] | Operating Segments [Member] | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 1,061,310 | 1,042,925 |
Electronic Technologies Group [Member] | Operating Segments [Member] | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | $ 1,391,902 | $ 1,339,363 |
COMMITMENTS AND CONTINGENCIES50
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Apr. 30, 2018 | Apr. 30, 2017 | |
Schedule of Product Warranties [Line Items] | ||
Balances as of beginning of fiscal year | $ 2,921 | $ 3,351 |
Accruals for warranties | 1,466 | 1,107 |
Acquired warranty liabilities | 300 | |
Warranty claims settled | (1,431) | (1,250) |
Balances as of end of period | $ 3,256 | $ 3,208 |
COMMITMENTS AND CONTINGENCIES51
COMMITMENTS AND CONTINGENCIES (Details Textuals) $ in Millions | Apr. 30, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Guarantor Obligations, Maximum Exposure, Undiscounted | $ 4.3 |