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As filed with the Securities and Exchange Commission on January 27, 1998
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K
(Mark One)

X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
----- THE SECURITIES EXCHANGE ACT OF 1934 (fee required)

FOR THE FISCAL YEAR ENDED OCTOBER 31, 1997 OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
----- THE SECURITIES EXCHANGE ACT OF 1934 (no fee required)

For the transition period from ___________ to __________

Commission file number 1-4604

HEICO CORPORATION
(Exact name of registrant as specified in its charter)



FLORIDA 65-0341002
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

3000 TAFT STREET, HOLLYWOOD, FLORIDA 33021
(Address of principal executive offices) (Zip Code)

(954) 987-6101
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b)of the Act:

COMMON STOCK, PAR VALUE $.01 PER SHARE AMERICAN STOCK EXCHANGE
(Title of Each Class) (Name of Each Exchange On Which Registered)


Securities registered pursuant to Section 12(g) of the Act:

PREFERRED STOCK PURCHASE RIGHTS
(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.

Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

The aggregate market value of the voting and non-voting stock held by
nonaffiliates of the registrant as of December 31, 1997 was $141,000,000 based
on the closing price of $28.50 on December 31, 1997 as reported by the American
Stock Exchange and after subtracting from the number of shares outstanding on
that date the number of shares held by affiliates of the Registrant.

The number of shares outstanding of each of the registrant's classes of common
stock, as of the latest practicable date:

COMMON STOCK, $.01 PAR VALUE 8,289,659 SHARES
(Class) (Outstanding at December 31, 1997)

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the proxy statement for the 1998 Annual Meeting of Shareholders are
incorporated by reference into Part III. See Item 14(a)(3) on page 43 for a
listing of exhibits.

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CERTAIN STATEMENTS IN THIS REPORT CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN
THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH
FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND
OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF
THE COMPANY, OR INDUSTRY RESULTS, TO BE MATERIALLY DIFFERENT FROM ANY FUTURE
RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH
FORWARD-LOOKING STATEMENTS. SUCH FACTORS INCLUDE, AMONG OTHERS, THE FOLLOWING:
LOWER COMMERCIAL AIR TRAVEL, PRODUCT PRICING LEVELS, ECONOMIC CONDITIONS WITHIN
THE AEROSPACE INDUSTRY, GENERAL ECONOMIC CONDITIONS AND COMPETITION ON MILITARY
PROGRAMS.

PART I
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ITEM 1. BUSINESS

GENERAL

HEICO Corporation (the Company) is principally engaged in the design,
manufacture and sale of aerospace products and services through its subsidiaries
HEICO Aerospace Holdings Corp. (HEICO Aerospace), which represents the Flight
Support Group, and HEICO Aviation Products Corp. (HEICO Aviation), which
represents the Ground Support Group. HEICO Aerospace became 20%-owned by
Lufthansa Technik AG as of October 30, 1997 (see discussion below) and HEICO
Aviation is wholly-owned. References in this Annual Report on Form 10-K to the
"Company" include each of the Company's subsidiaries unless otherwise required
by the context.

The Company is one of the world's largest non-original equipment
manufacturers (OEMs) of Federal Aviation Administration (FAA)-approved jet
engine replacement parts and a market leader in the sale of certain Ground
Support Equipment (GSE) to the airline and defense industries. The Company's
Flight Support Group, which currently accounts for approximately 65% of the
Company's revenues, operates in the jet engine service market through (i) the
research and development, design, manufacture and sale of FAA-approved jet
engine replacement parts, (ii) the repair, maintenance and overhaul of jet
engine and airframe components, and (iii) the manufacture of specialty aviation
and defense component parts as a subcontractor for OEMs and the U.S. government.
The Company's Ground Support Group, which currently accounts for approximately
35% of the Company's revenues, manufactures various types of GSE, including
ground power, air start and air conditioning units, as well as certain
electronic equipment for commercial airlines and military agencies.

On October 30, 1997, the Company entered into a strategic alliance with
Lufthansa Technik AG (Lufthansa), the technical services subsidiary of Lufthansa
German Airlines, whereby Lufthansa invested approximately $26 million in HEICO
Aerospace, a newly-formed subsidiary of the Company, including $10 million paid
at closing pursuant to a stock purchase agreement and approximately $16 million
to be paid to HEICO Aerospace over three years pursuant to a research and
development cooperation agreement. The research and development cooperation
agreement will partially fund accelerated development of additional FAA-approved
replacement parts for jet engines. The funds


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received pursuant to the research and development cooperation agreement will
reduce research and development expenses in the period such expenses are
incurred. In addition, Lufthansa and HEICO Aerospace have agreed to cooperate
regarding technical services and marketing support for jet engine parts on a
worldwide basis. For further information regarding the strategic alliance with
Lufthansa and sale of the 20% minority interest in HEICO Aerospace, see Note 2
to the Consolidated Financial Statements.

In September 1997, the Company acquired, through HEICO Aerospace,
Northwings Accessories Corporation (Northwings), a Florida-based, FAA-authorized
repair and overhaul facility servicing aircraft engine components and airframe
accessories, for approximately $7.0 million in cash and 232,000 shares of the
Company's common stock. For further information regarding the acquisition of
Northwings, see Note 2 to the Consolidated Financial Statements.

The Company was organized in 1993 creating a new holding company known
as HEICO Corporation and renaming the former holding company (formerly known as
HEICO Corporation, organized in 1957) as HEICO Aerospace Corporation. The
reorganization, which was completed in 1993, did not result in any change in the
business of the Company, its consolidated assets or liabilities or the relative
interests of its shareholders.

MARKETS - FLIGHT SUPPORT GROUP

The Flight Support Group's operating subsidiaries are HEICO Aerospace
Corporation and its subsidiaries Jet Avion Corporation (Jet Avion), LPI
Industries Corporation (LPI) and Aircraft Technology, Inc. (Aircraft
Technology), as well as Northwings.

JET AVION - Jet Avion's principal business is the research and development,
design, manufacture and sale of FAA-approved jet engine replacement parts that
are sold to domestic and foreign commercial air carriers and aircraft repair and
overhaul companies. Jet Avion's jet engine replacement parts include combustion
chambers and various other jet engine replacement parts. A key element of the
Company's growth strategy is the continued design and development of an
increasing number of replacement parts in order to further penetrate its
existing customer base and obtain new customers. The Company selects the jet
engine replacement parts to design and manufacture through a selection process
in which the Company analyzes industry information to determine which jet engine
replacement parts are expected to generate the greatest profitability. As part
of Lufthansa's investment in the Flight Support Group, Lufthansa will have the
right to select 50% of the engine parts for which the Company will seek FAA
authorization to manufacture (PMAs), provided that such parts are
technologically and economically feasible and substantially comparable with the
profitability of the Company's other PMAs.







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The following table sets forth (i) the lines of engines for which the
Company provides jet engine replacement parts and (ii) the approximate number of
such engines currently in service as estimated by the Company. Although the
Company expects that its strategic alliance with Lufthansa will broaden the
Company's product lines, virtually all of the Company's current PMA parts are
for Pratt & Whitney engines, with a majority for the JT8D engine.



NUMBER IN
OEM LINE SERVICE PRINCIPAL ENGINE APPLICATION
--- ---- --------- ----------------------------

Pratt & Whitney JT8D 10,300 Boeing 727 and 737
McDonnell Douglas DC-9 and MD-80
JT9D 2,100 Boeing 747 and 767
Airbus A300 and A310
McDonnell Douglas DC-10
PW2000 700 Boeing 757
PW4000 1,500 Boeing 747,767 and 777
Airbus A300, A310 and A330
CFM International CFM56 6,500 McDonnell Douglas MD-11
Boeing 737, Airbus A320 and A340


Non-OEMs of jet engine replacement parts must receive a PMA from the
FAA. The PMA process includes the submission of sample parts, drawings and
testing data to one of the FAA's Aircraft Certification Offices, where the
submitted materials are analyzed.

For information regarding pending litigation relating to certain of Jet
Avion's sales, see Item 3 to Part I of this Form 10-K.

AIRCRAFT TECHNOLOGY AND NORTHWINGS - Aircraft Technology and Northwings provide
jet engine replacement parts repair and overhaul services to domestic and
foreign commercial air carriers and aircraft repair and overhaul companies for
the Pratt & Whitney JT8D, JT3D, JT9D, PW2000 and PW4000 and the CFM
International CFM56 engines. The repair and overhaul services offered by the
Company include the repair, refurbishment and overhaul of numerous accessories
and parts mounted on or within gas turbine engines, aircraft wings and frames or
fuselages. Engine accessories include fuel pumps, generators and fuel controls.
Parts include combustion chambers, pneumatic valves, starters and actuators,
turbo compressors and constant speed drives, hydraulic pumps, valves and
actuators, electro-mechanical equipment and auxiliary power unit accessories.

The Company continually evaluates new engine lines, models and
derivatives to determine whether the potential demand for overhaul services
justifies the expenditures required for inventory and modifications to tooling
and equipment. The Company believes that its acquisition of Northwings will
provide the Company with a well-established platform for additional growth in
the repair and overhaul sector of the aviation industry.

LPI - LPI is engaged in the production of a variety of component parts for the
aerospace industry and manufactures a substantial portion of Jet Avion's
products. In addition, LPI manufactures and sells component parts to OEMs as a
sub-contractor and to U.S. military agencies as a replacement parts supplier.
Orders generally have contract terms from one to three years. Currently, orders
extending beyond one year are not significant.



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MARKETS - GROUND SUPPORT GROUP

The Ground Support Group, through Trilectron, currently serves the commercial
and military GSE markets through its manufacture of ground power units, air
start units and air conditioning units that are sold to both domestic and
foreign commercial and military customers. Trilectron also manufactures
specialty military electronics for use as shipboard power supplies and power
converters and for use in connection with the ground operations of the
International Space Station. Because military and commercial aircraft vary so
widely by size and manufacturer, unique equipment is often required for
different air frames. Military aircraft frequently require unique equipment
arrangements that necessitate custom manufacturing. Examples of Trilectron's GSE
products include a sophisticated cooling system for the Air Force's new F-22
fighter aircraft and a combination ground power and air conditioning unit for
the F-16 aircraft.

Customers of Trilectron are primarily domestic and foreign commercial
air carriers (passenger and cargo), contracted ground support service providers,
military and space agencies or subcontractors (United States and foreign).
Orders generally have contract terms from one to three years. Currently, orders
extending beyond one year are not significant.

SALES AND MARKETING

Each of the Company's operating divisions and subsidiaries independently
conducts sales and marketing efforts directed at their respective customers and
industries and, in some cases, collaborate with other operating divisions and
subsidiaries for cross-marketing efforts. Sales and marketing efforts are
conducted primarily by in-house sales personnel, and to a lesser extent by
independent manufacturer's representatives. Generally, in-house sales personnel
receive a base salary plus incentive compensation and manufacturer's
representatives receive a commission on sales.

The Company believes that direct relationships are crucial to
establishing and maintaining a strong customer base and, accordingly, the
Company's senior management team is actively involved in the Company's marketing
activities, particularly with established customers. The Company is also a
member of various trade and business organizations related to the commercial
aviation industry. For example, the Company is one of the smallest independent
companies in the Aerospace Industries Association (AIA), the leading trade
association representing the nation's manufacturers of commercial, military and
business aircraft, aircraft engines and related components and equipment. Due in
large part to its established industry presence, the Company believes that it
benefits from strong customer relations, name recognition and repeat business.

PRINCIPAL PRODUCTS AND CUSTOMERS

Sales of the Flight Support Group accounted for 65% of the Company's total
consolidated sales in fiscal 1997, 93% of the Company's sales from continuing
operations in fiscal 1996, and all of the Company's sales from continuing
operations in fiscal 1995. On a proforma basis,



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assuming Northwings had been acquired as of the beginning of fiscal 1997, the
Flight Support Group's sales would have accounted for 69% of consolidated fiscal
1997 sales from continuing operations.

Sales of products and services related to JT8D engines accounted for
approximately 51% of the Company's net sales in fiscal 1997.

No one customer accounted for sales of 10% or more of total
consolidated sales from continuing operations during any of the last three
fiscal years. Aggregate United States and foreign military sales were 17% of the
Company's consolidated sales in fiscal 1997.

COMPETITION

With respect to sales of jet engine replacement parts by the Flight Support
Group, the Company competes mainly with Pratt & Whitney, a division of United
Technologies Corporation. The competition is principally based on price and
service inasmuch as the Company's parts are interchangeable with the parts
produced by Pratt & Whitney. The Company believes that it supplies over 50% of
the market for certain JT8D engine components for which it holds a PMA from the
FAA, with Pratt & Whitney controlling the balance. With respect to other
aerospace products and services sold by the Flight Support Group, the Company
competes with a large number of machining, fabrication and repair companies,
some of which have greater financial resources than the Company. Competition is
based mainly on price, product performance, service and technical capability.

The Company's Ground Support Group competes with several large and
small domestic and foreign competitors, some of which have greater financial
resources than the Company. The Company believes the market for its ground
support equipment is highly fragmented, with competition based mainly on price,
product performance and service.

BACKLOG

The Company's backlog of unshipped orders as of October 31, 1997 was $36 million
as compared to $25 million as of October 31, 1996 and $23 million as of October
31, 1995. The backlog includes $17 million representing forecasted shipments
over the next 12 months for certain contracts of the Flight Support Group
pursuant to which customers provide estimated annual usage. Substantially all of
the backlog of orders as of October 31, 1997 are expected to be delivered during
fiscal 1998. For additional information regarding the Company's backlog, see
Item 7, "Management's Discussion and Analysis of Financial Condition and Results
of Operations - Backlogs."

RESEARCH, DEVELOPMENT AND PRODUCT IMPROVEMENT ACTIVITIES

The Company's research and development department uses state-of-the-art
equipment to design and engineer components, as well as to ensure accurate data
transfer between the Company's new product development and manufacturing
departments. The Company's engineers, recruited from OEMs and other aerospace
industry participants, specialize in a variety of disciplines, including
aerodynamics, heat transfer, manufacturing, electronics, software, materials and
structures. As part of its growth strategy, the Company has continued to
increase its research and development activities. In fiscal 1997, 1996 and 1995,


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the cost of such activities amounted to approximately $3,100,000, $2,400,000 and
$1,800,000, respectively. The Company's new strategic alliance with Lufthansa
discussed previously will provide the Flight Support Group with $16 million for
research and development projects relating to jet engine replacement parts over
the period ending July 31, 2000. In addition, the Company has and intends to
continue to increase the development of new products within its Ground Support
Group in order to expand the existing product line.

PATENTS, TRADEMARKS, ETC.

As discussed under "Markets - Flight Support Group" above, the Company's PMAs
from the FAA are material to the Company's operations. The Company does not have
any patents, trademarks or licenses the loss of which would materially adversely
affect the Company.

RAW MATERIALS

The principal materials used in the manufacture of the Company's Flight Support
Group's products are high temperature alloy sheet metal and castings and
forgings. The principal materials used in the manufacture of the Company's
Ground Support Group's products are numerous raw materials, parts and
components, including diesel and gas powered engines, compressors, and
generators. The materials used by the Company's operations are generally
available from a number of sources and in sufficient quantities to meet current
requirements subject to normal lead times.

EMPLOYEES

At the end of fiscal 1997, the Company and its subsidiaries employed
approximately 480 full-time persons, of which approximately 330 were employed
within the Flight Support Group and approximately 140 were employed within the
Ground Support Group.

GOVERNMENT REGULATIONS

FAA - The FAA regulates the manufacture, repair and operation of all aircraft
and aircraft parts operated in the United States. Its regulations are designed
to ensure that all aircraft and aviation equipment are continuously maintained
in proper condition to ensure safe operation of the aircraft. Similar rules
apply in other countries. All aircraft must be maintained under a continuous
condition monitoring program and must periodically undergo thorough inspection
and maintenance. The inspection, maintenance and repair procedures for the
various types of aircraft and equipment are prescribed by regulatory authorities
and can be performed only by certified repair facilities utilizing certified
technicians. Certification and conformance is required prior to installation of
a part on an aircraft. Aircraft operators must maintain logs concerning the
utilization and condition of aircraft engines, life-limited engine parts and
airframes. In addition, the FAA requires that various maintenance routines be
performed on aircraft engines, certain engine parts and airframes at regular
intervals based on cycles or flight time. Engine maintenance must also be
performed upon the occurrence of certain events, such as foreign object damage
in an aircraft engine

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or the replacement of life-limited engine parts. Such maintenance usually
requires that an aircraft engine be taken out of service. The operations of the
Company may in the future be subject to new and more stringent regulatory
requirements. In that regard, the Company closely monitors the FAA and industry
trade groups in an attempt to understand how possible future regulations might
impact the Company.

Because the Company's jet engine replacement parts largely consist of
older model JT8D aircraft engines and engine parts, the FAA's noise regulations
also have a substantial impact upon the Company. The ability of aircraft
operators to utilize such JT8D aircraft engines in domestic flight operations is
significantly influenced by regulations promulgated by the FAA governing, among
other things, noise emission standards. Pursuant to the Aircraft Noise and
Capacity Act, the FAA has required all aircraft operating in the United States
with a maximum weight of more than 75,000 pounds to meet Stage 2 noise
restriction levels. The FAA has mandated that all such Stage 2 aircraft (such as
the non-hush-kitted Boeing 727- 200s, Boeing 737-200s and McDonnell Douglas
DC-9-30/40/50s) must be phased out of operation in the contiguous United States
by December 31, 1999 or fitted with hush kits. This ban on operation in the
United States of non-hush-kitted Stage 2 aircraft applies to both domestic and
foreign aircraft operators. The European Union has adopted similar restrictions
for the operation of Stage 2 aircraft within member nations of the European
Union subject to a variety of exemptions. Various communities surrounding the
larger European cities also have adopted more stringent local regulations which
restrict the operation of non-hush-kitted aircraft in such jurisdictions.

ENVIRONMENTAL - The Company's operations are subject to extensive, and
frequently changing, federal, state and local environmental laws and substantial
related regulation by government agencies, including the EPA. Among other
matters, these regulatory authorities impose requirements that regulate the
operation, handling, transportation, and disposal of hazardous materials, and
require the Company to obtain and maintain licenses and permits in connection
with its operations. The Company believes that it is in material compliance with
all federal, state and local environmental laws and regulations governing its
operations.

OTHER - The Company is also subject to a variety of other regulations, including
worker-related and community safety laws. The Company believes that its
operations are in material compliance with such requirements.

SEASONALITY

The Company believes that its business activities are not materially seasonal.

FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
SALES

The Company has no operations located outside of the United States. See Note 12
to the Consolidated Financial Statements for additional information regarding
the Company's export sales.

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ITEM 2. PROPERTIES

The Company owns or leases the following facilities:



SQUARE OWNED/LEASE
LOCATION DESCRIPTION FOOTAGE EXPIRATION
- -------- ----------- ------- ----------


Hollywood, Florida Flight Support Group design 140,000 Owned
and manufacturing facility
and corporate headquarters

Palmetto, Florida Ground Support Group design 35,000 July 1998(1)
manufacturing facility and
office

Miami, Florida Overhaul and repair facility 18,000 Month-to-
month(2)

Miami, Florida Executive offices 2,300 December 1998


- -------------------------

(1) The Company has acquired 18.5 acres of land in Palmetto, Florida on which
it is building a new 75,000 square foot Ground Support Group manufacturing
facility and office. The Company expects to complete the facility by the
end of fiscal 1998.

(2) The Company is evaluating the lease or purchase agreement of a new overhaul
and repair facility.

Including the presently planned additional facilities described above,
the Company believes that it has adequate capacity to handle its anticipated
needs for the foreseeable future. The real property owned by the Company is
subject to mortgages as set forth in Note 5 to the Consolidated Financial
Statements. For additional information with respect to the Company's leases, see
Note 6 to the Consolidated Financial Statements.



















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ITEM 3. LEGAL PROCEEDINGS

In November 1989, HEICO Aerospace Corporation and Jet Avion were named
defendants in a complaint filed by United Technologies Corporation (UTC) in the
United States District court for the Southern District of Florida. The
complaint, as amended in fiscal 1995, alleged infringement of a patent,
misappropriation of trade secrets and unfair competition relating to certain jet
engine parts and coatings sold by Jet Avion in competition with Pratt & Whitney,
a division of UTC. UTC seeks approximately $8 million in damages for the patent
infringement and sought approximately $30 million in damages for the
misappropriation of trade secrets and unfair competition claims. The aggregate
damages referred to in the preceding sentence did not exceed approximately $30
million because a portion of the misappropriation and unfair competition damages
duplicate the patent infringement damages. UTC also seeks, among other things,
pre-judgment interest and treble damages.

In July and November 1995, the Company filed its answers to UTC's
complaint denying the allegations. In addition, the Company filed counterclaims
against UTC for, among other things, malicious prosecution, trade disparagement,
tortious interference, unfair competition and antitrust violations. The Company
is seeking treble, compensatory and punitive damages in amounts to be determined
at trial. UTC filed its answer denying certain counterclaims and moved to
dismiss other counterclaims. A number of motions are pending and no trial date
is currently set.

In August 1997, a Motion for Summary Judgment filed by the Company on a
portion of the lawsuit was granted by the United States District Court Judge.
The Summary Judgment dismissed UTC's claims for misappropriation of trade
secrets and unfair competition, finding that Florida's statute of limitations
bars such claims. In September 1997, UTC served a Motion for Reconsideration of
the Court's Motion for Summary Judgment. In October 1997, UTC's Motion for
Reconsideration was denied. UTC may appeal these rulings.

These rulings leave currently pending UTC's single claim alleging
infringement of a patent that expired in 1992 and the Company's Counterclaims
against UTC.

Based on currently known facts, the Company's legal counsel has advised
that it believes that the Company should be able to successfully defend the
remaining patent infringement claim alleged in UTC's complaint. Further, the
Company intends to vigorously pursue its counterclaims against UTC. The ultimate
outcome of this litigation is not certain at this time and no provision for gain
or loss, if any, has been made in the consolidated financial statements.

The Company is involved in various other legal actions arising in the
normal course of business. After taking into consideration legal counsel's
evaluation of such actions, management is of the opinion that the outcome of
these other matters will not have a significant effect on the Company's
consolidated financial statements.


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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

There were no matters submitted to a vote of securities holders during the
fourth quarter of fiscal 1997.

EXECUTIVE OFFICERS OF THE REGISTRANT

The Executive Officers are elected by the Board of Directors at the first
meeting following the annual meeting of shareholders and serve at the discretion
of the Board. The names and ages of, and offices held by, the executive officers
of the Company are as follows:



NAME AGE OFFICE
---- --- ------


Laurans A. Mendelson 59 Chairman of the Board, President
and Chief Executive Officer of
the Company

Thomas S. Irwin 51 Executive Vice President and
Chief Financial Officer of the
Company

Eric A. Mendelson 32 Vice President and Director of
the Company; President of the
Company's Flight Support Group

Victor H. Mendelson 30 Vice President, General Counsel
and Director of the Company;
President of the Company's Ground
Support Group

James L. Reum 66 Chief Operating Officer of the
Company's Flight Support Group


Mr. Laurans A. Mendelson has served as Chairman of the Board of the Company
since December 1990 and as Co-Chairman of the Board of the Company from January
1990 until December 1990. Mr. Mendelson has also served as Chief Executive
Officer of the Company since February 1990, President of the Company since
September 1991 and served as President of MediTek Health Corporation from May
1994 until its sale in July 1996. Mr. Mendelson served as Chairman of the Board
of Directors of U.S. Diagnostic Inc. from February 1997 until he resigned in
December 1997. Mr. Mendelson also served on the Board of Governors of the
Aerospace Industries Association (AIA) in 1997. Mr. Mendelson has been Chairman
of the Board of Ambassador Square, Inc. (a Miami, Florida real estate
development and management company) since 1980 and President of that company
since 1988. He has been Chairman of Columbia Ventures, Inc. (a private
investment company) since 1985 and President of that company since 1988. Mr.
Mendelson is a Certified Public Accountant. Mr. Mendelson is also a trustee of
Columbia University, New York, New York, a trustee of Mount Sinai Medical
Center, Miami Beach Florida and Chairman of the Hollywood Economic Growth
Corporation, Hollywood, Florida, a non-profit corporation engaged in community
development activities. Mr. Mendelson holds an AB degree from Columbia College
of Columbia University and an MBA degree from the Columbia University Graduate
School of Business.

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Mr. Thomas S. Irwin has served as Executive Vice President and Chief Financial
Officer of the Company since September 1991 and served as Senior Vice President
of the Company from 1986 to 1991 and Vice President and Treasurer from 1982 to
1986. Mr Irwin is a Certified Public Accountant. Mr. Irwin holds a BBA degree
from Wake Forest University.

Mr. Eric A. Mendelson has served as a Vice President of the Company since March
1992 and President of the Flight Support Group since April 1993. Mr. Mendelson
served as Director of Planning and Operations of the Company and Executive Vice
President of the Flight Support Group from 1990 to March 1992. Mr. Mendelson
holds an AB degree from Columbia College of Columbia University and an MBA
degree from the Columbia University Graduate School of Business. Mr. Mendelson
served on the Product Certification and Parts Manufacturing Working Groups of
the Aviation Rulemaking Advisory Committee of the FAA and the Civil Aviation
Council of the AIA. Eric Mendelson is the son of Laurans Mendelson and the
brother of Victor Mendelson.

Mr. Victor H. Mendelson has served as a Vice President of the Company since
1996, President of the Ground Support Group since September 1996 and General
Counsel of the Company since 1993. Mr. Mendelson served as Executive Vice
President of MediTek Health Corporation beginning in 1994 and its Chief
Operating Officer from January 1995 until its sale in July 1996. Mr. Mendelson
served as the Company's Associate General Counsel from 1992 until 1993. From
1990 until 1992, he served on a consulting basis with the Company developing and
analyzing various strategic opportunities. Mr. Mendelson is a member of the
American Bar Association and The Florida Bar. Mr. Mendelson is a trustee of St.
Thomas University, Miami, FL. Mr. Mendelson holds an AB degree from Columbia
College of Columbia University and a JD from the University of Miami School of
Law. Mr. Mendelson is a member of the Legal and Legislative Committee of the
AIA. Victor Mendelson is the son of Laurans Mendelson and the brother of Eric
Mendelson.

Mr. James L. Reum, Chief Operating Officer of the Company's Flight Support Group
since May 1995, has held various executive positions in the Company since
January 1990. From 1986 to 1989, Mr. Reum was self-employed as a management and
engineering consultant to companies primarily within the aerospace industry.
From 1957 to 1986, he was employed in various management positions with
Chromalloy Gas Turbine Corp., Cooper Airmotive (later named Aviall, Inc.),
United Airlines, Inc. and General Electric Company. Mr. Reum is a member of the
Product Certification and Parts Manufacturing Working Groups of the Aviation
Rulemaking Advisory Committee of the FAA and the Civil Aviation Counsel of the
AIA.









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COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES AND EXCHANGE ACT OF 1934

Section 16(a) of the Securities and Exchange Act of 1934 requires the Company's
Directors, Executive Officers and 10% shareholders to file initial reports of
ownership and changes in ownership of Common Stock with the Securities and
Exchange Commission and the American Stock Exchange. Directors, Executive
Officers and 10% shareholders are required to furnish the Company with copies of
all Section 16(a) forms they file. Based on the review of such reports furnished
to the Company, the Company believes that during 1997, the Company's Directors,
Executive Officers and 10% shareholders complied with all Section 16(a) filing
requirements applicable to them.
































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- --------------------------------------------------------------------------------
PART II


ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS

The Company's common stock is traded on the American Stock Exchange under the
Symbol "HEI". The following table sets forth the quarterly high and low sales
prices for the common stock on the American Stock Exchange and the amounts of
cash dividends paid per share during the last two fiscal years. In July 1995,
February 1996, July 1996 and January 1997 the Company paid 10% stock dividends
in addition to its semi-annual cash dividends. The Company also distributed a
three-for-two stock split in April 1996. In November 1997, the Company declared
a three-for-two stock split payable December 16, 1997 to shareholders of record
December 3, 1997. The quarterly sales prices and cash dividend amounts set forth
below have been retroactively adjusted for the stock splits and stock dividends,
including the stock split paid in December 1997.

1997 1996
------------------------ ------------------------

CASH CASH
FISCAL DIVIDENDS DIVIDENDS
QUARTER HIGH LOW PER SHARE HIGH LOW PER SHARE
----------------------------------------------------------------
First 18.00 10.08 $.0335 6.35 6.01 $.027
Second 19.00 14.75 -- 8.86 5.83 --
Third 16.83 13.83 $.0335 16.05 7.99 $.030
Fourth 27.33 15.67 -- 11.82 9.39 --

The Company had approximately 1,300 shareholders of record as of December 31,
1997.


















-13-





- -----------------------------------------------------------------------------------------------------------------------------
ITEM 6. SELECTED FINANCIAL DATA
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
(in thousands of dollars, except per share data)

OPERATING DATA
Net sales $ 63,674 $ 34,565 $ 25,613 $ 19,212 $ 19,856
========== ========== ========== ========== ==========
Gross profit $ 20,629 $ 12,169 $ 8,116 $ 5,835 $ 5,119
========== ========== ========== ========== ==========
Selling, general and
administrative expenses $ 11,515 $ 7,657 $ 6,405 $ 5,495 $ 4,850
========== ========== ========== ========== ==========

Interest expense $ 477 $ 185 $ 169 $ 59 $ 205
========== ========== ========== ========== ==========
Net income:
From continuing operations
before cumulative effect
of change in accounting
principle $ 7,019 $ 3,665 $ 1,437 $ 640 $ 728
From discontinued operations(1) --- 963 1,258 830 256(2)
From gain on sale of dis-
continued operations --- 5,264 --- --- ---
From cumulative effect on prior years
of change in accounting principle --- --- --- 381 ---
---------- ----------- ---------- ---------- ----------
Net income $ 7,019 $ 9,892 $ 2,695 $ 1,851 $ 984
========== =========== ========== ========== ==========
Weighted average number of common
and common equivalent shares (3) 9,612,205 8,854,726 7,953,555 7,567,444 7,785,294
========== =========== ========== ========== ==========
Net income per share:(3)
From continuing operations before
cumulative effect of change
in accounting principle $ .73 $ .41 $ .18 $ .08 $ .09
From discontinued operations --- .11 .16 .11 .03
From gain on sale of
discontinued operations --- .59 --- --- ---
From cumulative effect of change
in accounting principle --- --- --- .05 ---
---------- ----------- ---------- ---------- ----------
Net income per share $ .73 $ 1.11 $ .34 $ .24 $ .12
========== =========== ========== ========== ==========
Cash dividends per share(3) $ .067 $ .057 $ .048 $ .045 $ .045
========== =========== ========== ========== ==========
BALANCE SHEET DATA
Working capital $ 45,131 $ 25,248 $ 14,755 $ 12,691 $ 12,517
========== =========== ========== ========== ==========
Net property, plant and equipment $ 8,543 $ 5,845 $ 9,296 $ 8,608 $ 7,734
========== =========== ========== ========== ==========
Total assets $ 88,639 $ 61,836 $ 47,401 $ 39,020 $ 33,738
========== =========== ========== ========== ==========
Long-term debt $ 10,458 $ 6,022 $ 7,076 $ 4,402 $ 2,864
========== =========== ========== ========== ==========
Minority interest in consolidated
subsidiary $ 3,273 $ -- $ -- $ -- $ --
========== =========== ========== ========== ==========
Shareholders' equity $ 59,446 $ 41,488 $ 30,146 $ 27,061 $ 25,513
========== =========== ========== ========== ==========


(1) Represents income from the discontinued health care operations that were
sold in fiscal 1996.
(2) Includes a $194,000 loss from the discontinued health care operations and a
$450,000 reversal of a portion of reserves for costs related to the
laboratory products segment disposed of in 1990, which were determined not
to be required.
(3) Information has been adjusted to reflect three-for-two stock splits
distributed in April 1996 and December 1997 and 10% stock dividends paid in
July 1995, February 1996, July 1996 and January 1997.


-14-



- --------------------------------------------------------------------------------
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

OVERVIEW

Net sales in fiscal 1997 totaled $63,674,000, up 84% when compared to fiscal
1996 net sales of $34,565,000 and up 148% when compared to fiscal 1995 net sales
of $25,613,000.

The Company's net income from continuing operations totaled $7,019,000,
or $.73 per share, in fiscal 1997, improving 92% from net income from continuing
operations of $3,665,000, or $.41 per share, in fiscal 1996 and improving 388%
from net income from continuing operations of $1,437,000, or $.18 per share, in
fiscal 1995.

The Company paid 10% stock dividends in July 1995, February 1996, July
1996, and January 1997. In addition, the Company distributed 3-for-2 stock
splits in April 1996 and December 1997. All net income per share, dividends per
share and common stock outstanding information has been adjusted for all years
presented to give effect to the stock dividends and stock splits, including the
stock dividend paid in December 1997.

On October 30, 1997, the Company entered into a strategic alliance with
Lufthansa Technik AG (Lufthansa), the technical services subsidiary of Lufthansa
German Airlines, whereby Lufthansa invested approximately $26 million in HEICO
Aerospace, including $10 million paid at closing pursuant to a stock purchase
agreement and approximately $16 million to be paid to HEICO Aerospace over three
years pursuant to a research and development cooperation agreement, which will
partially fund accelerated development of additional Federal Aviation
Administration (FAA)-approved replacement parts for jet engines. The funds
received pursuant to the research and development cooperation agreement will
reduce research and development expenses in the period such expenses are
incurred. In addition, Lufthansa and HEICO Aerospace have agreed to cooperate
regarding technical services and marketing support for jet engine parts on a
worldwide basis.

As part of the strategic alliance, the Company sold 20% of HEICO
Aerospace (200 shares) with an approximate book value of $3,273,000 to Lufthansa
for $10 million. The Company's accounting policy is to treat the sale of a
subsidiary's stock as an equity transaction, recording the difference between
the purchase price, net of transaction costs incurred, and book value of the
subsidiary, to the subsidiary's retained earnings. As a result of this sale,
$6,427,000 was recorded as an increase to the retained earnings of the Company
in the consolidated financial statements. For further information regarding the
strategic alliance and sale of the 20% minority interest, see Note 2 to the
Consolidated Financial Statements.

In September 1997, the Company acquired all of the outstanding stock of
Northwings, an FAA-authorized overhaul and repair facility servicing aircraft
engine components and airframe accessories. In consideration of this
acquisition, the Company paid approximately $7.0 million in cash and 232,360
shares of the Company's common stock, having an aggregate fair value of
approximately $3.5 million. The acquisition of Northwings has been accounted for
using the purchase


-15-



method of accounting and the results of operations of Northwings are included in
the Consolidated Statements of Operations from September 1, 1997. For further
information regarding the acquisition of Northwings, see Note 2 to the
Consolidated Financial Statements.

In September 1996, the Company acquired all of the outstanding stock of
Trilectron for $7.0 million in cash and the assumption of debt aggregating $2.3
million. Trilectron is a leading manufacturer of ground support equipment for
civil and military aircraft and a designer and manufacturer of certain military
and space electronics. The acquisition of Trilectron has been accounted for
using the purchase method of accounting and the results of operations of
Trilectron are included in the Consolidated Statements of Operations from
September 1, 1996. For further information regarding the acquisition of
Trilectron, see Note 2 to the Consolidated Financial Statements.

In July 1996, the Company sold its wholly-owned healthcare subsidiary,
MediTek Health Corporation (MediTek) to U.S. Diagnostic Inc. The Company
received $13.8 million in cash and a $10.0 million, 6-1/2% convertible
promissory note. The sale of MediTek resulted in a fiscal 1996 gain of $5.3
million. In September 1997, the Company sold the convertible note to an
unrelated party for the stated par value of $10 million plus accrued interest.
For further information regarding the sale of MediTek, see Note 3 to the
Consolidated Financial Statements.

The increase in fiscal 1997 sales over fiscal 1996 sales reflects an
increase in revenues from the Company's Flight Support products, including
$2,223,000 in revenues representing Northwing's sales for the two months since
its acquisition; and an increase of $19,827,000 in revenues from the Company's
Ground Support products (twelve months of Trilectron's sales for fiscal 1997
compared to two months in fiscal 1996). The $6,401,000 increase in fiscal 1996
sales over fiscal 1995 sales is attributable to higher sales of Flight Support
products and two months of sales of Trilectron from its September 1996
acquisition.

The increases in sales of Flight Support products in fiscal 1997 and
fiscal 1996, exclusive of sales of newly-acquired Northwings, are principally
due to increased sales volumes of jet engine replacement parts to the Company's
commercial airline industry customers.

The improvement in net income from continuing operations in fiscal 1997
and fiscal 1996 is primarily attributable to the increased sales volumes and
improved profit margins as further discussed below.

RESULTS OF OPERATIONS

BACKLOGS

The Company's Flight Support operations had a backlog of unshipped orders as of
October 31, 1997 of $24 million as compared to $14 million as of October 31,
1996 and $23 million as of October 31, 1995. This backlog includes $17 million
representing forecasted shipments over the next 12 months for certain contracts
of the Flight Support operations pursuant to which customers provide estimated
annual usage. The increase in the current backlog from that of October 31, 1996
is principally due to certain customers entering into longer term contracts,
which replaced shorter term purchase orders.

-16-



The Company's Ground Support operations had a backlog of $12 million as
of October 31, 1997 and $11 million as of October 31, 1996.

Substantially all of the backlog of orders as of October 31, 1997 are
expected to be delivered during fiscal 1998.

GROSS MARGINS AND OPERATING EXPENSES

The Company's gross profit margins averaged 32.4% in fiscal 1997 as compared to
35.2% in fiscal 1996 and 31.7% in fiscal 1995. These margins reflect the
inclusion of Ground Support operations beginning in the fourth quarter of fiscal
1996, which generally carry lower profit margins than those of the Company's
Flight Support operations, partially offset by improvement in gross margins in
the Company's Flight Support operations. The improvement in gross profit margins
in the Flight Support Group reflects volume increases in sales of higher gross
profit margin products and manufacturing cost efficiencies.

Selling, general and administrative (SG&A) expenses were $11,515,000 in
fiscal 1997, $7,657,000 in fiscal 1996 and $6,405,000 in fiscal 1995. As a
percentage of net sales, SG&A expenses declined from 25.0% in fiscal 1995 to
22.2% in fiscal 1996 and further declined to 18% in fiscal 1997, reflecting
continuing efforts to control costs while increasing revenues. The $3,858,000
increase from fiscal 1996 to fiscal 1997 is due principally to increased selling
expenses of the Flight Support Group and SG&A expenses of Trilectron since
acquisition. The $1,252,000 increase in SG&A expenses from fiscal 1995 to fiscal
1996 is due principally to an increase in sales efforts.

INCOME FROM OPERATIONS

Income from operations increased $4,602,000 to $9,114,000 in fiscal 1997 and
increased $2,801,000 to $4,512,000 in fiscal 1996. These improvements in
operating income are due primarily to the increases in sales and gross margins
of the Flight Support Group and Trilectron discussed above.

INTEREST EXPENSE

Interest expense increased $292,000 from fiscal 1996 to fiscal 1997, after
remaining approximately level from fiscal 1995 to fiscal 1996. The increase was
principally due to increases in long-term debt related to equipment financing
and industrial development revenue bonds.

INTEREST AND OTHER INCOME

Interest and other income in fiscal 1997 increased $664,000 over fiscal 1996 due
principally to interest income on the convertible note received from the sale of
MediTek, as well as the interest income received on the unexpended proceeds of
industrial development revenue bonds.

Fiscal 1996 interest and other income increased by $392,000 over fiscal
1995 due primarily to interest income on the convertible note and the investment
of cash received from the sale of MediTek.

-17-



INCOME TAX EXPENSE

The Company's effective tax rate of 32.2% in fiscal 1997 was comparable with the
31.9% rate in fiscal 1996.

The Company's effective tax rate in fiscal 1996 declined from the 34.9%
rate in fiscal 1995 due principally to the tax benefits from tax-free investment
income and lower state taxes.

For a detailed analysis of the provisions for income taxes, see Note 7
to the Consolidated Financial Statements.

INFLATION

The Company has generally experienced increases in its costs of labor, materials
and services consistent with overall rates of inflation. The impact of such
increases on the Company's net income from continuing operations has been
generally minimized by efforts to lower costs through manufacturing efficiencies
and cost reductions.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash flow from operations aggregated $10.5 million over the last
three years, including $7.1 million in fiscal 1995. Net cash provided by
operations of $1.7 million in fiscal 1997 was comparable to net cash provided by
operations in fiscal 1996.

The Company's current ratio remained strong at 4.5 to 1 as of October
31, 1997 and working capital increased by approximately $20 million in fiscal
1997, including a $13 million increase in cash and cash equivalents.

During the past three years, the Company's principal cash proceeds from
investing activities were the $14 million in fiscal 1996 and $10 million in
fiscal 1997 from the sale of the health care operations. The principal cash used
in investing activities the past three years were the cash used in the
acquisition of Northwings of $7 million, the acquisition of Trilectron for $7
million, acquisitions by MediTek prior to its sale aggregating $6 million and
purchases of property, plant and equipment aggregating $8 million, including
approximately $7 million purchased by the Flight Support Group primarily to
expand and improve its product development, manufacturing capabilities and
facilities.

The Company's principal financing activities during the same three-year
period included the use of an aggregate of $6 million for scheduled payments on
short-term debt, long-term debt and capital leases. In addition, the Company
received $9.7 million in fiscal 1997 from the sale of a 20% minority interest in
HEICO Aerospace to Lufthansa. The Company also received $4 million from the
issuance of long-term debt and $3 million from the exercise of stock options
during the three-year period.

The Company has available revolving credit facilities aggregating $7
million, unexpended industrial development revenue bond proceeds of $5.4 million
available for future qualified expenditures and a $2 million equipment facility.
See Note 5 to the Consolidated Financial Statements for further information
regarding credit facilities.

The Company believes that operating cash flow and available borrowings
under the Company's revolving credit facility, industrial revenue bond
financings and equipment loan facility will be sufficient to fund the Company's
operations for the foreseeable future.

-18-




ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HEICO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
October 31, 1997 and 1996

ASSETS


1997 1996
----------- -----------

Current assets:
Cash and cash equivalents.................... $24,199,000 $11,025,000

Accounts receivable, net..................... 12,560,000 7,879,000

Inventories.................................. 18,359,000 15,277,000

Prepaid expenses and other current assets.... 1,500,000 874,000

Deferred income taxes........................ 1,098,000 2,058,000
----------- -----------

Total current assets................... 57,716,000 37,113,000

Note receivable................................ -- 10,000,000

Property, plant and equipment, net............. 8,543,000 5,845,000

Intangible assets, net......................... 13,258,000 4,756,000

Unexpended bond proceeds....................... 5,437,000 2,649,000

Deferred income taxes.......................... 857,000 --

Other assets................................... 2,828,000 1,473,000
----------- -----------

Total assets........................... $88,639,000 $61,836,000
=========== ===========



See notes to consolidated financial statements.












-19-




ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HEICO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
October 31, 1997 and 1996

LIABILITIES AND SHAREHOLDERS' EQUITY


1997 1996
----------- -----------

Current liabilities:
Current maturities of long-term debt............. $ 342,000 $ 494,000

Trade accounts payable........................... 4,180,000 4,803,000

Accrued expenses and other current liabilities... 6,680,000 5,903,000

Income taxes payable............................. 1,383,000 665,000
----------- -----------

Total current liabilities.................. 12,585,000 11,865,000

Long-term debt, net of current maturities.......... 10,458,000 6,022,000

Deferred income taxes.............................. 463,000 1,137,000

Other non-current liabilities...................... 2,414,000 1,324,000
----------- -----------

Total liabilities.......................... 25,920,000 20,348,000
----------- -----------

Minority interest in consolidated subsidiary....... 3,273,000 --
----------- -----------
Commitments and contingencies (Notes 2, 6 and 13)

Shareholders' equity:
Preferred stock, par value $.01 per share;
Authorized - 10,000,000 shares issuable
in series, 200,000 designated as Series A
Junior Participating Preferred Stock,
none issued.................................... -- --
Common stock, $.01 par value; Authorized -
20,000,000 shares; Issued - 8,283,493 shares
in 1997 and 7,913,326 in 1996 (as restated -
Note 4)........................................ 83,000 53,000

Capital in excess of par value................... 35,533,000 30,881,000

Retained earnings................................ 26,772,000 13,893,000
----------- -----------

62,388,000 44,827,000

Less: Note receivable from employee savings and
investment plan ......................... (2,942,000) (3,339,000)
----------- -----------

Total shareholders' equity................. 59,446,000 41,488,000
----------- -----------

Total liabilities and shareholders' equity. $88,639,000 $61,836,000
----------- -----------


See notes to consolidated financial statements.



-20-




ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HEICO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended October 31, 1997, 1996 and 1995


1997 1996 1995
------------ ------------ ------------


Net sales.......................... $ 63,674,000 $ 34,565,000 $ 25,613,000
------------ ------------ ------------

Operating costs and expenses:
Cost of sales...................... 43,045,000 22,396,000 17,497,000
Selling, general and
administrative expenses.......... 11,515,000 7,657,000 6,405,000
------------ ------------ ------------

Total operating costs and
expenses......................... 54,560,000 30,053,000 23,902,000
------------ ------------ ------------

Income from operations............. 9,114,000 4,512,000 1,711,000

Interest expense................... (477,000) (185,000) (169,000)
Interest and other income.......... 1,722,000 1,058,000 666,000
------------ ------------ ------------

Income from continuing
operations before income taxes... 10,359,000 5,385,000 2,208,000

Income tax expense................. 3,340,000 1,720,000 771,000
------------ ------------ ------------

Net income from continuing
operations....................... 7,019,000 3,665,000 1,437,000

Discontinued operations (Note 3):
Net income from discontinued health
care operations, net of applicable
income taxes of $717,000 and
$894,000 in fiscal 1996 and 1995
respectively..................... -- 963,000 1,258,000
Gain on sale of health care
operations, net of applicable
income taxes of $1,719,000....... -- 5,264,000 --
------------ ------------ ------------

Net income......................... $ 7,019,000 $ 9,892,000 $ 2,695,000
============ ============ ============

Net income per share:
From continuing operations......... $ 0.73 $ 0.41 $ 0.18

From discontinued health care
operations....................... -- 0.11 0.16

From gain on sale of health
care operations.................. -- 0.59 --
------------ ------------ ------------

Net income per share............... $ 0.73 $ 1.11 $ 0.34
============ ============ ============

Weighted average number of common
and common equivalent shares
outstanding...................... 9,612,205 8,854,726 7,953,555
============ ============ ============



See notes to consolidated financial statements.


-21-




ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HEICO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS'EQUITY
For the years ended October 31, 1997, 1996 and 1995


CAPITAL IN
COMMON EXCESS OF RETAINED NOTE
STOCK PAR VALUE EARNINGS RECEIVABLE TOTAL
----------- ----------- ----------- ------------ -----------

Balances, October 31, 1994................ $ 23,000 $ 22,000 $30,994,000 $ (3,978,000) $27,061,000

Exercise of stock options................. 1,000 589,000 -- -- 590,000

Payment on note receivable from employee
savings and investment plan............. -- -- -- 286,000 286,000

Repurchases and retirements of 16,300
shares of common stock.................. -- (117,000) -- -- (117,000)

Cash dividends ($.048 per share).......... -- -- (369,000) -- (369,000)

10% common stock dividend paid July 28,
1995.................................... 2,000 3,240,000 (3,242,000) -- --

10% common stock dividend paid
February 8, 1996........................ 2,000 4,637,000 (4,639,000) -- --

Net income for the year................... -- -- 2,695,000 -- 2,695,000
----------- ----------- ----------- ------------ -----------

Balances, October 31, 1995................ 28,000 8,371,000 25,439,000 (3,692,000) 30,146,000

Exercise of stock options................. 2,000 1,562,000 -- -- 1,564,000

Payment on note receivable from employee
savings and investment plan............. -- -- -- 353,000 353,000

Cash dividends ($.057 per share).......... -- -- (475,000) -- (475,000)

Three-for-two common stock split distri-
buted April 24, 1996.................... 14,000 (14,000) -- -- --

10% common stock dividend paid July 26,
1996.................................... 4,000 10,827,000 (10,831,000) -- --

10% common stock dividend paid
January 17, 1997........................ 5,000 10,127,000 (10,132,000) -- --

Other..................................... -- 8,000 -- -- 8,000

Net income for the year................... -- -- 9,892,000 -- 9,892,000
----------- ----------- ----------- ------------ -----------

Balances, October 31, 1996................ 53,000 30,881,000 13,893,000 (3,339,000) 41,488,000

Exercise of stock options................. 1,000 1,117,000 -- -- 1,118,000

Payment on note receivable from employee
savings and investment plan............. -- -- -- 397,000 397,000

Cash dividends ($.067 per share).......... -- -- (548,000) -- (548,000)

Stock issued in acquisition............... 2,000 3,542,000 -- -- 3,544,000

Excess of purchase price over book
value on sale of minority interest...... -- -- 6,427,000 -- 6,427,000

Three-for-two common stock split distri-
buted December 16, 1997................. 27,000 (27,000) -- -- --

Other..................................... -- 20,000 (19,000) -- 1,000

Net income for the year................... -- -- 7,019,000 -- 7,019,000
----------- ----------- ----------- ------------ -----------

Balances, October 31, 1997................ $ 83,000 $35,533,000 $26,772,000 $ (2,942,000) $59,446,000
=========== =========== =========== ============ ===========

See notes to consolidated financial statements.

-22-



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HEICO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended October 31, 1997, 1996 and 1995

1997 1996 1995
----------- ----------- --------

Cash flows from operating activities:
Net income......................................... $ 7,019,000 $ 9,892,000 $2,695,000
Adjustments to reconcile net income to
cash provided by operating activities:
Gain from sale of health care operations......... -- (5,264,000) --
Depreciation and amortization.................... 1,624,000 2,107,000 2,638,000
Deferred income taxes............................ (486,000) (1,048,000) (245,000)
Deferred financing costs......................... (144,000) (159,000) (56,000)
(Income) loss from unconsolidated partnerships
of health care operations...................... -- (393,000) 590,000
Minority interest in consolidated partnerships
of health care operations...................... -- 313,000 144,000
Change in assets and liabilities:
(Increase) decrease in accounts receivable..... (2,713,000) 166,000 (967,000)
(Increase) in inventories...................... (2,912,000) (3,283,000) (98,000)
(Increase) decrease in prepaid expenses and
other current assets......................... (605,000) 111,000 (147,000)
(Increase) in unexpended bond proceeds......... (222,000) -- --
(Decrease) increase in trade payables, accrued
expenses and other current liabilities....... (215,000) (14,000) 2,111,000
Increase (decrease) in income taxes payable
and deferred income taxes.................... 118,000 (983,000) 488,000
Increase in other non-current liabilities...... 266,000 251,000 67,000
Other.......................................... (14,000) (4,000) (97,000)
----------- ----------- -----------
Net cash provided by operating activities.......... 1,716,000 1,692,000 7,123,000
----------- ----------- -----------
Cash flows from investing activities:
Proceeds from sale of health care operations,
net of cash sold of $304,000..................... -- 13,524,000 --
Sale (purchase) of short-term investments.......... -- 2,939,000 (2,939,000)
Acquisitions:
Purchases of businesses, net of cash acquired.... (6,737,000) (6,555,000) (154,000)
Contingent note payments of health care
operations..................................... -- (1,106,000) (1,945,000)
Purchases of property, plant and equipment......... (3,551,000) (3,227,000) (800,000)
Payments for deferred organization costs........... -- (387,000) (358,000)
Payment received from employee savings and
investment plan note receivable.................. 397,000 353,000 286,000
Proceeds from the sale of property, plant
and equipment.................................... -- 17,000 324,000
Distributions from (advances to) unconsolidated
partnerships of health care operations........... -- 60,000 (480,000)
Distributions to minority interests of health
care operations.................................. -- (216,000) (71,000)
Sale of note receivable............................ 10,000,000 -- --
Other.............................................. (268,000) 155,000 87,000
----------- ----------- -----------
Net cash (used in) provided by investing
activities....................................... (159,000) 5,557,000 (6,050,000)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from the issuance of long-term debt....... 2,272,000 1,343,000 201,000
Proceeds from the exercise of stock options........ 1,118,000 1,525,000 570,000
Repurchases of common stock ....................... -- -- (117,000)
Principal payments on short-term debt, long-term
debt and capital leases.......................... (926,000) (3,289,000) (1,715,000)
Cash dividends paid................................ (548,000) (475,000) (369,000)
Proceeds from sale of minority interest,
net of expenses.................................. 9,700,000 -- --
Other.............................................. 1,000 8,000 (9,000)
----------- ----------- -----------
Net cash provided by (used in) financing
activities....................................... 11,617,000 (888,000) (1,439,000)
----------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents...................................... 13,174,000 6,361,000 (366,000)
Cash and cash equivalents at beginning of year..... 11,025,000 4,664,000 5,030,000
----------- ----------- -----------
Cash and cash equivalents at end of year........... $24,199,000 $11,025,000 $ 4,664,000
=========== =========== ===========

See notes to consolidated financial statements.

-23-



HEICO CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
For the years ended October 31, 1997, 1996 and 1995

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS
HEICO Corporation (the Company), through its principal subsidiaries HEICO
Aerospace Holdings Corp. (HEICO Aerospace) and HEICO Aviation Products Corp.
(HEICO Aviation) and their subsidiaries, is engaged in the design, manufacture
and sale of aerospace products and services throughout the United States and
abroad. HEICO Aerospace's subsidiaries include HEICO Aerospace Corporation, Jet
Avion Corporation (Jet Avion), LPI Industries Corporation (LPI), Aircraft
Technology, Inc. (Aircraft Technology) and Northwings Accessories Corporation
(Northwings). HEICO Aviation's subsidiaries include Trilectron Industries, Inc.
(Trilectron). The Company's customer base is primarily the commercial airline
industry. As of October 31, 1997, the Company's principal operations are located
in Hollywood, Miami and Palmetto, Florida.

BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the Company and
its subsidiaries, all of which are wholly-owned except for HEICO Aerospace, of
which a 20% interest was sold to Lufthansa Technik AG on October 30, 1997 (see
Note 2). All significant intercompany balances and transactions are eliminated.

USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues 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 purchased with an original maturity of three months or
less to be cash equivalents.

INVENTORIES
Portions of the inventories are stated at the lower of cost or market, with cost
being determined on the first-in, first-out basis. The remaining portions of the
inventories are stated at the lower of cost or market, on a per contract basis,
with estimated total contract costs being allocated ratably to all units. The
effects of changes in estimated total contract costs are recognized in the
period determined. Losses, if any, are recognized fully when identified.




-24-



PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost. Depreciation and amortization
is provided mainly on the straight-line method over the estimated useful lives
of the various assets. Property, plant and equipment useful lives are as
follows:

Buildings and components............. 7 to 55 years
Building improvements................ 3 to 15 years
Machinery and equipment.............. 3 to 20 years

The costs of major renewals and betterments are capitalized. Repairs
and maintenance are charged to operations as incurred. Upon disposition, the
cost and related accumulated depreciation are removed from the accounts and any
related gain or loss is reflected in earnings.

INTANGIBLE ASSETS
Intangible assets include the excess of cost over the fair value of net assets
acquired and deferred charges which are amortized on the straight-line method
over their legal or estimated useful lives, whichever is shorter, as follows:

Excess of cost over the
fair market value
of net assets acquired............. 20 to 40 years
Deferred charges..................... 3 to 20 years

The Company continually evaluates the periods of intangible asset
amortization to determine whether events and circumstances subsequent to the
origination dates of such assets warrant revised estimates of useful lives. In
addition, the Company periodically reviews the excess of cost over the fair
value of net assets acquired (goodwill) to assess recoverability based upon
expectations of undiscounted cash flows and operating income of each
consolidated entity having a material goodwill balance. An impairment would be
recognized in operating results, based upon the difference between each
consolidated entities' respective present value of future cash flows and the
carrying value of the goodwill, if a permanent diminution in value were to
occur. There have not been any significant revised estimates nor recognition of
goodwill impairment during the three years ended October 31, 1997.

FINANCIAL INSTRUMENTS
The carrying amounts of cash and cash equivalents, accounts receivable, accounts
payable and accrued expenses and other current liabilities approximate fair
value due to the relatively short maturity of the respective instruments. The
Company's financial instruments also include long-term debt (see Note 5).

Long-term debt at October 31, 1997 includes industrial development
revenue bonds with a carrying value of $9,480,000 and other long-term debt with
a carrying value of $1,320,000. The carrying value of long-term debt
approximates fair market value due to its floating interest rates.


-25-



Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of temporary cash investments
and trade receivables. 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. At October 31, 1997, the Company had no
significant concentrations of credit risk.

REVENUE RECOGNITION
Revenues are recognized on an accrual basis, primarily upon shipment of products
and the rendering of services. Certain contracts of Trilectron are long-term
contracts and the related net costs and estimated earnings in excess of
billings, if any, are included in accounts receivable on a percentage of
completion basis.

INCOME TAXES
Deferred income taxes are provided on elements of income that are recognized for
financial accounting purposes in periods different from such items recognized
for income tax purposes in accordance with the provisions of Statement of
Financial Accounting Standard (SFAS) No.
109, "Accounting for Income Taxes."

NET INCOME PER SHARE
Net income per share is calculated on the basis of the weighted average number
of shares outstanding plus common share equivalents arising from the assumed
exercise of stock options, if dilutive, and has been adjusted for the effect of
any stock dividends and splits (see Note 4).

STOCK BASED COMPENSATION
Effective November 1, 1996, the Company adopted SFAS No. 123, "Stock Based
Compensation." This statement requires the Company to choose between two
different methods of accounting for stock options. The statement defines a
fair-value-based method of accounting for stock options but allows an entity to
continue to measure compensation cost for stock options using the intrinsic
value method of accounting prescribed by Accounting Principles Board (APB)
Opinion No. 25, "Accounting for Stock Issued to Employees." The Company has
elected to continue using the accounting methods prescribed by APB No. 25 and to
provide in Note 9 the pro forma disclosures required by SFAS No.
123.

NEW ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board (FASB) issued SFAS
No. 128, "Earnings Per Share." SFAS No. 128, which supersedes APB Opinion No.
15, requires a dual presentation of basic and diluted earnings per share on the
face of the income statement. Basic earnings per share excludes dilution and is
computed by dividing income or loss attributable to common stockholders by the
weighted-



-26-



average number of common shares outstanding for the period. Diluted earnings per
share reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock that then shared in the earnings of the
entity. Diluted earnings per share is computed similarly to primary earnings per
share under APB Opinion No. 15. SFAS No. 128 is effective for financial
statements issued for periods ending after December 15, 1997, including interim
periods; earlier application is not permitted. Had SFAS No. 128 been adopted for
the years ended October 31, 1997 and 1996, basic and diluted earnings per share
would have been:

1997 1996
------ -----
Basic earnings per share:
From continuing operations.......................... $ .87 $ .47
From discontinued health care operations............ -- .12
From gain on sale of health care operations......... -- .68
----- -----
Net income per share................................ $ .87 $1.27
===== =====

Diluted earnings per share:
From continuing operations.......................... $ .73 $ .41
From discontinued health care operations............ -- .11
From gain on sale of health care operations......... -- .59
----- -----
Net income per share................................ $ .73 $1.11
===== =====

In March 1997, the FASB issued Statement of Financial Accounting
Standards No. 129, "Disclosure of Information About Capital Structure"
(SFAS No. 129). SFAS No. 129 is effective for interim and annual
periods ending after December 15, 1997. The Company believes SFAS No.
129 will have little, if any, effect on the information already
disclosed in the Company's consolidated financial statements.

In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information." SFAS No. 131, establishes standards
for the way that public companies report selected information about operating
segments in annual financial statements and requires that those companies report
selected information about segments in interim financial reports issued to
shareholders. It also establishes standards for related disclosures about
products and services, geographic areas, and major customers. SFAS No. 131 is
effective for financial statements for fiscal years beginning after December 15,
1997, with earlier application permitted. Adoption of this statement will not
impact the Company's consolidated financial position, results of operations or
cash flows, and any effect will be limited to the form and content of its
disclosures.

NOTE 2 - STRATEGIC ALLIANCE AND ACQUISITIONS

STRATEGIC ALLIANCE AND SALE OF MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY

On October 30, 1997, the Company entered into a strategic alliance with
Lufthansa Technik AG (Lufthansa), the technical services subsidiary of Lufthansa
German Airlines, whereby Lufthansa invested approximately $26 million in HEICO
Aerospace, including $10 million paid at closing pursuant to a stock purchase
agreement and approximately $16 million to be paid to HEICO Aerospace over three
years pursuant to a research and development cooperation agreement,



-27-




which will partially fund accelerated development of additional Federal Aviation
Administration (FAA)-approved replacement parts for jet engines. The funds
received as a result of the research and development cooperation agreement will
reduce research and development expenses in the period such expenses are
incurred. In addition, Lufthansa and HEICO Aerospace have agreed to cooperate
regarding technical services and marketing support for jet engine parts on a
worldwide basis.

As part of the strategic alliance, the Company sold 20% of HEICO
Aerospace (200 shares) with an approximate book value of $3,273,000 to Lufthansa
for $10 million. The Company's accounting policy is to treat the sale of a
subsidiary's stock as an equity transaction, recording the difference between
the purchase price, net of transaction costs incurred, and book value of the
subsidiary, to the subsidiary's retained earnings. As a result of this sale,
$6,427,000 was recorded as an increase to the retained earnings of the Company
in the consolidated financial statements.

ACQUISITIONS
Pursuant to a Stock Purchase Agreement, the Company, through a subsidiary,
acquired effective as of September 1, 1997 all of the outstanding stock of
Northwings. In consideration of this acquisition, the Company paid approximately
$7.0 million in cash and 232,360 shares of the Company's common stock, having an
aggregate fair value of approximately $3.5 million. Northwings is an
FAA-authorized overhaul and repair facility servicing aircraft engine components
and airframe accessories.

The acquisition of Northwings has been accounted for using the purchase
method of accounting and the purchase price has been assigned to the net assets
acquired based on the fair value of such assets and liabilities at the date of
acquisition. The excess of the purchase price over the fair value of the
identifiable net assets acquired amounted to $8,395,000, which is being
amortized over 20 years using the straight line method. The results of
operations of Northwings are included in the Consolidated Statements of
Operations from September 1, 1997.

In September 1996, the Company, through HEICO Aviation, acquired
effective as of September 1, 1996 all of the outstanding stock of Trilectron for
$7.0 million in cash and the assumption of debt aggregating $2.3 million.
Trilectron is a leading manufacturer of ground support equipment for civil and
military aircraft and a designer and manufacturer of certain military
electronics.

The acquisition of Trilectron has been accounted using the purchase
method of accounting and the purchase price has been assigned to the net assets
acquired based on the fair value of such assets and liabilities at the date of
acquisition. The excess of the purchase price over the fair value of the
identifiable net assets acquired amounted to $2,838,000, which is being
amortized over 20 years using the straight line method. The results of
operations of Trilectron are included in the Consolidated Statements of
Operations from September 1, 1996.

The following table presents unaudited pro forma consolidated operating
results as if the Company's sale of a 20% minority interest in HEICO Aerospace
to Lufthansa, its acquisition of Northwings and its


-28-



acquisition of Trilectron had been consummated as of November 1, 1995. The
unaudited pro forma consolidated operating results do not include any future
income to be received from the aforementioned research and development
cooperation agreement with Lufthansa or the gain on the sale of the 20% minority
interest referenced above. The pro forma consolidated operating results do not
purport to present actual operating results had the acquisition been made at the
beginning of fiscal 1996, or the results which may occur in the future.

1997 1996
------------- -------------

Net sales.................................. $ 71,554,000 $ 52,905,000
============= =============
Net income from continuing operations
before minority interest................. $ 8,454,000 $ 4,534,000
============= =============
Minority interest.......................... $ (2,088,000) $ (1,041,000)
============= =============
Net income from continuing operations...... $ 6,366,000 $ 3,493,000
============= =============
Net income................................. $ 6,366,000 $ 9,720,000
============= =============
Net income per share from continuing
operations.............................. $ 0.66 $ 0.38
============= =============
Net income per share....................... $ 0.66 $ 1.07
============= =============

NOTE 3 - SALE OF HEALTH CARE OPERATIONS

In July 1996, the Company consummated the sale of all of the outstanding capital
stock of its wholly-owned subsidiary MediTek Health Corporation (MediTek),
representing the Company's health care services segment, to U.S. Diagnostic Inc.
In consideration for the sale of MediTek, the Company received $13,828,000 in
cash and a five-year, 6-1/2% promissory note in the principal amount of
$10,000,000. This note was sold to an unrelated party in September 1997 for the
par value of the note of $10,000,000 plus accrued interest.

The sale of MediTek resulted in a gain in fiscal 1996 of $5,264,000,
net of expenses and applicable income taxes. The income taxes on the gain are
less than the normal Federal statutory rate principally due to the utilization
of a $4.6 million capital loss carryforward partially offset by state income
taxes. MediTek's results of operations, net of taxes, for fiscal 1996 and 1995
have been reported separately as discontinued operations in the Consolidated
Statements of Operations. No amounts related to the discontinued operations
remained in the October 31, 1996 Consolidated Balance Sheet.

The condensed statements of operations related to the discontinued
health care services segment during fiscal years 1996 and 1995 are presented
below:
EIGHT MONTHS YEAR ENDED
ENDED JUNE 30, OCTOBER 31,
1996 1995
-------------- -----------
Net revenues................... $ 11,382,000 $14,766,000
============== ===========
Income before income taxes..... $ 1,680,000 $ 2,152,000
Income tax expense............. 717,000 894,000
-------------- -----------
Net income..................... $ 963,000 $ 1,258,000
============== ===========



-29-



The effective tax rate used in calculating income tax expense related
to discontinued operations exceeds the normal Federal statutory tax rate due
principally to state income taxes.

NOTE 4 - STOCK DIVIDENDS AND SPLITS

In December 1996, June 1996, December 1995 and May 1995, the Company's Board of
Directors declared 10% stock dividends that were paid in January 1997, July
1996, February 1996 and July 1995, respectively. In March 1996, the Company's
Board of Directors declared a three-for-two stock split that was distributed in
April 1996. On November 20, 1997, the Company's Board of Directors declared a
second three-for-two stock split payable on December 16, 1997, to shareholders
of record on December 3, 1997. Stock dividends were valued based on the closing
market prices of the Company's stock as of the respective declaration dates. All
income per share, dividend per share, stock options and common shares
outstanding information has been retroactively restated to reflect these stock
dividends and splits.

NOTE 5 - CREDIT FACILITIES AND LONG-TERM DEBT

Long-term debt consists of:
OCTOBER 31,
------------------------------
1997 1996
----------- -----------
Industrial Development Revenue
Bonds - Series 1997A................ $ 3,000,000 --
Industrial Development Revenue
Bonds - Series 1997B................ 1,000,000 --
Industrial Development Revenue
Bonds - Series 1996................. 3,500,000 $ 3,500,000
Industrial Development Revenue
Refunding Bonds - Series 1988....... 1,980,000 1,980,000
Term loan borrowing under revolving
credit facility..................... -- 317,000
Equipment loans....................... 1,320,000 719,000
----------- -----------
10,800,000 6,516,000
Less current maturities............... (342,000) (494,000)
----------- -----------
$10,458,000 $ 6,022,000
=========== ===========

The amount of long-term debt maturing in each of the next five years is
$342,000 in fiscal 1998, $342,000 in fiscal 1999, $291,000 in fiscal 2000,
$225,000 in fiscal 2001 and $112,000 in fiscal 2002.

INDUSTRIAL DEVELOPMENT REVENUE BONDS
The industrial development revenue bonds represent bonds issued by Manatee
County, Florida in 1997 (the 1997 bonds), and bonds issued by Broward County,
Florida in 1996 (the 1996 bonds) and in 1988 (the 1988 bonds).

The Series 1997A and 1997B bonds were issued in the amounts of
$3,000,000 and $1,000,000, respectively, for the purpose of constructing and
purchasing equipment for a new facility in Palmetto, Florida. As of October 31,
1997, the Company has been reimbursed $80,000 for such expenditures, and the
balance of the unexpended bond proceeds of $4,044,000, including investment
earnings, is held by the


-30-



trustee and is available for future qualified expenditures. The Series 1997A and
1997B bonds bear interest at variable rates calculated weekly (3.80% and 5.60%,
respectively, at October 31, 1997). On November 3, 1997, the Series 1997B bonds
were refinanced by the issuance of Series 1997C bonds, which bear interest at
the same variable rates as the Series 1997A bonds. The 1997A and 1997C bonds are
due March 2017 and are secured by a letter of credit expiring in March 2004 and
a mortgage on the related properties pledged as collateral. The letter of credit
requires annual sinking fund payments of $200,000 beginning in March 1998.

The 1996 bonds are due October 2011 and bear interest at a variable
rate calculated weekly (3.75% at October 31, 1997). The 1996 bonds are secured
by a letter of credit expiring in October 2001 and a mortgage on the related
properties pledged as collateral. The letter of credit requires annual sinking
fund payments beginning October 2000 in the amount of $187,500. As of October
31, 1997, the balance of the unexpended bond proceeds of $1,393,000, including
investment earnings, is held by the trustee and is available for future
qualified expenditures.

The 1988 bonds are due April 2008 and bear interest at a variable rate
calculated weekly (3.60% at October 31, 1997). The 1988 bonds are secured by a
letter of credit expiring in February 1999, a bond sinking fund ($8,250 payable
monthly) and a mortgage on the related properties pledged as collateral.

The pledged properties for the 1997 bonds, excluding the unexpended
bond proceeds, have a carrying value aggregating approximately $881,000 at
October 31, 1997.

The pledged properties for the 1996 and 1988 bonds, excluding the
unexpended bond proceeds, have a carrying value aggregating approximately
$6,621,000 at October 31, 1997.

REVOLVING CREDIT FACILITY
The Company has a $7 million credit facility available for funding acquisitions,
working capital and general corporate requirements. Borrowings under this credit
facility bear interest at 1/4% over the bank's prime rate, adjusted daily, and
are convertible to term loans that bear interest, at the Company's option, at
1/4% over the bank's prime rate, adjusted daily, or a fixed interest rate of 200
basis points over the bank's prime rate in effect on the day of the conversion.
Term loan borrowings under the credit facility are payable in 36 monthly
installments. The credit facility is secured by substantially all the assets of
HEICO Aerospace and its subsidiaries, excluding Northwings. The revolving
portion of the facility expires in February 1998 and may be renewed annually by
mutual agreement. This credit facility and the letters of credit securing the
1996 bonds and 1988 bonds contain covenants which, among other things, restrict
borrowings, capital expenditures and cash dividends, require the maintenance of
certain net worth, working capital and debt service amounts and ratios, require
the continued employment of the current Chairman, President and Chief Executive
Officer and require that he and his affiliates maintain a specified ownership
position in the Company.


-31-



EQUIPMENT LOAN FACILITY
In March 1994, a bank committed to advance up to $2,000,000, as amended, for the
purpose of purchasing equipment to be used in the Company's operations. Each
term loan is limited to 80% of the purchase price of the related equipment and
is repayable up to a maximum of 60 months with interest at a rate equal to prime
rate (as defined). The term loans are secured by collateral representing the
related purchased equipment, which has a carrying value of approximately
$1,763,000 at October 31, 1997. The facility expires in December 1998. Equipment
loans bear interest at rates ranging from 8.50% to 9.00% as of October 31, 1997.

NOTE 6 - 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 its 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.

Minimum payments for operating leases having initial or remaining
noncancelable terms in excess of one year are as follows:

Year ending October 31,
1998.................................. $ 433,000
1999.................................. 427,000
2000.................................. 277,000
2001.................................. 187,000
After 2001............................ 223,000
----------
Total minimum lease commitments....... $1,547,000
==========

Total rent expense charged to continuing operations for all operating
leases in fiscal 1997, fiscal 1996 and fiscal 1995 amounted to $240,000,
$166,000 and $133,000, respectively. Included in the fiscal 1997 rent expense
was approximately $12,000 paid to a related party for the month-to-month lease
of the Northwings facility.

NOTE 7 - INCOME TAXES

The provision for income taxes on income from continuing operations for each of
the three years ended October 31, 1997 is as follows:

1997 1996 1995
---------- ---------- ----------
Current:
Federal...................... $3,468,000 $4,084,000 $1,592,000
State........................ 358,000 459,000 318,000
---------- ---------- ----------
3,826,000 4,543,000 1,910,000
Deferred....................... (486,000) (387,000) (245,000)
---------- ---------- ----------
Total income tax expense ...... 3,340,000 4,156,000 1,665,000
Less income taxes for
discontinued health
care operations.............. -- (2,436,000) (894,000)
---------- ---------- ----------
Income taxes on income from
continuing operations........ $3,340,000 $1,720,000 $ 771,000
========== ========== ==========

-32-




A net deferred tax liability of $661,000 relating to MediTek was
written off as a result of the sale of such discontinued operations described in
Note 3.
The following table reconciles the federal statutory tax rate to the
Company's effective rate for continuing operations:

1997 1996 1995
---------- ---------- --------
Federal statutory tax
rate........................ 34.0% 34.0% 34.0%
State taxes, less applicable
federal income tax
reduction................... 1.9 2.3 2.6
Tax benefits on export
sales....................... (3.6) (5.1) (6.4)
Tax benefits from tax free
investments................. (1.0) (1.1) (.2)
Tax benefits from dividend
income...................... (.2) (.2) (.1)
Nondeductible amortization
of intangible assets........ .5 .3 .8
Other, net................... .6 1.7 4.2
---------- --------- -------
Effective tax rate........... 32.2% 31.9% 34.9%
========== ========== =======

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. Significant
components of the Company's deferred tax assets and liabilities as of October
31, 1997, 1996 and 1995 are as follows:



OCTOBER 31,
---------------------------------------------
1997 1996 1995
---------- ---------- ----------

Deferred tax assets:
Inventory........................... $ 571,000 $ 600,000 $ 412,000
Bad debt allowances................. 124,000 62,000 436,000
Deferred compensation liability..... 445,000 148,000 102,000
Vacation accruals................... 121,000 147,000 112,000
Customer rebates and credits........ 169,000 860,000 371,000
Retirement plan liability........... 156,000 -- --
Warranty accruals................... 256,000 94,000 --
Alternative minimum tax credit...... -- -- 13,000
Other............................... 113,000 147,000 147,000
---------- ---------- ----------
Total deferred tax assets........... 1,955,000 2,058,000 1,593,000
---------- ---------- ----------
Deferred tax liabilities:
Accelerated depreciation............ 436,000 927,000 1,208,000
Intangible asset amortization....... 22,000 345,000 545,000
Retirement plan liability........... -- (127,000) --
Equity in losses of partnerships.... -- -- (35,000)
Other............................... 5,000 (8,000) 2,000
---------- ---------- ----------
Total deferred tax liabilities...... 463,000 1,137,000 1,720,000
---------- ---------- ----------
Net deferred tax asset (liability).. $1,492,000 $ 921,000 $ (127,000)
========== ========== ==========





-33-



NOTE 8 - PREFERRED STOCK PURCHASE RIGHTS PLAN

In November 1993, pursuant to a plan adopted by the Board of Directors on such
date, the Board declared a distribution of one Preferred Stock Purchase Right
(the Rights) for each outstanding share of common stock, par value $.01 per
share, of the Company. The Rights trade with the common stock and are not
exercisable or transferable apart from the common stock until after a person or
group either acquires 15% or more of the outstanding common stock or commences
or announces an intention to commence a tender offer for 30% or more of the
outstanding common stock. Absent either of the aforementioned events
transpiring, the Rights will expire at the close of business on November 2,
2003.

The Rights have certain anti-takeover effects and, therefore, will
cause substantial dilution to a person or group who attempts to acquire the
Company on terms not approved by the Company's Board of Directors or who
acquires 15% or more of the outstanding common stock without approval of the
Company's Board of Directors. The Rights should not interfere with any merger or
other business combination approved by the Board since they may be redeemed by
the Company at $.01 per Right at any time until the close of business on the
tenth day after a person or group has obtained beneficial ownership of 15% or
more of the outstanding common stock or until a person commences or announces an
intention to commence a tender offer for 30% or more of the outstanding common
stock.

NOTE 9 - STOCK OPTIONS

The Company currently has two stock option plans, the 1993 Stock Option Plan
(1993 Plan) and the Non-Qualified Stock Option Plan (NQSOP). In March 1997 and
March 1996, shareholders of the Company approved increases in the number of
shares issuable pursuant to the 1993 Plan by 397,614 shares and 376,767 shares,
respectively. In September 1996, the Board of Directors reserved 105,270 shares
for the issuance of non-qualified stock options in conjunction with the purchase
of Trilectron. Under the terms of the plans, a total of 2,655,392 shares of the
Company's stock are reserved for issuance to directors, officers and key
employees as of October 31, 1997. Options issued under the 1993 Plan may be
designated incentive stock options (ISO) or non-qualified stock options (NQSO).
ISOs are granted at not less than 100% of the fair market value at the date of
grant (110% thereof in certain cases) and are exercisable in percentages
specified at date of grant over a period up to ten years. Only employees are
eligible to receive ISOs. NQSOs may be granted at less than fair market value
and may be immediately exercisable. Options granted under the NQSOP may be
granted to directors, officers and employees at no less than the fair market
value at the date of grant and are generally exercisable in four equal annual
installments commencing one year from date of grant.



-34-




Information concerning all of the stock option transactions for the
three years ended October 31, 1997 follows:

SHARES UNDER OPTION
SHARES ----------------------------
AVAILABLE PRICE
FOR OPTION SHARES PER SHARE
------- --------- ----------------
Outstanding,
October 31, 1994 374,754 2,111,059 $ 2.19 - $ 5.97
Granted............... (291,048) 291,048 $ 2.88 - $ 5.76
Cancelled............. 86,883 (93,474) $ 2.92 - $ 5.44
Exercised............. -- (190,386) $ 2.31 - $ 5.44
------- --------- ----------------
Outstanding,
October 31, 1995 170,589 2,118,247 $ 2.19 - $ 5.97

Additional shares
approved for 1993
Stock Option Plan... 376,767 -- --
Shares approved
for grant in
the Trilectron
acquisition......... 105,270 -- --
Granted............... (493,204) 493,204 $ 6.05 - $11.09
Cancelled............. 28,425 (44,118) $ 3.07 - $ 7.63
Exercised............. -- (303,295) $ 2.92 - $ 5.97
------- --------- ----------------
Outstanding,
October 31, 1996 187,847 2,264,038 $ 2.19 - $11.09

Additional shares
approved for 1993
Stock Option Plan... 397,614 -- --
Granted............... (543,000) 543,000 $12.65 - $18.54
Cancelled............. 3,472 (58,661) $ 3.98 - $16.33
Exercised............. -- (138,918) $ 2.92 - $11.09
-------- ---------- ----------------

Outstanding,
October 31, 1997 45,933 2,609,459 $ 2.19 - $18.54
======== ========== ================

Information concerning stock options outstanding and exercisable as of
October 31, 1997 follows:



WEIGHTED WEIGHTED AVERAGE WEIGHTED
RANGE OF OPTIONS AVERAGE REMAINING OPTIONS AVERAGE
EXERCISE PRICES OUTSTANDING EXERCISE PRICE CONTRACTUAL LIFE EXERCISABLE EXERCISE PRICE
- --------------- ----------- -------------- ---------------- ----------- ---------------

$ 2.19 - $ 5.00 1,533,102 $ 3.38 3.9 1,498,686 $ 3.38
5.01 - 11.00 503,657 6.70 6.3 364,513 6.59
11.01 - 18.54 572,700 14.95 9.4 263,715 14.81
---------- ------ --- --------- ------
2,609,459 $ 6.56 5.6 2,099,914 $ 5.22
========== ====== === ========= ======

Information concerning stock options outstanding and exercisable as of
October 31, 1996 follows:

WEIGHTED WEIGHTED AVERAGE WEIGHTED
RANGE OF OPTIONS AVERAGE REMAINING OPTIONS AVERAGE
EXERCISE PRICES OUTSTANDING EXERCISE PRICE CONTRACTUAL LIFE EXERCISABLE EXERCISE PRICE
- --------------- ----------- -------------- ---------------- ----------- ---------------
$ 2.19 - $ 5.00 1,589,837 $ 3.39 4.8 1,529,461 $ 3.38
5.01 - 8.00 567,281 6.67 6.6 392,749 6.60
8.01 - 11.09 106,920 11.09 3.9 -- --
---------- ------ --- --------- --
2,264,038 $ 4.57 5.2 1,922,210 $ 4.04
========== ====== === ========= ======



-35-



During fiscal 1997 the Company granted options for 45,750 shares at an
option price below the fair market value of the stock on the date of grant. The
remaining options for 497,250 shares were granted at the fair market value of
the stock on the date of grant. As of October 31, 1997, options for 2,099,914
shares were exercisable at a weighted average option price of $5.22. If there
were a change in control of the Company, options for an additional 509,545
shares would become immediately exercisable. All stock option share and price
per share information has been retroactively restated for stock dividends and
splits.

The Company applies APB Opinion No. 25 and related Interpretations in
accounting for its stock option plans. Accordingly, compensation expense has
been recorded in the accompanying consolidated financial statements for those
options granted below the fair market value of the stock on the date of grant.
The compensation expense on the aforementioned options totalled approximately
$8,000 for the year. Had the fair value of all grants under these plans been
recognized as compensation expense over the vesting period of the grants,
consistent with SFAS No. 123, the Company's net income for fiscal 1997 and
fiscal 1996 would have been $4,805,000 ($.50 per share) and $9,020,000 ($1.02
per share), respectively. The estimated fair value of options granted during
fiscal 1997 and fiscal 1996 was $11.59 per share and $5.85 per share,
respectively.

The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following assumptions:

1997 1996
---------- ---------

Volatility......................... 66.21% 77.19%
Risk free interest rate
(weighted average)............... 6.35% 5.84%
Dividend yield (weighted average).. .67% 1.29%
Expected life (years).............. 10 10

NOTE 10 - RETIREMENT PLANS

The Company has a qualified defined contribution retirement plan (the Plan)
under which eligible employees of the Company and its participating subsidiaries
may contribute up to 10% of their annual compensation, as defined, and the
Company will contribute specified percentages ranging from 25% to 50% of
employee contributions up to 3% of annual pay in Company stock or cash, as
determined by the Company. The Plan also provides that the Company may
contribute additional amounts in its common stock or cash at the discretion of
the Board of Directors.

In September 1992, the Company sold 988,267 shares of the Company's
stock to the Plan for an aggregate price of $4,122,000 entirely financed through
a promissory note with the Company. The promissory note is payable in nine equal
annual installments, inclusive of principal and interest at the rate of 8% per
annum, of $655,000 each and a final installment of $640,000 and is prepayable in
full or in part without penalty at any time. Prior to September 1992, the
Company sold an aggregate of 678,643 shares of its stock to the Plan in exchange
for two notes receivable, which have been fully satisfied.


-36-



Participants receive 100% vesting in employee contributions. Vesting in
Company contributions is based on number of years of service. Contributions to
the Plan charged to income from continuing operations for fiscal 1997, 1996 and
1995 totaled $498,000, $364,000 and $240,000, respectively, net of interest
income earned on the note received from the Plan of $267,000 in fiscal 1997,
$272,000 in fiscal 1996 and $299,000 in fiscal 1995.

In 1991, the Company established a Directors Retirement Plan covering
its then current directors. The net assets of this plan as of October 31, 1997
are not material to the financial position of the Company. During fiscal 1997,
1996 and 1995, $76,000, $82,000 and $75,000 respectively, was expensed for this
plan.

NOTE 11 - QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------

Net sales:
1997.......... $14,267,000 $13,552,000 $16,716,000 $19,139,000
1996.......... $ 6,978,000 $ 7,942,000 $ 8,059,000 $11,586,000



Gross profit:
1997.......... $ 4,741,000 $ 4,536,000 $ 4,869,000 $ 6,483,000
1996.......... $ 2,322,000 $ 2,716,000 $ 2,897,000 $ 4,234,000


Net income from continuing operations:
1997.......... $ 1,594,000 $ 1,640,000 $ 1,712,000 $ 2,073,000
1996.......... $ 578,000 $ 647,000 $ 1,053,000 $ 1,387,000


Net income:
1997.......... $ 1,594,000 $ 1,640,000 $ 1,712,000 $ 2,073,000
1996.......... $ 870,000 $ 1,082,000 $ 6,553,000 $ 1,387,000


Net income per share share from continuing operations:
1997.......... $ .17 $ .17 $ .18 $ .21
1996.......... $ .07 $ .07 $ .11 $ .15


Net income per share:
1997.......... $ .17 $ .17 $ .18 $ .21
1996.......... $ .10 $ .12 $ .71 $ .15

Due to changes in the average number of common shares outstanding, net
income per share for the full fiscal year does not equal the sum of the four
individual quarters.






-37-



NOTE 12 - OTHER CONSOLIDATED BALANCE SHEETS, STATEMENTS OF OPERATIONS AND
STATEMENTS OF CASH FLOWS INFORMATION

Accounts receivable are composed of the following:



BALANCE AT OCTOBER 31,
----------------------------
1997 1996
------------ ------------

Accounts receivable................ $ 12,922,000 $ 7,882,000
Net costs and estimated earnings
in excess of billings on un-
completed contracts.............. -- 265,000
Less allowance for doubtful
accounts......................... (362,000) (268,000)
------------ ------------
Accounts receivable, net........... $ 12,560,000 $ 7,879,000
============ ============

Revenue amounts set forth in the accompanying Consolidated Statements
of Operations do not include any material amounts in excess of billings related
to long-term contracts.

Inventories are composed of the following:

BALANCE AT OCTOBER 31,
----------------------------
1997 1996
------------ ------------
Finished products.................. $ 4,329,000 $ 4,428,000
Work in process.................... 7,359,000 5,845,000
Materials, parts, assemblies and
supplies......................... 6,671,000 5,004,000
------------ ------------
Total inventories.................. $ 18,359,000 $ 15,277,000
============ ============

Inventories related to long-term contracts aggregated $628,000 as of
October 31, 1996. There were no such inventories as of October 31, 1997.

Property, plant and equipment are composed of the following:

BALANCE AT OCTOBER 31,
----------------------------
1997 1996
------------ ------------
Land............................... $ 525,000 $ 523,000
Buildings and improvements......... 6,578,000 5,418,000
Machinery and equipment............ 15,753,000 13,658,000
Construction in progress........... 507,000 --
------------ ------------
23,363,000 19,599,000
Less accumulated depreciation...... (14,820,000) (13,754,000)
------------ ------------
Property, plant and equipment, net. $ 8,543,000 $ 5,845,000
============ ============

Intangible assets are composed of the following:

BALANCE AT OCTOBER 31,
----------------------------
1997 1996
------------ ------------
Excess of cost over the fair value
of net assets acquired........... $ 13,729,000 $ 4,882,000
Deferred charges................... 905,000 679,000
------------ ------------
14,634,000 5,561,000
Less accumulated amortization...... (1,186,000) (805,000)
------------ ------------
Intangible assets, net............. $ 13,258,000 $ 4,756,000
============ ============

Accrued expenses and other current liabilities are composed of the following:

BALANCE AT OCTOBER 31,
----------------------------
1997 1996
------------ ------------
Accrued employee compensation...... $ 2,757,000 $ 2,071,000
Accrued customer rebates and
credits.......................... 1,553,000 1,848,000
Other.............................. 2,370,000 1,984,000
------------ ------------
Total accrued expenses and other
current liabilities.............. $ 6,680,000 $ 5,903,000
============ ============

-38-



SALES
Export sales were $18,662,000 in fiscal 1997, $9,806,000 in fiscal 1996 and
$5,762,000 in fiscal 1995. Fiscal 1997 export sales include $7,912,000 to
Europe.

No one customer accounted for sales of 10% or more of consolidated
sales during the last three fiscal years.

RESEARCH AND DEVELOPMENT EXPENSES
Fiscal 1997, 1996 and 1995 cost of sales amounts include approximately
$3,100,000, $2,400,000 and $1,800,000, respectively, of new product research and
development expenses.

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION ARE AS FOLLOWS:

Cash paid for interest was $477,000, $264,000 and $386,000 in 1997, 1996 and
1995, respectively. Cash paid for income taxes was $3,438,000, $4,421,000 and
$1,400,000 in 1997, 1996 and 1995, respectively.

Non-cash investing and financing activities related to the acquisitions
and contingent note payments during fiscal 1997, 1996 and 1995 were as follows:



1997 1996 1995
------------ ------------ ------------

Fair value of assets acquired:
Intangible assets. $ 8,395,000 $ 3,944,000 $ 1,945,000
Inventories....... 669,000 6,635,000 --
Accounts re-
ceivable........ 2,032,000 3,051,000 --
Property, plant
and equipment... 421,000 104,000 --
Other assets...... 24,000 41,000 154,000
Cash paid, including
contingent note
payments............ (6,737,000) (7,661,000) (2,099,000)
Fair value of common
stock issued........ (3,544,000) -- --
------------ ------------ ------------

Liabilities assumed... $ 1,260,000 $ 6,411,000 $ --
============ ============ ============


Non-cash investing and financing activities related to purchases by the
discontinued health care operations of property, plant and equipment financed by
capital leases during fiscal 1996 and 1995 amounted to $1,343,000 and
$2,257,000, respectively. There were no capital lease financing activities
during fiscal 1997. Non-cash investing and financing activities during fiscal
1995 also included purchases of property, plant and equipment of $2,269,000,
investments in and advances to unconsolidated partnerships of $862,000, deferred
charges of $461,000 and other assets of $139,000 which were financed by capital
leases assumed, issuance of a note payable and distributions from an
unconsolidated partnership by the discontinued health care operations.
Additionally, retained earnings was charged $20,963,000 in fiscal 1996 and
$7,881,000 in fiscal 1995 as a result of the 10% stock dividends described in
Note 4 above.




-39-



NOTE 13 - PENDING LITIGATION

In November 1989, HEICO Aerospace Corporation and Jet Avion were named
defendants in a complaint filed by United Technologies Corporation (UTC) in the
United States District court for the Southern District of Florida. The
complaint, as amended in fiscal 1995, alleged infringement of a patent,
misappropriation of trade secrets and unfair competition relating to certain jet
engine parts and coatings sold by Jet Avion in competition with Pratt & Whitney,
a division of UTC. UTC seeks approximately $8 million in damages for the patent
infringement and sought approximately $30 million in damages for the
misappropriation of trade secrets and unfair competition claims. The aggregate
damages referred to in the preceding sentence did not exceed approximately $30
million because a portion of the misappropriation and unfair competition damages
duplicate the patent infringement damages. UTC also seeks, among other things,
pre-judgment interest and treble damages.

In July and November 1995, the Company filed its answers to UTC's
complaint denying the allegations. In addition, the Company filed counterclaims
against UTC for, among other things, malicious prosecution, trade disparagement,
tortious interference, unfair competition and antitrust violations. The Company
is seeking treble, compensatory and punitive damages in amounts to be determined
at trial. UTC filed its answer denying certain counterclaims and moved to
dismiss other counterclaims. A number of motions are pending and no trial date
is currently set.

In August 1997, a Motion for Summary Judgment filed by the Company on a
portion of the lawsuit was granted by the United States District Court Judge.
The Summary Judgment dismissed UTC's claims for misappropriation of trade
secrets and unfair competition, finding that Florida's statute of limitations
bars such claims. In September 1997, UTC served a Motion for Reconsideration of
the Court's Motion for Summary Judgment. In October 1997, UTC's Motion for
Reconsideration was denied. UTC may appeal these rulings.

These rulings leave currently pending UTC's single claim alleging
infringement of a patent that expired in 1992 and the Company's Counterclaims
against UTC.

Based on currently known facts, the Company's legal counsel has advised
that it believes that the Company should be able to successfully defend the
remaining patent infringement claim alleged in UTC's complaint. Further, the
Company intends to vigorously pursue its counterclaims against UTC. The ultimate
outcome of this litigation is not certain at this time and no provision for gain
or loss, if any, has been made in the consolidated financial statements.

The Company is involved in various other legal actions arising in the
normal course of business. After taking into consideration legal counsel's
evaluation of such actions, management is of the opinion that the outcome of
these other matters will not have a significant effect on the Company's
consolidated financial statements.


*******************



-40-



HEICO Corporation and Subsidiaries
INDEPENDENT AUDITORS' REPORT



To the Board of Directors and
Shareholders of HEICO Corporation


We have audited the accompanying consolidated balance sheets of HEICO
Corporation and subsidiaries (the Company) as of October 31, 1997 and 1996, and
the related consolidated statements of operations, shareholders' equity, and
cash flows for each of the three years in the period ended October 31, 1997.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

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

In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of the Company as of October
31, 1997 and 1996, and the results of its operations and its cash flows for each
of the three years in the period ended October 31, 1997 in conformity with
generally accepted accounting principles.



DELOITTE & TOUCHE LLP
Certified Public Accountants
Miami, Florida
December 24, 1997














-41-



- --------------------------------------------------------------------------------
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not applicable.


PART III

- --------------------------------------------------------------------------------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information concerning the Directors of the Company is incorporated by reference
to the Company's definitive proxy statement which will be filed with the
Securities and Exchange Commission (Commission) within 120 days after the close
of fiscal 1997.
Information concerning the executive officers of the Company is set
forth at Part I hereof under the caption "Executive Officers of the Registrant."


- --------------------------------------------------------------------------------
ITEM 11. EXECUTIVE COMPENSATION

Information concerning executive compensation is hereby incorporated by
reference to the Company's definitive proxy statement which will be filed with
the Commission within 120 days after the close of fiscal 1997.


- --------------------------------------------------------------------------------
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information concerning security ownership of certain beneficial owners and
management is hereby incorporated by reference to the Company's definitive proxy
statement which will be filed with the Commission within 120 days after the
close of fiscal 1997.


- --------------------------------------------------------------------------------
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information concerning certain relationships and related transactions is hereby
incorporated by reference to the Company's definitive proxy statement which will
be filed with the Commission within 120 days after the close of fiscal 1997.







-42-



PART IV
- --------------------------------------------------------------------------------

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)(1) Financial Statements:
The following consolidated financial statements of
the Company and subsidiaries are included in Part II,
Item 8:

PAGE
Consolidated Balance Sheets at October 31, 1997
and 1996....................................... 19

Consolidated Statements of Operations for the
years ended October 31, 1997, 1996 and 1995.... 21

Consolidated Statements of Shareholders' Equity
for the years ended October 31, 1997, 1996
and 1995....................................... 22

Consolidated Statements of Cash Flows for the
years ended October 31, 1997, 1996 and 1995.... 23

Notes to Consolidated Financial Statements....... 24

Report of Independent Auditors................... 41

(a)(2) Financial Statement Schedules:

No schedules have been submitted because they are not applicable or the
required information is included in the financial statements or notes thereto.

(a)(3) Exhibits

2.1 Amended and Restated Agreement of Merger and Plan of Reorganization,
dated as of March 22, 1993, by and among HEICO Corporation, HEICO
Industries, Corp. and New HEICO, Inc. is incorporated by reference
to Exhibit 2.1 to the Company's Registration Statement on Form S-4
(Registration No. 33-57624) Amendment No. 1 filed on March 19, 1993.

2.2 Stock Purchase Agreement, dated June 20, 1996, by and among HEICO
Corporation, MediTek Health Corporation and U.S. Diagnostic Labs
Inc. is incorporated by reference to Exhibit 2 to the Form 8-K dated
July 11, 1996.

2.3 Stock Purchase Agreement, dated as of September 16, 1996, by and
between HEICO Corporation and Sigmund Borax is incorporated by
reference to Exhibit 2 to the Form 8-K dated September 16, 1996.

-43-



Item 14 (a) (3) Exhibits continued

2.4 Stock Purchase Agreement dated July 25, 1997, among HEICO
Corporation, N.A.C. Acquisition Corporation, Northwings Accessories
Corporation, Ramon Portela and Otto Neuman (without schedules) is
incorporated by reference to Exhibit 2 to Form 8-K dated September
16, 1997.

3.1 Articles of Incorporation of the Registrant are incorporated by
reference to Exhibit 3.1 to the Company's Registration Statement on
Form S-4 (Registration No. 33-57624) Amendment No. 1 filed on March
19, 1993.

3.2 Articles of Amendment of the Articles of Incorporation of the
Registrant, dated April 27, 1993, are incorporated by reference to
Exhibit 3.2 to the Company's Registration Statement on Form 8-B
dated April 29, 1993.

3.3 Articles of Amendment of the Articles of Incorporation of the
Registrant, dated November 3, 1993, are incorporated by reference to
Exhibit 3.3 to the Form 10-K for the year ended October 31, 1993.

3.4 Bylaws of the Registrant are incorporated by reference to Exhibit
3.4 to the Form 10-K for the year ended October 31, 1996.

4.0 The description and terms of Preferred Stock Purchase Rights are set
forth in a Rights Agreement between the Company and SunBank, N.A.,
as Rights Agent, dated as of November 2, 1993, incorporated by
reference to Exhibit 1 to the Form 8-K dated November 2, 1993.

10.1 Loan Agreement, dated March 1, 1988, between HEICO Corporation and
Broward County, Florida is incorporated by reference to Exhibit 10.1
to the Form 10-K for the year ended October 31, 1994.

10.2 SunBank Reimbursement Agreement, dated February 28, 1994, between
HEICO Aerospace Corporation and SunBank/South Florida, N.A. is
incorporated by reference to Exhibit 10.2 to the Form 10-K for the
year ended October 31, 1994.



-44-



Item 14 (a) (3) Exhibits continued

10.3 Amendment, dated March 1, 1995, to the SunBank Reimbursement
Agreement dated February 28, 1994 between HEICO Aerospace
Corporation and SunBank/South Florida, N.A. is incorporated by
reference to Exhibit 10.3 to the Form 10-K from the year ended
October 31, 1995.

10.4 Loan Agreement, dated February 28, 1994, between HEICO Corporation
and SunBank/South Florida, N.A. is incorporated by reference to
Exhibit 10.3 to the Form 10-K for the year ended October 31, 1994.

10.5 The First Amendment, dated October 13, 1994, to Loan Agreement dated
February 28, 1994 between HEICO Corporation and SunBank/South
Florida, N.A. is incorporated by reference to Exhibit 10.4 to the
Form 10-K for the year ended October 31, 1994.

10.6 Second Amendment, dated March 1, 1995, to the Loan Agreement dated
February 28, 1994 between HEICO Corporation and SunBank/South
Florida, N.A. is incorporated by reference to Exhibit 10.6 to the
Form 10-K for the year ended October 31, 1995.

10.7 Third Amendment, dated September 16, 1997, to Loan Agreement dated
February 28, 1994 between HEICO Corporation and SunTrust Bank, South
Florida, National Association.

10.8 Fourth Amendment, dated December 1, 1997, to Loan Agreement dated
February 28, 1994 between HEICO Corporation and SunTrust Bank, South
Florida, National Association.

10.9 Loan Agreement, dated March 31, 1994, between HEICO Corporation and
Eagle National Bank of Miami is incorporated by reference to Exhibit
10.5 to the Form 10-K for the year ended October 31, 1994.

10.10 The First Amendment, dated May 31, 1994, to Loan Agreement dated
March 31, 1994 between HEICO Corporation and Eagle National Bank of
Miami is incorporated by reference to Exhibit 10.6 to the Form 10-K
for the year ended October 31, 1994.



-45-



Item 14 (a) (3) Exhibits continued

10.11 The Second Amendment, dated August 9, 1995, to the Loan Agreement
dated March 31, 1994 between HEICO Corporation and Eagle National
Bank of Miami is incorporated by reference to Exhibit 10.9 to the
Form 10-K for the year ended October 31, 1995.

10.12 Second Loan Modification Agreement, dated February 27, 1997, between
HEICO Corporation and Eagle National Bank of Miami is incorporated
by reference to Exhibit 10.3 to the Form 10-Q for the three months
ended April 30, 1997.

10.13 Loan Agreement, dated October 1, 1996, between HEICO Aerospace
Corporation and Broward County, Florida, is incorporated by
reference to Exhibit 10.10 to the Form 10-K for the year ended
October 31, 1996.

10.14 SunTrust Bank Reimbursement Agreement, dated October 1, 1996,
between HEICO Aerospace Corporation and SunTrust Bank, South
Florida, N.A. is incorporated by reference to Exhibit 10.11 to the
Form 10-K for the year ended October 31, 1996.

10.15 HEICO Savings and Investment Plan and Trust, as amended and restated
effective January 2, 1987 is incorporated by reference to Exhibit
10.2 to the Form 10-K for the year ended October 31, 1987.

10.16 HEICO Savings and Investment Plan, as amended and restated December
19, 1994, is incorporated by reference to Exhibit 10.11 to the Form
10-K for the year ended October 31, 1994.

10.17 HEICO Corporation 1993 Stock Option Plan.

10.18 HEICO Corporation Combined Stock Option Plan, dated March 15, 1988,
is incorporated by reference to Exhibit 10.3 to the Form 10-K for
the year ended October 31, 1989.

10.19 Non-Qualified Stock Option Agreement for Directors, Officers and
Employees is incorporated by reference to Exhibit 10.8 to the Form
10-K for the year ended October 31, 1985.


-46-



Item 14 (a) (3) Exhibits continued

10.20 HEICO Corporation Directors' Retirement Plan, as amended, dated as
of May 31, 1991, is incorporated by reference to Exhibit 10.19 to
the Form 10-K for the year ended October 31, 1992.

10.21 Key Employee Termination Agreement, dated as of April 5, 1988,
between HEICO Corporation and Thomas S. Irwin is incorporated by
reference to Exhibit 10.20 to the Form 10-K for the year ended
October 31, 1992.

10.22 Employment and Non-compete Agreement, dated as of September 16,
1996, by and between HEICO Corporation and Sigmund Borax is
incorporated by reference to Exhibit 10.1 to the Form 8-K dated
September 16, 1996.

10.23 Loan Agreement, dated as of March 1, 1997, between Trilectron
Industries, Inc. and Manatee County, Florida is incorporated by
reference to Exhibit 10.1 to the Form 10-Q for the three months
ended April 30, 1997.

10.24 Letter of Credit and Reimbursement Agreement, dated as of March 1,
1997, between Trilectron Industries, Inc., and First Union National
Bank of Florida (excluding referenced exhibits) is incorporated by
reference to Exhibit 10.2 to the Form 10-Q for the three months
ended April 30, 1997.

10.25 Registration Rights Agreement, dated September 15, 1997, by and
between HEICO Corporation and Ramon Portela is incorporated by
reference to Exhibit 10.1 to Form 8-K dated September 16, 1997.

10.26 Employment and Non-compete Agreement dated September 16, 1997, by
and between Northwings Accessories Corporation and Ramon Portela is
incorporated by reference to Exhibit 10.2 to Form 8-K dated
September 16, 1997.

10.27 Amendment to Registration and Sale Rights Agreement, dated as of
December 24, 1996, by and among U.S. Diagnostic, Inc. and HEICO
Corporation is incorporated by reference to Exhibit 10.22 to Form
10-K for the year ended October 31, 1996.


-47-



Item 14 (a) (3) Exhibits continued

10.28 Assignment of Promissory Note by and between HEICO Corporation and
Forum Capital Markets L.P. is incorporated by reference to Exhibit
10.3 to Form 8-K dated September 16, 1997.

10.29 Amendment to 6 1/2% Convertible Note, dated as of December 24, 1996,
by and among U.S. Diagnostic, Inc. and HEICO Corporation is
incorporated by reference to Exhibit 10.21 to Form 10-K for the year
ended October 31, 1996.

10.30 Second Amendment to the 6 1/2% Convertible Note, dated as of
September 10, 1997, by and among U.S. Diagnostic Inc., and HEICO
Corporation is incorporated by reference to Exhibit 10.4 to Form 8-K
dated September 16, 1997.

10.31 Stock Purchase Agreement, dated October 30, 1997, by and among HEICO
Corporation, HEICO Aerospace Holdings Corp. and Lufthansa Technik
AG.

10.32 Shareholders Agreement, dated October 30, 1997, by and between HEICO
Aerospace Holdings Corp., HEICO Aerospace Corporation and all of the
shareholders of HEICO Aerospace Holdings Corp. and Lufthansa Technik
AG.

11 Computation of earnings per share.

21 Subsidiaries of the Company.

23.1 Consent of independent auditors.

27 Financial Data Schedule.

(b) Reports on Form 8-K

A report on Form 8-K was filed by the Company dated September
16, 1997 and is reported under Item 2, "Acquisition or Disposition of Assets,"
relating to the purchase of all the outstanding capital stock of Northwings
Accessories Corporation.

The only other report on Form 8-K filed by the Company during the
fourth quarter of fiscal 1997 was dated October 30, 1997 and is reported under
Item 2, "Acquisition or Disposition of Assets," relating to the sale of a 20%
interest in the net assets of HEICO Aerospace Holdings Corp. to Lufthansa
Technik AG.

(c) Exhibits
See Item 14 (a) (3).

(d) Separate Financial Statements Required
Not applicable.

-48-



SIGNATURES
- --------------------------------------------------------------------------------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

HEICO CORPORATION


Date: January 26, 1998 BY:/S/ THOMAS S. IRWIN
---------------------
THOMAS S. IRWIN
Executive Vice President
and Chief Financial Officer
(Principal Financial and
Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.




/S/ LAURANS A. MENDELSON Chairman, January 26, 1998
- ---------------------------- President, Chief
LAURANS A. MENDELSON Executive Officer
and Director (Principal
Executive Officer)


/S/ JACOB T. CARWILE Director January 26, 1998
- ----------------------------
JACOB T. CARWILE


/S/ SAMUEL L. HIGGINBOTTOM Director January 26, 1998
- ----------------------------
SAMUEL L. HIGGINBOTTOM


/S/ PAUL F. MANIERI Director January 26, 1998
- ----------------------------
PAUL F. MANIERI


/S/ ERIC A. MENDELSON Director January 26, 1998
- ----------------------------
ERIC A. MENDELSON


/S/ VICTOR H. MENDELSON Director January 26, 1998
- ----------------------------
VICTOR H. MENDELSON


/S/ ALBERT MORRISON, JR. Director January 26, 1998
- ----------------------------
ALBERT MORRISON, JR.


/S/ ALAN SCHRIESHEIM Director January 26, 1998
- ----------------------------
ALAN SCHRIESHEIM


/S/ GUY C. SHAFER Director January 26, 1998
- ----------------------------
GUY C. SHAFER


-49-



EXHIBIT INDEX



EXHIBIT
NUMBER DESCRIPTION


10.7 Third Amendment, dated September 16, 1997, to Loan Agreement dated
February 28, 1994 between HEICO Corporation and SunTrust Bank, South
Florida, National Association.

10.8 Fourth Amendment, dated December 1, 1997, to Loan Agreement dated
February 28, 1994 between HEICO Corporation and SunTrust Bank, South
Florida, National Association.

10.17 HEICO Corporation 1993 Stock Option Plan.

10.31 Stock Purchase Agreement, dated October 30, 1997, by and among HEICO
Corporation, HEICO Aerospace Holdings Corp. and Lufthansa Technik AG.

10.32 Shareholders Agreement, dated October 30, 1997, by and between HEICO
Aerospace Holdings Corp., HEICO Aerospace Corporation and all of the
shareholders of HEICO Aerospace Holdings Corp. and Lufthansa Technik
AG.

11 Computation of earnings per share.

21 Subsidiaries of the Company.

23.1 Consent of independent auditors.

27 Financial Data Schedule.