Company: HEI-A
Filing Date: 2025-12-22
Form Type: 10-K
Source: 0000046619-25-000082
Chunk: 88

Company: HEICO CORP
Filing Date: 2025-12-22
Form: 10-K
Item: Item 8
Chunk 88
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 adjustments recorded in operations.  Additional information regarding the Company's contingent consideration arrangements may be found in Note 2, Acquisitions, and Note 8, Fair Value Measurements.Goodwill and Other Intangible Assets    The Company tests goodwill for impairment annually as of October 31, or more frequently if events or changes in circumstances indicate that the carrying amount of goodwill may exceed its fair value.  When testing goodwill for impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more-likely-than-not that the estimated fair value of a reporting unit is less than its carrying amount.  If the Company elects to perform a qualitative assessment and determine that an impairment is more-likely-than-not, the Company is then required to perform a quantitative impairment test, otherwise no further analysis is required.  The Company may elect not to perform a qualitative assessment and, instead, proceed directly to a quantitative impairment test.  When performing the quantitative impairment test, the Company compares the fair value of each of its reporting units to its carrying value to determine potential impairment and an impairment loss is recognized in the amount by which the carrying value of a reporting unit’s goodwill exceeds its fair value.  The fair values of the Company's reporting units are determined by using a weighted average of a market approach and an income approach.  Under the market approach, fair values are estimated using published market multiples for comparable companies.  The Company calculates fair values under the income approach 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.The Company’s intangible assets not subject to amortization consist principally of its trade names.  The Company’s intangible assets subject to amortization are amortized on the straight-line method (except for customer relationships, which are amortized on an accelerated method) over the following estimated useful lives:

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Customer relationships3to17yearsIntellectual property3to22yearsOther5to19years    Amortization expense of intellectual property is recorded as a component of cost of sales and amortization expense of customer relationships is recorded as a component of SG&A expenses in the Company’s Consolidated Statements of Operations.  The Company tests each non-amortizing intangible asset 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 its trade names, the Company utilizes an