Company: HEI-A
Filing Date: 2025-12-22
Form Type: 10-K
Source: 0000046619-25-000082
Chunk: 70

Company: HEICO CORP
Filing Date: 2025-12-22
Form: 10-K
Item: Item 7
Chunk 70
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 our reporting units are determined using a weighted average of a market approach and an income approach.  The market approach estimates the value of reporting units by comparing to guideline public companies or guideline transactions.  Various valuation multiples are calculated utilizing financial data of companies that are economically and operationally similar resulting in ranges of multiples.  Judgmental adjustments are often necessary to ensure comparability.  The selection of the appropriate multiple within a range requires judgment, considering various qualitative and quantitative factors.  Changes in assumptions or estimates could materially affect the estimated fair value of our reporting units and the potential for impairment.  The income approach estimates fair value by taking estimated future cash flows that are based on internal projections and other assumptions deemed reasonable by management and discounting them using an estimated weighted average cost of capital.  Assumptions used in the analysis include estimated future revenues and expenses, the weighted average cost of working capital, capital expenditures, and other variables.  The discount rate utilized for each reporting unit is indicative of the return an investor would expect to receive for investing in such a business.  Based on the annual goodwill impairment test as of October 31, 2025, 2024 and 2023, we determined there was no impairment of our goodwill.  The fair value of each of our reporting units calculated as part of our quantitative impairment test significantly exceeded its carrying value as of October 31, 2025.

We test each non-amortizing intangible asset (principally trade names) for impairment annually as of October 31, or more frequently if events or changes in circumstances indicate that the asset might be impaired.  To derive the fair value of our trade names, we utilize an income approach, which relies upon management's assumptions of royalty rates, projected revenues and discount rates.  We also test each amortizing intangible asset for impairment if events or circumstances indicate that the asset might be impaired.  The test consists of determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows.  If the total of the undiscounted future cash flows is less than the carrying amount of those assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets.  The determination of fair value requires us to make a number of estimates, assumptions and judgments of underlying factors such as projected revenues and related earnings as well as discount rates.  Based on the intangible impairment tests conducted, we recognized no impairment loss in fiscal 2025, an aggregate impairment loss of $7