Laurans A. Mendelson - Chairman, Chief Executive Officer and Chairman of Executive Committee Eric A. Mendelson - Co-President, Director, Member of Environmental, Safety & Health Committee, Chief Executive Officer of Heico Aerospace Holdings Corp and President of Heico Aerospace Holdings Corp Victor H. Mendelson - Co-President, Director, Member of Environmental, Safety & Health Committee, Chief Executive Officer of Heico Electronic Technologies Corp and President of Heico Electronic Technologies Corp Thomas S. Irwin - Senior Executive Vice President and Member of The Office of The Chief Executive Officer Carlos L. Macau - Chief Financial Officer, Executive Vice President and Treasurer

Tyler Hojo - Sidoti & Company, LLC Lee Jagoda - CJS Securities, Inc. Michael F. Ciarmoli - KeyBanc Capital Markets Inc., Research Division Stephen E. Levenson - Stifel, Nicolaus & Co., Inc., Research Division Chris Quilty - Raymond James & Associates, Inc., Research Division James Foung - Gabelli & Company, Inc.

Good morning. My name is Tamika, and I will be your conference operator today. At this time, I would like to welcome everyone to the Fiscal 2013 First Quarter Conference Call. [Operator Instructions] Certain statements in this conference call will constitute forward-looking statements, which are subject to risks, uncertainties and contingencies. HEICO's actual results may differ materially from those expressed in or implied by those forward-looking statements, as a result of factors, including, but not limited to lower demand for commercial air travel or air fleet changes, which could cause lower demand for our goods and services; product-specification costs and requirements, which could cause an increase to our costs to complete contracts; governmental and regulatory demands, export policies and restrictions, reductions in defense, space or homeland security spending by U.S. and/or foreign customers or competition from existing and new competitors, which could reduce our sales; HEICO's ability to introduce new products and product pricing levels, which could reduce our sales or sales growth; HEICO's ability to make acquisitions and achieve operating synergies from acquired businesses, customer credit risks, interest and income tax rates and economic conditions, within and outside of aviation, defense, space, medical, telecommunication and electronic industries, which could negatively impact our costs and revenues. Those listening to this call are encouraged to review all of HEICO's filings with the Securities and Exchange Commission, including, but not limited to filings on Form 10-K, 10-Q and 8-K. We undertake no obligation to publicly update or revise any forward-looking statement whether as a result of new information, future events or otherwise. Thank you. I'll now turn the call over to Laurans Mendelson. Laurans A. Mendelson: Thank you, and good morning to everyone on the call. As you probably can hear, I have a terrible sore throat and cold, and therefore, I am going to turn the call over to our very capable management team of Eric, Victor Mendelson, Tom Irwin and Carlos Macau, and I just -- am available -- I will be listening on the call if our team can't answer your questions, I'll try to do it, but I thank you for understanding that I will not be actively participating in this call. So with that, I'm inviting Eric to step in and to start the call, please. Eric A. Mendelson: Thank you. Good morning. This is Eric Mendelson, the Co-President of HEICO Corporation, and I'm joined here this morning with Tom Irwin, HEICO's Senior Executive Vice President; and Carlos Macau, our Executive Vice President and CFO. Victor Mendelson is visiting our operations on the West Coast and is also dialed in by telephone. Before reviewing our first quarter operating results in detail, I would like to take a few minutes to summarize the highlights. Despite a challenging global business environment, our segments performed in line with budgeted expectations and are positioned to take advantage of the anticipated growth in the markets we serve during the second half of fiscal 2013. Consistent with our philosophy of investing in future growth, we increased spending on new product development during the first quarter of fiscal 2013 by approximately 13% over the first quarter of fiscal 2012. Our consolidated first quarter 2013 net sales and net income represent record results for the first quarter. The aforementioned first quarter net sales record was driven principally by first quarter record net sales within both our Flight Support Group and Electronic Technologies Group. Consolidated net sales increased 2% to $216.5 million in the first quarter of 2013, up from $212.7 million in the first quarter of 2012. Consolidated net income increased by 4% to $20.0 million for the first quarter of fiscal 2013, up from $19.2 million for the first quarter of fiscal '12. Consolidated net income per diluted share increased to $0.37 per diluted share for the first quarter of fiscal 2013, up from $0.36 per diluted share for the first quarter of fiscal 2012. Cash flow provided by operating activities increased $15.5 million to $13.3 million for the first quarter of fiscal 2013. As of January 31, the company's net debt-to-shareholders equity ratio was 37.3% with net debt, which is defined as total debt less cash of $235.8 million. In December 2012, we paid our 69th consecutive cash dividend at a rate of $0.06 per share in the previously announced special and extraordinary cash dividend of $2.14 per share on both classes of our common stock. The dividends, which aggregated $116.6 million, were funded from borrowings under our revolving credit facility. Now, I would like to go into the results of the Flight Support Group. The Flight Support Group's net sales improved slightly to a first quarter record of $139 million for the first quarter of fiscal 2013 compared to $138.9 million for the first quarter of fiscal 2012. This increase reflects additional net sales of $3.6 million from our fiscal 2012 acquisitions, partially offset by an aggregate decrease of $1.9 million within our aftermarket replacement parts and repair and overhaul services product lines and a decrease of $1.6 million within our specialty product lines. Consistent with previous guidance, domestic economic uncertainty contributed to the demand decline for certain products within our aftermarket replacement parts and overhaul services product line during the first quarter of fiscal 2013. Furthermore, the decrease in net sales within our specialty product lines primarily reflects the impact of production delays at certain customers. Based on our current economic visibility, we anticipate improving demand and moderate organic growth within the Flight Support Group principally during the second half of fiscal 2013. The Flight Support Group's operating income was $24.2 million in the first quarter of fiscal 2013 compared to $25.5 million in the first quarter of fiscal 2012. This decrease principally reflects the combination of a less favorable product mix in the previously mentioned lower sales within our specialty product line. The Flight Support Group's operating margin was 17.4% for the first quarter of fiscal 2013 compared to 18.4% for the first quarter of fiscal 2012. The decrease in operating margin principally reflects the previously mentioned less favorable product mix and lower sales within our specialty product lines. Based on our current economic visibility, we estimate the Flight Support Group's fiscal 2013 full year operating margins to approximate those in fiscal 2012. Operating results for the first quarter of fiscal 2012 were a challenging comparable period to the first quarter of fiscal 2013 because the first quarter of fiscal 2012 was highlighted by 10% organic sales growth, an increase of 25% in operating income and a 1.5% improvement in operating margins. Now I would like introduce Victor Mendelson, Co-President of HEICO and President of HEICO's Electronic Technologies Group to discuss the results of the Electronic Technologies Group and the remainder of HEICO's performance. Victor H. Mendelson: Eric, thank you very much. The Electronic Technologies Group's net sales increased 6% to a first quarter record of $78.8 million for the first quarter of fiscal '13, up from $74.5 million from the first quarter of '12. The increase in net sales for the first quarter of fiscal '13 principally reflects additional net sales of $4.2 million contributed by the 2012 acquisitions. Further, the net sales increase reflects greater demand for certain space products resulting in a $4.4 million net sales increase from this product line, partially offset by a $2.3 million and $1.7 million net sales decline from defense and industrial products respectively. Ongoing economic uncertainty, coupled with weaker market conditions for defense-related products, in part due to the threat of U.S. defense spending reductions, contributed to lower sales of certain ETG products during the first quarter of fiscal '13. Despite the uncertainty about government budget reductions, we anticipate improving demand and moderate organic growth within the ETG, principally during the second half of fiscal 2013, and this is not unusual for the ETG's sales progression in prior years. The Electronic Technologies Group's operating income was $15.5 million for the first quarter of fiscal '13 compared to $16.2 million for the first quarter of fiscal '12. The decrease in operating income principally reflects less favorable product mix of certain higher-margin products in the first quarter of fiscal '13, and increase in new product research and development expenses and increased intangible asset amortization expense from our fiscal 2012 acquisitions. The Electronic Technologies Group's operating margin was 19.7% for the first quarter of fiscal '13 compared to 21.8% for the first quarter of fiscal '12. The decrease in operating margin principally reflects the previously mentioned unfavorable product mix, increase in new product research and development expenses and amortization expense. Based on our current economic visibility, we estimate the ETG's fiscal '13 full year operating margins to approximate those we experienced in fiscal '12. Turning to HEICO Corporation. At consolidated level, our diluted EPS increased to $0.37 in the first quarter of '13, up from $0.36 in the first quarter of '12. Additionally, diluted EPS for the first quarter of '13 includes a $0.02 per share diluted benefit -- or other $.02 per diluted share benefit, net of expenses, attributed to a tax credit for qualified research and development activities for the last 10 months of fiscal '12 that was recognized in the first quarter of fiscal '13. The aforementioned tax credit is the result of a retroactive extension in January of 2013, R&D tax credit to cover 2-year period from January 1, 2012, to December 31, 2013. Of course, the fiscal '12 diluted EPS amounts have been adjusted retrospectively for our 5-for-4 stock split distributed in April 2012. Depreciation and amortization expense increased to $8.1 million for the first quarter of fiscal '13, up from $7 million for the first quarter of '12. And this increase is primarily a result of higher amortization expense of intangible assets that was principally the result of our acquisitions in fiscal '12. In research and development, consistent with our philosophy of investing in future growth, we increased spending on new product development during the first quarter of '13 by 13% to $7.3 million, up from $6.5 million in the first quarter of fiscal '12. Significant ongoing new product development efforts are continued at both the Flight Support and Electronic Technologies Groups as we reinvest approximately 3% to 4% of each sales dollar. Our effective strategy for the last 22 years has been to reinvest a portion of our earnings into the development of new products and services that we can offer at lower cost to our customers, which in turn, facilitates market share growth sufficient to meet our growth warrants. Our SG&A expenses were $42.7 million and $40.6 million [Audio Gap] first quarter of fiscal '13 and fiscal '12 respectively. The increase in SG&A expenses principally reflects an increase of $2.5 million attributed to the fiscal 2012 acquired businesses. SG&A expenses as a percentage of net sales increased from 19.1% in the first quarter of fiscal '12 to 19.7% in the first quarter of '13, principally reflecting the impact of higher SG&A expenses as a percentage of net sales at the acquired businesses of which, 0.4/10 of 1% of the increase is attributed to amortization expense of intangible assets recognized in conjunction with the acquisitions. Interest expense approximated $600,000 in both the first quarter of fiscal '13 and fiscal '12, and our outstanding debt balance was $255 million as of January 31, 2013, at a weighted average interest rate of approximately 2%. Other income in the first quarter of fiscal '13 and fiscal '12 was not significant. Our effective tax rate was 27.8% in the first quarter of '13 compared to 34.2% in the first quarter of '12. The decrease in this tax rate is principally due to the previously mentioned income tax credit for qualified research and development activities that was recognized in the first quarter of fiscal '13. The decrease in the effective tax rate was also attributed to an income tax reduction for the special and extraordinary cash dividend paid in December 2012 to participants of the HEICO 401(k) plan holding common stock -- HEICO common stock, that is. For the full fiscal '13, we are now estimating an effective tax rate of approximately 33%. Net income attributable to noncontrolling interest was $5 million in the first quarter of '13 compared to $5.3 million in the first quarter of '12. The decrease in the first quarter of fiscal '13 principally reflects our purchases of certain [indiscernible] interest during fiscal '12 and '13 resulting in reallocations of net income to noncontrolling interests partially offset by higher earnings of certain ETG and FSG subsidiaries during the first quarter of '13. Turning to the balance sheet. As I mentioned earlier, our financial position and forecasted cash flow and [Audio Gap] Cash flow provided by operating activities increased $15.5 million to $13.3 million for the first quarter of fiscal '13. We continue to expect strong cash flow provided by operating activities, approximately a total of $140 million for fiscal '13. Our working capital ratio, current assets divided by current liabilities, is a strong 3.5 as of January 31, '13, up from 2.8 as of October 31, '12. Day sales outstanding of accounts receivable was 47 days as of January 31, '13 compared to 46 days as of October 31, '12. We continue to closely monitor our receivable collection efforts in order to limit our credit exposure. No one customer accounted for more than 10% of our net sales and our top 5 customers represented approximately 15% of consolidated net sales for the first quarters of both fiscal '13 and fiscal '12. Our inventory turnover rate was 129 days as of January 31, '13 compared to 114 days as of October 31, '12. Decrease in our turnover rate principally reflects an increase in inventory levels toward the end of the first quarter of '13 due to anticipated sales growth in the second half of the fiscal year. Capital expenditures were $4.5 million in the first quarter of '13 compared to $3.8 million in '12. We continue to plan for approximately $18 million to $20 million in capital expenditures during the current fiscal year. We continue to anticipate depreciation and amortization expenses in this fiscal year to approximate $35 million. Our net debt-to-shareholders equity ratio was 37.3% as of January 31, '13 with net debt, which is total debt less cash and cash equivalents, of $235.8 million. As of January 31, 2013, we had a total of $250 million of outstanding borrowings under our revolving credit facility with a maturity in fiscal 2018. The $123 million increase over the $127 million outstanding as of October 31, '12, principally relates to borrowings made to fund the previously mentioned aggregate $2.20 of cash dividends paid in December 2012 and to purchase the remaining 13.3% interest in one of our subsidiaries. Turning to our outlook. As expected, global economic uncertainty and domestic governmental spending reductions were principal contributing factors to the nominal sales growth and lower operating income reported in the first quarter of fiscal '13. As we look ahead for the remainder of fiscal 2013, we remain optimistic in the consensus outlook for the commercial airline industry and expect to see growth in airline capacity and maintenance spending in the back half of '13. Additionally, we expect improving demand for certain products of our Electronic Technologies Group in the space, aerospace and medical industries. Based on current economic visibility, we are increasing our estimates of full year fiscal '13 year-over-year growth in net sales to 6.8% -- excuse me, 6% to 8% and growth in net income to 9% to 11%, up from our prior growth estimates of 5.5% to 7% in both net sales and net income. Additionally, we continue to estimate consolidated operating margins to approximate 18% for the full fiscal '13 year. Roughly 75% of this growth is expected to be organic, would represent organic growth of approximately 7% for the balance of fiscal '13. These estimates do not include the impact of any potential 2013 acquisitions. In closing, we will continue to focus on intermediate and long-term growth strategies with an emphasis on acquiring profitable businesses at fair prices, and we are currently actively pursuing opportunities within both of our segments that complement our existing operations. And with that, I am going to ask the operator to please [Audio Gap] the floor for questions.

[Operator Instructions] Your first question comes from the line of Tyler Hojo with Sidoti & Company. Tyler Hojo - Sidoti & Company, LLC: First question. I -- if we look at your organic growth within the Flight Support Group, this is now the fifth consecutive quarter where we've kind of seen decelerating growth rates on an organic basis. And I'm just kind of wondering if you could kind of talk a little bit about what gives you confidence that you will see kind of a rebound as we move through the remainder of fiscal '13. Eric A. Mendelson: Tyler, this is Eric, so I'll go ahead and answer that. If you look at our sales in fiscal 2011, we were up about 23%. We had about 23% organic growth, which obviously, was a huge number. And I think we outperformed a number of our peers in the industry in turning out those numbers and even in the first quarter of fiscal 2012, we were up about 10%. And I think in hindsight, when we look back, the airlines were a little overoptimistic perhaps, for the ultimate results that fiscal 2012 would generate and ended up in hindsight probably over-ordering a little bit in fiscal 2011, not because they were worried about shortages, or not because they were trying to restock, but when the economy started stalling and all the political issues came to light in the beginning of 2012, things softened up. So I think that we're just really seeing a continuation of that and really a continuing burn off of the inventory. I can tell you that I've met recently with our sales folks, and I've ask them exactly that question: Why are they optimistic? And I can tell you that we've gone through on a customer-by-customer basis and our normally extremely conservative, and I would say, sandbagging sales folks, were -- had very concrete answers as to why they thought the results would be better. We are aware of certain airlines who kept inventory levels down for their 12/31 fiscal year end, and there were some other issues going on, so our folks really, when you dive into the details, they're pretty optimistic on a rebound in the second half. So I would say that's why we feel good. And then in addition, normally, November and December are slower months for us just due to the number of working days and people trying to conserve working capital, but in January of 2013, our sales were up, and that trend continues into February of 2013. So we do have some tangible results. Now, I don't want to mischaracterize and say that we're going to go back anywhere near the 2011 numbers, but we do see a firming, which leads us to be able to increase our estimates for the back half of the year. Tyler Hojo - Sidoti & Company, LLC: Okay, got it. And the kind of inventory stocking and destocking seems to be kind of a theme your competitors have talked about. Is it possible that perhaps, you're being a little overly conservative in regards to kind of the growth expectation of -- in FSG, if you do see some sort of restock occur in the back half of your fiscal year? Eric A. Mendelson: Yes. I mean, I would say normally, we err to the side of being conservative because that's just in our DNA and how we're wired. But yes, I suppose there is a possibility that things will be even better. But I can tell you when we look customer by customer, we do expect the rebound, but we're not anticipating any sort of restocking levels or huge movements that would be beyond our guidance. Yes, it's possible, but we're really not anticipating that. Tyler Hojo - Sidoti & Company, LLC: Got it, okay. And just one more for me, maybe for Victor. Just kind of curious what is kind of baked into the full year outlook in regards to kind of this overhang in regards to sequestration? Victor H. Mendelson: Tyler, it's Victor. By the way, I apologize for -- probably it sounded like a Marco Rubio moment there where phone went quiet, but some lamp stand [ph] in my hotel room, and I had to turn it off. Tyler Hojo - Sidoti & Company, LLC: No problem. Victor H. Mendelson: I don't what it was about. Anyway, the answer is, at this point on sequestration, it's really very murky, and I'm not sure what we attribute the sequestration at this point in the first quarter and even beyond versus, what I would say would been, some of the normal defense cuts that we talked about in the past just because of operations levels. And right now, we're seeing, I think, a little evidence of it, possibly, in a couple of our businesses where DOD is reticent to place orders. And we're waiting on orders, and we just aren't certain though whether that, is in fact, the result of the sequester, Obama's sequester or something else. So we're just sort of staying flexible at this point, and we'll see what happens. I wish I had a better answer, but everyone I talked with, by the way, pretty much in our level within the industry, seems to be feeling the same thing.

Your next question comes from the line of Arnold Ursaner with CJS Securities. Lee Jagoda - CJS Securities, Inc.: This is Lee Jagoda for Arnie. So since Q1 was flat organically and you did see a pickup in January, how far down were November and December? Thomas S. Irwin: This is Tom Irwin. We report on a quarterly basis, the consolidated numbers. Again, our commentary back in our fourth quarter conference call was that the November, December were down, but again, we don't really subscribe to monthly or weekly sales forecast or sales reporting. But again, as Eric said, we did see a recovery in actually both of our segments in the month of January. And again, based on our updated second quarter forecast from our business units, that's what's baked in to our updated estimate growth. Lee Jagoda - CJS Securities, Inc.: Okay. And you highlighted R&D spending by segment, which you rarely, if ever, do. Was the increased ETG R&D spending more broad-based or more project-specific? And as a follow-up to that, how or did it have any impact on the spending you did related to the FSG segment? Thomas S. Irwin: Again, this is Tom Irwin. The answer is really R&D spending principally in the ETG group, we've actually spoke about it last year. We began ramping up ETG in fiscal '12. The first quarter kind of reflects -- the first quarter of this year versus the first quarter of last year, kind of reflects that growth in that, as an example, R&D spending the first quarter was about 3.4% of sales. That's pretty close to where it ran for the full year of last year, it was about 3.3%. So we saw some ramping up after the first and second quarters of last year. The net-net gross increases principally in ETG. And I would say it's broad-based, and I'd say broadly reflective of our targeted areas of growth such as space, aerospace, industrial, given the uncertainty of near-term defense spending. Lee Jagoda - CJS Securities, Inc.: Okay. And one more question, I'll hop back in queue. Corporate expense was higher as a percent of sales in the quarter. Can you just give us more color on what caused that jump and the outlook for corporate expense for the remainder of the year? Thomas S. Irwin: Here and again in our guidance, is about -- right number's just about 2% of sales. It's about what's been running on just between 1.8% and 2% of sales is what's baked into our guidance. I don't recall -- Carlos, you can add any color on any detailed changes in the first quarter, but... Carlos L. Macau: Now the only incremental increase if you would to overhead corporate expenses would be from the new acquisitions and that was not a needle-mover.

Your next question comes from the line of Michael Ciarmoli with KeyBanc Capital Markets. Michael F. Ciarmoli - KeyBanc Capital Markets Inc., Research Division: Real quick first, Tom, just kind of a housekeeping question. But I know you mentioned that the tax rate for the full year is expected to be, I think, it's at 33%. Does that bake in additional impacts from the R&D tax credit? How are you guys dealing with that? Thomas S. Irwin: The answer is yes. Our updated tax rate for the full year reflects the additional R&D credit, which will be eligible for the full year, which wasn't eligible, and of course, we mentioned earlier the retro impact of the first quarter, as well as the other things that impacted the first quarter: Effective tax rate, the deductibility of a portion of our special dividend payable to our 401(k). On the other hand, we have some other things going the other way such as the acquisition of some noncontrolling interests that were -- that are basically entities of LL -- limited liability corporations that are taxed as partnerships. So that kind of goes the other way, but inherent in our updated full year tax effective rate of 33% are all of the above. Michael F. Ciarmoli - KeyBanc Capital Markets Inc., Research Division: Okay, okay, great. That's helpful. And then just one other one, are you guys expecting to see any material impact, or I guess, potential opportunities from the U.S. Airways/American merger, I mean, should it go through? Eric A. Mendelson: Yes. We normally don't comment on specific customers or products due to competitive reasons since we have our competitors on this call and listening actively to what we say, but I can say that in general, bigger airlines are good for what we do or good for HEICO because when they've got more aircraft and more aircraft of a particular type, we're able to develop more products and be a more meaningful savings target for them on all of the different stuff that we do for them. So I would say in general, that's good for us. And of course, both of the other major U.S. combinations, I think, helped HEICO. So -- and of course, both American and U.S. Airways are currently our customers and have been for a very long time, so I would say that we're optimistic on that.

Your next question comes from the line of Steve Levenson of Stifel. Stephen E. Levenson - Stifel, Nicolaus & Co., Inc., Research Division: Just going back to the R&D spending increases, are these line extensions, or are you expanding to new aircraft and engine families? Thomas S. Irwin: This is Tom Irwin. Again, it's mostly in the Electronic Technologies Group, that increase, and so it wouldn't be specific. Stephen E. Levenson - Stifel, Nicolaus & Co., Inc., Research Division: Not in airline then? Thomas S. Irwin: Yes. Exactly. Stephen E. Levenson - Stifel, Nicolaus & Co., Inc., Research Division: How about your plans to [indiscernible]... Eric A. Mendelson: Steve, I can tell you, it's a matter of course, we do continue to develop products for new aircraft that are developed and being used by the airlines. So there's a natural evolution towards developing parts for newer aircraft. Thomas S. Irwin: And our spend was consistent. Eric A. Mendelson: Yes. And our spend was consistent with that. Stephen E. Levenson - Stifel, Nicolaus & Co., Inc., Research Division: Okay. As leasing becomes a bigger part of acquisition, are you seeing any change in attitude from the leasing companies to some of your products, or your acceptance, for example? Eric A. Mendelson: Yes. We have seen -- we have had success with certain lessors, permitting their lessees to use our parts. And we think that we've got to continue to educate and make sure that the operators understand the benefit and the lessors understand that this is not detrimental to the value of their aircraft or engines. So yes, I would say, we made continued progress on that front. Stephen E. Levenson - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And last one in terms of acquisition opportunities, are they skewed more towards one side of the business or the other? Eric A. Mendelson: No. I would say we're -- right now, we are looking at a number of opportunities in each of our business segments. Of course, we never know what we're going to end up being able to vote on, but I would say there are plenty of opportunities in each business segment. And I think that when -- one of the things, which is sort of interesting is we go out on the road and we meet new leadership teams and talk to them about their businesses. I think what's becoming more and more consistent to us is that HEICO seems to be an acquirer of choice for these folks because of our operating style, because we treat people fairly, both customers and team members, shareholders. I mean, that's all part of our D&A. And when they have the opportunity to select with whom they are going to work, whether it is an entrepreneur who's built up a business or a management team, say, or even a private equity firm that feels like HEICO can write a check and close. We continue to be, I think, favored in that area. And we just got to make sure that we find businesses that match with our D&A, and that can be acquired at fair prices where it's fair for the seller, it's fair for the sellers' leadership team and employees, and also, it's fair for HEICO. But there are plenty of opportunities, many opportunities on -- in both businesses and both business segments that we're working on right now.

Your next question comes from the line of Chris Quilty of Raymond James. Chris Quilty - Raymond James & Associates, Inc., Research Division: I know you don't provide quarterly guidance, but the guidance seems to imply that most of the growth is in the second half of the year. And I'm assuming that Q2, in terms of both growth rate and margins, might be more similar to Q1, or is there a different progression that we should expect throughout the year? Thomas S. Irwin: Chris, this is Tom Irwin. And as you pointed out, we don't give quarterly earnings guidance or revenue guidance. I think as we reported in our press release and the commentary from Eric and Victor earlier, I think we see the strengthening more pushed towards the back half of the year based on what we see today, and other than that, we won't be more specific, so somewhat back-ended, if you will. Chris Quilty - Raymond James & Associates, Inc., Research Division: And that would be for the margins also, as you get volume? Thomas S. Irwin: Typically, historically, we get a bump in margins with increased volumes, yes. Obviously, a piece of our cost structure is either fully variable or semi- variable, so volume definitely does help and tends to move the margins. And that being said as we commented in the past, in the ETG group sometimes you'll get some abnormality based on mix and lumpiness. But just generally, yes, we do have historically seen, we'd expect to see margin improvement with volume increases.

[Operator Instructions] Your next question comes from the line of Jim Foung of Gabelli & Company. James Foung - Gabelli & Company, Inc.: I guess just circling back on the R&D, as you're spending on the primarily, ETG segment, are you expecting a, I guess, a fast payback on that? I mean, is it kind of on new products that can be developed relatively sooner than you normally spend on the Flight Support Group? Victor H. Mendelson: Jim, this is Victor. I would say it is our typical payback. There's nothing here that's going to be accelerated by the higher spending in, let's say, we'll see special results in the next quarter, or 2 quarters out or something like that. I think it's in the normal flow of the business. James Foung - Gabelli & Company, Inc.: Okay. So it's kind of your normal kind of a time frame, but you're stepping up because you need to continue to maintain your edge in the marketplace. Victor H. Mendelson: Yes, and I think there are a lot of opportunities out there, particularly in the space side for us that we're working on and spending on at moment. And actually, as well as in some defense-related areas as well that offer opportunities even in a shrinking, budgetary environment. Thomas S. Irwin: Jim, let me just clarify, I mean, the commentary was that the growth in the spend first quarter was in ETG, but I don't want that to be misconstrued. We continue to spend -- again, typically we spend 3% to 4% sales dollar towards new product development, both of our segments. And as Eric said earlier, we continued at that targeted level in FSG as well, but it's just -- as you look quarter-over-quarter, the dollar increase is principally in ETG. But again, for the full year, pretty close to what we ran last year about 3.3% of sales. James Foung - Gabelli & Company, Inc.: Okay. So it is pretty much in line then, with your typical spending? Victor H. Mendelson: Yes. Thomas S. Irwin: Yes. James Foung - Gabelli & Company, Inc.: And then can you just kind of give me some color in terms of what you're seeing in Europe, overall -- from a corporation, are you seeing activity improving or are you still kind of seeing pretty sluggish in terms of the environment out there. Eric A. Mendelson: Yes. Jim, this is Eric. Yes. I mean, a year ago everybody thought Europe was going to collapse and things -- sentiment got very bad. I'm not sure sales ever got down to that level. But certainly, emotion was very raw back then. I would say, Europe is still very slow. There are a lot of issues over there. I don't think the fundamental issues have been corrected even though the market seemed to be rallying a little bit. But we're doing fine over there, but I would say, there's not really any pockets of tremendous strength over there. A number of the airlines have got labor issues, have got cost issues and they've got to work through those. I think that they will and since we provide cost saving alternatives, whether they're in parts or repair, I think that we continue to grow our share, but Europe is still a pretty tough place right now. James Foung - Gabelli & Company, Inc.: So have your results been hurt by kind of the weaker Europe in the last 12 months? Eric A. Mendelson: I'm sorry. Have they been hurt by what? James Foung - Gabelli & Company, Inc.: By the weaker economies in Europe in the last 12 months. Eric A. Mendelson: Yes, yes, I would say so. I would say so. Yes, they've been hurt. James Foung - Gabelli & Company, Inc.: Are you able to kind of quantify that a bit or you think it's a... Eric A. Mendelson: I really don't have the data in front of me right now, but I can tell you definitely that customers over there are struggling, unit volumes are down. While we may be winning share, unit volumes are challenged because they're trying to save as much money as possible and cut back on maintenance spending. I think that it will -- they're not going to be able to do that indefinitely, and that will -- there will be a rebound. But it still continues to be a tough region, and I think other corporate executives with whom we speak are basically saying the same thing.

[Operator Instructions] Your next question comes from the line of Ken Herbert with Imperial Capital.

I'm actually for Ken this morning. I had a question about FSG specifically, I mean, it seems like the number of aircraft getting torn down is going up. I was wondering if you felt like the amount of used parts within the channel was hurting maybe sales within FSG at all. Eric A. Mendelson: Yes. We don't think -- it's a very good question and we're asked that quite a bit at the conferences that we attend and again, it's important to remember that most of what we sell in the parts side are expendable parts. And those are typically not recovered in these tear-down operations. So we have not seen any meaningful impact, I would say, as a result of the tear-downs, nor really do we anticipate a big impact there. The other thing, which I think is also very important to point out is that HEICO is not a trading operation in that we don't take inventory positions in various inventories where if suddenly the price goes down due to tear-downs, that we would be impacted, likewise the price goes up due to lack of tear-downs, where we'll benefit. We tend to be more focused on the expendable area and in our asset management business, more on serving the customers and acquiring in pretty short term, what they need and not buying out big inventories. So no, I don't think we're impacted significantly there.

Okay, okay. That's helpful. And then can we still sort of look at FSG as creating 500 new PMA parts a year? Is that still sort of the run rate that you guys are going at? Eric A. Mendelson: Yes. We, a couple of years ago, we started talking about parts and DER repairs because the 2 are interchangeable depending on sort of what the customer wants, but yes, I mean, we're running at the same rate that we've been running now for the last couple of years. So there's no meaningful change there.

Okay. And then my last question was just on your OEM counterparts. And I was just wondering if they were all getting maybe more creative as far like the sort of service packages that they're offering or if you just were finding it may be more difficult to maybe get sort of maybe deeper penetration within airlines. Is that -- are you finding it more difficult at all to move PMA or products now than maybe 1 or 2 years ago, or... Eric A. Mendelson: No, no. I would -- we're not. We have a tremendous amount of respect for our OEM competition and they're always doing the same stuff that they've always done. I mean, we typically say that the card they like to play is the FUD card: Fear, uncertainty and doubt. And they're very effective in doing that, and they're also very focused on maintaining their margins. So no, we haven't seen any special activities. The other thing which, I think is important to point out, is that we're not greedy and that we only go for up to a 1/3 market share in each of the parts we provide. We intentionally leave them with 2/3, so if you look at the economics of that, they can get 2/3 at an aggressive price. And if they want try to squeeze us on the 1/3 that we're going to take and compete on price, then we're just going have to go after some of the 2/3, some of the other piece that they've got in order to capture our target market share. So I think we sort of -- they don't like us and they wish that we didn't exist. Nobody likes competition. But I think if we didn't exist, somebody else would do it, ultimately. And we're probably the best type of competition to have. So no, I don't think there's anything -- there are no material changes in those areas.

And there are no further questions at this time. I would now like to turn the floor back to management for any closing remarks. Eric A. Mendelson: Thank you very much. We appreciate everybody attending our first quarter earnings call, and we will be having our second quarter earnings call at -- towards the end of May, and perhaps, our Chairman, Larry Mendelson would like to say a few parting comments. Or maybe not, and anyway, he is recovering very well from his cold, nothing serious and all of us will be here for our second quarter conference call. Laurans A. Mendelson: Eric, I just wanted to say goodbye to everyone and I look forward to speaking to them this time for real at the second quarter meeting. And I'm going to get off and rest my voice and you could all hear the problem. So thank you very much for your interest in HEICO, and let us know if we can answer any questions you may have. Thanks. Eric A. Mendelson: Thank you. And that is the end of the call.

Thank you all for participating in today's conference call. You may now disconnect.