FAIR VALUE MEASUREMENTS

6 Months Ended

Apr. 30, 2012

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

7. FAIR VALUE MEASUREMENTS

The following tables set forth by level within the fair value hierarchy, the Company’s assets and liabilities that were measured at fair value on a recurring basis (in thousands):

	As of April 30, 2012
	Quoted Prices		Significant		Significant
	in Active Markets		Other Observable		Unobservable
	for Identical Assets		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Deferred compensation plans:
Corporate owned life insurance	$	-	$	35,677	$	-	$	35,677
Equity securities		1,225		-		-		1,225
Mutual funds		1,114		-		-		1,114
Money market funds and cash		963		-		-		963
Other		-		425		576		1,001
Total assets	$	3,302	$	36,102	$	576	$	39,980
Liabilities:
Contingent Consideration	$	-	$	-	$	10,825	$	10,825

	As of October 31, 2011
	Quoted Prices		Significant		Significant
	in Active Markets		Other Observable		Unobservable
	for Identical Assets		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Deferred compensation plans:
Corporate owned life insurance		$-	$	26,989		$-	$	26,989
Equity securities		1,150		-		-		1,150
Mutual funds		1,004		-		-		1,004
Money market funds and cash		920		-		-		920
Other		-		451		573		1,024
Total assets	$	3,074	$	27,440	$	573	$	31,087
Liabilities:	$	-	$	-	$	-	$	-

The Company maintains two non-qualified deferred compensation plans. The assets of the HEICO Corporation Leadership Compensation Plan (the “LCP”) principally represent cash surrender values of life insurance policies, which derive their fair values from investments in mutual funds that are managed by an insurance company and are classified within Level 2 and are valued using a market approach. Certain other assets of the LCP represent investments in money market funds that are classified within Level 1. The majority of the assets of the Company’s other deferred compensation plan are principally invested in equity securities, mutual funds and money market funds that are classified within Level 1. A portion of the assets within the other deferred compensation plan is currently invested in a fund that invests in future and forward contracts; most of which are privately negotiated with counterparties without going through a public exchange, and that use trading methods that are proprietary and confidential. These assets are therefore classified within Level 3 and are valued using a market approach with corresponding gains and losses reported within other income in the Company’s Condensed Consolidated Statements of Operations. The assets of both plans are held within irrevocable trusts and classified within other assets in the Company’s Condensed Consolidated Balance Sheets and have an aggregate value of $40.0 million as of April 30, 2012 and $31.1 million as of October 31, 2011, of which the LCP related assets were $35.7 million and $27.0 million as of April 30, 2012 and October 31, 2011, respectively. The related liabilities of the two deferred compensation plans are included within other long-term liabilities in the Company’s Condensed Consolidated Balance Sheets and have an aggregate value of $39.6 million as of April 30, 2012 and $30.8 million as of October 31, 2011, of which the LCP related liability was $35.3 million and $26.7 million as of April 30, 2012 and October 31, 2011, respectively.

As part of the agreement to acquire a subsidiary by the ETG in the second quarter of fiscal 2012, the Company may be obligated to pay contingent consideration of up to $14.6 million in aggregate should the acquired entity meet certain earnings objectives during each of the first five years following the acquisition. The $10.8 million estimated fair value of the contingent consideration as of the acquisition date is classified within Level 3 and was determined using a probability-based scenario analysis approach. Under this method, a set of discrete potential future subsidiary earnings was determined using internal estimates based on various revenue growth rate assumptions for each scenario that ranged from a compound annual growth rate of (8%) to 20%. A probability of likelihood was assigned to each discrete potential future earnings estimate and the resultant contingent consideration was calculated. The resulting probability-weighted contingent consideration amounts were discounted using a weighted average discount rate of 3.5% reflecting the credit risk of a market participant. Significant changes to either the revenue growth rates, related earnings or the discount rate could result in a material change to the amount of contingent consideration accrued and such changes will be recorded in the Company’s condensed consolidated statements of operations. Changes in the fair value of this contingent consideration were not material during the second quarter ended April 30, 2012. As of April 30, 2012, the estimated amount of such contingent consideration to be paid within the next twelve months of $1.6 million is included in accrued expenses and other current liabilities and the remaining $9.2 million is included in other long-term liabilities in the Company’s Condensed Consolidated Balance Sheet.

Changes in the Company’s assets and liabilities measured at fair value on a recurring basis using unobservable inputs (Level 3) for the six months ended April 30, 2012 are as follows (in thousands):

	Assets		Liabilities
Balances as of October 31, 2011	$	573	$	-
Contingent consideration related to acquisition		-		10,778
Increase in value of contingent consideration		-		47
Total unrealized gains		3		-
Balances as of April 30, 2012	$	576	$	10,825

The Company did not have any transfers between Level 1 and Level 2 fair value measurements during the six months ended April 30, 2012.

The carrying amounts of the Company’s cash and cash equivalents, accounts receivable, trade accounts payable and accrued expenses and other current liabilities approximate fair value as of April 30, 2012 due to the relatively short maturity of the respective instruments. The carrying amount of long-term debt approximates fair value due to its variable interest rates.