SELECTED FINANCIAL STATEMENT INFORMATION

Accounts Receivable



	As of October 31,
(in thousands)	2016			2015
Accounts receivable		$205,386			$183,631
Less: Allowance for doubtful accounts	(3,159		)	(2,038		)
Accounts receivable, net		$202,227			$181,593

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



	As of October 31,
(in thousands)	2016			2015
Costs incurred on uncompleted contracts		$19,086			$22,645
Estimated earnings	13,887			16,116
	32,973			38,761
Less: Billings to date	(39,142		)	(36,442		)
		($6,169	)		$2,319
Included in the accompanying Consolidated Balance Sheets under the following captions:
Accounts receivable, net (costs and estimated earnings in excess of billings)		$4,839			$6,263
Accrued expenses and other current liabilities (billings in excess of costs and estimated earnings)	(11,008		)	(3,944		)
		($6,169	)		$2,319

Changes in estimates pertaining to percentage-of-completion contracts did not have a material effect on net income from consolidated operations in fiscal 2016, 2015 or 2014.

Inventories



	As of October 31,
(in thousands)	2016			2015
Finished products		$131,008			$119,262
Work in process	36,076			32,201
Materials, parts, assemblies and supplies	117,153			89,739
Contracts in process	3,253			4,521
Less: Billings to date	(1,188		)	(2,206		)
Inventories, net of valuation reserves		$286,302			$243,517

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)	2016			2015
Land		$5,090			$5,060
Buildings and improvements	79,205			70,626
Machinery, equipment and tooling	171,717			152,022
Construction in progress	10,453			4,668
	266,465			232,376
Less: Accumulated depreciation and amortization	(144,854		)	(126,706		)
Property, plant and equipment, net		$121,611			$105,670

The amounts set forth above include tooling costs having a net book value of $7.7 million and $6.5 million as of October 31, 2016 and 2015, respectively. Amortization expense on capitalized tooling was $2.9 million, $2.4 million and $2.4 million in fiscal 2016, 2015 and 2014, respectively.

The amounts set forth above also include $4.8 million and $3.7 million of assets under capital leases as of October 31, 2016 and October 31, 2015, respectively. Accumulated depreciation associated with the assets under capital leases was $.9 million and $.7 million as of October 31, 2016 and October 31, 2015, respectively. See Note 5, Long-Term Debt, for additional information pertaining to these capital lease obligations.

Depreciation and amortization expense, exclusive of tooling, on property, plant and equipment was $20.4 million, $17.8 million and $17.1 million in fiscal 2016, 2015 and 2014, respectively.

Accrued Expenses and Other Current Liabilities



	As of October 31,
(in thousands)	2016		2015
Accrued employee compensation and related payroll taxes		$67,660		$53,238
Deferred revenue	32,135		16,498
Accrued customer rebates and credits	11,881		8,072
Accrued additional purchase consideration	6,918		6,859
Other	17,459		15,488
Accrued expenses and other current liabilities		$136,053		$100,155

The increase in accrued employee compensation and related payroll taxes principally reflects a higher level of accrued performance-based compensation based on the improved consolidated operating results. The increase in deferred revenue is primarily attributed to billings in excess of costs and estimated earnings on a fixed price contract for which revenue is being recognized on the percentage-of-completion method and customer deposits received in connection with a contract to provided repair and overhaul services. The total customer rebates and credits deducted within net sales in fiscal 2016, 2015 and 2014 was $10.8 million, $4.7 million and $8.3 million, respectively. The increase in total customer rebates and credits deducted within net sales in fiscal 2016 and the amount of accrued customer rebates and credits principally reflects an increase in the net sales volume of certain customers eligible for rebates.

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 2016, 2015 and 2014 totaled $6.8 million, $5.7 million and $5.3 million, respectively. The aggregate liabilities of the LCP were $87.9 million and $76.2 million as of October 31, 2016 and 2015, respectively, and are classified within other long-term liabilities in the Company’s Consolidated Balance Sheets. The assets of the LCP, totaling $88.5 million and $77.1 million as of October 31, 2016 and 2015, 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 $4.7 million and $4.5 million as of October 31, 2016 and 2015, 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, 2016 and 2015, 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,
	2016		2015		2014
R&D expenses		$44,726		$38,747		$37,377

Accumulated Other Comprehensive Loss

Changes in the components of accumulated other comprehensive loss during fiscal 2016 and 2015 are as follows (in thousands):



	Foreign Currency Translation			Pension Benefit Obligation			Accumulated Other Comprehensive Loss
Balances as of October 31, 2014		($8,348	)		$59			($8,289	)
Unrealized loss	(16,020		)	(771		)	(16,791		)
Balances as of October 31, 2015	(24,368		)	(712		)	(25,080		)
Unrealized gain (loss)	415			(661		)	(246		)
Balances as of October 31, 2016		($23,953	)		($1,373	)		($25,326	)