SELECTED FINANCIAL STATEMENT INFORMATION

12 Months Ended

Oct. 31, 2020

Selected Financial Statement Information [Abstract]

Additional Financial Information Disclosure [Text Block]

SELECTED FINANCIAL STATEMENT INFORMATION

Accounts Receivable

	As of October 31,
(in thousands)	2020	2019
Accounts receivable	$223,171	$277,992
Less: Allowance for doubtful accounts	(12,738)	(3,666)
Accounts receivable, net	$210,433	$274,326

The $9.1 million increase in the Company’s allowance for doubtful accounts is principally due to potential collection difficulties from certain commercial aviation customers that filed for bankruptcy protection in fiscal 2020 as a result of the Pandemic's financial impact.

Inventories

	As of October 31,
(in thousands)	2020	2019
Finished products	$235,501	$199,880
Work in process	37,957	32,548
Materials, parts, assemblies and supplies	189,747	187,891
Inventories, net of valuation reserves	$463,205	$420,319

Property, Plant and Equipment

	As of October 31,
(in thousands)	2020	2019
Land	$6,678	$6,820
Buildings and improvements	120,769	116,997
Machinery, equipment and tooling	265,408	253,127
Construction in progress	8,487	8,382
	401,342	385,326
Less:  Accumulated depreciation and amortization	(232,494)	(211,981)
Property, plant and equipment, net	$168,848	$173,345

The amounts set forth above include tooling costs having a net book value of $8.3 million and $8.8 million as of October 31, 2020 and 2019, respectively. Amortization expense on capitalized tooling was $3.2 million, $3.1 million and $2.8 million in fiscal 2020, 2019 and 2018, respectively.

As of October 31, 2019, the amounts set forth above include $11.7 million of assets under capital leases and $2.1 million of accumulated depreciation associated with such assets. See Note 9, Leases, for additional information pertaining to the Company’s finance lease disclosures made in accordance with the adoption of ASC 842 in fiscal 2020.

Depreciation and amortization expense, exclusive of tooling, on property, plant and equipment was $27.1 million, $25.8 million and $23.2 million in fiscal 2020, 2019 and 2018, respectively.

Accrued Expenses and Other Current Liabilities

	As of October 31,
(in thousands)	2020	2019
Accrued employee compensation and related payroll taxes	$83,055	$112,602
Contract liabilities	25,631	23,809
Accrued customer rebates and credits	15,813	17,978
Current operating lease liabilities	14,180	—
Other	23,553	24,568
Accrued expenses and other current liabilities	$162,232	$178,957

    The decrease in accrued employee compensation and related payroll taxes principally reflects a lower level of accrued performance-based compensation expense resulting from lower consolidated operating results mainly attributable to the Pandemic. The increase in current operating lease liabilities is the result of adopting ASC 842 during fiscal 2020. See Note 1, Summary of Significant Accounting Policies, and Note 9, Leases, for additional information. The total customer rebates and credits deducted within net sales in fiscal 2020, 2019 and 2018 was $4.6 million, $9.0 million and $9.9 million, respectively. The decrease in total customer

rebates and credits deducted within net sales in fiscal 2020 principally reflects a decrease in the net sales volume of certain commercial aerospace customers eligible for rebates mainly resulting from the Pandemic's impact.

Other Long-Term Assets and Liabilities

    The Company provides eligible employees, officers and directors of the Company the opportunity to voluntarily defer base salary, bonus payments, commissions, long-term incentive awards and directors fees, as applicable, on a pre-tax basis through the HEICO Corporation Leadership Compensation Plan (“LCP”), a nonqualified deferred compensation plan that conforms to Section 409A of the Internal Revenue Code.  The Company matches 50% of the first 6% of base salary deferred by each participant.  Director fees that would otherwise be payable in Company common stock may be deferred into the LCP, and, when distributable, are distributed in actual shares of Company common stock.  The LCP does not provide for diversification of a director’s assets allocated to Company common stock.  The deferred compensation obligation associated with Company common stock is recorded as a component of shareholders’ equity at cost and subsequent changes in fair value are not reflected in operations or shareholders’ equity of the Company.  Further, while the Company has no obligation to do so, the LCP also provides the Company the opportunity to make discretionary contributions.  The Company’s matching contributions and any discretionary contributions are subject to vesting and forfeiture provisions set forth in the LCP.  Company contributions to the LCP charged to income in fiscal 2020, 2019 and 2018 totaled $4.7 million, $6.1 million and $5.9 million, respectively.  The aggregate liabilities of the LCP were $178.3 million and $151.1 million as of October 31, 2020 and 2019, respectively, and are classified within other long-term liabilities and accrued expenses and other current liabilities in the Company’s Consolidated Balance Sheets.  The assets of the LCP, totaling $180.1 million and $151.9 million as of October 31, 2020 and 2019, respectively, are classified within other assets in the Company's Consolidated Balance Sheets and principally represent cash surrender values of life insurance policies that are held within an irrevocable trust that may be used to satisfy the obligations of the LCP. Additional information regarding the assets of the LCP may be found in Note 8, Fair Value Measurements.    

Research and Development Expenses

    The amount of new product research and development ("R&D") expenses included in cost of sales is as follows (in thousands):

	Year ended October 31,
	2020	2019	2018
R&D expenses	$65,559	$66,630	$57,450

Accumulated Other Comprehensive Loss

    Changes in the components of accumulated other comprehensive loss during fiscal 2020 and 2019 are as follows (in thousands):

	Foreign Currency Translation	Defined Benefit Pension Plan	Accumulated Other Comprehensive Loss
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)
Unrealized gain (loss)	8,529	(1,012)	7,517
Amortization of unrealized loss	—	73	73
Balances as of October 31, 2020	($6,460)	($2,689)	($9,149)