HEICO Annual Report 2017

← All annual reports

FY2017 Annual Report · HEICO

Loading PDF…

A N N U A L R E P O R T 2 0 1 7

H
E

C
O

C
O
R
P
O
R
A
T

O
N

2
0
1
7

A
N
N
U
A
L

R
E
P
O
R
T

HE I C O C O RP O R AT I O N

Corporate Of fices: 3000 Taf t S treet | Holly wood, FL 33021

Phone: 954-987-4000 | Fax: 954-987-8228 | www.heico.com

60 Years of Excellence in Aerospace, Defense and Electronics

FINANCIAL HIGHLIGHTS

Year ended October 31,(1)

(in thousands, except per share data)

Operating Data:
Net sales
Operating income
Interest expense
Net income attributable to HEICO

Weighted average number of common shares outstanding: (2)

Basic
Diluted

Per Share Data: (2)
Net income per share attributable to HEICO shareholders:

Basic
Diluted

Cash dividends per share

Balance Sheet Data (as of October 31):
Total assets (3)
Total debt (including current portion)
Redeemable noncontrolling interests
Total shareholders’ equity

2015

2016

2017

1,188,648
229,656
4,626
133,364 (4)

$ 1,376,258

265,345 (5)
8,272
156,192 (5)(6)

1,524,813
306,658
9,790
185,985 (7)

83,425
84,764

83,807
85,213

84,290
86,776

1.60 (4)
1.57 (4)
.112

1.86 (5)(6)
1.83 (5)(6)
.128

2.21 (7)
2.14 (7)
.152

1,700,857
367,598
91,282
893,271

$ 1,998,412
458,225
99,512
1,047,705

$ 2,512,431
673,979
131,123
1,248,292

(1) Results include the results of acquisitions from each respective effective date.

(2) All share and per share information has been adjusted retrospectively to reflect the 5-for-4 stock split effected in April 2017.

(3) During fiscal 2017, we adopted Accounting Standards Update (“ASU”) 2015-17, “Balance Sheet Classification of Deferred Taxes,” on a retrospective basis resulting in a

reclassification of $35.5 million and $41.1 million in current deferred tax assets to noncurrent deferred tax liabilities in our Consolidated Balance Sheet as of October 31,
2015 and 2016, respectively.

(4) Includes additional income tax credits for qualified research and development (“R&D”) activities related to the last ten months of fiscal 2014 recognized in fiscal 2015

upon the retroactive extension of the United States (“U.S.”) federal R&D tax credit in December 2014 to cover calendar year 2014, which, net of expenses, increased net
income attributable to HEICO by $1.8 million, or $.02 per basic and diluted share.

(5) Includes $3.1 million of acquisition costs incurred in connection with a fiscal 2016 acquisition within the Electronic Technologies Group. These expenses, net of tax,

decreased net income attributable to HEICO by $2.0 million, or $.02 per basic and diluted share.

(6) Includes additional income tax credits for qualified R&D activities related to the last ten months of fiscal 2015 recognized in fiscal 2016 upon the retroactive and

permanent extension of the U.S. federal R&D tax credit in December 2015, which, net of expenses, increased net income attributable to HEICO by $1.7 million, or $.02 per
basic and diluted share.

(7) During fiscal 2017, we adopted ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting,” resulting in the recognition of a $3.1 million discrete

income tax benefit and a 781,000 increase in our weighted average number of diluted common shares outstanding, which, net of noncontrolling interests, increased net
income attributable to HEICO by $2.6 million, or $.03 per basic and $.01 per diluted share.

FORWARD-LOOKING STATEMENTS
Certain statements in this report constitute forward-looking statements, which are subject to risks, uncertainties and contingencies.
HEICO’s actual results may differ materially from those expressed in or implied by those forward-looking statements as a result of
factors including: lower demand for commercial air travel or airline fleet changes or airline purchasing decisions, which could cause
lower demand for our goods and services; product specification costs and requirements, which could cause an increase to our costs to
complete contracts; governmental and regulatory demands, export policies and restrictions, reductions in defense, space or homeland
security spending by U.S. and/or foreign customers or competition from existing and new competitors, which could reduce our sales;
our ability to introduce new products and services at profitable pricing levels, which could reduce our sales or sales growth; product
development or manufacturing difficulties, which could increase our product development costs and delay sales; our ability to make
acquisitions and achieve operating synergies from acquired businesses; customer credit risk; interest, foreign currency exchange and
income tax rates; economic conditions within and outside of the aviation, defense, space, medical, telecommunications and electronics
industries, which could negatively impact our costs and revenues; and defense budget cuts, which could reduce our defense-related
revenue. Parties receiving this material are encouraged to review all of HEICO’s filings with the Securities and Exchange Commission,
including, but not limited to filings on Form 10-K, Form 10-Q and Form 8-K. We undertake no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information, future events or otherwise, except to the extent required by
applicable law.

BOARD OF DIRECTORS

THOMAS M. CULLIGAN
retired Chairman and CEO,
Raytheon International
retired Sr. Vice President,
The Raytheon Company

ADOLFO HENRIQUES
Chairman,
Gibraltar Private Bank & Trust
Vice Chairman,
Related Group

MARK H. HILDEBRANDT
Managing Partner and Member,
Waldman, Trigoboff, Hildebrandt
& Calnan, P.A.

WOLFGANG MAYRHUBER
retired Chairman of the
Supervisory Board,
Deutsche Lufthansa AG
Chairman of the Supervisory Board,
Infineon Technologies AG

ERIC A. MENDELSON
Co-President,
HEICO Corporation

LAURANS A. MENDELSON
Chairman and
Chief Executive Officer,
HEICO Corporation

VICTOR H. MENDELSON
Co-President,
HEICO Corporation

JULIE NEITZEL
Partner,
WE Family Offices

DR. ALAN SCHRIESHEIM
retired Director,
Argonne National Laboratory

FRANK J. SCHWITTER
retired Partner,
Arthur Andersen LLP

Thomas M. Culligan

Adolfo Henriques

Mark H. Hildebrandt

Wolfgang Mayrhuber

Eric A. Mendelson

Laurans A. Mendelson

Victor H. Mendelson

Julie Neitzel

Dr. Alan Schriesheim

Frank J. Schwitter

C O R P O R A T E
P R O F I L E

C elebrating our 60th anniversary in business, HEICO

Corporation is a rapidly growing aerospace and electronics

company focused on niche markets and cost-saving solutions

for its customers. HEICO’s products are found in the most

demanding applications requiring high-reliability parts and

components, such as aircraft, spacecraft, defense equipment,

medical equipment, and telecommunications systems. Through

our Flight Support Group, we are: the world’s largest independent

provider of commercial, FAA-approved aircraft replacement

parts; a significant provider of aircraft accessories component

repair & overhaul services for avionic, electro-mechanical, flight

surface, hydraulic and pneumatic applications; a leader in niche

aircraft parts distribution; and a manufacturer of other critical

aircraft parts.

Our Electronic Technologies Group designs and manufactures

mission-critical, niche electronic, electro-optical, microwave

and other components found in aviation, broadcast, defense,

homeland security, medical, space, telecom and other complex

equipment used worldwide.

HEICO’s customers include most of the world’s airlines, overhaul

shops, satellite manufacturers, commercial and defense equip-

ment producers, medical equipment manufacturers, government

agencies, telecommunications equipment suppliers and others.

Net Sales
(in millions)

$1,188.6

$1,376.3

$1,524.8

Operating Income
(in millions)

$229.7

$265.3

$306.7

$133.4

$156.2

$186.0

Net Income
(in millions)

Net Income Per Share
(diluted)

$1.57

$1.83

$2.14

MANAGEMENT’S MESSAGE

Dear Fellow Shareholder:

In fiscal 2017, HEICO achieved its eighth consecutive

year of record net income, operating income and
sales results. Net income increased 19% to $186.0

million ($2.14 per diluted share) from $156.2 million

($1.83 per diluted share); operating income increased

16% to $306.7 million from $265.3 million; and net

sales increased 11% to $1,524.8 million from $1,376.3

million. Operating cash flow increased 10% to $274.9

million from $249.2 million. This figure represents

148% of net income.

Our record year was driven by excellent performance

in both segments. In the Flight Support Group,

operating income grew 10% to a record $179.3 million

from $163.4 million. Additionally, net sales increased

10% to a record $967.5 million from $875.9 million.

subsidiary, Radiant Power Corp., completed an add-

on acquisition of Interface Displays & Controls, Inc.

Despite the active year, HEICO’s total debt to

shareholders’ equity ratio was 54.0% as of October

31, 2017. With net debt of only $621.9 million and

a healthy leverage ratio of approximately 1.7x Net

Debt/ EBITDA, we remain well capitalized to fund

future growth opportunities and acquisitions. In

maintaining our focus on long-term growth, we

recently entered into a new $1.3 billion unsecured

revolving credit agreement that doesn’t mature until

2022 and that can be expanded to $1.65 billion with

bank approval.

As significant shareholders ourselves, we always

strive to be great stewards of the Company and

efficient capital allocators. To that effect, we
increased the semi-annual dividend 22%, cumula-

tively, in the past 12 months through three separate

increases. Additionally, we completed one 5-for-4

stock split and declared another, which became

effective in January 2018.

We are optimistic and bullish about HEICO’s future.

Our strategy remains the same; we will continue

to innovate, exceed customer expectations and

acquire strong businesses. Please read the question

and answer section that follows this letter to gain

The Electronic Technologies Group reached new

more insight into our company.

heights, as well. Operating income grew 25% to a

record $157.5 million from $126.0 million. Concurrently,

net sales increased 12% to $574.3 million from $511.3

million. The excellent performance by both segments

was primarily driven through organic product

development initiatives and acquisitions.

In calendar 2017, we completed four acquisitions.

HEICO’s Flight Support Group acquired a France,

Germany and United States-based distributor, Air Cost
Control, and a California-based composites manufac-
turer, Carbon by Design, in the first half of the year. In

the latter half of the year, the Electronic Technologies

Group acquired AeroAntenna Technology, Inc., which

is HEICO’s largest acquisition ever to date. Shortly

after the fiscal year ended, our Sarasota, FL-based

Finally, 2017 marked HEICO’s 60th anniversary. We

would like to thank our approximately 5,200 Team

Members who continue to be the gold standard in our

industry. Without their hard work, talent and loyalty,

HEICO would not be here today. Their devotion to

their craft, and to HEICO, continues to inspire us and

we are humbled to be their partners in our mutual

endeavors. We are also thankful to our Board of

Directors for their unwavering support and counsel.

Sincerely,

Laurans A. Mendelson
Chairman & Chief
Executive Officer

Eric A. Mendelson
Co-President

Victor H. Mendelson
Co-President

QUESTION AND ANSWER DISCUSSION

Q&A

Q. Could you please provide more information on HEICO’s recent acquisitions?

We are excited about all four acquisitions. Our largest ever acquisition, AeroAntenna Technology (Chats-
worth, CA), manufactures high-reliability, mission critical antennas for a variety of commercial and defense
applications. Air Cost Control (Toulouse, France; Hamburg, Germany and Sunrise, FL) is a commercial aero-
space interconnect distributor that expands HEICO’s growing distribution business. HEICO has a substantial
presence abroad, particularly in France, and we intend to make more international investments in the future.
Carbon by Design (Oceanside, CA) manufactures composite components for highly specialized applications
like UAVs, spacecraft, rockets and other end markets. This acquisition also expands HEICO’s footprint in
the niche specialty products space. Last, Interface Displays & Controls (Oceanside, CA) produces displays,
panels and exterior lighting for a variety of defense platforms. All four acquisitions have been meeting or
exceeding expectations so far and we could not be happier with the respective management teams.

Q. How does the acquisition pipeline look and what are your views on the current market environment?

Our acquisition pipeline remains strong; we currently have projects in all stages of the acquisition process
(as we always do). We believe HEICO’s post-acquisition operating philosophy of respecting and leaving
intact a business’ team renders us the best buyer of businesses from owners who want a great home
for their company. We value and honor the prior owner’s legacy and, often, that owner continues to have
an ownership interest in the business. We will not stray from our principled investing strategy and will
continue to invest in desirable assets at fair prices.

While we never provide macro forecasts, we believe that the current business environment is bullish. A more
hospitable attitude toward businesses by the U.S. Government, lower taxes, increased defense spending
and general business enthusiasm should increase HEICO’s bottom line in the medium and long-term. The
recent U.S. tax law change alone will benefit HEICO’s Team Members, customers and shareholders, allowing
us to reinvest in our business and to continue to develop products to meet our customers’ needs.

Q. Does HEICO plan to acquire larger companies and/ or invest outside its current markets?

Our focus is not on acquiring companies of a particular size. We want to acquire and partner with strong,
market-leading companies run by capable and ethical management teams. While our heritage is based
in acquiring smaller companies by Wall Street standards, we will not hesitate to buy larger companies. Of
course, we will not compromise our standards to hit a certain growth target.

With regard to different industries, we continually assess and explore investing in complementary end
markets. We have always said that we do not view HEICO solely as an aerospace company, but equally as
a cash flow generating business. If an opportunity arises to make an investment in an adjacent industry
and it fits with our stringent criteria, then we would take a serious look.

Q. Are there any other reflections or thoughts on HEICO’s 60th Anniversary?

Yes – we are truly humbled, thankful and amazed at HEICO’s performance since we took over in 1990.
While it has been financially rewarding for our shareholders and Team Members, we are most grateful for
the countless friendships that have been cultivated throughout the years. We frequently travel to our
different subsidiaries and locations every year; as a result, we get to know many of our colleagues on a
more personal level than would otherwise be possible. These interactions inspire us and make us enthu-
siastic about HEICO’s future. Hopefully, HEICO’s next sixty years will follow a similar pattern to the years
since 1990. On the following pages, we have laid out some guiding principles for our future.

HEICO

‹ HEICO’s earlier years

P R I N C I P L E S

For HEICO’s 60th anniversary, we felt it worthwhile

to reflect on our Company’s and Team Members’

accomplishments, while also outlining the likely

framework for our future. In 1990, when current

leadership assumed HEICO’s management, the

Company’s future was cloudy, at best. At that time,

HEICO was a small company, with about $26 million

in sales and $2 million in operating income, reliant

on a few, soon to be increasingly retired aircraft jet

engine parts. However, even with all the unforeseen

challenges, we knew that by committing to a few key

principles, we could grow a business that would make

both our shareholders and Team Members proud.

First, our customers are our highest priority. After

all, without customers, we have no business. HEICO

succeeds when we deliver value to our customers,

often by providing a lower cost alternative. Our

heritage is deeply entrenched in developing

cost-saving solutions for our aerospace and defense

partners. Additionally, we continually invest a

significant amount in our Research and Development

programs to introduce newer, more efficient products

that meet stringent customer demands. Through our

FAA-approved aircraft replacements parts business,

we save our major airline customers an estimated

average of over $30 million annually. Our Electronic

Technologies Group subsidiaries manufacture

mission-critical parts for highly technical and sensitive

programs, many of which keep our soldiers safe every

day. Suffice it to say, we will always search for new

ways to grow our business by serving our customers.

Above, inset photo, a technician performed a jet engine Combustion Chamber
repair years ago in the Hollywood, FL facility. Above, large photo, today, a
specially-trained machinist uses a computer-controlled machining center
in the manufacture of a sophisticated jet engine part at the same facility.

Our industry has very technical specifications and requirements for all component
products that must be met in order to keep our passengers and soldiers safe.
Above, a Team Member is testing and measuring one such component at our
Hollywood, FL facility. HEICO’s PMA business alone designs and receives new
approvals to make 300-500 highly-engineered parts each year.

Second, we care for our Team Members. We have

businesses are already the best in their fields, as

repeatedly commented that we consider HEICO’s

they possess unique talents and deep expertise.

Team Members to be some of the most talented and

We want our Team Members to feel pride in being

hard-working people in our industry. Without them,

part of the HEICO family. We congratulate all of our

HEICO would not be where it is today. We try to do

Team Members for the wonderful journey that we

right by our Team Members, as well. In 1985 HEICO

have been on so far and we look forward to many

established a 401K Plan, called the HEICO Savings

more years to come.

and Investment Plan, with the intent of allowing the

Company’s Team Members to plan for retirement.

At that time, the Company provided approximately

6% of its shares to the Plan. In 1992, we added

another roughly 13% of the Company’s shares to

the Plan. At the time the shares were provided, their

aggregate value was $5.7 million. Today, those same

shares are worth around $1 billion.* From an investor

return perspective, a $100,000 investment in HEICO

in 1990 would be worth $24.9 million* as of December

31, 2017, which is a compounded annual growth

rate of 23%. As a result, our Team Members are

true shareholders of this business and participate

in HEICO’s success through ownership stakes, in

addition to standard compensation.

$100,000
investment
in 1990

$24.9
million
value as of
Dec 2017

23%
Compounded
Annual Growth
Rate

In acquisitions, we like to retain management and

have minimal employee turnover – we believe this

upfront loyalty has saved us much of the difficulty

Third, we will continue to be an acquisitive company.

We have made 65 purchases since 1996 and hope

to do another 65

in the next 20

years. In 2017, we

completed four

acquisitions, with

65acquisitions

since 1996

4acquisitions

in 2017

AeroAntenna Technology, Inc., being our largest ever.

Our increased borrowing capability under our $1.3

billion line of credit, which can be expanded to $1.65

billion with approval of our banking group, provides

us with ample capacity to make acquisitions under

our disciplined acquisition program. If you own, or

know of, a Company that would like to be part of the

HEICO family, please let us know.

It continues to be one of our greatest honors and

privileges to lead HEICO. We are humbled through

our daily interactions with our colleagues and enjoy

the relationships we continue to cultivate with our

shareholders. In short, we cannot be more excited

about HEICO’s future. In the pages that follow, we

pay tribute to some of the wonderful HEICO Team

other companies experience. We do not need to find

Members who have been with our company and our

theoretical “best-in-class” operators and implement

subsidiaries for many years.

bureaucratic “corporate guidelines” because our

*Including dividends and assuming reinvestment of those dividends.

C O M M E R C I A L
A V I A T I O N

SOUBINH
CHANTHAVONGSOUK
Manufacturing Lead,
Team Member for
38 years.

Santa Fe Springs, CA

Mt. Juliet, TN

JOHN
MCKINNEY
Supervisor & Export
Administrator, Team
Member for 13 years.

HEICO’s commercial aviation business continued to grow in

2017. Our FAA-approved commercial aircraft alternative

replacement parts (“PMA”) companies continued to deliver

outstanding cost-saving solutions to our customers. HEICO

currently holds more than 10,000 FAA-approvals for PMA

parts on virtually all the major, large commercial aircraft in

production. Each year, we develop approximately 300-500

new and highly engineered parts, as well. While our PMA

program is robust and growing rapidly, HEICO still adheres

to strict quality standards. In the close to 70 million parts

delivered, we have a record of zero service bulletins, zero

airworthiness directives and zero in-flight shutdowns.

We anticipate that our growing PMA portfolio, combined with

HEICO’s repair operations, will save airlines roughly $1.5 billion

over the next five years. In fact, since 2002, our customers

have saved an estimated nearly $3.0 billion.

$3 billion

customer savings
since 2002

$1.5 billion

projected savings for airlines
in the next five years

HEICO continues to expand its product breadth. At the top right, our Aeroworks
subsidiary (based in Middenmeer, The Netherlands) supplies an extensive set of Galley
Cart and Compartment Retainers. Below, two Team Members at our Tempe, AZ-based
Harter Aerospace subsidiary repair a Thrust Reverser Actuation component.

Our Aero Design subsidiary in Mt. Juliet, TN, pictured below,
supplies Mainship, Emergency Backup and other Batteries for
commercial, regional, business and general aviation aircraft.
Above, an Aero Design Aircraft Mainship Battery Cell.

LATONIA
MAYES
Warehouse
Supervisor,
Team Member
for 21 years.

Hauppauge, NY

C O M M E R C I A L A V I A T I O N ( c o n t i n u e d )

The outlook for the commercial aerospace industry remains

positive. Boeing’s current 20-year market outlook forecasts

4.7% traffic growth, 41,030 new aircraft deliveries and a total

industry market value of $6.1 trillion worth of aircraft deliveries.

These predictions are all signs of a healthy industry that is

poised to grow at a faster rate than most global GDP forecasts.

Our niche manufacturing and distribution businesses had an

outstanding year as well. Two acquisitions, Air Cost Control and

Carbon by Design, bolstered HEICO’s footprint in these growing

markets. These acquisitions expand HEICO’s customer base

and product set, and both companies are run by outstanding

Team Members and management teams.

HEICO’s business continues to expand internationally.
Above, two engineers at our JetAvi Engineering subsidiary
in Bengaluru, India working on new product designs.

Above left, at our Ft. Myers, FL facility, a HEICO technician works in our component repair and overhaul businesses, which are among the largest independent
operations in the United States. HEICO’s distribution business continues to grow rapidly. Our recent acquisition of Air Cost Control (Toulouse, France; Hamburg,
Germany and Sunrise, FL) expanded our distribution exposure in Europe; pictured above right are stocked parts at one warehouse at our Blue Aerospace
subsidiary (Tamarac, FL).

4.7%

traffic growth

41,030

new commercial aircraft deliveries

$6.1 trillion

total estimated new commercial

aircraft market value

Source: Current market

outlook 2017 - 2036 (Boeing)

HEICO subsidiaries extensively utilize sophisticated
optical and computerized measurement systems in
the design, production and quality processes.

D E F E N S E

Tempe, AZ-based Robertson Fuel Systems manufactures Crashworthy, Self-Sealing Auxiliary Fuel Systems. Since 1976, Robertson is believed to
have saved thousands of our soldiers’ lives with this unique technology. Pictured above, an Apache helicopter flies over mountainous terrain.
Apache pilots are known to refuse to fly unless their helicopters are equipped with a Robertson Fuel System.

AEROANTENNA
TECHNOLOGY, INC.
Team joined the
HEICO family in
September 2017.

ROB
CALLAHAN
Engineering
Tech Manager,
Team Member
for 33 years.

Chatsworth, CA

Tempe, AZ

Carbon by Design, acquired in 2017 and located in Oceanside, CA, manufactures a variety of composite
components for UAVs (such as the one pictured above), rockets, spacecraft and other specialized
applications. Pictured to the left, a Team Member is building one such composite component.

HEICO is a proud supporter of our country’s military forces and her Allies across the world. Our companies

manufacture a multitude of products, including: High Performance Active Antenna Systems, Electro-Optical

Test Equipment, Power Amplifiers, Power Supplies, Power Converters, Recorders, Digital Receivers, Digital

Tuners, Laser Rangefinder Receivers, Electromagnetic Interference and Radio Frequency Interference Shielding,

Traveling Wave Tube Amplifiers and Crashworthy and Self-Sealing Auxiliary Fuel Systems.

We have a strong legacy of serving the military. This bond goes deeper than just our products; many of HEICO’s

Team Members are veterans or have family in the military. We take immense pride in serving our country. It

is our duty to provide products that excel in mission-critical and dangerous environments, oftentimes saving

our soldiers’ lives. As our military requires newer technologies and innovative designs for future defense, we

intend to be their most trusted partner.

HEICO’s products are on many major military
jets, including the F-16 pictured to the left. Our
Fort Worth, TX-based subsidiary, Aerospace
& Commercial Technologies, supports the
worldwide fleet of F-16s through its parts
manufacturing, repair and overhaul operations.
Pictured below is an F-16 Bulkhead.

S P A C E A N D
E L E C T R O N I C S

HEICO continues to innovate in the space markets. Above, 3D Plus (Buc, France) designs and manufactures Radiation Tolerant Memory Modules,
Point of Load Converters and Camera Heads for a variety of space applications. Our space businesses have supplied mission-critical, high-
reliability components for many strenuous missions, which recently includes: the Solar Eclipse Observation (August 2017), NASA’s OSIRIS-REx
mission (September 2016) and NASA’s Juno Spacecraft (July 2016).

Our Georgetown, TX-based, Sierra Microwave Technology, and Blacksburg, VA-based, VPT, Inc., subsidiaries continue to design and manufacture highly-
engineered components for our space and defense customers. Our customers rely on our unique expertise and capabilities to deliver products that cannot
fail under the harshest environments.

In the Electronic Technologies Group, our space businesses continue

to be great success stories. Among the many critical components

and equipment we make are: Microwave Assemblies, Ferrite Devices,

Sierra Microwave Technology’s product portfolio
includes microwave components and assemblies.
Pictured above is an integrated assembly for
a satellite.

Amplifiers, Down-Converters, Electric Power Converters, Memory

Modules, Power Supplies, Recorders and Systems in Packages. Each

of our businesses invests heavily in new technologies and strives to

be at the forefront of tomorrow’s extraterrestrial missions. In 2017,

HEICO’s IRCameras subsidiary supplied a specially designed infrared

imaging camera, which was incorporated into an Airborne Infrared

Spectrometer (“AIR-Spec”). This AIR-Spec observed and obtained

measurements of the total solar eclipse that crossed the United States

on August 21, 2017.

Our customers rely on us in order to make their missions successful.

Our products have to perform in highly-critical situations and harsh

environments. We are honored to contribute to some of our nation’s

most unique and important space exploration programs.

SHAWN
GRAHAM
Chief
Operations
Officer, Team
Member for
21 years.

Buc, France

Blacksburg, VA

CENDRINE
NOIR
Project Manager
of Standard
Products,
Team Member
for 21 years.

O T H E R M A R K E T S

Our largest acquisition ever, AeroAntenna Technology,
designs and manufactures High Performance Active
Antenna Systems for a multitude of end markets. To the
right is a Ruggedized Global Navigations Satellite System
Antenna for heavy construction or machine control
applications. The antenna is specifically designed to
withstand extreme conditions and high levels of shock.

ROBERT
BÉLAND
Co-Founder
and Chief
Technology
Officer, Team
Member for
35 years.

Chelmsford, MA

Saint-Eustache, Canada

HANK
PHELPS
Production
Manager,
Team Member
for 32 years.

In addition to Aerospace, Defense and Space, HEICO has a medical equipment
footprint. Our EMD Technologies subsidiary, based in Saint-Eustache, Canada,
designs and manufactures high-voltage advanced power electronics products
for the medical imaging and treatment equipment industry. To the right is a
radiography-dedicated EMD Power Generator.

Many of HEICO’s businesses supply

components and equipment for

a variety of other industries, including:

Medical, Telecommunications, Oil and

Gas, Agriculture and other markets.

HEICO’s presence in these industries

takes on a similar role to our Aerospace,

Defense and Space focus; our products

are used in highly sensitive, “cannot

fail” environments. Our customers have

come to associate us with reliability,

durability and high quality. Adherence

to the strict standards of our heritage

industries and markets gives us the

credibility to branch out into these related,

adjacent markets.

HEICO also supplies cable assemblies,
switches, jacks, plugs and other connec-
tors to other industrial markets through
its Chicago, IL-based Switchcraft and
Conxall subsidiaries. Pictured above are
Sealed Harsh Environment Shielded Cable
Assemblies, which are available in both
straight and right-angle versions.

2017

FINANCIAL STATEMENTS AND OTHER INFORMATION

Selected Financial Data

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income

Consolidated Statements of Shareholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Management’s Annual Report on Internal Control Over

Financial Reporting and Executive Officer Certifications

Reports of Independent Registered Public

Accounting Firm

Market for Company’s Common Equity and

Related Stockholder Matters

Seated, left to right:

Thomas S. Irwin
Senior Executive Vice President

Laurans A. Mendelson
Chairman and Chief Executive Officer

Standing, left to right:

Victor H. Mendelson
Co-President

Joseph W. Pallot
General Counsel

Carlos L. Macau, Jr.
Executive Vice President,

Chief Financial Officer

and Treasurer

Eric A. Mendelson
Co-President

Year ended October 31, (1)

2017

2016

2015

2014

2013

(in thousands, except per share data)

Operating Data:
Net sales
Gross profit
Selling, general and administrative expenses
Operating income
Interest expense
Other income (expense)
Net income attributable to HEICO

Weighted average number of common
shares outstanding: (2)

Basic
Diluted

Per Share Data: (2)
Net income per share attributable to HEICO
shareholders:

Basic
Diluted

Cash dividends per share

Balance Sheet Data (as of October 31):
Cash and cash equivalents
Total assets (9)
Total debt (including current portion)
Redeemable noncontrolling interests
Total shareholders’ equity

1,524,813
574,725
268,067
306,658
9,790
1,092
185,985 (3)

1,376,258
515,492
250,147
265,345 (4)
8,272
(23)
156,192 (4)(5)

1,188,648
434,179
204,523
229,656
4,626
(66)
133,364 (6)

1,132,311
398,312
194,924
203,388 (7)
5,441
625
121,293 (7)

1,008,757
371,181
187,591
183,590
3,717
888
102,396 (8)

84,290
86,776

83,807
85,213

83,425
84,764

83,079
84,316

82,873
83,727

2.21 (3) $
2.14 (3)
.152

1.86 (4)(5) $
1.83 (4)(5)
.128

1.60 (6) $
1.57 (6)
.112

1.46 (7) $
1.44 (7)
.376

1.24 (8)
1.22 (8)

1.453

52,066
2,512,431
673,979
131,123
1,248,292

42,955
1,998,412
458,225
99,512
1,047,705

33,603
1,700,857
367,598
91,282
893,271

20,229
1,454,729
329,109
39,966
774,619

15,499
1,499,979
377,515
59,218
723,235

(1)

Results include the results of acquisitions from each respective effective date. See Note 2, Acquisitions, of the Notes to Consolidated Financial Statements for more
information.

(2) All share and per share information has been adjusted retrospectively to reflect the 5-for-4 stock split effected in April 2017.

(3)

During fiscal 2017, we adopted Accounting Standards Update (“ASU”) 2016-09, “Improvements to Employee Share-Based Payment Accounting,” resulting in the
recognition of a $3.1 million discrete income tax benefit and a 781,000 increase in our weighted average number of diluted common shares outstanding, which, net of
noncontrolling interests, increased net income attributable to HEICO by $2.6 million, or $.03 per basic and $.01 per diluted share. See Note 1, Summary of Significant
Accounting Policies - New Accounting Pronouncements, of the Notes to Consolidated Financial Statements for more information.

(4) Includes $3.1 million of acquisition costs incurred in connection with a fiscal 2016 acquisition within the Electronic Technologies Group (“ETG”). These expenses, net of

tax, decreased net income attributable to HEICO by $2.0 million, or $.02 per basic and diluted share.

(5) Includes additional income tax credits for qualified research and development (“R&D”) activities related to the last ten months of fiscal 2015 recognized in fiscal 2016
upon the retroactive and permanent extension of the United States (“U.S.”) federal R&D tax credit in December 2015, which, net of expenses, increased net income
attributable to HEICO by $1.7 million, or $.02 per basic and diluted share.

(6)

(7)

Includes additional income tax credits for qualified R&D activities related to the last ten months of fiscal 2014 recognized in fiscal 2015 upon the retroactive extension
of the U.S. federal R&D tax credit in December 2014 to cover calendar year 2014, which, net of expenses, increased net income attributable to HEICO by $1.8 million, or
$.02 per basic and diluted share.

Operating income was increased by a $28.1 million reduction in accrued contingent consideration related to a fiscal 2013 and a fiscal 2012 acquisition within the
ETG, partially offset by $15.0 million in impairment losses related to the write-down of certain intangible assets of the fiscal 2013 and fiscal 2012 acquisitions to their
estimated fair values as well as lower than expected operating income at the fiscal 2013 acquired business, which in aggregate increased net income attributable to
HEICO by $10.2 million, or $.12 per basic and diluted share. The reduction in accrued contingent consideration and $13.1 million of the impairment losses were recorded
as a component of selling, general and administrative expenses, while the remaining impairment losses of $1.9 million were recorded as a component of cost of sales.

(8) Includes additional income tax credits for qualified R&D activities related to the last ten months of fiscal 2012 recognized in fiscal 2013 upon the retroactive extension
of the U.S. federal R&D tax credit in January 2013 and higher R&D tax credits recognized upon the filing of HEICO’s fiscal 2012 U.S. federal and state tax returns, which,
net of expenses, increased net income attributable to HEICO by $1.8 million, or $.02 per basic and diluted share.

(9)

During fiscal 2017, we adopted ASU 2015-17, “Balance Sheet Classification of Deferred Taxes,” on a retrospective basis resulting in a reclassification of $41.1 million,
$35.5 million, $34.5 million and $33.0 million in current deferred tax assets to noncurrent deferred tax liabilities in our Consolidated Balance Sheet as of October 31,
2016, 2015, 2014 and 2013, respectively. See Note 1, Summary of Significant Accounting Policies - New Accounting Pronouncements, of the Notes to Consolidated
Financial Statements for more information.

HEICO Corporation and SubsidiariesSELECTED FINANCIAL DATA

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

HEICO Corporation
and Subsidiaries

Overview

Our business is comprised of two operating segments, the Flight Support Group (“FSG”) and the Electronic Technologies Group (“ETG”).

The Flight Support Group consists of HEICO Aerospace Holdings Corp. (“HEICO Aerospace”), which is 80% owned, and HEICO Flight

Support Corp., which is wholly owned, and their collective subsidiaries, which primarily:

• Designs, Manufactures, Repairs, Overhauls and Distributes Jet Engine and Aircraft Component Replacement Parts. The Flight

Support Group designs, manufactures, repairs, overhauls and distributes jet engine and aircraft component replacement parts.
The parts and services are approved by the Federal Aviation Administration (“FAA”). The Flight Support Group also manufactures
and sells specialty parts as a subcontractor for aerospace and industrial original equipment manufacturers and the United States
(“U.S.”) government. Additionally, the Flight Support Group is a leading supplier, distributor, and integrator of military aircraft parts
and support services primarily to foreign military organizations allied with the U.S. and a leading manufacturer of advanced niche
components and complex composite assemblies for commercial aviation, defense and space applications. Further, the Flight
Support Group engineers, designs and manufactures thermal insulation blankets and parts as well as removable/reusable insulation
systems for aerospace, defense, commercial and industrial applications, manufactures expanded foil mesh for lightning strike
protection in fixed and rotary wing aircraft and is a leading distributor of aviation electrical interconnect products and electro-
mechanical parts.

The Electronic Technologies Group consists of HEICO Electronic Technologies Corp. (“HEICO Electronic”) and its subsidiaries, which

primarily:

• Designs and Manufactures Electronic, Microwave and Electro-Optical Equipment, High-Speed Interface Products, High Voltage

Interconnection Devices and High Voltage Advanced Power Electronics. The Electronic Technologies Group designs, manufactures
and sells various types of electronic, microwave and electro-optical equipment and components, including power supplies, laser
rangefinder receivers, infrared simulation, calibration and testing equipment; power conversion products serving the high-reliability
military, space and commercial avionics end-markets; underwater locator beacons used to locate data and voice recorders utilized
on aircraft and marine vessels; electromagnetic interference shielding for commercial and military aircraft operators, electronics
companies and telecommunication equipment suppliers; traveling wave tube amplifiers and microwave power modules used in
radar, electronic warfare and on-board jamming and countermeasure systems; advanced high-technology interface products that
link devices such as telemetry receivers, digital cameras, high resolution scanners, simulation systems and test systems to computers;
high voltage energy generators, high voltage interconnection devices, cable assemblies and wire for the medical equipment,
defense and other industrial markets; high voltage power supplies found in satellite communications, CT scanners and in medical
and industrial x-ray systems; three-dimensional microelectronic and stacked memory products that are principally integrated
into larger subsystems equipping satellites and spacecraft; harsh environment connectivity products and custom molded cable
assemblies; radio frequency (RF) and microwave amplifiers, transmitters and receivers used to support military communications
on unmanned aerial systems, other aircraft, helicopters and ground-based data/communications systems; communications and
electronic intercept receivers and tuners for military and intelligence applications; wireless cabin control systems, solid state power
distribution and management systems and fuel level sensing systems for business jets and for general aviation, as well as for the
military/defense market; microwave modules, units and integrated sub-systems for commercial and military satellites; crashworthy
and ballistically self-sealing auxiliary fuel systems for military rotorcraft; and high performance active antenna systems for
commercial aircraft, precision guided munitions, other defense applications and commercial uses.

Our results of operations during each of the past three fiscal years have been affected by a number of transactions. This discussion

of our financial condition and results of operations should be read in conjunction with the Consolidated Financial Statements and Notes
thereto included herein. For further information regarding the acquisitions discussed below, see Note 2, Acquisitions, of the Notes to
Consolidated Financial Statements. Each acquisition was included in our results of operations from the effective acquisition date.

In September 2017, we acquired, through HEICO Electronic, all of the outstanding stock of AeroAntenna Technology, Inc. (“AAT”). AAT

designs and produces high performance active antenna systems for commercial aircraft, precision guided munitions, other defense
applications and commercial uses.

In June 2017, we acquired, through a subsidiary of the HEICO Flight Support Corp., all of the ownership interests of Carbon by Design
(“CBD”). CBD is a manufacturer of composite components for UAVs, rockets, spacecraft and other specialized applications. The purchase
price of CBD was paid using cash provided by operating activities.

In April 2017, we acquired, through a subsidiary of HEICO Flight Support Corp., 80.1% of the equity interests of LLP Enterprises, LLC,
which owns all of the outstanding equity interests of the operating units of Air Cost Control (“A2C”). A2C is a leading aviation electrical
interconnect product distributor of items such as connectors, wire, cable, protection and fastening systems, in addition to distributing a
wide range of electromechanical parts. The remaining 19.9% interest continues to be owned by certain members of A2C’s management
team.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

HEICO Corporation
and Subsidiaries

In January 2016, we acquired, through HEICO Electronic, all of the limited liability company interests of Robertson Fuel Systems, LLC
(“Robertson”). Robertson designs and produces mission-extending, crashworthy and ballistically self-sealing auxiliary fuel systems for
military rotorcraft.

In December 2015, we acquired, through a subsidiary of HEICO Electronic, certain assets of a company that designs and manufactures

underwater locator beacons used to locate aircraft cockpit voice recorders, flight data recorders, marine ship voyage recorders and other
devices which have been submerged under water. The purchase price of this acquisition was paid using cash provided by operating
activities.

In August 2015, we acquired, through HEICO Flight Support Corp., all of the stock of Astroseal Products Mfg. Corporation (“Astroseal”).

Astroseal manufactures expanded foil mesh, which is integrated into composite aerospace structures for lightning strike protection in
fixed and rotary wing aircraft.

In August 2015, we acquired, through HEICO Electronic, 80.1% of the equity of Midwest Microwave Solutions, Inc. (“MMS”). MMS
designs, manufactures and sells unique Size, Weight, Power and Cost (SWAP-C) optimized Communications and Electronic Intercept
Receivers and Tuners for military and intelligence applications. The remaining 19.9% continues to be owned by certain members of MMS’
management team.

In August 2015, we acquired, through HEICO Flight Support Corp., 80.1% of the assets and assumed certain liabilities of Aerospace

& Commercial Technologies, LLC (“ACT”). ACT is a provider of products and services necessary to maintain up-to-date F-16 fighter aircraft
operational capabilities. The remaining 19.9% continues to be owned by certain members of ACT’s management team.

In May 2015, we acquired, through a subsidiary of HEICO Flight Support Corp., all of the stock of Thermal Energy Products, Inc. (“TEP”).

TEP engineers, designs and manufactures removable/reusable insulation systems for industrial, commercial, aerospace and defense
applications.

In January 2015, we acquired, through HEICO Flight Support Corp., 80.1% of the equity of Harter Aerospace, LLC (“Harter”). Harter
is a globally recognized component and accessory maintenance, repair, and overhaul (MRO) station specializing in commercial aircraft
accessories, including thrust reverse actuation systems and pneumatics, and electromechanical components. The remaining 19.9%
interest continues to be owned by certain members of Harter’s management team.

In January 2015, we acquired, through HEICO Flight Support Corp., 80% of the equity of Aeroworks International Holding B.V.
(“Aeroworks”). Aeroworks, which is headquartered in the Netherlands and maintains a significant portion of its production facilities in
Thailand and Laos, is a manufacturer of both composite and metal parts used primarily in aircraft interior applications, including seating,
galleys, lavatories, doors, and overhead bins. The remaining 20% interest continues to be owned by a certain member of Aeroworks’
management team.

Unless otherwise noted, the purchase price of each of the above referenced acquisitions was paid in cash, principally using proceeds
from our revolving credit facility. The aggregate amount paid in cash for acquisitions was $418.3 million, $263.8 million and $166.8 million in
fiscal 2017, 2016 and 2015, respectively.

Critical Accounting Policies

We believe that the following are our most critical accounting policies, which require management to make judgments about matters

that are inherently uncertain.

Assumptions utilized to determine fair value in connection with business combinations, contingent consideration arrangements and
in goodwill and intangible assets impairment tests are highly judgmental. If there is a material change in such assumptions or if there is a
material change in the conditions or circumstances influencing fair value, we could be required to recognize a material impairment charge.

Revenue Recognition

Revenue from the sale of products and the rendering of services is recognized when title and risk of loss passes to the customer,
which is generally at the time of shipment. Revenue from certain fixed price contracts for which costs can be dependably estimated is
recognized on the percentage-of-completion method, measured by the percentage of costs incurred to date to estimated total costs for
each contract. This method is used because management considers costs incurred to be the best available measure of progress on these
contracts. Revisions in cost estimates as contracts progress have the effect of increasing or decreasing profits in the period of revision.
Revisions in cost estimates may be caused by factors such as the price or availability of raw materials and component parts or variations
in the amount of labor required and/or the materials necessary to meet customer specifications and requirements. Provisions for
estimated losses on uncompleted contracts are made in the period in which such losses are determined. The percentage of our net sales
recognized under the percentage-of-completion method was approximately 3%, 3% and 4% in fiscal 2017, 2016 and 2015, respectively.
Changes in estimates pertaining to percentage-of-completion contracts did not have a material or significant effect on net income or net
income per share in fiscal 2017, 2016 and 2015.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

HEICO Corporation
and Subsidiaries

For fixed price contracts in which costs cannot be dependably estimated, revenue is recognized on the completed- contract method.
A contract is considered complete when all significant costs have been incurred or the item has been accepted by the customer. Progress
billings and customer advances received on fixed price contracts accounted for under the completed-contract method are classified as a
reduction to contract costs that are included in inventories, if any, and any remaining amount is included in accrued expenses and other
current liabilities.

Valuation of Accounts Receivable

The valuation of accounts receivable requires that we set up an allowance for estimated uncollectible accounts and record a
corresponding charge to bad debt expense. We estimate uncollectible receivables based on such factors as our prior experience, our
appraisal of a customer’s ability to pay, age of receivables outstanding and economic conditions within and outside of the aviation,
defense, space, medical, telecommunications and electronics industries. Actual bad debt expense could differ from estimates made.

Valuation of Inventory

Inventory is stated at the lower of cost or market, with cost being determined on the first-in, first-out or the average cost basis.

Losses, if any, are recognized fully in the period when identified.

We periodically evaluate the carrying value of inventory, giving consideration to factors such as its physical condition, sales patterns

and expected future demand in order to estimate the amount necessary to write down any slow moving, obsolete or damaged inventory.
These estimates could vary significantly from actual amounts based upon future economic conditions, customer inventory levels, or
competitive factors that were not foreseen or did not exist when the estimated write-downs were made.

In accordance with industry practice, all inventories are classified as a current asset including portions with long production cycles,

some of which may not be realized within one year.

Business Combinations

We allocate the purchase price of acquired entities to the underlying tangible and identifiable intangible assets acquired and liabilities
and any noncontrolling interests assumed based on their estimated fair values, with any excess recorded as goodwill. Determining the fair
value of assets acquired and liabilities and noncontrolling interests assumed requires management’s judgment and often involves the use
of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset
lives and market multiples, among other items. We determine the fair values of intangible assets acquired generally in consultation with
third-party valuation advisors.

As part of the agreement to acquire certain subsidiaries, we may be obligated to pay contingent consideration should the acquired

entity meet certain earnings objectives subsequent to the date of acquisition. As of the acquisition date, contingent consideration is
recorded at fair value as determined through the use of a probability-based scenario analysis approach. Under this method, a set of
discrete potential future subsidiary earnings is determined using internal estimates based on various revenue growth rate assumptions for
each scenario. A probability of likelihood is then assigned to each discrete potential future earnings estimate and the resultant contingent
consideration is calculated and discounted using a weighted average discount rate reflecting the credit risk of HEICO. Subsequent to
the acquisition date, the fair value of such contingent consideration is measured each reporting period and any changes are recorded to
selling, general and administrative (“SG&A”) expenses within our Consolidated Statements of Operations. Changes in either the revenue
growth rates, related earnings or the discount rate could result in a material change to the amount of contingent consideration accrued.
As of October 31, 2017, 2016 and 2015, $27.6 million, $18.9 million and $21.4 million of contingent consideration was accrued within our
Consolidated Balance Sheets, respectively. During fiscal 2017, 2016 and 2015, such fair value measurement adjustments resulted in net
increases to SG&A expenses of $1.1 million, $3.1 million and $.3 million, respectively. For further information regarding our contingent
consideration arrangements, see Note 7, Fair Value Measurements, of the Notes to Consolidated Financial Statements.

Valuation of Goodwill and Other Intangible Assets

We test 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 not be fully recoverable. In evaluating the recoverability of goodwill, we compare the fair value of each of
our reporting units to its carrying value to determine potential impairment. If the carrying value of a reporting unit exceeds its fair value,
the implied fair value of that reporting unit’s goodwill is to be calculated and an impairment loss is recognized in the amount by which the
carrying value of the reporting unit’s goodwill exceeds its implied fair value, if any. The fair values of our reporting units were determined
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. We calculate 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. Based on the annual goodwill impairment test as of October 31, 2017, 2016 and 2015,
we determined there was no impairment of our goodwill. The fair value of each of our reporting units as of October 31, 2017 significantly
exceeded its carrying value.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

HEICO Corporation
and Subsidiaries

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 did not recognize any impairment losses in fiscal 2017, 2016 and 2015.

Results of Operations

The following table sets forth the results of our operations, net sales and operating income by segment and the percentage of net

sales represented by the respective items in our Consolidated Statements of Operations (in thousands):

Year ended October 31,

Net sales
Cost of sales
Selling, general and administrative expenses
Total operating costs and expenses
Operating income

Net sales by segment:
Flight Support Group
Electronic Technologies Group

Intersegment sales

Operating income by segment:
Flight Support Group
Electronic Technologies Group
Other, primarily corporate

Net sales
Gross profit
Selling, general and administrative expenses
Operating income
Interest expense
Other income (expense)
Income tax expense
Net income attributable to noncontrolling interests
Net income attributable to HEICO

2017

1,524,813
950,088
268,067
1,218,155
$ 306,658

967,540
574,261
(16,988)
1,524,813

179,278
157,451
(30,071)
$ 306,658

100.0%
37.7%
17.6%
20.1%
.6%
.1%
5.9%
1.4%
12.2%

2016

$ 1,376,258
860,766
250,147
1,110,913
$ 265,345

875,870
511,272
(10,884)
$ 1,376,258

163,427
126,031
(24,113)
$ 265,345

100.0%
37.5%
18.2%
19.3%
.6%
—%
5.9%
1.5%
11.3%

2015

1,188,648
754,469
204,523
958,992
$ 229,656

$ 809,700
390,982
(12,034)
1,188,648

149,798
98,833
(18,975)
$ 229,656

100.0%
36.5%
17.2%
19.3%
.4%
—%
6.0%
1.7%
11.2%

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Comparison of Fiscal 2017 to Fiscal 2016

Net Sales

Our net sales in fiscal 2017 increased by 11% to a record $1,524.8 million, as compared to net sales of $1,376.3 million in fiscal 2016.
The increase in consolidated net sales reflects an increase of $63.0 million (a 12% increase) to a record $574.3 million in net sales within
the ETG as well as an increase of $91.7 million (a 10% increase) to a record $967.5 million in net sales within the FSG. The net sales increase
in the ETG resulted from organic growth of 7% as well as net sales of $23.3 million contributed by our fiscal 2017 and 2016 acquisitions.
The ETG’s organic growth is mainly attributed to increased demand for our space, aerospace and other electronics products resulting in
net sales increases of $14.7 million, $12.6 million and $9.3 million, respectively. The net sales increase in the FSG reflects net sales of $49.0
million contributed by our fiscal 2017 acquisitions as well as organic growth of 5%. The FSG’s organic growth is principally attributed
to increased demand and new product offerings within our aftermarket replacement parts and repair and overhaul parts and services
product lines, resulting in net sales increases of $39.8 million and $19.1 million, respectively. These increases were partially offset by $16.2
million of lower organic net sales from our specialty products product line principally related to certain aerospace, industrial and defense
products. Sales price changes were not a significant contributing factor to the FSG and ETG net sales growth in fiscal 2017.

Our net sales in fiscal 2017 and 2016 by market consisted of approximately 53% and 52%, respectively, from the commercial aviation

industry, 34% in both periods from the defense and space industries, and 13% and 14%, respectively, from other industrial markets
including medical, electronics and telecommunications.

Gross Profit and Operating Expenses

Our consolidated gross profit margin increased to 37.7% in fiscal 2017 as compared to 37.5% in fiscal 2016, principally reflecting an
increase of .9% in the ETG’s gross profit margin, partially offset by a .3% decrease in the FSG’s gross profit margin. The increase in the ETG’s
gross profit margin is principally attributed to increased net sales and a more favorable product mix for certain aerospace products. The
decrease in the FSG’s gross profit margin is attributed to the previously mentioned decrease in net sales and a less favorable product mix
within our specialty products product line partially offset by increased net sales and a more favorable product mix within our aftermarket
replacement parts and repair and overhaul parts and services product lines. Total new product research and development (“R&D”) expenses
included within our consolidated cost of sales increased to $46.5 million in fiscal 2017 compared to $44.7 million in fiscal 2016.

Our consolidated SG&A expenses were $268.1 million and $250.1 million in fiscal 2017 and 2016, respectively. The increase in
consolidated SG&A expenses principally reflects $13.6 million attributable to the fiscal 2017 acquisitions, $4.3 million of higher perfor-
mance-based compensation expense and a $2.9 million impact from foreign currency transaction adjustments on borrowings denominated
in Euros under our revolving credit facility, partially offset by $3.1 million of acquisition costs recorded in fiscal 2016 associated with a fiscal
2016 acquisition.

Our consolidated SG&A expenses as a percentage of net sales decreased to 17.6% in fiscal 2017, down from 18.2% in fiscal 2016.
The decrease in consolidated SG&A expenses as a percentage of net sales principally reflects an aggregate .8% impact from efficiencies
realized from the benefit of our net sales growth on relatively consistent period-over-period SG&A expenses and the aforementioned
decrease in acquisition costs, partially offset by a .2% impact from the previously mentioned foreign currency transaction adjustments.

Operating Income

Our consolidated operating income increased by 16% to a record $306.7 million in fiscal 2017, up from $265.3 million in fiscal 2016.
The increase in consolidated operating income principally reflects a $31.4 million increase (a 25% increase) to a record $157.5 million in
operating income of the ETG as well as a $15.9 million increase (a 10% increase) to a record $179.3 million in operating income of the FSG.
Additionally, our consolidated operating income was unfavorably impacted by a $5.3 million increase in corporate expenses principally
due to the previously mentioned foreign currency transaction adjustments as well as higher operating costs in line with and to support the
growth of our overall business. The increase in operating income of the ETG is principally attributed to the previously mentioned net sales
growth and improved gross profit margin as well as the aforementioned favorable impact of SG&A efficiencies and decrease in acquisition
costs. The increase in operating income of the FSG is principally attributed to the previously mentioned net sales growth partially offset by
an increase in performance-based compensation expense and the less favorable gross profit margin.

Our consolidated operating income as a percentage of net sales increased to 20.1% in fiscal 2017, up from 19.3% in fiscal 2016. The

increase principally reflects an increase in the ETG’s operating income as a percentage of net sales to 27.4% in fiscal 2017, up from 24.7%
in fiscal 2016, partially offset by a slight decrease in the FSG’s operating income as a percentage of net sales to 18.5% in fiscal 2017, down
from 18.7% in fiscal 2016. Additionally, our consolidated operating income as a percentage of net sales was unfavorably impacted by a
.2% impact from the previously mentioned foreign currency transaction adjustments. The increase in the ETG’s operating income as a
percentage of net sales is principally attributed to the previously mentioned, SG&A efficiencies, improved gross profit margin, and decrease
in acquisition costs.

HEICO Corporation and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Interest Expense

Interest expense increased to $9.8 million in fiscal 2017 from $8.3 million in fiscal 2016. The increase was principally due to higher

interest rates partially offset by a lower weighted average balance outstanding under our revolving credit facility.

Other Income (Expense)

Other income (expense) in fiscal 2017 and 2016 was not material.

Income Tax Expense

Our 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 Corporation
Leadership Compensation Plan and a $3.1 million discrete income tax benefit related to stock option exercises resulting from the adoption
of Accounting Standards Update 2016-09, “Improvements to Employee Share-Based Payment Accounting,” in the first quarter of fiscal
2017 (see New Accounting Pronouncements below). 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.

Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests relates to the 20% noncontrolling interest held by Lufthansa Technik AG in
HEICO Aerospace and the noncontrolling interests held by others in certain subsidiaries of the FSG and ETG. Net income attributable to
noncontrolling interests was $21.7 million in fiscal 2017 compared to $20.0 million in fiscal 2016. The increase in fiscal 2017 reflects higher
net income of certain subsidiaries of the FSG and ETG in which noncontrolling interests are held, inclusive of a fiscal 2017 acquisition.

Net Income Attributable to HEICO

Net income attributable to HEICO increased by 19% to a record $186.0 million, or $2.14 per diluted share, in fiscal 2017, up from $156.2
million, or $1.83 per diluted share, in fiscal 2016, principally reflecting the previously mentioned increased net sales and operating income.

Outlook

As we look ahead to fiscal 2018, we anticipate net sales growth within the FSG’s commercial aviation and defense product lines. We

also expect growth within the ETG, principally driven by demand for the majority of our products. During fiscal 2018, we will continue
our commitments to developing new products and services, further market penetration, and an aggressive acquisition strategy while
maintaining our financial strength and flexibility. Overall, we are targeting growth in fiscal 2018 full year net sales and net income over
fiscal 2017 levels. This outlook excludes the impact of additional acquired businesses, if any.

Comparison of Fiscal 2016 to Fiscal 2015

Net Sales

Our net sales in fiscal 2016 increased by 16% to a record $1,376.3 million, as compared to net sales of $1,188.6 million in fiscal 2015.
The increase in consolidated net sales reflects an increase of $120.3 million (a 31% increase) to a record $511.3 million in net sales within
the ETG as well as an increase of $66.2 million (an 8% increase) to a record $875.9 million in net sales within the FSG. The net sales
increase in the ETG reflects net sales of $107.3 million contributed by our fiscal 2016 and 2015 acquisitions as well as organic growth of 4%.
The ETG’s organic growth resulted mainly from an aggregate net sales increase of $17.2 million attributed to higher demand from certain
space, medical and other electronics products, partially offset by a $3.2 million net sales decrease from lower demand for certain defense
products. The net sales increase in the FSG reflects net sales of $40.6 million contributed by our fiscal 2015 acquisitions as well as organic
growth of 3%. The FSG’s organic growth is principally attributed to increased demand and new product offerings within our aftermarket
replacement parts and specialty products lines, resulting in net sales increases of $22.6 million and $10.9 million, respectively. These
increases were partially offset by $7.9 million of lower organic net sales from our repair and overhaul parts and services product line. Our
repair and overhaul parts and services product line was adversely impacted by the mix of products repaired during fiscal 2016, which
required less extensive repair and overhaul services, as well as softer demand from our South American market. The FSG experienced
organic revenue growth of 6% in fiscal 2016 excluding our repair and overhaul parts and services product line. Sales price changes were
not a significant contributing factor to the FSG and ETG net sales growth in fiscal 2016.

Our net sales in fiscal 2016 and 2015 by market consisted of approximately 52% and 57%, respectively, from the commercial aviation

industry, 34% and 27%, respectively, from the defense and space industries, and 14% and 16%, respectively, from other industrial
markets including medical, electronics and telecommunications.

HEICO Corporation and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Gross Profit and Operating Expenses

Our consolidated gross profit margin increased to 37.5% in fiscal 2016 as compared to 36.5% in fiscal 2015, principally reflecting an

increase of .9% in the FSG’s gross profit margin, partially offset by a .5% decrease in the ETG’s gross profit margin. The increase in the
FSG’s gross profit margin is principally attributed to increased net sales and a more favorable product mix within our aftermarket replace-
ment parts and specialty products product lines, partially offset by decreased net sales and a less favorable product mix within our repair
and overhaul parts and services product line. The decrease in the ETG’s gross profit margin is principally attributed to a less favorable
product mix for certain space products. Total new product R&D expenses included within our consolidated cost of sales increased to $44.7
million in fiscal 2016 compared to $38.7 million in fiscal 2015.

Our consolidated SG&A expenses were $250.1 million and $204.5 million in fiscal 2016 and 2015, respectively. The increase in
consolidated SG&A expenses principally reflects $21.8 million attributable to the fiscal 2016 and 2015 acquisitions, inclusive of $3.1 million
of acquisition costs associated with a fiscal 2016 acquisition, $9.1 million of higher performance-based compensation expense, $3.1 million
attributable to changes in the estimated fair value of accrued contingent consideration associated with a prior year acquisition, inclusive
of foreign currency transaction adjustments, and a $2.4 million impact from foreign currency transaction adjustments on borrowings
denominated in Euros under our revolving credit facility.

Our consolidated SG&A expenses as a percentage of net sales were 18.2% and 17.2% in fiscal 2016 and 2015, respectively. The
increase in consolidated SG&A expenses as a percentage of net sales principally reflects a .5% impact from higher performance-based
compensation expense and a .2%, .2% and .2% impact from the aforementioned changes in the estimated fair value of accrued
contingent consideration, foreign currency transaction adjustments and acquisition costs, respectively.

Operating Income

Our consolidated operating income in fiscal 2016 increased by 16% to a record $265.3 million, up from $229.7 million in fiscal 2015.
As a percentage of net sales, our consolidated operating income was 19.3% in both fiscal 2016 and 2015. The increase in consolidated
operating income is primarily attributed to a $27.2 million increase (a 28% increase) to a record $126.0 million in operating income of
the ETG as well as a $13.6 million increase (a 9% increase) to a record $163.4 million in operating income of the FSG, partially offset by a
$5.1 million increase in corporate expenses principally reflecting higher performance-based compensation expense and the previously
mentioned foreign currency transaction adjustments on borrowings denominated in Euros. The increase in operating income of the ETG is
mainly attributed to the previously mentioned net sales growth, partially offset by a $6.4 million and $5.2 million increase in amortization
expense of intangible assets and performance-based compensation expense, respectively, in addition to the impact from the previously
mentioned acquisition costs. The increase in operating income of the FSG is mainly attributed to the previously mentioned net sales growth
and improved gross profit margin, partially offset by a $4.4 million increase in performance-based compensation expense, the previously
mentioned changes in the estimated fair value of accrued contingent consideration and a $3.0 million increase in amortization expense of
intangible assets.

Interest Expense

Interest expense increased to $8.3 million in fiscal 2016 from $4.6 million in fiscal 2015. The increase was due to a higher weighted
average balance outstanding under our revolving credit facility associated with our fiscal 2016 and 2015 acquisitions as well as higher
interest rates.

Other Expense

Other expense in fiscal 2016 and 2015 was not material.

Income Tax Expense

Our effective tax rate in fiscal 2016 decreased to 31.5% from 31.7% in fiscal 2015. The decrease principally reflects the benefits

recognized in fiscal 2016 of a larger income tax credit for qualified R&D activities resulting from the permanent extension of the U.S.
federal R&D tax credit in December 2015 and a lower effective state tax rate driven by certain apportionment updates recognized upon
the amendment of certain prior year tax returns in fiscal 2016. These decreases were partially offset by the benefits recognized in fiscal
2015 from a prior year tax return amendment for additional foreign tax credits related to R&D activities at one of our foreign subsidiaries
and higher net income attributable to noncontrolling interests in subsidiaries structured as partnerships. See Note 6, Income Taxes, of the
Notes to Consolidated Financial Statements for a detailed analysis of the provision for income taxes.

Net Income Attributable to Noncontrolling Interests

HEICO Corporation and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Net Income Attributable to HEICO

Net income attributable to HEICO increased by 17% to a record $156.2 million, or $1.83 per diluted share, in fiscal 2016 from $133.4
million, or $1.57 per diluted share, in fiscal 2015, principally reflecting the previously mentioned increased net sales and operating income.

Inflation

We have generally experienced increases in our costs of labor, materials and services consistent with overall rates of inflation. The
impact of such increases on net income attributable to HEICO has been generally minimized by efforts to lower costs through manufactur-
ing efficiencies and cost reductions.

Liquidity and Capital Resources

Our capitalization was as follows (in thousands):

As of October 31,

Total debt (including current portion)
Less: Cash and cash equivalents
Net debt (total debt less cash and cash equivalents)
Shareholders’ equity
Total capitalization (debt plus equity)
Net debt to shareholders’ equity
Total debt to total capitalization

2017

2016

673,979
(52,066)
621,913
1,248,292
1,922,271

50%
35%

$ 458,225
(42,955)
415,270
1,047,705
1,505,930

40%
30%

Our principal uses of cash include acquisitions, capital expenditures, cash dividends, distributions to noncontrolling interests and
working capital needs. Capital expenditures in fiscal 2018 are anticipated to approximate $50 million. We finance our activities primarily
from our operating and financing activities, including borrowings under our revolving credit facility.

In November 2017, we entered into a new $1.3 billion Revolving Credit Facility Agreement (“New Credit Facility”) with a bank syndicate,
which matures in November 2022. Under certain circumstances, the maturity of the New Credit Facility may be extended for two one-year
periods. The New Credit Facility also includes a feature that will allow us to increase revolving commitments under the New Credit Facility
by $350 million to become a $1.65 billion facility, through increased commitments from existing lenders or the addition of new lenders.
Borrowings under the New Credit Facility may be used to finance acquisitions and for working capital and other general corporate
purposes, including capital expenditures. The New Credit Facility replaced the $670 million Revolving Credit Agreement (see Financing
Activities below).

Borrowings under the New Credit Facility accrue interest at our election of the Base Rate or the Eurocurrency Rate, plus in each case,

the Applicable Rate (based on our Total Leverage Ratio). The Base Rate for any day is a fluctuating rate per annum equal to the highest
of (i) the Prime Rate; (ii) the Federal Funds Rate plus .50%; and (iii) the Eurocurrency Rate for an Interest Period of one month plus 100
basis points. The Eurocurrency Rate is the rate per annum obtained by dividing LIBOR for the applicable Interest Period by a percentage
equal to 1.00 minus the daily average Eurocurrency Reserve Rate for such Interest Period, as such capitalized terms are defined in the New
Credit Facility. The Applicable Rate for Eurocurrency Rate Loans ranges from 1.00% to 2.00%. The Applicable Rate for Base Rate Loans
ranges from 0% to 1.00%. A fee is charged on the amount of the unused commitment ranging from .125% to .30% (depending on our Total
Leverage Ratio). The New Credit Facility also includes $100 million sublimits for borrowings made in foreign currencies and for swingline
borrowings, and a $50 million sublimit for letters of credit. Outstanding principal, accrued and unpaid interest and other amounts payable
under the New Credit Facility may be accelerated upon an event of default, as such events are described in the New Credit Facility. The
New Credit Facility is unsecured and contains covenants that require, among other things, the maintenance of a Total Leverage Ratio and
an Interest Coverage Ratio, as such capitalized terms are defined in the New Credit Facility. We were in compliance with all financial and
nonfinancial covenants of the New Credit Facility as of October 31, 2017.

As of December 19, 2017, we had approximately $625 million of unused committed availability under the terms of our revolving credit

facility. Based on our current outlook, we believe that net cash provided by operating activities and available borrowings under our
revolving credit facility will be sufficient to fund our cash requirements for at least the next twelve months.

HEICO Corporation and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Operating Activities

Net cash provided by operating activities was $274.9 million in fiscal 2017 and consisted primarily of net income from consolidated
operations of $207.7 million and depreciation and amortization expense of $64.8 million (a non-cash item). Net cash provided by operating
activities increased by $25.7 million in fiscal 2017 from $249.2 million in fiscal 2016. The increase in net cash provided by operating
activities in fiscal 2017 is principally due to a $31.5 million increase in net income from consolidated operations and a $4.5 million increase
in depreciation and amortization expense (a non-cash item), partially offset by a $12.0 million increase in working capital (current assets
minus current liabilities). The $12.0 million increase in working capital is principally attributed to a $33.5 million decrease in accrued
expenses and other current liabilities, which mainly reflects a decrease in deferred revenue attributed to billings in excess of costs and
estimated earnings on fixed price contracts for which revenue is being recognized on the percentage-of-completion method and customer
deposits received in connection with both manufacturing and repair and overhaul services, partially offset by an $18.8 million decrease in
accounts receivable.

Net cash provided by operating activities was $249.2 million in fiscal 2016 and consisted primarily of net income from consolidated
operations of $176.2 million, depreciation and amortization expense of $60.3 million (a non-cash item) and an increase in working capital
(current assets minus current liabilities) of $8.1 million. Net cash provided by operating activities increased by $76.3 million in fiscal 2016
from $172.9 million in fiscal 2015. The increase in net cash provided by operating activities in fiscal 2016 is principally due to a $36.7 million
decrease in working capital, a $22.6 million increase in net income from consolidated operations and a $12.4 million increase in deprecia-
tion and amortization expense (a non-cash item). The $36.7 million decrease in working capital is principally attributed to a $36.2 million
increase in accrued expenses and other current liabilities, which mainly reflects an increase in deferred revenue attributed to billings in
excess of costs and estimated earnings on a fixed price contract for which revenue is being recognized on the percentage-of-completion
method and customer deposits received in connection with a contract to provided repair and overhaul services, as well as a higher level
of accrued performance-based compensation due to the improved consolidated operating results, and an increase in accrued customer
rebates and credits.

Net cash provided by operating activities was $172.9 million in fiscal 2015 and consisted primarily of net income from consolidated
operations of $153.6 million, depreciation and amortization expense of $47.9 million (a non-cash item) and a decrease in working capital
(current assets minus current liabilities) of $28.7 million.

Investing Activities

Net cash used in investing activities during the three-year fiscal period ended October 31, 2017 primarily relates to several

acquisitions aggregating $848.9 million, including $418.3 million in fiscal 2017, $263.8 million in fiscal 2016, and $166.8 million in fiscal 2015.
Further details on acquisitions may be found under the caption “Overview” and Note 2, Acquisitions, of the Notes to Consolidated Financial
Statements. Capital expenditures aggregated $75.1 million over the last three fiscal years, primarily reflecting the expansion, replacement
and betterment of existing production facilities and capabilities, which were generally funded using cash provided by operating activities.

Financing Activities

Net cash provided by financing activities was $175.9 million in fiscal 2017 as compared to $56.8 million in fiscal 2016 and $27.3
million in fiscal 2015. During the three-year fiscal period ended October 31, 2017, we borrowed an aggregate $837.7 million under our
revolving credit facility including borrowings of $404.0 million in fiscal 2017, $260.0 million in fiscal 2016, and $173.7 million in fiscal 2015.
The aforementioned borrowings were made principally to fund acquisitions. Further details on acquisitions may be found under the
caption “Overview” and Note 2, Acquisitions, of the Notes to Consolidated Financial Statements. Payments on our revolving credit facility
aggregated $492.9 million over the last three fiscal years, including $190.9 million in fiscal 2017, $170.0 million in fiscal 2016, and $132.0
million in fiscal 2015. For the three-year fiscal period ended October 31, 2017, we made distributions to noncontrolling interests aggregating
$47.1 million and paid an aggregate $32.9 million in cash dividends.

Borrowings under our revolving credit facility in fiscal 2017, 2016 and 2015 were made under our $670 million Revolving Credit
Agreement (“Prior Credit Facility”) with a bank syndicate, which was amended in November 2013 to become an $800 million facility and
again in April 2017 to become a $1.0 billion facility. The Prior Credit Facility was available to finance acquisitions and for working capital and
general corporate purposes, including capital expenditures.

HEICO Corporation and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Advances under the Prior Credit Facility accrued interest at our choice of the “Base Rate” or the London Interbank Offered Rate

(“LIBOR”) plus the applicable margin (based on our ratio of total funded debt to earnings before interest, taxes, depreciation and
amortization, noncontrolling interests and non-cash charges, or “leverage ratio”). The Base Rate was the highest of (i) the Prime Rate;
(ii) the Federal Funds rate plus .50% per annum; and (iii) the Adjusted LIBO Rate determined on a daily basis for an Interest Period of one
month plus 1.00% per annum, as such capitalized terms were defined in the Prior Credit Facility. The applicable margin for a LIBOR-based
borrowing ranged from .75% to 2.25%. The applicable margin for a Base Rate borrowing ranged from 0% to 1.25%. A fee was charged
on the amount of the unused commitment ranging from .125% to .35% (depending on our leverage ratio). The Prior Credit Facility was
unsecured and contained covenants that restricted the amount of certain payments, including dividends, and required, among other
things, the maintenance of a total leverage ratio, a senior leverage ratio and a fixed charge coverage ratio. As of October 31, 2017, we
were in compliance with all financial and nonfinancial covenants of the Prior Credit Facility. See Note 5, Long-Term Debt, of the Notes to
Consolidated Financial Statements for further information regarding the Prior Credit Facility.

Contractual Obligations

The following table summarizes our contractual obligations as of October 31, 2017 (in thousands):

Long-term debt obligations (1)
Capital lease obligations (2)
Operating lease obligations (3)
Purchase obligations (4) (5) (6)
Other long-term liabilities (7)
Total contractual obligations

Total

$ 671,115
3,325
74,127
29,931
2,689
$ 781,187

2018

—
575
13,402
8,803
479
$ 23,259

Payments due by fiscal period

2019 - 2020

2021 - 2022

Thereafter

$ 671,115
1,100
23,997
7,085
2,210
$ 705,507

—
1,028
20,663
413
—
$ 22,104

—
622
16,065
13,630
—
$ 30,317

(1)

Excludes interest charges on borrowings and the fee on the amount of any unused commitment that we may be obligated to pay under our revolving credit facility
as such amounts vary. See Note 5, Long-Term Debt, of the Notes to Consolidated Financial Statements and “Liquidity and Capital Resources,” above for additional
information regarding our long-term debt obligations. As discussed in “Liquidity and Capital Resources,” we entered into a New Credit Facility in November 2017 that
matures in November 2022. Accordingly, the $671 million we had outstanding under our prior revolving credit facility as of October 31, 2017 and shown as due in fiscal
2019 is now due in fiscal 2023.

(2)

Inclusive of $.5 million in interest charges. See Note 5, Long-Term Debt, of the Notes to Consolidated Financial Statements for additional information regarding our
capital lease obligations.

(3)

See Note 15, Commitments and Contingencies – Lease Commitments, of the Notes to Consolidated Financial Statements for additional information regarding our
operating lease obligations.

(4) Includes contingent consideration aggregating $27.6 million related to a fiscal 2015, 2016 and 2017 acquisition. See Note 7, Fair Value Measurements, of the Notes to

Consolidated Financial Statements for additional information.

(5) Also includes an aggregate $2.3 million of commitments principally for capital expenditures and inventory. All purchase obligations of inventory and supplies in the

ordinary course of business (i.e., with deliveries scheduled within the next year) are excluded from the table.

(6)

The holders of equity interests in certain of our subsidiaries have rights (“Put Rights”) that may be exercised on varying dates causing us to purchase their equity
interests through fiscal 2025. The Put Rights provide that cash consideration be paid for their equity interests (the “Redemption Amount”). As of October 31, 2017,
management’s estimate of the aggregate Redemption Amount of all Put Rights that we could be required to pay is approximately $131.1 million, which is reflected within
redeemable noncontrolling interests in our Consolidated Balance Sheet. The amounts in the table do not include Put Right obligations as none of the noncontrolling
interest holders have exercised their Put Rights as of October 31, 2017. See Note 11, Redeemable Noncontrolling Interests, of the Notes to Consolidated Financial
Statements for further information.

(7)

The amounts in the table do not include liabilities related to the HEICO Corporation Leadership Compensation Plan or our other deferred compensation arrangement as
they are each fully supported by assets held within irrevocable trusts. See Note 3, Selected Financial Statement Information - Other Long-Term Assets and Liabilities,
of the Notes to Consolidated Financial Statements for further information about these two deferred compensation plans.

Off-Balance Sheet Arrangements

Guarantees

As of October 31, 2017, we have arranged for standby letters of credit aggregating $4.2 million, which are supported by our revolving

credit facility and pertain to payment guarantees related to potential workers’ compensation claims and a facility lease as well as
performance guarantees related to customer contracts entered into by certain of our subsidiaries.

HEICO Corporation and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from
Contracts with Customers,” which provides a comprehensive new revenue recognition model that will supersede nearly all existing revenue
recognition guidance. Under ASU 2014-09, an entity will recognize revenue when it transfers promised goods or services to a customer
at an amount that reflects the consideration it expects to receive in exchange for those goods or services. The guidance also requires
additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. ASU
2014-09, as amended, is effective for fiscal years and interim reporting periods within those years beginning after December 15, 2017, or in
fiscal 2019 for HEICO. Early adoption in the year preceding the effective date is permitted. ASU 2014-09 shall be applied either retrospec-
tively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at
the date of initial application. We are currently evaluating which transition method we will elect. In addition, we are currently identifying
our various revenue streams and reviewing certain underlying customer contracts to determine the effect the adoption of this guidance
will have on our consolidated results of operations, financial position and cash flows.

In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory,” which requires entities to measure inventories

at the lower of cost or net realizable value. Under current guidance, inventories are measured at the lower of cost or market. ASU 2015-11
must be applied prospectively and is effective for fiscal years and interim reporting periods within those years beginning after December
15, 2016, or in fiscal 2018 for HEICO. We are currently evaluating the effect, if any, the adoption of this guidance will have on our consolidat-
ed results of operations, financial position and cash flows.

In November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes,” which requires that all deferred

tax assets and liabilities be classified as noncurrent in the balance sheet. We adopted ASU 2015-17 on a retrospective basis in the fourth
quarter of fiscal 2017, resulting in a reclassification of $41.1 million in current deferred tax assets to noncurrent deferred tax liabilities in our
Consolidated Balance Sheet as of October 31, 2016.

In February 2016, the FASB issued ASU 2016-02, “Leases,” which requires recognition of lease assets and lease liabilities on the

balance sheet of lessees. ASU 2016-02 is effective for fiscal years and interim reporting periods within those years beginning after
December 15, 2018, or in fiscal 2020 for HEICO. Early adoption is permitted. ASU 2016-02 requires a modified retrospective transition
approach and provides certain optional transition relief. We are currently evaluating the effect the adoption of this guidance will have on
our consolidated results of operations, financial position and cash flows.

In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting,” which simplifies several
aspects related to accounting for share-based payment transactions. Under ASU 2016-09, all excess tax benefits and tax deficiencies are
to be recognized in the statement of operations as a component of income tax expense rather than as capital in excess of par value. We
adopted ASU 2016-09 in the first quarter of fiscal 2017 resulting in the recognition of a $3.1 million discrete income tax benefit, which, net of
noncontrolling interests, increased net income attributable to HEICO by $2.6 million. Additionally, ASU 2016-09 requires excess tax benefits
and deficiencies to be prospectively excluded from the assumed future proceeds in the calculation of diluted shares, which increased
our weighted average number of diluted common shares outstanding by 781,000 for fiscal 2017. Further, ASU 2016-09 requires excess
tax benefits be presented within the statement of cash flows as an operating activity rather than as a financing activity. We adopted this
change on a prospective basis, which resulted in a $3.1 million increase in cash provided by operating activities and a $3.1 million decrease
in cash provided by financing activities in fiscal 2017.

In August 2016, the FASB issued ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments,” which clarifies how
certain cash receipts and cash payments are to be presented and classified in the statement of cash flows. ASU 2016-15 provides guidance
on eight specific cash flow classification issues including contingent consideration payments made after a business combination,
proceeds from corporate-owned life insurance policies and distributions received from equity method investees. ASU 2016-15 is effective
for fiscal years and interim reporting periods within those years beginning after December 15, 2017, or in fiscal 2019 for HEICO. Early
adoption is permitted. ASU 2016-15 requires a retrospective transition approach for all periods presented. We are currently evaluating the
effect the adoption of this guidance will have on its consolidated statement of cash flows.

In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment,” which is intended to simplify the
current test for goodwill impairment by eliminating the second step in which the implied value of a reporting unit is calculated when the
carrying value of the reporting unit exceeds its fair value. Under ASU 2017-04, goodwill impairment should be recognized for the amount
by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 must be
applied prospectively and is effective for any annual or interim goodwill impairment test in fiscal years beginning after December 15, 2019,
or in fiscal 2021 for HEICO. Early adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our
consolidated results of operations, financial position and cash flows.

HEICO Corporation and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

Certain statements in this report constitute “forward-looking statements” within the meaning of the Private Securities Litigation

Reform Act of 1995. All statements contained herein that are not clearly historical in nature may be forward-looking and the words
“anticipate,” “believe,” “expect,” “estimate” and similar expressions are generally intended to identify forward-looking statements.
Any forward-looking statement contained herein, in press releases, written statements or other documents filed with the Securities
and Exchange Commission or in communications and discussions with investors and analysts in the normal course of business through
meetings, phone calls and conference calls, concerning our operations, economic performance and financial condition are subject to risks,
uncertainties and contingencies. We have based these forward-looking statements on our current expectations and projections about
future events. All forward-looking statements involve risks and uncertainties, many of which are beyond our control, which may cause
actual results, performance or achievements to differ materially from anticipated results, performance or achievements. Also, forward-
looking statements are based upon management’s estimates of fair values and of future costs, using currently available information.
Therefore, actual results may differ materially from those expressed in or implied by those forward-looking statements. Factors that could
cause such differences include:

• Lower demand for commercial air travel or airline fleet changes or airline purchasing decisions, which could cause lower demand for

our goods and services;

• Product specification costs and requirements, which could cause an increase to our costs to complete contracts;

• Governmental and regulatory demands, export policies and restrictions, reductions in defense, space or homeland security
spending by U.S. and/or foreign customers or competition from existing and new competitors, which could reduce our sales;

• Our ability to introduce new products and services at profitable pricing levels, which could reduce our sales or sales growth;

• Product development or manufacturing difficulties, which could increase our product development costs and delay sales;

• Our ability to make acquisitions and achieve operating synergies from acquired businesses; customer credit risk; interest, foreign

currency exchange and income tax rates; economic conditions within and outside of the aviation, defense, space, medical,
telecommunications and electronics industries, which could negatively impact our costs and revenues; and

• Defense budget cuts, which could reduce our defense-related revenue.

We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future

events or otherwise, except to the extent required by applicable law.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

We have exposure to interest rate risk, mainly related to our revolving credit facility, which has variable interest rates. Interest rate
risk associated with our variable rate debt is the potential increase in interest expense from an increase in interest rates. Based on our
aggregate outstanding variable rate debt balance of $671.0 million as of October 31, 2017, a hypothetical 10% increase in interest rates
would not have a material effect on our results of operations, financial position or cash flows. We also maintain a portion of our cash
and cash equivalents in financial instruments with original maturities of three months or less. These financial instruments are subject to
interest rate risk and will decline in value if interest rates increase. Due to the short duration of these financial instruments, a hypothetical
10% increase in interest rates as of October 31, 2017 would not have a material effect on our results of operations, financial position or
cash flows.

Foreign Currency Risk

We have a few foreign subsidiaries that conduct a portion of their operations in currencies other than the U.S. dollar, or principally
in Euros, Canadian dollars and British pounds sterling. Accordingly, changes in exchange rates between such foreign currencies and the
U.S. dollar will affect the translation of the financial results of our foreign subsidiaries into the U.S. dollar for purposes of reporting our
consolidated financial results. A hypothetical 10% weakening in the exchange rate of the Euro, Canadian dollar or British pound sterling to
the U.S. dollar as of October 31, 2017 would not have a material effect on our results of operations, financial position or cash flows.

HEICO Corporation and Subsidiaries

CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)

As of October 31,

ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable, net

Inventories, net

Prepaid expenses and other current assets

Total current assets

Property, plant and equipment, net
Goodwill
Intangible assets, net
Deferred income taxes
Other assets

Total assets

LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt
Trade accounts payable
Accrued expenses and other current liabilities

Income taxes payable
Total current liabilities

Long-term debt, net of current maturities
Deferred income taxes
Other long-term liabilities

Total liabilities

Commitments and contingencies (Note 15)

2017

2016

$ 52,066
222,456
343,628
13,742
631,892

129,883
1,081,306
538,081
—
131,269
$ 2,512,431

451
89,724
147,612
11,650
249,437

673,528
59,026
151,025
1,133,016

$ 42,955
202,227
286,302
11,674
543,158

121,611
865,717
366,863
407
100,656
$ 1,998,412

411
73,335
136,053
4,622
214,421

457,814
64,899
114,061
851,195

Redeemable noncontrolling interests (Note 11)

131,123

99,512

Shareholders’ equity:
Common Stock, $.01 par value per share; 75,000 shares authorized;

33,777 and 33,715 shares issued and outstanding

Class A Common Stock, $.01 par value per share; 75,000 shares authorized;

50,705 and 50,396 shares issued and outstanding

Capital in excess of par value
Deferred compensation obligation
HEICO stock held by irrevocable trust
Accumulated other comprehensive loss
Retained earnings

Total HEICO shareholders’ equity

Noncontrolling interests

Total shareholders’ equity
Total liabilities and equity

The accompanying notes are an integral part of these consolidated financial statements.

338

270

507
326,544
3,118
(3,118)
(10,556)
844,247
1,161,080
87,212
1,248,292
$ 2,512,431

403
306,328
2,460
(2,460)
(25,326)
681,704
963,379
84,326
1,047,705
$ 1,998,412

HEICO Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)

Year ended October 31,

2017

2016

2015

Net sales

$ 1,524,813

$ 1,376,258

$ 1,188,648

Operating costs and expenses:

Cost of sales
Selling, general and administrative expenses

950,088
268,067

860,766
250,147

754,469
204,523

Total operating costs and expenses

1,218,155

1,110,913

958,992

Operating income

Interest expense
Other income (expense)

306,658

265,345

229,656

(9,790)
1,092

(8,272)
(23)

(4,626)
(66)

Income before income taxes and noncontrolling interests

297,960

257,050

224,964

Income tax expense

Net income from consolidated operations

Less: Net income attributable to noncontrolling interests

90,300

207,660

21,675

80,900

176,150

19,958

71,400

153,564

20,200

Net income attributable to HEICO

185,985

156,192

133,364

Net income per share attributable to HEICO shareholders (Note 17):

Basic
Diluted

Weighted average number of common shares outstanding (Note 17):

Basic
Diluted

The accompanying notes are an integral part of these consolidated financial statements.

$
$

2.21
2.14

$
$

1.86
1.83

$
$

1.60
1.57

84,290
86,776

83,807
85,213

83,425
84,764

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)

Year ended October 31,

2017

2016

2015

Net income from consolidated operations
Other comprehensive income (loss):
Foreign currency translation adjustments
Unrealized gain (loss) on defined benefit pension plan, net of tax
Amortization of unrealized loss on defined benefit pension plan, net of tax
Total other comprehensive income (loss)
Comprehensive income from consolidated operations
Net income attributable to noncontrolling interests
Foreign currency translation adjustments attributable to noncontrolling interests
Comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to HEICO

$ 207,660

176,150

153,564

15,346
321
29
15,696
223,356
21,675
926
22,601
$ 200,755

353
(661)
—
(308)
175,842
19,958
(62)
19,896
155,946

(16,880)
(771)
—
(17,651)
135,913
20,200
(860)
19,340
116,573

The accompanying notes are an integral part of these consolidated financial statements.

HEICO Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(in thousands, except per share data)

Redeemable
Noncontrolling
Interests

Common
Stock

$ 99,512
11,637
—
—
—
—
—
23,339
(10,323)
(3,848)
10,806
—
—
131,123

$ 91,282
9,968
—
—
—
—
—
(9,957)
(3,599)
11,818
—
—
$ 99,512

$ 39,966
6,534
—
—
—
—
—
36,224
(5,166)
13,724
—
—
$ 91,282

$ 270
—
—
68
—
—
—
—
—
—
—
—
—
$ 338

$ 269
—
—
1
—
—
—
—
—
—
—
—
$ 270

$ 268
—
—
1
—
—
—
—
—
—
—
—
$ 269

Class A
Common
Stock

$ 403
—
—
101
—
—
3
—
—
—
—
—
—
$ 507

$ 400
—
—
1
—
2
—
—
—
—
—
—
$ 403

$ 397
—
—
1
—
2
—
—
—
—
—
—
$ 400

Balances as of October 31, 2016
Comprehensive income
Cash dividends ($.152 per share)
Five-for-four common stock split
Issuance of common stock to HEICO Savings and Investment Plan
Share-based compensation expense
Proceeds from stock option exercises
Noncontrolling interests assumed related to acquisitions
Distributions to noncontrolling interests
Acquisitions of noncontrolling interests
Adjustments to redemption amount of redeemable noncontrolling interests
Deferred compensation obligation
Other
Balances as of October 31, 2017

Balances as of October 31, 2015
Comprehensive income (loss)
Cash dividends ($.128 per share)
Issuance of common stock to HEICO Savings and Investment Plan
Share-based compensation expense
Proceeds from stock option exercises
Tax benefit from stock option exercises
Distributions to noncontrolling interests
Acquisitions of noncontrolling interests
Adjustments to redemption amount of redeemable noncontrolling interests
Deferred compensation obligation
Other
Balances as of October 31, 2016

Balances as of October 31, 2014
Comprehensive income (loss)
Cash dividends ($.112 per share)
Issuance of common stock to HEICO Savings and Investment Plan
Share-based compensation expense
Proceeds from stock option exercises
Tax benefit from stock option exercises
Noncontrolling interests assumed related to acquisitions
Distributions to noncontrolling interests
Adjustments to redemption amount of redeemable noncontrolling interests
Deferred compensation obligation
Other
Balances as of October 31, 2015

The accompanying notes are an integral part of these consolidated financial statements.

HEICO Shareholders’ Equity

Capital in

Excess of

Par Value

Deferred

Compensation

Obligation

HEICO Stock

Held by

Irrevocable

Trust

Accumulated

Comprehensive

Other

Loss

$ 306,328

$ 2,460

(2,460)

$ (25,326)

$ 681,704

14,770

Retained

Earnings

Noncontrolling

Interests

Shareholders’

Total

Equity

$ 1,047,705

658

(658)

(203)

$ 326,544

$ 286,220

3,118

1,783

(3,118)

(10,556)

$ 844,247

87,212

$ 1,248,292

(1,783)

$ (25,080)

$ 548,054

$ 893,271

(246)

156,192

(10,724)

185,985

(12,807)

(23)

194

(10,806)

—

84,326

10,964

(8,078)

83,408

9,928

(9,060)

84,326

75,135

12,806

—

211,719

(12,807)

(23)

7,517

7,415

5,659

(8,078)

194

(10,806)

—

(203)

165,874

(10,724)

6,892

6,434

5,924

868

(9,060)

(11,818)

—

129,379

(9,343)

5,754

6,048

3,673

1,402

—

(4,533)

(13,724)

—

(4)

—

677

(677)

(11,818)

$ 306,328

$ 2,460

(2,460)

$ (25,326)

$ 681,704

$ 269,351

1,138

(1,138)

$ 1,047,705

774,619

(8,289)

(16,791)

$ 437,757

133,364

(9,343)

645

(645)

(13,724)

(4,533)

$ 286,220

1,783

(1,783)

$ (25,080)

$ 548,054

83,408

$ 893,271

(169)

7,517

7,415

5,656

—

6,890

6,434

5,922

868

—

(6)

—

5,752

6,048

3,671

1,402

—

(4)

—

Balances as of October 31, 2016

Comprehensive income

Cash dividends ($.152 per share)

Five-for-four common stock split

Issuance of common stock to HEICO Savings and Investment Plan

Share-based compensation expense

Proceeds from stock option exercises

Noncontrolling interests assumed related to acquisitions

Distributions to noncontrolling interests

Acquisitions of noncontrolling interests

Adjustments to redemption amount of redeemable noncontrolling interests

Issuance of common stock to HEICO Savings and Investment Plan

Adjustments to redemption amount of redeemable noncontrolling interests

Deferred compensation obligation

Other

Balances as of October 31, 2017

Balances as of October 31, 2015

Comprehensive income (loss)

Cash dividends ($.128 per share)

Share-based compensation expense

Proceeds from stock option exercises

Tax benefit from stock option exercises

Distributions to noncontrolling interests

Acquisitions of noncontrolling interests

Deferred compensation obligation

Other

Balances as of October 31, 2016

Balances as of October 31, 2014

Comprehensive income (loss)

Cash dividends ($.112 per share)

Share-based compensation expense

Proceeds from stock option exercises

Tax benefit from stock option exercises

Deferred compensation obligation

Other

Balances as of October 31, 2015

Redeemable

Noncontrolling

Interests

$ 99,512

11,637

Common

Stock

$ 270

Class A

Common

Stock

$ 403

101

131,123

$ 338

$ 507

$ 91,282

9,968

$ 269

$ 400

$ 99,512

$ 270

$ 403

$ 39,966

6,534

$ 268

$ 397

23,339

(10,323)

(3,848)

10,806

(9,957)

(3,599)

11,818

—

Issuance of common stock to HEICO Savings and Investment Plan

Noncontrolling interests assumed related to acquisitions

Distributions to noncontrolling interests

Adjustments to redemption amount of redeemable noncontrolling interests

36,224

(5,166)

13,724

The accompanying notes are an integral part of these consolidated financial statements.

$ 91,282

$ 269

$ 400

HEICO Shareholders’ Equity

Deferred
Compensation
Obligation

HEICO Stock
Held by
Irrevocable
Trust

Accumulated
Other
Comprehensive
Loss

$ 2,460
—
—
—
—
—
—
—
—
—
—
658
—
3,118

1,783
—
—
—
—
—
—
—
—
—
677
—
$ 2,460

1,138
—
—
—
—
—
—
—
—
—
645
—
1,783

(2,460)
—
—
—
—
—
—
—
—
—
—
(658)
—
(3,118)

(1,783)
—
—
—
—
—
—
—
—
—
(677)
—
(2,460)

(1,138)
—
—
—
—
—
—
—
—
—
(645)
—
(1,783)

$ (25,326)
14,770
—
—
—
—
—
—
—
—
—
—
—
(10,556)

$ (25,080)
(246)
—
—
—
—
—
—
—
—
—
—
$ (25,326)

(8,289)
(16,791)
—
—
—
—
—
—
—
—
—
—
$ (25,080)

Capital in
Excess of
Par Value

$ 306,328
—
—
(169)
7,517
7,415
5,656
—
—
—
—
—
(203)
$ 326,544

$ 286,220
—
—
6,890
6,434
5,922
868
—
—
—
—
(6)
$ 306,328

$ 269,351
—
—
5,752
6,048
3,671
1,402
—
—
—
—
(4)
$ 286,220

Retained
Earnings

$ 681,704
185,985
(12,807)
(23)
—
—
—
—
—
194
(10,806)
—
—
$ 844,247

$ 548,054
156,192
(10,724)
—
—
—
—
—
—
(11,818)
—
—
$ 681,704

$ 437,757
133,364
(9,343)
—
—
—
—
—
—
(13,724)
—
—
$ 548,054

Noncontrolling
Interests

84,326
10,964
—
—
—
—
—
—
(8,078)
—
—
—
—
87,212

83,408
9,928
—
—
—
—
—
(9,060)
—
—
—
50
84,326

75,135
12,806
—
—
—
—
—
—
(4,533)
—
—
—
83,408

Total
Shareholders’
Equity

$ 1,047,705
211,719
(12,807)
(23)
7,517
7,415
5,659
—
(8,078)
194
(10,806)
—
(203)
$ 1,248,292

$ 893,271
165,874
(10,724)
6,892
6,434
5,924
868
(9,060)
—
(11,818)
—
44
$ 1,047,705

774,619
129,379
(9,343)
5,754
6,048
3,673
1,402
—
(4,533)
(13,724)
—
(4)
$ 893,271

HEICO Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

Year ended October 31,

2017

2016

2015

Operating Activities:
Net income from consolidated operations
Adjustments to reconcile net income from consolidated operations

to net cash provided by operating activities:
Depreciation and amortization
Employer contributions to HEICO Savings and Investment Plan
Share-based compensation expense

Increase in accrued contingent consideration, net

Foreign currency transaction adjustments, net
Deferred income tax benefit
Tax benefit from stock option exercises
Excess tax benefit from stock option exercises
Payment of contingent consideration
Changes in operating assets and liabilities, net of acquisitions:

Decrease (increase) in accounts receivable

Increase in inventories

Decrease (increase) in prepaid expenses and other current assets

Increase in trade accounts payable
Increase (decrease) in accrued expenses and other current liabilities
Increase in income taxes payable

Other long-term assets and liabilities, net

Net cash provided by operating activities

Investing Activities:
Acquisitions, net of cash acquired
Capital expenditures
Other
Net cash used in investing activities

Financing Activities:
Borrowings on revolving credit facility
Payments on revolving credit facility
Distributions to noncontrolling interests
Cash dividends paid
Payment of contingent consideration
Acquisitions of noncontrolling interests
Proceeds from stock option exercises
Excess tax benefit from stock option exercises
Revolving credit facility issuance costs
Other
Net cash provided by financing activities

Effect of exchange rate changes on cash

Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

The accompanying notes are an integral part of these consolidated financial statements.

$ 207,660

176,150

153,564

64,823
7,768
7,415
1,100
3,347
(11,096)
—
—
—

2,846
(21,204)
134
6,386
1,794
6,071
(2,159)
274,885

(418,265)
(25,998)
(552)
(444,815)

404,000
(190,877)
(18,401)
(12,807)
(7,039)
(3,848)
5,659
—
(270)
(545)
175,872

3,169

9,111
42,955
52,066

60,277
7,020
6,434
3,063
13
(9,194)
868
(881)
(631)

(15,955)
(14,421)
(2,356)
4,074
35,279
1,443
(1,999)
249,184

(263,811)
(30,863)
(2,942)
(297,616)

260,000
(170,000)
(19,017)
(10,724)
(6,329)
(3,599)
5,924
881
—
(364)
56,772

1,012

9,352
33,603
42,955

47,907
6,125
6,048
293
(3,704)
(7,080)
1,402
(1,402)
—

(22,572)
(10,187)
1,433
3,169
(883)
373
(1,623)
172,863

(166,784)
(18,249)
(973)
(186,006)

173,696
(132,000)
(9,699)
(9,343)
—
—
3,673
1,402
—
(393)
27,336

(819)

13,374
20,229
33,603

HEICO Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 . S U M M A RY O F S I G N I F I C A N T A C C O U N T I N G P O L I C I ES

Nature of Business

HEICO Corporation, through its principal subsidiaries consisting of HEICO Aerospace Holdings Corp. (“HEICO Aerospace”), HEICO Flight
Support Corp. and HEICO Electronic Technologies Corp. (“HEICO Electronic”) and their respective subsidiaries (collectively, the “Company”),
is principally engaged in the design, manufacture and sale of aerospace, defense and electronic related products and services throughout
the United States (“U.S.”) and internationally. The Company’s customer base is primarily the aviation, defense, space, medical, telecommu-
nications and electronics industries.

Basis of Presentation

The Company has two operating segments: the Flight Support Group (“FSG”), consisting of HEICO Aerospace and HEICO Flight Support

Corp. and their respective subsidiaries; and the Electronic Technologies Group (“ETG”), consisting of HEICO Electronic and its subsidiaries.

The consolidated financial statements include the financial accounts of HEICO Corporation and its subsidiaries, all of which are

wholly owned except for HEICO Aerospace, which is 20% owned by Lufthansa Technik AG (“LHT”), the technical services subsidiary of
Lufthansa German Airlines. In addition, HEICO Aerospace consolidates two subsidiaries which are 80.1% and 82.3% owned, respectively,
and a joint venture, which is 84% owned. Also, HEICO Flight Support Corp. consolidates two subsidiaries which are 80% and 84% owned,
respectively, and four subsidiaries that are each 80.1% owned. Furthermore, HEICO Electronic consolidates four subsidiaries, which are
80.1%, 80.1%, 82.5%, and 95.9% owned, respectively, and a wholly owned subsidiary of HEICO Electronic consolidates a subsidiary
which is 78% owned. See Note 11, Redeemable Noncontrolling Interests. All intercompany balances and transactions are eliminated.

Stock Split

In March 2017, the Company’s Board of Directors declared a 5-for-4 stock split on both classes of the Company’s common stock. The
stock split was effected as of April 19, 2017 in the form of a 25% stock dividend distributed to shareholders of record as of April 7, 2017. All
applicable share and per share information has been adjusted retrospectively to give effect to the fiscal 2017 5-for-4 stock split.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America

requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

For purposes of the consolidated financial statements, the Company considers all highly liquid investments such as U.S. Treasury

bills and money market funds, without liquidity fees or redemption gates, with an original maturity of three months or less at the time of
purchase to be cash equivalents.

Accounts Receivable

Accounts receivable consist of amounts billed and currently due from customers and unbilled costs and estimated earnings
related to revenue from certain fixed price contracts recognized on the percentage-of-completion method that have been recognized for
accounting purposes, but not yet billed to customers. The valuation of accounts receivable requires that the Company set up an allowance
for estimated uncollectible accounts and record a corresponding charge to bad debt expense. The Company estimates uncollectible
receivables based on such factors as its prior experience, its appraisal of a customer’s ability to pay, age of receivables outstanding and
economic conditions within and outside of the aviation, defense, space, medical, telecommunications and electronics industries.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of temporary cash

investments and trade accounts receivable. The Company places its temporary cash investments with high credit quality financial
institutions and limits the amount of credit exposure to any one financial institution. Concentrations of credit risk with respect to trade
receivables are limited due to the large number of customers comprising the Company’s customer base and their dispersion across
many different geographical regions. The Company performs ongoing credit evaluations of its customers, but does not generally require
collateral to support customer receivables.

Inventory

Inventory is stated at the lower of cost or market, with cost being determined on the first-in, first-out or the average cost basis.

Losses, if any, are recognized fully in the period when identified.

HEICO Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company periodically evaluates the carrying value of inventory, giving consideration to factors such as its physical condition,

sales patterns and expected future demand in order to estimate the amount necessary to write down any slow moving, obsolete or damaged
inventory. These estimates could vary significantly from actual amounts based upon future economic conditions, customer inventory levels or
competitive factors that were not foreseen or did not exist when the estimated write-downs were made. In accordance with industry practice,
all inventories are classified as a current asset including portions with long production cycles, some of which may not be realized within one year.

Property, Plant and Equipment

Property, plant and equipment is recorded at cost. Depreciation and amortization is generally provided on the straight-line method

over the estimated useful lives of the various assets. The Company’s property, plant and equipment is depreciated over the following
estimated useful lives:

Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 to 40 years
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 to 20 years
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 to
10 years
Tooling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 to 5 years

The costs of major additions and improvements are capitalized. Leasehold improvements are amortized over the shorter of the

leasehold improvement’s useful life or the lease term. Repairs and maintenance costs are expensed as incurred. Upon an asset’s
disposition, its cost and related accumulated depreciation are removed from the financial accounts and any resulting gain or loss is
reflected within earnings.

Capital Leases

Assets acquired under capital leases are recorded at the lower of the asset’s fair value or the present value of the future minimum lease

payments, excluding any portion of the lease payments representing executory costs. The discount rate used in determining the present value
of the minimum lease payments is the lower of the rate implicit in the lease or the Company’s incremental borrowing rate. Assets under capital
leases are included in property, plant and equipment and are depreciated over the shorter of the lease term or the useful life of the leased
asset. Lease payments under capital leases are recognized as a reduction of the capital lease obligation and as interest expense.

Business Combinations

The Company allocates the purchase price of acquired entities to the underlying tangible and identifiable intangible assets acquired
and liabilities and any noncontrolling interests assumed based on their estimated fair values, with any excess recorded as goodwill. The
operating results of acquired businesses are included in the Company’s results of operations beginning as of their effective acquisition
dates. Acquisition costs are generally expensed as incurred, were not material in fiscal 2017 or 2015 and totaled $3.2 million in fiscal 2016.
See Note 2, Acquisitions, for additional information regarding fiscal 2016 acquisition costs.

For contingent consideration arrangements, a liability is recognized at fair value as of the acquisition date with subsequent fair value
adjustments recorded in operations. Additional information regarding the Company’s contingent consideration arrangements may be found
in Note 2, Acquisitions, and Note 7, 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 not be fully recoverable. In evaluating the recoverability of goodwill, the Company
compares the fair value of each of its reporting units to its carrying value to determine potential impairment. If the carrying value of a
reporting unit exceeds its fair value, the implied fair value of that reporting unit’s goodwill is to be calculated and an impairment loss is
recognized in the amount by which the carrying value of the reporting unit’s goodwill exceeds its implied fair value, if any. 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 certain customer relationships amortized on an accelerated
method) over the following estimated useful lives:

Customer relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 to
15 years
Intellectual property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 to 22 years
Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 to
17 years
Patents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 to 20 years
15 years
Trade names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 to

HEICO Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Amortization expense of intellectual property, licenses and patents is recorded as a component of cost of sales, and amortization

expense of customer relationships, non-compete agreements and trade names is recorded as a component of selling, general and
administrative (“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 income approach, which relies upon management’s
assumptions of royalty rates, projected revenues and discount rates. The Company also tests 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, the Company recognizes an impairment loss based on the excess of the carrying amount
over the fair value of the assets. The determination of fair value requires management to make a number of estimates, assumptions and
judgments of such factors as projected revenues and earnings and discount rates.

Investments

Investments are stated at fair value based on quoted market prices. Investments that are intended to be held for less than one year
are included within prepaid expenses and other current assets in the Company’s Consolidated Balance Sheets, while those intended to be
held for longer than one year are classified within other assets. Unrealized gains or losses associated with available-for-sale securities
are reported net of tax within other comprehensive income or (loss) in shareholders’ equity. Unrealized gains or losses associated with
trading securities are recorded as a component of other income in the Company’s Consolidated Statements of Operations.

Customer Rebates and Credits

The Company records accrued customer rebates and credits as a component of accrued expenses and other current liabilities in the
Company’s Consolidated Balance Sheets. These amounts generally relate to discounts negotiated with customers as part of certain sales
contracts that are usually tied to sales volume thresholds. The Company accrues customer rebates and credits as a reduction within net
sales as the revenue is recognized based on the estimated level of discount rate expected to be earned by each customer over the life of
the contractual rebate period (generally one year). Accrued customer rebates and credits are monitored by management and discount
levels are updated at least quarterly.

Product Warranties

Product warranty liabilities are estimated at the time of shipment and recorded as a component of accrued expenses and other

current liabilities in the Company’s Consolidated Balance Sheets. The amount recognized is based on historical claims experience.

Defined Benefit Pension Plan

In connection with a prior year acquisition, the Company assumed a frozen qualified defined benefit pension plan (the “Plan”). The
Plan’s benefits are based on employee compensation and years of service; however, the accrued benefit for Plan participants was fixed as
of the date of acquisition. The Company uses an actuarial valuation to determine the projected benefit obligation of the Plan and records
the difference between the fair value of the Plan’s assets and the projected benefit obligation as of October 31 in its Consolidated Balance
Sheets. Additionally, any actuarial gain or loss that arises during a fiscal year that is not recognized as a component of net periodic
pension income or expense is recorded as a component of other comprehensive income or (loss), net of tax. See Note 10, Employee
Retirement Plans, for additional information and disclosures about the Plan.

Revenue Recognition

Revenue from the sale of products and the rendering of services is recognized when title and risk of loss passes to the customer, which

is generally at the time of shipment. Revenue from the rendering of services represented less than 10% of consolidated net sales for all
periods presented. Revenue from certain fixed price contracts for which costs can be dependably estimated is recognized on the percent-
age-of-completion method, measured by the percentage of costs incurred to date to estimated total costs for each contract. The percentage
of the Company’s net sales recognized under the percentage-of-completion method was approximately 3%, 3% and 4% in fiscal 2017, 2016
and 2015, respectively. Contract costs include all direct material and labor costs and those indirect costs related to contract performance,
such as indirect labor, supplies, tools, repairs and depreciation costs. SG&A costs are charged to expense as incurred.

Revisions in cost estimates as contracts progress have the effect of increasing or decreasing profits in the period of revision.

Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Variations in actual
labor performance, changes to estimated profitability, and final contract settlements may result in revisions to cost estimates and are
recognized in income in the period in which the revisions are determined. Changes in estimates pertaining to percentage-of-completion
contracts did not have a material effect on net income from consolidated operations in fiscal 2017, 2016 or 2015.

HEICO Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The asset, “costs and estimated earnings in excess of billings” on uncompleted percentage-of-completion contracts, included in

accounts receivable, represents revenue recognized in excess of amounts billed. The liability, “billings in excess of costs and estimated
earnings,” included in accrued expenses and other current liabilities, represents billings in excess of revenue recognized on contracts
accounted for under the percentage-of-completion method. Billings are made based on the completion of certain milestones as provided
for in the contracts.

For fixed price contracts in which costs cannot be dependably estimated, revenue is recognized on the completed-contract method.
A contract is considered complete when all significant costs have been incurred or the item has been accepted by the customer. Progress
billings and customer advances (“billings to date”) received on fixed price contracts accounted for under the completed-contract method
are classified as a reduction to contracts in process (a component of inventories), if any, and any remaining amount is included in accrued
expenses and other current liabilities.

Stock-Based Compensation

The Company records compensation expense associated with stock options in its Consolidated Statements of Operations based on

the grant date fair value of those awards. The fair value of each stock option on the date of grant is estimated using the Black-Scholes
pricing model based on certain valuation assumptions. Expected stock price volatility is based on the Company’s historical stock prices
over the contractual term of the option grant and other factors. The risk-free interest rate used is based on the published U.S. Treasury
yield curve in effect at the time of the option grant for instruments with a similar life. The dividend yield reflects the Company’s expected
dividend yield at the date of grant. The expected option life represents the period of time that the stock options are expected to be
outstanding, taking into consideration the contractual term of the option grant and employee historical exercise behavior. The Company
generally recognizes stock option compensation expense ratably over the award’s vesting period.

Income Taxes

Income tax expense includes U.S. and foreign income taxes, plus a provision for U.S. taxes on undistributed earnings of foreign
subsidiaries not deemed to be permanently invested. Deferred income taxes are provided on elements of income that are recognized for
financial accounting purposes in periods different from periods recognized for income tax purposes. The Company’s policy is to recognize
interest and penalties related to income tax matters as a component of income tax expense. Further information regarding income taxes
can be found in Note 6, Income Taxes.

Redeemable Noncontrolling Interests

As further detailed in Note 11, Redeemable Noncontrolling Interests, the holders of equity interests in certain of the Company’s
subsidiaries have rights (“Put Rights”) that require the Company to provide cash consideration for their equity interests (the “Redemption
Amount”) at fair value or at a formula that management intended to reasonably approximate fair value based solely on a multiple of future
earnings over a measurement period. The Put Rights are embedded in the shares owned by the noncontrolling interest holders and are not
freestanding. The Company tracks the carrying cost of such redeemable noncontrolling interests at historical cost plus an allocation of
subsidiary earnings based on ownership interest, less dividends paid to the noncontrolling interest holders. Redeemable noncontrolling
interests are recorded outside of permanent equity at the higher of their carrying cost or management’s estimate of the Redemption
Amount. The initial adjustment to record redeemable noncontrolling interests at the Redemption Amount results in a corresponding
decrease to retained earnings. Subsequent adjustments to the Redemption Amount of redeemable noncontrolling interests may result
in corresponding decreases or increases to retained earnings, provided any increases to retained earnings may only be recorded to the
extent of decreases previously recorded. Adjustments to Redemption Amounts based on fair value will have no effect on net income per
share attributable to HEICO shareholders whereas the portion of periodic adjustments to the carrying amount of redeemable noncontrolling
interests based solely on a multiple of future earnings that reflect a redemption amount in excess of fair value will affect net income per
share attributable to HEICO shareholders. Acquisitions of redeemable noncontrolling interests are treated as equity transactions.

Net Income per Share Attributable to HEICO Shareholders

Basic net income per share attributable to HEICO shareholders is computed by dividing net income attributable to HEICO by the

weighted average number of common shares outstanding during the period. Diluted net income per share attributable to HEICO share-
holders is computed by dividing net income attributable to HEICO by the weighted average number of common shares outstanding during
the period plus potentially dilutive common shares arising from the assumed exercise of stock options, if dilutive. The dilutive impact of
potentially dilutive common shares is determined by applying the treasury stock method.

HEICO Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Foreign Currency

All assets and liabilities of foreign subsidiaries that do not utilize the U.S. dollar as its functional currency are translated at period-end

exchange rates, while revenue and expenses are translated using average exchange rates for the period. Unrealized translation gains
or losses are reported as foreign currency translation adjustments through other comprehensive income or (loss) in shareholders’ equity.
Transaction gains or losses related to balances denominated in a currency other than the functional currency are recorded in the
Company’s Consolidated Statements of Operations.

Contingencies

Losses for contingencies such as product warranties, litigation and environmental matters are recognized in income when they are

probable and can be reasonably estimated. Gain contingencies are not recognized in income until they have been realized.

New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from
Contracts with Customers,” which provides a comprehensive new revenue recognition model that will supersede nearly all existing revenue
recognition guidance. Under ASU 2014-09, an entity will recognize revenue when it transfers promised goods or services to a customer
at an amount that reflects the consideration it expects to receive in exchange for those goods or services. The guidance also requires
additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. ASU
2014-09, as amended, is effective for fiscal years and interim reporting periods within those years beginning after December 15, 2017, or in
fiscal 2019 for HEICO. Early adoption in the year preceding the effective date is permitted. ASU 2014-09 shall be applied either retrospec-
tively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized
at the date of initial application. The Company is currently evaluating which transition method it will elect. In addition, the Company is
currently identifying its various revenue streams and reviewing certain underlying customer contracts to determine the effect the adoption
of this guidance will have on its consolidated results of operations, financial position and cash flows.

In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory,” which requires entities to measure inventories

at the lower of cost or net realizable value. Under current guidance, inventories are measured at the lower of cost or market. ASU 2015-11
must be applied prospectively and is effective for fiscal years and interim reporting periods within those years beginning after December
15, 2016, or in fiscal 2018 for HEICO. The Company is currently evaluating the effect, if any, the adoption of this guidance will have on its
consolidated results of operations, financial position and cash flows.

In November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes,” which requires that all deferred tax

assets and liabilities be classified as noncurrent in the balance sheet. The Company adopted ASU 2015-17 on a retrospective basis in the
fourth quarter of fiscal 2017, resulting in a reclassification of $41.1 million in current deferred tax assets to noncurrent deferred tax liabilities
in the Company’s Consolidated Balance Sheet as of October 31, 2016.

In February 2016, the FASB issued ASU 2016-02, “Leases,” which requires recognition of lease assets and lease liabilities on the

balance sheet of lessees. ASU 2016-02 is effective for fiscal years and interim reporting periods within those years beginning after
December 15, 2018, or in fiscal 2020 for HEICO. Early adoption is permitted. ASU 2016-02 requires a modified retrospective transition
approach and provides certain optional transition relief. The Company is currently evaluating the effect the adoption of this guidance will
have on its consolidated results of operations, financial position and cash flows.

In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting,” which simplifies several
aspects related to accounting for share-based payment transactions. Under ASU 2016-09, all excess tax benefits and tax deficiencies are
to be recognized in the statement of operations as a component of income tax expense rather than as capital in excess of par value. The
Company adopted ASU 2016-09 in the first quarter of fiscal 2017 resulting in the recognition of a $3.1 million discrete income tax benefit,
which, net of noncontrolling interests, increased net income attributable to HEICO by $2.6 million. Additionally, ASU 2016-09 requires
excess tax benefits and deficiencies to be prospectively excluded from the assumed future proceeds in the calculation of diluted shares,
which increased the Company’s weighted average number of diluted common shares outstanding by 781,000 for fiscal 2017. Further, ASU
2016-09 requires excess tax benefits be presented within the statement of cash flows as an operating activity rather than as a financing
activity. The Company adopted this change on a prospective basis, which resulted in a $3.1 million increase in cash provided by operating
activities and a $3.1 million decrease in cash provided by financing activities in fiscal 2017.

In August 2016, the FASB issued ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments,” which clarifies how cer-

tain cash receipts and cash payments are to be presented and classified in the statement of cash flows. ASU 2016-15 provides guidance on
eight specific cash flow classification issues including contingent consideration payments made after a business combination, proceeds
from corporate-owned life insurance policies and distributions received from equity method investees. ASU 2016-15 is effective for fiscal
years and interim reporting periods within those years beginning after December 15, 2017, or in fiscal 2019 for HEICO. Early adoption is
permitted. ASU 2016-15 requires a retrospective transition approach for all periods presented. The Company is currently evaluating the
effect the adoption of this guidance will have on its consolidated statement of cash flows.

HEICO Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment,” which is intended to simplify the
current test for goodwill impairment by eliminating the second step in which the implied value of a reporting unit is calculated when the
carrying value of the reporting unit exceeds its fair value. Under ASU 2017-04, goodwill impairment should be recognized for the amount by
which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 must be applied
prospectively and is effective for any annual or interim goodwill impairment test in fiscal years beginning after December 15, 2019, or in
fiscal 2021 for HEICO. Early adoption is permitted. The Company does not expect the adoption of this guidance to have a material impact
on its consolidated results of operations, financial position and cash flows.

2 . A C Q U I S I T I O N S

AAT Acquisition

On September 15, 2017, the Company, through HEICO Electronic, acquired all of the outstanding stock of AeroAntenna Technology, Inc.
(“AAT”). The purchase price of this acquisition was paid in cash using proceeds from the Company’s revolving credit facility. AAT designs
and produces high performance active antenna systems for commercial aircraft, precision guided munitions, other defense applications
and commercial uses. The Company believes that this acquisition is consistent with HEICO’s practice of acquiring high quality niche
designers and manufacturers who also focus on customer needs and will further enable the Company to broaden its product offerings,
technologies and customer base.

The following table summarizes the total consideration for the acquisition of AAT (in thousands):

Cash paid
Less: cash acquired
Cash paid, net
Contingent consideration
Additional purchase consideration
Total consideration

$ 317,500
(868)
316,632
13,797
220
$ 330,649

As noted in the table above, the total consideration includes an accrual of $13.8 million representing the estimated fair value of contin-
gent consideration the Company may be obligated to pay should AAT meet certain earnings objectives during the first six years following the
acquisition. See Note 7, Fair Value Measurements, for additional information regarding the Company’s contingent consideration obligation.

The following table summarizes the allocation of the total consideration for the acquisition of AAT to the estimated fair values of the

tangible and identifiable intangible assets acquired and liabilities assumed (in thousands):

Assets acquired:
Goodwill
Customer relationships
Intellectual property

Trade name
Accounts receivable

Inventories

Property, plant and equipment
Other assets

Total assets acquired, excluding cash

Liabilities assumed:
Accounts payable
Accrued expenses

Total liabilities assumed

Net assets acquired, excluding cash

$ 160,903
100,000
39,000
20,000
6,115
5,923
1,246
208
333,395

1,290
1,456
2,746
$ 330,649

The allocation of the total consideration to the tangible and identifiable intangible assets acquired and liabilities assumed is

preliminary until the Company obtains final information regarding their fair values. However, the Company does not expect any adjustments
to such allocations to be material to the Company’s consolidated financial statements. The primary items that generated the goodwill
recognized were the premiums paid by the Company for the future earnings potential of AAT and the value of its assembled workforce
that do not qualify for separate recognition. The amortization period of the customer relationships, intellectual property and trade name
acquired is 15 years, 15 years and indefinite, respectively. The operating results of AAT were included in the Company’s results of operations
from the effective acquisition date. The Company’s consolidated net sales and net income attributable to HEICO for the fiscal year ended
October 31, 2017 includes $10.2 million and $2.5 million, respectively from the acquisition of AAT.

HEICO Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents unaudited pro forma financial information for fiscal 2017 and fiscal 2016 as if the acquisition of AAT had

occurred as of November 1, 2015 (in thousands, except per share data):

Year ended October 31,

Net sales
Net income from consolidated operations
Net income attributable to HEICO
Net income per share attributable to HEICO shareholders:
Basic
Diluted

2017

$ 1,582,653
220,419
$
198,744
$

$
$

2.36
2.29

2016

$ 1,428,336
185,070
$
165,112
$

$
$

1.97
1.94

Robertson Acquisition

On January 11, 2016, the Company, through HEICO Electronic, acquired all of the limited liability company interests of Robertson Fuel
Systems, LLC (“Robertson”). The purchase price of this acquisition was paid in cash using proceeds from the Company’s revolving credit
facility. Robertson designs and produces mission-extending, crashworthy and ballistically self-sealing auxiliary fuel systems for military
rotorcraft. The Company believes that this acquisition is consistent with HEICO’s practice of acquiring outstanding niche designers and
manufacturers of critical components in the defense industry and will further enable the Company to broaden its product offerings,
technologies and customer base.

The following table summarizes the total consideration for the acquisition of Robertson (in thousands):

Cash paid
Less: cash acquired
Total consideration

$ 256,293
(3,271)
$ 253,022

The following table summarizes the allocation of the total consideration for the acquisition of Robertson to the estimated fair values

of the tangible and identifiable intangible assets acquired and liabilities assumed (in thousands):

Assets acquired:
Goodwill
Customer relationships
Intellectual property

Trade name
Inventories

Property, plant and equipment
Accounts receivable
Other assets

Total assets acquired, excluding cash

Liabilities assumed:
Accounts payable
Accrued expenses

Total liabilities assumed

Net assets acquired, excluding cash

$ 93,425
55,100
39,600
28,400
27,417
7,476
4,973
1,884
258,275

4,606
647
5,253
$ 253,022

The primary items that generated the goodwill recognized were the premiums paid by the Company for the future earnings potential of

Robertson and the value of its assembled workforce that do not qualify for separate recognition. The amortization period of the customer
relationships, intellectual property and trade name acquired is 15 years, 22 years and indefinite, respectively. Acquisition costs associated
with the purchase of Robertson totaled $3.1 million in fiscal 2016 and were recorded as a component of SG&A expenses in the Company’s
Consolidated Statements of Operations. The operating results of Robertson were included in the Company’s results of operations from the
effective acquisition date. The Company’s consolidated net sales and net income attributable to HEICO for the fiscal year ended October 31,
2016 includes $84.1 million and $12.3 million, respectively, from the acquisition of Robertson, exclusive of the aforementioned acquisition costs.

HEICO Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents unaudited pro forma financial information for fiscal 2015 as if the acquisition of Robertson had occurred

as of November 1, 2014 (in thousands, except per share data):

Year ended October 31,

Net sales
Net income from consolidated operations
Net income attributable to HEICO
Net income per share attributable to HEICO shareholders:
Basic
Diluted

2015

$ 1,275,926
162,645
$
142,445
$

$
$

1.71
1.68

The pro forma financial information is presented for comparative purposes only and is not necessarily indicative of the results of
operations that actually would have been achieved if the acquisition had taken place as of November 1, 2014. The unaudited pro forma
financial information includes adjustments to historical amounts such as additional amortization expense related to intangible assets
acquired, increased interest expense associated with borrowings to finance the acquisition, the reclassification of acquisition costs
associated with the purchase of Robertson from fiscal 2016 to fiscal 2015, and inventory purchase accounting adjustments charged to cost
of sales as the inventory is sold. Had the acquisition of Robertson been consummated as of November 1, 2014, net sales, net income from
consolidated operations, net income attributable to HEICO, and basic and diluted net income per share attributable to HEICO shareholders
on a pro forma basis for fiscal 2016 would not have been materially different than the reported amounts.

Other Acquisitions

In June 2017, the Company, through a subsidiary of the HEICO Flight Support Corp., acquired all of the ownership interests of Carbon

by Design (“CBD”). CBD is a manufacturer of composite components for UAVs, rockets, spacecraft and other specialized applications. The
purchase price of CBD was paid using cash provided by operating activities.

In April 2017, the Company, through a subsidiary of HEICO Flight Support Corp., acquired 80.1% of the equity interests of LLP
Enterprises, LLC, which owns all of the outstanding equity interests of the operating units of Air Cost Control (“A2C”). A2C is a leading
aviation electrical interconnect product distributor of items such as connectors, wire, cable, protection and fastening systems, in addition
to distributing a wide range of electromechanical parts. The remaining 19.9% interest continues to be owned by certain members of A2C’s
management team (see Note 11, Redeemable Noncontrolling Interests, for additional information).

In December 2015, the Company, through a subsidiary of HEICO Electronic, acquired certain assets of a company that designs and

manufactures underwater locator beacons used to locate aircraft cockpit voice recorders, flight data recorders, marine ship voyage
recorders and other devices which have been submerged under water. The total consideration includes an accrual representing the
estimated fair value of contingent consideration the Company may be obligated to pay in aggregate during the first five years following the
acquisition. See Note 7, Fair Value Measurements, for additional information regarding the Company’s contingent consideration obligation.
The purchase price of this acquisition was paid using cash provided by operating activities.

In August 2015, the Company, through HEICO Flight Support Corp., acquired all of the stock of Astroseal Products Mfg. Corporation
(“Astroseal”). Astroseal manufactures expanded foil mesh, which is integrated into composite aerospace structures for lightning strike
protection in fixed and rotary wing aircraft.

In August 2015, the Company, through HEICO Electronic, acquired 80.1% of the equity of Midwest Microwave Solutions, Inc. (“MMS”).
MMS designs, manufactures and sells unique Size, Weight, Power and Cost (SWAP-C) optimized Communications and Electronic Intercept
Receivers and Tuners for military and intelligence applications. The remaining 19.9% continues to be owned by certain members of MMS’
management team (see Note 11, Redeemable Noncontrolling Interests, for additional information).

In August 2015, the Company, through HEICO Flight Support Corp., acquired 80.1% of the assets and assumed certain liabilities of
Aerospace & Commercial Technologies, LLC (“ACT”). ACT is a provider of products and services necessary to maintain up-to-date F-16
fighter aircraft operational capabilities. The remaining 19.9% continues to be owned by certain members of ACT’s management team (see
Note 11, Redeemable Noncontrolling Interests, for additional information).

In May 2015, the Company, through a subsidiary of HEICO Flight Support Corp., acquired all of the stock of Thermal Energy Products,
Inc. (“TEP”). TEP engineers, designs and manufactures removable/reusable insulation systems for industrial, commercial, aerospace and
defense applications.

In January 2015, the Company, through HEICO Flight Support Corp., acquired 80.1% of the equity of Harter Aerospace, LLC (“Harter”).

Harter is a globally recognized component and accessory maintenance, repair, and overhaul (MRO) station specializing in commercial
aircraft accessories, including thrust reverse actuation systems and pneumatics, and electromechanical components. The remaining
19.9% interest continues to be owned by certain members of Harter’s management team (see Note 11, Redeemable Noncontrolling Interests,
for additional information).

HEICO Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In January 2015, the Company, through HEICO Flight Support Corp., acquired 80% of the equity of Aeroworks International Holding

B.V. (“Aeroworks”). Aeroworks, which is headquartered in the Netherlands and maintains a significant portion of its production facilities in
Thailand and Laos, is a manufacturer of both composite and metal parts used primarily in aircraft interior applications, including seating,
galleys, lavatories, doors, and overhead bins. The remaining 20% interest continues to be owned by a certain member of Aeroworks’
management team (see Note 11, Redeemable Noncontrolling Interests, for additional information). The total consideration includes an
accrual representing the estimated fair value of contingent consideration that the Company may be obligated to pay should Aeroworks
meet certain earnings objectives during each of the first four years following the acquisition. See Note 7, Fair Value Measurements, for
additional information regarding the Company’s contingent consideration obligation.

Unless otherwise noted, the purchase price of each of the above referenced other acquisitions was paid in cash, principally using
proceeds from the Company’s revolving credit facility, and is not material or significant to the Company’s consolidated financial statements.

The following table summarizes the aggregate total consideration for the Company’s other acquisitions (in thousands):

Year ended October 31,

Cash paid
Less: cash acquired
Cash paid, net
Contingent consideration
Additional purchase consideration
Total consideration

2017

2016

109,345
(7,712)
101,633
—
—
101,633

11,000
—
11,000
1,225
—
12,225

2015

171,829
(5,062)
166,767
21,355
(211)
187,911

The following table summarizes the allocation of the aggregate total consideration for the Company’s other acquisitions to the estimated

fair values of the tangible and identifiable intangible assets acquired and liabilities and noncontrolling interests assumed (in thousands):

Year ended October 31,

Assets acquired:
Goodwill
Customer relationships
Trade names

Intellectual property

Licenses

Inventories

Accounts receivable
Property, plant and equipment
Other assets

Total assets acquired, excluding cash

Liabilities assumed:
Accounts payable
Accrued expenses
Deferred income taxes
Other liabilities

Total liabilities assumed

Noncontrolling interests in consolidated subsidiaries

2017

2016

2015

$ 48,960
29,500
16,750
1,950
—
27,271
15,169
4,503
976
145,079

7,696
6,016
4,984
1,411
20,107

23,339

6,876
2,800
300
2,000
—
249
—
—
—
12,225

—
—
—
—
—

—

$ 88,602
58,410
14,094
29,177
1,300
18,055
10,719
16,031
2,547
238,935

4,845
2,570
6,764
621
14,800

36,224

Net assets acquired, excluding cash

101,633

12,225

187,911

The following table summarizes the weighted average amortization period of the definite-lived intangible assets acquired in connection

with the Company’s other fiscal 2017, 2016 and 2015 acquisitions (in years):

Year ended October 31,

Customer relationships
Trade names
Intellectual property
Licenses

2017

2016

12
—
13
—

11
15
15
—

2015

10
—
12
11

HEICO Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The allocation of the total consideration of the Company’s other fiscal 2017 acquisitions to the tangible and identifiable intangible

assets acquired and liabilities and noncontrolling interests assumed is preliminary until the Company obtains final information regarding
their fair values. However, the Company does not expect any adjustments to such allocations to be material to the Company’s consolidated
financial statements. The primary items that generated the goodwill recognized were the premiums paid by the Company for the future
earnings potential of the businesses acquired and the value of their assembled workforces that do not qualify for separate recognition,
which, in the case of A2C, MMS, ACT, Harter and Aeroworks benefit both the Company and the noncontrolling interest holders. The fair value
of the noncontrolling interests in A2C, MMS, ACT, Harter and Aeroworks was determined based on the consideration paid by the Company
for its controlling ownership interest adjusted for a lack of control that a market participant would consider when estimating the fair value
of the noncontrolling interest.

The operating results of the Company’s other fiscal 2017 acquisitions were included in the Company’s results of operations from each
of the effective acquisition dates. The Company’s consolidated net sales for the fiscal year ended October 31, 2017 includes $49.0 million
from the other fiscal 2017 acquisitions. The amount of earnings of the other fiscal 2017 acquisitions included in the Company’s results of
operations for the fiscal year ended October 31, 2017 is not material. Had the acquisitions occurred as of November 1, 2015, net sales on a
pro forma basis for fiscal 2017 would not have been materially different than the reported amounts and net sales on a pro forma basis for
fiscal 2016 would have been $1,464.5 million. Net income from consolidated operations, net income attributable to HEICO, and basic and
diluted net income per share attributable to HEICO shareholders on a pro forma basis for fiscal 2017 and 2016 would not have been materially
different than the reported amounts. The pro forma financial information is presented for comparative purposes only and is not necessarily
indicative of the results of operations that actually would have been achieved if the acquisitions had taken place as of November 1, 2015.

The operating results of the Company’s other fiscal 2016 acquisition were included in the Company’s results of operations from
the effective acquisition date. The amount of net sales and earnings of the Company’s other fiscal 2016 acquisition included in the
Consolidated Statement of Operations is not material. Had the other fiscal 2016 acquisition occurred as of November 1, 2014, net sales, net
income from consolidated operations, net income attributable to HEICO, and basic and diluted net income per share attributable to HEICO
shareholders on a pro forma basis for fiscal 2016 and 2015 would not have been materially different than the reported amounts.

The operating results of the Company’s fiscal 2015 acquisitions were included in the Company’s results of operations from each

of the effective acquisition dates. The Company’s consolidated net sales and net income attributable to HEICO for fiscal 2015 includes
approximately $62.9 million and $7.9 million, respectively, from the fiscal 2015 acquisitions.

The following table presents unaudited pro forma financial information for fiscal 2015 as if the Company’s fiscal 2015 acquisitions had

occurred as of November 1, 2013 (in thousands, except per share data):

Year ended October 31,

Net sales
Net income from consolidated operations
Net income attributable to HEICO
Net income per share attributable to HEICO shareholders:
Basic
Diluted

2015

1,244,911
163,012
140,771

1.69
1.66

$
$
$

$
$

3 . S E L ECT E D F I N A N C I A L STAT E M E N T I N FO R M AT I O N

Accounts Receivable

As of October 31,
(in thousands)
Accounts receivable
Less: Allowance for doubtful accounts
Accounts receivable, net

2017

2016

225,462
(3,006)
222,456

$ 205,386
(3,159)
202,227

HEICO Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Costs and Estimated Earnings on Uncompleted Percentage-of-Completion Contracts

As of October 31,
(in thousands)
Costs incurred on uncompleted contracts
Estimated earnings

Less: Billings to date

Included in the accompanying Consolidated Balance Sheets
under the following captions:

Accounts receivable, net (costs and estimated earnings in excess of billings)
Accrued expenses and other current liabilities (billings

in excess of costs and estimated earnings)

2017

2016

29,491
19,902
49,393
(41,262)
8,131

9,377

(1,246)
8,131

19,086
13,887
32,973
(39,142)
(6,169)

4,839

(11,008)
(6,169)

Changes in estimates pertaining to percentage-of-completion contracts did not have a material effect on net income from consolidated

operations in fiscal 2017, 2016 or 2015.

Inventories

As of October 31,
(in thousands)
Finished products
Work in process
Materials, parts, assemblies and supplies
Contracts in process
Less: Billings to date

Inventories, net of valuation reserves

2017

2016

173,559
39,986
128,031
2,415
(363)
$ 343,628

131,008
36,076
117,153
3,253
(1,188)
286,302

Contracts in process represents accumulated capitalized costs associated with fixed price contracts. Related progress billings and
customer advances (“billings to date”) are classified as a reduction to contracts in process, if any, and any excess is included in accrued
expenses and other liabilities.

Property, Plant and Equipment

As of October 31,
(in thousands)
Land
Buildings and improvements
Machinery, equipment and tooling
Construction in progress

Less: Accumulated depreciation and amortization
Property, plant and equipment, net

2017

2016

5,435
91,916
191,298
5,553
294,202
(164,319)
129,883

5,090
79,205
171,717
10,453
266,465
(144,854)
121,611

The amounts set forth above include tooling costs having a net book value of $7.6 million and $7.7 million as of October 31, 2017 and

2016, respectively. Amortization expense on capitalized tooling was $2.7 million, $2.9 million and $2.4 million in fiscal 2017, 2016 and 2015,
respectively.

The amounts set forth above also include $4.8 million of assets under capital leases as of both October 31, 2017 and October 31, 2016.

Accumulated depreciation associated with assets under capital leases was $1.0 million and $.9 million as of October 31, 2017 and October
31, 2016, respectively. See Note 5, Long-Term Debt, for additional information pertaining to capital lease obligations.

Depreciation and amortization expense, exclusive of tooling, on property, plant and equipment was $21.9 million, $20.4 million and

$17.8 million in fiscal 2017, 2016 and 2015, respectively.

HEICO Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accrued Expenses and Other Current Liabilities

As of October 31,
(in thousands)
Accrued employee compensation and related payroll taxes
Deferred revenue
Accrued customer rebates and credits
Contingent consideration and other accrued purchase consideration
Other
Accrued expenses and other current liabilities

2017

78,058
29,247
12,866
7,588
19,853
147,612

2016

67,660
32,135
11,881
6,918
17,459
136,053

The increase in accrued employee compensation and related payroll taxes principally reflects a higher level of accrued performance-
based compensation based on the improved consolidated operating results and the impact from our fiscal 2017 acquisitions. The total customer
rebates and credits deducted within net sales in fiscal 2017, 2016 and 2015 was $11.0 million, $10.8 million and $4.7 million, respectively.

Other Long-Term Assets and Liabilities

The Company provides eligible employees, officers and directors of the Company the opportunity to voluntarily defer base salary,

bonus payments, commissions, long-term incentive awards and directors fees, as applicable, on a pre-tax basis through the HEICO
Corporation Leadership Compensation Plan (“LCP”), a nonqualified deferred compensation plan that conforms to Section 409A of the
Internal Revenue Code. The Company matches 50% of the first 6% of base salary deferred by each participant. Director fees that would
otherwise be payable in Company common stock may be deferred into the LCP, and, when distributable, are distributed in actual shares
of Company common stock. The LCP does not provide for diversification of a director’s assets allocated to Company common stock. The
deferred compensation obligation associated with Company common stock is recorded as a component of shareholders’ equity at cost
and subsequent changes in fair value are not reflected in operations or shareholders’ equity of the Company. Further, while the Company
has no obligation to do so, the LCP also provides the Company the opportunity to make discretionary contributions. The Company’s
matching contributions and any discretionary contributions are subject to vesting and forfeiture provisions set forth in the LCP. Company
contributions to the LCP charged to income in fiscal 2017, 2016 and 2015 totaled $4.6 million, $6.8 million and $5.7 million, respectively. The
aggregate liabilities of the LCP were $116.0 million and $87.9 million as of October 31, 2017 and 2016, respectively, and are classified within
other long-term liabilities in the Company’s Consolidated Balance Sheets. The assets of the LCP, totaling $117.2 million and $88.5 million
as of October 31, 2017 and 2016, respectively, are classified within other assets and principally represent cash surrender values of life
insurance policies that are held within an irrevocable trust that may be used to satisfy the obligations under the LCP.

Other long-term liabilities also includes deferred compensation of $5.7 million and $4.7 million as of October 31, 2017 and 2016, respec-

tively, principally related to elective deferrals of salary and bonuses under a Company sponsored non-qualified deferred compensation
plan formerly available to selected employees. The Company makes no contributions to this plan. The assets of this plan, which equaled
the deferred compensation liability as of October 31, 2017 and 2016, respectively, are held within an irrevocable trust and classified within
other assets in the Company’s Consolidated Balance Sheets. Additional information regarding the assets of this deferred compensation
plan and the LCP may be found in Note 7, Fair Value Measurements.

Research and Development Expenses

The amount of new product research and development (“R&D”) expenses included in cost of sales is as follows (in thousands):

Year ended October 31,

R&D expenses

Accumulated Other Comprehensive Loss

2017

2016

2015

$ 46,473

$ 44,726

$ 38,747

Changes in the components of accumulated other comprehensive loss during fiscal 2017 and 2016 are as follows (in thousands):

Balances as of October 31, 2015
Unrealized gain (loss)
Balances as of October 31, 2016
Unrealized gain
Amortization of unrealized loss
Balances as of October 31, 2017

Foreign Currency
Translation

Pension Benefit
Obligation

$ (24,368)
415
(23,953)
14,420
—
(9,533)

(712)
(661)
(1,373)
321
29
$ (1,023)

Accumulated
Other Comprehensive
Loss

$ (25,080)
(246)
(25,326)
14,741
29
$ (10,556)

HEICO Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4 . G O O D W I L L A N D OT H E R I N TA N G I B L E A S S E TS

Changes in the carrying amount of goodwill during fiscal 2017 and 2016 by operating segment are as follows (in thousands):

Balances as of October 31, 2015
Goodwill acquired
Foreign currency translation adjustments
Adjustments to goodwill
Balances as of October 31, 2016
Goodwill acquired
Foreign currency translation adjustments
Balances as of October 31, 2017

FSG

$ 337,507
—
(256)
(570)
336,681
48,960
2,965
$ 388,606

Segment

ETG

$ 429,132
100,301
(425)
28
529,036
160,903
2,761
$ 692,700

Consolidated
Totals

$ 766,639
100,301
(681)
(542)
865,717
209,863
5,726
$ 1,081,306

The goodwill acquired during fiscal 2017 and 2016 relates to the acquisitions consummated in those respective years as described

in Note 2, Acquisitions, and represents the residual value after the allocation of the total consideration to the tangible and identifiable
intangible assets acquired and liabilities and noncontrolling interests assumed. Foreign currency translation adjustments are included
in other comprehensive income (loss) in the Company’s Consolidated Statements of Comprehensive Income. The adjustments to goodwill
represent immaterial measurement period adjustments to the purchase price allocation of certain fiscal 2015 acquisitions. The Company
estimates that the majority of the goodwill acquired in fiscal 2017 and all of the goodwill acquired in fiscal 2016 is deductible for income tax
purposes. Based on the annual test for goodwill impairment as of October 31, 2017, the Company determined there is no impairment of its
goodwill and the fair value of each of the Company’s reporting units significantly exceeded their carrying value.

Identifiable intangible assets consist of the following (in thousands):

Amortizing Assets:
Customer relationships
Intellectual property

Licenses
Patents
Non-compete agreements
Trade names

Non-Amortizing Assets:
Trade names

Gross
Carrying
Amount

$ 379,966
181,811
6,559
870
817
466
570,489

As of October 31, 2017

As of October 31, 2016

Accumulated
Amortization

Net
Carrying
Amount

Gross
Carrying
Amount

Accumulated
Amortization

$ (117,069)
(44,861)
(2,928)
(551)
(817)
(118)
(166,344)

$ 262,897
136,950
3,631
319
—
348
404,145

$ 248,271
139,817
6,559
779
811
466
396,703

$ (88,829)
(33,291)
(2,325)
(480)
(811)
(77)
(125,813)

Net
Carrying
Amount

$ 159,442
106,526
4,234
299
—
389
270,890

133,936
$ 704,425

—
$ (166,344)

133,936
$ 538,081

95,973
$ 492,676

—
$ (125,813)

95,973
$ 366,863

The increase in the gross carrying amount of customer relationships, intellectual property and non-amortizing trade names as of

October 31, 2017 compared to October 31, 2016 principally relates to such intangible assets recognized in connection with the fiscal 2017
acquisitions (see Note 2, Acquisitions).

Amortization expense related to intangible assets was $39.5 million, $36.4 million and $27.0 million in fiscal 2017, 2016 and 2015,
respectively. Amortization expense for each of the next five fiscal years and thereafter is estimated to be $48.3 million in fiscal 2018, $46.0
million in fiscal 2019, $43.2 million in fiscal 2020, $40.5 million in fiscal 2021, $35.1 million in fiscal 2022 and $191.0 million thereafter.

5 . L O N G -T E R M D E B T

Long-term debt consists of the following (in thousands):

As of October 31,

Borrowings under revolving credit facility
Capital leases and note payable

Less: Current maturities of long-term debt

2017

671,000
2,979
673,979
(451)
673,528

2016

$ 455,083
3,142
458,225
(411)
457,814

HEICO Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of October 31, 2017 and 2016, the weighted average interest rate on borrowings under the Company’s revolving credit facility was
2.4% and 1.6%, respectively. The revolving credit facility contains both financial and non-financial covenants. As of October 31, 2017, the
Company was in compliance with all such covenants.

As of October 31, 2017, the Company’s borrowings under its revolving credit facility were to mature in fiscal 2019. In November 2017,

the Company entered into a new $1.3 billion Revolving Credit Agreement with a bank syndicate, which matures in November 2022 and
replaced the prior revolving credit facility (see Revolving Credit Facility below).

During fiscal 2015, the Company elected to borrow €32 million under its revolving credit facility to facilitate a fiscal 2015 acquisition.

During fiscal 2017, the Company repaid the full amount of the Euro borrowing.

Revolving Credit Facility

On November 6, 2017, the Company entered into a new $1.3 billion Revolving Credit Facility Agreement (“New Credit Facility”) with a

bank syndicate, which matures in November 2022. Under certain circumstances, the maturity of the New Credit Facility may be extended
for two one-year periods. The New Credit Facility also includes a feature that will allow the Company to increase revolving commitments
under the New Credit Facility by $350 million, to become a $1.65 billion facility, through increased commitments from existing lenders or the
addition of new lenders. Borrowings under the New Credit Facility may be used to finance acquisitions and for working capital and other
general corporate purposes, including capital expenditures. The New Credit Facility replaced the $670 million Revolving Credit Agreement.

Borrowings under the New Credit Facility accrue interest at the Company’s election of the Base Rate or the Eurocurrency Rate, plus in

each case, the Applicable Rate (based on the Company’s Total Leverage Ratio). The Base Rate for any day is a fluctuating rate per annum
equal to the highest of (i) the Prime Rate; (ii) the Federal Funds Rate plus .50%; and (iii) the Eurocurrency Rate for an Interest Period of one
month plus 100 basis points. The Eurocurrency Rate is the rate per annum obtained by dividing LIBOR for the applicable Interest Period by a
percentage equal to 1.00 minus the daily average Eurocurrency Reserve Rate for such Interest Period, as such capitalized terms are defined
in the New Credit Facility. The Applicable Rate for Eurocurrency Rate Loans ranges from 1.00% to 2.00%. The Applicable Rate for Base
Rate Loans ranges from 0% to 1.00%. A fee is charged on the amount of the unused commitment ranging from .125% to .30% (depending
on the Company’s Total Leverage Ratio). The New Credit Facility also includes $100 million sublimits for borrowings made in foreign
currencies and for swingline borrowings, and a $50 million sublimit for letters of credit. Outstanding principal, accrued and unpaid interest
and other amounts payable under the New Credit Facility may be accelerated upon an event of default, as such events are described in the
New Credit Facility. The New Credit Facility is unsecured and contains covenants that require, among other things, the maintenance of a
Total Leverage Ratio and an Interest Coverage Ratio, as such capitalized terms are defined in the New Credit Facility.

Borrowings under the Company’s revolving credit facility as of October 31, 2017 were made under the Company’s $670 million
Revolving Credit Agreement (“Prior Credit Facility”) with a bank syndicate, which was amended in November 2013 to become an $800
million facility and again in April 2017 to become a $1.0 billion facility. The Prior Credit Facility was available to finance acquisitions and for
working capital and other general corporate purposes of the Company, including capital expenditures.

Advances under the Prior Credit Facility accrued interest at the Company’s choice of the “Base Rate” or the London Interbank Offered

Rate (“LIBOR”) plus the applicable margin (based on the Company’s ratio of total funded debt to earnings before interest, taxes, depreciation
and amortization, noncontrolling interests and non-cash charges, or “leverage ratio”). The Base Rate was the highest of (i) the Prime Rate;
(ii) the Federal Funds rate plus .50% per annum; and (iii) the Adjusted LIBO Rate determined on a daily basis for an Interest Period of one
month plus 1.00% per annum, as such capitalized terms were defined in the Prior Credit Facility. The applicable margin for a LIBOR-based
borrowing ranged from .75% to 2.25%. The applicable margin for a Base Rate borrowing ranged from 0% to 1.25%. A fee was charged on
the amount of the unused commitment ranging from .125% to .35% (depending on the Company’s leverage ratio). The Prior Credit Facility
also included a $50 million sublimit for borrowings made in foreign currencies, letters of credit and swingline borrowings. Outstanding
principal, accrued and unpaid interest and other amounts payable under the Prior Credit Facility may have been accelerated upon an event
of default, as such events were described in the Prior Credit Facility. The Prior Credit Facility was unsecured and contained covenants that
restricted the amount of certain payments, including dividends, and required, among other things, the maintenance of a total leverage ratio,
a senior leverage ratio and a fixed charge coverage ratio. In the event the Company’s leverage ratio exceeded a specified level, the Prior
Credit Facility would have become secured by the capital stock owned in substantially all of the Company’s subsidiaries.

HEICO Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Capital Lease Obligations

A subsidiary of HEICO Electronic is a party to a capital lease for a manufacturing facility and related property in France. The lease
contains a bargain purchase option and has a twelve-year term, which began in fiscal 2011. Additionally, the subsidiary is a party to certain
capital leases, principally for office equipment, with lease terms of approximately five years. Furthermore, a subsidiary of HEICO Flight
Support Corp. entered into a ten-year capital lease for a manufacturing facility during fiscal 2016. The estimated future minimum lease
payments of all capital leases for the next five fiscal years and thereafter are as follows (in thousands):

Year ending October 31,

2018
2019
2020
2021
2022
Thereafter
Total minimum lease payments
Less: amount representing interest
Present value of minimum lease payments

6 .

I N C O M E TA X ES

$ 575
575
525
519
509
622
3,325
(461)
$ 2,864

The components of income before income taxes and noncontrolling interests are as follows (in thousands):

Year ended October 31,

Domestic
Foreign
Income before taxes and noncontrolling interests

2017

$ 264,420
33,540
$ 297,960

2016

$ 227,927
29,123
$ 257,050

2015

$ 206,612
18,352
$ 224,964

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,

Current:
Federal
State
Foreign

Deferred:
Federal
State
Foreign

Total income tax expense

2017

2016

2015

$ 85,047
6,820
9,529
101,396

(9,661)
(499)
(936)
(11,096)
$ 90,300

75,261
7,463
7,370
90,094

(5,979)
(2,587)
(628)
(9,194)
$ 80,900

$ 65,857
8,559
4,064
78,480

(4,459)
(1,907)
(714)
(7,080)
71,400

2015

35.0%
2.4%
(1.9%)
.1%
(1.2%)
—%
(1.3%)
(.8%)
(.6%)
31.7%

A reconciliation of the federal statutory income tax rate to the Company’s effective tax rate is as follows:

Year ended October 31,

Federal statutory income tax rate
State taxes, net of federal income tax benefit
Research and development tax credits
Tax-exempt (gains) losses on corporate-owned life insurance policies
Domestic production activities tax deduction
Tax benefit related to stock option exercises (ASU 2016-09 adoption)
Noncontrolling interests’ share of income
Foreign tax differential, where permanently reinvested outside of the U.S.
Other, net
Effective tax rate

2017

35.0%
1.9%
(1.8%)
(1.8%)
(1.1%)
(1.0%)
(.7%)
(.4%)
.2%
30.3%

2016

35.0%
1.7%
(2.7%)
(.1%)
(1.3%)
—%
(.7%)
(.8%)
.4%
31.5%

HEICO Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 LCP and a $3.1
million discrete income tax benefit related to stock option exercises resulting from the adoption of ASU 2016-09 in the first quarter of fiscal
2017 (see Note 1, Summary of Significant Accounting Policies - New Accounting Pronouncements). 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’s effective tax rate in fiscal 2016 decreased to 31.5% from 31.7% in fiscal 2015. The decrease principally reflects the
benefits recognized in fiscal 2016 of a larger income tax credit for qualified R&D activities resulting from the retroactive and permanent
extension of the U.S. federal R&D tax credit in December 2015 and a lower effective state tax rate driven by certain apportionment updates
recognized upon the amendment of certain prior year tax returns in fiscal 2016. These decreases were partially offset by the benefits
recognized in fiscal 2015 from a prior year tax return amendment for additional foreign tax credits related to R&D activities at one of our
foreign subsidiaries and higher net income attributable to noncontrolling interests in subsidiaries structured as partnerships.

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 2013.

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,

Deferred tax assets:
Deferred compensation liability

Inventories

Share-based compensation
Bonus accrual
Vacation accrual
Customer rebates accrual
Deferred revenue
R&D related carryforward
Other

Total deferred tax assets

Deferred tax liabilities:
Goodwill and other intangible assets
Property, plant and equipment
Other

Total deferred tax liabilities
Net deferred tax liability

2017

2016

$ 47,093
31,797
12,984
4,956
2,112
1,864
730
645
8,585
110,766

(160,158)
(7,887)
(1,747)
(169,792)
$ (59,026)

36,134
27,969
11,338
4,744
2,127
1,917
1,365
2,057
8,489
96,140

(150,185)
(8,291)
(2,156)
(160,632)
$ (64,492)

The net deferred tax liability is classified in the Company’s Consolidated Balance Sheets as follows (in thousands) in accordance with

ASU 2015-17, which the Company adopted in the fourth quarter of fiscal 2017 on a retrospective basis (see Note 1, Summary of Significant
Accounting Policies - New Accounting Pronouncements):

As of October 31,

Long-term liability
Long-term asset
Net deferred tax liability

2017

$ (59,026)
—
$ (59,026)

2016

$ (64,899)
407
$ (64,492)

HEICO Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of October 31, 2017 and 2016, the Company’s liability for gross unrecognized tax benefits related to uncertain tax positions was
$2.0 million and $1.6 million, respectively, of which $1.3 million and $1.0 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 2017 and 2016 is as follows (in thousands):

Year ended October 31,

Balances as of beginning of year
Increases related to current year tax positions
Increases related to prior year tax positions
Decreases related to prior year tax positions
Lapses of statutes of limitations
Balances as of end of year

7 . FA I R VA L U E M E A S U R E M E N TS

2017

2016

1,602
596
—
(24)
(134)
2,040

787
524
521
(14)
(216)
1,602

The Company’s assets and liabilities that were measured at fair value on a recurring basis are set forth by level within the fair value

hierarchy in the following tables (in thousands):

Assets:
Deferred compensation plans:

Corporate owned life insurance
Money market funds
Equity securities
Mutual funds
Other

Total assets

Liabilities:
Contingent consideration

As of October 31, 2017

Quoted Prices
in Active Markets
for Identical Assets
(Level 1)

Significant
Other Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

—
3,972
2,895
1,541
1,246
$ 9,654

$ 113,220
—
—
—
—
$ 113,220

—
—
—
—
—
—

Total

$ 113,220
3,972
2,895
1,541
1,246
$ 122,874

—

$ 27,573

Assets:
Deferred compensation plans:

Corporate owned life insurance
Money market funds
Equity securities
Mutual funds
Other

Total assets

Liabilities:
Contingent consideration

As of October 31, 2016

Quoted Prices
in Active Markets
for Identical Assets
(Level 1)

Significant
Other Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

—
2,515
1,832
1,758
1,043
7,148

$ 86,004
—
—
—
50
$ 86,054

—
—
—
—
—
—

Total

$ 86,004
2,515
1,832
1,758
1,093
$ 93,202

—

18,881

HEICO Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company maintains two non-qualified deferred compensation plans. The assets of 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 valued using a market approach. Certain other assets of the LCP represent investments
in money market funds that are classified within Level 1. The assets of the Company’s other deferred compensation plan are principally
invested in equity securities and mutual funds that are classified within Level 1. The assets of both plans are held within irrevocable trusts
and classified within other assets in the Company’s Consolidated Balance Sheets.

As part of the agreement to acquire certain assets of a company by the ETG in fiscal 2016, the Company may be obligated to pay
contingent consideration of up to $2.0 million in aggregate during the five year period following the acquisition. During fiscal 2017, the
Company paid $.3 million of contingent consideration based on the actual financial performance of the acquired entity during the first year
following the acquisition. As of October 31, 2017, the estimated fair value of the remaining contingent consideration was $1.4 million.

As part of the agreement to acquire a subsidiary by the FSG in fiscal 2015, the Company may be obligated to pay contingent consid-

eration of up to €6.1 million per year, or €18.3 million in aggregate, should the acquired entity meet certain earnings objectives during each
of the first three years following the first anniversary of the acquisition. During fiscal 2017, the Company paid €6.1 million, or $6.8 million,
of contingent consideration based on the actual earnings of the acquired entity during the second year following the acquisition. As of
October 31, 2017, the estimated fair value of the remaining contingent consideration was €10.8 million, or $12.6 million.

As part of the agreement to acquire a subsidiary by the ETG in fiscal 2017, the Company may be obligated to pay contingent consid-
eration of $20.0 million in fiscal 2023 should the acquired entity meet certain earnings objectives during the first six years following the
acquisition. As of October 31, 2017, the estimated fair value of the contingent consideration was $13.6 million.

The estimated fair value of the contingent consideration arrangements described above are classified within Level 3 and were de-
termined 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. 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 reflecting the credit risk
of HEICO. Changes in 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 consolidated statements of operations.

The Level 3 inputs used to derive the estimated fair value of the Company’s contingent consideration liability as of October 31, 2017

are as follows:

Compound annual revenue growth rate range
Weighted average discount rate

Fiscal 2017
Acquisition

(8%) - 4%
4.7%

Fiscal 2016
Acquisition

4% - 12%
3.4%

Fiscal 2015
Acquisition

8% - 13%
.8%

Changes in the Company’s contingent consideration liability measured at fair value on a recurring basis using unobservable inputs

(Level 3) during fiscal 2017 and 2016 are as follows (in thousands):

Balance as of October 31, 2015
Increase in accrued contingent consideration
Contingent consideration related to acquisition
Payment of contingent consideration
Foreign currency transaction adjustments
Balance as of October 31, 2016
Contingent consideration related to acquisition
Increase in accrued contingent consideration, net
Payment of contingent consideration
Foreign currency transaction adjustments
Balance as of October 31, 2017

Included in the accompanying Consolidated Balance Sheet under the following captions:

Accrued expenses and other current liabilities
Other long-term liabilities

Liabilities

$ 21,405
3,063
1,225
(6,960)
148
18,881
13,797
1,100
(7,039)
834
$ 27,573

$
7,368
20,205
$ 27,573

HEICO Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company recorded the increase in accrued contingent consideration and foreign currency transaction adjustments set forth in

the table above within SG&A expenses in the Company’s Consolidated Statements of Operations.

The Company did not have any transfers between Level 1 and Level 2 fair value measurements during fiscal 2017 and 2016.

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 October 31, 2017 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.

8 . S H A R E H O L D E R S ’ EQ U I T Y

Common Stock and Class A Common Stock

The Company has two classes of common stock that are virtually identical in all economic respects except voting rights. Each share
of Common Stock is entitled to one vote per share. Each share of Class A Common Stock is entitled to a 1/10 vote per share. Holders of the
Company’s common stock are entitled to receive dividends and other distributions payable in cash, property, stock or otherwise, when and
if declared by the Board of Directors. In the event of liquidation, after payment of debts and other liabilities of the Company, the remaining
assets of the Company will be distributable ratably among the holders of both classes of common stock.

Share Repurchases

In 1990, the Company’s Board of Directors authorized a share repurchase program, which allows the Company to repurchase shares

of Company common stock in the open market or in privately negotiated transactions at the Company’s discretion, subject to certain
restrictions included in the Company’s revolving credit agreement. As of October 31, 2017, the maximum number of shares that may yet be
purchased under this program was 3,127,266 of either or both of the Company’s Class A Common Stock and the Company’s Common Stock.
The repurchase program does not have a fixed termination date. During fiscal 2017, 2016 and 2015, the Company did not repurchase any
shares of Company common stock under this program.

Stock Split

9 . S H A R E - B A S E D C O M P E N S AT I O N

The Company may grant various forms of share-based compensation awards including stock options, restricted stock, restricted
stock awards and stock appreciation rights through the HEICO Corporation 2012 Incentive Compensation Plan (“2012 Plan”). The 2012
Plan became effective in fiscal 2012, the same time the Company’s 2002 Stock Option Plan (“2002 Plan”) expired. Also, in fiscal 2012, the
Company made a decision to no longer issue options under its Non-Qualified Stock Option Plan (“NQSOP”). Options outstanding under the
2002 Plan and NQSOP may be exercised pursuant to their terms. The total number of shares approved by the shareholders of the Company
for the 2012 Plan is 3.3 million plus any options outstanding under the 2002 Plan and NQSOP as of the 2012 Plan’s effective date that are
subsequently forfeited or expire. A total of approximately 5.2 million shares of the Company’s common stock are reserved for issuance to
employees, directors, officers and consultants as of October 31, 2017, including 4.7 million shares currently under option and 0.5 million
shares available for future grants.

Stock options granted pursuant to the 2012 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. The exercise price
per share of a stock option granted under the 2012 Plan may not be less than the fair market value of the designated class of Company
common stock as of the date of grant and stock option grants vest ratably over a period specified as of the date of grant (generally five
years) and expire ten years after the date of grant. Options issued under the 2012 Plan may be designated as incentive stock options
or non-qualified stock options, but only employees are eligible to receive incentive stock options and no incentive stock options were
outstanding as of October 31, 2017. The 2012 Plan will terminate no later than the tenth anniversary of its effective date.

HEICO Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Information concerning share-based activity for each of the last three fiscal years ended October 31 is as follows (in thousands,

except per share data):

Outstanding as of October 31, 2014
Granted
Exercised
Outstanding as of October 31, 2015
Granted
Exercised
Cancelled
Outstanding as of October 31, 2016
Granted
Exercised
Outstanding as of October 31, 2017

Shares Available
For Grant

2,021
(363)
—
1,658
(375)
—
7
1,290
(759)
—
531

Shares Under Option

4,080
363
(274)
4,169
375
(364)
(7)
4,173
759
(262)
4,670

Weighted Average
Exercise Price

$
18.08
$ 41.48
$
13.48
$ 20.42
$ 36.84
$
16.33
$ 29.10
$ 22.23
$ 64.63
$ 23.85
$ 29.04

Information concerning stock options outstanding (all of which are vested or expected to vest) and stock options exercisable by class

of common stock as of October 31, 2017 is as follows (in thousands, except per share and contractual life data):

Common Stock
Class A Common Stock

Number
Outstanding

2,343
2,327
4,670

Number
Outstanding

1,887
1,226
3,113

Options Outstanding

Weighted
Average
Exercise Price

Weighted Average
Remaining Contractual
Life (Years)

$ 25.44
$ 32.66
$ 29.04

4.0
6.1
5.1

Options Exercisable

Weighted
Average
Exercise Price

Weighted Average
Remaining Contractual
Life (Years)

$
17.82
$ 20.30
18.80
$

2.9
4.3
3.5

2016

$ 5,924
868
9,751

Aggregate
Intrinsic
Value

$ 152,858
101,081
$ 253,939

Aggregate
Intrinsic
Value

$ 137,469
68,432
$ 205,901

2015

$ 3,673
1,402
6,958

Information concerning stock options exercised is as follows (in thousands):

Year ended October 31,

Cash proceeds from stock option exercises
Tax benefit realized from stock option exercises
Intrinsic value of stock option exercises

2017

$ 5,659
3,087
10,376

Net income attributable to HEICO for the fiscal years ended October 31, 2017, 2016 and 2015 includes compensation expense of $7.4

million, $6.4 million and $5.8 million, respectively, and an income tax benefit of $2.6 million, $2.4 million and $2.2 million, respectively,
related to the Company’s stock options. Substantially all of the stock option compensation expense was recorded as a component of SG&A
expenses in the Company’s Consolidated Statements of Operations. As of October 31, 2017, there was $25.5 million of pre-tax unrecognized
compensation expense related to nonvested stock options, which is expected to be recognized over a weighted average period of
approximately 3.7 years. The total fair value of stock options that vested in fiscal 2017, 2016 and 2015 was $5.3 million, $5.8 million and
$5.5 million, respectively. If there were a change in control of the Company, all of the unvested options outstanding as of October 31, 2017
would become immediately exercisable.

HEICO Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As previously mentioned in Note 1, Summary of Significant Accounting Policies - New Accounting Pronouncements, the Company
adopted ASU 2016-09 in fiscal 2017, resulting in the recognition of a $3.1 million discrete income tax benefit from stock option exercises in
the Company’s Consolidated Statement of Operations as a component of income tax expense. For the fiscal years ended October 31, 2016
and 2015, the excess tax benefit resulting from tax deductions in excess of the cumulative compensation cost recognized for stock options
exercised was $.9 million and $1.4 million, respectively, and is presented as a financing activity in the Company’s Consolidated Statements
of Cash Flows.

The fair value of each stock option grant in fiscal 2017, 2016 and 2015 was estimated on the date of grant using the Black-Scholes

option-pricing model based on the following weighted average assumptions:

Year ended October 31,

2017

Class A

2016

Class A

2015

Class A

Common Stock Common Stock Common Stock Common Stock

Common Stock Common Stock

Expected stock price volatility
Risk-free interest rate
Dividend yield
Forfeiture rate
Expected option life (years)
Weighted average fair value

37.89%
2.44%
.26%
.00%
9
$ 33.38

28.18%
2.06%
.31%
.00%
7
$ 19.49

39.63%
2.16%
.24%
.00%
9
$ 18.90

32.52%
1.82%
.32%
.00%
6
$ 12.38

39.96%
2.30%
.24%
.00%
9
$ 22.77

36.51%
2.12%
.32%
.00%
7
$ 15.67

1 0 . E M P L OY E E R E T I R E M E N T P L A N S

The HEICO Savings and Investment Plan (the “401(k) Plan”) is a qualified defined contribution retirement plan under which eligible
employees of the Company and its participating subsidiaries may make Elective Deferral Contributions up to the limitations set forth in
Section 402(g) of the Internal Revenue Code. The Company generally makes a 50% Employer Matching Contribution, as determined by
the Board of Directors, based on a participant’s Elective Deferral Contribution up to 6% of the participant’s Compensation for the Elective
Deferral Contribution period. The 401(k) Plan also provides that the Company may make additional Employer Contributions. Employer
Contributions may be contributed in the form of the Company’s common stock or cash, as determined by the Company. Employer Contribu-
tions awarded in the form of Company common stock are valued based on the fair value of the underlying shares as of the effective date
of contribution. Employer Contributions may be diversified by a participant into any of the participant-directed investment options of the
401(k) Plan; however, Employee Contributions may not be invested in Company common stock. Unless specified otherwise, all capitalized
terms herein are defined in the 401(k) Plan document.

Participants receive 100% vesting in Employee Contributions and on cash dividends received on Company common stock. Vesting

in Employer Contributions is based on a participant’s number of Years of Service. Employer Contributions to the 401(k) Plan charged to
income in fiscal 2017, 2016 and 2015 totaled $7.8 million, $7.0 million and $6.1 million, respectively, and were made through the issuance of
new shares of Company common stock and the use of forfeited shares within the 401(k) Plan.

Information concerning share-based activity pertaining to the 401(k) Plan for each of the last three fiscal years ended October 31 is as

follows (in thousands):

Shares available for issuance as of October 31, 2014
Issuance of common stock to 401(k) Plan
Shares available for issuance as of October 31, 2015
Shares registered for issuance to the 401(k) Plan
Issuance of common stock to 401(k) Plan
Shares available for issuance as of October 31, 2016
Issuance of common stock to 401(k) Plan
Shares available for issuance as of October 31, 2017

Common Stock

Class A
Common Stock

85
(67)
18
375
(78)
315
(60)
255

As previously mentioned in Note 1, Summary of Significant Accounting Policies, the Company acquired a frozen qualified defined

benefit pension plan in connection with a prior year acquisition.

HEICO Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Changes in the Plan’s projected benefit obligation and plan assets during fiscal 2017 and 2016 are as follows (in thousands):

Change in projected benefit obligation:
Projected benefit obligation as of October 31, 2015
Actuarial loss
Interest cost
Benefits paid
Projected benefit obligation as of October 31, 2016
Actuarial gain
Interest cost
Benefits paid
Projected benefit obligation as of October 31, 2017

Change in plan assets:
Fair value of plan assets as of October 31, 2015
Actual return on plan assets
Employer contributions
Benefits paid
Fair value of plan assets as of October 31, 2016
Actual return on plan assets
Employer contributions
Benefits paid
Fair value of plan assets as of October 31, 2017

Funded status as of October 31, 2016

Funded status as of October 31, 2017

14,168
655
613
(925)
14,511
(156)
561
(916)
14,000

10,767
263
405
(925)
10,510
1,048
428
(916)
11,070

(4,001)

(2,930)

The $2.9 million and $4.0 million difference between the projected benefit obligation and fair value of plan assets as of October
31, 2017 and October 31, 2016, respectively, is included in other long-term liabilities within the Company’s Consolidated Balance Sheets.
Additionally, the Plan experienced a $.5 million unrealized gain and a $1.1 million unrealized loss during fiscal 2017 and 2016, respectively,
that were recognized in other comprehensive income (loss) and reported net of $.2 million and ($.4) million of tax in fiscal 2017 and 2016,
respectively. The total unrealized loss in accumulated other comprehensive loss that has yet to be recognized as a component of net
periodic pension income (expense) as of October 31, 2017 is $1.7 million (pre-tax), of which the Company expects to recognize less than $.1
million during fiscal 2018.

Weighted average assumptions used to determine the projected benefit obligation are as follows:

As of October 31,

Discount rate

2017

3.98%

Weighted average assumptions used to determine net pension income are as follows:

Year ended October 31,

Discount rate
Expected return on plan assets

2017

3.99%
6.75%

2016

3.99%

2016

4.47%
6.75%

2015

4.20%
6.75%

The discount rate used to determine the projected benefit obligation was determined using the results of a bond yield curve model

based on a portfolio of high-quality bonds matching expected Plan benefit payments. The expected return on Plan assets was based
upon the target asset allocation and investment return estimates for the Plan’s equity and fixed income securities. In establishing this
assumption, the Company considers many factors including both the historical rate of return and projected inflation-adjusted real rate of
return on the Plan’s various asset classes and the expected working lifetime for Plan participants.

HEICO Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Components of net pension income that were recorded within the Company’s Consolidated Statements of Operations are as follows

(in thousands):

Year ended October 31,

Expected return on plan assets
Less: Interest cost
Less: Amortization of unrealized loss
Net pension income

2017

$ 688
(561)
(46)
81

2016

$ 702
(613)
—
$ 89

2015

$ 738
(561)
—
177

The Company anticipates making contributions of $.5 million to the Plan during fiscal 2018. Estimated future benefit payments to be

made during each of the next five fiscal years and in aggregate during the succeeding five fiscal years are as follows (in thousands):

Year ending October 31,

2018
2019
2020
2021
2022
2023-2027

$ 895
926
928
898
878
4,378

The fair value of the Plan’s assets are set forth by level within the fair value hierarchy in the following tables (in thousands):

Equity securities
Fixed income securities
Money market funds and cash

As of October 31, 2017

Quoted Prices
in Active Markets
for Identical Assets
(Level 1)

Significant
Other Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

$ 5,593
5,382
95
11,070

—
—
—
—

As of October 31, 2016

Quoted Prices
in Active Markets
for Identical Assets
(Level 1)

Significant
Other Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

$ 5,149
5,219
142
10,510

—
—
—
—

Total

$ 5,593
5,382
95
11,070

Total

$ 5,149
5,219
142
10,510

Fixed income securities consist of investments in mutual funds. Equity securities consist of investments in common stocks, mutual

funds and exchange traded funds.

The Plan’s actual and targeted asset allocations by investment category are as follows:

As of October 31,

2017

2016

Equity securities
Fixed income securities
Money market funds and cash

Actual

50%
49%
1%
100%

Target

50%
50%
—%
100%

Actual

49%
50%
1%
100%

Target

50%
50%
—%
100%

HEICO Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 1 . R E D E E M A B L E N O N C O N T R O L L I N G I N T E R ESTS

The holders of equity interests in certain of the Company’s subsidiaries have rights (“Put Rights”) that may be exercised on varying

dates causing the Company to purchase their equity interests through fiscal 2025. The Put Rights, all of which relate either to common
shares or membership interests in limited liability companies, provide that the cash consideration to be paid for their equity interests (the
“Redemption Amount”) be at fair value or at a formula that management intended to reasonably approximate fair value based solely on
a multiple of future earnings over a measurement period. As of October 31, 2017, management’s estimate of the aggregate Redemption
Amount of all Put Rights that the Company could be required to pay is approximately $131.1 million. The actual Redemption Amount will
likely be different. The aggregate Redemption Amount of all Put Rights was determined using probability adjusted internal estimates of
future earnings of the Company’s subsidiaries with Put Rights while considering the earliest exercise date, the measurement period and
any applicable fair value adjustments. The portion of the estimated Redemption Amount as of October 31, 2017 redeemable at fair value is
approximately $82.1 million and the portion redeemable based solely on a multiple of future earnings is approximately $49.0 million.

A summary of the Put Rights associated with the redeemable noncontrolling interests in certain of the Company’s subsidiaries as of

October 31, 2017 is as follows:

Subsidiary
Acquisition

Year

2005
2006
2008
2009
2012
2012
2012
2015
2015
2015
2015
2017

Operating
Segment

Company
Ownership
Interest

Earliest
Put Right
Year

Purchase
Period
(Years)

ETG
FSG
FSG
ETG
ETG
FSG
FSG
FSG
FSG
ETG
FSG
FSG

95.9%
80.1%
82.3%
82.5%
78.0%
84.0%
80.1%
80.0%
80.1%
80.1%
80.1%
80.1%

2018 (1)
2018 (1)
2018 (1)
2018 (1)
2018 (1)
2018
2019
2019
2020
2020
2022
2022

4 (2)
4
5
1
2
4
4
4
4
2
4
2 (3)

(1) Currently puttable

(2) A portion is to be purchased in a lump sum

(3) The second purchase is to be made two years after the first Put Right Year

The estimated aggregate Redemption Amount of the Put Rights that are currently puttable or becoming puttable during fiscal 2018
is approximately $40.4 million, of which approximately $21.0 million would be payable in fiscal 2018 should all of the eligible associated
noncontrolling interest holders elect to exercise their Put Rights during fiscal 2018. Additionally, the Company has call rights to purchase
the equity interests of the noncontrolling holders over the same purchase period as the Put Rights.

During fiscal 2016, the holders of a 19.9% noncontrolling equity interest in a subsidiary of the FSG that was acquired in fiscal 2011
exercised their option to cause the Company to purchase their interests over a two-year period ending in fiscal 2017. Accordingly, the
Company’s ownership interest in the subsidiary increased to 100% effective March 2017.

The $3.8 million and $3.6 million Redemption Amount for the redeemable noncontrolling interests acquired in fiscal 2017 and 2016,

respectively, were paid using cash provided by operating activities.

HEICO Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 2 . N E T I N C O M E P E R S H A R E AT T R I B U TA B L E TO H E I C O S H A R E H O L D E R S

The computation of basic and diluted net income per share attributable to HEICO shareholders is as follows (in thousands, except per

share data):

Year ended October 31,

Numerator:
Net income attributable to HEICO

Denominator:
Weighted average common shares outstanding - basic
Effect of dilutive stock options
Weighted average common shares outstanding - diluted

Net income per share attributable to HEICO shareholders:
Basic
Diluted

Anti-dilutive stock options excluded

2017

2016

2015

$ 185,985

$ 156,192

$ 133,364

84,290
2,486
86,776

$
$

2.21
2.14

511

83,807
1,406
85,213

$
$

1.86
1.83

725

83,425
1,339
84,764

$
$

1.60
1.57

515

1 3 . Q U A R T E R LY F I N A N C I A L I N FO R M AT I O N ( U N A U D I T E D )

(in thousands, except per share data)

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

Net sales:
2017
2016
Gross profit:
2017
2016

Net income from consolidated operations:

2017
2016

Net income attributable to HEICO:

2017
2016

Net income per share attributable to HEICO:
Basic:
2017
2016
Diluted:
2017
2016

$ 343,432
$ 306,227

$
$

125,417
112,196

$ 46,265
$ 35,924

$ 40,927
31,271
$

$
$

.49
.37

.47
.37

$ 368,657
$ 350,648

$
$

140,382
134,029

50,833
43,729

$ 45,686
38,657
$

$
$

.54
.46

.53
.45

$ 391,500
$ 356,084

$
$

148,897
133,583

$
51,475
$ 46,976

$ 45,698
$ 42,002

$
$

.54
.50

.53
.49

$ 421,224
$ 363,299

$
$

160,029
135,684

59,087
49,521

$
53,674
$ 44,262

$
$

.64
.53

.62
.52

During the first quarter of fiscal 2017, the Company adopted ASU 2016-09 (see Note 1, Summary of Significant Accounting Policies -
New Accounting Pronouncements), resulting in the recognition of a $3.1 million discrete income tax benefit and a 679,000 increase in the
Company’s weighted average number of diluted common shares outstanding, which, net of noncontrolling interests, increased net income
attributable to HEICO by $2.6 million, or $.03 per basic and diluted share.

During the first quarter of fiscal 2016, the Company incurred $3.1 million of acquisition costs in connection with a fiscal 2016 acquisition.

These expenses, net of tax, decreased net income attributable to HEICO by $2.0 million, or $.02 per basic and diluted share.

During the first quarter of fiscal 2016, the Company recognized additional income tax credits for qualified R&D activities related to the
last ten months of fiscal 2015 upon the retroactive and permanent extension of the U.S. federal R&D tax credit in December 2015, which, net
of expenses, increased net income attributable to HEICO by $1.7 million, or $.02 per basic and per diluted share.

Due to changes in the average number of common shares outstanding, net income per share attributable to HEICO for the full fiscal

year may not equal the sum of the four individual quarters.

HEICO Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 4 . O P E R AT I N G S EG M E N TS

The Company has two operating segments: the Flight Support Group (“FSG”), consisting of HEICO Aerospace and HEICO Flight Support
Corp. and their collective subsidiaries; and the Electronic Technologies Group (“ETG”), consisting of HEICO Electronic and its subsidiaries.
The Company’s operating segment reporting structure is consistent with how management reviews the business, makes investing and
resource decisions and assesses operating performance. Additionally, characteristics such as similarity of products, customers, economic
characteristics and various other factors are considered when identifying the Company’s operating segments. The FSG designs, manufac-
tures, repairs, overhauls and distributes jet engine and aircraft component replacement parts. The parts and services are approved by the
FAA. The FSG also manufactures and sells specialty parts as a subcontractor for aerospace and industrial original equipment manufacturers
and the U.S. government. Additionally, the FSG is a leading supplier, distributor, and integrator of military aircraft parts and support services
primarily to foreign military organizations allied with the U.S. and is a leading manufacturer of advanced niche components and complex
composite assemblies for commercial aviation, defense and space applications. Further, the FSG engineers, designs and manufactures
thermal insulation blankets and parts and is a leading distributor of aviation electrical interconnect products and electromechanical parts.
The ETG collectively designs and manufactures electronic, microwave, and electro-optical equipment and components, three-dimensional
microelectronic and stacked memory products, high-speed interface products, high voltage interconnection devices, high voltage advanced
power electronics products, power conversion products, underwater locator beacons, electromagnetic interference shielding, traveling
wave tube amplifiers, harsh environment electronic connectors and other interconnect products, communications and electronic intercept
receivers and tuners, crashworthy and ballistically self-sealing auxiliary fuel systems for military rotorcraft, radio frequency (RF) and
microwave amplifiers, transmitters and receivers, satellite microwave modules and integrated subsystems and high performance active
antenna systems primarily for the aviation, defense, space, medical, telecommunications and electronics industries.

The Company’s reportable operating segments offer distinctive products and services that are marketed through different channels.

They are managed separately because of their unique technology and service requirements.

Segment Profit or Loss

The accounting policies of the Company’s operating segments are the same as those described in Note 1, Summary of Significant

Accounting Policies. Management evaluates segment performance based on segment operating income.

Information on the Company’s two operating segments, the FSG and the ETG, for each of the last three fiscal years ended October 31 is

as follows (in thousands):

Year ended October 31, 2017:
Net sales
Depreciation
Amortization
Operating income
Capital expenditures
Total assets

Year ended October 31, 2016:
Net sales
Depreciation
Amortization
Operating income
Capital expenditures
Total assets

Year ended October 31, 2015:
Net sales
Depreciation
Amortization
Operating income
Capital expenditures
Total assets

Segment

FSG

ETG

Other, Primarily
Corporate and
Intersegment (1)

Consolidated
Totals

$ 967,540
13,042
18,026
179,278
15,665
1,042,925

$ 875,870
12,113
16,590
163,427
18,434
877,672

$ 809,700
10,859
13,470
149,798
11,737
867,213

$ 574,261
8,609
24,167
157,451
10,100
1,339,363

$ 511,272
8,030
22,664
126,031
11,962
1,015,696

$ 390,982
6,803
15,945
98,833
6,201
743,873

$ (16,988)
227
752
(30,071)
233
130,143

$ (10,884)
218
662
(24,113)
467
105,044

$ (12,034)
168
662
(18,975)
311
89,771

1,524,813
21,878
42,945
306,658
25,998
2,512,431

1,376,258
20,361
39,916
265,345
30,863
1,998,412

1,188,648
17,830
30,077
229,656
18,249
1,700,857

(1) Intersegment activity principally consists of net sales from the ETG to the FSG.

Year ended October 31, 2016:

Net sales

Depreciation

Amortization

Operating income

Capital expenditures

Total assets

Year ended October 31, 2015:

Net sales

Depreciation

Amortization

Operating income

Capital expenditures

Total assets

Year ended October 31, 2014:

Net sales

Depreciation

Amortization

Operating income

Capital expenditures

Total assets

Segment

FSG

ETG

Other, Primarily

Corporate and

Intersegment (1)

Consolidated

Totals

$ 875,870

$ 511,272

$ (10,884)

1,376,258

$ 809,700

$ 390,982

$ (12,034)

1,188,648

12,113

16,590

163,427

18,434

878,674

10,859

13,470

149,798

11,737

868,218

9,809

10,034

136,480

9,437

676,824

8,030

22,664

126,031

11,962

1,017,827

6,803

15,945

98,833

6,201

746,018

7,113

19,993

88,914

6,327

703,144

218

662

(24,113)

467

142,974

168

662

(18,975)

311

122,151

146

662

(22,006)

646

109,246

20,361

39,916

265,345

30,863

2,039,475

17,830

30,077

229,656

18,249

1,736,387

17,068

30,689

203,388

16,410

1,489,214

$ 762,801

$ 379,404

(9,894)

1,132,311

HEICO Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the Company’s net sales to external customers by product lines included in each operating segment

(in thousands):

Year ended October 31,

Flight Support Group:
Aftermarket replacement parts (1)
Repair and overhaul parts and services (2)
Specialty products (3)
Total net sales

Electronic Technologies Group:
Electronic component parts for defense,
space and aerospace equipment (4)
Electronic component parts for equipment

in various other industries (5)

Total net sales

2017

2016

2015

$ 489,644
270,482
207,414
967,540

$ 405,108
251,357
219,405
875,870

$ 356,070
258,952
194,678
809,700

420,991

371,297

255,095

153,270
574,261

139,975
511,272

135,887
390,982

Other, primarily corporate and intersegment

(16,988)

(10,884)

(12,034)

Total consolidated net sales

$ 1,524,813

$ 1,376,258

$ 1,188,648

(1)

Includes various jet engine and aircraft component replacement parts.

(2)

Includes primarily the sale of parts consumed in various repair and overhaul services on selected jet engine and aircraft components, avionics, instruments,
composites and flight surfaces of commercial and military aircraft.

(3)

Includes primarily the sale of specialty components such as thermal insulation blankets, renewable/reusable insulation systems, advanced niche components,
complex composite assemblies, and expanded foil mesh.

(4) Includes various component parts such as electro-optical infrared simulation and test equipment, electro-optical laser products, electro-optical, microwave and

other power equipment, high-speed interface products, power conversion products, underwater locator beacons, traveling wave tube amplifiers, microwave power
modules, three-dimensional microelectronic and stacked memory products, crashworthy and ballistically self-sealing auxiliary fuel systems, radio frequency (RF)
and microwave amplifiers, transmitters and receivers, high performance communications and electronic intercept receivers and tuners and high performance active
antenna systems.

(5) Includes various component parts such as electromagnetic and radio interference shielding, high voltage interconnection devices, high voltage advanced power

electronics, harsh environment connectivity products and custom molded cable assemblies.

Major Customer and Geographic Information

The Company markets its products and services in approximately 110 countries. The following table summarizes the Company’s net
sales to customers located in the United States and to those in other countries for each of the last three fiscal years ended October 31 (in
thousands). Net sales are attributed to countries based on the location of the customer. Net sales to any one customer or originating from
any one foreign country did not account for 10% or more of the Company’s consolidated net sales during any of the last three fiscal years.
The following table also summarizes the Company’s long-lived assets held within and outside of the United States as of October 31 of the
last three fiscal years (in thousands). Long-lived assets consist of net property, plant and equipment.

Net Sales:
United States of America
Other countries
Total net sales

Long-lived assets:
United States of America
Other countries
Total long-lived assets

2017

2016

2015

$ 1,007,491
517,322
$ 1,524,813

$ 904,670
471,588
$ 1,376,258

97,367
32,516
129,883

$ 94,889
26,722
121,611

$ 785,567
403,081
$ 1,188,648

$ 85,253
20,417
105,670

HEICO Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 5 . C O M M I T M E N TS A N D C O N T I N G E N C I ES

Lease Commitments

The Company leases certain property and equipment, including manufacturing facilities and office equipment under operating leases.

Some of these leases provide the Company with the option after the initial lease term either to purchase the property at the then fair
market value or renew the lease at the then fair rental value. Generally, management expects that leases will be renewed or replaced by
other leases in the normal course of business.

Future minimum payments under non-cancelable operating leases for the next five fiscal years and thereafter are estimated to be as

follows (in thousands):

Year ending October 31,

2018
2019
2020
2021
2022
Thereafter
Total minimum lease commitments

$ 13,402
12,249
11,748
10,904
9,759
16,065
$ 74,127

Total rent expense charged to operations for operating leases in fiscal 2017, 2016 and 2015 amounted to $15.6 million, $14.7 million and

$11.9 million, respectively.

Guarantees

As of October 31, 2017, the Company has arranged for standby letters of credit aggregating $4.2 million, which are supported by its
revolving credit facility and pertain to payment guarantees related to potential workers’ compensation claims and a facility lease as well
as performance guarantees related to customer contracts entered into by certain of the Company’s subsidiaries.

Product Warranty

Changes in the Company’s product warranty liability in fiscal 2017 and 2016 are as follows (in thousands):

Year ended October 31,

Balances as of beginning of year
Accruals for warranties
Warranty claims settled
Balances as of end of year

Litigation

2017

$ 3,351
2,254
(2,684)
$ 2,921

2016

$ 3,203
3,025
(2,877)
$ 3,351

The Company is involved in various legal actions arising in the normal course of business. Based upon the Company’s and its legal

counsel’s evaluations of any claims or assessments, management is of the opinion that the outcome of these matters will not have a
material adverse effect on the Company’s results of operations, financial position or cash flows.

HEICO Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 6 . S U P P L E M E N TA L D I S C L O S U R ES O F C A S H F L O W I N FO R M AT I O N

The following table presents supplemental disclosures of cash flow information and non-cash investing activities for fiscal 2017, 2016

and 2015 (in thousands):

Year ended October 31,

Cash paid for income taxes
Cash received from income tax refunds
Cash paid for interest
Contingent consideration
Additional purchase consideration
Property, plant and equipment acquired through capital lease obligations

1 7 . S U B S EQ U E N T E V E N TS

2017

$ 95,851
(2,953)
9,631
13,797
220
37

2016

$ 87,486
(1,906)
8,288
1,225
—
1,111

2015

$ 76,021
(1,211)
4,598
21,355
(204)
59

In November 2017, the Company, through a subsidiary of HEICO Electronic, acquired all the stock of Interface Displays & Controls,
Inc. (“IDC”). IDC designs and manufactures electronic products for aviation, marine, military, fighting vehicles, and embedded computing
markets. The purchase price of this acquisition was paid using cash provided by operating activities and the total consideration for the
acquisition is not material or significant to the Company’s consolidated financial statements.

On December 15, 2017, the Company’s Board of Directors declared a 5-for-4 stock split on both classes of the Company’s common
stock. The stock split is payable to shareholders of record as of January 3, 2018 and the Company expects to distribute the additional
shares to shareholders on January 17, 2018. Accordingly, the prices of both the Company’s Class A Common Stock and Common Stock are
anticipated to begin trading on a post-split basis on January 18, 2018. None of the applicable share and per share information in these
consolidated financial statements has been adjusted retrospectively to give effect to the pending 5-for-4 stock split. Pro forma unaudited
net income per share attributable to HEICO shareholders and the weighted average number of common shares outstanding for fiscal 2017,
2016 and 2015 giving retrospective effect to the pending fiscal 2018 stock split is as follows (in thousands, except per share data):

Year ended October 31,

2017

2016

2015

Net income per share attributable to HEICO shareholders:
Basic
Diluted

Weighted average number of common shares outstanding:
Basic
Diluted

$
$

1.77
1.71

105,363
108,470

$
$

1.49
1.47

104,758
106,516

$
$

1.28
1.26

104,281
105,955

HEICO Corporation and Subsidiaries

MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING

Management of HEICO Corporation is responsible for establishing and maintaining adequate internal control over financial reporting
for the Company. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance
of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii)
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance
with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial
statements.

Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of
any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management, under the supervision of and with the participation of the Company’s Chief Executive Officer and the Chief Financial

Officer, assessed the effectiveness of the Company’s internal control over financial reporting based on the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework (2013). Based on its
assessment, management concluded that the Company’s internal control over financial reporting is effective as of October 31, 2017.

In September 2017, the Company acquired all of the outstanding stock of AeroAntenna Technology, Inc., (“AAT”). In June 2017, the
Company acquired all of the ownership interests of Carbon by Design (“CBD”). In April 2017, the Company acquired 80.1% of the equity
interests of LLP Enterprises, LLC, which owns all of the outstanding equity interests of the operating units of Air Cost Control (“A2C”). See
Note 2, Acquisitions, of the Notes to Consolidated Financial Statements for additional information. As permitted by the Securities and
Exchange Commission, companies are allowed to exclude acquisitions from their assessment of internal control over financial reporting
during the first year of an acquisition and management elected to exclude AAT, CBD, and A2C (collectively, the “Excluded Acquisitions”)
from its assessment of internal control over financial reporting as of October 31, 2017. The aggregate assets and net sales of the Excluded
Acquisitions constituted 19.7% and 3.9% of the Company’s consolidated total assets and net sales as of and for the year ended October
31, 2017, respectively.

Deloitte & Touche LLP, an independent registered public accounting firm, audited the Company’s consolidated financial statements

included in this Annual Report for the year ended October 31, 2017. A copy of their report is included in this Annual Report. Deloitte &
Touche LLP has issued their attestation report on management’s internal control over financial reporting, which is set forth below.

EXECUTIVE OFFICER CERTIFICATIONS

HEICO Corporation has filed with the U.S. Securities and Exchange Commission as Exhibits 31.1 and 31.2 to its Form 10-K for the year

ended October 31, 2017, the required certifications of its Chief Executive Officer (CEO) and Chief Financial Officer under Section 302 of the
Sarbanes-Oxley Act regarding the quality of its public disclosures. HEICO Corporation’s CEO also has submitted to the New York Stock
Exchange (NYSE) following the March 2017 annual meeting of shareholders, the annual CEO certification stating that he is not aware of any
violation by HEICO Corporation of the NYSE’s corporate governance listing standards. All Board of Directors Committee Charters, Corporate
Governance Guidelines as well as HEICO’s Code of Ethics and Business Conduct are located on HEICO’s website at www.heico.com.

HEICO Corporation and Subsidiaries

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
HEICO Corporation
Hollywood, Florida

We have audited the accompanying consolidated balance sheets of HEICO Corporation and subsidiaries (the “Company”) as of October
31, 2017 and 2016, and the related consolidated statements of operations, comprehensive income, shareholders’ equity, and cash flows
for each of the three years in the period ended October 31, 2017. These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on the financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of HEICO Corporation
and subsidiaries as of October 31, 2017 and 2016, and the results of their operations and their cash flows for each of the three years in the
period ended October 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s
internal control over financial reporting as of October 31, 2017, based on the criteria established in Internal Control - Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated December 21, 2017
expressed an unqualified opinion on the Company’s internal control over financial reporting.

/s/ DELOITTE & TOUCHE LLP
Certified Public Accountants

Miami, Florida
December 21, 2017

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
HEICO Corporation
Hollywood, Florida

We have audited the internal control over financial reporting of HEICO Corporation and subsidiaries (the “Company”) as of October 31,
2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission. As described in Management’s Annual Report on Internal Control Over Financial Reporting, management
excluded from its assessment the internal control over financial reporting at AeroAntenna Technology, Inc., Carbon by Design and Air Cost
Control, (collectively, the “Excluded Acquisitions”), which were acquired during 2017 and whose financial statements constitute 19.7%
of total assets and 3.9% of net sales of the Company’s consolidated financial statement amounts as of and for the year ended October
31, 2017. Accordingly, our audit did not include the internal control over financial reporting of the Excluded Acquisitions. The Company’s
management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness
of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial
Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over
financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal
executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors,
management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control
over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use,
or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper
management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also,
projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the
risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of October 31, 2017,
based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of
the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated
financial statements as of and for the year ended October 31, 2017 of the Company and our report dated December 21, 2017 expressed an
unqualified opinion on those financial statements.

/s/ DELOITTE & TOUCHE LLP
Certified Public Accountants

Miami, Florida
December 21, 2017

MARKET FOR COMPANY’S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS

Market Information

Our Class A Common Stock and Common Stock are listed and traded on the New York Stock Exchange (“NYSE”) under the symbols

“HEI.A” and “HEI,” respectively. The following tables set forth, for the periods indicated, the high and low share prices for our Class A
Common Stock and our Common Stock as reported on the NYSE, as well as the amount of cash dividends paid per share during such periods.

Fiscal 2016:

First Quarter
Second Quarter
Third Quarter
Fourth Quarter

Fiscal 2017:

First Quarter
Second Quarter
Third Quarter
Fourth Quarter

Class A Common Stock
Low

High

Common Stock

High

Low

Cash Dividends
Per Share

$ 40.06
41.18
46.26
48.82

$ 56.20
61.35
71.85
78.70

$ 34.25
32.08
39.94
45.07

$ 47.36
51.92
58.75
69.75

$ 45.42
50.15
55.98
60.01

$ 65.90
71.62
81.69
93.00

$ 38.29
41.41
48.27
52.56

$ 53.08
60.00
70.59
80.29

.064
—
.064
—

.072
—
.080
—

As of December 19, 2017, there were 340 holders of record of our Class A Common Stock and 330 holders of record of our Common Stock.

In addition, as of December 19, 2017, there were approximately 47,195 shareholder account positions of the Company’s Class A
Common Stock and Common Stock in brokerage or nominee accounts. The combined total of all record holders and brokerage or nominee
shareholder account positions is approximately 47,865 of both classes of common stock.

Performance Graphs

The following graph and table compare the total return on $100 invested in HEICO Common Stock and HEICO Class A Common Stock
with the total return on $100 invested in the NYSE Composite Index and the Dow Jones U.S. Aerospace Index for the five-year period from
October 31, 2012 through October 31, 2017. The NYSE Composite Index measures the performance of all common stocks listed on the NYSE.
The Dow Jones U.S. Aerospace Index is comprised of large companies which make aircraft, major weapons, radar and other defense
equipment and systems as well as providers of satellites and spacecraft used for defense purposes. The total returns include the
reinvestment of cash dividends.

Comparison of Five-Year Cumulative Total Return
$440

$400

$360

$320

$280

$240

$200

$160

$120

$80

$40

2012

2013

2014

2015

2016

2017

HEICO Common Stock

HEICO Class A
Common Stock

NYSE Composite Index

Dow Jones
U.S. Aerospace Index

HEICO Common Stock
HEICO Class A Common Stock
NYSE Composite Index
Dow Jones U.S. Aerospace Index

Cumulative Total Return as of October 31,

2012

100.00
100.00
100.00
100.00

2013

$ 182.13
171.07
121.75
153.74

2014

185.88
203.08
131.91
157.68

2015

173.27
194.47
127.24
165.11

2016

2017

$ 232.72
268.01
127.50
175.50

$ 391.31
426.00
150.11
262.34

HEICO Corporation and Subsidiaries

MARKET FOR COMPANY’S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS

The following graph and table compare the total return on $100 invested in HEICO Common Stock since October 31, 1990 using the
same indices shown on the five-year performance graph above. October 31, 1990 was the end of the first fiscal year following the date the
current executive management team assumed leadership of the Company. No Class A Common Stock was outstanding as of October 31,
1990. As with the five-year performance graph, the total returns include the reinvestment of cash dividends.

Comparison of Twenty-Seven Year Cumulative Total Return

HEICO Common Stock

NYSE Composite Index

Dow Jones U.S. Aerospace Index

$25,000

$20,000

$15,000

$10,000

$5,000

HEICO Common Stock
NYSE Composite Index
Dow Jones U.S. Aerospace Index

Cumulative Total Return as of October 31,

1990

1991

1992

1993

1994

1995

100.00
100.00
100.00

1996

430.02
225.37
341.65

2002

670.39
284.59
343.88

141.49
130.31
130.67

158.35
138.76
122.00

1997

1,008.31
289.55
376.36

1998

$ 1,448.99
326.98
378.66

173.88
156.09
158.36

1999

1,051.61
376.40
295.99

123.41
155.68
176.11

2000

809.50
400.81
418.32

263.25
186.32
252.00

2001

1,045.86
328.78
333.32

2003

2004

2005

2006

2007

1,067.42
339.15
393.19

1,366.57
380.91
478.49

1,674.40
423.05
579.77

$ 2,846.48
499.42
757.97

$ 4,208.54
586.87
1,000.84

2008

2009

2010

2011

2012

2013

HEICO Common Stock
NYSE Composite Index
Dow Jones U.S. Aerospace Index

$ 2,872.01
344.96
602.66

$ 2,984.13
383.57
678.00

$ 4,722.20
427.61
926.75

$ 6,557.88
430.46
995.11

$ 5,900.20
467.91
1,070.15

$ 10,457.14
569.69
1,645.24

HEICO Common Stock
NYSE Composite Index
Dow Jones U.S. Aerospace Index

2014

11,416.51
617.23
1,687.41

2015

2016

2017

$ 10,776.88
595.37
1,766.94

$ 14,652.37
596.57
1,878.10

$ 23,994.03
702.38
2,807.42

HEICO Corporation and Subsidiaries

Electronic Technologies Group
3D-Plus SAS
AeroAntenna Technology, Inc.
Analog Modules, Inc.
Connectronics Corp. and Wiremax
dB Control Corp.
Dukane Seacom, Inc.
EMD Technologies Incorporated
Engineering Design Team, Inc.
HEICO Electronic Technologies Corp.
HVT Group, Inc.

Dielectric Sciences, Inc.
Essex X-Ray &

Medical Equipment LTD

Interface Displays & Controls, Inc.

Leader Tech, Inc.
Lucix Corporation
Lumina Power, Inc.
Midwest Microwave Solutions, Inc.
Radiant Power Corp.
Ramona Research, Inc.
Robertson Fuel Systems, LLC
Santa Barbara Infrared, Inc.
Sierra Microwave Technology, LLC
Switchcraft, Inc. and Conxall
VPT, Inc.

Subsidiaries

Flight Support Group
Action Research Corporation
Aero Design, Inc.
Aerospace & Commercial

Technologies, LLC

Aeroworks International Holding B.V.
Air Cost Control
Aircraft Technology, Inc.
Astroseal Products Mfg. Corporation
Blue Aerospace LLC
Carbon by Design Corporation
CSI Aerospace, Inc.
Future Aviation, Inc.
Harter Aerospace, LLC
HEICO Aerospace Corporation
HEICO Aerospace Holdings Corp.
HEICO Aerospace Parts Corp.
HEICO Component Repair Group - Miami
HEICO Flight Support Corp.
HEICO Parts Group
HEICO Repair Group

Inertial Airline Services, Inc.

Jet Avion Corporation
Jetseal, Inc.
LPI Corporation
McClain International, Inc.
Niacc-Avitech Technologies, Inc.
Prime Air, LLC and Prime Air Europe
Reinhold Industries, Inc.
Seal Dynamics LLC
Sunshine Avionics LLC
Thermal Energy Products, Inc.
Thermal Structures, Inc.
Turbine Kinetics, Inc.

Registrar & Transfer Agent

Computershare

By Regular Mail
PO Box 505000
Louisville, KY 40233-5000
United States

By Overnight Delivery
462 South 4th Street
Suite 1600
Louisville, KY 40233-5000
United States

Telephone: 800-368-5948
www.computershare.com/investor

New York Stock Exchange Symbols

Class A Common Stock - “HEI.A”
Common Stock - “HEI”

Form 10-K and Board of
Directors Inquiries

The Company’s Annual Report on Form 10-K
for 2017, as filed with the Securities and
Exchange Commission, is available without
charge upon written request to the Corporate
Secretary at the Company’s headquarters.

Any inquiry to any member of the Company’s
Board of Directors, including, but not limited
to “independent” Directors, should be
addressed to such Director(s) care of the
Company’s Headquarters and such inquiries
will be forwarded to the Director(s) of whom
the inquiry is being made.

Annual Meeting

The Annual Meeting of Shareholders
will be held on Friday,
March 16, 2018 at 10:00 a.m.
at the Conrad Miami
1395 Brickell Avenue
Miami, FL 33131
Telephone: 305-503-6500

Shareholder Information

Elizabeth R. Letendre
Corporate Secretary
HEICO Corporation
3000 Taft Street
Hollywood, FL 33021
Telephone: 954-987-4000
Facsimile: 954-987-8228
eletendre@heico.com

OFFICERS AND SENIOR LEADERSHIP

Laurans A. Mendelson
Chairman of the Board of Directors and
Chief Executive Officer,
HEICO Corporation

Jerry Goldlust
President and Founder,
HVT Group, Inc. and
Dielectric Sciences, Inc.

Nadim Bakhache
President,
EMD Technologies Incorporated

Keith Bandolik
President,
Switchcraft, Inc. and Conxall

Vaughn Barnes
President,
HEICO Specialty Products Group -
Thermal Products (Thermal Structures,
Inc., Thermal Energy Products, Inc. and
Jetseal, Inc.)

Paul Belisle
Vice President and General Manager,
Turbine Kinetics, Inc.

Adam Bentkover
Vice President - Acquisitions,
HEICO Corporation

Jeffrey S. Biederwolf
Senior Vice President,
HEICO Repair Group

Steven Case
President,
Engineering Design Team, Inc.

Vladimir Cervera
Vice President and General Manager -
Structures,
HEICO Component Repair Group –
Miami

Barry Cohen
President and Founder,
Prime Air, LLC

Dominick Consalvi
Vice President and General Manager,
Carbon by Design Corporation

Ian D. Crawford
President and Founder,
Analog Modules, Inc.

Alexandre de Gunten
Business Development Officer,
HEICO Aerospace Corporation

Leon Gonzalez
Vice President and General Manager,
Sunshine Avionics LLC

Clarence Hightower
President,
HEICO Specialty Products Group -
Interiors and Composites, and
Reinhold Industries, Inc.

William J. Hinski
Vice President - Managing Director,
Harter Aerospace, LLC

John F. Hunter
Senior Vice President,
HEICO Parts Group

Tung Huynh
President and Co-Founder,
Lumina Power, Inc.

Thomas S. Irwin
Senior Executive Vice President,
HEICO Corporation

Todd Jones
General Manager,
Ramona Research, Inc.

Joe Klein
Chief Executive Officer and Founder,
AeroAntenna Technology, Inc.

Elizabeth R. Letendre
Corporate Secretary,
HEICO Corporation

Jack Lewis
Senior Vice President,
HEICO Parts Group

Omar Lloret
Vice President and General Manager -
Accessories,
HEICO Component Repair Group –
Miami

Carlos L. Macau, Jr.
Executive Vice President,
Chief Financial Officer and Treasurer,
HEICO Corporation

Sjuk de Vries
Chief Executive Officer and Founder,
Aeroworks International Holding B.V.

Patrick Markham
Vice President - Technical Services,
HEICO Parts Group

Andrew J. Feeley
Vice President and General Manager,
CSI Aerospace, Inc.

Pierre Maurice
President and Co-Founder,
3D Plus SAS

William Fenne
Vice President and General Manager,
Niacc-Avitech Technologies, Inc.

Steve McHugh
Chief Operating Officer,
Electronic Technologies Group and
President and Co-Founder,
Santa Barbara Infrared, Inc. and
IRCameras, LLC

Robert J. McKenna
President,
Leader Tech, Inc.

Bruce McQuerry
Vice President and General Manager,
McClain International, Inc.

Eric A. Mendelson
Co-President,
HEICO Corporation

Victor H. Mendelson
Co-President,
HEICO Corporation

Michael Milardo
President,
Astroseal Products Mfg. Corporation

Michael Montgomery
Vice President and General Manager,
Aero Design, Inc.

Luis J. Morell
President,
HEICO Parts Group and
HEICO Repair Group

Michael Navon
President and Founder,
Blue Aerospace LLC

Joseph W. Pallot
General Counsel,
HEICO Corporation

Laurent Parelle
Chief Executive Officer,
Air Cost Control

Anish V. Patel
President,
Radiant Power Corp. and
Dukane Seacom, Inc.

Jeffrey Perkins
Vice President and General Manager,
Seal Dynamics – Tampa

Niall Porter
General Manager,
Jet Avion Corporation

Chad Putnam
General Manager,
Action Research Corporation

Rex Reum
President,
Jetseal, Inc.

Phillip J. Rezin
President,
Midwest Microwave Solutions, Inc.

Thomas L. Ricketts
Chief Executive Officer and
Co-Founder,
Connectronics Corp. and Wiremax

Troy J. Rodriguez
President and Co-Founder,
Sierra Microwave Technology, LLC

James E. Roubian
Senior Vice President - Manufacturing,
HEICO Parts Group

Dr. Daniel M. Sable
Chief Executive Officer and
Co-Founder,
VPT, Inc.

Mark Shahriary
Chief Executive Officer,
Lucix Corporation

Val R. Shelley
Vice President - Strategy,
HEICO Corporation

Newman Shufflebarger
Chief Executive Officer,
Robertson Fuel Systems, LLC

David R. Smith
President,
Aerospace & Commercial
Technologies, LLC

Gary Spaulding
Chief Operating Officer,
dB Control Corp.

David J. Susser
President,
HEICO Distribution Group and
Seal Dynamics LLC

Gregg Tuttle
Vice President and General Manager,
Future Aviation, Inc.

Steven M. Walker
Chief Accounting Officer and
Assistant Treasurer,
HEICO Corporation

Nicholas “Tony” Wright
Vice President and General Manager -
Avionics,
HEICO Repair Group