|
|
|
|
|
☒
|
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
|
|
For the fiscal year ended October 31, 2019 or
|
|
|
|
☐
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
|
|
For the transition period from ______ to _______
|
Florida
|
|
65-0341002
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
3000 Taft Street, Hollywood, Florida
|
|
33021
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Title of each class
|
|
Trading Symbol(s)
|
|
Name of each exchange on which registered
|
|
|
|
|
|
Common Stock, $.01 par value per share
|
|
HEI
|
|
New York Stock Exchange
|
Class A Common Stock, $.01 par value per share
|
|
HEI.A
|
|
New York Stock Exchange
|
Common Stock, $.01 par value
|
54,142,746
|
|
shares
|
Class A Common Stock, $.01 par value
|
80,359,982
|
|
shares
|
|
|
|
|
|
|
|
|
Page
|
PART I
|
|||
|
Item 1.
|
||
|
|||
|
Item 1A.
|
||
|
Item 1B.
|
||
|
Item 2.
|
||
|
Item 3.
|
||
|
Item 4.
|
||
|
|
|
|
PART II
|
|||
|
Item 5.
|
||
|
Item 6.
|
||
|
Item 7.
|
||
|
Item 7A.
|
||
|
Item 8.
|
||
|
Item 9.
|
||
|
Item 9A.
|
||
|
Item 9B.
|
||
|
|
|
|
PART III
|
|||
|
Item 10.
|
||
|
Item 11.
|
||
|
Item 12.
|
||
|
Item 13.
|
||
|
Item 14.
|
||
|
|
|
|
PART IV
|
|||
|
Item 15.
|
||
|
Item 16.
|
||
|
|
|
|
SIGNATURES
|
Name
|
|
Age
|
|
Position(s)
|
|
Director
Since
|
Laurans A. Mendelson
|
|
81
|
|
Chairman of the Board; Chief Executive Officer; and Director
|
|
1989
|
Eric A. Mendelson
|
|
54
|
|
Co-President and Director; President and Chief Executive Officer of the HEICO Flight Support Group
|
|
1992
|
Victor H. Mendelson
|
|
52
|
|
Co-President and Director; President and Chief Executive Officer of the HEICO Electronic Technologies Group
|
|
1996
|
Thomas S. Irwin
|
|
73
|
|
Senior Executive Vice President
|
|
—
|
Carlos L. Macau, Jr.
|
|
52
|
|
Executive Vice President - Chief Financial Officer and Treasurer
|
|
—
|
Steven M. Walker
|
|
55
|
|
Chief Accounting Officer and Assistant Treasurer
|
|
—
|
•
|
Fluctuations in currency exchange rates;
|
•
|
Volatility in foreign political, regulatory, and economic environments;
|
•
|
Ability to obtain required export licenses or approvals;
|
•
|
Uncertainty of the ability of foreign customers to finance purchases;
|
•
|
Uncertainties and restrictions concerning the availability of funding credit or guarantees;
|
•
|
Imposition of taxes, export controls, tariffs, embargoes and other trade restrictions; and
|
•
|
Compliance with a variety of international laws, as well as U.S. laws affecting the activities of U.S. companies abroad such as the U.S. Foreign Corrupt Practices Act.
|
•
|
For jet engine and aircraft component replacement parts, we compete with the industry’s leading jet engine and aircraft component OEMs.
|
•
|
For the distribution, overhaul and repair of jet engine and aircraft components and avionics and navigation systems as well as the manufacture of specialty aircraft and defense related parts, we compete with:
|
-
|
major commercial airlines, many of which operate their own maintenance and overhaul units;
|
-
|
OEMs, which manufacture, distribute, repair and overhaul their own and other OEM parts; and
|
-
|
other independent service companies.
|
•
|
For the design and manufacture of various types of electronic, data and microwave, and electro-optical equipment products, we compete in a fragmented marketplace with a number of companies, some of which are well capitalized.
|
•
|
We may not be able to successfully protect the proprietary interests we have in various aircraft parts, electronic and electro-optical equipment and our repair processes;
|
•
|
As OEMs continue to develop and improve jet engines and aircraft components, we may not be able to re-design and manufacture replacement parts that perform as well as those offered by OEMs or we may not be able to profitably sell our replacement parts at lower prices than the OEMs;
|
•
|
We may need to expend significant capital to:
|
-
|
purchase new equipment and machines,
|
-
|
train employees in new methods of production and service, and
|
-
|
fund the research and development of new products; and
|
•
|
Development by our competitors of patents or methodologies that preclude us from the design and manufacture of aircraft replacement parts or electrical and electro-optical equipment could adversely affect our business, financial condition and results of operations.
|
•
|
Availability of suitable acquisition candidates;
|
•
|
Availability of capital;
|
•
|
Diversion of management’s attention;
|
•
|
Effective integration of the operations and personnel of acquired companies;
|
•
|
Potential write downs of acquired intangible assets;
|
•
|
Potential loss of key employees of acquired companies;
|
•
|
Use of a significant portion of our available cash;
|
•
|
Significant dilution to our shareholders for acquisitions made utilizing our securities; and
|
•
|
Consummation of acquisitions on satisfactory terms.
|
•
|
Changes in statutory tax rates in any of the various jurisdictions where we file tax returns;
|
•
|
Changes in available tax credits or tax deductions;
|
•
|
Changes in tax laws or the interpretation of such tax laws including interpretations, amendments and technical corrections of the recently enacted Tax Cuts and Jobs Act;
|
•
|
Changes to the accounting for income taxes in accordance with generally accepted accounting principles;
|
•
|
The amount of net income attributable to noncontrolling interests in our subsidiaries structured as partnerships;
|
•
|
Changes in the mix of earnings in jurisdictions with differing statutory tax rates;
|
•
|
Adjustments to estimated taxes upon finalization of various tax returns;
|
•
|
Resolution of issues arising from tax audits with various tax authorities; and
|
•
|
The reversal of any previously experienced tax-exempt unrealized gains in the cash surrender values of life insurance policies related to the HEICO Corporation Leadership Compensation Plan, a nonqualified deferred compensation plan.
|
|
|
Square Footage
|
|
|
||||
Location
|
|
Leased
|
|
Owned
|
|
Description
|
||
United States facilities (13 states)
|
|
820,000
|
|
|
260,000
|
|
|
Manufacturing, engineering and distribution facilities, and corporate headquarters
|
United States facilities (6 states)
|
|
193,000
|
|
|
127,000
|
|
|
Repair and overhaul facilities
|
International facilities (11 countries)
- China, France, Germany, India, Laos, Netherlands, Singapore, Spain, Thailand, United Arab Emirates and United Kingdom
|
|
129,000
|
|
|
173,000
|
|
|
Manufacturing, engineering and distribution facilities, and sales offices
|
|
|
Square Footage
|
|
|
||||
Location
|
|
Leased
|
|
Owned
|
|
Description
|
||
United States facilities (14 states)
|
|
763,000
|
|
|
414,000
|
|
|
Manufacturing and engineering facilities
|
International facilities (4 countries)
- Canada, France, South Korea and
United Kingdom
|
|
97,000
|
|
|
51,000
|
|
|
Manufacturing and engineering facilities
|
|
|
Square Footage
|
|
|
||||
Location
|
|
Leased
|
|
Owned (1)
|
|
Description
|
||
United States facilities (1 state)
|
|
—
|
|
|
7,000
|
|
|
Administrative offices
|
(1)
|
Represents the square footage of our corporate offices in Miami, Florida. The square footage of our corporate headquarters in Hollywood, Florida is included within Square Footage-Owned of the caption “United States facilities (13 states)” under Flight Support Group.
|
Item 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
|
|
Cumulative Total Return as of October 31,
|
||||||||||||||||||||||
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
||||||||||||
HEICO Common Stock
|
|
|
$100.00
|
|
|
|
$93.22
|
|
|
|
$125.20
|
|
|
|
$210.52
|
|
|
|
$304.59
|
|
|
|
$448.78
|
|
HEICO Class A Common Stock
|
|
100.00
|
|
|
95.76
|
|
|
131.97
|
|
|
209.77
|
|
|
287.68
|
|
|
411.87
|
|
||||||
NYSE Composite Index
|
|
100.00
|
|
|
96.46
|
|
|
96.65
|
|
|
113.79
|
|
|
112.57
|
|
|
121.46
|
|
||||||
Dow Jones U.S. Aerospace Index
|
|
100.00
|
|
|
104.71
|
|
|
111.30
|
|
|
166.38
|
|
|
199.92
|
|
|
220.76
|
|
|
|
Cumulative Total Return as of October 31,
|
||||||||||||||||||||||
|
|
1990
|
|
1991
|
|
1992
|
|
1993
|
|
1994
|
|
1995
|
||||||||||||
HEICO Common Stock
|
|
|
$100.00
|
|
|
|
$141.49
|
|
|
|
$158.35
|
|
|
|
$173.88
|
|
|
|
$123.41
|
|
|
|
$263.25
|
|
NYSE Composite Index
|
|
100.00
|
|
|
130.31
|
|
|
138.76
|
|
|
156.09
|
|
|
155.68
|
|
|
186.32
|
|
||||||
Dow Jones U.S. Aerospace Index
|
|
100.00
|
|
|
130.67
|
|
|
122.00
|
|
|
158.36
|
|
|
176.11
|
|
|
252.00
|
|
|
|
1996
|
|
1997
|
|
1998
|
|
1999
|
|
2000
|
|
2001
|
||||||||||||
HEICO Common Stock
|
|
|
$430.02
|
|
|
|
$1,008.31
|
|
|
|
$1,448.99
|
|
|
|
$1,051.61
|
|
|
|
$809.50
|
|
|
|
$1,045.86
|
|
NYSE Composite Index
|
|
225.37
|
|
|
289.55
|
|
|
326.98
|
|
|
376.40
|
|
|
400.81
|
|
|
328.78
|
|
||||||
Dow Jones U.S. Aerospace Index
|
|
341.65
|
|
|
376.36
|
|
|
378.66
|
|
|
295.99
|
|
|
418.32
|
|
|
333.32
|
|
|
|
2002
|
|
2003
|
|
2004
|
|
2005
|
|
2006
|
|
2007
|
||||||||||||
HEICO Common Stock
|
|
|
$670.39
|
|
|
|
$1,067.42
|
|
|
|
$1,366.57
|
|
|
|
$1,674.40
|
|
|
|
$2,846.48
|
|
|
|
$4,208.54
|
|
NYSE Composite Index
|
|
284.59
|
|
|
339.15
|
|
|
380.91
|
|
|
423.05
|
|
|
499.42
|
|
|
586.87
|
|
||||||
Dow Jones U.S. Aerospace Index
|
|
343.88
|
|
|
393.19
|
|
|
478.49
|
|
|
579.77
|
|
|
757.97
|
|
|
1,000.84
|
|
|
|
2008
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
||||||||||||
HEICO Common Stock
|
|
|
$2,872.01
|
|
|
|
$2,984.13
|
|
|
|
$4,722.20
|
|
|
|
$6,557.88
|
|
|
|
$5,900.20
|
|
|
|
$10,457.14
|
|
NYSE Composite Index
|
|
344.96
|
|
|
383.57
|
|
|
427.61
|
|
|
430.46
|
|
|
467.91
|
|
|
569.69
|
|
||||||
Dow Jones U.S. Aerospace Index
|
|
602.66
|
|
|
678.00
|
|
|
926.75
|
|
|
995.11
|
|
|
1,070.15
|
|
|
1,645.24
|
|
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
||||||||||||
HEICO Common Stock
|
|
|
$11,416.51
|
|
|
|
$10,776.88
|
|
|
|
$14,652.37
|
|
|
|
$23,994.03
|
|
|
|
$33,876.95
|
|
|
|
$49,277.28
|
|
NYSE Composite Index
|
|
617.23
|
|
|
595.37
|
|
|
596.57
|
|
|
702.38
|
|
|
694.81
|
|
|
749.66
|
|
||||||
Dow Jones U.S. Aerospace Index
|
|
1,687.41
|
|
|
1,766.94
|
|
|
1,878.10
|
|
|
2,807.42
|
|
|
3,373.52
|
|
|
3,725.15
|
|
|
Year ended October 31, (1)
|
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
||||||||||
|
(in thousands, except per share data)
|
|
||||||||||||||||||
Operating Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
|
$2,055,647
|
|
|
|
$1,777,721
|
|
|
|
$1,524,813
|
|
|
|
$1,376,258
|
|
|
|
$1,188,648
|
|
|
Gross profit
|
813,840
|
|
|
690,715
|
|
|
574,725
|
|
|
515,492
|
|
|
434,179
|
|
|
|||||
Selling, general and administrative expenses
|
356,743
|
|
|
314,470
|
|
|
268,067
|
|
|
250,147
|
|
|
204,523
|
|
|
|||||
Operating income
|
457,097
|
|
|
376,245
|
|
|
306,658
|
|
|
265,345
|
|
|
229,656
|
|
|
|||||
Interest expense
|
21,695
|
|
|
19,901
|
|
|
9,790
|
|
|
8,272
|
|
|
4,626
|
|
|
|||||
Other income (expense)
|
2,439
|
|
|
(58
|
)
|
|
1,092
|
|
|
(23
|
)
|
|
(66
|
)
|
|
|||||
Net income attributable to HEICO
|
327,896
|
|
(2)
|
259,233
|
|
(3)(4)
|
185,985
|
|
(5)
|
156,192
|
|
|
133,364
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
133,640
|
|
|
132,543
|
|
|
131,703
|
|
|
130,948
|
|
|
130,351
|
|
|
|||||
Diluted
|
137,350
|
|
|
136,696
|
|
|
135,588
|
|
|
133,145
|
|
|
132,444
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Per Share Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income per share attributable to HEICO shareholders:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$2.45
|
|
(2)
|
|
$1.96
|
|
(3)(4)
|
|
$1.41
|
|
(5)
|
|
$1.19
|
|
|
|
$1.02
|
|
|
Diluted
|
2.39
|
|
(2)
|
1.90
|
|
(3)(4)
|
1.37
|
|
(5)
|
1.17
|
|
|
1.01
|
|
|
|||||
Cash dividends per share
|
.140
|
|
|
.116
|
|
|
.097
|
|
|
.082
|
|
|
.072
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance Sheet Data (as of October 31):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$57,001
|
|
|
|
$59,599
|
|
|
|
$52,066
|
|
|
|
$42,955
|
|
|
|
$33,603
|
|
|
Total assets
|
2,969,211
|
|
|
2,653,396
|
|
|
2,512,431
|
|
|
1,998,412
|
|
|
1,700,857
|
|
|
|||||
Total debt (including current portion)
|
561,955
|
|
|
532,470
|
|
|
673,979
|
|
|
458,225
|
|
|
367,598
|
|
|
|||||
Redeemable noncontrolling interests
|
188,264
|
|
|
132,046
|
|
|
131,123
|
|
|
99,512
|
|
|
91,282
|
|
|
|||||
Total shareholders’ equity
|
1,694,660
|
|
|
1,503,008
|
|
|
1,248,292
|
|
|
1,047,705
|
|
|
893,271
|
|
|
(1)
|
Results include the results of acquisitions from each respective effective date. See Note 2, Acquisitions, of the Notes to Consolidated Financial Statements for more information.
|
(2)
|
During fiscal 2019, the Company recognized a $16.5 million discrete tax benefit from stock option exercises, which, net of noncontrolling interests, increased net income attributable to HEICO by $15.0 million, or $.11 per basic and diluted share.
|
(3)
|
During fiscal 2018, the United States ("U.S.") government enacted significant changes to existing tax law resulting in HEICO recording a discrete tax benefit from remeasuring its U.S. federal net deferred tax liabilities that was partially offset by a provisional discrete tax expense related to a one-time transition tax on the unremitted earnings of HEICO's foreign subsidiaries. The net impact of these amounts increased net income attributable to HEICO by $12.1 million, or $.09 per basic and diluted share. See Note 7, Income Taxes, of the Notes to Consolidated Financial Statements for more information.
|
(4)
|
During fiscal 2018, the Company recognized a net benefit from stock option exercises that increased net income attributable to HEICO by $2.1 million, or $.02 per basic and diluted share.
|
(5)
|
During fiscal 2017, we adopted Accounting Standards Update 2016-09, "Improvements to Employee Share-Based Payment Accounting," resulting in the recognition of a $3.1 million discrete income tax benefit and a 1,220,000 increase in our weighted average number of diluted common shares outstanding, which, net of noncontrolling interests, increased net income attributable to HEICO by $2.6 million, or $.02 per basic and $.01 per diluted share.
|
Item 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Designs, Manufactures, Repairs, Overhauls and Distributes Jet Engine and Aircraft Component Replacement Parts. The Flight Support Group designs, manufactures, repairs, overhauls and distributes jet engine and aircraft component replacement parts. The parts and services are approved by the Federal Aviation Administration (“FAA”). The Flight Support Group also manufactures and sells specialty parts as a subcontractor for aerospace and industrial original equipment manufacturers and the United States ("U.S.") government. Additionally, the Flight Support Group is a leading supplier, distributor, and integrator of military aircraft parts and support services primarily to foreign military organizations allied with the U.S. and a leading manufacturer of advanced niche components and complex composite assemblies for commercial aviation, defense and space applications. Further, the Flight Support Group engineers, designs and manufactures thermal insulation blankets and parts as well as removable/reusable insulation systems for aerospace, defense, commercial and industrial applications, manufactures expanded foil mesh for lightning strike protection in fixed and rotary wing aircraft and is a distributor of aviation electrical interconnect products and electromechanical parts.
|
•
|
Designs and Manufactures Electronic, Microwave and Electro-Optical Equipment, High-Speed Interface Products, High Voltage Interconnection Devices and High Voltage Advanced Power Electronics. The Electronic Technologies Group collectively designs, manufactures and sells various types of electronic, data and microwave, and electro-optical products, including power supplies, laser rangefinder receivers, infrared simulation, calibration and testing equipment; power conversion products serving the high-reliability military, space and commercial avionics end-markets; underwater locator beacons used to locate data and voice recorders utilized on aircraft and marine vessels; emergency locator beacons utilized on commercial and military aircraft; electromagnetic interference shielding for commercial and military aircraft operators, electronics companies and telecommunication equipment suppliers; traveling wave tube amplifiers and microwave power modules used in radar, electronic warfare and on-board jamming and countermeasure systems; advanced high-technology interface products that link devices such as telemetry receivers, digital cameras, high resolution scanners, simulation systems
|
|
Year ended October 31,
|
||||||
|
2019
|
|
2018
|
||||
Net sales
|
|
$2,055,647
|
|
|
|
$1,777,721
|
|
Cost of sales
|
1,241,807
|
|
|
1,087,006
|
|
||
Selling, general and administrative expenses
|
356,743
|
|
|
314,470
|
|
||
Total operating costs and expenses
|
1,598,550
|
|
|
1,401,476
|
|
||
Operating income
|
|
$457,097
|
|
|
|
$376,245
|
|
|
|
|
|
||||
Net sales by segment:
|
|
|
|
||||
Flight Support Group
|
|
$1,240,183
|
|
|
|
$1,097,937
|
|
Electronic Technologies Group
|
834,522
|
|
|
701,827
|
|
||
Intersegment sales
|
(19,058
|
)
|
|
(22,043
|
)
|
||
|
|
$2,055,647
|
|
|
|
$1,777,721
|
|
|
|
|
|
||||
Operating income by segment:
|
|
|
|
||||
Flight Support Group
|
|
$242,029
|
|
|
|
$206,623
|
|
Electronic Technologies Group
|
245,743
|
|
|
204,508
|
|
||
Other, primarily corporate
|
(30,675
|
)
|
|
(34,886
|
)
|
||
|
|
$457,097
|
|
|
|
$376,245
|
|
|
|
|
|
||||
Net sales
|
100.0
|
%
|
|
100.0
|
%
|
||
Gross profit
|
39.6
|
%
|
|
38.9
|
%
|
||
Selling, general and administrative expenses
|
17.4
|
%
|
|
17.7
|
%
|
||
Operating income
|
22.2
|
%
|
|
21.2
|
%
|
||
Interest expense
|
1.1
|
%
|
|
1.1
|
%
|
||
Other income (expense)
|
.1
|
%
|
|
—
|
%
|
||
Income tax expense
|
3.8
|
%
|
|
4.0
|
%
|
||
Net income attributable to noncontrolling interests
|
1.5
|
%
|
|
1.5
|
%
|
||
Net income attributable to HEICO
|
16.0
|
%
|
|
14.6
|
%
|
|
As of October 31,
|
||||||
|
2019
|
|
2018
|
||||
Cash and cash equivalents
|
|
$57,001
|
|
|
|
$59,599
|
|
Total debt (including current portion)
|
561,955
|
|
|
532,470
|
|
||
Shareholders’ equity
|
1,694,660
|
|
|
1,503,008
|
|
||
Total capitalization (debt plus equity)
|
2,256,615
|
|
|
2,035,478
|
|
||
Total debt to total capitalization
|
25%
|
|
|
26%
|
|
|
|
|
Payments due by fiscal period
|
||||||||||||||||
|
Total
|
|
2020
|
|
2021 - 2022
|
|
2023 - 2024
|
|
Thereafter
|
||||||||||
Long-term debt obligations (1)
|
|
$553,320
|
|
|
|
$62
|
|
|
|
$129
|
|
|
|
$553,106
|
|
|
|
$23
|
|
Estimated interest payments (1)
|
50,310
|
|
|
16,724
|
|
|
33,358
|
|
|
228
|
|
|
—
|
|
|||||
Capital lease obligations (2)
|
10,962
|
|
|
1,213
|
|
|
2,415
|
|
|
1,738
|
|
|
5,596
|
|
|||||
Operating lease obligations (3)
|
76,947
|
|
|
15,508
|
|
|
29,371
|
|
|
13,256
|
|
|
18,812
|
|
|||||
Purchase obligations (4) (5) (6)
|
21,666
|
|
|
2,711
|
|
|
2,253
|
|
|
16,702
|
|
|
—
|
|
|||||
Other long-term liabilities (7)
|
8,052
|
|
|
1,976
|
|
|
2,448
|
|
|
1,756
|
|
|
1,872
|
|
|||||
Total contractual obligations
|
|
$721,257
|
|
|
|
$38,194
|
|
|
|
$69,974
|
|
|
|
$586,786
|
|
|
|
$26,303
|
|
(1)
|
Estimated interest payments assumes the $553.0 million outstanding balance under our revolving credit facility and related interest rate of 3.0% as of October 31, 2019, will remain constant through the credit facility's maturity date in fiscal 2023. Actual interest payments may vary significantly based on future borrowings, repayments and interest rate fluctuations. See Note 5, Long-Term Debt, of the Notes to Consolidated Financial Statements and "Liquidity and Capital Resources," above for additional information regarding our long-term debt obligations.
|
(2)
|
Inclusive of $2.3 million in interest charges. See Note 5, Long-Term Debt, of the Notes to Consolidated Financial Statements for additional information regarding our capital lease obligations.
|
(3)
|
See Note 16, Commitments and Contingencies – Lease Commitments, of the Notes to Consolidated Financial Statements for additional information regarding our operating lease obligations.
|
(4)
|
Includes contingent consideration aggregating $18.3 million related to a fiscal 2016, 2017 and 2019 acquisition. See Note 8, Fair Value Measurements, of the Notes to Consolidated Financial Statements for additional information.
|
(5)
|
Also includes an aggregate $3.3 million of commitments principally for capital expenditures and inventory. All purchase obligations of inventory and supplies in the ordinary course of business (i.e., with deliveries scheduled within the next year) are excluded from the table.
|
(6)
|
The holders of equity interests in certain of our subsidiaries have rights (“Put Rights”) that may be exercised on varying dates causing us to purchase their equity interests through fiscal 2029. The Put Rights provide that cash consideration be paid for their equity interests (the “Redemption Amount”). As of October 31, 2019, management’s estimate of the aggregate Redemption Amount of all Put Rights that we could be required to pay is approximately $188.3 million, which is reflected within redeemable noncontrolling interests in our Consolidated Balance Sheet. The amounts in the table do not include Put Right obligations as none of the noncontrolling interest holders have exercised their Put Rights as of October 31, 2019. See Note 12, Redeemable Noncontrolling Interests, of the Notes to Consolidated Financial Statements for further information.
|
(7)
|
The amounts in the table do not include liabilities related to the HEICO LCP as they are fully supported by assets held within irrevocable trusts. See Note 3, Selected Financial Statement Information - Other Long-Term Assets and Liabilities, of the Notes to Consolidated Financial Statements for further information about this deferred compensation plan.
|
•
|
Lower demand for commercial air travel or airline fleet changes or airline purchasing decisions, which could cause lower demand for our goods and services;
|
•
|
Product specification costs and requirements, which could cause an increase to our costs to complete contracts;
|
•
|
Governmental and regulatory demands, export policies and restrictions, reductions in defense, space or homeland security spending by U.S. and/or foreign customers or competition from existing and new competitors, which could reduce our sales;
|
•
|
Our ability to introduce new products and services at profitable pricing levels, which could reduce our sales or sales growth;
|
•
|
Product development or manufacturing difficulties, which could increase our product development costs and delay sales;
|
•
|
Our ability to make acquisitions and achieve operating synergies from acquired businesses; customer credit risk; interest, foreign currency exchange and income tax rates; economic conditions within and outside of the aviation, defense, space, medical, telecommunications and electronics industries, which could negatively impact our costs and revenues; and
|
•
|
Defense spending or budget cuts, which could reduce our defense-related revenue.
|
|
|
Page
|
|
|
|
|
||
|
|
|
Consolidated Balance Sheets as of October 31, 2019 and 2018
|
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
•
|
We tested the effectiveness of controls, including those related to evaluating the reasonableness of expected future demand and sales patterns.
|
•
|
We evaluated the reasonableness of management’s assumptions of future demand and sales patterns by performing the following:
|
•
|
Utilized historical inventory usage data to analyze the relationship between the inventory valuation reserve calculated, the inventory on hand, and the sales trends over time.
|
•
|
Evaluated management’s ability to accurately estimate future demand by comparing actual inventory sales to estimates made in prior years.
|
•
|
Compared management’s assumptions to available external market data for certain inventory items.
|
•
|
Evaluated the accuracy and completeness of the valuation reserve by selecting a sample of inventory items and obtaining supporting documentation regarding current and historical sales patterns.
|
•
|
We tested declines in the inventory valuation reserve and evaluated whether such declines were the result of the sale or write off of inventory parts or the result of changes in the significant assumptions used to develop the valuation reserve.
|
|
As of October 31,
|
||||||
|
2019
|
|
2018
|
||||
ASSETS
|
|||||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
|
$57,001
|
|
|
|
$59,599
|
|
Accounts receivable, net
|
274,326
|
|
|
237,286
|
|
||
Contract assets
|
43,132
|
|
|
14,183
|
|
||
Inventories, net
|
420,319
|
|
|
401,553
|
|
||
Prepaid expenses and other current assets
|
18,953
|
|
|
21,187
|
|
||
Total current assets
|
813,731
|
|
|
733,808
|
|
||
|
|
|
|
||||
Property, plant and equipment, net
|
173,345
|
|
|
154,739
|
|
||
Goodwill
|
1,268,703
|
|
|
1,114,832
|
|
||
Intangible assets, net
|
550,693
|
|
|
506,360
|
|
||
Other assets
|
162,739
|
|
|
143,657
|
|
||
Total assets
|
|
$2,969,211
|
|
|
|
$2,653,396
|
|
|
|
|
|
||||
LIABILITIES AND EQUITY
|
|||||||
Current liabilities:
|
|
|
|
||||
Current maturities of long-term debt
|
|
$906
|
|
|
|
$859
|
|
Trade accounts payable
|
106,225
|
|
|
107,219
|
|
||
Accrued expenses and other current liabilities
|
178,957
|
|
|
171,514
|
|
||
Income taxes payable
|
3,050
|
|
|
2,837
|
|
||
Total current liabilities
|
289,138
|
|
|
282,429
|
|
||
|
|
|
|
||||
Long-term debt, net of current maturities
|
561,049
|
|
|
531,611
|
|
||
Deferred income taxes
|
51,496
|
|
|
46,644
|
|
||
Other long-term liabilities
|
184,604
|
|
|
157,658
|
|
||
Total liabilities
|
1,086,287
|
|
|
1,018,342
|
|
||
|
|
|
|
||||
Commitments and contingencies (Note 16)
|
|
|
|
|
|
||
|
|
|
|
||||
Redeemable noncontrolling interests (Note 12)
|
188,264
|
|
|
132,046
|
|
||
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
||||
Preferred Stock, $.01 par value per share; 10,000 shares authorized; none issued
|
—
|
|
|
—
|
|
||
Common Stock, $.01 par value per share; 150,000 shares authorized;
54,143 and 53,355 shares issued and outstanding
|
541
|
|
|
534
|
|
||
Class A Common Stock, $.01 par value per share; 150,000 shares authorized; 80,353 and 79,576 shares issued and outstanding
|
804
|
|
|
796
|
|
||
Capital in excess of par value
|
284,609
|
|
|
320,994
|
|
||
Deferred compensation obligation
|
4,232
|
|
|
3,928
|
|
||
HEICO stock held by irrevocable trust
|
(4,232
|
)
|
|
(3,928
|
)
|
||
Accumulated other comprehensive loss
|
(16,739
|
)
|
|
(15,256
|
)
|
||
Retained earnings
|
1,397,327
|
|
|
1,091,183
|
|
||
Total HEICO shareholders’ equity
|
1,666,542
|
|
|
1,398,251
|
|
||
Noncontrolling interests
|
28,118
|
|
|
104,757
|
|
||
Total shareholders’ equity
|
1,694,660
|
|
|
1,503,008
|
|
||
Total liabilities and equity
|
|
$2,969,211
|
|
|
|
$2,653,396
|
|
|
Year ended October 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
Net sales
|
|
$2,055,647
|
|
|
|
$1,777,721
|
|
|
|
$1,524,813
|
|
|
|
|
|
|
|
||||||
Operating costs and expenses:
|
|
|
|
|
|
||||||
Cost of sales
|
1,241,807
|
|
|
1,087,006
|
|
|
950,088
|
|
|||
Selling, general and administrative expenses
|
356,743
|
|
|
314,470
|
|
|
268,067
|
|
|||
|
|
|
|
|
|
||||||
Total operating costs and expenses
|
1,598,550
|
|
|
1,401,476
|
|
|
1,218,155
|
|
|||
|
|
|
|
|
|
||||||
Operating income
|
457,097
|
|
|
376,245
|
|
|
306,658
|
|
|||
|
|
|
|
|
|
||||||
Interest expense
|
(21,695
|
)
|
|
(19,901
|
)
|
|
(9,790
|
)
|
|||
Other income (expense)
|
2,439
|
|
|
(58
|
)
|
|
1,092
|
|
|||
|
|
|
|
|
|
||||||
Income before income taxes and noncontrolling interests
|
437,841
|
|
|
356,286
|
|
|
297,960
|
|
|||
|
|
|
|
|
|
||||||
Income tax expense
|
78,100
|
|
|
70,600
|
|
|
90,300
|
|
|||
|
|
|
|
|
|
||||||
Net income from consolidated operations
|
359,741
|
|
|
285,686
|
|
|
207,660
|
|
|||
|
|
|
|
|
|
||||||
Less: Net income attributable to noncontrolling interests
|
31,845
|
|
|
26,453
|
|
|
21,675
|
|
|||
|
|
|
|
|
|
||||||
Net income attributable to HEICO
|
|
$327,896
|
|
|
|
$259,233
|
|
|
|
$185,985
|
|
|
|
|
|
|
|
||||||
Net income per share attributable to HEICO shareholders:
|
|
|
|
|
|
||||||
Basic
|
|
$2.45
|
|
|
|
$1.96
|
|
|
|
$1.41
|
|
Diluted
|
|
$2.39
|
|
|
|
$1.90
|
|
|
|
$1.37
|
|
|
|
|
|
|
|
||||||
Weighted average number of common shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
133,640
|
|
|
132,543
|
|
|
131,703
|
|
|||
Diluted
|
137,350
|
|
|
136,696
|
|
|
135,588
|
|
|
Year ended October 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
Net income from consolidated operations
|
|
$359,741
|
|
|
|
$285,686
|
|
|
|
$207,660
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
(844
|
)
|
|
(5,243
|
)
|
|
15,346
|
|
|||
Unrealized (loss) gain on defined benefit pension plan, net of tax
|
(889
|
)
|
|
(97
|
)
|
|
321
|
|
|||
Amortization of unrealized loss on defined benefit pension plan, net of tax
|
25
|
|
|
13
|
|
|
29
|
|
|||
Total other comprehensive (loss) income
|
(1,708
|
)
|
|
(5,327
|
)
|
|
15,696
|
|
|||
Comprehensive income from consolidated operations
|
358,033
|
|
|
280,359
|
|
|
223,356
|
|
|||
Net income attributable to noncontrolling interests
|
31,845
|
|
|
26,453
|
|
|
21,675
|
|
|||
Foreign currency translation adjustments attributable to noncontrolling interests
|
(225
|
)
|
|
(406
|
)
|
|
926
|
|
|||
Comprehensive income attributable to noncontrolling interests
|
31,620
|
|
|
26,047
|
|
|
22,601
|
|
|||
Comprehensive income attributable to HEICO
|
|
$326,413
|
|
|
|
$254,312
|
|
|
|
$200,755
|
|
|
|
|
HEICO Shareholders' Equity
|
|
|
|
|
||||||||||||||||||||||||||||||||
|
Redeemable Noncontrolling Interests
|
|
Common Stock
|
|
Class A Common Stock
|
|
Capital in Excess of Par Value
|
|
Deferred Compensation Obligation
|
|
HEICO Stock Held by Irrevocable Trust
|
|
Accumulated Other Comprehensive Loss
|
|
Retained Earnings
|
|
Noncontrolling Interests
|
|
Total Shareholders' Equity
|
||||||||||||||||||||
Balances as of October 31, 2018
|
|
$132,046
|
|
|
|
$534
|
|
|
|
$796
|
|
|
|
$320,994
|
|
|
|
$3,928
|
|
|
|
($3,928
|
)
|
|
|
($15,256
|
)
|
|
|
$1,091,183
|
|
|
|
$104,757
|
|
|
|
$1,503,008
|
|
Cumulative effect from adoption of ASC 606 (see Note 1)
|
819
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,373
|
|
|
326
|
|
|
13,699
|
|
||||||||||
Comprehensive income
|
18,116
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,483
|
)
|
|
327,896
|
|
|
13,504
|
|
|
339,917
|
|
||||||||||
Cash dividends ($.14 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,691
|
)
|
|
—
|
|
|
(18,691
|
)
|
||||||||||
Issuance of common stock to HEICO Savings and Investment Plan
|
—
|
|
|
—
|
|
|
—
|
|
|
8,666
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,666
|
|
||||||||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
10,334
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,334
|
|
||||||||||
Proceeds from stock option exercises
|
—
|
|
|
12
|
|
|
8
|
|
|
8,527
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,547
|
|
||||||||||
Redemptions of common stock related to stock option exercises
|
—
|
|
|
(5
|
)
|
|
(1
|
)
|
|
(64,008
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(64,014
|
)
|
||||||||||
Distributions to noncontrolling interests
|
(17,847
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(93,022
|
)
|
|
(93,022
|
)
|
||||||||||
Noncontrolling interests assumed related to acquisitions
|
38,696
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,551
|
|
|
2,551
|
|
||||||||||
Adjustments to redemption amount of redeemable noncontrolling interests
|
16,434
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,434
|
)
|
|
—
|
|
|
(16,434
|
)
|
||||||||||
Deferred compensation obligation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
304
|
|
|
(304
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Other
|
—
|
|
|
—
|
|
|
1
|
|
|
96
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
99
|
|
||||||||||
Balances as of October 31, 2019
|
|
$188,264
|
|
|
|
$541
|
|
|
|
$804
|
|
|
|
$284,609
|
|
|
|
$4,232
|
|
|
|
($4,232
|
)
|
|
|
($16,739
|
)
|
|
|
$1,397,327
|
|
|
|
$28,118
|
|
|
|
$1,694,660
|
|
|
|
|
HEICO Shareholders' Equity
|
|
|
|
|
||||||||||||||||||||||||||||||||
|
Redeemable Noncontrolling Interests
|
|
Common Stock
|
|
Class A Common Stock
|
|
Capital in Excess of Par Value
|
|
Deferred Compensation Obligation
|
|
HEICO Stock Held by Irrevocable Trust
|
|
Accumulated Other Comprehensive Loss
|
|
Retained Earnings
|
|
Noncontrolling Interests
|
|
Total Shareholders' Equity
|
||||||||||||||||||||
Balances as of October 31, 2017
|
|
$131,123
|
|
|
|
$338
|
|
|
|
$507
|
|
|
|
$326,544
|
|
|
|
$3,118
|
|
|
|
($3,118
|
)
|
|
|
($10,556
|
)
|
|
|
$844,247
|
|
|
|
$87,212
|
|
|
|
$1,248,292
|
|
Comprehensive income
|
13,070
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,921
|
)
|
|
259,233
|
|
|
12,977
|
|
|
267,289
|
|
||||||||||
Cash dividends ($.116 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,363
|
)
|
|
—
|
|
|
(15,363
|
)
|
||||||||||
Five-for-four common stock splits
|
—
|
|
|
191
|
|
|
286
|
|
|
(477
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(28
|
)
|
|
—
|
|
|
(28
|
)
|
||||||||||
Issuance of common stock to HEICO Savings and Investment Plan
|
—
|
|
|
1
|
|
|
1
|
|
|
7,868
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,870
|
|
||||||||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
9,283
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,283
|
|
||||||||||
Proceeds from stock option exercises
|
—
|
|
|
7
|
|
|
2
|
|
|
4,022
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,031
|
|
||||||||||
Redemptions of common stock related to stock option exercises
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(24,980
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24,983
|
)
|
||||||||||
Noncontrolling interests assumed
related to acquisitions
|
2,491
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,350
|
|
|
5,350
|
|
||||||||||
Distributions to noncontrolling interests
|
(12,005
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,054
|
)
|
|
(1,054
|
)
|
||||||||||
Adjustments to redemption amount of redeemable noncontrolling interests
|
(3,627
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,627
|
|
|
—
|
|
|
3,627
|
|
||||||||||
Deferred compensation obligation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
810
|
|
|
(810
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Other
|
994
|
|
|
—
|
|
|
—
|
|
|
(1,266
|
)
|
|
—
|
|
|
—
|
|
|
221
|
|
|
(533
|
)
|
|
272
|
|
|
(1,306
|
)
|
||||||||||
Balances as of October 31, 2018
|
|
$132,046
|
|
|
|
$534
|
|
|
|
$796
|
|
|
|
$320,994
|
|
|
|
$3,928
|
|
|
|
($3,928
|
)
|
|
|
($15,256
|
)
|
|
|
$1,091,183
|
|
|
|
$104,757
|
|
|
|
$1,503,008
|
|
|
|
|
HEICO Shareholders' Equity
|
|
|
|
|
||||||||||||||||||||||||||||||||
|
Redeemable Noncontrolling Interests
|
|
Common Stock
|
|
Class A Common Stock
|
|
Capital in Excess of Par Value
|
|
Deferred Compensation Obligation
|
|
HEICO Stock Held by Irrevocable Trust
|
|
Accumulated Other Comprehensive Loss
|
|
Retained Earnings
|
|
Noncontrolling Interests
|
|
Total Shareholders' Equity
|
||||||||||||||||||||
Balances as of October 31, 2016
|
|
$99,512
|
|
|
|
$270
|
|
|
|
$403
|
|
|
|
$306,328
|
|
|
|
$2,460
|
|
|
|
($2,460
|
)
|
|
|
($25,326
|
)
|
|
|
$681,704
|
|
|
|
$84,326
|
|
|
|
$1,047,705
|
|
Comprehensive income
|
11,637
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,770
|
|
|
185,985
|
|
|
10,964
|
|
|
211,719
|
|
||||||||||
Cash dividends ($.097 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,807
|
)
|
|
—
|
|
|
(12,807
|
)
|
||||||||||
Five-for-four common stock split
|
—
|
|
|
68
|
|
|
101
|
|
|
(169
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23
|
)
|
|
—
|
|
|
(23
|
)
|
||||||||||
Issuance of common stock to HEICO Savings and Investment Plan
|
—
|
|
|
—
|
|
|
—
|
|
|
7,517
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,517
|
|
||||||||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
7,415
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,415
|
|
||||||||||
Proceeds from stock option exercises
|
—
|
|
|
—
|
|
|
3
|
|
|
5,656
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,659
|
|
||||||||||
Noncontrolling interests assumed
related to acquisitions
|
23,339
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Distributions to noncontrolling interests
|
(10,323
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,078
|
)
|
|
(8,078
|
)
|
||||||||||
Acquisitions of noncontrolling interests
|
(3,848
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
194
|
|
|
—
|
|
|
194
|
|
||||||||||
Adjustments to redemption amount of redeemable noncontrolling interests
|
10,806
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,806
|
)
|
|
—
|
|
|
(10,806
|
)
|
||||||||||
Deferred compensation obligation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
658
|
|
|
(658
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
(203
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(203
|
)
|
||||||||||
Balances as of October 31, 2017
|
|
$131,123
|
|
|
|
$338
|
|
|
|
$507
|
|
|
|
$326,544
|
|
|
|
$3,118
|
|
|
|
($3,118
|
)
|
|
|
($10,556
|
)
|
|
|
$844,247
|
|
|
|
$87,212
|
|
|
|
$1,248,292
|
|
|
Year ended October 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Operating Activities:
|
|
|
|
|
|
||||||
Net income from consolidated operations
|
|
$359,741
|
|
|
|
$285,686
|
|
|
|
$207,660
|
|
Adjustments to reconcile net income from consolidated operations
to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
83,497
|
|
|
77,191
|
|
|
64,823
|
|
|||
Share-based compensation expense
|
10,334
|
|
|
9,283
|
|
|
7,415
|
|
|||
Employer contributions to HEICO Savings and Investment Plan
|
9,528
|
|
|
8,019
|
|
|
7,768
|
|
|||
Increase (decrease) in accrued contingent consideration, net
|
2,630
|
|
|
(1,365
|
)
|
|
1,100
|
|
|||
Deferred income tax benefit
|
(6,392
|
)
|
|
(12,977
|
)
|
|
(11,096
|
)
|
|||
Payment of contingent consideration
|
(3,105
|
)
|
|
—
|
|
|
—
|
|
|||
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
|
||||||
(Increase) decrease in accounts receivable
|
(28,976
|
)
|
|
(23,763
|
)
|
|
7,384
|
|
|||
Decrease (increase) in contract assets
|
11,583
|
|
|
(4,806
|
)
|
|
(4,538
|
)
|
|||
Increase in inventories
|
(30,077
|
)
|
|
(49,455
|
)
|
|
(21,204
|
)
|
|||
Decrease in prepaid expenses and other current assets
|
609
|
|
|
401
|
|
|
134
|
|
|||
(Decrease) increase in trade accounts payable
|
(3,851
|
)
|
|
17,403
|
|
|
6,386
|
|
|||
Increase in accrued expenses and other current liabilities
|
17,151
|
|
|
22,121
|
|
|
1,794
|
|
|||
Increase (decrease) in income taxes payable
|
1,296
|
|
|
(12,530
|
)
|
|
6,071
|
|
|||
Net changes in other long-term liabilities and assets related to HEICO Leadership Compensation Plan
|
12,920
|
|
|
11,610
|
|
|
12,841
|
|
|||
Other
|
490
|
|
|
1,669
|
|
|
1,747
|
|
|||
Net cash provided by operating activities
|
437,378
|
|
|
328,487
|
|
|
288,285
|
|
|||
|
|
|
|
|
|
||||||
Investing Activities:
|
|
|
|
|
|
||||||
Acquisitions, net of cash acquired
|
(240,841
|
)
|
|
(59,775
|
)
|
|
(418,265
|
)
|
|||
Capital expenditures
|
(28,938
|
)
|
|
(41,871
|
)
|
|
(25,998
|
)
|
|||
Investments related to HEICO Leadership Compensation Plan, net
|
(13,701
|
)
|
|
(11,500
|
)
|
|
(13,400
|
)
|
|||
Other
|
2,834
|
|
|
(365
|
)
|
|
(552
|
)
|
|||
Net cash used in investing activities
|
(280,646
|
)
|
|
(113,511
|
)
|
|
(458,215
|
)
|
|||
|
|
|
|
|
|
||||||
Financing Activities:
|
|
|
|
|
|
||||||
Borrowings on revolving credit facility
|
313,000
|
|
|
56,000
|
|
|
404,000
|
|
|||
Payments on revolving credit facility
|
(283,000
|
)
|
|
(204,000
|
)
|
|
(190,877
|
)
|
|||
Distributions to noncontrolling interests
|
(110,869
|
)
|
|
(13,059
|
)
|
|
(18,401
|
)
|
|||
Redemptions of common stock related to stock option exercises
|
(64,014
|
)
|
|
(24,983
|
)
|
|
(203
|
)
|
|||
Cash dividends paid
|
(18,691
|
)
|
|
(15,363
|
)
|
|
(12,807
|
)
|
|||
Payment of contingent consideration
|
(4,073
|
)
|
|
(5,425
|
)
|
|
(7,039
|
)
|
|||
Revolving credit facility issuance costs
|
—
|
|
|
(4,067
|
)
|
|
(270
|
)
|
|||
Acquisitions of noncontrolling interests
|
—
|
|
|
—
|
|
|
(3,848
|
)
|
|||
Proceeds from stock option exercises
|
8,547
|
|
|
4,031
|
|
|
5,659
|
|
|||
Other
|
(620
|
)
|
|
(669
|
)
|
|
(342
|
)
|
|||
Net cash (used in) provided by financing activities
|
(159,720
|
)
|
|
(207,535
|
)
|
|
175,872
|
|
|||
|
|
|
|
|
|
||||||
Effect of exchange rate changes on cash
|
390
|
|
|
92
|
|
|
3,169
|
|
|||
|
|
|
|
|
|
||||||
Net (decrease) increase in cash and cash equivalents
|
(2,598
|
)
|
|
7,533
|
|
|
9,111
|
|
|||
Cash and cash equivalents at beginning of year
|
59,599
|
|
|
52,066
|
|
|
42,955
|
|
|||
Cash and cash equivalents at end of year
|
|
$57,001
|
|
|
|
$59,599
|
|
|
|
$52,066
|
|
|
Buildings and improvements
|
10
|
to
|
40
|
years
|
|
|
Machinery and equipment
|
3
|
to
|
10
|
years
|
|
|
Leasehold improvements
|
2
|
to
|
20
|
years
|
|
|
Tooling
|
2
|
to
|
5
|
years
|
|
|
Customer relationships
|
4
|
to
|
15
|
years
|
|
|
Intellectual property
|
4
|
to
|
22
|
years
|
|
|
Licenses
|
10
|
to
|
11
|
years
|
|
|
Patents
|
5
|
to
|
20
|
years
|
|
|
Trade names
|
8
|
to
|
15
|
years
|
|
|
As of October 31,
|
||||||
|
2019
|
|
2018
|
||||
Fair value of plan assets
|
|
$11,311
|
|
|
|
$10,379
|
|
Projected benefit obligation
|
13,943
|
|
|
12,890
|
|
||
Funded status
|
|
($2,632
|
)
|
|
|
($2,511
|
)
|
|
As Reported
|
|
Impact of
|
|
As Adjusted
|
||||||
|
Under ASC 605
|
|
ASC 606
|
|
Under ASC 606
|
||||||
|
October 31, 2018
|
|
Adoption
|
|
November 1, 2018
|
||||||
Assets
|
|
|
|
|
|
||||||
Contract assets
|
|
$14,183
|
|
|
|
$40,089
|
|
|
|
$54,272
|
|
Inventories, net
|
401,553
|
|
|
(29,412
|
)
|
|
372,141
|
|
|||
Prepaid expenses and other current assets
|
21,187
|
|
|
(489
|
)
|
|
20,698
|
|
|||
|
|
|
|
|
|
||||||
Liabilities
|
|
|
|
|
|
||||||
Accrued expenses and other current
liabilities
|
|
$171,514
|
|
|
|
($8,588
|
)
|
|
|
$162,926
|
|
Deferred income taxes
|
46,644
|
|
|
4,258
|
|
|
50,902
|
|
|||
|
|
|
|
|
|
||||||
Redeemable noncontrolling interests
|
|
$132,046
|
|
|
|
$819
|
|
|
|
$132,865
|
|
|
|
|
|
|
|
||||||
Shareholders' equity
|
|
|
|
|
|
||||||
Retained earnings
|
|
$1,091,183
|
|
|
|
$13,373
|
|
|
|
$1,104,556
|
|
Noncontrolling interests
|
104,757
|
|
|
326
|
|
|
105,083
|
|
|
As of October 31, 2019
|
||||||||||
|
As Reported
|
|
Effect of
|
|
As Adjusted
|
||||||
|
Under ASC 606
|
|
ASC 606
|
|
Under ASC 605
|
||||||
Assets
|
|
|
|
|
|
||||||
Contract assets
|
|
$43,132
|
|
|
|
($39,638
|
)
|
|
|
$3,494
|
|
Inventories, net
|
420,319
|
|
|
28,079
|
|
|
448,398
|
|
|||
Prepaid expenses and other current assets
|
18,953
|
|
|
116
|
|
|
19,069
|
|
|||
|
|
|
|
|
|
||||||
Liabilities
|
|
|
|
|
|
||||||
Accrued expenses and other current
liabilities
|
|
$178,957
|
|
|
|
$6,144
|
|
|
|
$185,101
|
|
Deferred income taxes
|
51,496
|
|
|
(3,978
|
)
|
|
47,518
|
|
|||
|
|
|
|
|
|
||||||
Redeemable noncontrolling interests
|
|
$188,264
|
|
|
|
$—
|
|
|
|
$188,264
|
|
|
|
|
|
|
|
||||||
Shareholders' equity
|
|
|
|
|
|
||||||
Retained earnings
|
|
$1,397,327
|
|
|
|
($13,261
|
)
|
|
|
$1,384,066
|
|
Noncontrolling interests
|
28,118
|
|
|
(348
|
)
|
|
27,770
|
|
Cash paid
|
|
$317,500
|
|
Less: cash acquired
|
(868
|
)
|
|
Cash paid, net
|
316,632
|
|
|
Contingent consideration
|
13,797
|
|
|
Additional purchase consideration
|
544
|
|
|
Total consideration
|
|
$330,973
|
|
|
Year ended
|
||
|
October 31, 2017
|
||
Net sales
|
|
$1,582,653
|
|
Net income from consolidated operations
|
|
$220,419
|
|
Net income attributable to HEICO
|
|
$198,744
|
|
Net income per share attributable to HEICO shareholders:
|
|
||
Basic
|
|
$1.51
|
|
Diluted
|
|
$1.47
|
|
|
Year ended October 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Cash paid
|
|
$243,550
|
|
|
|
$61,931
|
|
|
|
$109,346
|
|
Less: cash acquired
|
(2,466
|
)
|
|
(4,000
|
)
|
|
(7,713
|
)
|
|||
Cash paid, net
|
241,084
|
|
|
57,931
|
|
|
101,633
|
|
|||
Contingent consideration
|
2,107
|
|
|
—
|
|
|
—
|
|
|||
Fair value of existing equity interest
|
1,417
|
|
|
—
|
|
|
—
|
|
|||
Additional purchase consideration
|
—
|
|
|
(243
|
)
|
|
1,300
|
|
|||
Total consideration
|
|
$244,608
|
|
|
|
$57,688
|
|
|
|
$102,933
|
|
|
Year ended October 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Assets acquired:
|
|
|
|
|
|
||||||
Goodwill
|
|
$156,177
|
|
|
|
$38,359
|
|
|
|
$49,932
|
|
Customer relationships
|
47,553
|
|
|
11,620
|
|
|
29,500
|
|
|||
Intellectual property
|
31,459
|
|
|
6,970
|
|
|
1,950
|
|
|||
Trade names
|
19,216
|
|
|
760
|
|
|
16,750
|
|
|||
Property, plant and equipment
|
18,013
|
|
|
1,777
|
|
|
4,522
|
|
|||
Inventories
|
17,676
|
|
|
6,307
|
|
|
28,410
|
|
|||
Accounts receivable
|
8,673
|
|
|
1,480
|
|
|
15,165
|
|
|||
Other assets (including contract assets)
|
907
|
|
|
126
|
|
|
982
|
|
|||
Total assets acquired, excluding cash
|
299,674
|
|
|
67,399
|
|
|
147,211
|
|
|||
|
|
|
|
|
|
||||||
Liabilities assumed:
|
|
|
|
|
|
||||||
Deferred income taxes
|
7,455
|
|
|
—
|
|
|
5,432
|
|
|||
Accrued expenses
|
2,937
|
|
|
1,522
|
|
|
6,054
|
|
|||
Accounts payable
|
2,879
|
|
|
671
|
|
|
7,696
|
|
|||
Other liabilities
|
548
|
|
|
—
|
|
|
1,434
|
|
|||
Total liabilities assumed
|
13,819
|
|
|
2,193
|
|
|
20,616
|
|
|||
|
|
|
|
|
|
||||||
Noncontrolling interests in consolidated subsidiaries
|
41,247
|
|
|
7,518
|
|
|
23,662
|
|
|||
|
|
|
|
|
|
||||||
Net assets acquired, excluding cash
|
|
$244,608
|
|
|
|
$57,688
|
|
|
|
$102,933
|
|
|
Year ended October 31,
|
||||
|
2019
|
|
2018
|
|
2017
|
Customer relationships
|
11
|
|
7
|
|
12
|
Intellectual property
|
15
|
|
10
|
|
13
|
|
|
As of October 31,
|
||||||
(in thousands)
|
|
2019
|
|
2018
|
||||
Accounts receivable
|
|
|
$277,992
|
|
|
|
$240,544
|
|
Less: Allowance for doubtful accounts
|
|
(3,666
|
)
|
|
(3,258
|
)
|
||
Accounts receivable, net
|
|
|
$274,326
|
|
|
|
$237,286
|
|
|
|
As of October 31,
|
||||||
(in thousands)
|
|
2019
|
|
2018
|
||||
Finished products
|
|
|
$199,880
|
|
|
|
$192,758
|
|
Work in process
|
|
32,548
|
|
|
49,315
|
|
||
Materials, parts, assemblies and supplies
|
|
187,891
|
|
|
158,039
|
|
||
Contracts in process
|
|
—
|
|
|
1,649
|
|
||
Less: Billings to date
|
|
—
|
|
|
(208
|
)
|
||
Inventories, net of valuation reserves
|
|
|
$420,319
|
|
|
|
$401,553
|
|
|
|
As of October 31,
|
||||||
(in thousands)
|
|
2019
|
|
2018
|
||||
Land
|
|
|
$6,820
|
|
|
|
$5,864
|
|
Buildings and improvements
|
|
116,997
|
|
|
101,424
|
|
||
Machinery, equipment and tooling
|
|
253,127
|
|
|
230,108
|
|
||
Construction in progress
|
|
8,382
|
|
|
5,044
|
|
||
|
|
385,326
|
|
|
342,440
|
|
||
Less: Accumulated depreciation and amortization
|
|
(211,981
|
)
|
|
(187,701
|
)
|
||
Property, plant and equipment, net
|
|
|
$173,345
|
|
|
|
$154,739
|
|
|
|
As of October 31,
|
||||||
(in thousands)
|
|
2019
|
|
2018
|
||||
Accrued employee compensation and related payroll taxes
|
|
|
$112,602
|
|
|
|
$97,048
|
|
Contract liabilities
|
|
23,809
|
|
|
28,262
|
|
||
Accrued customer rebates and credits
|
|
17,978
|
|
|
16,861
|
|
||
Contingent consideration and other accrued purchase consideration
|
|
497
|
|
|
6,138
|
|
||
Other
|
|
24,071
|
|
|
23,205
|
|
||
Accrued expenses and other current liabilities
|
|
|
$178,957
|
|
|
|
$171,514
|
|
|
Year ended October 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
R&D expenses
|
|
$66,630
|
|
|
|
$57,450
|
|
|
|
$46,473
|
|
|
Foreign Currency Translation
|
|
Defined Benefit Pension Plan
|
|
Accumulated
Other Comprehensive
Loss
|
||||||
Balances as of October 31, 2017
|
|
($9,533
|
)
|
|
|
($1,023
|
)
|
|
|
($10,556
|
)
|
Unrealized (loss) gain
|
(4,837
|
)
|
|
124
|
|
|
(4,713
|
)
|
|||
Amortization of unrealized loss
|
—
|
|
|
13
|
|
|
13
|
|
|||
Balances as of October 31, 2018
|
(14,370
|
)
|
|
(886
|
)
|
|
(15,256
|
)
|
|||
Unrealized loss
|
(619
|
)
|
|
(889
|
)
|
|
(1,508
|
)
|
|||
Amortization of unrealized loss
|
—
|
|
|
25
|
|
|
25
|
|
|||
Balances as of October 31, 2019
|
|
($14,989
|
)
|
|
|
($1,750
|
)
|
|
|
($16,739
|
)
|
|
Segment
|
|
Consolidated
|
||||||||
|
FSG
|
|
ETG
|
|
Totals
|
||||||
Balances as of October 31, 2017
|
|
$388,606
|
|
|
|
$692,700
|
|
|
|
$1,081,306
|
|
Goodwill acquired
|
10,586
|
|
|
27,734
|
|
|
38,320
|
|
|||
Adjustments to goodwill
|
972
|
|
|
(3,003
|
)
|
|
(2,031
|
)
|
|||
Foreign currency translation adjustments
|
(1,470
|
)
|
|
(1,293
|
)
|
|
(2,763
|
)
|
|||
Balances as of October 31, 2018
|
398,694
|
|
|
716,138
|
|
|
1,114,832
|
|
|||
Goodwill acquired
|
12,891
|
|
|
143,286
|
|
|
156,177
|
|
|||
Foreign currency translation adjustments
|
(1,580
|
)
|
|
(765
|
)
|
|
(2,345
|
)
|
|||
Adjustments to goodwill
|
39
|
|
|
—
|
|
|
39
|
|
|||
Balances as of October 31, 2019
|
|
$410,044
|
|
|
|
$858,659
|
|
|
|
$1,268,703
|
|
|
As of October 31, 2019
|
|
As of October 31, 2018
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
||||||||||||
Amortizing Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer relationships
|
|
$411,076
|
|
|
|
($162,722
|
)
|
|
|
$248,354
|
|
|
|
$373,946
|
|
|
|
($135,359
|
)
|
|
|
$238,587
|
|
Intellectual property
|
216,359
|
|
|
(70,169
|
)
|
|
146,190
|
|
|
185,983
|
|
|
(56,055
|
)
|
|
129,928
|
|
||||||
Licenses
|
6,559
|
|
|
(4,102
|
)
|
|
2,457
|
|
|
6,559
|
|
|
(3,522
|
)
|
|
3,037
|
|
||||||
Patents
|
986
|
|
|
(666
|
)
|
|
320
|
|
|
927
|
|
|
(609
|
)
|
|
318
|
|
||||||
Non-compete agreements
|
813
|
|
|
(813
|
)
|
|
—
|
|
|
814
|
|
|
(814
|
)
|
|
—
|
|
||||||
Trade names
|
450
|
|
|
(180
|
)
|
|
270
|
|
|
466
|
|
|
(157
|
)
|
|
309
|
|
||||||
|
636,243
|
|
|
(238,652
|
)
|
|
397,591
|
|
|
568,695
|
|
|
(196,516
|
)
|
|
372,179
|
|
||||||
Non-Amortizing Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Trade names
|
153,102
|
|
|
—
|
|
|
153,102
|
|
|
134,181
|
|
|
—
|
|
|
134,181
|
|
||||||
|
|
$789,345
|
|
|
|
($238,652
|
)
|
|
|
$550,693
|
|
|
|
$702,876
|
|
|
|
($196,516
|
)
|
|
|
$506,360
|
|
|
As of October 31,
|
||||||
|
2019
|
|
2018
|
||||
Borrowings under revolving credit facility
|
|
$553,000
|
|
|
|
$523,000
|
|
Capital leases and note payable
|
8,955
|
|
|
9,470
|
|
||
|
561,955
|
|
|
532,470
|
|
||
Less: Current maturities of long-term debt
|
(906
|
)
|
|
(859
|
)
|
||
|
|
$561,049
|
|
|
|
$531,611
|
|
Year ending October 31,
|
|
||
2020
|
|
$1,213
|
|
2021
|
1,212
|
|
|
2022
|
1,203
|
|
|
2023
|
906
|
|
|
2024
|
832
|
|
|
Thereafter
|
5,596
|
|
|
Total minimum lease payments
|
10,962
|
|
|
Less: amount representing interest
|
(2,327
|
)
|
|
Present value of minimum lease payments
|
|
$8,635
|
|
•
|
The majority of the Company’s performance obligations related to customer contracts are satisfied within one year. As such, the Company has elected to disclose remaining performance obligations only for contracts with an original duration of greater than one year.
|
•
|
The Company has elected to record all shipping and handling activities as fulfillment activities. When revenue is recognized in advance of incurring shipping and handling costs, the costs related to the shipping and handling activities are accrued.
|
•
|
For certain contracts with similar characteristics and for which revenue is recognized using an over-time model, the Company uses a portfolio approach to estimate the amount of revenue to recognize. For each portfolio of contracts, the respective work in process and/or finished goods inventory balances are identified and the portfolio-specific margin is applied to estimate the pro rata portion of the transaction price to recognize in relation to the costs incurred. This approach is utilized only when the resulting revenue recognition is not expected to be materially different than if the accounting was applied to the individual contracts.
|
•
|
The Company does not adjust the amount of revenue to be recognized under a customer contract for the effects of the time value of money when the timing difference between receipt of payment and recognition of revenue for satisfaction of the related performance obligation is less than one year.
|
•
|
Sales commissions and any other costs of obtaining a customer contract with a duration of one year or less are expensed as incurred.
|
|
October 31, 2019
|
|
November 1, 2018
|
|
Change
|
||||||
|
|
|
|
|
|
||||||
Contract assets
|
|
$43,132
|
|
|
|
$54,272
|
|
|
|
($11,140
|
)
|
Contract liabilities
|
23,809
|
|
|
19,674
|
|
|
4,135
|
|
|||
Net contract assets
|
|
$19,323
|
|
|
|
$34,598
|
|
|
|
($15,275
|
)
|
|
Year Ended October 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Flight Support Group:
|
|
|
|
|
|
||||||
Aftermarket replacement parts (1)
|
|
$678,001
|
|
|
|
$582,562
|
|
|
|
$489,644
|
|
Repair and overhaul parts and services (2)
|
299,323
|
|
|
286,454
|
|
|
270,482
|
|
|||
Specialty products (3)
|
262,859
|
|
|
228,921
|
|
|
207,414
|
|
|||
Total net sales
|
1,240,183
|
|
|
1,097,937
|
|
|
967,540
|
|
|||
|
|
|
|
|
|
||||||
Electronic Technologies Group:
|
|
|
|
|
|
||||||
Electronic component parts for defense,
space and aerospace equipment (4)
|
633,685
|
|
|
547,088
|
|
|
420,991
|
|
|||
Electronic component parts for equipment
in various other industries (5)
|
200,837
|
|
|
154,739
|
|
|
153,270
|
|
|||
Total net sales
|
834,522
|
|
|
701,827
|
|
|
574,261
|
|
|||
|
|
|
|
|
|
||||||
Intersegment sales
|
(19,058
|
)
|
|
(22,043
|
)
|
|
(16,988
|
)
|
|||
|
|
|
|
|
|
||||||
Total consolidated net sales
|
|
$2,055,647
|
|
|
|
$1,777,721
|
|
|
|
$1,524,813
|
|
|
|
|
|
|
|
(1)
|
Includes various jet engine and aircraft component replacement parts.
|
(2)
|
Includes primarily the sale of parts consumed in various repair and overhaul services on selected jet engine and aircraft components, avionics, instruments, composites and flight surfaces of commercial and military aircraft.
|
(3)
|
Includes primarily the sale of specialty components such as thermal insulation blankets, renewable/reusable insulation systems, advanced niche components, complex composite assemblies, and expanded foil mesh.
|
(4)
|
Includes various component parts such as electro-optical infrared simulation and test equipment, electro-optical laser products, electro-optical, microwave and other power equipment, high-speed interface products, power conversion products, underwater locator beacons, emergency locator transmission beacons, traveling wave tube amplifiers, microwave power modules, three-dimensional microelectronic and stacked memory products, crashworthy and ballistically self-sealing auxiliary fuel systems, radio frequency (RF) and microwave amplifiers, transmitters and receivers, high performance communications and electronic intercept receivers and tuners, high performance active antenna systems, and technical surveillance countermeasures equipment.
|
(5)
|
Includes various component parts such as electromagnetic and radio interference shielding, high voltage interconnection devices, high voltage advanced power electronics, harsh environment connectivity products, custom molded cable assemblies, and silicone material for a variety of demanding applications.
|
|
Year ended October 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Flight Support Group:
|
|
|
|
|
|
||||||
Aerospace
|
|
$1,004,088
|
|
|
|
$890,059
|
|
|
|
$781,344
|
|
Defense and Space
|
190,076
|
|
|
163,330
|
|
|
146,708
|
|
|||
Other (1)
|
46,019
|
|
|
44,548
|
|
|
39,488
|
|
|||
Total net sales
|
1,240,183
|
|
|
1,097,937
|
|
|
967,540
|
|
|||
|
|
|
|
|
|
||||||
Electronic Technologies Group:
|
|
|
|
|
|
||||||
Defense and Space
|
531,029
|
|
|
452,714
|
|
|
368,234
|
|
|||
Other (2)
|
217,889
|
|
|
177,878
|
|
|
157,195
|
|
|||
Aerospace
|
85,604
|
|
|
71,235
|
|
|
48,832
|
|
|||
Total net sales
|
834,522
|
|
|
701,827
|
|
|
574,261
|
|
|||
|
|
|
|
|
|
||||||
Other, primarily corporate and intersegment
|
(19,058
|
)
|
|
(22,043
|
)
|
|
(16,988
|
)
|
|||
|
|
|
|
|
|
||||||
Total consolidated net sales
|
|
$2,055,647
|
|
|
|
$1,777,721
|
|
|
|
$1,524,813
|
|
|
|
|
|
|
|
(1)
|
Principally industrial products.
|
(2)
|
Principally other electronics and medical products.
|
|
Year ended October 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Domestic
|
|
$386,584
|
|
|
|
$309,123
|
|
|
|
$264,420
|
|
Foreign
|
51,257
|
|
|
47,163
|
|
|
33,540
|
|
|||
Income before taxes and noncontrolling interests
|
|
$437,841
|
|
|
|
$356,286
|
|
|
|
$297,960
|
|
|
Year ended October 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
|
$56,670
|
|
|
|
$61,548
|
|
|
|
$85,047
|
|
State
|
12,795
|
|
|
9,420
|
|
|
6,820
|
|
|||
Foreign
|
15,027
|
|
|
12,608
|
|
|
9,529
|
|
|||
|
84,492
|
|
|
83,576
|
|
|
101,396
|
|
|||
Deferred:
|
|
|
|
|
|
|
|
|
|||
Federal
|
(3,140
|
)
|
|
(13,115
|
)
|
|
(9,661
|
)
|
|||
State
|
(1,263
|
)
|
|
1,578
|
|
|
(499
|
)
|
|||
Foreign
|
(1,989
|
)
|
|
(1,439
|
)
|
|
(936
|
)
|
|||
|
(6,392
|
)
|
|
(12,976
|
)
|
|
(11,096
|
)
|
|||
Total income tax expense
|
|
$78,100
|
|
|
|
$70,600
|
|
|
|
$90,300
|
|
|
Year ended October 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Federal statutory income tax rate (blended rate in fiscal 2018)
|
21.0
|
%
|
|
23.3
|
%
|
|
35.0
|
%
|
State taxes, net of federal income tax benefit
|
3.0
|
%
|
|
2.9
|
%
|
|
1.9
|
%
|
Tax benefit related to stock option exercises
|
(3.8
|
%)
|
|
(.5
|
%)
|
|
(1.0
|
%)
|
Discrete net tax benefit related to Tax Act
|
—
|
%
|
|
(3.4
|
%)
|
|
—
|
%
|
Research and development tax credits
|
(1.7
|
%)
|
|
(2.0
|
%)
|
|
(1.8
|
%)
|
Foreign derived intangible income deduction
|
(1.4
|
%)
|
|
—
|
%
|
|
—
|
%
|
Tax-exempt (gains) losses on corporate-owned life insurance policies
|
(.6
|
%)
|
|
.1
|
%
|
|
(1.8
|
%)
|
Nondeductible compensation
|
.8
|
%
|
|
.2
|
%
|
|
—
|
%
|
Domestic production activities tax deduction
|
—
|
%
|
|
(.8
|
%)
|
|
(1.1
|
%)
|
Other, net
|
.5
|
%
|
|
—
|
%
|
|
(.9
|
%)
|
Effective tax rate
|
17.8
|
%
|
|
19.8
|
%
|
|
30.3
|
%
|
|
As of October 31,
|
||||||
|
2019
|
|
2018
|
||||
Deferred tax assets:
|
|
|
|
||||
Deferred compensation liability
|
|
$35,437
|
|
|
|
$31,152
|
|
Inventories
|
23,858
|
|
|
22,204
|
|
||
Share-based compensation
|
10,206
|
|
|
9,811
|
|
||
Bonus accrual
|
6,463
|
|
|
4,474
|
|
||
Customer rebates accrual
|
2,324
|
|
|
1,526
|
|
||
Vacation accrual
|
1,452
|
|
|
1,456
|
|
||
Other
|
8,806
|
|
|
7,152
|
|
||
Total deferred tax assets
|
88,546
|
|
|
77,775
|
|
||
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
||||
Goodwill and other intangible assets
|
(122,075
|
)
|
|
(112,533
|
)
|
||
Property, plant and equipment
|
(14,137
|
)
|
|
(11,615
|
)
|
||
Adoption of ASC 606
|
(3,277
|
)
|
|
—
|
|
||
Other
|
(553
|
)
|
|
(271
|
)
|
||
Total deferred tax liabilities
|
(140,042
|
)
|
|
(124,419
|
)
|
||
Net deferred tax liability
|
|
($51,496
|
)
|
|
|
($46,644
|
)
|
|
Year ended October 31,
|
||||||
|
2019
|
|
2018
|
||||
Balances as of beginning of year
|
|
$2,100
|
|
|
|
$2,040
|
|
Increases related to current year tax positions
|
653
|
|
|
591
|
|
||
Increases related to prior year tax positions
|
45
|
|
|
20
|
|
||
Settlements
|
—
|
|
|
(394
|
)
|
||
Lapses of statutes of limitations
|
(128
|
)
|
|
(157
|
)
|
||
Balances as of end of year
|
|
$2,670
|
|
|
|
$2,100
|
|
|
|
As of October 31, 2019
|
||||||||||||||
|
|
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 plan:
|
|
|
|
|
|
|
|
|
||||||||
Corporate-owned life insurance
|
|
|
$—
|
|
|
|
$151,871
|
|
|
|
$—
|
|
|
|
$151,871
|
|
Money market funds
|
|
20
|
|
|
—
|
|
|
—
|
|
|
20
|
|
||||
Total assets
|
|
|
$20
|
|
|
|
$151,871
|
|
|
|
$—
|
|
|
|
$151,891
|
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
|
|
$—
|
|
|
|
$—
|
|
|
|
$18,326
|
|
|
|
$18,326
|
|
|
|
As of October 31, 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
|
|
|
$—
|
|
|
|
$123,255
|
|
|
|
$—
|
|
|
|
$123,255
|
|
Money market funds
|
|
3,560
|
|
|
—
|
|
|
—
|
|
|
3,560
|
|
||||
Equity securities
|
|
3,179
|
|
|
—
|
|
|
—
|
|
|
3,179
|
|
||||
Mutual funds
|
|
1,437
|
|
|
—
|
|
|
—
|
|
|
1,437
|
|
||||
Other
|
|
1,306
|
|
|
—
|
|
|
—
|
|
|
1,306
|
|
||||
Total assets
|
|
|
$9,482
|
|
|
|
$123,255
|
|
|
|
$—
|
|
|
|
$132,737
|
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
|
|
$—
|
|
|
|
$—
|
|
|
|
$20,875
|
|
|
|
$20,875
|
|
|
Fiscal 2019 Acquisition
|
|
Fiscal 2017 Acquisition
|
|
Fiscal 2016 Acquisition
|
|||||||
Compound annual revenue growth rate range
|
(7%)
|
-
|
9%
|
|
(3%)
|
-
|
10%
|
|
(11
|
%)
|
-
|
3%
|
Weighted average discount rate
|
5.7%
|
|
4.6%
|
|
3.0%
|
|
Liabilities
|
||
Balance as of October 31, 2017
|
|
$27,573
|
|
Payment of contingent consideration
|
(5,425
|
)
|
|
Decrease in accrued contingent consideration, net
|
(1,365
|
)
|
|
Foreign currency transaction adjustments
|
92
|
|
|
Balance as of October 31, 2018
|
20,875
|
|
|
Increase in accrued contingent consideration, net
|
2,630
|
|
|
Contingent consideration related to acquisition
|
2,107
|
|
|
Payment of contingent consideration
|
(7,178
|
)
|
|
Foreign currency transaction adjustments
|
(108
|
)
|
|
Balance as of October 31, 2019
|
|
$18,326
|
|
|
|
||
Included in the accompanying Consolidated Balance Sheet
under the following captions:
|
|
||
Accrued expenses and other current liabilities
|
|
$497
|
|
Other long-term liabilities
|
17,829
|
|
|
|
|
$18,326
|
|
|
|
|
Shares Under Option
|
||||||
|
Shares Available For Grant
|
|
Shares
|
|
Weighted Average Exercise Price
|
||||
Outstanding as of October 31, 2016
|
2,016
|
|
|
6,520
|
|
|
|
$14.23
|
|
Granted
|
(1,186
|
)
|
|
1,186
|
|
|
|
$41.37
|
|
Exercised
|
—
|
|
|
(409
|
)
|
|
|
$15.27
|
|
Outstanding as of October 31, 2017
|
830
|
|
|
7,297
|
|
|
|
$18.58
|
|
Shares approved by the Company's shareholders for the 2018 Incentive Compensation Plan
|
5,000
|
|
|
—
|
|
|
|
$—
|
|
Cancelled unissued shares under the 2012 Incentive Compensation Plan
|
(830
|
)
|
|
—
|
|
|
|
$—
|
|
Granted
|
(412
|
)
|
|
412
|
|
|
|
$65.64
|
|
Exercised
|
—
|
|
|
(1,285
|
)
|
|
|
$10.54
|
|
Cancelled
|
24
|
|
|
(24
|
)
|
|
|
$28.85
|
|
Outstanding as of October 31, 2018
|
4,612
|
|
|
6,400
|
|
|
|
$23.19
|
|
Granted
|
(538
|
)
|
|
538
|
|
|
|
$73.30
|
|
Exercised
|
—
|
|
|
(2,235
|
)
|
|
|
$12.98
|
|
Cancelled
|
11
|
|
|
(11
|
)
|
|
|
$49.79
|
|
Outstanding as of October 31, 2019
|
4,085
|
|
|
4,692
|
|
|
|
$33.73
|
|
|
Options Outstanding
|
|||||||||||
|
Number Outstanding
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Contractual Life (Years)
|
|
Aggregate
Intrinsic
Value
|
|||||
Common Stock
|
1,682
|
|
|
|
$35.91
|
|
|
5.6
|
|
|
$147,012
|
|
Class A Common Stock
|
3,010
|
|
|
|
$32.52
|
|
|
5.8
|
|
188,927
|
|
|
|
4,692
|
|
|
|
$33.73
|
|
|
5.7
|
|
|
$335,939
|
|
|
Options Exercisable
|
|||||||||||
|
Number Outstanding
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Contractual Life (Years)
|
|
Aggregate
Intrinsic
Value
|
|||||
Common Stock
|
1,030
|
|
|
|
$22.81
|
|
|
4.2
|
|
|
$103,538
|
|
Class A Common Stock
|
1,755
|
|
|
|
$20.85
|
|
|
4.2
|
|
130,618
|
|
|
|
2,785
|
|
|
|
$21.57
|
|
|
4.2
|
|
|
$234,156
|
|
|
Year ended October 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Cash proceeds from stock option exercises
|
|
$8,547
|
|
|
|
$4,031
|
|
|
|
$5,659
|
|
Tax benefit realized from stock option exercises
|
16,490
|
|
|
2,162
|
|
|
3,087
|
|
|||
Intrinsic value of stock option exercises
|
204,901
|
|
|
75,152
|
|
|
10,376
|
|
|
Year ended October 31,
|
||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||||||||
|
Common Stock
|
|
Class A Common Stock
|
|
Common Stock
|
|
Class A Common Stock
|
|
Common Stock
|
|
Class A Common Stock
|
||||||
Expected stock price volatility
|
28.52
|
%
|
|
24.81
|
%
|
|
31.00
|
%
|
|
27.69
|
%
|
|
37.89
|
%
|
|
28.18
|
%
|
Risk-free interest rate
|
2.52
|
%
|
|
2.69
|
%
|
|
2.83
|
%
|
|
2.81
|
%
|
|
2.44
|
%
|
|
2.06
|
%
|
Dividend yield
|
.22
|
%
|
|
.22
|
%
|
|
.24
|
%
|
|
.29
|
%
|
|
.26
|
%
|
|
.31
|
%
|
Forfeiture rate
|
.00
|
%
|
|
.00
|
%
|
|
.00
|
%
|
|
.00
|
%
|
|
.00
|
%
|
|
.00
|
%
|
Expected option life (years)
|
8
|
|
|
6
|
|
|
9
|
|
|
8
|
|
|
9
|
|
|
7
|
|
Weighted average fair value
|
$33.88
|
|
|
$19.64
|
|
|
$30.00
|
|
|
$20.93
|
|
|
$21.36
|
|
|
$12.47
|
|
|
Common Stock
|
|
Class A Common Stock
|
||
Shares available for issuance as of October 31, 2016
|
491
|
|
|
491
|
|
Issuance of common stock to the 401(k) Plan
|
(93
|
)
|
|
(93
|
)
|
Shares available for issuance as of October 31, 2017
|
398
|
|
|
398
|
|
Issuance of common stock to the 401(k) Plan
|
(65
|
)
|
|
(65
|
)
|
Shares available for issuance as of October 31, 2018
|
333
|
|
|
333
|
|
Issuance of common stock to the 401(k) Plan
|
(53
|
)
|
|
(53
|
)
|
Shares available for issuance as of October 31, 2019
|
280
|
|
|
280
|
|
|
|
As of October 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Redeemable at fair value
|
|
|
$136,611
|
|
|
|
$83,524
|
|
Redeemable based on a multiple of future earnings
|
|
51,653
|
|
|
48,522
|
|
||
Redeemable noncontrolling interests
|
|
|
$188,264
|
|
|
|
$132,046
|
|
|
Year ended October 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income attributable to HEICO
|
|
$327,896
|
|
|
|
$259,233
|
|
|
|
$185,985
|
|
|
|
|
|
|
|
||||||
Denominator:
|
|
|
|
|
|
||||||
Weighted average common shares outstanding - basic
|
133,640
|
|
|
132,543
|
|
|
131,703
|
|
|||
Effect of dilutive stock options
|
3,710
|
|
|
4,153
|
|
|
3,885
|
|
|||
Weighted average common shares outstanding - diluted
|
137,350
|
|
|
136,696
|
|
|
135,588
|
|
|||
|
|
|
|
|
|
||||||
Net income per share attributable to HEICO shareholders:
|
|
|
|
|
|
||||||
Basic
|
|
$2.45
|
|
|
|
$1.96
|
|
|
|
$1.41
|
|
Diluted
|
|
$2.39
|
|
|
|
$1.90
|
|
|
|
$1.37
|
|
|
|
|
|
|
|
||||||
Anti-dilutive stock options excluded
|
330
|
|
|
512
|
|
|
799
|
|
(in thousands, except per share data)
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
Net sales:
|
|
|
|
|
|
|
|
|
||||||||
2019
|
|
|
$466,146
|
|
|
|
$515,648
|
|
|
|
$532,324
|
|
|
|
$541,529
|
|
2018
|
|
|
$404,410
|
|
|
|
$430,602
|
|
|
|
$465,825
|
|
|
|
$476,884
|
|
Gross profit:
|
|
|
|
|
|
|
|
|
||||||||
2019
|
|
|
$182,237
|
|
|
|
$209,387
|
|
|
|
$212,831
|
|
|
|
$209,385
|
|
2018
|
|
|
$154,791
|
|
|
|
$167,857
|
|
|
|
$181,609
|
|
|
|
$186,458
|
|
Net income from consolidated operations:
|
|
|
|
|
|
|
|
|
||||||||
2019
|
|
|
$88,026
|
|
|
|
$90,083
|
|
|
|
$89,059
|
|
|
|
$92,573
|
|
2018
|
|
|
$71,695
|
|
|
|
$66,011
|
|
|
|
$73,899
|
|
|
|
$74,081
|
|
Net income attributable to HEICO:
|
|
|
|
|
|
|
|
|
||||||||
2019
|
|
|
$79,332
|
|
|
|
$81,782
|
|
|
|
$81,098
|
|
|
|
$85,684
|
|
2018
|
|
|
$65,152
|
|
|
|
$59,618
|
|
|
|
$67,086
|
|
|
|
$67,377
|
|
Net income per share attributable to HEICO:
|
|
|
|
|
|
|
|
|
||||||||
Basic:
|
|
|
|
|
|
|
|
|
||||||||
2019
|
|
|
$.60
|
|
|
|
$.61
|
|
|
|
$.61
|
|
|
|
$.64
|
|
2018
|
|
|
$.49
|
|
|
|
$.45
|
|
|
|
$.51
|
|
|
|
$.51
|
|
Diluted:
|
|
|
|
|
|
|
|
|
||||||||
2019
|
|
|
$.58
|
|
|
|
$.60
|
|
|
|
$.59
|
|
|
|
$.62
|
|
2018
|
|
|
$.48
|
|
|
|
$.44
|
|
|
|
$.49
|
|
|
|
$.49
|
|
|
|
|
|
|
|
Other,
Primarily Corporate |
|
Consolidated
Totals |
||||||||
|
|
Segment
|
|
|
||||||||||||
As of October 31,
|
|
FSG
|
|
ETG
|
|
|
||||||||||
2019
|
|
|
$1,149,737
|
|
|
|
$1,643,032
|
|
|
|
$176,442
|
|
|
|
$2,969,211
|
|
2018
|
|
1,093,858
|
|
|
1,391,997
|
|
|
167,541
|
|
|
2,653,396
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net sales:
|
|
|
|
|
|
||||||
United States of America
|
|
$1,308,943
|
|
|
|
$1,127,998
|
|
|
|
$1,007,491
|
|
Other countries
|
746,704
|
|
|
649,723
|
|
|
517,322
|
|
|||
Total net sales
|
|
$2,055,647
|
|
|
|
$1,777,721
|
|
|
|
$1,524,813
|
|
|
|
|
|
|
|
||||||
Long-lived assets:
|
|
|
|
|
|
||||||
United States of America
|
|
$143,350
|
|
|
|
$124,225
|
|
|
|
$97,367
|
|
Other countries
|
29,995
|
|
|
30,514
|
|
|
32,516
|
|
|||
Total long-lived assets
|
|
$173,345
|
|
|
|
$154,739
|
|
|
|
$129,883
|
|
Year ending October 31,
|
|
||
2020
|
|
$15,508
|
|
2021
|
15,563
|
|
|
2022
|
13,808
|
|
|
2023
|
8,515
|
|
|
2024
|
4,741
|
|
|
Thereafter
|
18,812
|
|
|
Total minimum lease commitments
|
|
$76,947
|
|
|
Year ended October 31,
|
||||||
|
2019
|
|
2018
|
||||
Balances as of beginning of year
|
|
$3,306
|
|
|
|
$2,921
|
|
Accruals for warranties
|
2,061
|
|
|
2,720
|
|
||
Acquired warranty liabilities
|
—
|
|
|
320
|
|
||
Warranty claims settled
|
(2,557
|
)
|
|
(2,655
|
)
|
||
Balances as of end of year
|
|
$2,810
|
|
|
|
$3,306
|
|
|
Year ended October 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Cash paid for income taxes
|
|
$82,211
|
|
|
|
$90,488
|
|
|
|
$95,851
|
|
Cash received from income tax refunds
|
(578
|
)
|
|
(1,510
|
)
|
|
(2,953
|
)
|
|||
Cash paid for interest
|
22,158
|
|
|
19,233
|
|
|
9,631
|
|
|||
Contingent consideration
|
2,107
|
|
|
—
|
|
|
13,797
|
|
|||
Additional purchase consideration
|
—
|
|
|
(407
|
)
|
|
220
|
|
|||
Property, plant and equipment acquired through capital lease obligations
|
84
|
|
|
7,166
|
|
|
37
|
|
Item 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
Item 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
Plan Category
|
|
Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights
(a)
|
|
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
(b)
|
|
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities Reflected in
Column (a))
(c) (2)
|
||||
Equity compensation plans approved by security holders (1)
|
|
4,692
|
|
|
|
$33.73
|
|
|
4,085
|
|
Equity compensation plans not approved by security holders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
4,692
|
|
|
|
$33.73
|
|
|
4,085
|
|
(1)
|
Represents aggregated information pertaining to our four equity compensation plans: the HEICO Corporation 2018 Incentive Compensation Plan, the 2012 Incentive Compensation Plan, the 2002 Stock Option Plan and the Non-Qualified Stock Option Plan. See Note 10, Share-Based Compensation, of the Notes to Consolidated Financial Statements for further information regarding these plans.
|
(2)
|
Shares are available for future grant in column (c) solely under the HEICO Corporation 2018 Incentive Compensation Plan, under a formula that counts one share against the available share reserve for each one share subject to a stock option or stock appreciation right, and counts 2.5 shares against the available share reserve for each one share subject to a restricted stock award, a restricted stock unit award, a free-standing dividend equivalent award, or any other stock-based award or a performance award denominated in shares. Additionally, the 4,085 remaining number of securities available for future issuance may be designated as Common Stock and/or Class A Common Stock in such proportions as shall be determined by the Board of Directors or the Stock Option Plan Committee at its sole discretion.
|
Item 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
|
Page
|
Exhibit
|
|
Description
|
|
|
|
2.1
|
—
|
Amended and Restated Agreement of Merger and Plan of Reorganization, dated as of March 22, 1993, by and among HEICO Corporation, HEICO Industries, Corp. and New HEICO, Inc. is incorporated by reference to Exhibit 2.1 to the Registrant’s Registration Statement on Form S-4 (Registration No. 33-57624) Amendment No. 1 filed on March 19, 1993. *
|
|
|
|
3.1
|
—
|
Articles of Incorporation of the Registrant are incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-4 (Registration No. 33-57624) Amendment No. 1 filed on March 19, 1993. *
|
|
|
|
3.2
|
—
|
Articles of Amendment of the Articles of Incorporation of the Registrant, dated April 27, 1993, are incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Form 8-B dated April 29, 1993. *
|
|
|
|
3.3
|
—
|
Articles of Amendment of the Articles of Incorporation of the Registrant, dated November 3, 1993, are incorporated by reference to Exhibit 3.3 to the Form 10-K for the year ended October 31, 1993. *
|
|
|
|
3.4
|
—
|
|
|
|
|
3.5
|
—
|
|
|
|
|
3.6
|
—
|
|
|
|
|
3.7
|
—
|
|
|
|
|
3.8
|
—
|
|
|
|
|
4.1
|
—
|
|
|
|
|
10.1#
|
—
|
|
|
|
|
10.2#
|
—
|
Non-Qualified Stock Option Agreement for Directors, Officers and Employees is incorporated by reference to Exhibit 10.8 to the Form 10-K for the year ended October 31, 1985. *
|
|
|
|
Exhibit
|
|
Description
|
|
|
|
10.3#
|
—
|
|
|
|
|
10.4#
|
—
|
|
|
|
|
10.5#
|
—
|
|
|
|
|
10.6#
|
—
|
HEICO Corporation Directors’ Retirement Plan, as amended, dated as of May 31, 1991, is incorporated by reference to Exhibit 10.19 to the Form 10-K for the year ended October 31, 1992. *
|
|
|
|
10.7#
|
—
|
|
|
|
|
10.8#
|
—
|
|
|
|
|
10.9#
|
—
|
|
|
|
|
10.10
|
—
|
|
|
|
|
10.11
|
—
|
|
|
|
|
10.12
|
—
|
|
|
|
|
10.13
|
—
|
|
|
|
|
Exhibit
|
|
Description
|
|
|
|
10.14
|
—
|
|
|
|
|
10.15
|
—
|
|
|
|
|
10.16
|
—
|
|
|
|
|
21
|
—
|
|
|
|
|
23
|
—
|
|
|
|
|
31.1
|
—
|
|
|
|
|
31.2
|
—
|
|
|
|
|
32.1
|
—
|
|
|
|
|
32.2
|
—
|
|
|
|
|
101.INS
|
—
|
Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL Document. **
|
|
|
|
101.SCH
|
—
|
Inline XBRL Taxonomy Extension Schema Document. **
|
|
|
|
101.CAL
|
—
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document. **
|
|
|
|
101.DEF
|
—
|
Inline XBRL Taxonomy Extension Definition Linkbase Document. **
|
|
|
|
101.LAB
|
—
|
Inline XBRL Taxonomy Extension Labels Linkbase Document. **
|
|
|
|
101.PRE
|
—
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document. **
|
|
|
|
104
|
—
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). **
|
|
|
|
#
|
Management contract or compensatory plan or arrangement required to be filed as an exhibit.
|
*
|
Previously filed.
|
**
|
Filed herewith.
|
***
|
Furnished herewith.
|
|
|
Year ended October 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Allowance for doubtful accounts (in thousands):
|
|
|
|
|
|
|
||||||
Allowance as of beginning of year
|
|
|
$3,258
|
|
|
|
$3,006
|
|
|
|
$3,159
|
|
Additions charged to costs and expenses
|
|
638
|
|
|
492
|
|
|
7
|
|
|||
Additions charged (credited) to other accounts (a)
|
|
10
|
|
|
(13
|
)
|
|
298
|
|
|||
Deductions (b)
|
|
(240
|
)
|
|
(227
|
)
|
|
(458
|
)
|
|||
Allowance as of end of year
|
|
|
$3,666
|
|
|
|
$3,258
|
|
|
|
$3,006
|
|
(a)
|
Principally additions from acquisitions and foreign currency translation adjustments.
|
(b)
|
Principally write-offs of uncollectible accounts receivable.
|
|
|
Year ended October 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Inventory valuation reserves (in thousands):
|
|
|
|
|
|
|
||||||
Reserves as of beginning of year
|
|
|
$95,391
|
|
|
|
$92,148
|
|
|
|
$81,449
|
|
Additions charged to costs and expenses
|
|
10,148
|
|
|
9,227
|
|
|
6,284
|
|
|||
Additions charged to other accounts (a)
|
|
1,885
|
|
|
1,270
|
|
|
6,264
|
|
|||
Deductions (b)
|
|
(3,603
|
)
|
|
(7,254
|
)
|
|
(1,849
|
)
|
|||
Reserves as of end of year
|
|
|
$103,821
|
|
|
|
$95,391
|
|
|
|
$92,148
|
|
(a)
|
Principally additions from acquisitions and foreign currency translation adjustments.
|
(b)
|
Principally write-offs of slow-moving, obsolete or damaged inventory.
|
|
|
HEICO CORPORATION
|
|
|
|
|
|
Date:
|
December 19, 2019
|
By:
|
/s/ CARLOS L. MACAU, JR.
|
|
|
|
Carlos L. Macau, Jr.
Executive Vice President - Chief Financial Officer and Treasurer
(Principal Financial Officer)
|
|
|
|
|
|
|
By:
|
/s/ STEVEN M. WALKER
|
|
|
|
Steven M. Walker
Chief Accounting Officer
and Assistant Treasurer
(Principal Accounting Officer)
|
Name
|
|
Position(s)
|
|
Date
|
|
|
|
|
|
/s/ LAURANS A. MENDELSON
|
|
Chairman of the Board; Chief Executive Officer; and Director
(Principal Executive Officer) |
|
December 19, 2019
|
Laurans A. Mendelson
|
|
|
|
|
|
|
|
|
|
/s/ THOMAS M. CULLIGAN
|
|
Director
|
|
December 19, 2019
|
Thomas M. Culligan
|
|
|
|
|
|
|
|
|
|
/s/ ADOLFO HENRIQUES
|
|
Director
|
|
December 19, 2019
|
Adolfo Henriques
|
|
|
|
|
|
|
|
|
|
/s/ MARK H. HILDEBRANDT
|
|
Director
|
|
December 19, 2019
|
Mark H. Hildebrandt
|
|
|
|
|
|
|
|
|
|
/s/ ERIC A. MENDELSON
|
|
Co-President and Director
|
|
December 19, 2019
|
Eric A. Mendelson
|
|
|
|
|
|
|
|
|
|
/s/ VICTOR H. MENDELSON
|
|
Co-President and Director
|
|
December 19, 2019
|
Victor H. Mendelson
|
|
|
|
|
|
|
|
|
|
/s/ JULIE NEITZEL
|
|
Director
|
|
December 19, 2019
|
Julie Neitzel
|
|
|
|
|
|
|
|
|
|
/s/ ALAN SCHRIESHEIM
|
|
Director
|
|
December 19, 2019
|
Alan Schriesheim
|
|
|
|
|
|
|
|
|
|
/s/ FRANK J. SCHWITTER
|
|
Director
|
|
December 19, 2019
|
Frank J. Schwitter
|
|
|
|
|
•
|
establish advance notice procedures for the nomination of candidates for election as directors and for shareholder proposals to be considered at annual shareholders’ meetings;
|
•
|
provide that special meetings of the shareholders may be called by the Chairman of the Board of Directors or the President of HEICO or by a majority of the Board of Directors and shall be called by the President or the Secretary at the request of a majority of the Board of Directors then in office or at the request of the holders of not less than one-tenth (1/10th) of all the outstanding shares of the corporation entitled to vote at the meeting;
|
•
|
authorize the issuance of 10,000,000 shares of Preferred Stock with the designations, rights, preferences and limitations as may be determined from time to time by the Board of Directors;
|
•
|
authorize the issuance of 150,000,000 shares of Common Stock having one vote per share; and
|
•
|
authorize the issuance of 150,000,000 shares of Class A Common Stock having 1/10th vote per share.
|
•
|
issue preferred stock with dividend, liquidation, conversion, voting or other rights that could adversely affect the voting powers or other rights of holders of our Common Stock and Class A Common Stock; and
|
•
|
help maintain the voting power of existing Common Stock shareholders and deter or frustrate takeover attempts that existing holders of Common Stock might consider to be in their best interest by issuing additional shares of Class A Common Stock.
|
|
State or Other
|
Name
|
Jurisdiction of Incorporation
|
|
|
HEICO Aerospace Holdings Corp.
|
Florida
|
HEICO Aerospace Corporation
|
Florida
|
Jet Avion Corporation
|
Florida
|
LPI Industries Corporation
|
Florida
|
HEICO Repair Group Aerostructures, LLC
|
Florida
|
Parts Advantage, LLC
|
Delaware
|
HNW Building Corp.
|
Florida
|
HNW2 Building Corp.
|
Florida
|
McClain International, Inc.
|
Georgia
|
McClain Property Corp.
|
Florida
|
Rogers-Dierks, Inc.
|
Florida
|
Turbine Kinetics, Inc.
|
Florida
|
ATK Acquisition Corp.
|
Florida
|
AD HEICO Acquisition Corp.
|
Florida
|
AeroDesign, Inc.
|
Tennessee
|
Battery Shop, L.L.C.
|
Tennessee
|
Aviation Facilities, Inc.
|
Florida
|
JA Engineering I Corp.
|
Florida
|
JA Engineering II Corp.
|
Florida
|
Jetavi Engineering Private Limited
|
India
|
DEC Technologies, Inc.
|
Florida
|
Meridian Industrial, Inc.
|
Florida
|
Dynatech Acquisition Corp.
|
Florida
|
HEICO Parts Group, Inc.
|
Florida
|
|
|
HEICO Flight Support Corp.
|
Florida
|
HEICO Repair, LLC
|
Florida
|
Aircraft Technology, Inc.
|
Florida
|
Northwings Accessories Corp.
|
Florida
|
Aviation Engineered Services Corp.
|
Florida
|
HB Fuel Systems LLC
|
Florida
|
Future Aviation, Inc.
|
Florida
|
Inertial Airline Services, Inc.
|
Ohio
|
HEICO Aerospace Parts Corp.
|
Florida
|
Niacc-Avitech Technologies Inc.
|
Florida
|
Prime Air, LLC
|
Florida
|
Avisource Limited
|
United Kingdom
|
Prime Air Europe Limited
|
United Kingdom
|
Sunshine Avionics LLC
|
Florida
|
CSI Aerospace, Inc.
|
Florida
|
Action Research Corporation
|
Florida
|
|
|
|
State or Other
|
Name
|
Jurisdiction of Incorporation
|
|
|
Reinhold Holdings, Inc.
|
Delaware
|
Reinhold Industries, Inc.
|
Delaware
|
Carbon by Design Corporation
|
Florida
|
Carbon by Design LLC
|
California
|
Optical Display Engineering, Inc.
|
Florida
|
Thermal Structures, Inc.
|
California
|
Thermal Energy Products, Inc.
|
California
|
Jetseal, Inc.
|
Delaware
|
Seal Dynamics LLC
|
Florida
|
Seal Dynamics LLC (Singapore Branch)
|
Singapore
|
Seal Dynamics Limited
|
United Kingdom
|
Seal Q Corp.
|
Florida
|
Blue Aerospace LLC
|
Florida
|
HEICO International Holdings B.V.
|
Netherlands
|
Aeroworks International Holding B.V.
|
Netherlands
|
Aeroworks Europe B.V.
|
Netherlands
|
Aeroworks (Lao) Co., Ltd.
|
Laos
|
DIRI Co., Ltd.
|
Laos
|
Aeroworks Lao II Co., Ltd.
|
Laos
|
Aeroworks Special Products B.V.
|
Netherlands
|
Aeroworks (Asia) Ltd.
|
Thailand
|
Aeroworks Manufacturing Services (Asia) Ltd.
|
Thailand
|
Aeroworks Composites B.V.
|
Netherlands
|
Aeroworks Composites (Asia) Ltd.
|
Thailand
|
HFSC III Corp.
|
Florida
|
Harter Aerospace, LLC
|
Florida
|
Aerospace & Commercial Technologies, LLC
|
Florida
|
Astroseal Products Mfg. Corporation
|
Connecticut
|
Astro Property, LLC
|
Connecticut
|
HFSC IV Corp.
|
Florida
|
LLP Enterprises, LLC
|
Florida
|
Air Cost Control US, LLC
|
Florida
|
Air Cost Control PTE, Ltd.
|
Singapore
|
A2C Air Cost Control SAS
|
France
|
Air Cost Control Germany GmbH
|
Germany
|
60 Sequin LLC
|
Connecticut
|
HFSC V, LLC
|
Florida
|
Decavo LLC
|
Oregon
|
HFSC VI, LLC
|
Florida
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State or Other
|
Name
|
Jurisdiction of Incorporation
|
|
|
HEICO Electronic Technologies Corp.
|
Florida
|
Radiant Power Corp.
|
Florida
|
Radiant-Seacom Repairs Corp.
|
Florida
|
Radiant Power IDC, LLC
|
Florida
|
Interface Displays & Controls, Inc.
|
California
|
Leader Tech, Inc.
|
Florida
|
FerriShield, Inc.
|
Pennsylvania
|
Santa Barbara Infrared, Inc.
|
California
|
IRCameras LLC
|
Florida
|
Sensor Technology Engineering, LLC
|
Florida
|
Analog Modules, Inc.
|
Florida
|
Sierra Microwave Technology, LLC
|
Delaware
|
Connectronics Corp.
|
Florida
|
Lumina Power, Inc.
|
Florida
|
De-Icing Investment Holdings Corp.
|
Florida
|
HVT Group, Inc.
|
Delaware
|
Dielectric Sciences, Inc.
|
Massachusetts
|
Essex X-Ray & Medical Equipment LTD
|
United Kingdom
|
High Voltage Technology Limited
|
United Kingdom
|
Engineering Design Team, Inc.
|
Oregon
|
EMD Acquisition Corp.
|
Florida
|
EMD Technologies Incorporated
|
Canada
|
VPT, Inc.
|
Virginia
|
SI-REL, Inc.
|
Delaware
|
SST Components, Inc.
|
Delaware
|
Freebird Semiconductor Corporation
|
Delaware
|
Dukane Seacom, Inc.
|
Florida
|
AeroELT, LLC
|
Florida
|
dB Control Corp.
|
Florida
|
TTT-Cubed, Inc.
|
California
|
3D Acquisition Corp.
|
Florida
|
3D Plus SAS
|
France
|
Bernier Connect SAS
|
France
|
Moulages Plastiques Industriels de L'essonne SARL
|
France
|
3D Plus U.S.A., Inc.
|
Delaware
|
Switchcraft Holdco, Inc.
|
Delaware
|
Switchcraft, Inc.
|
Illinois
|
Conxall Corporation
|
Illinois
|
Switchcraft Far East Company, Ltd.
|
Republic of South Korea
|
Ramona Research, Inc.
|
California
|
Lucix Corporation
|
California
|
Midwest Microwave Solutions, Inc.
|
Iowa
|
Robertson Fuel Systems, L.L.C.
|
Arizona
|
AeroAntenna Technology, Inc.
|
California
|
|
|
|
|
|
State or Other
|
Name
|
Jurisdiction of Incorporation
|
|
|
HETC I, LLC
|
Florida
|
Research Electronics International, L.L.C.
|
Tennessee
|
Specialty Silicone Products, Inc.
|
New York
|
3 McCrea Property Company, LLC
|
Florida
|
HETC II Corp.
|
Florida
|
Apex Holding Corp.
|
Delaware
|
Apex Microtechnology, Inc.
|
Arizona
|
HETC III, LLC
|
Florida
|
Solid Sealing Technology, Inc.
|
New York
|
Quell Corporation*
|
Colorado
|
|
|
HEICO East Corporation
|
Florida
|
16-1741 Property, Inc.
|
Florida
|
Bay Equipment Corp.
|
Delaware
|
(1)
|
I have reviewed this annual report on Form 10-K of HEICO Corporation;
|
(2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
(3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
(4)
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(5)
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
Date:
|
December 19, 2019
|
/s/ LAURANS A. MENDELSON
|
|
|
Laurans A. Mendelson
|
|
|
Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
(1)
|
I have reviewed this annual report on Form 10-K of HEICO Corporation;
|
(2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
(3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
(4)
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(5)
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
Date:
|
December 19, 2019
|
/s/ CARLOS L. MACAU, JR.
|
|
|
Carlos L. Macau, Jr.
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
December 19, 2019
|
/s/ LAURANS A. MENDELSON
|
|
|
Laurans A. Mendelson
|
|
|
Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
December 19, 2019
|
/s/ CARLOS L. MACAU, JR.
|
|
|
Carlos L. Macau, Jr.
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|