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INCOME TAXES | 12 Months Ended
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Oct. 31, 2018
Income Tax Disclosure [Abstract] |
Income Tax Disclosure [Text Block] | INCOME TAXES The components of income before income taxes and noncontrolling interests are as follows (in thousands):
| Year ended October 31,
| 2018 |  | 2017 |  | 2016
Domestic |  | $309,123 |  |  |  | $264,420 |  |  |  | $227,927 |
Foreign | 47,163 |  |  | 33,540 |  |  | 29,123 |
Income before taxes and noncontrolling interests |  | $356,286 |  |  |  | $297,960 |  |  |  | $257,050 |
The components of the provision for income taxes on income before income taxes and noncontrolling interests are as follows (in thousands):
| Year ended October 31,
| 2018 |  | 2017 |  | 2016
Current: |  |  |  |  |
Federal |  | $61,548 |  |  |  | $85,047 |  |  |  | $75,261 |
State | 9,420 |  |  | 6,820 |  |  | 7,463 |
Foreign | 12,608 |  |  | 9,529 |  |  | 7,370 |
| 83,576 |  |  | 101,396 |  |  | 90,094 |
Deferred: |  |  |  |  |  |  |  |
Federal | (13,115 | ) |  | (9,661 | ) |  | (5,979 | )
State | 1,578 |  |  | (499 | ) |  | (2,587 | )
Foreign | (1,439 | ) |  | (936 | ) |  | (628 | )
| (12,976 | ) |  | (11,096 | ) |  | (9,194 | )
Total income tax expense |  | $70,600 |  |  |  | $90,300 |  |  |  | $80,900 |
A reconciliation of the federal statutory income tax rate to the Company’s effective tax rate is as follows:
| Year ended October 31,
| 2018 |  | 2017 |  | 2016
Federal statutory income tax rate (blended rate in fiscal 2018) | 23.3 | % |  | 35.0 | % |  | 35.0 | %
State taxes, net of federal income tax benefit | 2.9 | % |  | 1.9 | % |  | 1.7 | %
Discrete net tax benefit related to Tax Act | (3.4 | %) |  | — | % |  | — | %
Research and development tax credits | (2.0 | %) |  | (1.8 | %) |  | (2.7 | %)
Domestic production activities tax deduction | (.8 | %) |  | (1.1 | %) |  | (1.3 | %)
Tax benefit related to stock option exercises | (.5 | %) |  | (1.0 | %) |  | — | %
Noncontrolling interests’ share of income | (.3 | %) |  | (.7 | %) |  | (.7 | %)
Tax-exempt losses (gains) on corporate-owned life insurance policies | .1 | % |  | (1.8 | %) |  | (.1 | %)
Other, net | .5 | % |  | (.2 | %) |  | (.4 | %)
Effective tax rate | 19.8 | % |  | 30.3 | % |  | 31.5 | %
On December 22, 2017, the United States ("U.S.") government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act contains significant changes to existing tax law including, among other things, a reduction in the U.S. federal statutory tax rate from 35% to 21% and the implementation of a territorial tax system resulting in a one-time transition tax on the unremitted earnings of the Company’s foreign subsidiaries. The Tax Act also contains additional provisions that will become effective for HEICO in fiscal 2019 including a new tax on Global Intangible Low-Taxed Income (“GILTI”), a new deduction for Foreign-Derived Intangible Income (“FDII”), the repeal of the domestic production activity deduction and additional limitations on the deductibility of certain executive compensation. The Company has not yet determined the impact of the provisions of the Tax Act which do not become effective for HEICO until fiscal 2019 but does not anticipate these provisions to materially affect its consolidated results of operations, financial position or cash flows. The Securities and Exchange Commission issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on the accounting for the tax effects of the Tax Act. This guidance provides companies with a measurement period not to exceed one year from the enactment of the Tax Act to complete their accounting for the related tax effects. SAB 118 further states that during the measurement period, companies who are able to make reasonable estimates of the tax effects of the Tax Act should include those amounts in their financial statements as provisional amounts and reflect any adjustments in subsequent periods as they refine their estimates or complete their accounting of such tax effects. As a result of the Tax Act, the Company's effective federal statutory income tax rate in fiscal 2018 is a blended rate of 23.3%, which reflects the reduction in the U.S. federal statutory tax rate from 35% to 21% effective January 1, 2018. Additionally, the Company remeasured its U.S. federal net deferred tax liabilities and recorded a discrete tax benefit of $16.5 million in fiscal 2018. Further, the Company recorded a provisional discrete tax expense of $4.4 million in fiscal 2018 related to a one-time transition tax on the unremitted earnings of the Company's foreign subsidiaries. The Company intends to pay this tax over the eight-year period allowed for in the Tax Act. The Company’s effective tax rate in fiscal 2018 decreased to 19.8% from 30.3% in fiscal 2017. The decrease principally reflects the previously mentioned discrete tax benefit from the remeasurement of the Company’s U.S. federal net deferred tax liabilities and the net benefit of a lower federal statutory income tax rate, which were partially offset by the aforementioned one-time transition tax expense. Further, the decrease in fiscal 2018 was slightly moderated by an unfavorable impact from lower tax-exempt unrealized gains in the cash surrender values of life insurance policies related to the HEICO Corporation Leadership Compensation Plan ("HEICO LCP"). The Company’s effective tax rate in fiscal 2017 decreased to 30.3% from 31.5% in fiscal 2016. The decrease principally reflects the favorable impact of higher tax-exempt unrealized gains in the cash surrender values of life insurance policies related to the HEICO LCP and a $3.1 million discrete income tax benefit related to stock option exercises resulting from the adoption of ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting," in the first quarter of fiscal 2017. These decreases were partially offset by the benefit recognized in fiscal 2016 from the retroactive and permanent extension of the U.S. federal R&D tax credit that resulted in the recognition of additional income tax credits for qualified R&D activities related to the last ten months of fiscal 2015 and a less favorable benefit in fiscal 2017 from the foreign tax rate differential associated with the undistributed earnings of a fiscal 2015 acquisition. The Company files income tax returns in the U.S. federal jurisdiction and in multiple state jurisdictions. The Company is also subject to income taxes in certain jurisdictions outside the U.S., none of which are individually material to the accompanying consolidated financial statements. Generally, the Company is no longer subject to U.S. federal, state or foreign examinations by tax authorities for years prior to fiscal 2014. The Company has not made a provision for U.S. income taxes on the undistributed earnings of a fiscal 2015 foreign acquisition as such earnings are considered permanently reinvested outside of the U.S. The amount of undistributed earnings is not material to the Company's consolidated financial statements. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company believes that it is more likely than not that it will generate sufficient future taxable income to utilize all of its deferred tax assets and has therefore not recorded a valuation allowance on any such asset. Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):
| As of October 31,
| 2018 |  | 2017
Deferred tax assets: |  |  |
Deferred compensation liability |  | $31,152 |  |  |  | $47,093 |
Inventories | 22,204 |  |  | 31,797 |
Share-based compensation | 9,811 |  |  | 12,984 |
Bonus accrual | 4,474 |  |  | 4,956 |
Customer rebates accrual | 1,526 |  |  | 1,864 |
Vacation accrual | 1,456 |  |  | 2,112 |
Deferred revenue | 68 |  |  | 730 |
Other | 7,084 |  |  | 9,230 |
Total deferred tax assets | 77,775 |  |  | 110,766 |
Deferred tax liabilities: |  |  |
Goodwill and other intangible assets | (112,533 | ) |  | (160,158 | )
Property, plant and equipment | (11,615 | ) |  | (7,887 | )
Other | (271 | ) |  | (1,747 | )
Total deferred tax liabilities | (124,419 | ) |  | (169,792 | )
Net deferred tax liability |  | ($46,644 | ) |  |  | ($59,026 | )
As of October 31, 2018 and 2017, the Company’s liability for gross unrecognized tax benefits related to uncertain tax positions was $2.1 million and $2.0 million, respectively, of which $1.7 million and $1.3 million, respectively, would decrease the Company’s income tax expense and effective income tax rate if the tax benefits were recognized. A reconciliation of the activity related to the liability for gross unrecognized tax benefits during fiscal 2018 and 2017 is as follows (in thousands):
| Year ended October 31,
| 2018 |  | 2017
Balances as of beginning of year |  | $2,040 |  |  |  | $1,602 |
Increases related to current year tax positions | 591 |  |  | 596 |
Increases related to prior year tax positions | 20 |  |  | — |
Decreases related to prior year tax positions | — |  |  | (24 | )
Settlements | (394 | ) |  | — |
Lapses of statutes of limitations | (157 | ) |  | (134 | )
Balances as of end of year |  | $2,100 |  |  |  | $2,040 |

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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