HEICO Annual Report 2018

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FY2018 Annual Report · HEICO

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HEIC:D

CORPORATION

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H E I C O C O R P O R A T I O N

Corporate Offices: 3000 Taft Street | Hollywood, FL 33021

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

A N N U A L R E P O R T

2018

F I N A N C I A L H I G H L I G H T S

B O A R D O F D I R E C T O R S

Year ended October 31,(1)

2016

2017

2018

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
Total debt (including current portion)
Redeemable noncontrolling interests
Total shareholders’ equity

(in thousands, except per share data)

$ 1,376,258

265,345 (3)
8,272
156,192 (3)

$ 1,524,813
306,658
9,790
185,985 (4)

$ 1,777,721
376,245
19,901
259,233 (5)

130,948
133,145

131,703
135,588

132,543
136,696

1.19 (3)
1.17 (3)
.082

1.41 (4)
1.37 (4)
.097

1.96 (5)
1.90 (5)
.116

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

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

$ 2,653,396
532,470
132,046
1,503,008

(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 splits effected in June 2018, January 2018, and April 2017.

(3) 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 $.01 per diluted share.

(4) During fiscal 2017, we adopted Accounting Standards Update 2016-09, “Improvements to Employee Share-Based Payment Accounting,” resulting in the recognition of a $3.1
million discrete income tax benefit and a 1,220,000 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 $.02 per basic and $.01 per diluted share.

(5) During fiscal 2018, the United States (“U.S.”) government enacted significant changes to existing tax law resulting in HEICO recording a discrete tax benefit from remeasuring
its U.S. federal net deferred tax liabilities that was partially offset by a provisional discrete tax expense related to a one-time transition tax on the unremitted earnings of
HEICO’s foreign subsidiaries. The net impact of these amounts increased net income attributable to HEICO by $12.1 million, or $.09 per basic and diluted share.

F O R W A R D - L O O K I N G S T A T E M E N T S

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 spending or 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.

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

ADOLFO HENRIQUES
Vice Chairman,
The Related Group

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

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

I N M E M O R Y O F
W O L F G A N G M AY R H U B E R

Mr. Wolfgang Mayrhuber passed away at the age of 71 on December 1, 2018.

Our relationship with Wolfgang started in 1997, when as a senior executive at

Lufthansa, he championed the 20% investment in HEICO’s Flight Support Group.

This vote of confidence from a well-respected aviation executive and large

airline business accelerated HEICO’s growth and solidified its reputation as a

trusted supplier. However, the real benefit was building a long-term relationship

and friendship with Wolfgang, who eventually became the Chairman of the

Executive Board and CEO of Deutsche Lufthansa AG and, later, Chairman of its

Supervisory Board. His unwavering counsel, first as an equity partner in 1997

and then as a board member since 2001, helped HEICO’s success. Business

prowess aside, Wolfgang was most fond of and cherished his wife of over 43

years, Beate, their three children and five grandchildren. We miss Wolfgang, but

we will continue to live and abide by the principles he personified.

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

Celebrating our 61st anniversary in business, HEICO Corporation is a rapidly growing global

aerospace, defense 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, Non-OEM 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, scientific, 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 equipment producers, medical equipment manufacturers, government

agencies, telecommunications equipment suppliers and others.

NET SALES (in millions)

OPERATING INCOME (in millions)

$1,777.7

F O R 2 0 1 8

$376.2

F O R 2 0 1 8

$1,524.8

$1,376.3

$306.7

$265.3

NET INCOME (in millions)

NET INCOME PER SHARE (diluted)

$259.2

F O R 2 0 1 8

$1.90

F O R 2 0 1 8

$186.0

$156.2

$1.37

$1.17

A N N U A L R E P O R T 2 0 1 8 | 1

M A N A G E M E N T ’ S M E S S A G E

Dear Fellow Shareholder:

For the ninth consecutive year, HEICO Corporation

reported record net income, operating income and net

sales. Net income increased 39% to a record $259.2 million,
or $1.90 per diluted share, up from $186.0 million, or $1.37
per diluted share in fiscal 2017. HEICO’s operating income
increased 23% to a record $376.2 million from $306.7 million.
Net sales increased 17% to a record $1.78 billion, up from
$1.52 billion.

Additionally, HEICO’s Earnings Before Interest, Taxes,
Depreciation and Amortization (EBITDA) increased 22% to
$453.4 million from $372.6 million in fiscal 2017.

Our Flight Support Group’s net sales increased 13%
to a record $1.1 billion. Operating income also increased
to a record $206.6 million, a 15% increase year-over-year.
This growth was primarily driven by strong demand across
all of the Flight Support Group’s product lines and stellar
performance from our fiscal 2017 and 2018 acquisitions.

The Electronic Technologies Group experienced another
year of outsized growth. Net sales increased 22% to a record
$701.8 million. Additionally, operating income increased to
$204.5 million, representing a 30% increase year-over-year.
This strong performance was driven by increased demand
across nearly all product lines (as evidenced by an organic
growth rate of 6%) and strong results from our fiscal 2017
and 2018 acquisitions.

In the past two years, we have been very acquisitive,

completing nine acquisitions. AeroAntenna Technology
(Chatsworth, CA), our largest acquisition to date, closed in
September 2017. After completing five transactions in 2018,
our deal pipeline remains robust and we have ample capacity
to pursue acquisitions that fit within our stringent criteria.

$0.07 per share regular, semi-annual cash dividend on both
classes of common stock, which was paid in January 2019.
Since December 2017, we have increased the cash dividend
by 25% cumulatively. Additionally, we completed two
5-for-4 stock splits in 2018. This balanced capital allocation
approach is intended to reward all company stakeholders.
Our record results are a testament to the outstanding
organization that we have the privilege of leading. Please
read the question and answer discussion that follows this
letter to gain more insights into our company.

Sadly, as we noted in our December 3, 2018 press
release, HEICO Director Wolfgang Mayrhuber recently passed
away at the age of 71, after battling a long illness. Wolfgang
served on HEICO’s board since 2001 and was an integral
advisor and friend throughout the past few decades. His
extensive business background and aviation knowledge
made him a trusted and respected industry executive and
HEICO board member. However, he was most known for his
kindness, humility and generosity towards his family and
friends - we miss him dearly.

As always, we salute our 5,400-plus Team Members.
In our view, HEICO has the most talented work force in the
entire industry. Their combination of skills and ownership
mindset have been crucial factors to HEICO’s success over
the past 29 years. We are honored and humbled by our Team
Members’ commitment and devotion to the company –
as leaders, we do not take this for granted and will strive to
maintain HEICO as one of the best places to work. Finally,
we are grateful for our Board of Directors for their continuing
counsel and advice.

While laser-focused on achieving our growth objectives,

Sincerely,

HEICO continues to stay financially disciplined. With net
debt of $472.9 million, our net debt to EBITDA ratio improved
to 1.04x at fiscal year-end. Additionally, our cash flow from
operating activities increased 14% year-over-year to $328.5
million, which represents 127% of our net income. As a result
of the strong cash flows, our Board of Directors declared a

2 | A N N U A L R E P O R T 2 0 1 8

Laurans A. Mendelson
Chairman & Chief
Executive Officer

Eric A. Mendelson
Co-President

Victor H. Mendelson
Co-President

Q U E S T I O N A N D A N S W E R D I S C U S S I O N

Q. What is your view on the commercial aviation and defense outlook in 2019 and beyond?

While it is difficult to know how our industry will do in any particular year, we remain optimistic about the commercial
aviation and defense sector’s long-term growth prospects. According to the Federal Aviation Administration (FAA),
expected worldwide GDP growth will be 2.8% in the next twenty years, while Boeing predicts a 4.7% increase in passenger
traffic growth and 3.5% increase in the global fleet. This growth differential gives us confidence in our industry’s long-term
prospects. In terms of the defense sector, we strongly believe in supporting our nation’s troops and its allies. With an
increased defense budget and unrelenting conflicts worldwide, we believe the defense business is poised to grow.

Q. Can you please provide more background on your 2018 acquisitions?

We completed five acquisitions in 2018. The latest, Specialty Silicone Products (Ballston Spa, NY) and Apex
Microtechnology (Tucson, AZ) were stand-alone acquisitions within the Electronic Technologies Group. The former
designs and manufactures specialty silicone materials for a variety of demanding applications within the aerospace,
defense and general industrial markets; Apex designs and manufactures niche power amplifier components for similar
high quality, high-reliability industries.

The other three were add-on asset acquisitions for our existing subsidiaries. We acquired the Emergency Locator
Transmitter product line from Instrumar Limited and relocated the business to Sarasota, FL, where it will be managed
by the experienced Dukane Seacom team. The next, Optical Display Engineering, is an FAA-authorized Part 145 Repair
Station that will be relocated and operated by our Inertial Aerospace Services subsidiary (Highland Heights, OH). Last,
Sensor Technology Engineering, a leading maker of radiation detection technologies, was acquired by Santa Barbara
Infrared (Santa Barbara, CA). When our existing subsidiaries pursue complementary, add-on acquisition strategies, we
provide resources to aid the due diligence and deal closing process. Overall, our acquisitions have been performing at,
or above, expectations so far and we are enthusiastic about their futures.

Q. What is HEICO’s growth strategy going forward?

Since 1990, our strategy has remained the same and we do not foresee any changes. We intend to grow HEICO through
a combination of organic growth and acquisitions while maintaining our special HEICO Family culture. On an organic
basis, each of our subsidiaries goes through a detailed process before proceeding with any major investment or initiative.
We analyze potential acquisitions in a similar analytical manner, while also taking into account the leadership teams and
culture fit. Our acquisitions are long-term partnerships, so we do our best to make sure both sides are excited about
the deal. As we have stated in the past, we view HEICO as a business through which we intend to ethically and honestly
produce outsized cash flow returns.

Q. Will HEICO “change” as it becomes a larger company?

We remain committed to the entrepreneurial spirit and small-business mindset that has served us well since taking over the
company in 1990. We strongly believe that our lack of bureaucracy, flat organizational structure and transparent culture
have been large drivers of our success. By empowering our Team Members and making them true owners (via our 401(k)
Stock Ownership Plan), we have recruited and retained the best people into the HEICO Family. These talented and driven
Team Members are aligned with HEICO’s overall goals and that is a key ingredient that we must foster as HEICO grows.

From an acquisitions standpoint, we continue to look at all types of companies, both ranging in size and market.
We recognize that HEICO must stay flexible as we enter the next growth phase.

A N N U A L R E P O R T 2 0 1 8 | 3

LEFT, IN OUR HOLLYWOOD, FL MANUFACTURING

FACILITY, A QUALITY ENGINEER PERFORMS AN

IN-PROCESS INSPECTION ON A COMBUSTION

HOUSING.

PICTURED TO THE RIGHT IS A DIFFUSER,

WHICH DISPERSES THE AIR ENTERING

A COMMERCIAL AIRCRAFT ENGINE,

MANUFACTURED BY THE COMPANY’S

FLIGHT SUPPORT GROUP.

LEFT, A TEAM MEMBER AT OUR HAUPPAUGE,

NEW YORK-BASED SEAL DYNAMICS DISTRIBUTION

FACILITY IS RETRIEVING PARTS IN INVENTORY

USING A STANDARD HIGH-LOW MACHINE, WHICH

ALLOWS THE TEAM MEMBER TO PULL STOCK IN

ELEVATED LOCATIONS.

4 | A N N U A L R E P O R T 2 0 1 8

O U R S T R A T E G I C F O O T P R I N T

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

The commercial aviation sector continues to soar to greater heights. According to Boeing,

42,000-plus aircraft deliveries are anticipated in the next twenty years, with a 4.7% expected

annual passenger traffic growth. Much of this growth is forecasted to be driven by emerging

economies in Asia and Africa, which will see a large increase in air travel as their industries

mature and their GDP per capita increases. Worldwide GDP is forecasted to grow at

approximately 2.8% in the same timeframe, implying that the aerospace sector is still a great

industry to participate in.

HEICO supports this market by providing more than 11,000 FAA-approved PMA parts on

essentially all the major, large commercial aircraft in production. While delivering in excess

of 72 million parts over the past few decades, we have maintained an unparalleled standard

of quality, with zero service bulletins, zero airworthiness directives and zero in-flight

shutdowns. In addition to our quality standards, we anticipate saving customers over $1.3

billion in the next three to five years.

42,000 +

4.7%

Aircarft deliveries in the next 20 years

Expected passenger traffic growth

11,000 +

$1.3 Billion

FAA-Approved PMA parts that HEICO supplies

Customer savings over the next 3 to 5 years

A N N U A L R E P O R T 2 0 1 8 | 5

OUR SARASOTA, FL-BASED DUKANE SEACOM SUBSIDIARY DESIGNS

AND MANUFACTURES EMERGENCY LOCATOR TRANSMITTERS

(ELTs), SUCH AS THE ONE SHOWN BELOW. THESE ELTs ARE

MISSION-CRITICAL DEVICES THAT ARE INSTALLED ON MOST MAJOR

COMMERCIAL AIRCRAFT TODAY. UPON ACTIVATION, THESE SAFETY

DEVICES TRANSMIT A DISTRESS SIGNAL TO ALERT SEARCH AND

RESCUE OPERATIONS OF AN AIRCRAFT LOCATION POST-ACCIDENT.

PICTURED TO THE RIGHT IS A COCKPIT LCD FOR

RADAR, WHICH WAS REPAIRED BY OUR OPTICAL

DISPLAY ENGINEERING SUBSIDIARY. THIS FAA-AUTHORIZED PART 145 REPAIR STATION WAS

ACQUIRED BY THE FLIGHT SUPPORT GROUP’S INERTIAL AEROSPACE SERVICES SUBSIDIARY

(BASED IN HIGHLAND HEIGHTS, OH) IN AUGUST 2018.

Our businesses operate in highly specialized, niche segments

across the aviation sector. HEICO parts can be found across the

entire aircraft, ranging from the cockpit to the lavatory. Today,

in addition to our legacy aftermarket replacement parts and

repair and overhaul businesses, we manufacture a variety of

specialty products, including: electronic components, thermal

insulation products and complex composite assemblies. This

wide product offering allows us to build deep relationships

with the major airlines and original equipment manufacturers.

HEICO is committed to a standard of excellence and exceeding

customer expectations. Through these basic principles, we

have been able to build a strong reputation within our industry.

6 | A N N U A L R E P O R T 2 0 1 8

LEFT, AN AUTOMATIC WELDING

MACHINE AT AIRCRAFT TECHNOLOGY

IN HOLLYWOOD, FL, PERFORMS A 360

DEGREE RAIL WELDING ON AN AIRCRAFT

ENGINE CASE.

BELOW, A SOPHISTICATED AIRCRAFT

ELECTRONIC COMPONENT

UNDERGOES TESTING AT THE FLIGHT

SUPPORT GROUP’S HIGHLAND

HEIGHTS, OH FACILITY.

AEROWORKS, IN MIDDENMEER, THE

NETHERLANDS, MANUFACTURES AN

EXTENSIVE RANGE OF GALLEY SYSTEM

AND COMPARTMENT RETAINERS, SUCH

AS THE ONE SHOWN TO THE RIGHT.

A N N U A L R E P O R T 2 0 1 8 | 7

I N N O VA T I O N S T H R O U G H

D E F E N S E C A P A B I L I T I E S

HEICO’s defense operations grew significantly in 2018. Each of our businesses invests heavily in

product development, sometimes for projects that only realize cash flows years into the future.

This long-term vision is required when developing products that must perform in highly demanding,

“cannot fail” type of environments. Our products and subcomponents can be found in aircraft,

spacecraft, missiles, high-end shipboard and limited ground-based applications; these products

include: 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 shielding, radio frequency interference shielding, traveling

wave tube amplifiers, and crashworthy and ballistically self-sealing auxiliary fuel systems. As an

aerospace and defense company, we believe that it is our duty to invest in innovative technologies to

help serve our soldiers on the battlefield.

Many of HEICO’s Team Members are also veterans, or have family

in the military. We are proud of our veterans and are always

recruiting more qualified military candidates to our company.

~···
...
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-- _··>f,~;;_ ... . _·- '_; (

PICTURED TO THE RIGHT ARE TWO ORION ROCKET

MOTOR NOZZLES, WHICH ARE MANUFACTURED BY

OUR LOS ANGELES, CA-BASED REINHOLD INDUSTRIES

SUBSIDIARY, AND USED ON THE GROUND BASED

INTERCEPTOR PROGRAM, THE PEGASUS LAUNCH

VEHICLE AND THE TAURUS LAUNCH VEHICLE.

8 | A N N U A L R E P O R T 2 0 1 8

OUR LONGWOOD, FL-BASED ANALOG MODULES SUBSIDIARY

DESIGNS AND MANUFACTURES MISSION-CRITICAL

ELECTRONIC COMPONENTS FOR THE DEFENSE SECTOR.

PICTURED TO THE RIGHT IS A HIGH-PERFORMANCE

LASER RANGEFINDER RECEIVER THAT IS USED ACROSS

A VARIETY OF MILITARY PLATFORMS, SUCH AS THE TANK

PICTURED BELOW.

HEICO’S SUB-ASSEMBLIES AND COMPONENTS ARE

DESIGNED INTO THE MAJORITY OF ACTIVE MILITARY

AIRCRAFT TODAY, INCLUDING THE F-22 RAPTOR,

SHOWN BELOW.

The appearance of U.S. Department of Defense (DoD) visual
information does not imply or constitute DoD endorsement

TEMPE, AZ-BASED ROBERTSON FUEL SYSTEMS HAS KEPT OUR MILITARY SAFE SINCE 1977 WITH ITS SUITE

OF MISSION-EXTENDING, CRASHWORTHY AND BALLISTICALLY SELF-SEALING AUXILIARY FUEL SYSTEMS.

AS DEPICTED ABOVE AND TO THE RIGHT, ROBERSTON’S SEAHAWK CRASHWORTHY EXTERNAL FUEL

SYSTEMS (SEACEFS) ARE INSTALLED ON U.S. NAVY SEAHAWK HELICOPTERS.

A N N U A L R E P O R T 2 0 1 8 | 9

SpaceX

HEICO CONTINUALLY INNOVATES IN THE

SPACE MARKETS. PICTURED TO THE LEFT

ARE TWO SPACE MICRO-CAMERAS THAT

ARE DESIGNED AND MANUFACTURED

BY OUR BUC, FRANCE-BASED 3D-PLUS

SUBSIDIARY. THESE CAMERAS ARE

SPECIFICALLY DESIGNED TO BE AS SMALL

IN WEIGHT AND SIZE AS POSSIBLE,

WHILE BEING ABLE TO WITHSTAND THE

EXTREME ENVIRONMENTS IN SPACE.

OUR VISTA, CA-BASED CARBON BY DESIGN SUBSIDIARY

MANUFACTURED THE INTERIOR COMPOSITE PANELS

FOR THE NEXT-GENERATION SPACEX CREW DRAGON

SPACECRAFT, WHOSE MISSION IS TO CARRY HUMANS

TO THE INTERNATIONAL SPACE STATION AND OTHER,

AMBITIOUS DESTINATIONS IN THE FUTURE.

10 | A N N U A L R E P O R T 2 0 1 8

E X P L O R I N G M A R K E T S I N

S P A C E A N D T E C H N O L O G Y

HEICO’s space businesses continue to innovate and partner with major space

organizations on pioneering programs. Some of the critical components and

equipment we make are: microwave assemblies, ferrite devices, amplifiers,

down-converters, electric power converters, memory modules, power supplies,

recorders and systems in packages. In recent years, our companies have

supplied parts for numerous missions, such as: InSight, RainCube, ICESat-2,

Parker Solar Probe, Juno, New Horizons, Dawn and Orion.

NASA’s InSight, which is the acronym for Interior Exploration using Seismic

Investigations, Geodesy and Heat Transport, landed on Mars on November

26, 2018 and is currently studying the planet’s surface and atmosphere.

Three HEICO subsidiaries, Sierra Microwave Technology, VPT and 3D-Plus

supplied mission-critical components on board the InSight landing vehicle

and accompanying twin cube satellites. To have three HEICO subsidiaries

contribute to such a historic program is an honor.

NASA/JPL–Calteh

AS PART OF NASA’S INSIGHT MISSION,

3D-PLUS SUPPLIED PARTS FOR THE TWIN

MARS CUBE ONE SATELLITES TO HELP

FACILITATE COMMUNICATIONS BETWEEN

THE LANDING VEHICLE AND EARTH.

THESE SATELLITES, WHICH ARE PICTURED

ABOVE, ARE A UNIQUE INNOVATION AND

APPROXIMATE THE SIZE OF A BRIEFCASE.

GEORGETOWN, TX-BASED SIERRA MICROWAVE TECHNOLOGY, BLACKSBURG, VA-BASED

VPT AND 3D-PLUS ALL SUPPLIED MISSION-CRITICAL PARTS ON BOARD THE INSIGHT

LANDING VEHICLE. OUR BUSINESSES CONTINUALLY INVEST IN NEW TECHNOLOGY

AND PROCESSES AND THEIR PARTICIPATION IN SUCH A HIGH-PROFILE MISSION IS A

TESTAMENT TO THEIR CUTTING-EDGE PRODUCTS AND PERSISTENT EFFORTS.

A N N U A L R E P O R T 2 0 1 8 | 11

C U T T I N G - E D G E T E C H N O L O G Y I N

R E S E A R C H A N D M A N U F A C T U R I N G

LEFT, A TEAM MEMBER IS

PROGRAMMING A 5-AXIS

CNC MACHINING CENTER

AS IT MACHINES A CRITICAL

ENGINE PART.

HEICO strongly believes that smart internal investments today will result in organic success

tomorrow. Therefore, investments in research, product development and capital equipment

are key metrics that leaders across our company closely track and analyze.

HEICO’s Team Members are empowered to take calculated risks in the spirit of continuous

innovation. As a result, many of our businesses are currently exploring newer robotics

capabilities, artificial intelligence applications, ERP software systems, inventory management

systems, vertical storage capabilities, new CNC milling machines and even moving to new,

state-of-the-art facilities. With costs increasing, customers requiring modern, first-class

service and a more competitive marketplace, HEICO must position itself to face any

challenge. By having a long-term perspective and vision in mind, we are able to separate

ourselves from companies that do not operate with the same ownership mindset. With our

dedicated and talented Team Members, modern equipment and facilities and customer-

oriented focus, HEICO is well-positioned for the future.

12 | A N N U A L R E P O R T 2 0 1 8

PICTURED TO THE RIGHT, AN ENGINEER CONFIGURES EQUIPMENT

FOR AN OPTICAL PERFORMANCE TEST AT OUR SANTA BARBARA

INFRARED SUBSIDIARY IN CALIFORNIA.

BELOW, A TEAM MEMBER USES CUTTING EDGE

“BLUE-LIGHT” INSPECTION TECHNOLOGY TO PERFORM A

RAPID INSPECTION OF COMPLEX MECHANICAL PARTS.

A N N U A L R E P O R T 2 0 1 8 | 13

T A P P I N G I N T O

N E W M A R K E T S

HEICO’s businesses also supply high-quality components and

equipment for a number of other industries, such as: medical,

telecommunications, oil and gas, agriculture and the general industrial

sector. While these markets are clearly different than aerospace and

defense, HEICO’s parts are still relied on and used in highly sensitive,

high-reliability environments. By adhering to strict quality standards

and operational processes required within our legacy industry, we

have been able to leverage our reputation and branch out into these

complementary markets.

Furthermore, we are truly committed to providing solutions to

customer needs. Very often, this requires producing unique, new

products in small quantities for a niche application in a small market

segment. Our willingness to work with the customer has created

lasting relationships and ongoing business opportunities in markets

that we did not originally envision expanding into. However, by being

open to exploring unique, but profitable niches, we have been able to

grow our customer base, product offering and business.

14 | A N N U A L R E P O R T 2 0 1 8

PICTURED ABOVE, OUR CHATSWORTH, CA-BASED

AEROANTENNA TECHNOLOGY SUBSIDIARY

MANUFACTURES GLOBAL NAVIGATION SATELLITE

SYSTEM ANTENNAS (GNSS ANTENNAS) THAT

ARE USED IN DEMANDING APPLICATIONS

ACROSS THE SURVEY, CONSTRUCTION AND

MARINE MARKETS. THESE ANTENNAS ARE

DESIGNED TO BE ROBUST AND OPTIMIZED TO

REJECT UNWANTED INTERFERENCE SIGNALS

KNOWN AS MULTIPATH.

HEICO IS ALSO A LEADING DESIGNER AND

MANUFACTURER OF NICHE ELECTRONICS FOR THE

MEDICAL AND GENERAL INDUSTRIAL MARKETS.

PICTURED BELOW IS A POWER SUPPLY, DESIGNED

AND MANUFACTURED BY BRADFORD, MA-BASED

LUMINA POWER, WHICH IS USED IN MEDICAL LASERS

FOR DERMATOLOGY, UROLOGY, OPHTHALMOLOGY

AND OTHER MINIMALLY INVASIVE PROCEDURES.

A S Y S T E M A T I C

G L O B A L R E A C H

HEICO is a global business that operates in the most global industry. With 70

facilities across 20 U.S. states and 14 countries, our company’s footprint continues

to expand with new acquisitions and growing businesses. Naturally, our operations

2018 Net Income
$259.2 Million

2018 Net Sales
$1.78 Billion

must be able to support the worldwide aerospace network. While we will always

be an American company, we recognize that there may be profitable business

ventures internationally that will benefit all stakeholders. By owning businesses

internationally, servicing international customers and participating in the

aerospace industry, there are few companies as global as HEICO.

NET SALES AND NET INCOME
SINCE 1990

NET SALES

NET INCOME

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18

1.95B 260M

1.80B 240M

1.65B 220M

1.50B 200M

1.35B 180M

1.20B 160M

1.05B 140M

900M 120M

750M 100M

600M 80M

450M 60M

300M 40M

150M 20M

0 0

A N N U A L R E P O R T 2 0 1 8 | 15

F I N A N C I A L S T A T E M E N T S

A N D O T H E R I N F O R M A T I O N

2018

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

16 | A N N U A L R E P O R T 2 0 1 8

S E L E C T E D F I N A N C I A L D A T A

Year ended October 31, (1)

2018

2017

2016
(in thousands, except per share data)

2015

2014

Operating Data:
Net sales
Gross profit
Selling, general and administrative expenses
Operating income
Interest expense
Other (expense) income
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
Total debt (including current portion)
Redeemable noncontrolling interests
Total shareholders’ equity

$ 1,777,721
690,715
314,470
376,245
19,901
(58)

259,233 (3)

$ 1,524,813
574,725
268,067
306,658
9,790
1,092
185,985 (4)

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

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

$ 1,132,311
398,312
194,924
203,388 (6)
5,441
625
121,293 (6)

132,543
136,696

131,703
135,588

130,948
133,145

130,351
132,444

129,811
131,744

1.96 (3) $
1.90 (3)
.116

1.41 (4) $
1.37 (4)
.097

1.19 (5) $
1.17 (5)
.082

1.02
1.01
.072

59,599
2,653,396
532,470
132,046
1,503,008

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

0.93 (6)
0.92 (6)
.241

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

(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 splits effected in June 2018, January 2018 and April 2017.

(3) During fiscal 2018, the United States (“U.S.”) government enacted significant changes to existing tax law resulting in HEICO recording a discrete tax benefit from
remeasuring its U.S. federal net deferred tax liabilities that was partially offset by a provisional discrete tax expense related to a one-time transition tax on the
unremitted earnings of HEICO’s foreign subsidiaries. The net impact of these amounts increased net income attributable to HEICO by $12.1 million, or $.09 per basic
and diluted share. See Note 6, Income Taxes, of the Notes to Consolidated Financial Statements for more information.

(4) 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 1,220,000 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 $.02 per basic and $.01 per diluted share.

(5) 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 $.01 per diluted share.

(6) 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 $.08 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.

A N N U A L R E P O R T 2 0 1 8 | 17

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 electromechanical 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; emergency locator beacons utilized on commercial and military aircraft; 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; nuclear radiation detectors for law
enforcement, homeland security and military applications; 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. All applicable share and per share information has been adjusted retrospectively to reflect the 5-for-4 stock splits effected in
June 2018, January 2018 and April 2017. See Note 1, Summary of Significant Accounting Policies - Stock Splits, of the Notes to Consolidated
Financial Statements for additional information regarding these stock splits. 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. Additionally, our results of operations in fiscal 2018 have been affected by the Tax Cuts and Jobs Acts as
further detailed in “Comparison of Fiscal 2018 to Fiscal 2017 - Income Tax Expense”.

In September 2018, we, through a subsidiary of HEICO Electronic, obtained control over 53.1% of the equity interests of SST

Components, Inc. (“SST”). SST manufactures discrete semiconductor components, tests electronic components, and custom assembles a
wide variety of prototype and off the shelf components into desired package styles for military, space and commercial uses. The purchase
price of this acquisition was paid using cash provided by operating activities.

In August 2018, we acquired, through a subsidiary of HEICO Flight Support Corp., all of the business and assets of Optical Display
Engineering (“ODE”). ODE is a Federal Aviation Administration (“FAA”)-authorized Part 145 Repair Station focusing on the repair of LCD
screens and display modules for aviation displays used in civilian and military aircraft. ODE also holds FAA-Parts Manufacturer Approval

18 | A N N U A L R E P O R T 2 0 1 8

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSHEICO CORPORATION AND SUBSIDIARIES

authority to supply products that it repairs. The purchase price of this acquisition was paid in cash, principally using cash provided by
operating activities.

In April 2018, we acquired, through a subsidiary of HEICO Electronic, all of the assets and business of the Emergency Locator
Transmitter Beacon product line (“ELT Product Line”) of Instrumar Limited. The ELT Product Line designs and manufactures Emergency
Locator Transmitter Beacons for the commercial aviation and defense markets, that upon activation, transmit a distress signal to alert search
and rescue operations of the aircraft’s location. The purchase price of this acquisition was paid using cash provided by operating activities.

In February 2018, we acquired, through a subsidiary of HEICO Electronic, 85% of the assets and business of Sensor Technology
Engineering, Inc. (“Sensor Technology”). Sensor Technology designs and manufactures sophisticated nuclear radiation detectors for law
enforcement, homeland security and military applications. The remaining 15% continues to be owned by certain members of Sensor
Technology’s management team.

In November 2017, we acquired, through a subsidiary of HEICO Electronic, all of 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.

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.

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.

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 $59.8 million, $418.3 million and $263.8 million in
fiscal 2018, 2017 and 2016, 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 2%, 3% and 3% in fiscal 2018, 2017 and 2016, 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
2018, 2017 and 2016.

A N N U A L R E P O R T 2 0 1 8 | 19

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSHEICO 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.

Effective as of the beginning of the first quarter of fiscal 2019, we will adopt Accounting Standards Update (“ASU”) 2014-09, “Revenue

from Contracts with Customers,” which will impact the timing of revenue recognition for two types of our customer contracts. See “New
Accounting Pronouncements,” for additional information.

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 net realizable value, 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, 2018,
2017 and 2016, $20.9 million, $27.6 million and $18.9 million of contingent consideration was accrued within our Consolidated Balance
Sheets, respectively. During fiscal 2018, 2017 and 2016, such fair value measurement adjustments resulted in net (decreases) increases to
SG&A expenses of ($1.4) million, $1.1 million and $3.1 million, respectively. For further information regarding our contingent consideration
arrangements, see Note 7, Fair Value Measurements, of the Notes to Consolidated Financial Statements.

20 | A N N U A L R E P O R T 2 0 1 8

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSHEICO CORPORATION AND SUBSIDIARIES

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, 2018, 2017 and 2016,
we determined there was no impairment of our goodwill. The fair value of each of our reporting units as of October 31, 2018 significantly
exceeded its carrying value.

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 asset
impairment tests conducted, we did not recognize any impairment losses in fiscal 2018, 2017 and 2016.

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,

2018

2017

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 (expense) income
Income tax expense
Net income attributable to noncontrolling interests
Net income attributable to HEICO

$ 1,777,721
1,087,006
314,470
1,401,476
376,245

$ 1,097,937
701,827
(22,043)
$ 1,777,721

206,623
204,508
(34,886)
376,245

100.0%
38.9%
17.7%
21.2%
1.1%
— %
4.0%
1.5%
14.6%

$ 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%

A N N U A L R E P O R T 2 0 1 8 | 21

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSHEICO CORPORATION AND SUBSIDIARIES

Comparison of Fiscal 2018 to Fiscal 2017

Net Sales

Our consolidated net sales in fiscal 2018 increased by 17% to a record $1,777.7 million, up from net sales of $1,524.8 million in fiscal

2017. The increase in consolidated net sales principally reflects an increase of $127.6 million (a 22% increase) to a record $701.8 million in
net sales within the ETG as well as an increase of $130.4 million (a 13% increase) to a record $1,097.9 million in net sales within the FSG. The
net sales increase in the ETG reflects net sales of $88.3 million contributed by our fiscal 2017 and 2018 acquisitions as well as organic growth
of 6%. The ETG’s organic growth principally reflects increased demand for certain defense products resulting in a net sales increase of $30.9
million. The net sales increase in the FSG reflects organic growth of 8% as well as net sales of $53.1 million contributed by our fiscal 2017
and 2018 acquisitions. The FSG’s organic growth reflects increased demand and new product offerings within our aftermarket replacement
parts and repair and overhaul parts and services product lines as well as within our specialty products product line resulting in net sales
increases of $48.0 million, $15.1 million and $14.2 million, respectively. Sales price changes were not a significant contributing factor to the
ETG and FSG net sales growth in fiscal 2018.

Our net sales in fiscal 2018 and 2017 by market consisted of approximately 53% in both periods from the commercial aviation industry,

35% and 34% from the defense and space industries, respectively, and 12% and 13%, respectively, from other industrial markets including
electronics, medical and telecommunications.

Gross Profit and Operating Expenses

Our consolidated gross profit margin increased to 38.9% in fiscal 2018 as compared to 37.7% in fiscal 2017, principally reflecting an
increase of 1.8% and .4% in the ETG’s and FSG’s gross profit margin, respectively. The increase in the ETG’s gross profit margin is principally
attributable to increased net sales and a more favorable product mix for certain of our defense products partially offset by a less favorable
product mix for certain of our space products. The increase in the FSG’s gross profit margin is principally attributable to the previously
mentioned increase in net sales within our aftermarket replacement parts product line. Total new product research and development (“R&D”)
expenses included within our consolidated cost of sales increased to $57.5 million in fiscal 2018 compared to $46.5 million in fiscal 2017.

Our consolidated SG&A expenses were $314.5 million and $268.1 million in fiscal 2018 and 2017, respectively. Our consolidated SG&A

expenses as a percentage of net sales were 17.7% in fiscal 2018 compared to 17.6% in fiscal 2017. The increase in consolidated SG&A
expenses principally reflects $26.1 million attributable to the fiscal 2017 and fiscal 2018 acquisitions and $11.3 million of higher performance-
based compensation expense.

Operating Income

Our consolidated operating income increased by 23% to a record $376.2 million in fiscal 2018, up from $306.7 million in fiscal 2017. The
increase in consolidated operating income principally reflects a $47.1 million increase (a 30% increase) to a record $204.5 million in operating
income of the ETG as well as a $27.3 million increase (a 15% increase) to a record $206.6 million in operating income of the FSG. The
increase in operating income of the ETG and FSG is principally attributable to the previously mentioned net sales growth and improved gross
profit margins. Additionally, our corporate expenses increased by $3.9 million due mainly to a $2.8 million increase in performance-based
compensation expense.

As a percentage of net sales, our consolidated operating income increased to 21.2% in fiscal 2018, up from 20.1% in fiscal 2017. The

increase in consolidated operating income as a percentage of net sales principally reflects an increase in the ETG’s operating income as
a percentage of net sales to 29.1% in fiscal 2018, up from 27.4% in fiscal 2017 as well as an increase in the FSG’s operating income as a
percentage of net sales to 18.8% in fiscal 2018, up from 18.5% in fiscal 2017. The increase in the ETG’s and FSG’s operating income as a
percentage of net sales principally reflects the previously mentioned improved gross profit margins.

Interest Expense

Interest expense increased to $19.9 million in fiscal 2018 from $9.8 million in fiscal 2017. The increase in interest expense was
principally due to higher interest rates as well as a higher weighted average balance outstanding under our revolving credit facility primarily
associated with a late fiscal 2017 acquisition.

Other (Expense) Income

Other (expense) income in fiscal 2018 and 2017 was not material.

22 | A N N U A L R E P O R T 2 0 1 8

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSHEICO CORPORATION AND SUBSIDIARIES

Income Tax Expense

On December 22, 2017, the United States (U.S.) government enacted comprehensive tax legislation commonly referred to as the Tax
Cuts and Jobs Act (the “Tax Act”). The Tax Act contains significant changes to existing tax law including, among other things, a reduction
in the U.S. federal statutory tax rate from 35% to 21% and the implementation of a territorial tax system resulting in a one-time transition
tax on the unremitted earnings of our foreign subsidiaries. The Tax Act also contains additional provisions that will become effective for
HEICO in fiscal 2019 including a new tax on Global Intangible Low-Taxed Income (“GILTI”), a new deduction for Foreign-Derived Intangible
Income (“FDII”), the repeal of the domestic production activity deduction and additional limitations on the deductibility of certain executive
compensation. We have not yet determined the impact of the provisions of the Tax Act which do not become effective for HEICO until fiscal
2019, but do not anticipate these provisions to materially affect our consolidated results of operations, financial position or cash flows.

The Securities and Exchange Commission issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on the
accounting for the tax effects of the Tax Act. This guidance provides companies with a measurement period not to exceed one year from
the enactment of the Tax Act to complete their accounting for the related tax effects. SAB 118 further states that during the measurement
period, companies who are able to make reasonable estimates of the tax effects of the Tax Act should include those amounts in their financial
statements as provisional amounts and reflect any adjustments in subsequent periods as they refine their estimates or complete their
accounting of such tax effects.

As a result of the Tax Act, our effective federal statutory income tax rate in fiscal 2018 is a blended rate of 23.3%, which reflects the

reduction in the U.S. federal statutory tax rate from 35% to 21% effective January 1, 2018. Additionally, we remeasured our U.S. federal
net deferred tax liabilities and recorded a discrete tax benefit of $16.5 million in fiscal 2018. Further, we recorded a provisional discrete tax
expense of $4.4 million in fiscal 2018 related to a one-time transition tax on the unremitted earnings of our foreign subsidiaries. We intend to
pay this tax over the eight-year period allowed for in the Tax Act.

Our effective tax rate in fiscal 2018 decreased to 19.8% from 30.3% in fiscal 2017. The decrease in our effective tax rate principally
reflects the previously mentioned discrete tax benefit from the remeasurement of our U.S. federal net deferred tax liabilities and the net
benefit of a lower federal statutory income tax rate, which were partially offset by the aforementioned one-time transition tax expense.
Further, the decrease in our effective tax rate in fiscal 2018 was slightly moderated by an unfavorable impact from lower tax-exempt
unrealized gains in the cash surrender values of life insurance policies related to the HEICO Corporation Leadership Compensation Plan
(“HEICO LCP”).

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 Holdings Corp. and the noncontrolling interests held by others in certain subsidiaries of the FSG and ETG. Net income attributable
to noncontrolling interests was $26.5 million in fiscal 2018 as compared to $21.7 million in fiscal 2017. The increase in net income
attributable to noncontrolling interests in fiscal 2018 principally reflects the impact of the Tax Act as well as improved operating results of
certain subsidiaries of the FSG and ETG in which noncontrolling interests are held.

Net Income Attributable to HEICO

Net income attributable to HEICO increased by 39% to a record $259.2 million, or $1.90 per diluted share, in fiscal 2018, up from $186.0
million, or $1.37 per diluted share, in fiscal 2017, principally reflecting the previously mentioned increased net sales and operating income as
well as the favorable impact of the Tax Act.

Outlook

As we look ahead to fiscal 2019, 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 2019, 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 2019 full year net sales and net income over fiscal 2018 levels.
This outlook excludes the impact of additional acquired businesses, if any.

A N N U A L R E P O R T 2 0 1 8 | 23

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSHEICO CORPORATION AND SUBSIDIARIES

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 in the FSG 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 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 performance-
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 in consolidated operating income as a percentage of net sales 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.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSHEICO CORPORATION AND SUBSIDIARIES

Interest Expense

Interest expense increased to $9.8 million in fiscal 2017 from $8.3 million in fiscal 2016. The increase in interest expense 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 in our effective tax rate principally
reflects the favorable impact of higher tax-exempt unrealized gains in the cash surrender values of life insurance policies related to the HEICO
LCP and a $3.1 million discrete income tax benefit related to stock option exercises resulting from the adoption of Accounting Standards
Update 2016-09, “Improvements to Employee Share-Based Payment Accounting,” in the first quarter of fiscal 2017. These decreases in our
effective tax rate 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 net income attributable to
noncontrolling interests 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 $1.37 per diluted share, in fiscal 2017, up from $156.2

million, or $1.17 per diluted share, in fiscal 2016, 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 manufacturing
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

2018

2017

532,470
(59,599)
472,871
1,503,008
2,035,478

31%
26%

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

50%
35%

Our principal uses of cash include acquisitions, capital expenditures, cash dividends, distributions to noncontrolling interests and
working capital needs. Capital expenditures in fiscal 2019 are anticipated to approximate $48 million. We finance our activities primarily from
our operating and financing activities, including borrowings under our revolving credit facility.

As of December 18, 2018, we had approximately $680 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.

A N N U A L R E P O R T 2 0 1 8 | 25

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSHEICO CORPORATION AND SUBSIDIARIES

Operating Activities

Net cash provided by operating activities was $328.5 million in fiscal 2018 and consisted primarily of net income from consolidated
operations of $285.7 million, depreciation and amortization expense of $77.2 million (a non-cash item) and net changes in other long-term
liabilities and assets related to the HEICO LCP of $11.6 million (principally participant deferrals and employer contributions), partially offset
by a $50.6 million increase in working capital. Net cash provided by operating activities increased by $40.2 million in fiscal 2018 from $288.3
million in fiscal 2017 (as adjusted for the adoption of Accounting Standard Update (“ASU”) 2016-15, “Classification of Certain Cash Receipts
and Cash Payments,” see New Accounting Pronouncements below for additional information). The increase in net cash provided by operating
activities in fiscal 2018 is principally due to a $78.0 million increase in net income from consolidated operations and a $12.4 million increase
in depreciation and amortization expense (a non-cash item), partially offset by a $46.7 million increase in working capital. The $46.7 million
increase in working capital is inclusive of a $31.4 million increase in accounts receivable reflecting the organic net sales growth in each of our
operating segments as well as timing in the collections of accounts receivable, a $28.3 million increase in inventories to support the growth of
our businesses and anticipated higher demand during fiscal 2019 and an $18.6 million decrease in income taxes payable principally reflecting
a change in the timing of certain estimated tax payments due to Hurricane Irma, partially offset by an increase in accrued expenses and trade
accounts payable of $31.3 million principally from a higher level of accrued performance based-compensation due to the improved operating
results and the timing of payments and accruals for certain other items.

Net cash provided by operating activities was $288.3 million in fiscal 2017 and consisted primarily of net income from consolidated

operations of $207.7 million, depreciation and amortization expense of $64.8 million (a non-cash item), and net changes in other long-term
liabilities and assets related to the HEICO LCP of $12.8 million (principally participant deferrals and employer contributions). Net cash
provided by operating activities increased by $28.6 million in fiscal 2017 from $259.7 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.
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 $259.7 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), net changes in other long-term
liabilities and assets related to the HEICO LCP of $10.8 million (principally participant deferrals and employer contributions) and a decrease in
working capital of $8.1 million.

Investing Activities

Net cash used in investing activities during the three-year fiscal period ended October 31, 2018 primarily relates to several acquisitions

aggregating $741.9 million, including $59.8 million in fiscal 2018, $418.3 million in fiscal 2017, and $263.8 million in fiscal 2016. 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 $98.7 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.
Upon adoption of ASU 2016-15, the Company now classifies investments related to the HEICO LCP as an investing activity (see New
Accounting Pronouncements below). Such investments aggregated $35.4 million during the three-year fiscal period ended October 31, 2018
and were primarily invested in corporate-owned life insurance policies.

Financing Activities

Net cash used in financing activities was $207.5 million in fiscal 2018 as compared to net cash provided by financing activities of $175.9

million in fiscal 2017 and $56.8 million in fiscal 2016. During the three-year fiscal period ended October 31, 2018, we borrowed an aggregate
$720.0 million under our revolving credit facility including borrowings of $56.0 million in fiscal 2018, $404.0 million in fiscal 2017, and $260.0
million in fiscal 2016. 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 $564.9 million over the last three fiscal years, including $204.0 million in fiscal 2018, $190.9 million in fiscal 2017,
and $170.0 million in fiscal 2016. For the three-year fiscal period ended October 31, 2018, we made distributions to noncontrolling interests
aggregating $50.5 million, paid an aggregate $38.9 million in cash dividends, redeemed common stock related to stock option exercises
aggregating $25.2 million and made contingent consideration payments aggregating $18.8 million.

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.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSHEICO CORPORATION AND SUBSIDIARIES

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 our prior $1.0 billion (as amended) Revolving Credit Agreement.

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, 2018.

Contractual Obligations

The following table summarizes our contractual obligations as of October 31, 2018 (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

$ 523,113
12,075
81,986
25,219
3,299
$ 645,692

2019

22
1,240
14,961
9,804
3,237
$ 29,264

Payments due by fiscal period

2020 - 2021

2022 - 2023

Thereafter

66
2,375
29,138
1,477
62
$ 33,118

$ 523,025
2,048
19,880
13,938
—
$ 558,891

—
6,412
18,007
—
—
$ 24,419

(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.

(2) Inclusive of $2.7 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 $20.9 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 $4.3 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,
2018, management’s estimate of the aggregate Redemption Amount of all Put Rights that we could be required to pay is approximately $132.0 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, 2018. 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 LCP 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, 2018, we have arranged for standby letters of credit aggregating $4.3 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.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSHEICO CORPORATION AND SUBSIDIARIES

New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, 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. ASU 2014-09 shall be applied either retrospectively to each
prior reporting period presented (“full retrospective method”) or retrospectively with the cumulative effect of initially applying ASU 2014-09
recognized at the date of initial application (“modified retrospective method”).

We have completed a review of our customer contracts and have evaluated the impact of ASU 2014-09 on each of our primary revenue

streams. While we finalize our overall assessment of the amended guidance, the most significant impact relates to the timing of revenue
recognition, presentation and disclosures. ASU 2014-09 will impact the timing of revenue recognition for two types of our customer
contracts. For certain contracts under which we produce products with no alternative use and for which we have an enforceable right
to payment during the production cycle and for certain other contracts under which we create or enhance customer-owned assets while
performing repair and overhaul services, ASU 2014-09 will require us to recognize revenue using an over-time recognition model as opposed
to our current policy of recognizing revenue at the time of shipment. For impacted customer contracts, the adoption of ASU 2014-09 will
accelerate revenue recognition and the associated cost of sales.

Effective as of the beginning of the first quarter of fiscal 2019, we will adopt ASU 2014-09 using the modified retrospective method and

recognize a cumulative effect adjustment to retained earnings based on any open contracts at that time for which revenue recognition has
changed from a point-in-time recognition model to an over-time recognition model. While the ongoing impact to net sales and net income is
not expected to be material to our consolidated results of operations, the future impact of ASU 2014-09 is dependent on the mix and nature of
specific customer contracts. We are nearing completion of implementing changes to our business processes, systems and controls needed
to support recognition and disclosure requirements under ASU 2014-09.

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. Previously, inventories were measured at the lower of cost or market. We adopted ASU 2015-11 in
the first quarter of fiscal 2018, resulting in no material effect on our consolidated results of operations, financial position or cash flows.

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, as amended, provides certain optional transition relief and
shall be applied either at the beginning of the earliest comparative period presented in the year of adoption using a modified retrospective
transition approach or by recognizing a cumulative effect adjustment at the date of adoption. 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 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. We adopted ASU 2016-15
on a retrospective basis in the fourth quarter of fiscal 2018, which requires that proceeds from corporate-owned life insurance policies
be classified as cash inflows from investing activities. Such proceeds aggregated $.1 million over the past three fiscal years and were all
received in fiscal 2016. In addition, and as permitted by ASU 2016-15, we have elected to classify investments related to the HEICO LCP
as cash outflows from investing activities as such investments primarily represent premium payments on corporate-owned life insurance
policies. The adoption of ASU 2016-15 resulted in an $11.5 million, $13.4 million and $10.5 million increase in cash provided by operating
activities and in cash used in investing activities in fiscal 2018, 2017 and 2016, respectively.

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 are currently evaluating the effect the adoption of this guidance will have on our
consolidated results of operations, financial position and cash flows.

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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 spending or 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 $523.0 million as of October 31, 2018, 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, 2018 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. 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 to the U.S. dollar as of October 31, 2018 would not have a material effect on our results of
operations, financial position or cash flows.

A N N U A L R E P O R T 2 0 1 8 | 29

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSHEICO CORPORATION AND SUBSIDIARIES

C O N S O L I D A T E D B A L A N C E S H E E T S
(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
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)

2018

2017

59,599
251,469
401,553
21,187
733,808

154,739
1,114,832
506,360
143,657
$ 2,653,396

859
107,219
171,514
2,837
282,429

531,611
46,644
157,658
1,018,342

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

Redeemable noncontrolling interests (Note 11)

132,046

131,123

Shareholders’ equity:
Preferred Stock, $.01 par value per share; 10,000 shares authorized; none issued
Common Stock, $.01 par value per share; 150,000 and 75,000 shares authorized;

53,355 and 52,776 shares issued and outstanding

Class A Common Stock, $.01 par value per share; 150,000 and 75,000 shares authorized;

79,576 and 79,227 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.

—

534

796
320,994
3,928
(3,928)
(15,256)
1,091,183
1,398,251
104,757
1,503,008
$ 2,653,396

—

338

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

30 | A N N U A L R E P O R T 2 0 1 8

HEICO CORPORATION AND SUBSIDIARIES

C O N S O L I D A T E D S T A T E M E N T S O F O P E R A T I O N S
(in thousands, except per share data)

Year ended October 31,

2018

2017

2016

Net sales

$ 1,777,721

$ 1,524,813

$ 1,376,258

Operating costs and expenses:

Cost of sales
Selling, general and administrative expenses

1,087,006
314,470

950,088
268,067

860,766
250,147

Total operating costs and expenses

1,401,476

1,218,155

1,110,913

Operating income

Interest expense
Other (expense) income

376,245

306,658

265,345

(19,901)
(58)

(9,790)
1,092

(8,272)
(23)

Income before income taxes and noncontrolling interests

356,286

297,960

257,050

Income tax expense

70,600

90,300

80,900

Net income from consolidated operations

285,686

207,660

176,150

Less: Net income attributable to noncontrolling interests

26,453

21,675

19,958

Net income attributable to HEICO

259,233

185,985

156,192

Net income per share attributable to HEICO shareholders:

Basic
Diluted

Weighted average number of common shares outstanding:

Basic
Diluted

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

$
$

1.96
1.90

$
$

1.41
1.37

$
$

1.19
1.17

132,543
136,696

131,703
135,588

130,948
133,145

C O N S O L I D AT E D S TAT E M E N T S O F C O M P R E H E N S I V E I N C O M E
(in thousands)

Year ended October 31,

2018

2017

2016

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

285,686

207,660

176,150

(5,243)
(97)
13
(5,327)
280,359
26,453
(406)
26,047
254,312

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

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

A N N U A L R E P O R T 2 0 1 8 | 31

HEICO CORPORATION AND SUBSIDIARIES

C O N S O L I D A T E D S TAT E M E N T S O F S H A R E H O L D E R S ’ E Q U I T Y
(in thousands, except per share data)

Redeemable
Noncontrolling
Interests

Common
Stock

Class A
Common
Stock

$ 131,123
13,070
—
—
—
—
—
—
2,491
(12,005)
(3,627)
—
994
$ 132,046

$ 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

$ 338
—
—
191
1
—
7
(3)
—
—
—
—
—
$ 534

$ 270
—
—
68
—
—
—
—
—
—
—
—
—
$ 338

$ 269
—
—
1
—
—
—
—
—
—
—
—
$ 270

$ 507
—
—
286
1
—
2
—
—
—
—
—
—
$ 796

$ 403
—
—
101
—
—
3
—
—
—
—
—
—
$ 507

$ 400
—
—
1
—
2
—
—
—
—
—
—
$ 403

Balances as of October 31, 2017
Comprehensive income
Cash dividends ($.116 per share)
Five-for-four common stock splits
Issuance of common stock to HEICO Savings and Investment Plan
Share-based compensation expense
Proceeds from stock option exercises
Redemptions of common stock related to 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, 2018

Balances as of October 31, 2016
Comprehensive income
Cash dividends ($.097 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 ($.082 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

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

32 | A N N U A L R E P O R T 2 0 1 8

HEICO Shareholders’ Equity

Capital in

Excess of

Par Value

Deferred

Compensation

Obligation

HEICO Stock

Held by

Irrevocable

Trust

Accumulated

Comprehensive

Other

Loss

(10,556)

(4,921)

Noncontrolling

Shareholders’

Interests

87,212

12,977

$ 326,544

$ 3,118

(3,118)

$ 844,247

$ 1,248,292

$ 320,994

$ 3,928

(3,928)

(15,256)

$ 1,091,183

$ 104,757

$ 1,503,008

$ 306,328

$ 2,460

(2,460)

$ 681,704

$ 1,047,705

810

—

(810)

221

(25,326)

14,770

Retained

Earnings

259,233

(15,363)

(28)

3,627

(533)

185,985

(12,807)

(23)

194

(10,806)

—

(11,818)

—

Total

Equity

267,289

(15,363)

(28)

7,870

9,283

4,031

(24,983)

5,350

(1,054)

3,627

—

(1,306)

211,719

(12,807)

(23)

7,517

7,415

5,659

—

(8,078)

194

(10,806)

—

(203)

$ 893,271

165,874

(10,724)

6,892

6,434

5,924

868

(9,060)

(11,818)

—

5,350

(1,054)

—

272

84,326

10,964

(8,078)

—

(9,060)

658

—

(658)

$ 326,544

$ 3,118

(3,118)

(10,556)

$ 844,247

87,212

$ 1,248,292

$ 286,220

$ 1,783

(1,783)

(25,080)

$ 548,054

83,408

9,928

(246)

156,192

(10,724)

677

—

(677)

$ 306,328

$ 2,460

(2,460)

(25,326)

$ 681,704

84,326

$ 1,047,705

—

(477)

7,868

9,283

4,022

(24,980)

—

(1,266)

—

(169)

7,517

7,415

5,656

—

(203)

—

6,890

6,434

5,922

868

—

(6)

—

HEICO CORPORATION AND SUBSIDIARIES

Balances as of October 31, 2017

Comprehensive income

Cash dividends ($.116 per share)

Five-for-four common stock splits

Share-based compensation expense

Proceeds from stock option exercises

Issuance of common stock to HEICO Savings and Investment Plan

Redemptions of common stock related to 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, 2018

Balances as of October 31, 2016

Comprehensive income

Cash dividends ($.097 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

Deferred compensation obligation

Other

Balances as of October 31, 2017

Balances as of October 31, 2015

Comprehensive income (loss)

Cash dividends ($.082 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

Redeemable

Noncontrolling

Interests

$ 131,123

13,070

Common

Stock

$ 338

Class A

Common

Stock

$ 507

191

286

$ 132,046

$ 534

$ 796

$ 270

$ 403

—

2,491

(12,005)

(3,627)

—

994

$ 99,512

11,637

23,339

(10,323)

(3,848)

10,806

(9,957)

(3,599)

11,818

—

(3)

—

101

—

$ 131,123

$ 338

$ 507

$ 91,282

9,968

$ 269

$ 400

Adjustments to redemption amount of redeemable noncontrolling interests

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

$ 99,512

$ 270

$ 403

HEICO Shareholders’ Equity

Deferred
Compensation
Obligation

HEICO Stock
Held by
Irrevocable
Trust

Accumulated
Other
Comprehensive
Loss

$ 3,118
—
—
—
—
—
—
—
—
—
—
810
—
$ 3,928

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

$ 1,783
—
—
—
—
—
—
—
—
—
677
—
$ 2,460

(3,118)
—
—
—
—
—
—
—
—
—
—
(810)
—
(3,928)

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

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

(10,556)
(4,921)
—
—
—
—
—
—
—
—
—
—
221
(15,256)

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

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

Capital in
Excess of
Par Value

$ 326,544
—
—
(477)
7,868
9,283
4,022
(24,980)
—
—
—
—
(1,266)
$ 320,994

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

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

Retained
Earnings

$ 844,247
259,233
(15,363)
(28)
—
—
—
—
—
—
3,627
—
(533)
$ 1,091,183

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

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

Noncontrolling
Interests

87,212
12,977
—
—
—
—
—
—
5,350
(1,054)
—
—
272
$ 104,757

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

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

Total
Shareholders’
Equity

$ 1,248,292
267,289
(15,363)
(28)
7,870
9,283
4,031
(24,983)
5,350
(1,054)
3,627
—
(1,306)
$ 1,503,008

$ 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

A N N U A L R E P O R T 2 0 1 8 | 33

C O N S O L I D A T E D S T A T E M E N T S O F C A S H F L O W S
(in thousands)

Year ended October 31,

2018

2017

2016

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
Share-based compensation expense
Employer contributions to HEICO Savings and Investment Plan
Foreign currency transaction adjustments, net

(Decrease) increase in accrued contingent consideration, net

Deferred income tax benefit
Other
Changes in operating assets and liabilities, net of acquisitions:

(Increase) decrease in accounts receivable
Increase in inventories

Decrease (increase) in prepaid expenses and other current assets

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

Net changes in other long-term liabilities and assets related to

HEICO Leadership Compensation Plan
Other long-term assets and liabilities, net

Net cash provided by operating activities

Investing Activities:
Acquisitions, net of cash acquired
Capital expenditures

Investments related to HEICO Leadership Compensation Plan, net

Other
Net cash used in investing activities

Financing Activities:
Payments on revolving credit facility
Borrowings on revolving credit facility
Redemptions of common stock related to stock option exercises
Cash dividends paid
Distributions to noncontrolling interests
Payment of contingent consideration
Revolving credit facility issuance costs
Acquisitions of noncontrolling interests
Proceeds from stock option exercises
Other
Net cash (used in) 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.

34 | A N N U A L R E P O R T 2 0 1 8

$ 285,686

$ 207,660

$ 176,150

77,191
9,283
8,019
365
(1,365)
(12,977)
—

(28,569)
(49,455)
401
17,403
22,121
(12,530)

11,610
1,304
328,487

(59,775)
(41,871)
(11,500)
(365)
(113,511)

(204,000)
56,000
(24,983)
(15,363)
(13,059)
(5,425)
(4,067)
—
4,031
(669)
(207,535)

7,533
52,066
59,599

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

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

12,841
(1,600)
288,285

(418,265)
(25,998)
(13,400)
(552)
(458,215)

(190,877)
404,000
(203)
(12,807)
(18,401)
(7,039)
(270)
(3,848)
5,659
(342)
175,872

60,277
6,434
7,020
13
3,063
(9,194)
(644)

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

10,811
(2,281)
259,713

(263,811)
(30,863)
(10,529)
(2,942)
(308,145)

(170,000)
260,000
(4)
(10,724)
(19,017)
(6,329)
—
(3,599)
5,924
521
56,772

3,169

9,111
42,955
52,066

1,012

9,352
33,603
42,955

HEICO CORPORATION AND SUBSIDIARIES

N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

NOTE 1 | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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,
telecommunications 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. Additionally, a wholly owned subsidiary of HEICO Electronic consolidates two subsidiaries which are
78% and 85% owned, respectively, while an 82.5% owned subsidiary of HEICO Electronic consolidates a subsidiary in which it has a 53.1%
controlling interest. See Note 11, Redeemable Noncontrolling Interests. All intercompany balances and transactions are eliminated.

Stock Splits

In June 2018, December 2017 and 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 splits were effected as of June 28, 2018, January 18, 2018 and April 19, 2017, respectively, in the
form of a 25% stock dividend distributed to shareholders of record as of June 21, 2018, January 3, 2018 and April 7, 2017, respectively. All
applicable share and per share information has been adjusted retrospectively to give effect to the 5-for-4 stock splits.

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.

A N N U A L R E P O R T 2 0 1 8 | 35

HEICO CORPORATION AND SUBSIDIARIES

N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

Inventory

Inventory is stated at the lower of cost or net realizable value, 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.

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 generally depreciated over the following
estimated useful lives:

Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . 10 to 40 years
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 to 10 years
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 to 20 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 2018 or 2017 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.

36 | A N N U A L R E P O R T 2 0 1 8

HEICO CORPORATION AND SUBSIDIARIES

N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 to 15 years
Intellectual property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 to 22 years
Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 to 17 years
Patents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 to 20 years
Trade names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 to 15 years

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 percentage-
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 2%, 3% and 3% in fiscal 2018, 2017 and
2016, 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.

A N N U A L R E P O R T 2 0 1 8 | 37

HEICO CORPORATION AND SUBSIDIARIES

N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

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 2018, 2017 or 2016.

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.

Effective as of the beginning of the first quarter of fiscal 2019, the Company will adopt Accounting Standards Update (“ASU”) 2014-09,

“Revenue from Contracts with Customers,” which will impact the timing of revenue recognition for two types of the Company’s customer
contracts. See “New Accounting Pronouncements,” below for additional information.

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.

38 | A N N U A L R E P O R T 2 0 1 8

HEICO CORPORATION AND SUBSIDIARIES

N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

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 shareholders
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.

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 ASU 2014-09, which provides a comprehensive new revenue

The Company has completed a review of its customer contracts and has evaluated the impact of ASU 2014-09 on each of its primary
revenue streams. While the Company finalizes its overall assessment of the amended guidance, the most significant impact relates to the
timing of revenue recognition, presentation and disclosures. ASU 2014-09 will impact the timing of revenue recognition for two types of the
Company’s customer contracts. For certain contracts under which it produces products with no alternative use and for which the Company
has an enforceable right to payment during the production cycle and for certain other contracts under which the Company creates or
enhances customer-owned assets while performing repair and overhaul services, ASU 2014-09 will require HEICO to recognize revenue using
an over-time recognition model as opposed to the Company’s current policy of recognizing revenue at the time of shipment. For impacted
customer contracts, the adoption of ASU 2014-09 will accelerate revenue recognition and the associated cost of sales.

Effective as of the beginning of the first quarter of fiscal 2019, the Company will adopt ASU 2014-09 using the modified retrospective

method and recognize a cumulative effect adjustment to retained earnings based on any open contracts at that time for which revenue
recognition has changed from a point-in-time recognition model to an over-time recognition model. While the ongoing impact to net sales
and net income is not expected to be material to the Company’s consolidated results of operations, the future impact of ASU 2014-09 is
dependent on the mix and nature of specific customer contracts. The Company is nearing completion of implementing changes to its
business processes, systems and controls needed to support recognition and disclosure requirements under ASU 2014-09.

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. Previously, inventories were measured at the lower of cost or market. The Company adopted
ASU 2015-11 in the first quarter of fiscal 2018, resulting in no material effect on the Company’s consolidated results of operations, financial
position or cash flows.

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, as amended, provides certain optional transition relief and
shall be applied either at the beginning of the earliest comparative period presented in the year of adoption using a modified retrospective
transition approach or by recognizing a cumulative effect adjustment at the date of adoption. 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.

A N N U A L R E P O R T 2 0 1 8 | 39

HEICO CORPORATION AND SUBSIDIARIES

N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

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. The Company adopted ASU 2016-15 on a
retrospective basis in the fourth quarter of fiscal 2018, which requires that proceeds from corporate-owned life insurance policies be classified
as cash inflows from investing activities. Such proceeds aggregated $.1 million over the past three fiscal years and were all received in fiscal
2016. In addition, and as permitted by ASU 2016-15, the Company has elected to classify investments related to the HEICO Corporation
Leadership Compensation Plan as cash outflows from investing activities as such investments primarily represent premium payments on
corporate-owned life insurance policies. The adoption of ASU 2016-15 resulted in an $11.5 million, $13.4 million and $10.5 million increase in
cash provided by operating activities and in cash used in investing activities in fiscal 2018, 2017 and 2016, respectively.

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 is currently evaluating the effect the adoption of this guidance will have on its
consolidated results of operations, financial position and cash flows.

NOTE 2 | ACQUISITIONS

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
544
$ 330,973

As noted in the table above, the total consideration includes an accrual of $13.8 million as of the acquisition date representing the
estimated fair value of contingent 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
Inventories

Accounts receivable
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

40 | A N N U A L R E P O R T 2 0 1 8

$ 157,901
100,000
39,000
20,000
8,306
6,115
1,893
208
333,423

1,299
1,151
2,450
$ 330,973

HEICO CORPORATION AND SUBSIDIARIES

N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

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.

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
$

$
$

1.51
1.47

2016

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

$
$

1.26
1.24

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, 2015. 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 and inventory purchase accounting adjustments
charged to cost of sales as the inventory is sold.

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

A N N U A L R E P O R T 2 0 1 8 | 41

HEICO CORPORATION AND SUBSIDIARIES

N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

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.

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 September 2018, the Company, through a subsidiary of HEICO Electronic, obtained control over 53.1% of the equity interests of SST
Components, Inc. (“SST”). SST manufactures discrete semiconductor components, tests electronic components, and custom assembles a
wide variety of prototype and off the shelf components into desired package styles for military, space and commercial uses. The purchase
price of this acquisition was paid using cash provided by operating activities.

In August 2018, the Company, through a subsidiary of HEICO Flight Support Corp., acquired all of the business and assets of Optical
Display Engineering (“ODE”). ODE is a Federal Aviation Administration (“FAA”)-authorized Part 145 Repair Station focusing on the repair of
LCD screens and display modules for aviation displays used in civilian and military aircraft. ODE also holds FAA-Parts Manufacturer Approval
authority to supply products that it repairs. The purchase price of this acquisition was paid in cash, principally using cash provided by
operating activities.

In April 2018, the Company, through a subsidiary of HEICO Electronic, acquired all of the assets and business of the Emergency Locator

Transmitter Beacon product line (“ELT Product Line”) of Instrumar Limited. The ELT Product Line designs and manufactures Emergency
Locator Transmitter Beacons for the commercial aviation and defense markets, that upon activation, transmit a distress signal to alert search
and rescue operations of the aircraft’s location. The purchase price of this acquisition was paid using cash provided by operating activities.

In February 2018, the Company, through a subsidiary of HEICO Electronic, acquired 85% of the assets and business of Sensor

Technology Engineering, Inc. (“Sensor Technology”). Sensor Technology designs and manufactures sophisticated nuclear radiation detectors
for law enforcement, homeland security and military applications. The remaining 15% continues to be owned by certain members of Sensor
Technology’s management team (see Note 11, Redeemable Noncontrolling Interests, for additional information).

In November 2017, the Company, through a subsidiary of HEICO Electronic, acquired all of 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.

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 as of the acquisition date
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.

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.

42 | A N N U A L R E P O R T 2 0 1 8

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N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

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

2018

2017

61,931
(4,000)
57,931
—
(407)
57,524

$ 109,346
(7,713)
101,633
—
1,300
$ 102,933

2016

$ 11,000
—
11,000
1,225
—
$ 12,225

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
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

2018

2017

2016

38,320
11,620
760
6,970
6,219
1,488
1,807
51
67,235

671
1,522
—
—
2,193

7,518

$ 49,932
29,500
16,750
1,950
28,410
15,165
4,522
982
147,211

7,696
6,054
5,432
1,434
20,616

23,662

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

—
—
—
—
—

—

Net assets acquired, excluding cash

57,524

$ 102,933

$ 12,225

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

with the Company’s other fiscal 2018, 2017 and 2016 acquisitions (in years):

Year ended October 31,

Customer relationships
Trade names
Intellectual property

2018

7
—
10

2017

12
—
13

2016

11
15
15

The allocation of the total consideration of the Company’s other fiscal 2018 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 Sensor Technology and A2C benefit both the Company and the noncontrolling interest holders. The fair value of the noncontrolling
interests in Sensor Technology and A2C 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.

A N N U A L R E P O R T 2 0 1 8 | 43

HEICO CORPORATION AND SUBSIDIARIES

N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

The operating results of the Company’s other fiscal 2018 acquisitions were included in the Company’s results of operations from each

of the effective acquisition dates. The amount of net sales and earnings of the Company’s other fiscal 2018 acquisitions included in the
Consolidated Statement of Operations is not material. Had the other fiscal 2018 acquisitions occurred as of November 1, 2016, 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 2018 and 2017 would not have been materially different than the reported amounts.

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 other fiscal 2017 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 would not have been materially different than the reported amounts.

NOTE 3 | SELECTED FINANCIAL STATEMENT INFORMATION

Accounts Receivable

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

2018

2017

254,727
(3,258)
251,469

225,462
(3,006)
222,456

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)

2018

2017

39,350
19,708
59,058
(45,731)
13,327

14,183

(856)
13,327

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

9,377

(1,246)
8,131

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

operations in fiscal 2018, 2017 or 2016.

44 | A N N U A L R E P O R T 2 0 1 8

HEICO CORPORATION AND SUBSIDIARIES

N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

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

2018

2017

192,758
49,315
158,039
1,649
(208)
401,553

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

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

2018

2017

5,864
101,424
230,108
5,044
342,440
(187,701)
154,739

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

The amounts set forth above include tooling costs having a net book value of $8.2 million and $7.6 million as of October 31, 2018 and
2017, respectively. Amortization expense on capitalized tooling was $2.8 million, $2.7 million and $2.9 million in fiscal 2018, 2017 and 2016,
respectively.

The amounts set forth above also include $11.9 million and $4.8 million of assets under capital leases as of October 31, 2018 and
October 31, 2017, respectively. Accumulated depreciation associated with assets under capital leases was $1.5 million and $1.0 million as
of October 31, 2018 and October 31, 2017, 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 $23.2 million, $21.9 million and $20.4

million in fiscal 2018, 2017 and 2016, respectively.

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

2018

2017

97,048
28,262
16,861
6,138
23,205
171,514

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

The increase in accrued employee compensation and related payroll taxes principally reflects a higher level of accrued performance-
based compensation resulting from the improved consolidated operating results and the impact of our fiscal 2018 acquisitions. The total
customer rebates and credits deducted within net sales in fiscal 2018, 2017 and 2016 was $9.9 million, $11.0 million and $10.8 million,
respectively.

A N N U A L R E P O R T 2 0 1 8 | 45

HEICO CORPORATION AND SUBSIDIARIES

N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

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 2018, 2017 and 2016 totaled $5.9 million, $4.6 million and $6.8 million, respectively. The aggregate liabilities of the LCP
were $125.8 million and $116.0 million as of October 31, 2018 and 2017, respectively, and are classified within other long-term liabilities in the
Company’s Consolidated Balance Sheets. The assets of the LCP, totaling $126.8 million and $117.2 million as of October 31, 2018 and 2017,
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 $5.9 million and $5.7 million as of October 31, 2018 and 2017,
respectively, 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, 2018 and 2017, 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

2018

2017

2016

57,450

$ 46,473

$ 44,726

Accumulated Other Comprehensive Loss

Changes in the components of accumulated other comprehensive loss during fiscal 2018 and 2017 are as follows (in thousands):

Balances as of October 31, 2016
Unrealized gain
Amortization of unrealized loss
Balances as of October 31, 2017
Unrealized (loss) gain
Amortization of unrealized loss
Balances as of October 31, 2018

Foreign Currency
Translation

Pension Benefit
Obligation

Accumulated
Other Comprehensive
Loss

$ (23,953)
14,420
—
(9,533)
(4,837)
—
$ (14,370)

$ (1,373)
321
29
(1,023)
124
13
(886)

$ (25,326)
14,741
29
(10,556)
(4,713)
13
$ (15,256)

46 | A N N U A L R E P O R T 2 0 1 8

HEICO CORPORATION AND SUBSIDIARIES

N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

NOTE 4 | GOODWILL AND OTHER INTANGIBLE ASSETS

Changes in the carrying amount of goodwill during fiscal 2018 and 2017 by operating segment are as follows (in thousands):

Balances as of October 31, 2016
Goodwill acquired
Foreign currency translation adjustments
Balances as of October 31, 2017
Goodwill acquired
Adjustments to goodwill
Foreign currency translation adjustments
Balances as of October 31, 2018

FSG

$ 336,681
48,960
2,965
388,606
10,586
972
(1,470)
$ 398,694

Segment

ETG

$ 529,036
160,903
2,761
692,700
27,734
(3,003)
(1,293)
$ 716,138

Consolidated
Totals

$ 865,717
209,863
5,726
1,081,306
38,320
(2,031)
(2,763)
$ 1,114,832

The goodwill acquired during fiscal 2018 and 2017 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 2017 acquisitions. The Company
estimates that most of the goodwill acquired in fiscal 2018 and 2017 is deductible for income tax purposes. Based on the annual test for
goodwill impairment as of October 31, 2018, 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

As of October 31, 2018

As of October 31, 2017

Gross
Carrying
Amount

$ 373,946
185,983
6,559
927
814
466
568,695

Accumulated
Amortization

Net
Carrying
Amount

Gross
Carrying
Amount

Accumulated
Amortization

$ (135,359)
(56,055)
(3,522)
(609)
(814)
(157)
(196,516)

$ 238,587
129,928
3,037
318
—
309
372,179

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

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

Net
Carrying
Amount

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

134,181
$ 702,876

—
$ (196,516)

134,181
$ 506,360

133,936
$ 704,425

—
$ (166,344)

133,936
$ 538,081

Amortization expense related to intangible assets was $50.1 million, $39.5 million and $36.4 million in fiscal 2018, 2017 and 2016,
respectively. Amortization expense for each of the next five fiscal years and thereafter is estimated to be $49.0 million in fiscal 2019, $46.1
million in fiscal 2020, $43.4 million in fiscal 2021, $37.0 million in fiscal 2022, $32.0 million in fiscal 2023 and $164.7 million thereafter.

NOTE 5 | LONG-TERM DEBT

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

2018

523,000
9,470
532,470
(859)
531,611

2017

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

A N N U A L R E P O R T 2 0 1 8 | 47

HEICO CORPORATION AND SUBSIDIARIES

N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

The Company’s borrowings under its revolving credit facility mature in fiscal 2023. As of October 31, 2018 and 2017, the weighted
average interest rate on borrowings under the Company’s revolving credit facility was 3.4% and 2.4%, respectively. The revolving credit facility
contains both financial and non-financial covenants. As of October 31, 2018, the Company was in compliance with all such covenants.

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 Company’s prior $1.0 billion (as amended)
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.

Capital Lease Obligations

The Company’s capital lease obligations are principally for manufacturing facilities including a 14-year lease that a subsidiary of HEICO
Flight Support became party to during fiscal 2018. 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,

2019
2020
2021
2022
2023
Thereafter
Total minimum lease payments
Less: amount representing interest
Present value of minimum lease payments

NOTE 6 | INCOME TAXES

$ 1,240
1,191
1,184
1,175
873
6,412
12,075
(2,718)
$ 9,357

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

2018

$ 309,123
47,163
$ 356,286

2017

$ 264,420
33,540
$ 297,960

2016

$ 227,927
29,123
$ 257,050

48 | A N N U A L R E P O R T 2 0 1 8

HEICO CORPORATION AND SUBSIDIARIES

N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

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

2018

2017

2016

61,548
9,420
12,608
83,576

(13,115)
1,578
(1,439)
(12,976)
$ 70,600

$ 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

2016

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

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 (blended rate in fiscal 2018)
State taxes, net of federal income tax benefit
Discrete net tax benefit related to Tax Act
Research and development tax credits
Domestic production activities tax deduction
Tax benefit related to stock option exercises
Noncontrolling interests’ share of income
Tax-exempt losses (gains) on corporate-owned life insurance policies
Other, net
Effective tax rate

2018

23.3%
2.9%
(3.4%)
(2.0%)
(.8%)
(.5%)
(.3%)
.1%
.5%
19.8%

2017

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

On December 22, 2017, the United States (“U.S.”) government enacted comprehensive tax legislation commonly referred to as the Tax

Cuts and Jobs Act (the “Tax Act”). The Tax Act contains significant changes to existing tax law including, among other things, a reduction in
the U.S. federal statutory tax rate from 35% to 21% and the implementation of a territorial tax system resulting in a one-time transition tax
on the unremitted earnings of the Company’s foreign subsidiaries. The Tax Act also contains additional provisions that will become effective
for HEICO in fiscal 2019 including a new tax on Global Intangible Low-Taxed Income (“GILTI”), a new deduction for Foreign-Derived Intangible
Income (“FDII”), the repeal of the domestic production activity deduction and additional limitations on the deductibility of certain executive
compensation. The Company has not yet determined the impact of the provisions of the Tax Act which do not become effective for HEICO until
fiscal 2019 but does not anticipate these provisions to materially affect its consolidated results of operations, financial position or cash flows.

As a result of the Tax Act, the Company’s effective federal statutory income tax rate in fiscal 2018 is a blended rate of 23.3%, which
reflects the reduction in the U.S. federal statutory tax rate from 35% to 21% effective January 1, 2018. Additionally, the Company remeasured
its U.S. federal net deferred tax liabilities and recorded a discrete tax benefit of $16.5 million in fiscal 2018. Further, the Company recorded a
provisional discrete tax expense of $4.4 million in fiscal 2018 related to a one-time transition tax on the unremitted earnings of the Company’s
foreign subsidiaries. The Company intends to pay this tax over the eight-year period allowed for in the Tax Act.

The Company’s effective tax rate in fiscal 2018 decreased to 19.8% from 30.3% in fiscal 2017. The decrease principally reflects the
previously mentioned discrete tax benefit from the remeasurement of the Company’s U.S. federal net deferred tax liabilities and the net benefit
of a lower federal statutory income tax rate, which were partially offset by the aforementioned one-time transition tax expense. Further, the
decrease in fiscal 2018 was slightly moderated by an unfavorable impact from lower tax-exempt unrealized gains in the cash surrender values
of life insurance policies related to the HEICO Corporation Leadership Compensation Plan (“HEICO LCP”).

A N N U A L R E P O R T 2 0 1 8 | 49

HEICO CORPORATION AND SUBSIDIARIES

N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

The Company’s effective tax rate in fiscal 2017 decreased to 30.3% from 31.5% in fiscal 2016. The decrease principally reflects the

favorable impact of higher tax-exempt unrealized gains in the cash surrender values of life insurance policies related to the HEICO LCP and
a $3.1 million discrete income tax benefit related to stock option exercises resulting from the adoption of ASU 2016-09, “Improvements
to Employee Share-Based Payment Accounting,” in the first quarter of fiscal 2017. These decreases were partially offset by the benefit
recognized in fiscal 2016 from the retroactive and permanent extension of the U.S. federal R&D tax credit that resulted in the recognition of
additional income tax credits for qualified R&D activities related to the last ten months of fiscal 2015 and a less favorable benefit in fiscal
2017 from the foreign tax rate differential associated with the undistributed earnings of a fiscal 2015 acquisition.

The Company files income tax returns in the U.S. federal jurisdiction and in multiple state jurisdictions. The Company is also subject

to income taxes in certain jurisdictions outside the U.S., none of which are individually material to the accompanying consolidated financial
statements. Generally, the Company is no longer subject to U.S. federal, state or foreign examinations by tax authorities for years prior to
fiscal 2014.

The Company has not made a provision for U.S. income taxes on the undistributed earnings of a fiscal 2015 foreign acquisition as such

earnings are considered permanently reinvested outside of the U.S. The amount of undistributed earnings is not material to the Company’s
consolidated financial statements.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. The Company believes that it is more likely than not that it will
generate sufficient future taxable income to utilize all of its deferred tax assets and has therefore not recorded a valuation allowance on any
such asset.

Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):

As of October 31,

Deferred tax assets:
Deferred compensation liability

Inventories

Share-based compensation
Bonus accrual
Customer rebates accrual
Vacation accrual
Deferred revenue
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

2018

2017

$ 31,152
22,204
9,811
4,474
1,526
1,456
68
7,084
77,775

(112,533)
(11,615)
(271)
(124,419)
(46,644)

47,093
31,797
12,984
4,956
1,864
2,112
730
9,230
110,766

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

As of October 31, 2018 and 2017, the Company’s liability for gross unrecognized tax benefits related to uncertain tax positions was $2.1
million and $2.0 million, respectively, of which $1.7 million and $1.3 million, respectively, would decrease the Company’s income tax expense
and effective income tax rate if the tax benefits were recognized. A reconciliation of the activity related to the liability for gross unrecognized
tax benefits during fiscal 2018 and 2017 is as follows (in thousands):

As of 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
Settlements
Lapses of statutes of limitations
Balances as of end of year

50 | A N N U A L R E P O R T 2 0 1 8

2018

2017

2,040
591
20
—
(394)
(157)
2,100

1,602
596
—
(24)
—
(134)
2,040

HEICO CORPORATION AND SUBSIDIARIES

N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

NOTE 7 | FAIR VALUE MEASUREMENTS

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):

As of October 31, 2018

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

Significant
Other Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

—
3,560
3,179
1,437
1,306
$ 9,482

$ 123,255
—
—
—
—
$ 123,255

—
—
—
—
—
—

Total

$ 123,255
3,560
3,179
1,437
1,306
$ 132,737

—

$ 20,875

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

Assets:
Deferred compensation plans:

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

Total assets

Liabilities:
Contingent consideration

The Company maintains two non-qualified deferred compensation plans. The assets of the HEICO Corporation Leadership Compensation

Plan (“HEICO 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 HEICO 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 a subsidiary by the ETG in fiscal 2017, the Company may be obligated to pay contingent

consideration 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, 2018, the estimated fair value of the contingent consideration was $13.9 million.

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 $1.7 million in aggregate during the first four years following the first anniversary of the acquisition. During
fiscal 2018, the Company paid $.3 million of contingent consideration based on the actual financial performance of the acquired entity during
the second year following the acquisition. As of October 31, 2018, the estimated fair value of the remaining contingent consideration was
$1.2 million.

A N N U A L R E P O R T 2 0 1 8 | 51

HEICO CORPORATION AND SUBSIDIARIES

N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

As part of the agreement to acquire a subsidiary by the FSG in fiscal 2015, the Company may be obligated to pay contingent
consideration of up to €6.1 million per year should the acquired entity meet certain earnings objectives during each of the first four years
following the acquisition. The estimated fair value of the aggregate contingent consideration as of October 31, 2017 for the third and
fourth year following the acquisition was €10.8 million, or $12.6 million. During fiscal 2018, the Company paid €4.4 million, or $5.1 million,
of contingent consideration based on the lower actual than anticipated earnings of the acquired entity during the third year following the
acquisition and recognized a €1.3 million, or $1.8 million, reduction in accrued contingent consideration based principally on the lower actual
than anticipated earnings. As of October 31, 2018, the estimated fair vale of the contingent consideration for the fourth year following the
acquisition was €5.1 million, or $5.8 million.

The estimated fair value of the contingent consideration arrangements described above are classified within Level 3 and were
determined using a probability-based scenario analysis approach. Under this method, a set of discrete potential future subsidiary earnings
was determined using internal estimates based on various revenue growth rate assumptions for each scenario. 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, 2018 are

as follows:

Compound annual revenue growth rate range
Weighted average discount rate

Fiscal 2017
Acquisition

(4%) - 7%
6.3%

Fiscal 2016
Acquisition

4% - 13%
4.8%

Fiscal 2015
Acquisition

10% - 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 2018 and 2017 are as follows (in thousands):

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
Payment of contingent consideration
Decrease in accrued contingent consideration, net
Foreign currency transaction adjustments
Balance as of October 31, 2018

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

Accrued expenses and other current liabilities
Other long-term liabilities

Liabilities

$ 18,881
13,797
1,100
(7,039)
834
27,573
(5,425)
(1,365)
92
$ 20,875

6,107
14,768
$ 20,875

The Company recorded the increase (decrease) 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 2018 and 2017.

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, 2018 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.

52 | A N N U A L R E P O R T 2 0 1 8

HEICO CORPORATION AND SUBSIDIARIES

N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

NOTE 8 | SHAREHOLDERS’ EQUITY

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, 2018, the maximum number of shares that may yet be purchased
under this program was 4,886,353 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 2018, 2017 and 2016, the Company did not repurchase any shares
of Company common stock under this program.

During fiscal 2018, the Company repurchased an aggregate 332,140 shares and 18,145 shares of Common Stock and Class A Common

Stock, respectively, at a total cost of approximately $23.9 million and $1.1 million, respectively. The shares purchased represent shares
tendered as payment of employee withholding taxes due upon the issuance of a share-based award. The shares purchased in fiscal 2018
did not impact the number of shares authorized for future purchase under the Company’s share repurchase program and are reflected as
redemptions of common stock related to share-based compensation in the Company’s Consolidated Statements of Shareholders’ Equity and
the Company’s Consolidated Statements of Cash Flows. Such share repurchases in fiscal 2017 and 2016 were not material.

Stock Splits

In June 2018, December 2017 and March 2017, the Company’s Board of Directors declared a 5-for-4 stock split on both classes of the

NOTE 9 | SHARE-BASED COMPENSATION

The Company currently has one stock option plan, the HEICO Corporation 2018 Incentive Compensation Plan (“2018 Plan”), which enables

the Company to grant various forms of share-based compensation awards including stock options, restricted stock, restricted stock awards
and stock appreciation rights. The 2018 Plan became effective in fiscal 2018 and replaced the Company’s 2012 Incentive Compensation Plan
(“2012 Plan”). Options outstanding under the Company’s 2012 Plan, 2002 Stock Option Plan and Non-Qualified Stock Option Plan may be
exercised pursuant to their terms. The total number of shares approved by the shareholders of the Company for the 2018 Plan is 5.0 million
plus any options outstanding under the 2012 Plan as of the 2018 Plan’s effective date that are subsequently forfeited or expire. A total of
approximately 11.0 million shares of the Company’s common stock are reserved for issuance to employees, directors, officers and consultants
as of October 31, 2018, including 6.4 million shares currently under option and 4.6 million shares available for future grants.

Stock options granted pursuant to the 2018 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 2018 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 2018 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, 2018. The 2018 Plan will terminate no later than the tenth anniversary of its effective date.

A N N U A L R E P O R T 2 0 1 8 | 53

HEICO CORPORATION AND SUBSIDIARIES

N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

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, 2015
Granted
Exercised
Cancelled
Outstanding as of October 31, 2016
Granted
Exercised
Outstanding as of October 31, 2017
Shares approved by the Company’s shareholders for the
2018 Incentive Compensation Plan
Cancelled unissued shares under the 2012 Incentive
Compensation Plan
Granted
Exercised
Cancelled
Outstanding as of October 31, 2018

Shares Available
For Grant

2,590
(586)
—
12
2,016
(1,186)
—
830

5,000

(830)
(412)
—
24
4,612

Shares Under Option

6,514
586
(568)
(12)
6,520
1,186
(409)
7,297

Weighted Average
Exercise Price

$ 13.07
$ 23.58
$ 10.45
$ 18.62
$ 14.23
$ 41.37
$ 15.27
$ 18.58

—

—
412
(1,285)
(24)
6,400

$
—
$ 65.64
$ 10.54
$ 28.85
$ 23.19

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, 2018 is as follows (in thousands, except per share and contractual life data):

Options Outstanding

Weighted
Average
Exercise Price

Weighted Average
Remaining Contractual
Life (Years)

$ 23.48
$ 22.94
$ 23.19

4.4
5.5
5.0

Options Exercisable

Weighted
Average
Exercise Price

Weighted Average
Remaining Contractual
Life (Years)

$ 14.75
$ 15.59
$ 15.17

3.0
4.1
3.5

2017

$ 5,659
3,087
10,376

Aggregate
Intrinsic
Value

$ 178,327
150,649
$ 328,976

Aggregate
Intrinsic
Value

$ 151,756
110,297
$ 262,053

2016

$ 5,924
868
9,751

Common Stock
Class A Common Stock

Number
Outstanding

2,955
3,445
6,400

Number
Outstanding

2,197
2,160
4,357

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

2018

$ 4,031
2,162
75,152

54 | A N N U A L R E P O R T 2 0 1 8

HEICO CORPORATION AND SUBSIDIARIES

N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

Net income from consolidated operations for the fiscal years ended October 31, 2018, 2017 and 2016 includes compensation expense
of $9.3 million, $7.4 million and $6.4 million, respectively, and an income tax benefit of $2.2 million, $2.8 million and $2.4 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, 2018, there was $26.9 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 3.5 years. The total fair value of stock options that vested in fiscal 2018, 2017 and 2016 was $8.5 million, $5.3 million and $5.8
million, respectively. If there were a change in control of the Company, all of the unvested options outstanding as of October 31, 2018 would
become immediately exercisable.

The fair value of each stock option grant in fiscal 2018, 2017 and 2016 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,

---~-

2018

Class A

~--------

Class A

2017

2016

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

31.00%
2.83%
.24%
.00%
9
$ 30.00

27.69%
2.81%
.29%
.00%
8
$ 20.93

37.89%
2.44%
.26%
.00%
9
$ 21.36

28.18%
2.06%
.31%
.00%
7
$ 12.47

39.63%
2.16%
.24%
.00%
9
$ 12.10

32.52%
1.82%
.32%
.00%
6
$ 7.92

NOTE 10 | EMPLOYEE RETIREMENT PLANS

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 Contributions 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 2018, 2017 and 2016 totaled $8.0 million, $7.8 million and $7.0 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, 2015
Shares registered for issuance to the 401(k) Plan
Issuance of common stock to the 401(k) Plan
Shares available for issuance as of October 31, 2016
Issuance of common stock to the 401(k) Plan
Shares available for issuance as of October 31, 2017
Issuance of common stock to the 401(k) Plan
Shares available for issuance as of October 31, 2018

Common Stock

Class A
Common Stock

28
586
(123)
491
(93)
398
(65)
333

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

pension plan (the “Plan”) in connection with a prior year acquisition.

A N N U A L R E P O R T 2 0 1 8 | 55

HEICO CORPORATION AND SUBSIDIARIES

N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

Changes in the Plan’s projected benefit obligation and plan assets during fiscal 2018 and 2017 are as follows (in thousands):

Change in projected benefit obligation:

Projected benefit obligation as of October 31, 2016
Actuarial gain
Interest cost
Benefits paid
Projected benefit obligation as of October 31, 2017
Actuarial gain
Interest cost
Benefits paid
Projected benefit obligation as of October 31, 2018

Change in plan assets:
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
Actual return on plan assets
Employer contributions
Benefits paid
Fair value of plan assets as of October 31, 2018

Funded status as of October 31, 2017

Funded status as of October 31, 2018

$ 14,511
(156)
561
(916)
14,000
(749)
539
(900)
$ 12,890

$ 10,510
1,048
428
(916)
11,070
(151)
360
(900)
$ 10,379

(2,930)

(2,511)

The $2.5 million and $2.9 million difference between the projected benefit obligation and fair value of plan assets as of October 31, 2018

and October 31, 2017, respectively, is included in other long-term liabilities within the Company’s Consolidated Balance Sheets. Additionally,
the Plan experienced a $.1 million unrealized loss during fiscal 2018 and a $.5 million unrealized gain during fiscal 2017, that were recognized
in other comprehensive income (loss) and reported net of less than $.1 million and $.2 million of tax in fiscal 2018 and 2017, 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, 2018 is $1.8 million (pre-tax).

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

As of October 31,

Discount rate

2018

4.49%

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

Year ended October 31,

Discount rate
Expected return on plan assets

2018

3.98%
6.75%

2017

3.98%

2017

3.99%
6.75%

2016

4.47%
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.

56 | A N N U A L R E P O R T 2 0 1 8

HEICO CORPORATION AND SUBSIDIARIES

N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

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

2018

$ 728
(539)
(17)
$ 172

2017

$ 688
(561)
(46)
$ 81

2016

$ 702
(613)
—
$ 89

The Company anticipates making contributions of $1.0 million to the Plan during fiscal 2019. 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,

2019
2020
2021
2022
2023
2024-2028

$ 930
929
897
877
869
4,329

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

Fixed income securities
Equity securities
Money market funds and cash

As of October 31, 2018

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

Significant
Other Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

$ 5,276
5,006
97
$ 10,379

—
—
—
—

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)

$ 5,382
5,593
95
$ 11,070

—
—
—
—

Total

$ 5,276
5,006
97
$ 10,379

Total

$ 5,382
5,593
95
$ 11,070

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,

2018

2017

Fixed income securities
Equity securities
Money market funds and cash

Actual

51%
48%
1%
100%

Target

50%
50%
—%
100%

Actual

49%
50%
1%
100%

Target

50%
50%
—%
100%

A N N U A L R E P O R T 2 0 1 8 | 57

HEICO CORPORATION AND SUBSIDIARIES

N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

NOTE 11 | REDEEMABLE NONCONTROLLING INTERESTS

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, 2018, management’s estimate of the aggregate Redemption Amount of all Put
Rights that the Company could be required to pay is approximately $132.0 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, 2018 redeemable at fair value is approximately $83.5
million and the portion redeemable based solely on a multiple of future earnings is approximately $48.5 million.

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

October 31, 2018 is as follows:

Subsidiary
Acquisition
Year

Operating
Segment

Company
Ownership
Interest

Earliest
Put Right
Year

Purchase
Period
(Years)

2005
2006
2008
2009
2012
2012
2012
2015
2015
2015
2015
2017
2018

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

95.9%
80.1%
82.3%
82.5%
78.0%
84.0%
80.1%
80.0%
80.1%
80.1%
80.1%
80.1%
85.0%

2019 (1)
2019 (1)
2019 (1)
2019 (1)
2019 (1)
2019 (1)
2019 (1)
2019
2020
2020
2022
2022
2021

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

(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 2019
is approximately $61.3 million, of which approximately $27.7 million would be payable in fiscal 2019 should all of the eligible associated
noncontrolling interest holders elect to exercise their Put Rights during fiscal 2019. 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
Amounts for the redeemable noncontrolling interests acquired in fiscal 2017 and 2016, respectively, were paid using cash provided by
operating activities.

58 | A N N U A L R E P O R T 2 0 1 8

HEICO CORPORATION AND SUBSIDIARIES

N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

NOTE 12 | NET INCOME PER SHARE ATTRIBUTABLE TO HEICO SHAREHOLDERS

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

2018

2017

2016

$ 259,233

$ 185,985

$ 156,192

132,543
4,153
136,696

131,703
3,885
135,588

130,948
2,197
133,145

$
$

1.96
1.90

$
$

1.41
1.37

$
$

1.19
1.17

Anti-dilutive stock options excluded

512

799

1,133

NOTE 13 | QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

(in thousands, except per share data)

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

Net sales:
2018
2017
Gross profit:
2018
2017

Net income from consolidated operations:

2018
2017

Net income attributable to HEICO:

2018
2017

Net income per share attributable to HEICO:
Basic:

2018
2017
Diluted:
2018
2017

$ 404,410
$ 343,432

$ 154,791
$ 125,417

$ 71,695
$ 46,265

$ 65,152
$ 40,927

$
$

.49
.31

.48
.30

$ 430,602
$ 368,657

$ 167,857
$ 140,382

$
$

66,011
50,833

59,618
45,686

.45
.35

.44
.34

$ 465,825
$ 391,500

$ 181,609
$ 148,897

$ 73,899
$ 51,475

$ 67,086
$ 45,698

$
$

.51
.35

.49
.34

$ 476,884
$ 421,224

$ 186,458
$ 160,029

$ 74,081
$ 59,087

$ 67,377
$ 53,674

$
$

.51
.41

.49
.39

During the first quarter of fiscal 2018, the U.S. government enacted significant changes to existing tax law resulting in the Company

recording a provisional discrete tax benefit from remeasuring its U.S. federal net deferred tax liabilities that was partially offset by a
provisional discrete tax expenses related to a one-time transition tax on the unremitted earnings of the Company’s foreign subsidiaries. The
net impact of these provisional amounts increased net income attributable to HEICO by $11.9 million, or $.09 per basic and dilute share. See
Note 6, Income Taxes, for additional information regarding changes to existing tax law.

During the first quarter of fiscal 2017, the Company adopted ASU 2016-09, resulting in the recognition of a $3.1 million discrete income

tax benefit and a 1,220,000 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 $.02 per basic and $.01 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.

A N N U A L R E P O R T 2 0 1 8 | 59

HEICO CORPORATION AND SUBSIDIARIES

N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

NOTE 14 | OPERATING SEGMENTS

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, manufactures,
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, emergency locator transmission 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, 2018:
Net sales
Depreciation
Amortization
Operating income
Capital expenditures
Total assets

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

Segment

FSG

ETG

Other, Primarily
Corporate and
Intersegment (1)

Consolidated
Totals

$ 1,097,937
13,322
19,530
206,623
13,074
1,093,858

$ 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

$ 701,827
9,225
33,339
204,508
9,531
1,391,997

$ 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

$ (22,043)
692
1,083
(34,886)
19,266
167,541

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

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

$ 1,777,721
23,239
53,952
376,245
41,871
2,653,396

$ 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) Intersegment activity principally consists of net sales from the ETG to the FSG.
60 | A N N U A L R E P O R T 2 0 1 8

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N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

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

2018

2017

2016

$ 582,562
286,454
228,921
1,097,937

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

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

371,297
139,975
511,272

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

547,088
154,739
701,827

420,991
153,270
574,261

Other, primarily corporate and intersegment

(22,043)

(16,988)

(10,884)

Total consolidated net sales

$ 1,777,721

$ 1,524,813

$ 1,376,258

(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, emergency locator transmission 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 115 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

2018

2017

2016

$ 1,127,998
649,723
$ 1,777,721

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

$ 124,225
30,514
$ 154,739

97,367
32,516
$ 129,883

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

94,889
26,722
$ 121,611

A N N U A L R E P O R T 2 0 1 8 | 61

HEICO CORPORATION AND SUBSIDIARIES

N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

NOTE 15 | COMMITMENTS AND CONTINGENCIES

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,

2019
2020
2021
2022
2023
Thereafter
Total minimum lease commitments

$ 14,961
14,991
14,147
12,546
7,334
18,007
$ 81,986

Total rent expense charged to operations for operating leases in fiscal 2018, 2017 and 2016 amounted to $17.5 million, $15.6 million and

$14.7 million, respectively.

Guarantees

As of October 31, 2018, the Company has arranged for standby letters of credit aggregating $4.3 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 2018 and 2017 are as follows (in thousands):

Year ended October 31,

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

Litigation

2018

$ 2,921
2,720
320
(2,655)
$ 3,306

2017

$ 3,351
2,254
—
(2,684)
$ 2,921

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.

62 | A N N U A L R E P O R T 2 0 1 8

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N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

NOTE 16 | SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

The following table presents supplemental disclosures of cash flow information and non-cash investing activities for fiscal 2018, 2017

and 2016 (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

NOTE 17 | SUBSEQUENT EVENTS

2018

$ 90,488
(1,510)
19,233
—
(407)
7,166

2017

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

2016

$ 87,486
(1,906)
8,288
1,225
—
1,111

In November 2018, the Company, through HEICO Electronic, acquired all of the stock of Specialty Silicone Products, Inc. (“SSP”). SSP
designs and manufactures silicone material for a variety of demanding applications, used in aerospace, defense, research, oil and gas, testing,
pharmaceuticals and other markets. The purchase price of this acquisition was paid in cash principally using proceeds from the Company’s
revolving credit facility and the total consideration for the acquisition is not material or significant to the Company’s consolidated financial
statements.

In November 2018, the Company, through HEICO Electronic, acquired 93% of the stock of Apex Microtechnology, Inc. (“Apex”). Apex
designs and manufactures precision power analog monolithic, hybrid and open frame components for a certain wide range of aerospace,
defense, industrial, measurement, medical and test applications. The purchase price of this acquisition was paid in cash using proceeds
from the Company’s revolving credit facility and the total consideration for the acquisition is not material or significant to the Company’s
consolidated financial statements.

A N N U A L R E P O R T 2 0 1 8 | 63

HEICO CORPORATION AND SUBSIDIARIES

M A N A G E M E N T ’ S A N N U A L R E P O R T O N I N T E R N A L
C O N T R O L O V E R F I N A N C I A L R E P O R T I N G

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, 2018.

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 SST Components, Inc.,
Optical Display Engineering, the Emergency Locator Transmitter Beacon product line of Instrumar Limited, Sensor Technology Engineering,
Inc., and Interface Display & Controls, Inc. (collectively, the “Excluded Acquisitions”) from its assessment of internal control over financial
reporting as of October 31, 2018. See Note 2, Acquisitions, of the Notes to Consolidated Financial Statements for additional information. The
aggregate assets and net sales of the Excluded Acquisitions constituted 2.7% and .8% of the Company’s consolidated total assets and net
sales as of and for the year ended October 31, 2018, 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, 2018. 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.

E X E C U T I V E O F F I C E R C E R T I F I C A T I O N S

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, 2018, 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 2018 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 web site at www.heico.com.

64 | A N N U A L R E P O R T 2 0 1 8

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R E P O R T O F I N D E P E N D E N T R E G I S T E R E D
P U B L I C A C C O U N T I N G F I R M

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

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of HEICO Corporation and subsidiaries (the “Company”) as of October 31,
2018 and 2017, 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, 2018 and the related notes (collectively referred to as the “financial statements”). In our
opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of October 31, 2018 and
2017, and the results of its operations and its cash flows for each of the three years in the period ended October 31, 2018, 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) (PCAOB), the
Company’s internal control over financial reporting as of October 31, 2018, based on criteria established in Internal Control - Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated December 20,
2018, expressed an unqualified opinion on the Company’s internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s
financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent
with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or
fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the
amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide
a reasonable basis for our opinion.

/s/ DELOITTE & TOUCHE LLP

Miami, Florida
December 20, 2018
We have served as the Company’s auditor since 1990.

A N N U A L R E P O R T 2 0 1 8 | 65

HEICO CORPORATION AND SUBSIDIARIESR E P O R T O F I N D E P E N D E N T R E G I S T E R E D
P U B L I C A C C O U N T I N G F I R M

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

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of HEICO Corporation and subsidiaries (the “Company”) as of October 31, 2018,
based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of October 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the
consolidated financial statements as of and for the year ended October 31, 2018 of the Company and our report dated December 20, 2018
expressed an unqualified opinion on those financial statements.

Basis for Opinion

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 SST Components, Inc., Optical Display Engineering, the Emergency Locator Transmitter Beacon
product line of Instrumar Limited, Sensor Technology Engineering, Inc., and Interface Displays & Controls, Inc., (collectively, the “Excluded
Acquisitions”) which were acquired during the year ended October 31, 2018 and whose financial statements constitute 2.7% of total assets
and 0.8% of net sales of the Company’s consolidated financial statement amounts as of and for the year ended October 31, 2018, respectively.
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 are a public
accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. 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.

Definition and Limitations of Internal Control over Financial Reporting

A company’s 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 (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 its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may deteriorate.

/s/ DELOITTE & TOUCHE LLP

Miami, Florida
December 20, 2018

66 | A N N U A L R E P O R T 2 0 1 8

HEICO CORPORATION AND SUBSIDIARIESM A R K E T F O R C O M P A N Y ’ S C O M M O N E Q U I T Y A N D
R E L A T E D S T O C K H O L D E R M A T T E R S

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.

As of December 18, 2018, there were 321 holders of record of our Class A Common Stock and 317 holders of record of our Common Stock.

In addition, as of December 18, 2018, there were approximately 77,389 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 78,027 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, 2013 through October 31, 2018. 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

$400

$360

$320

$280

$240

$200

$160

$120

$80

$40

HEICO Common Stock

HEICO Class A
Common Stock

NYSE Composite Index

--+-

Dow Jones
U.S. Aerospace Index

2013

2014

2015

2016

2017

2018

HEICO Common Stock
HEICO Class A Common Stock
NYSE Composite Index
Dow Jones U.S. Aerospace Index

Cumulative Total Return as of October 31,

2013

2014

$ 100.00
100.00
100.00
100.00

$ 102.06
118.71
108.35
102.56

2015

95.14
113.67
104.51
107.40

2016

2017

2018

$ 127.78
156.66
104.72
114.15

$ 214.86
249.02
123.29
170.64

$ 310.87
341.51
121.96
205.05

A N N U A L R E P O R T 2 0 1 8 | 67

HEICO CORPORATION AND SUBSIDIARIES

M A R K E T F O R C O M P A N Y ’ S C O M M O N E Q U I T Y A N D
R E L A T E D S T O C K H O L D E R M A T T E R S

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 on the prior page. 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-Eight Year Cumulative Total Return

$35,000

$28,000

$21,000

$14,000

$7,000

HEICO Common Stock

NYSE Composite Index

Dow Jones U.S. Aerospace Index

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

141.49
130.31
130.67

158.35
138.76
122.00

173.88
156.09
158.36

123.41
155.68
176.11

263.25
186.32
252.00

1996

1997

1998

1999

2000

2001

430.02
225.37
341.65

$ 1,008.31
289.55
376.36

$ 1,448.99
326.98
378.66

$ 1,051.61
376.40
295.99

809.50
400.81
418.32

$ 1,045.86
328.78
333.32

2002

2003

2004

2005

2006

2007

670.39
284.59
343.88

$ 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

2014

2015

2016

2017

2018

HEICO Common Stock
NYSE Composite Index
Dow Jones U.S. Aerospace Index

$ 11,416.51
617.23
1,687.41

$ 10,776.88
595.37
1,766.94

$ 14,652.37
596.57
1,878.10

$ 23,994.03
702.38
2,807.42

$ 33,876.95
694.81
3,373.52

68 | A N N U A L R E P O R T 2 0 1 8

HEICO CORPORATION AND SUBSIDIARIES

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.
Optical Display Engineering
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.

Electronic Technologies Group
3D-Plus SAS
AeroAntenna Technology, Inc.
Analog Modules, Inc.
Apex Microtechnology, 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.
IRCameras, LLC
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.
Sensor Technology Engineering, LLC
Sierra Microwave Technology, LLC
Specialty Silicone Products, Inc.
Switchcraft, Inc. and Conxall
VPT, 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 2018, 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 15, 2019 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

A N N U A L R E P O R T 2 0 1 8 | 69

O F F I C E R S A N D S E N I O R L E A D E R S H I P

William Fenne
Vice President and General Manager,
Niacc-Avitech Technologies, Inc.

Pierre Maurice
President and Co-Founder,
3D Plus SAS

Chad Putnam
General Manager,
Action Research Corporation

Laurans A. Mendelson
Chairman of the Board of Directors
and Chief Executive Officer,
HEICO Corporation

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

Greg Brennan
Chief Executive Officer,
Apex Microtechnology, 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

Sjuk de Vries
Chief Executive Officer and Founder,
Aeroworks International Holding B.V.

Paul DiCaprio
President,
Specialty Silicone Products, Inc.

Jerry Goldlust
President and Founder,
HVT Group, Inc. and
Dielectric Sciences, Inc.

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.

Tom Lane
President,
Engineering Design Team, 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

Andrew J. Feeley
Vice President and General Manager,
CSI Aerospace, Inc.

Patrick Markham
Vice President - Technical Services,
HEICO Parts Group

70 | A N N U A L R E P O R T 2 0 1 8

Steve McHugh
President and Co-Founder,
Santa Barbara Infrared, Inc.,
IRCameras, LLC and Sensor
Technology Engineering, LLC

Robert J. McKenna
Chief Operating Officer,
Electronic Technologies Group and
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.,
Dukane Seacom, Inc. and
Interface Displays & Controls

Jeffrey Perkins
Vice President and General Manager,
Seal Dynamics – Tampa

Niall Porter
General Manager,
Jet Avion 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

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