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 25% or 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 2016, 2015 and 2014 totaled $7.0 million, $6.1 million and $6.3 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):



	Common Stock		Class A Common Stock
Shares available for issuance as of October 31, 2013	125		125
Issuance of common stock to 401(k) Plan	(57	)	(57	)
Shares available for issuance as of October 31, 2014	68		68
Issuance of common stock to 401(k) Plan	(54	)	(54	)
Shares available for issuance as of October 31, 2015	14		14
Shares registered for issuance to the 401(k) Plan	300		300
Issuance of common stock to 401(k) Plan	(62	)	(62	)
Shares available for issuance as of October 31, 2016	252		252

As previously mentioned in Note 1, Summary of Significant Accounting Policies, the Company acquired a frozen qualified defined benefit pension plan in connection with a prior year acquisition.

Changes in the Plan's projected benefit obligation and plan assets during fiscal 2016 and 2015 are as follows (in thousands):



Change in projected benefit obligation:
Projected benefit obligation as of October 31, 2014		$13,815
Actuarial loss	716
Interest cost	561
Benefits paid	(924		)
Projected benefit obligation as of October 31, 2015	14,168
Actuarial loss	655
Interest cost	613
Benefits paid	(925		)
Projected benefit obligation as of October 31, 2016		$14,511

Change in plan assets:
Fair value of plan assets as of October 31, 2014		$11,359
Actual return on plan assets	254
Employer contributions	78
Benefits paid	(924		)
Fair value of plan assets as of October 31, 2015	10,767
Actual return on plan assets	263
Employer contributions	405
Benefits paid	(925		)
Fair value of plan assets as of October 31, 2016		$10,510

Funded status as of October 31, 2015		($3,401	)
Funded status as of October 31, 2016		($4,001	)

The $4.0 million and $3.4 million difference between the projected benefit obligation and fair value of plan assets as of October 31, 2016 and October 31, 2015, respectively, is included in other long-term liabilities within the Company's Consolidated Balance Sheets. Additionally, the Plan experienced a $1.1 million and $1.2 million unrealized loss during fiscal 2016 and 2015, respectively, that was recognized in other comprehensive income (loss) where it is reported net of ($.4) million of tax in each year. 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, 2016 is $2.2 million (pre-tax), of which the Company expects to recognize less than $.1 million during fiscal 2017.

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



	As of October 31,
	2016		2015
Discount rate	3.99	%	4.47	%

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



	Year ended October 31,
	2016		2015		2014
Discount rate	4.47	%	4.20	%	4.79	%
Expected return on plan assets	6.75	%	6.75	%	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.

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,
	2016		2015		2014
Expected return on plan assets		$702		$738		$739
Interest cost	613		561		610
Net pension income		$89		$177		$129

The Company anticipates making contributions of $.4 million to the Plan during fiscal 2017. 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,
2017		$921
2018	895
2019	925
2020	926
2021	904
2022-2026	4,424

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



	As of October 31, 2016
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Fixed income securities		$5,219		$—		$—		$5,219
Equity securities	5,149		—		—		5,149
Money market funds and cash	142		—		—		142
		$10,510		$—		$—		$10,510



	As of October 31, 2015
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Fixed income securities		$5,372		$—		$—		$5,372
Equity securities	5,280		—		—		5,280
Money market funds and cash	115		—		—		115
		$10,767		$—		$—		$10,767

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,
	2016				2015
	Actual		Target		Actual		Target
Fixed income securities	50	%	50	%	50	%	50	%
Equity securities	49	%	50	%	49	%	50	%
Money market funds and cash	1	%	—	%	1	%	—	%
	100	%	100	%	100	%	100	%