SELECTED FINANCIAL STATEMENT INFORMATION

Accounts Receivable



	As of October 31,
(in thousands)	2017			2016
Accounts receivable		$225,462			$205,386
Less: Allowance for doubtful accounts	(3,006		)	(3,159		)
Accounts receivable, net		$222,456			$202,227

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



	As of October 31,
(in thousands)	2017			2016
Costs incurred on uncompleted contracts		$29,491			$19,086
Estimated earnings	19,902			13,887
	49,393			32,973
Less: Billings to date	(41,262		)	(39,142		)
		$8,131			($6,169	)
Included in the accompanying Consolidated Balance Sheets under the following captions:
Accounts receivable, net (costs and estimated earnings in excess of billings)		$9,377			$4,839
Accrued expenses and other current liabilities (billings in excess of costs and estimated earnings)	(1,246		)	(11,008		)
		$8,131			($6,169	)

Changes in estimates pertaining to percentage-of-completion contracts did not have a material effect on net income from consolidated operations in fiscal 2017, 2016 or 2015.

Inventories



	As of October 31,
(in thousands)	2017			2016
Finished products		$173,559			$131,008
Work in process	39,986			36,076
Materials, parts, assemblies and supplies	128,031			117,153
Contracts in process	2,415			3,253
Less: Billings to date	(363		)	(1,188		)
Inventories, net of valuation reserves		$343,628			$286,302

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

Property, Plant and Equipment



	As of October 31,
(in thousands)	2017			2016
Land		$5,435			$5,090
Buildings and improvements	91,916			79,205
Machinery, equipment and tooling	191,298			171,717
Construction in progress	5,553			10,453
	294,202			266,465
Less: Accumulated depreciation and amortization	(164,319		)	(144,854		)
Property, plant and equipment, net		$129,883			$121,611

The amounts set forth above include tooling costs having a net book value of $7.6 million and $7.7 million as of October 31, 2017 and 2016, respectively. Amortization expense on capitalized tooling was $2.7 million, $2.9 million and $2.4 million in fiscal 2017, 2016 and 2015, respectively.

The amounts set forth above also include $4.8 million of assets under capital leases as of both October 31, 2017 and October 31, 2016. Accumulated depreciation associated with assets under capital leases was $1.0 million and $.9 million as of October 31, 2017 and October 31, 2016, respectively. See Note 5, Long-Term Debt, for additional information pertaining to capital lease obligations.

Depreciation and amortization expense, exclusive of tooling, on property, plant and equipment was $21.9 million, $20.4 million and $17.8 million in fiscal 2017, 2016 and 2015, respectively.

Accrued Expenses and Other Current Liabilities



	As of October 31,
(in thousands)	2017		2016
Accrued employee compensation and related payroll taxes		$78,058		$67,660
Deferred revenue	29,247		32,135
Accrued customer rebates and credits	12,866		11,881
Contingent consideration and other accrued purchase consideration	7,588		6,918
Other	19,853		17,459
Accrued expenses and other current liabilities		$147,612		$136,053

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

Other Long-Term Assets and Liabilities

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

Other long-term liabilities also includes deferred compensation of $5.7 million and $4.7 million as of October 31, 2017 and 2016, 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, 2017 and 2016, respectively, are held within an irrevocable trust and classified within other assets in the Company’s Consolidated Balance Sheets. Additional information regarding the assets of this deferred compensation plan and the LCP may be found in Note 7, Fair Value Measurements.

Research and Development Expenses

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



	Year ended October 31,
	2017		2016		2015
R&D expenses		$46,473		$44,726		$38,747

Accumulated Other Comprehensive Loss

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



	Foreign Currency Translation			Pension Benefit Obligation			Accumulated Other Comprehensive Loss
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		)
Unrealized gain	14,420			321			14,741
Amortization of unrealized loss	—			29			29
Balances as of October 31, 2017		($9,533	)		($1,023	)		($10,556	)