STOCK OPTIONS

12 Months Ended

Oct. 31, 2011

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

9.      STOCK OPTIONS

The Company currently has two stock option plans, the 2002 Stock Option Plan (“2002 Plan”) and the Non-Qualified Stock Option Plan, under which stock options may be granted.  The Company’s 1993 Stock Option Plan (“1993 Plan”) terminated in March 2003 on the tenth anniversary of its effective date.  No options may be granted under the 1993 Plan after such termination date; however, options outstanding as of the termination date may be exercised pursuant to their terms.  In addition, the Company granted stock options in fiscal 2002 to a former shareholder of an acquired business pursuant to an employment agreement entered into in connection with the acquisition in fiscal 1999.  A total of 3,184,409 shares of the Company’s stock are reserved for issuance to employees, directors, officers and consultants as of October 31, 2011, including 1,851,194 shares currently under option and 1,333,215 shares available for future grants.  Options issued under the 2002 Plan may be designated as incentive stock options or non-qualified stock options.  Incentive stock options are granted with an exercise price of no less than fair market value of the Company’s common stock as of date of grant and are exercisable in percentages specified as of the date of grant over a period up to ten years.  Only employees are eligible to receive incentive stock options.  Non-qualified stock options under the 2002 Plan may be immediately exercisable.  The options granted pursuant to the 2002 Plan 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.  Options granted under the Non-Qualified Stock Option Plan may be granted with an exercise price of no less than the fair market value of the Company’s common stock as of the date of grant and are generally exercisable in four equal annual installments commencing one year from the date of grant.  The stock options granted to a former shareholder of an acquired business were fully vested and transferable as of the grant date and expire ten years from the date of grant.  The exercise price of such options was the fair market value as of the date of grant.  Options under all stock option plans expire no later than ten years after the date of grant, unless extended by the Stock Option Plan Committee or the Board of Directors.

Information concerning stock option activity for each of the three fiscal years ended October 31 is as follows:

	Shares			Shares Under Option
	Available						Weighted Average
	For Grant			Shares			Exercise Price
Outstanding as of October 31, 2008		2,599,309			2,537,097		$	6.29
Granted		(527,344	)		527,344		$	23.33
Exercised		—			(153,406	)	$	7.86
Outstanding as of October 31, 2009		2,071,965			2,911,035		$	9.30
Granted		(265,625	)		265,625		$	32.69
Cancelled		—			(930	)	$	8.73
Exercised		—			(503,920	)	$	6.74
Outstanding as of October 31, 2010		1,806,340			2,671,810		$	12.10
Granted		(473,125	)		473,125		$	40.31
Cancelled		—			(2,652	)	$	6.18
Exercised		—			(1,291,089	)	$	7.31
Outstanding as of October 31, 2011		1,333,215			1,851,194		$	22.66

Information concerning stock options outstanding and stock options exercisable by class of common stock as of October 31, 2011 is as follows:

	Options Outstanding
			Weighted		Weighted Average			Aggregate
	Number		Average			Remaining Contractual		Intrinsic
	Outstanding		Exercise Price		Life (Years)			Value
Common Stock		954,975	$	27.82			7.2	$	27,881,189
Class A Common Stock		896,219	$	17.15			5.3		19,856,466
		1,851,194	$	22.66			6.3	$	47,737,655

	Options Exercisable
			Weighted		Weighted Average			Aggregate
	Number		Average			Remaining Contractual		Intrinsic
	Exercisable		Exercise Price		Life (Years)			Value
Common Stock		367,475	$	14.71			4.4	$	15,547,539
Class A Common Stock		481,687	$	6.52			2.2		15,792,217
		849,162	$	10.07			3.1	$	31,339,756

Information concerning stock options exercised is as follows:

	Year ended October 31,
	2011		2010		2009
Cash proceeds from stock option exercises	$	2,167,000	$	1,815,000	$	1,207,000
Tax benefit realized from stock option exercises		7,703,000		951,000		1,890,000
Intrinsic value of stock option exercises		48,952,000		10,379,000		1,586,000

 

Net income attributable to HEICO for the fiscal years ended October 31, 2011, 2010 and 2009 includes compensation expense of $2,647,000, $1,353,000 and $181,000, respectively, and an income tax benefit of $1,003,000, $516,000 and $64,000, respectively, related to the Company’s stock options.  Substantially all of the stock option compensation expense was recorded as a component of selling, general and administrative expenses in the Company’s Consolidated Statements of Operations.  As of October 31, 2011, there was $15,017,000 of pre-tax unrecognized compensation expense related to nonvested stock options, which is expected to be recognized over a weighted average period of approximately 4.2 years.  The total fair value of stock options that vested in 2011, 2010 and 2009 was $2,130,000, $1,212,000 and $14,000, respectively.  If there were a change in control of the Company, all of the unvested options outstanding as of October 31, 2011 would become immediately exercisable.

For the fiscal years ended October 31, 2011, 2010 and 2009, the excess tax benefit resulting from tax deductions in excess of the cumulative compensation cost recognized for stock options exercised was $6,346,000, $669,000 and $1,573,000, respectively, and is presented as a financing activity in the Company’s Consolidated Statements of Cash Flows.

The weighted-average fair values of stock options granted are as follows:

	Year ended October 31,
	2011		2010		2009
Common Stock	$	22.93	$	17.85	$	13.43
Class A Common Stock	$	14.45	$	8.90	$	8.61

The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option-pricing model based on the following weighted average assumptions for the fiscal years ended October 31, 2011, 2010 and 2009:

	2011						2010						2009
				Class A						Class A						Class A
	Common			Common			Common			Common			Common			Common
	Stock			Stock			Stock			Stock			Stock			Stock
Expected stock price volatility		41.17	%		38.92	%		42.01	%		39.57	%		44.13	%		39.44	%
Risk-free interest rate		1.64	%		2.74	%		2.45	%		3.02	%		3.22	%		2.80	%
Dividend yield		.26	%		.33	%		.27	%		.33	%		.25	%		.33	%
Forfeiture rate		.00	%		.00	%		.00	%		.00	%		.00	%		.00	%
Expected option life (years)		9			7			9			7			9			6