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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
(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 DECEMBER 31, 1996
[ ] 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 No. 1-11775
AVIATION SALES COMPANY
(Exact name of Registrant in its charter)
DELAWARE 65-0665658
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6905 N.W. 25TH STREET, MIAMI, FLORIDA 33122
(Address of principal executive offices) (Zip Code)
(305) 592-4055
(Issuer's telephone number)
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
Common Stock, New York Stock Exchange
par value $.001 per share
Securities registered pursuant to Section 12(g) of the Exchange Act:
None
Indicate by check whether the registrant (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months
(or for such shorter periods that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. YES [X] NO [ ]
Indicate by check if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (ss.229.405) is contained hereon, and will not be contained, to
the best of 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. [ ]
As of February 20, 1997, 8,562,500 Shares of Common Stock were outstanding and
the aggregate market value (based on the closing price on the New York Stock
Exchange on February 20, 1997, which was $26.50 per share) of the Common Stock
held by non-affiliates was approximately $107,656,250.
DOCUMENTS INCORPORATED BY REFERENCE
Certain exhibits listed in Part IV of this Annual Report on Form 10-K,
as amended, are incorporated by reference from prior filings made by the
registrant under the Securities Act of 1933, as amended, and the Exchange Act of
1934, as amended.
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<PAGE>
The purpose of this Amendment No. 1 on Form 10-K of Aviation Sales
Company (the "Company") for the year ended December 31, 1996 is to add the
information required by Items 10, 11, 12 and 13 of Part III in the Form 10-K.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT.
The Articles of Incorporation and By-laws of the Company presently
provide for a Board of Directors divided into three classes, as nearly equal in
size as possible, with staggered terms of three years. At the date of this
report the current members of the Board and the expiration of their terms as
Directors were as follows:
TERM
NAME AGE POSITIONS EXPIRES
- ---- --- --------- -------
Dale S. Baker(1)(4) 39 Chairman of the Board, President
and Chief Executive Officer 1999
Harold M. Woody(4) 51 Director and Executive Vice 1999
President-Sales and Marketing
Robert Alpert(1)(2)(3)(4) 47 Director 1998
Tim Watkins(1)(3) 53 Director 1998
Kazutami Okui(2) 56 Director 1997
Sam Humphreys(2)(3) 35 Director 1997
- ---------------------------
(1) Member of the Executive Committee
(2) Member of the Audit Committee
(3) Member of the Compensation Committee
(4) Member of the Nominating Committee
BUSINESS EXPERIENCE
DALE S. BAKER has been the President and Chief Executive Officer of the
Company since February 1992. Prior thereto, Mr. Baker was a Senior Vice
President and Manager in GE Capital's Corporate Investment Finance Group.
HAROLD M. WOODY has been the Executive Vice President-Sales and Marketing
of the Company since February 1992. Prior thereto, from 1989 to 1992, Mr. Woody
was Senior Vice President-Sales and Marketing for Japan Fleet Service(S) Pte.
Ltd. and from 1987 to 1989, Mr. Woody was Executive Vice President of ASC.
1
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J/T Aviation Partners, whose ultimate beneficial owners are Tomen Corporation
and Japan Fleet Service(S) Pte. Ltd., is a shareholder of the Company.
ROBERT ALPERT is a private investor. In addition to his investment in the
Company, Mr. Alpert has invested significantly in business ventures in the
steel, environmental waste and oil service industries.
TIM WATKINS has served as the President and Chief Executive Officer of
Japan Fleet Service(S) Pte. Ltd. since 1989. Prior thereto, Mr. Watkins was
President and Chief Executive Officer of Ryder's Aviation Sales and Leasing
Division. J/T Aviation Partners, whose ultimate beneficial owners are Tomen
Corporation and Japan Fleet Service(S) Pte. Ltd., is a shareholder of the
Company.
KAZUTAMI OKUI has served as the General Manager of the Electronics and
Aircraft Department of Tomen Corporation, located in Tokyo, Japan, for more than
five years. J/T Aviation Partners, whose ultimate beneficial owners are Tomen
Corporation and Japan Fleet Service(S) Pte. Ltd., is a shareholder of the
Company.
SAM HUMPHREYS is a Managing Director of Main Street Capital Partners, L.P.
and has been a partner in that firm since its formation in January 1996. From
April 1994 until March 1997, Mr. Humphreys held various executive positions with
U.S. Delivery Systems, Inc. From April 1993 to May 1994, Mr. Humphreys served as
Senior Vice President and General Counsel of Envirofil, an environmental
services company. Prior thereto, he was a partner in the law firm of Andrews &
Kurth.
COMMITTEES OF THE BOARD
In January 1997, the Board established an Executive Committee, an Audit
Committee, a Compensation Committee and a Nominating Committee.
The Executive Committee is authorized to meet between meetings of the
Board of Directors and to exercise the powers of the Board, subject to
limitations imposed by law.
The Audit Committee is responsible for maintaining communications between
the Board and the Company's independent auditors, monitoring performance of the
independent auditors, reviewing audit scope and results, reviewing the
organization and performance of the Company's internal systems of audit and
financial controls, and recommending the retention or, where appropriate, the
replacement of independent auditors.
The Compensation Committee's responsibilities include reviewing and
approving compensation policies and practices for all elected corporate officers
and for fixing the total compensation of the Chief Executive Officer. The
Compensation Committee also administers the Company's 1996 Stock Option Plan.
The Nominating Committee's responsibility is to recommend to the Board
qualified candidates for election as directors and to consider the performance
of incumbent directors to determine whether they should be recommended to the
Board for renomination for election.
2
<PAGE>
EXECUTIVE OFFICERS
The following list reflects the Company's executive officers, as of this
date, the capacity in which they serve the Company, and when they assumed
office:
EXECUTIVE
NAME AGE POSITIONS OFFICER SINCE
- ---- --- --------- -------------
Dale S. Baker 39 President and Chief Executive February 1992
Officer
Harold M. Woody 51 Executive Vice President-Sales February 1992
and Marketing
William H. Alderman 34 Senior Vice President, Corporate September 1996
Development
Michael A. Saso 42 Senior Vice President-Purchasing December 1994
James C. Stoecker 39 Senior Vice President-Engine December 1996
Services
Joseph E. Civiletto 37 Vice President and Chief February 1992
Financial Officer
James D. Innella 37 Vice President and Chief December 1994
Operating Officer
BUSINESS EXPERIENCE
DALE S. BAKER. See the biographical information contained in "Board of
Directors" above.
HAROLD M. WOODY. See the biographical information contained in "Board of
Directors" above.
WILLIAM H. ALDERMAN has been the Senior Vice President of Corporate
Development since September 1996. Prior thereto, Mr. Alderman was a Managing
Director and Principal of the financial advisory firm of International Aviation
Management Group. Mr. Alderman is also on the Board of Directors of Turbine
Controls (Hartford, CT).
MICHAEL A. SASO has been the Senior Vice President - Purchasing of the
Company since December 1994. From 1986 until December 1994, Mr. Saso served as
Vice President - Purchasing for ASC.
JAMES C. STOECKER has been the Senior Vice President - Engine Services of
the Company since December 1996. From 1994 until December 1996, Mr. Stoecker
served as President of AvEng Trading Partners, Inc. Prior thereto: (i) from 1991
to 1994, Mr. Stoecker served as Manager GE/RR Productions Operations for AAR
Aircraft Turbine Center, (ii) from 1990 to 1991 Mr. Stoecker was the Manager
Operations/Information System for AAR Aviation Trading Group and (iii) from 1989
to 1990, Mr. Stoecker served as Manager of Strategic Services for Ernst & Young.
3
<PAGE>
JOSEPH E. CIVILETTO has been the Vice President and Chief Financial
Officer of the Company since February 1992. Prior thereto from 1982 to 1992, Mr.
Civiletto held various financial, planning and audit positions with Baker Hughes
Inc. and Arthur Andersen LLP.
JAMES D. INNELLA has been the Vice President and Chief Operating Officer
of the Company since December 1994. Prior thereto: (i) from July 1993 to
December 1994, Mr. Innella served as General Manager of ASC; (ii) from 1991 to
July 1993, Mr. Innella was a Director of Operations for Ryder Airlines Services;
and (iii) from 1988 to 1991, Mr. Innella was the Director of Operations and
Purchasing for Aviparts, Inc., a subsidiary of Ryder Airline Services.
FAMILY RELATIONSHIPS
There are no family relationships between or among any of the directors
and executive officers.
COMPLIANCE WITH SECTION 16(A)
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company pursuant to Rule 16a-3(d) under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), during the Company's fiscal year
ended December 31, 1996 and any Forms 5 and amendments thereto furnished to the
Company with respect to its most recent fiscal year, and any written
representations referred to in subparagraph (b)(2)(i) of Item 405 of Regulation
S-K, except as set forth below, no person who at any time during the fiscal year
ended December 31, 1996 was a Director, officer or, to the knowledge of the
Company, a beneficial owner of more than 10% of any class of equity securities
of the Company registered pursuant to Section 12 of the Exchange Act failed to
file on a timely basis, as disclosed in Forms 3, 4 and 5, reports required by
Section 16(a) of the Exchange Act during the fiscal year ended December 31,
1995. James C. Stoecker and William H. Alderman, who became executive officers
of the Company in fiscal year 1996, were late in the filing of a Form 3 during
fiscal year 1996.
4
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth information about the compensation paid
or accrued during 1996, 1995 and 1994 to the Company's Chief Executive Officer
and to each of the other most highly compensated executive officers of the
Company whose aggregate direct compensation exceeded $100,000.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
----------------------
ALL
OTHER
NAME YEAR SALARY BONUS COMPENSATION(1)
($) ($) ($)
- --------------------------------------------------------------------------
Dale S. Baker(1) 1996 248,416 124,208
1995 237,500 118,750
1994 175,000 ---
Harold M. Woody(2) 1996 222,267 111,134
1995 212,500 106,250
1994 175,000 --
Michael A. Saso(3) 1996 160,510 80,255
1995 125,000 62,500
1994 8,231 --
Joseph E. Civiletto 1996 135,975 67,988
1995 130,000 65,000
1994 90,000 --
James D. Innella(3) 1996 141,977 70,959
1995 125,000 62,500
1994 9,105 --
- ----------
(1) Mr. Baker also receives $5,000 per year for life insurance premiums. See
"Employment Agreements" below.
(2) During 1994, Mr. Woody was employed by Japan Fleet Service(S) Pte. Ltd.
("JFS"). The compensation set forth above was paid to JFS in return for Mr.
Woody's services.
(3) Compensation for 1994 represents one month of service.
No long-term compensation awards were made to management during the three years
ended December 31, 1996.
During 1994, Messrs. Baker, Woody, Civiletto and Innella received payments of
$250,000, $75,000, $50,000 and $25,000 respectively in connection with and as a
result of the acquisition of ASC by the Company.
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<PAGE>
OPTION GRANTS DURING LAST FISCAL YEAR
The following table sets forth information concerning options granted
during the fiscal year ended December 31, 1996 to those persons named in the
Summary Compensation Table.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(1
- --------------------------------------------------------------------------------------------------------------
SHARES % OF TOTAL
UNDERLYING OPTIONS
OPTIONS GRANTED TO EXERCISE
GRANTED EMPLOYEES IN PRICE EXPIRATION
NAME (#) FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
---- ----------- ---------- --------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
Dale S. Baker 10,000 6.4 19.00 6/26/2001 9,500 19,000
Harold M. Woody 10,000 6.4 19.00 6/26/2001 9,500 19,000
Michael A. Saso --- __ -- -- -- --
Joseph E. Civiletto 10,000 6.4 19.00 6/26/2001 9,500 19,000
James D. Innella 5,000 3.2 19.00 6/26/2001 4,750 9,500
</TABLE>
- -------------------------
(1) These amounts represent assumed rates of appreciation in the price of the
Common Stock during the term of the options in accordance with rates
specified in applicable federal securities regulations. Actual gains, if
any, on stock option exercises will depend on the future price of the
Common Stock and overall stock market conditions. There is no
representation that the rates of appreciation reflected in the table will
be achieved.
AGGREGATED OPTIONS EXERCISED DURING LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table sets forth information concerning the exercise of
stock options during the 1996 fiscal year and the value of unexercised stock
options at the end of the 1996 fiscal year for the persons named in the Summary
Compensation Table.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR IN-THE-MONEY OPTIONS AT
SHARES ACQUIRED VALUE REALIZED END FISCAL YEAR END ($)
NAME ON EXERCISE (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE*
---- --------------- --------------- ------------------------- --------------------------
<S> <C> <C> <C> <C>
Dale S. Baker -- -- 10,000/0 15,000/0
Harold M. Woody -- -- 10,000/0 15,000/0
Michael A. Saso -- -- --- --
Joseph E. Civiletto -- -- 3,333/6,667 5,000/10,000
James D. Innella -- -- 1,666/3,334 2,500/5,000
</TABLE>
- -------------------------
* Computed based upon the difference between the closing price of the Common
Stock at December 31, 1996 and the exercise price. No value has been
assigned to options which are not in-the-money.
6
<PAGE>
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company receives an annual
retainer fee at the rate of $12,000 per year for serving in such capacity. In
addition, each director who is not an employee of the Company receives $1,000
for each meeting of the Board of Directors attended and $1,000 for each
committee meeting attended.
Also, all directors will receive on an annual basis mandatory stock option
grants under the 1996 Director Stock Option Plan for serving on the Board.
Five-year options to purchase 5,000 shares of Common Stock will be automatically
granted to each director on July 1 of each year, starting July 1, 1997, at an
option exercise price equal to the closing price of the Common Stock on such
date. Existing directors, upon the organization of the Company, have been
granted five-year options to purchase 10,000 shares of Common Stock, all of
which are immediately exercisable, at an option exercise price of $19.00 per
share. Additionally, directors appointed to the Board in the future will be
granted options to purchase 10,000 shares of Common Stock when they are
appointed to the Board, at an option exercise price equal to the closing price
of the Common Stock on the date of their appointment to the Board.
EMPLOYMENT AGREEMENTS
Effective December 2, 1994, the Company entered into an employment
agreement with Mr. Baker (the "Employment Agreement"). The Employment Agreement
provides for an annual base salary of $237,500 (to be increased annually by a
cost of living adjustment). In addition, the Company agreed to provide Mr. Baker
with all employee benefits established by the Company, and to pay Mr. Baker an
additional sum of $5,000 per year for insurance premiums to maintain a whole
life insurance policy. The Employment Agreement requires Mr. Baker to use his
best efforts to perform the duties of President and Chief Executive Officer.
Mr. Woody has an employment agreement with the Company to serve as
Executive Vice President - Sales and Marketing, under which he is entitled to an
annual base salary of $212,500 (to be increased annually by a cost of living
adjustment), and all employee benefits established by the Company.
The employment agreements between the Company and Messrs. Baker and
Woody each provide for an initial term expiring on December 31, 1999.
Thereafter, the respective agreements each shall run for successive one-year
periods unless terminated by the Company upon six months' prior written notice,
or by Messrs. Baker or Woody upon three months' prior written notice.
Mr. Saso has an employment agreement with the Company to serve as
Senior Vice President - Purchasing under which he is entitled to an annual base
salary of $185,000 (to be increased annually by a cost of living adjustment),
and all employee benefits established by the Company. The agreement provides for
an initial term expiring on May 31, 2001, running for successive one-year terms
thereafter, unless terminated by the Company upon six months' prior written
notice, or by Mr. Saso upon three months' prior written notice.
Mr. Civiletto has an employment agreement with the Company to serve as
Vice President and Chief Financial Officer under which he is entitled to an
annual base salary of $130,000 (to be increased annually by a cost of living
adjustment), and all employee benefits established by the Company. The agreement
provides for an initial term expiring on December 31, 1997, running for
successive one-year terms thereafter, unless terminated by the Company upon six
months' prior written notice, or by Mr. Civiletto upon three months' prior
written notice.
7
<PAGE>
Mr. Innella has an employment agreement with the Company to serve as
Vice President and Chief Operating Officer under which he is entitled to an
annual base salary of $150,000 (to be increased annually by a cost of living
adjustment), and all employee benefits established by the Company. The agreement
provides for an initial term expiring on May 31, 2001, running for successive
one-year terms thereafter, unless terminated by the Company upon six months'
prior written notice, or by Mr. Innella upon three months' prior written notice.
Each of Messrs. Baker, Woody, Saso, Civiletto and Innella has further
agreed in his respective employment agreement that he shall refer to the Company
all opportunities in the aerospace industry relating to parts purchasing,
leasing, financing, repair, distribution and manufacturing, and aircraft
purchasing, leasing and financing to which he might become exposed in carrying
out his duties and responsibilities.
Each of the employment agreements for Messrs. Baker, Woody, Saso,
Civiletto and Innella also provides for participation in the Company's EBITDA
Incentive Compensation Plan whereby each of them has the opportunity to earn an
incentive bonus of between 20% and 50% of their base salary (under the Company's
1997 EBITDA Incentive Compensation Plan, such percentages increase to between
20% and 250% of base salary for calendar years commencing January 1, 1997 or
thereafter). Further, each of the employment agreements provides that in the
event of (a) a change in control of the Company including the vesting of
decision-making authority in one of the Company's current principal
stockholders; (b) the sale of all or substantially all of the assets of the
Company to a third party for which the executive officer does not continue in
employment; or (c) the merger or consolidation of the Company with an entity for
which the executive officer does not continue in employment, the employment
agreement shall be terminable by the executive officer upon 90 days' notice and
one year's base salary shall be payable to the executive officer as a
termination fee.
Section 162(m) of the Code generally disallows an income tax deduction
to public companies for compensation over $1.0 million paid in a year to any one
of the chief executive officer or the four most highly compensated other
executive officers, to the extent that this compensation is not "performance
based" within the meaning of Section 162(m). As a result of this limitation,
there can be no assurance that all of the compensation paid to the Company's
executive officers in the future will be deductible.
STOCK OPTIONS
In connection with the organization of the Company, the Company's Board
of Directors and shareholders adopted two stock option plans (the "Plans").
Pursuant to the 1996 Director Stock Option Plan (the "Director Plan"), options
to acquire a maximum of the greater of 150,000 shares or 2% of the number of
shares of Common Stock then outstanding may be granted to directors of the
Company. Pursuant to the 1996 Stock Option Plan (the "1996 Plan"), options to
acquire a maximum of the greater of 650,000 shares of Common Stock or 8% of the
number of shares of Common Stock then outstanding may be granted to executive
officers, employees (including employees who are directors), independent
contractors and consultants of the Company. Options to purchase 196,600 shares
at an exercise price equal to $19.00 per share have been granted under the
Plans, 128,867 of which are immediately exercisable.
The Plans are administered by the Compensation Committee of the Board
of Directors. The Compensation Committee determines which persons will receive
options and the number of options to be granted to such persons. The Director
Plan also provides for annual mandatory grants of options to directors. See
"Compensation of Directors." The Compensation Committee will also interpret the
provisions of the Plan and make all other determinations that it may deem
necessary or advisable for the administration of the Plans.
8
<PAGE>
Pursuant to the Plans, the Company may grant Incentive Stock Options
("ISOs") as defined in Section 422(b) of the Internal Revenue Code of 1986, as
amended, (the "Code"), and Non-Qualified Stock Options ("NQSOs"), not intended
to qualify under Section 422(b) of the Code. The price at which the Company's
Common Stock may be purchased upon the exercise of options granted under the
Plans will be required to be at least equal to the per share fair market value
of the Common Stock on the date the particular options are granted. Options
granted under the Plans may have maximum terms of not more than 10 years and are
not transferable, except by will or the laws of descent and distribution. None
of the ISOs under the Plans may be granted to an individual owning more than 10%
of the total combined voting power of all classes of stock issued by the Company
unless the purchase price of the Common Stock under such option is at least 110%
of the fair market value of the shares issuable on exercise of the option
determined as of the date the option is granted, and such option is not
exercisable more than five years after the grant date.
Generally, options granted under the Plans may remain outstanding and
may be exercised at any time up to three months after the person to whom such
options were granted is no longer employed or retained by the Company or serving
on the Company's Board of Directors.
Pursuant to the Plans, unless otherwise determined by the Compensation
Committee, one-third of the options granted to an individual are exercisable
upon grant, one-third are exercisable on the first anniversary of such grant and
the final one-third are exercisable on the second anniversary of such grant.
However, options granted under the Plans shall become immediately exercisable if
the holder of such options is terminated by the Company or is no longer a
director of the Company, as the case may be, subsequent to certain events which
are deemed to be a "change in control" of the Company. A "change in control" of
the Company generally is deemed to occur when ( a ) any person becomes the
beneficial owner of or acquires voting control with respect to more than 20% of
the Common Stock (or 35% if such person is a holder of Common Stock on the
effective date of the Company's initial public offering); ( b ) a change occurs
in the composition of a majority of the Company's Board of Directors during a
two-year period, provided that a change with respect to a member of the
Company's Board of Directors shall be deemed not to have occurred if the
appointment of a member of the Company's Board of Directors is approved by a
vote of at least 75% of the individuals who constitute the then existing Board
of Directors; or ( c ) the Company's stockholders approve the sale of all or
substantially all of the Company's assets.
ISOs granted under the Plans subject to the restriction that the
aggregate fair market value (determined as of the date of grant) of options
which first become exercisable in any calendar year cannot exceed $100,000.
The Plans provide for appropriate adjustments in the number and type of
shares covered by the Plans and options granted thereunder in the event of any
reorganization, merger, recapitalization or certain other transactions involving
the Company.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Compensation
Committee") is responsible for making recommendations to the Board of Directors
concerning executive compensation, including base salaries, bonuses and the
bases for their award, stock option plans and other benefits. Each of the
members of the Compensation Committee is an independent outside director of the
Company. The Compensation Committee was formed in January 1997. Prior to
formation of the Compensation Committee, the Board of Directors acted with
respect to compensation matters.
9
<PAGE>
In making its recommendations to the Board of Directors, the Board has
generally considered the overall performance of the Company during the prior
fiscal year, the individual executive officer's contribution to the achieving of
operating goals and business objectives and levels of compensation of companies
similar in size and development to the Company.
It is the Board's view that senior executives' interests should
complement those of stockholders. Accordingly, a substantial portion of senior
executive compensation above a base salary is intended to be provided through
bonuses tied to certain indicators of Company performance and through the grant
of stock options, thus creating incentives for executives to achieve long term
Company objectives and increase stockholder value.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 1996, the Company did not
have a Compensation Committee. In January 1997, the Board organized a
Compensation Committee. During the past fiscal year, none of the Company's
directors or executive officers served as a member of the compensation committee
or similar committee of another entity, one of whose executive officers served
on the Company's Board; served as a director of another entity, one of whose
executive officers served on the Company's Board or served as a member of the
compensation committee or similar committee of any other entity, one of whose
executive officers served as a director of the Company.
PERFORMANCE GRAPH
The following graph compares the total return on the Company's Common
Stock with the cumulative total return on the Standard & Poor's ("S&P") 500
Index, the S&P Midcap 400 Index, the S&P Smallcap 600 Index, the Dow Jones
Equity Market Index and a peer group index selected by the Company, for the
period between the Company's initial public offering on June 27, 1996 and
December 31, 1996.
The peer group selected by the Company is comprised of the following
companies: AAR Corp., Aviall, Inc., Banner Aerospace, Inc., Greenwich Air
Services, Inc., UNC, Inc. and Kellstrom.
These indices relate only to stock prices; they do not purport to
afford direct comparison of the business or financial performance of the
companies comprising such indices with the Company nor with each other.
COMPARISON OF 6 MONTH CUMULATIVE TOTAL RETURN(1)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHICS
6/27/96 12/31/96
------- --------
Aviation Sales Co. 100 108
Peer Group 100 125
S & P 500 100 112
S & P MIDCAP 400 100 109
S & P SmallCap 800 100 109
Dow Jones Equity Market 100 112
_____________
(1) Assumes $100 invested on June 27, 1996 in stock or on May 31, 1996 in
index, including reinvestment of dividends, in the Company's Common Stock,
S & P 500, S & P Midcap 400, S & P SmallCap 800, Dow Jones Equity Market
and the companies comprising the peer group.
10
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the date of this report, certain
information regarding the Common Stock, owned of record or beneficially by (i)
each person who owns beneficially more than 5% of the outstanding Common Stock;
(ii) each of the Company's directors and named executive officers; and (iii) all
directors and executive officers as a group. The address for each beneficial
owner is c/o the Company, 6905 N.W. 25th Street, Miami, Florida.
SHARES APPROXIMATE
BENEFICIALLY PERCENT
NAME OWNED OF CLASS
- ---- ------------ -----------
Robert Alpert(2)(7) 2,357,000 27.5
J/T Aviation Partners(3) 1,501,000 17.5
Dale S. Baker(4)(5)(7) 310,000 3.6
Harold M. Woody(4)(7) 210,000 2.4
Tim Watkins(6)(7) 10,000 *
Kazutami Okui(6)(7) 10,000 *
Sam Humphreys(7) 10,000 *
Michael A. Saso(4) 75,000 *
James D. Innella(4)(8) 76,666 *
Joseph E. Civiletto(4)(9) 35,000 *
All directors and executive officers 3,368,966 38.9
as a group (11 persons)(6)(10)
- ------------------------------
*Less than one percent
(1) Each person named in the table has the sole voting and investment power with
respect to the shares beneficially owned.
(2) Shares are owned of record by three corporate entities controlled by Mr.
Alpert.
(3) J/T is a general partnership with three general partners. The ultimate
beneficial owners of the partnership interests in J/T are Tomen Corporation
and Japan Fleet Service (S) Pte. Ltd.
(4) Shares shown as beneficially owned, except for currently exercisable
options, are pledged to secure payment of the Notes representing the
purchase price paid for their interest in the Company. See "Certain
Relationships and Related Transactions."
(5) A portion of these shares (35,000 shares) are owned by the Dale S. Baker
Family Limited Partnership.
(6) Messrs. Watkins and Okui disclaim beneficial ownership of the shares owned
by J/T.
(7) Includes five-year options to purchase 10,000 shares at an option exercise
price of $19.00 per share. See "Stock Options"
(8) Includes five-year options to purchase 1,666 shares at an option exercise
price of $19.00 per share. Excludes five-year options to purchase 3,334
shares at an option exercise price of $19.00 per share, which options are
not currently vested.
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(9) Includes five-year options to purchase 10,000 shares at an option exercise
price of $19.00 per share. Subsequent to December 31, 1996, the Company's
Board determined to immediately vest Mr. Civiletto's five-year options to
purchase 6,667 shares at an exercise price of $19.00 per share.
(10) Includes five-year options to purchase 96,666 shares at an option exercise
price of $19.00 per share.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of December 2, 1994, the Company entered into a 20-year lease with
Aviation Properties, a Delaware general partnership ("Aviation Properties"),
pursuant to which the Company leases its corporate headquarters and warehouse in
Miami, Florida (the "Miami Property"). The Company makes annual payments under
such lease in the amount of approximately $892,990. The sole partners of
Aviation Properties are (a) AVAC Corporation ("AVAC") and (b) J/T Aviation
Partners, a Delaware general partnership ("J/T,'). The sole stockholder and
president of AVAC is Robert Alpert, a principal stockholder and director of the
Company. J/T is also a principal stockholder of the Company.
In connection with Aviation Properties' purchase of the Miami Property,
the Company and Aviation Properties entered into a loan agreement (the "Loan
Agreement") whereby the Company made a $2,465,519 loan to Aviation Properties,
which loan bears interest at 8% per annum, with principal and interest due in a
single payment on December 2, 2004.
As of December 2, 1994, the Company entered into a six-year lease with
Aviation Properties of Texas, a Delaware general partnership ("AVTEX"), pursuant
to which the Company leases a warehouse in Pearland, Texas. The Company make
annual payments under such lease in the amount of $114,468. The sole partners of
AVTEX are AVAC and J/T.
The Company believes the terms of the Loan Agreement and the terms of
the leases with Aviation Properties and AVTEX are no less favorable than could
be obtained from an unaffiliated third party.
The Company is obligated to pay a fee of $50,000 per quarter to an
entity controlled by Mr. Alpert for consulting services. The Company's
obligation to pay this fee expired at the end of February 1997.
At January 1, 1995, Messrs. Baker, Woody, Saso, Civiletto and Innella
were granted options (the "Options") by the partners of the Partnership (AVAC
and J/I) to purchase an aggregate of 13.5% of the outstanding limited
partnership interests in the Partnership for an exercise price greater than the
fair market value of the interests in the partnership at that date. At January
1, 1996, the Options were exercised in full by delivery to AVAC and J/T of full
recourse promissory notes (the "Notes") in the aggregate principal amounts set
forth below, representing the payment in full of the exercise price of the
Options:
LIMITED PARTNER'S
PERCENTAGE INTEREST IN
PARTNERSHIP ACQUIRED PRINCIPAL AMOUNT
NAME UPON EXERCISE OF OPTIONS OF NOTES
- ---- ------------------------ ----------------
Dale S. Baker 6.0% $638,678.75
Harold M. Woody 4.0% 425,785.83
James D. Innella 1.5% 159,669.69
Michael A. Saso 1.5% 159,669.69
Joseph E. Civiletto 0.5% 53,223.23
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Management's interests in the Partnership are subject to a first
priority pledge to the lenders under the Company's revolving credit facility
with certain financial institutions and a second priority pledge to AVAC and J/T
to secure the repayment of their respective Notes. The Notes bear interest at
the rate of 8.0% per annum, with principal and interest due and payable on the
earlier of January 1, 2001 or from the net proceeds available upon the sale of
any portion of the collateral securing the Notes. Immediately prior to the
Company's initial public offering ("IPO") in June 1996, management contributed
their interests in the Partnership to the Company in exchange for shares of the
Common Stock. At such time, management pledged their shares of the Common Stock
to secure the repayment of their respective Notes. The exercise price of the
Options after giving effect to the exchange of Partnership interests for shares
of Common Stock would effectively have been $2.13 per share.
In July, 1996, $10,160,250 of the net proceeds of the IPO were used to
pay subordinated indebtedness due to J/T in connection with the formation of the
Company. J/T is a principal stockholder of the Company.
On December 10, 1996 (effective November 30, 1996), the Company
completed the acquisition of AvEng Trading Partners, Inc. ("AvEng") for a
purchase price equal to 400,000 shares of the Company's Common Stock. James C.
Stoecker and his wife received 250,000 of the 400,000 share purchase price. Upon
the completion of the AvEng acquisition by the Company, James S. Stoecker became
the Company's Senior Vice President-Engine Services.
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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.
AVIATION SALES COMPANY
By: /s/ DALE S. BAKER
--------------------------------------------------------
Dale S. Baker
President, Chief Executive Officer and
Chairman of the Board (Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
SIGNATURE AND TITLE DATE
------------------- ----
By: /s/ DALE S. BAKER April 30, 1997
-------------------------------------------------------
Dale S. Baker
President, Chief Executive Officer and
Chairman of the Board (Principal Executive
Officer)
By: /s/ JOSEPH E. CIVILETTO April 30, 1997
-------------------------------------------------------
Joseph E. Civiletto
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
By: /s/ HAROLD M. WOODY April 30, 1997
-------------------------------------------------------
Harold M. Woody
Executive Vice President - Sales and
Marketing and Director
By: /S/ JAMES D. INNELLA April 30, 1997
-------------------------------------------------------
James D. Innella
Vice President and Chief Operating Officer
By: /s/ ROBERT ALPERT April 30, 1997
-------------------------------------------------------
Robert Alpert
Director
By: /s/ SAM HUMPHREYS April 30, 1997
-------------------------------------------------------
Sam Humphreys
Director
By: April 30, 1997
-------------------------------------------------------
Tim Watkins
Director
By: April 30, 1997
-------------------------------------------------------
Kazutami Okui
Director
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