<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 8, 1997
REGISTRATION STATEMENT NO. 333-15639
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 4
TO
FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ARAMEX INTERNATIONAL LIMITED
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
BERMUDA 4513 NOT APPLICABLE
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification Number)
incorporation or
organization)
</TABLE>
------------------------
<TABLE>
<S> <C>
CT CORPORATION SYSTEM
2 BADR SHAKER ALSAYYAB STREET 1633 BROADWAY
UM UTHAYNA, AMMAN, JORDAN NEW YORK, NEW YORK 10019
(011) 962-6-5522192 (212) 246-5070
(Address, including zip code, (Name, address and telephone
and telephone number, including number
area code, of agent for service)
of Registrant's principal
executive offices)
</TABLE>
------------------------
COPIES TO:
<TABLE>
<S> <C>
LAWRENCE B. FISHER, ESQ. SAMUEL B. FORTENBAUGH III, ESQ.
ORRICK, HERRINGTON & SUTCLIFFE LLP MORGAN, LEWIS & BOCKIUS LLP
666 Fifth Avenue 101 Park Avenue
New York, New York 10103 New York, NY 10178-0060
(212) 506-5000 (212) 309-6000
(212) 506-5151 (Fax) (212) 309-6273 (Fax)
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY
BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS
PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH
SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO THE REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED JANUARY 8, 1997
PROSPECTUS
1,000,000 SHARES
[LOGO]
COMMON STOCK
------------------
Aramex International Limited (the "Company") is hereby offering (the
"Offering") 1,000,000 shares of common stock, par value $0.01 per share (the
"Common Stock"). Prior to this Offering, there has been no public market for the
Common Stock and there can be no assurance that such a market will develop after
consummation of this Offering or, if developed, that it will be sustained. It is
currently estimated that the initial public offering price per share of Common
Stock will be between $7.00 and $8.00. See "Risk Factors" and "Underwriting" for
a discussion of the factors considered in determining the initial public
offering price of the Common Stock. Application has been made for listing of the
Common Stock on the Nasdaq National Market under the symbol "ARMXF."
------------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE
OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 12.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNT PROCEEDS TO
PUBLIC AND COMMISSIONS(1) COMPANY(2)
<S> <C> <C> <C>
Per Share................................. $ $ $
Total(3).................................. $ $ $
</TABLE>
(1) Does not include additional compensation payable to Commonwealth Associates,
the representative of the Underwriters (the "Representative") in the form of
a non-accountable expense allowance, a corporate advisory fee and certain
warrants. See "Underwriting" for information concerning such additional
compensation and certain indemnification and contribution arrangements with
the Underwriters.
(2) Before deducting expenses payable by the Company estimated at $450,000, not
including the non-accountable expense allowance.
(3) Certain shareholders (the "Selling Shareholders") have granted the
Underwriters an option (the "Over-Allotment Option"), exercisable for 45
days after the date of this Prospectus to purchase up to 150,000 additional
shares of Common Stock solely to cover over-allotments, if any. If the
Underwriters exercise this option in full, the Price to Public will total
$ ; the Underwriting Discount and Commissions will total $ ; and
the Proceeds to the Selling Shareholders will total $ . See
"Underwriting."
The shares of Common Stock are being offered by the Underwriters named
herein when, as and if delivered to and accepted by the Underwriters and subject
to their right to reject any order in whole or in part. It is expected that
delivery of the certificates representing such shares will be made against
payment therefor at the office of Commonwealth Associates, New York, New York,
on or about January , 1997.
------------------------
COMMONWEALTH ASSOCIATES
The date of this Prospectus is January , 1997
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
------------------------
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND THE CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING THE NOTES
THERETO, APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS OTHERWISE INDICATED OR
THE CONTEXT OTHERWISE REQUIRES: (I) THE "COMPANY" OR "ARAMEX" REFERS TO ARAMEX
INTERNATIONAL, LIMITED, A HONG KONG COMPANY, AND ITS CONSOLIDATED SUBSIDIARIES
PRIOR TO THE REORGANIZATION (DESCRIBED UNDER "THE COMPANY'S ORGANIZATION") AND
ARAMEX INTERNATIONAL LIMITED AND ITS CONSOLIDATED SUBSIDIARIES FOLLOWING THE
REORGANIZATION, AND (II) ALL INFORMATION IN THIS PROSPECTUS ASSUMES NO EXERCISE
OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION AND NO EXERCISE OF THE WARRANTS TO
PURCHASE 100,000 SHARES OF COMMON STOCK ISSUED TO THE REPRESENTATIVE IN
CONNECTION WITH THIS OFFERING (THE "REPRESENTATIVE'S WARRANTS"). ALL REFERENCES
IN THIS PROSPECTUS TO "$" SHALL MEAN UNITED STATES DOLLARS. FOR THE PURPOSES OF
THIS PROSPECTUS, THE "MIDDLE EAST" SHALL INCLUDE THE FOLLOWING COUNTRIES:
BAHRAIN, CYPRUS, EGYPT, IRAN, IRAQ, ISRAEL, JORDAN, KUWAIT, LEBANON, OMAN, THE
PALESTINIAN TERRITORIES, QATAR, SAUDI ARABIA, SUDAN, SYRIA, TURKEY, THE UNITED
ARAB EMIRATES, AND YEMEN.
THE COMPANY
Aramex provides express delivery and freight forwarding services from its
main hubs in Dubai, London, New York and Amman primarily to, from and within
destinations in the Middle East and the Indian Sub-Continent. Aramex has
approximately 800 full-time employees and operates through a network of 36
stations/offices and 11 service providers located in 29 countries, and holds a
majority interest in a direct marketing and mail order business, Middle East
Direct Marketing ("MED"), which operates five SHOP THE WORLD DIRECT catalog
centers. The Company's strategy is to focus on its core business and to expand
its services in certain areas of the Middle East to include (i) warehouse
management in designated free trade zone locations, (ii) inter-modal regional
transportation and distribution (offering the options of express air freight
forwarding and ground distribution); (iii) inventory management; and (iv) local
warehousing. From 1991 to 1995, the Company's revenues grew from $17.2 million
to $43.6 million. The Company generated revenues of $43.6 million and $35.9
million, with corresponding net income of $1.5 million and $1.4 million, for the
year ended December 31, 1995 ("1995") and the nine months ended September 30,
1996 (the "Nine Month Period"), respectively. Aramex uses commercial airline
service to carry its express parcels and freight, resulting in lower capital
costs and greater pricing flexibility. Aramex is a founding member of the
Overseas Express Carriers Network (the "OEC"), which is a global alliance among
certain leading independent express companies that functions as a worldwide
delivery network for its members. In October 1996, Airborne Freight Corporation
("Airborne"), the parent of Airborne Express, the third largest domestic air
express delivery carrier in the United States and a member of the OEC, invested
$2.0 million for 8.9% of the Company's Common Stock at $6.56 per share.
The Company has been operating in the Middle East since 1982. According to
Boeing Commercial Airplane Group ("Boeing") in its 1996/1997 WORLD AIR CARGO
FORECAST, it has been estimated that real gross domestic product ("GDP") for the
Middle East will grow at approximately 3.5% per year to $740 billion by 2015.
Because of its strategic location at the crossroads of Asia, Europe, and Africa,
the Middle East is becoming a major center for world air freight distribution.
It was reported by Boeing that, in early 1996, total air traffic through Dubai,
where the Company operates one of its major hubs, increased 23% and
transshipments increased 41% from 1995. The Company believes it is well
positioned to benefit from the economic growth forecasted for the Middle East
which should result in an increased demand for express, freight forwarding and
regional trucking services.
INTERNATIONAL SMALL PARCEL EXPRESS SERVICE
Express shipments consist of small packages, typically ranging in weight
between 0.5 and 50 kilograms, with time-sensitive delivery requirements. The
Company offers its express delivery services on an international basis to both
retail and wholesale express accounts and has its own computer tracking system,
which permits rapid tracking of a customer's express shipments. Customers may
also track their shipments
3
<PAGE>
directly on-line on the Company's web-site on the world wide web
(www.aramex.com). At September 30, 1996, the Company had approximately 20,000
retail express accounts and 640 wholesale express accounts.
Retail express customers include individual and commercial accounts such as
trading companies, pharmaceutical companies, banks, service and information
companies and manufacturing and regional distribution companies. Revenues from
retail accounts were $13.7 million (or 31% of total revenues) and $11.7 million
(or 32% of total revenues) for 1995 and the Nine Month Period, respectively.
None of the Company's retail customers accounted for more than 1.2% of the
Company's total revenues for 1995 or the Nine Month Period.
Wholesale customers consist primarily of express delivery companies (such as
Airborne Express, Emery, Purolator Canada, and United Parcel Service), which
originate express packages that have a Middle Eastern destination and require
Aramex's network in the region to deliver their customers' shipments. Unlike
certain of its competitors, Aramex does not repackage these shipments. This is
attractive to the Company's wholesale customer because it enables the customer
to preserve its corporate identity with the end user. Based upon its knowledge
of the Middle East market, management believes that Aramex is the leading
independent wholesaler to the Middle East. Revenues from wholesale accounts were
$11.6 million (or 27% of total revenues) and $9.5 million (or 26% of total
revenues) for 1995 and the Nine Month Period, respectively.
FREIGHT FORWARDING
The Company offers a wide range of freight forwarding services, including
air and ocean freight forwarding, consolidation, warehousing, customs clearance
and breakbulk services. Aramex provides "door to door" service from, to and
within the Middle East and the Indian Sub-Continent. A significant portion of
the Company's freight forwarding business involves consignee sales (imports)
and, to a lesser extent, exports. Freight forwarding shipments (or "cargo"
shipments) typically have gross weights in excess of 50 kilograms, require
customs clearance and are less time-sensitive than express shipments. Revenues
from the Company's freight forwarding operations were $14.3 million (or 33% of
total revenues) and $10.4 million (or 29% of total revenues) for 1995 and the
Nine Month Period, respectively. Of the Company's more than 500 freight
forwarding accounts, none exceeded 1% of the total 1995 or Nine Month Period
freight forwarding revenues, respectively.
SHOP THE WORLD DIRECT CATALOG CENTERS (MED)
In 1995, Aramex launched MED, a direct marketing and mail order catalog
service on a test basis in Amman, Jordan, with the objective of developing
distribution and sales of international mail order products throughout the
Middle East. The catalogs are featured in the Company's SHOP THE WORLD DIRECT
catalog centers where salespeople assist customers in selecting and ordering
merchandise. At September 30, 1996, MED had exclusive rights to sell and
distribute products from approximately 20 catalogs including Brooks Brothers,
The Chef's Catalog, Hammacher Schlemmer, J.C. Penney, and Littlewoods (UK) and
others in the Middle East (with the exception of Saudi Arabia, Kuwait and the
Gulf States in the case of J.C. Penney). The Company operates SHOP THE WORLD
DIRECT catalog centers in Jordan, Kuwait, Egypt, Lebanon and Qatar, where the
Company sells, processes and delivers mail order products to its customers.
Commission revenue generated from such sales by MED accounted for $0.6 million
(or 2% of total revenue) for the Nine Month Period. In addition to generating
commissions on each sale of a product, MED generates package delivery revenue
for the Aramex express delivery network.
DOMESTIC AND REGIONAL GROUND EXPRESS TRANSPORTATION SERVICES
The Company has developed an extensive regional network for the delivery of
small parcels for its customers which include local distributors, pharmaceutical
companies, banks and a TV home shopping service. Revenues from intracountry
operations were $2.0 million (or 5% of total revenues) and $2.1 (or
4
<PAGE>
6% of total revenues ) for 1995 and the Nine Month Period, respectively. Aramex
plans to expand its ground transportation network to offer cross-border trucking
and ground transportation for small parcels and fast-moving consumer goods in
the region, servicing what the Company perceives to be a highly underdeveloped
market. In developing a parcel shuttle service linking the main cities in the
Middle East, Aramex expects to lower the cost of linehauling by reducing air
freight movement and thereby offer its customers lower prices and the option of
deferred service. Management believes the addition of such complementary
businesses should help strengthen the core business of Aramex.
GROWTH STRATEGY
The Company's business strategy is to provide a full range of international
and domestic express, freight forwarding, logistics, ground transportation and
mail order services to its customers. The Company believes that it competes in
an industry and a region characterized by a growing need among customers for
more comprehensive services. By offering a wide range of distinct delivery and
transportation services at a reasonable price, the Company plans to position
itself as a leading provider of express, freight forwarding and logistics
services in its core markets.
The express, transportation and logistics services businesses require
extensive and ongoing investments in technological and systems infrastructure.
The Company historically has made significant investments in its technology
systems to provide a strong platform for enhanced service and future growth. In
connection with the introduction of logistics and other services, the Company
has commenced a reengineering of its station operations, which includes a number
of ongoing technological initiatives such as: (i) the installation of upgraded
information systems; (ii) the development of Aramex's own private communications
network; (iii) the replacement of manual processing with bar coding scanner
technology for all its offices around the world; and (iv) the development of a
customized software package to provide customers and suppliers with direct
electronic connections to the Aramex network.
The Aramex management team has been carefully building the Company's
infrastructure, creating the technology and management systems, employee base
and strategic alliances required both to support future growth in the Company's
current business lines and to serve as a platform for the expansion into the
following new businesses and emerging markets:
LOGISTICS MANAGEMENT. The increased use of intermodalism (two or
more means of transportation) in freight forwarding has been coupled with
a corresponding increased demand for outsourced logistics management
services. Based upon the results of a pilot program implemented at its
headquarters, Aramex plans to introduce, on a Company-wide basis, a new
service concept, the "One Stop Shop," as a total logistical solution to
its customers' transport needs. Aramex is currently undertaking a major
re-engineering effort designed to transform the structure of its stations
from a department setup (e.g., express, freight forwarding, etc.) into
cross-functional personalized customer teams offering multi-modal
regional transportation and distribution as well as inventory management
services. Additionally, with a portion of the proceeds of this Offering,
the Company plans to open warehousing and distribution centers in
designated regional free trade zones. The Company will target its
existing customers as well as potential customers requiring high value
and timely delivery, including aviation, automobile, computer and
electronics companies, light assembly factories and wholesale freight
forwarders.
GEOGRAPHIC EXPANSION. The Company is implementing a strategy focused
on expanding its geographic presence in the Middle East, the Indian
Sub-Continent, and other emerging markets such as North Africa and
certain former Soviet Central Asian Republics. Each of these emerging
markets is characterized by large populations and growing economies which
are liberalizing and opening their markets to the private sector and to
foreign investors. The Company plans to expand its distribution network
in these regions, Aramex management believes it can (i) enhance its
regional market share and presence; (ii) expand its customer base; and
(iii) further reduce its
5
<PAGE>
geographic revenue concentration. The Company has targeted a portion of
the proceeds from the Offering to acquire an equity interest in the
operations of its current service providers or joint ventures located in
India, Sri Lanka, Pakistan and Turkey. Recently, the Company entered into
an agreement with a service provider in Uzbekistan to commence operations
in early 1997 and plans to commence negotiations to establish joint
ventures in certain North African countries and other Central Asian
Republics such as Kazakhstan and Azerbaijan.
ADDITIONAL MED SHOP THE WORLD DIRECT CATALOG CENTERS. In an effort
to add additional sources of revenue and as a natural extension of the
basic express business, the Company plans to open additional catalog
centers with a portion of the proceeds from the Offering and to commence
local advertising of its mail order services. The Company's goal is to
open at least five additional catalog centers in the next twelve months
with a long-term view to including a catalog center in or near each of
its stations in the Middle East. The Company plans to continue to seek to
offer similar value-added customized special services to its growing
customer base.
The Company's principal executive office is located at 2 Badr Shaker
Alsayyab Street, Um Uthayna, Amman, Jordan and the Company's telephone number is
962-6-5522192.
------------------------
ARAMEX-Registered Trademark- is a registered service mark of the Company.
This Prospectus includes trademarks and service marks of companies
other than those of the Company.
6
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Common Stock Offered Hereby.................. 1,000,000 shares
Common Stock to be Outstanding after the
Offering(1)................................ 4,429,688 shares
Use of Proceeds.............................. For expansion, working capital and other
general corporate purposes. See "Use of
Proceeds" and "Certain Transactions."
Proposed Nasdaq Symbol....................... "ARMXF"
Risk Factors................................. The Common Stock offered hereby involves a
high degree of risk. Prospective investors
should carefully consider the factors
discussed under the heading "Risk Factors."
</TABLE>
- ------------------------
(1) Excludes 300,000 shares of Common Stock issuable upon exercise of
outstanding options having an exercise price at or above the initial public
offering price of the Common Stock and 100,000 shares of Common Stock
issuable upon the exercise of the Representative's Warrants at an exercise
price of 120% of the initial offering price. See "Management" and
"Underwriting."
THE COMPANY IS ORGANIZED UNDER THE LAWS OF THE ISLANDS OF BERMUDA AND IS
HEADQUARTERED IN JORDAN. CERTAIN OF THE COMPANY'S DIRECTORS, OFFICERS AND
CONTROLLING PERSONS, AND SELLING SHAREHOLDERS AS WELL AS CERTAIN OF THE EXPERTS
NAMED IN THIS PROSPECTUS RESIDE OUTSIDE THE UNITED STATES. ALL OR A SUBSTANTIAL
PORTION OF THEIR ASSETS AND THE ASSETS OF THE COMPANY ARE LOCATED OUTSIDE THE
UNITED STATES, INCLUDING BERMUDA AND JORDAN. AS A RESULT, IT MAY NOT BE POSSIBLE
FOR INVESTORS TO EFFECT SERVICE OF PROCESS WITHIN THE UNITED STATES UPON SUCH
PERSONS OR TO ENFORCE JUDGMENTS AGAINST THE COMPANY OR SUCH PERSONS OBTAINED IN
UNITED STATES COURTS PREDICATED UPON THE CIVIL LIABILITY PROVISIONS OF THE
FEDERAL OR STATE SECURITIES LAWS OF THE UNITED STATES. THE COMPANY HAS BEEN
ADVISED BY CONYERS, DILL & PEARMAN, BERMUDA COUNSEL TO THE COMPANY, THAT THE
ENFORCEMENT OF JUDGMENTS OF UNITED STATES COURTS OBTAINED IN ACTIONS AGAINST THE
COMPANY OR SUCH PERSONS PREDICATED UPON THE CIVIL LIABILITY PROVISIONS OF THE
FEDERAL OR STATE SECURITIES LAWS AND THE ENFORCEABILITY, IN ORIGINAL ACTIONS, OF
LIABILITIES AGAINST THE COMPANY OR SUCH PERSONS PREDICATED SOLELY UPON THE
FEDERAL OR STATE SECURITIES LAWS OF THE UNITED STATES WOULD REQUIRE THE
COMMENCEMENT OF A SEPARATE ACTION IN THE BERMUDA COURTS. THERE IS UNCERTAINTY AS
TO WHETHER THE COURTS OF BERMUDA OR JORDAN WOULD (i) ENFORCE JUDGMENTS OF UNITED
STATES COURTS OBTAINED AGAINST THE COMPANY OR SUCH PERSONS PREDICATED UPON THE
CIVIL LIABILITY PROVISIONS OF THE FEDERAL SECURITIES LAWS OF THE UNITED STATES
OR (ii) ENTERTAIN ORIGINAL ACTIONS BROUGHT IN BERMUDA COURTS AGAINST THE COMPANY
OR SUCH PERSONS PREDICATED UPON THE FEDERAL SECURITIES LAWS OF THE UNITED
STATES. THE COMPANY HAS IRREVOCABLY APPOINTED CT CORPORATION SYSTEM, 1633
BROADWAY, NEW YORK, NEW YORK 10019, AS ITS AUTHORIZED AGENT TO RECEIVE SERVICE
OF PROCESS IN ANY LEGAL ACTION OR PROCEEDING AGAINST IT BASED UPON THE FEDERAL
SECURITIES LAWS OF THE UNITED STATES AND/OR ARISING
7
<PAGE>
OUT OF OR RELATING TO THIS OFFERING. THE COMPANY HAS BEEN ADVISED BY ALI SHARIF
ZU'BI & SHARIF ALI ZU'BI LAW FIRM THAT THE ENFORCEMENT OF FOREIGN JUDGEMENTS IN
JORDAN IS GOVERNED BY LAW NO. 8 OF 1952 WHICH PROVIDES THAT A FOREIGN JUDGEMENT
MAY BE ENFORCED IN JORDAN BY MEANS OF AN APPLICATION TO THE COMPETENT COURT
WITHOUT RETRIAL AND RE-EXAMINATION OF THE MERITS OR ISSUES OF THE CASE.
JORDANIAN COURTS MAY, HOWEVER, DECLINE TO ENFORCE A FOREIGN JUDGEMENT (I) IF THE
COURT WHICH PASSED THE JUDGEMENT WAS WITHOUT COMPETENT JURISDICTION, (II) IF THE
DEFENDANT HAS NOT CARRIED ON ANY BUSINESS WITHIN THE JURISDICTION OF THE COURT
WHICH PASSED THE JUDGEMENT OR WAS NOT RESIDENT WITHIN ITS JURISDICTION AND DID
NOT WILLFULLY APPEAR BEFORE THE COURT OR DID NOT RECOGNIZE ITS JURISDICTION,
(III) IF THE DEFENDANT WAS NOT NOTIFIED TO APPEAR BEFORE THE COURT WHICH ISSUED
THE JUDGEMENT OR WAS NOT DULY OR PROPERLY SERVED WITH NOTICE, (IV) IF THE
JUDGEMENT HAS BEEN PASSED IN A FRAUDULENT MANNER, (V) IF THE DEFENDANT IS ABLE
TO PERSUADE THE COURT THAT THE JUDGEMENT IS NOT FINAL, (VI) IF THE JUDGEMENT
CONTRAVENES JORDANIAN PUBLIC POLICY, AND (VII) IF THE LAWS OF THE COUNTRY OF THE
COURT WHICH PASSED THE JUDGEMENT DO NOT RECOGNIZE AND ENFORCE JUDGEMENTS OF
JORDANIAN COURTS.
8
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The summary consolidated financial information set forth below is derived
from and should be read in conjunction with the Consolidated Financial
Statements, including the Notes thereto, appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED
DECEMBER 31, SEPTEMBER 30,
------------------------------- --------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues:
Express............................................... $ 19,802 $ 22,349 $ 25,491 $ 18,467 $ 21,394
Freight Forwarding.................................... 6,544 13,104 14,306 10,707 10,421
Domestic(1)........................................... 833 1,291 2,007 1,407 2,099
Other(2).............................................. 1,635 1,385 1,798 1,179 1,982
--------- --------- --------- --------- ---------
Total revenues...................................... 28,814 38,129 43,602 31,760 35,896
Shipping costs.......................................... 13,676 19,992 23,045 17,109 18,623
--------- --------- --------- --------- ---------
Gross profit........................................ 15,138 18,137 20,557 14,651 17,273
Operating expenses...................................... 6,099 6,877 7,986 5,803 6,456
Selling, general and administrative expenses............ 7,885 10,232 10,664 7,774 9,050
--------- --------- --------- --------- ---------
Operating income.................................... 1,154 1,028 1,907 1,074 1,767
Interest expense........................................ (4) (46) (61) (13) (10)
Gain (loss) on sale of fixed assets..................... 7 (4) (1) (39) --
Exchange gain (loss).................................... (182) (55) 31 84 (6)
Other income (loss)..................................... (200) (123) 69 (26) 1
--------- --------- --------- --------- ---------
Income before income taxes.......................... 775 800 1,945 1,080 1,752
Provision for income taxes.............................. 56 227 266 233 180
Minority interests...................................... 633 278 157 95 124
--------- --------- --------- --------- ---------
Net income.......................................... $ 86 $ 295 $ 1,522 $ 752 $ 1,448
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Net income per common share(3).......................... $ 0.03 $ 0.09 $ 0.49 $ 0.24 $ 0.46
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Weighted average number of common shares
outstanding(3)........................................ 3,125 3,125 3,125 3,125 3,125
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
DECEMBER 31, --------------------------
------------------------------- PRO FORMA, AS
1993 1994 1995 ACTUAL ADJUSTED(4)(5)
--------- --------- --------- --------- ---------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.......................................... $ 2,239 $ 1,915 $ 2,867 $ 3,800 $ 11,990
Total assets............................................. 10,297 13,178 14,344 17,513 25,703
Total liabilities........................................ 6,908 9,715 9,649 11,379 11,379
Shareholders' equity..................................... $ 2,612 $ 2,889 $ 4,404 $ 5,850 $ 14,040
</TABLE>
- ------------------------
(1) Domestic revenues are derived from the intracountry delivery of packages,
primarily by ground transportation.
(2) Other revenues include revenue derived from the Company's remail and special
services and, for the nine months ended September 30, 1996, include $0.6
million of revenues from the Company's Middle East Direct Marketing (MED)
business.
(3) Assumes consummation of the Reorganization and excludes 300,000 shares of
Common Stock issuable upon exercise of outstanding options and 100,000
shares of Common Stock issuable upon the exercise of the Representative's
Warrants. See "Management" and "Underwriting."
(4) Gives effect to the sale of 304,688 shares of Common Stock to Airborne in
October 1996 for an aggregate purchase price of $2.0 million (the "Airborne
Stock Purchase"). See "Certain Transactions."
(5) Adjusted to reflect the sale of the shares of Common Stock offered hereby at
an assumed initial public offering price of $7.50 per share (after deducting
estimated offering expenses and underwriting discount and commissions). See
"Capitalization" and "Use of Proceeds."
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THE COMPANY'S ORGANIZATION
Aramex International Limited (sometimes referred to in this section as
"Aramex Bermuda") was incorporated under the laws of Bermuda in October 1996 as
the successor to Aramex International, Limited, a Hong Kong company which was
incorporated in February 1986 ("Aramex Hong Kong"). On December 13, 1996, Aramex
Bermuda subscribed for 100 shares of Aramex Hong Kong (the "Ordinary Shares")
and each share of Aramex Hong Kong outstanding prior to such subscription was
converted by a special resolution of the shareholders of Aramex Hong Kong into
non-voting deferred shares (the "Deferred Shares") (collectively, the
"Reorganization"). The Deferred Shares do not carry voting rights (other than in
respect of resolutions affecting their class rights) and are effectively
subordinated to the Ordinary Shares (all of which are held by Aramex Bermuda) in
respect of all dividends, distributions and liquidation rights until such time
as the holders of Ordinary Shares have received $100 billion. Subsequent to the
Reorganization and prior to the Offering, the Company's shareholders will own
the same proportion of outstanding shares of Aramex Bermuda as they held in
Aramex Hong Kong prior to the Reorganization. Pursuant to the Reorganization,
Aramex Bermuda will become the parent holding company of Aramex Hong Kong. The
existing shareholders of Aramex Hong Kong will retain a nominal interest in
Aramex Hong Kong through their ownership of the Deferred Shares. Aramex Hong
Kong will act as an intermediate holding company of the Company's subsidiaries
until the Company completes its reorganization plan to transfer all of its
assets from Aramex Hong Kong to Aramex Bermuda or into other subsidiary
companies. See "Risk Factors--Risks Inherent in International Operations" and
Note 1 to Notes to Consolidated Financial Statements.
The corporate structure of the Company's operating subsidiaries is in part
influenced by the laws of the countries in which the Company operates. Various
Middle Eastern and other governments require governmental approval prior to
investments by foreign persons and limit the extent of any such investment. See
"Risk Factors--Restrictions and Controls on Foreign Investments and Acquisitions
of Majority Interests." As a result, the Company generally operates through
subsidiaries, sponsors, joint ventures, service providers and agents.
The Company operates through wholly-owned subsidiaries in France, Greece,
Jordan, New York, United Kingdom, Washington D.C. and the Palestinian
Territories.
The Company has entered into sponsorship agreements whereby a domestic
company sponsors Aramex to obtain a charter or license. The Company has entered
into such agreements in Abu Dhabi, Bahrain, Cyprus, Dubai, Kuwait and Qatar.
The Company has entered into joint venture agreements in Canada, Egypt,
Lebanon, Syria and Turkey. The Company has entered into a technical services and
exclusive agency agreement in Saudi Arabia.
The Company has also entered into agency relationships with local service
providers whereby it appoints an agent to conduct its courier services in a
designated territory in return for royalties. The Company has entered into such
agreements in Bulgaria, Ethiopia, India, Iran, Oman, Pakistan, Sri Lanka,
Switzerland, Uzbekistan, Sudan, Hong Kong, Bangladesh and Yemen.
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The following chart illustrates the Company's corporate structure.
[CHART]
Recently, the Company entered into an agreement with a service provider in
Uzbekistan to commence operations in early 1997. Following the Offering, the
Company may enter into discussions to increase its ownership or participation
interest in several joint ventures as well as convert its agency arrangements
with certain of its service providers into joint ventures. The Company is
negotiating to increase its interest in its Egyptian joint venture and in its
Lebanese joint venture.
The Company may enter into discussions to commence new joint ventures in
certain North African countries and other Central Asian Republics, such as
Kazakhstan and Azerbaijan.
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RISK FACTORS
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK. IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, THE
FOLLOWING RISK FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING THE COMPANY
AND ITS BUSINESS BEFORE PURCHASING THE SECURITIES OFFERED HEREBY. PROSPECTIVE
INVESTORS SHOULD BE IN A POSITION TO RISK THE LOSS OF THEIR ENTIRE INVESTMENT.
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS WHICH INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS
INCLUDING THOSE SET FORTH IN THE FOLLOWING RISK FACTORS AND ELSEWHERE IN THIS
PROSPECTUS.
RISKS INHERENT IN INTERNATIONAL OPERATIONS
A majority of the Company's business is conducted outside of the United
States. As a result, the Company's operations are subject to various risks such
as the possibility of the loss of revenue, property or equipment due to
expropriation, nationalization, war, insurrection, terrorism or civil
disturbance, the instability of foreign economies, currency fluctuations and
devaluations, adverse tax policies and governmental activities that may limit or
disrupt markets, restrict payments or the movement of funds or result in the
deprivation of contract rights. Additionally, the ability of the Company to
compete may be adversely affected by foreign governmental regulations that
encourage or mandate the hiring of local contractors, or by regulations that
require foreign contractors to employ citizens of, or purchase supplies from
vendors in, a particular jurisdiction. The Company is subject to taxation in a
number of jurisdictions, and the final determination of its tax liabilities
involves the interpretation of the statutes and requirements of various domestic
and foreign taxing authorities. Foreign income tax returns of foreign
subsidiaries, unconsolidated affiliates and related entities are routinely
examined by foreign tax authorities. There can be no assurance that any of these
risks will not have an adverse effect on the Company.
RISKS ASSOCIATED WITH HONG KONG SUBSIDIARY
Following the Reorganization and until it completes the transfer of assets
from Aramex Hong Kong to Aramex Bermuda, the Company will continue to operate
through Aramex Hong Kong. As a result, the Company's business, results of
operations and financial condition may be influenced by the political situation
in Hong Kong. On July 1, 1997, sovereignty over Hong Kong will be transferred
from the United Kingdom to the People's Republic of China, and Hong Kong will
become a Special Administrative Region of China. There can be no assurance that
the transfer of sovereignty and any resulting changes in the political, legal or
other conditions in Hong Kong will not adversely impact the ability of Aramex
Hong Kong to conduct business.
RISKS RELATING TO OPERATIONS IN THE MIDDLE EAST
The Company operates in 17 countries located in the Middle East. The Company
derived 71% of 1995 revenue and 74% of the Nine Month Period revenue and
substantially all of its operating profit from operations in the Middle East,
and the risks of doing business in that region could adversely affect the
Company. Such risks include the following:
POLITICAL AND ECONOMIC FACTORS. The Middle East's economies have been
subject to many destabilizing factors, including military conflicts and
tensions, civil unrest, large government deficits, low foreign exchange reserves
and fluctuations in world commodity prices. In attempting to respond to these
problems, many Middle Eastern governments have intervened in their economies,
employing among other things, fiscal, monetary and trade policies, import
duties, foreign currency restrictions and controls of wages, prices and exchange
rates. Some Middle Eastern governments have frequently changed their policies in
all these areas. Certain Middle Eastern economies have received military and
economic aid from the United States and many Middle Eastern companies have been
financed by United States venture capital and
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<PAGE>
investment concerns. There is no assurance that such aid and investments will
continue to be available in the future.
RISKS OF FOREIGN LEGAL SYSTEMS. Many of the countries where the Company
operates and plans to operate have legal systems that differ from the United
States legal system and may provide substantially less protection for foreign
investors.
EFFECT OF POSTAL TAXES AND OTHER PAYMENTS. In several Middle Eastern
countries where the Company operates, it is required to pay taxes and/or
royalties to the local postal authority. To the extent these taxes and/or
royalties are increased, the Company's results of operations may adversely be
affected.
RESTRICTIONS AND CONTROLS ON FOREIGN INVESTMENTS AND ACQUISITIONS OF MAJORITY
INTERESTS
Foreign investment by the Company in local joint ventures or business
acquisitions has been and will continue to be restricted or controlled to
varying degrees. These restrictions or controls have and may continue to limit
or preclude foreign investment in certain proposed joint ventures or business
acquisitions or increase the costs and expenses of the Company in seeking to
effectuate such a transaction. Various governments require governmental approval
prior to investments by foreign persons and limit the extent of any such
investment. In certain countries, the Company is required to conduct operations
pursuant to an agency or sponsorship agreement. The loss of an agent or sponsor
could result in the temporary or permanent cessation of operations in a
particular country. There can be no assurance that the Company will be able to
replace such agent or sponsor on favorable terms, if at all. Furthermore,
various governments restrict investment opportunities by foreign persons in
certain industries. Various governments may also require governmental approval
for the repatriation of capital and income by foreign investors. Various
governments have laws protecting local postal authorities. Although such
approvals are usually given, there can be no assurance that such approvals will
be forthcoming in the future. There can be no assurance that additional or
different restrictions or adverse policies applicable to the Company will not be
imposed in the future or, if imposed, as to the duration or impact of any such
restrictions or policies.
DEPENDENCE ON INTERNATIONAL TRADE
International trade is essential to the Company's results of operations and
has played an important role in the economic development of the Middle East and
other regions where the Company currently operates or plans to operate.
International trade is influenced by many factors, including economic and
political conditions, major work stoppages, currency fluctuations, and laws
relating to tariffs, trade restrictions, foreign investments, and taxation. A
reduction in the volume of international trade due to one or more of these
factors, any material restrictions on trade, or a downturn in the economies
where the Company currently operates or plans to operate could have a material
adverse effect on the Company. Political differences may lead to the imposition
of trade barriers and/or economic sanctions. The occurrence of such barriers or
sanctions could have a material adverse effect on the Company's operations.
GOVERNMENT REGULATION
The Company's operations require and will require various licenses, permits
and approvals in each jurisdiction where it operates. The loss or revocation of
any existing licenses, permits or approvals or the failure to obtain any
necessary licenses, permits or approvals in new jurisdictions where the Company
intends to do business would have an adverse effect on the ability of the
Company to conduct its business and/or on its ability to expand into such
jurisdictions. Authorization to commence operations will be required in each
country in which the Company intends to operate. No assurance can be given that
the Company will obtain such authorizations, licenses, permits or necessary
approvals. In addition, countries in which the Company wishes to operate may
have regulatory systems that impose other impediments on the Company's
operations. There can be no assurance that the Company will be able to
profitably operate in light of these restrictions.
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RELIANCE ON COMMERCIAL CARRIERS
The Company relies on scheduled flights of commercial air carriers and
shipping companies in delivering its express mail and freight forwarding
services. Consequently, the ability of the Company to provide reliable, low-cost
express delivery would be adversely affected by changes in policies and
practices such as pricing, payment terms, scheduling, and frequency of service
or increases in the cost of fuel, taxes and labor, and other factors that are
not within the Company's control.
RISKS ASSOCIATED WITH GEOGRAPHIC EXPANSION AND NEW LINES OF BUSINESS
The Company intends to actively pursue a strategy of continued growth, and
will seek to expand the range of its services and penetrate new geographic
markets. The Company's ability to expand into new geographic markets will be
dependent upon its ability to secure the requisite local permits necessary to
conduct business, including those which may be required by the local postal
authority. Several countries targeted by the Company for expansion have
restricted express companies from operating in their jurisdiction. For example,
as of the date hereof, Algeria and Morocco each have permitted one of the
Company's competitors to operate therein and Tunisia has not permitted any
express company to operate therein. Failure to secure such local permits would
create a competitive disadvantage for the Company and hinder or delay its
expansion plans therein. The Company also plans to open additional catalog
centers and commence offering logistics management services along with regional
trucking and ground transportation. This will require additional capital
expenditures, including leasing additional facilities and purchasing and
operating a small trucking fleet. The Company has only limited experience in
operating a trucking operation and a logistics management service. The
availability of qualified and licensed drivers will become an important factor
in the Company's expansion of a regional trucking and ground transportation
business. In addition, the Company will be required to identify suitable new
geographic markets with sufficient demand for the Company's services, to hire
and retain skilled management, marketing, customer services and other personnel,
and to successfully manage growth, including monitoring operations, controlling
costs and maintaining effective quality and service controls. There can be no
assurance that the Company will be able to do so effectively or that allocation
of capital or human resources will not adversely impact the Company as a whole.
EFFECTS OF INFLATION; CURRENCY FLUCTUATIONS
Exchange rates for some local currencies in countries where Aramex operates
may fluctuate in relation to the U.S. dollar and such fluctuations may have an
adverse effect on the Company's earnings or assets when local currencies are
translated into U.S. dollars. Any weakening of the value of a local currency
against the U.S. dollar could result in lower revenues and earnings for the
Company when such local currencies are translated into U.S. dollars. Therefore,
there can be no assurance that currency exchange rates will not have a material
adverse effect on the Company.
COMPETITION
The Company faces strong competition in the Middle East and other regions in
which it operates. The Company's ability to compete effectively depends
principally upon price, frequency and capacity of scheduled service, extent of
geographic coverage and reliability. Some of the Company's competitors have well
established reputations and significantly greater financial and other resources
available for expansion than the Company. The Company's principal competitors
are DHL Worldwide Express, Federal Express, TNT Express Worldwide and UPS. There
can be no assurance that the Company will be able to expand as rapidly as, or
compete effectively against, its competitors.
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<PAGE>
HOLDING COMPANY STRUCTURE
The Company is a holding company and substantially all of its operations are
conducted through subsidiaries, joint ventures and contractual sponsorship
arrangements. Consequently, the Company will rely principally on dividends or
advances from its subsidiaries (including ones that are not wholly-owned), joint
ventures, contractual sponsorship arrangements and agency relationships with
service providers. The ability of such subsidiaries to pay dividends and the
ability of the Company to realize on its investment in other entities is subject
to applicable local law and certain other restrictions.
DEPENDENCE ON KEY EMPLOYEES
The Company's growth and profitability are dependent upon, among other
things, the abilities and experience of the Company's management team including
Mr. William Kingson and Mr. Fadi Ghandour, the Company's Chairman and the
Company's President, Deputy Chairman and Chief Executive Officer, respectively.
If the services of Messrs. Kingson and Ghandour or a number of the Company's
executive officers were no longer available to the Company, the Company's
business, financial condition and results of operations could be adversely
affected.
From time to time, Messrs. Fadi Ghandour and William Kingson have made
non-interest bearing loans to the Company. In addition, from time to time, Mr.
Ghandour has also personally guaranteed lines of credit and bank overdrafts on
behalf of the Company. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Certain Transactions" and Note 8 to Notes
to Consolidated Financial Statements. There can be no assurance that such loans
and guarantees will be available to the Company in the future.
SEASONALITY
The Company's business is seasonal in nature. Historically, the Company
experiences a decrease in demand for its services during the first and third
quarter, the post-winter holiday and summer vacation seasons. The Company
traditionally experiences its highest volume in the fourth quarter due to the
holiday season. The seasonality of the Company's sales may cause a variation in
its quarterly operating results and a significant decrease in second or fourth
quarter revenues may have an adverse effect on the Company's results of
operations for that fiscal year.
POTENTIAL LIABILITY REGARDING DELIVERY OF SHIPMENTS AND NO INSURANCE COVERAGE
In the Company's business, the Company assumes responsibility to its
customers for the safe delivery of shipments up to $100.00 in value. Upon the
customer's request, the Company insures amounts above $100.00 with local
insurance companies. The Company does not carry an umbrella insurance policy.
The Company has, from time to time, made payments to its customers for claims
related to its shipments which, to date, have not been material to the Company's
results of operations. Should the Company experience an increase in the number
of such claims, there can be no assurance that the Company's results of
operations will not be adversely affected.
ARBITRARY DETERMINATION OF OFFERING PRICE
The initial public offering price has been arbitrarily determined by
negotiation between the Company and the Underwriters. In determining the
offering price, the Underwriters and the Company have considered, among other
things, market prices of similar securities of comparable publicly traded
companies, the financial condition and operating information of companies
engaged in activities similar to those of the Company, the financial condition
and prospects of the Company and the general condition of the securities market.
Consequently, the initial public offering price of the Common Stock does not
necessarily bear any relationship to the Company's asset value, net worth or
other established valuation criteria and may not be indicative of prices that
may prevail at any time or from time to time in the public market for the Common
Stock. See "Underwriting."
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NO PRIOR PUBLIC TRADING MARKET; POTENTIAL VOLATILITY OF STOCK PRICE
Prior to the Offering, there has been no public market for the Common Stock
and there can be no assurance that an active trading market will develop or be
sustained after the Offering. The initial public offering price may not be
indicative of prices that will prevail in the trading market. The market prices
for securities of companies in the Company's industry have at times in the past
been volatile. The dissemination of news reflecting unrest or hostilities in the
Middle East or other regions of the world where the Company operates or plans to
operate could have a significant impact on the market price of the Common Stock.
The announcement of new commercial products or services by the Company or its
competitors, governmental regulations, regulatory approvals or developments
relating to the transportation industry generally, as well as period-to-period
fluctuations in financial results and general economic, political and market
conditions, may have a significant impact on the market price of the Common
Stock.
RIGHTS OF SHAREHOLDERS UNDER BERMUDA LAW
The Company is incorporated under the laws of Bermuda and is headquartered
in Jordan. Principles of law relating to such matters as the validity of
corporate procedures, the fiduciary duties of the Company's management and
directors and the rights of its shareholders, including those persons who will
become shareholders of the Company in connection with the Offering, are governed
by Bermuda law and the Company's Memorandum of Association and Bye-laws. Such
principles of law may differ from those that would apply if the Company were
incorporated in a jurisdiction in the United States. In addition, the Company
has been advised by Conyers, Dill & Pearman, its Bermuda counsel, that there is
uncertainty as to whether the courts of Bermuda would enforce (i) judgments of
United States courts obtained against the Company or its officers and directors
resident in foreign countries predicated upon the civil liability provisions of
the securities laws of the United States or any state or (ii) in original
actions brought in Bermuda, liabilities against the Company or such persons
predicated upon the securities laws of the United States or any state. The
Company has been further advised by the Ali Sharif Zu'bi & Sharif Ali Zu'bi Law
Firm, Jordanian counsel to the Company, that the enforcement of foreign
judgements in Jordan is governed by Law No. 8 of 1952. Basically, a foreign
judgement may be enforced in Jordan by means of an application to the competent
court without retrial and re-examination of the merits or issues of the case.
Jordanian courts may, however, decline to enforce a foreign judgement (i) if the
court which passed the judgement was without competent jurisdiction, (ii) if the
defendant has not carried on any business within the jurisdiction of the court
which passed the judgement or was not resident within its jurisdiction and did
not willfully appear before the court or did not recognize its jurisdiction,
(iii) if the defendant was not notified to appear before the court which issued
the judgement or was not duly or properly served with notice, (iv) if the
judgement has been passed in a fraudulent manner, (v) if the defendant is able
to persuade the court that the judgement is not final, (vi) if the judgement
contravenes Jordanian public policy, and (vii) if the laws of the country of the
court which passed the judgement do not recognize and enforce judgements of
Jordanian courts. See "Description of Capital Stock--Bermuda Law."
STOCK ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, the Company will have a total of 4,429,688
shares of Common Stock outstanding. Of these shares, the 1,000,000 shares
(1,150,000 shares if the Underwriters' over-allotment option is exercised in
full) sold in this Offering will be freely tradeable without restriction or
registration under the Securities Act by persons other than "affiliates" of the
Company, as defined under the Securities Act. The remaining 3,429,688 shares of
Common Stock outstanding upon completion of this Offering will be "restricted
stock" as that term is defined by Rule 144 as promulgated under the Securities
Act and may not be sold in the absence of registration under the Securities Act
unless an exemption from registration is available, including the exemption
provided by Rule 144. All officers, directors and shareholders of the Company
and all holders of any options, warrants or other securities convertible into,
or exercisable or exchangeable for, shares of Common Stock have agreed that they
will not, directly or indirectly, offer, sell, offer to sell, contract to sell,
pledge, grant any option to purchase or otherwise sell or
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dispose of any shares of Common Stock or other capital stock of the Company, or
any securities convertible into, or exercisable or exchangeable for, any shares
of Common Stock or other capital stock of the Company without the prior written
consent of the Representative, on behalf of the Underwriters, for a period of 12
months after the effective date of the Registration Statement of which this
Prospectus is a part; provided, however, that (i) any such person may make
private sales or bona fide gifts of securities of the Company during such period
if the proposed transferee agrees to be bound by the above restrictions and (ii)
such restrictions shall not apply with respect to the laws of descent and
distribution. In addition, Airborne has been granted certain "piggyback"
registration rights pursuant to the Airborne Stock Purchase. See "Certain
Transactions." Any future sales of shares of Common Stock may have an adverse
effect on the market price of the Common Stock. See "Principal and Selling
Shareholders," "Stock Eligible for Future Sale," "Management--Stock Option
Plans," and "Underwriting."
BROAD DISCRETION OF MANAGEMENT AND THE BOARD OF DIRECTORS IN USE OF PROCEEDS
Approximately 39% of the estimated net proceeds are presently designated to
be used for working capital and general corporate purposes. Although the Company
intends to apply the net proceeds of the Offering in the manner described under
"Use of Proceeds," the Company's management and the Board of Directors have
broad discretion within such proposed uses as to the precise allocation of the
net proceeds, the timing of expenditures and all other aspects of the use
thereof. The Company reserves the right to reallocate the net proceeds of the
Offering among the various categories set forth under "Use of Proceeds" as it,
in its sole discretion, deems necessary or advisable based upon prevailing
business conditions and circumstances. See "Use of Proceeds."
EFFECT OF PREFERRED STOCK AND STAGGERED BOARD
The Company's Board of Directors has the authority to issue up to 5,000,000
shares of undesignated preferred stock and to determine the price, rights,
preferences and privileges of those shares without any further vote or action by
the shareholders. The rights of holders of Common Stock will be subject to, and
may be adversely affected by, the rights of holders of any preferred stock that
may be issued in the future. There are presently no shares of preferred stock
outstanding. Although the Company has no present intention to issue shares of
preferred stock after consummation of the Offering, any issuance of undesignated
preferred stock, while potentially providing desirable flexibility in connection
with possible acquisitions and other corporate purposes, could have the effect
of making it more difficult for a third party to acquire a majority of the
outstanding voting stock of the Company.
In addition, the Company's Bye-laws provide for a classified Board of
Directors. This could inhibit a change of control of the Company because it will
take at least two annual meetings to change control of the Board of Directors by
shareholder vote. See "Management--Directors and Executive Officers."
CONTROL BY EXISTING SHAREHOLDERS; BENEFITS OF OFFERING TO EXISTING SHAREHOLDERS
Following the Offering, the Company's existing shareholders will
beneficially own approximately 78.4% of the outstanding shares of Common Stock
(assuming no exercise of the Underwriters' Over-Allotment Option). As a result
of such ownership, these shareholders will be able to control the election of
all directors and other actions submitted to a vote of the Company's
shareholders. See "Use of Proceeds," "Dilution," "Principal and Selling
Shareholders" and "Certain Transactions."
DILUTION
Purchasers of the shares of Common Stock offered hereby (at an assumed
initial public offering price of $7.50 per share) will incur an immediate
dilution in net tangible book value per share of Common Stock of $4.33 (58.0%)
per share. Additional dilution to future net tangible book value per share may
occur upon the exercise of the Representative's Warrants and options and
warrants that are outstanding or to be issued under the Company's stock option
plan or otherwise. See "Capitalization," "Dilution" and "Certain Transactions."
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EFFECT OF SHAREHOLDERS AGREEMENT
In connection with the Airborne Stock Purchase, the existing shareholders of
the Company entered into a Shareholders Agreement which provides, among other
things, that in the event the Company transfers (as defined in the Shareholders
Agreement) any shares of Common Stock to certain listed competitors of Airborne
or to any other company primarily engaged in the transportation of air freight
or air express shipments, Airborne has the right to sell all of its shares of
Common Stock to the Company on the same terms and conditions as the sale to such
other company. In the event that Messrs. Kingson and Ghandour and/or Ms. Rula
Ghandour transfer any shares of Common Stock to certain listed competitors to
Airborne or any other company primarily engaged in the transportation of air
freight or air express shipments, it shall be a condition of such transfer that
Airborne shall be offered the right to sell to such competitor all of its shares
of Common Stock on the same terms and conditions as the sale by Messrs. Kingson
and Ghandour and/or Ms. Rula Ghandour. Such provision may deter or frustrate a
takeover of the Company.
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USE OF PROCEEDS
The net proceeds to the Company from the sale of the 1,000,000 shares of
Common Stock offered hereby are estimated to be approximately $6,190,000,
assuming a public offering price of $7.50 per share, after deducting
underwriting discounts and commissions and estimated offering expenses payable
by the Company.
The Company presently anticipates utilizing the net proceeds of this
Offering (i) to expand into existing and emerging markets by acquiring ownership
interests or increasing existing participation interests in local service
providers, the amount and timing of which use of proceeds cannot be determined
at this time (ii) approximately $0.75 million to open additional SHOP THE WORLD
DIRECT catalog centers, (iii) approximately $1.0 million in technology and
systems infrastructure in order to introduce logistics management services, and
(iv) approximately $2.0 million to acquire additional vehicles for operation of
domestic and cross border ground transportation. The balance of the net proceeds
of this Offering will be used for working capital and general corporate
purposes, including funding accounts receivable.
As part of its growth strategy, the Company routinely considers acquisitions
of local service partners and complementary businesses; however, except as
described herein, the Company does not presently have any plans, arrangements or
agreements with respect to any potential acquisitions and there can be no
assurance that any acquisitions will be consummated.
The foregoing represents the Company's best estimates based upon its current
plans and certain assumptions regarding industry and general economic conditions
and the Company's future revenues and expenditures. If any of these factors
change, the Company may find it necessary or advisable to reallocate some of the
proceeds within the above-described categories or to use portions thereof for
other purposes or may be required to seek additional financing. There can be no
assurance that additional financing will be available to the Company on
acceptable terms, if at all. Pending application thereof, the net proceeds will
be invested in short-term, investment-grade, interest bearing securities.
The Company will not receive any proceeds from the sale of stock by the
Selling Shareholders upon the exercise of the Over-Allotment Option.
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DILUTION
The pro forma net tangible book value of the Company's Common Stock as of
September 30, 1996, after giving effect to the Airborne Stock Purchase, was
$7,850,260, or approximately $2.29 per share. Net tangible book value per share
represents the total amount of tangible assets less total liabilities (including
minority interests) divided by the number of shares of Common Stock issued and
outstanding. After giving effect to the sale of the 1,000,000 shares of Common
Stock offered hereby at an assumed initial public offering of $7.50 per share
and after deducting underwriting discounts and commissions and estimated
offering expenses payable by the Company, the pro forma net tangible book value
of the Company at September 30, 1996 would have been $14,040,260, or
approximately $3.17 per share. This represents an immediate increase in net
tangible book value of $0.88 per share to existing shareholders and an immediate
dilution in net tangible book value of $4.33 per share to new investors. The
following table illustrates dilution to new investors:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share of Common Stock........... $7.50
Pro forma net tangible book value per share prior to the Offering....... $2.29
Increase per share attributable to new investors........................ $0.88
---------
Pro forma net tangible book value per share after the Offering............ $3.17
---------
Dilution per share to new investors....................................... $4.33
---------
---------
</TABLE>
The following table summarizes the number of shares of Common Stock
purchased, the percentage of total consideration paid, and the average price per
share paid by the existing shareholders and new investors in the Offering. The
calculation below is based on an assumed initial public offering price of $7.50
per share (before deducting the Underwriting discounts and commissions and other
estimated expenses of the Offering payable by the Company).
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
----------------------- -------------------------- PRICE
NUMBER PERCENTAGE AMOUNT PERCENTAGE PER SHARE
---------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Existing Shareholders(1).......................... 3,429,688 77.4% $ 2,258,457 23.1% $ 0.66
New Investors..................................... 1,000,000 22.6% $ 7,500,000 76.9% $ 7.50
---------- ----- ------------- -----
Total....................................... 4,429,688 100.0% $ 9,758,457 100.0%
---------- ----- ------------- -----
---------- ----- ------------- -----
</TABLE>
- ------------------------
(1) Excludes 300,000 shares of Common Stock issuable upon exercise of
outstanding options and 100,000 shares issuable upon exercise of the
Representative's Warrants. See "Management" and "Underwriting."
DIVIDEND POLICY
The Company has not declared or paid cash dividends on its Common Stock
since 1992. The Company made a cash distribution aggregating $0.26 million in
1992 and $0.08 million in 1991. For the nine months ended September 30, 1996 and
1995, respectively, payments to minority interests aggregated $0.1 million and
$0.8 million, respectively. In 1995, 1994 and 1993, payments to minority
interests were $0.9 million, $0.4 million and $0.4 million, respectively. The
Company presently intends to retain earnings for use in its business and does
not anticipate paying cash dividends in the foreseeable future. The payment of
future cash dividends by the Company on its Common Stock will be at the
discretion of the Board of Directors and will depend on its earnings, financial
condition, cash flows, capital requirements and such other considerations as the
Board of Directors may consider relevant with respect to the payment of
dividends.
20
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated short-term and long-term
debt and capitalization of the Company at September 30, 1996, and on a pro
forma, as adjusted basis to reflect (i) the Airborne Stock Purchase in October
1996 and (ii) the sale of the Common Stock offered hereby, assuming an initial
public offering price of $7.50 per share, after deducting underwriting discounts
and commissions and estimated offering expenses payable by the Company. See "Use
of Proceeds." The information set forth below should be read in conjunction with
the Consolidated Financial Statements including the Notes thereto included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1996
------------------------
<S> <C> <C>
PRO FORMA, AS
ACTUAL ADJUSTED
--------- -------------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C>
SHORT TERM DEBT AND CURRENT PORTION OF NOTES PAYABLE.................................... $ 1,092 $ 1,092
LONG-TERM DEBT.......................................................................... 15 15
--------- -------------
Total Debt.................................................................... $ 1,107 $ 1,107
--------- -------------
Minority interests in subsidiaries...................................................... $ 284 $ 284
--------- -------------
SHAREHOLDERS' EQUITY(1):
Preferred Stock, $0.01 par value; 5,000,000 shares authorized; zero shares issued and
outstanding......................................................................... $ -0- $ -0-
Common Stock, $0.01 par value; 15,000,000 shares authorized; 3,125,000 shares issued
and outstanding; 4,429,688 shares issued and outstanding pro forma, as adjusted..... $ 31 $ 44
Additional paid-in capital............................................................ $ 228 $ 8,405
Cumulative translation adjustment..................................................... (146) (146)
Retained Earnings..................................................................... $ 5,737 $ 5,737
--------- -------------
Total shareholders' equity........................................................ $ 5,850 $ 14,040
--------- -------------
Total capitalization.......................................................... $ 7,241 $ 15,431
--------- -------------
--------- -------------
</TABLE>
- ------------------------
(1) Excludes 300,000 shares of Common Stock issuable upon exercise of
outstanding options and 100,000 shares of Common Stock issuable upon the
exercise of the Representative's Warrants. See "Management" and
"Underwriting."
21
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following selected consolidated financial data as of December 31 1994
and 1995 and for the years ended December 31, 1993, 1994 and 1995 have been
derived from the Company's audited Consolidated Financial Statements included
herein. The selected consolidated financial data as of December 31, 1993 have
been derived from the Company's audited consolidated financial statements not
included herein. The selected consolidated financial data as of and for the
years ended December 31, 1991 and 1992 and as of September 30, 1996 and for the
nine-month periods ended September 30, 1995 and 1996 have been derived from
unaudited consolidated financial statements of the Company which, in the opinion
of management, include all adjustments (consisting of normal recurring
adjustments) necessary to fairly present such data. The information should be
read in conjunction with the Consolidated Financial Statements and Notes thereto
appearing elsewhere in this Prospectus and "Management's Discussion and Analysis
of Financial Condition and Results of Operations." Operating results for the
nine-month period ended September 30, 1996 are not necessarily indicative of the
results to be expected for future periods, including for the year ending
December 31, 1996.
The Company's Consolidated Financial Statements have been prepared in
accordance with international accounting standards, which, for purposes of the
Company's financial statements, are substantially consistent with U.S. GAAP.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED
DECEMBER 31, SEPTEMBER 30,
----------------------------------------------------- --------------------
1991 1992 1993 1994 1995 1995 1996
--------- --------- --------- --------- --------- --------- ---------
STATEMENT OF INCOME DATA:
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Express............................. $ 11,350 $ 15,692 $ 19,802 $ 22,349 $ 25,491 $ 18,467 $ 21,394
Freight Forwarding.................. 4,479 6,211 6,544 13,104 14,306 10,707 10,421
Domestic(1)......................... 438 585 833 1,291 2,007 1,407 2,099
Other(2)............................ 887 590 1,635 1,385 1,798 1,179 1,982
--------- --------- --------- --------- --------- --------- ---------
Total revenues.................... 17,154 23,078 28,814 38,129 43,602 31,760 35,896
Shipping costs........................ 9,343 11,208 13,676 19,992 23,045 17,109 18,623
--------- --------- --------- --------- --------- --------- ---------
Gross profit...................... 7,811 11,870 15,138 18,137 20,557 14,651 17,273
Operating expenses.................... 3,089 4,213 6,099 6,877 7,986 5,803 6,456
Selling, general and administrative
expenses............................ 3,434 6,467 7,885 10,232 10,664 7,774 9,050
--------- --------- --------- --------- --------- --------- ---------
Operating income.................. 1,288 1,190 1,154 1,028 1,907 1,074 1,767
Interest expense...................... 0 (14) (4) (46) (61) (13) (10)
Gain (loss) on sale of fixed assets... 0 23 7 (4) (1) (39) --
Exchange gain (loss).................. 63 47 (182) (55) 31 84 (6)
Other income (loss)................... 46 112 (200) (123) 69 (26) 1
--------- --------- --------- --------- --------- --------- ---------
Income before income taxes........ 1,397 1,358 775 800 1,945 1,080 1,752
Provision for income taxes............ 0 24 56 227 266 233 180
Minority interests.................... 270 317 633 278 157 95 124
--------- --------- --------- --------- --------- --------- ---------
Net income........................ $ 1,127 $ 1,017 $ 86 $ 295 $ 1,522 $ 752 $ 1,448
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Net income per common share(3)........ $ 0.36 $ 0.33 $ 0.03 $ 0.09 $ 0.49 $ 0.24 $ 0.46
Weighted average number of common
shares outstanding(3)............... 3,125 3,125 3,125 3,125 3,125 3,125 3,125
Cash Dividends Per Share Declared..... $ 0.026 $ 0.083 -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
DECEMBER 31, --------------------------
----------------------------------------------------- PRO FORMA, AS
1991 1992 1993 1994 1995 ACTUAL ADJUSTED(4)(5)
--------- --------- --------- --------- --------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.................................. $ 1,465 $ 2,371 $ 2,239 $ 1,915 $ 2,867 $ 3,800 $ 11,990
Total assets..................................... 5,118 7,184 10,297 13,178 14,344 17,513 25,703
Total liabilities................................ 2,743 3,565 6,908 9,715 9,649 11,379 11,379
Shareholders' equity............................. $ 2,374 $ 3,619 $ 2,612 $ 2,889 $ 4,404 $ 5,850 $ 14,040
</TABLE>
- --------------------------
(1) Domestic revenue are derived from the intracountry delivery of packages,
primarily by ground transportation.
(2) Other revenues include revenue derived from the Company's remail and special
services and for the nine months ended September 30, 1996, include $0.6
million of revenues from the Company's Middle East Direct Marketing (MED)
business.
(3) Assumes consummation of the Reorganization and excludes 300,000 shares of
Common Stock issuable upon exercise of outstanding options and 100,000
shares of Common Stock issuable upon the exercise of the Representative's
Warrants. See "Management" and "Underwriting."
(4) Gives effect to the sale of 304,688 shares of Common Stock to Airborne in
October 1996 for an aggregate purchase price of $2.0 million (the "Airborne
Stock Purchase"). See "Certain Transactions."
(5) Adjusted to reflect the sale of the shares of Common Stock offered hereby at
an assumed initial public offering price of $7.50 per share (after deducting
estimated offering expenses and underwriting discounts and commissions). See
"Capitalization" and "Use of Proceeds."
22
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the Company's historical financial condition and
results of operations should be read in conjunction with the Consolidated
Financial Statements, including the Notes thereto and the other financial
information appearing elsewhere in this Prospectus. Except for historical
information, this Management's Discussion and Analysis of Financial Condition
and Results of Operations and other parts of this Prospectus contain
forward-looking information that involve risks and uncertainties. The Company's
actual results could differ materially from those anticipated by such
forward-looking information. Factors that may cause such differences include,
but are not limited to, those discussed under "Risk Factors" and elsewhere in
this Prospectus. All amounts and percentages have been rounded.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated the percentages of
total sales represented by certain items reflected in the Company's consolidated
statements of income:
<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL REVENUES
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
NINE MONTHS
ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------- --------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
<CAPTION>
<S> <C> <C> <C> <C> <C>
Revenues:.................................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Express.................................................... 68.7 58.6 58.5 58.1 59.6
Freight Forwarding......................................... 22.7 34.4 32.8 33.7 29.0
Domestic................................................... 2.9 3.4 4.6 4.4 5.8
Other...................................................... 5.7 3.6 4.1 3.7 5.5
Shipping costs............................................... 47.5 52.4 52.9 53.9 51.9
Gross profit............................................... 52.5 47.6 47.1 46.1 48.1
Operating expenses........................................... 21.2 18.0 18.3 18.3 18.0
Selling, general and administrative expenses................. 27.4 26.8 24.5 24.5 25.2
Operating income........................................... 4.0 2.7 4.4 3.4 4.9
Income before income taxes................................. 2.7 2.1 4.5 3.4 4.9
Provision for income taxes................................... 0.2 0.6 0.6 0.7 0.5
Minority interests......................................... 2.2 0.7 0.4 0.3 0.3
Net income................................................. 0.3 0.8 3.5 2.4 4.0
</TABLE>
The Company recognizes revenues when shipments are completed. For "door to
door" shipments, revenues are recognized upon delivery of freight at the
destination. For other shipments, revenues are recognized upon delivery of
freight to the air carrier, at which time the revenue process is completed.
Shipping costs include linehaul expenses, distribution expenses, inbound
costs and cargo airfreight and related expenses, the latter constituting the
largest component of direct costs. The Company's operating expenses are
primarily the expenses of the Company's stations and include salaries and fringe
benefits, communication, travel expenses, vehicle expenses, operating material,
depreciation expense, office rent and utilities, printing and stationery,
maintenance expenses, governmental fees and uniform expenses. The Company's
operating expenses also include expenses of the Company's General Services
Office ("GSO"), which is located in Amman, Jordan and oversees all shipments
throughout Aramex's distribution network and charges local stations. Selling,
general and administrative expenses include executive salaries, corporate
overhead at the GSO and selling and marketing expenses for the Company as a
whole.
Aramex sells its products and services mainly to customers in the Middle
East, Europe and North America. Revenues are generally recognized at the source,
I.E., by the station which invoices the ultimate customer. The table below shows
the breakdown of revenues by geographic region for 1995 and the Nine Month
Period.
23
<PAGE>
GEOGRAPHIC BREAKDOWN OF REVENUES
(DOLLARS IN MILLIONS)
1995
<TABLE>
<CAPTION>
FREIGHT
EXPRESS FORWARDING DOMESTIC & TOTAL
(60%) (32%) OTHER (8%) COMPANY
-------------------- -------------------- -------------------- --------------------
REGION $ % $ % $ % $ %
- ----------------------------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Middle East.................. 27.7 72 9.2 65 3.6 94 40.6 71
Europe....................... 8.0 21 2.1 14 .1 3 10.1 18
North America................ 3.0 7 3.0 21 .1 3 6.1 11
Elimination(1)............... (13.2) -- -- -- -- -- (13.2) --
--------- --------- --------- --------- --- --------- --------- ---------
Total 1995 Revenues.... $ 25.5 100% $ 14.3 100% $ 3.8 100% $ 43.6 100%
--------- --------- --------- --------- --- --------- --------- ---------
--------- --------- --------- --------- --- --------- --------- ---------
</TABLE>
NINE MONTH PERIOD
<TABLE>
<CAPTION>
FREIGHT DOMESTIC
EXPRESS FORWARDING & OTHER TOTAL
(60%) (29%) (11%) COMPANY
-------------------- -------------------- -------------------- --------------------
REGION $ % $ % $ % $ %
- --------------------------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Middle East................ 23.8 73 7.3 70 3.7 91 34.8 74
Europe..................... 6.3 19 1.5 14 .1 2 7.9 17
North America.............. 2.4 8 1.6 16 .3 7 4.3 9
Elimination(1)............. (11.1) -- -- -- -- -- (11.1) --
--------- --------- --------- --------- --- --------- --------- ---------
Total Nine Month
Period Revenues.... $ 21.4 100% $ 10.4 100% $ 4.1 100% $ 35.9 100%
--------- --------- --------- --------- --- --------- --------- ---------
--------- --------- --------- --------- --- --------- --------- ---------
</TABLE>
- ------------------------
(1) Revenues between stations that are wholly-owned subsidiaries are priced at
cost. Transactions with other affiliated stations are priced at cost plus
10%. All intercompany transactions have been eliminated in consolidation.
The Company's business is seasonal in nature. Historically, the Company
experiences a decrease in demand for its services during the first and third
quarters, the post-winter holiday and summer vacation seasons. The Company
traditionally experiences its highest volume in the fourth quarter due to the
holiday season. The seasonality of the Company's sales may cause a variation in
its quarterly operating results and a significant decrease in second or fourth
quarter revenue may have an adverse effect on the Company's results of
operations for that fiscal year.
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1996 TO NINE MONTHS ENDED
SEPTEMBER 30, 1995
REVENUES. Consolidated revenues of the Company increased by $4.1 million,
or 12.9%, to $35.9 million for the Nine Month Period from $31.8 million for the
nine months ended September 30, 1995 (the "1995 Period"). Express revenues
increased by $2.9 million, or 15.8%, to $21.4 million for the Nine Month Period
from $18.5 million in the 1995 Period, primarily as a result of an increase in
the demand for the Company's express services particularly in Dubai and the Gulf
region, which is experiencing economic growth. The increase in revenues is also
attributable to the addition of new accounts in Greece and Kuwait and increases
in the GSO's wholesale business. Express revenues for the Nine Month Period also
include express delivery service revenues attributable to the new MED business.
Freight forwarding revenue decreased by $0.3 million, or 2.8%, to $10.4
million for the Nine Month Period from $10.7 million for the 1995 Period
primarily as a result of the closure of three stations in the U.S. (Los Angeles,
Houston and New Jersey). Excluding these stations, the Company's freight
forwarding revenues increased 4.0% and total revenues increased 16.0% for the
Nine Month Period from the 1995
24
<PAGE>
Period. During the Nine Month Period the Company achieved better margins on its
freight forwarding business due to improved buying rates from airlines as well
as achieving better selling rates in its markets.
Domestic and other revenue increased by $1.5 million, or 57.8%, to $4.1
million for the Nine Month Period from $2.6 million for the 1995 Period,
primarily as a result of aggressive sales efforts to promote these services
station-wide. Additionally, the Company's MED business generated revenues of
$0.6 million for the Nine Month Period from sales commissions in the sale of
mail order products.
SHIPPING COSTS. Shipping costs increased by $1.5 million, or 8.8% to $18.6
million for the Nine Month Period from $17.1 million for the 1995 Period,
primarily as a result of increased revenues and, to a lesser extent, increased
MED product costs (which are included in shipping costs).
OPERATING EXPENSES. Operating expenses increased by $0.7 million, or 12.1%,
to $6.5 million for the Nine Month Period from $5.8 million for the 1995 Period,
primarily as a result of an increase in local ground delivery expenses.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by $1.3 million, or 16.4%, to $9.1 million for
the Nine Month Period from $7.8 million for the 1995 Period. The Company
incurred additional promotional, travel, market research and other expenses for
the Nine Month Period related to its MED business.
NET INCOME. Net income increased by $0.7 million, or 93%, to $1.4 million
for the Nine Month Period from $0.8 million for the 1995 Period.
COMPARISON OF YEAR ENDED DECEMBER 31, 1995 TO YEAR ENDED DECEMBER 31, 1994
REVENUES. Consolidated revenue of the Company increased by $5.5 million, or
14.4%, to $43.6 million for the year ended December 31, 1995 ("1995") from $38.1
million for the year ended December 31, 1994 ("1994"). Express revenue increased
by $3.1 million, or 14.0%, to $25.5 million in 1995 from $22.4 million for 1994,
primarily as a result of increased revenues from the Company's operations in the
Gulf region and the newly established Greek operations. In addition, the Company
experienced increased revenues from its London hub. In 1995, Aramex reorganized
its United States operation by closing its Houston office and merging its
business with Airborne Express. The Company currently maintains a Middle East
desk in the Airborne Express office. At the same time, due to a dispute with the
Company's local partner in Los Angeles, the office was closed. In New Jersey,
the Company bought its minority partner and merged the operation with its New
York operation. The Company believes that this reorganized structure is adequate
to serve the United States market.
Freight forwarding revenue increased by $1.2 million, or 9.2%, to $14.3,
million for 1995 from $13.1 million for 1994, primarily as a result of increased
revenues generated by the Company's stations in the Middle East.
Domestic and other revenue increased by $1.1 million, or 42.2%, to $3.8
million for 1995 from $2.7 million for 1994, primarily as a result of the
introduction of domestic service in additional stations in the Middle East.
SHIPPING COSTS. Shipping costs increased by $3.1 million, or 15.3%, to
$23.0 million for 1995 from $20.0 million for 1994.
OPERATING EXPENSES. Operating expenses increased by $1.1 million, or 16.0%,
to $8.0 million for 1995 from $6.9 million for 1994, primarily as a result of
increased communications and related expenses.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by $0.5 million, or 4.2%, to $10.7 million for
1995 from $10.2 million for 1994, primarily as a result of increased advertising
and promotional campaigns associated with the Company's growth. In particular,
selling expenses increased 21.0% for 1995 from 1994.
25
<PAGE>
NET INCOME. Net income increased by $1.2 million, or 416%, to $1.5 million
for 1995 from $0.3 million for 1994.
COMPARISON OF YEAR ENDED DECEMBER 31, 1994 TO YEAR ENDED DECEMBER 31, 1993
REVENUE. Consolidated revenue of the Company increased by $9.3 million, or
32.3%, to $38.1 million for 1994 from $28.8 million for the year ended December
31, 1993 ("1993"). Express revenue increased by $2.5 million, or 12.6%, to $22.3
million for 1994 from $20.0 million for 1993, primarily as a result of increased
revenues generated by the Company's stations in Europe and the Middle East. The
growth in 1994 total revenues was offset by the loss in February 1994 of the
Federal Express wholesale account (which, in 1993 accounted for 7.8% of total
revenue) after it secured a license to operate outbound express business in
Saudi Arabia.
Freight forwarding revenue increased by $6.6 million, or 100%, to $13.1
million for 1994 from $6.6 million for 1993, primarily as a result of the
introduction in 1993 of freight forwarding services on a system-wide basis.
Domestic and other revenue increased by $0.2 million, or 8%, to $2.7 million
for 1994 from $2.5 million for 1993, primarily as a result of increased revenues
generated by the Company's operations in Dubai and Saudi Arabia.
SHIPPING COSTS. Shipping costs increased by $6.3 million, or 46.2%, to
$20.0 million for 1994 from $13.7 million for 1993, primarily as a result of an
increase in cargo cost of service of $5.5 million, or 116%. The increase in
cargo cost is attributable to a 100% increase in cargo revenues during 1994.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by $2.3 million, or 29.8%, to $10.2 million
for 1994 from $7.9 million for 1993, primarily as a result of increased employee
related and advertising expenses associated with the opening of the Cyprus and
Greece offices and the newly launched freight forwarding operation.
NET INCOME. Net income increased by $0.21 million, or 243%, to $0.30
million for 1994 from $.09 million for 1993.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital requirements to date have been funding its
accounts receivable. The requirements have been met primarily by internally
generated funds and bank financings.
The Company's working capital was $3.8 million at September 30, 1996, as
compared to $2.9 million at September 30, 1995 and $5.9 million at December 31,
1995.
The Company's cash balances were $1.4 million at September 30, 1996 as
compared to $0.9 million at September 30, 1995 and $1.3 million at December 31,
1995. Net cash flow from operating activities was $0.8 million for the Nine
Month Period as compared to $0.4 million for the 1995 Period and $1.5 million
for 1995 as compared to $1.5 million for 1994. Net cash used in investing
activities was $0.7 million for the Nine Month Period as compared to $0.5
million for the 1995 Period and $0.8 million for 1995 as compared to $1.4
million for 1994. Net cash used in financing activities was $0.1 million for the
Nine Month Period as compared to $0.01 million for the 1995 period and $0.2
million for 1995 as compared to $0.7 million for 1994.
The Company leases office space and office and transportation equipment
under various operating leases, some of which are renewable annually. Rent
expense related to these leases amounted to $0.7 million, $0.9 million and $0.9
million for the Nine Month Period, 1994 and 1995, respectively.
The Company maintains several lines of credit with various banks aggregating
$0.8 million, $0.6 million and $0.5 million at September 30, 1996, and December
31, 1995 and 1994, respectively. The Company had $0.9 million, $0.6 million and
$0.2 million outstanding under these lines of credit at September 30, 1996, and
December 31, 1995 and 1994, respectively. The weighted average interest rates on
the Company's lines of credit were 12.3%, 11.3% and 10.3% at September 30, 1996,
and December 31,
26
<PAGE>
1995 and 1994, respectively. Historically, the Company's lines of credit have
been personally guaranteed by Mr. Fadi Ghandour, the Company's President and
Chief Executive Officer. Additionally, in 1996, the Company secured a three-year
term loan from NatWest Bank in the principal amount of $0.2 million bearing
interest at 9.875% per annum. The remaining amounts due to banks of $0.2
million, $0.2 million and $0.1 million at September 30, 1996, and December 31,
1995 and 1994, respectively, represent bank overdrafts. The Company has from
time to time experienced a need for cash to fund its receivables and sourced
such need with bank overdrafts and/or available credit under its lines of
credit.
For the nine months ended September 30, 1996 and 1995, respectively,
payments to minority interests aggregated $0.1 million and $0.8 million,
respectively. In 1995, 1994 and 1993, payments to minority interests were $0.9
million, $0.4 million and $0.4 million, respectively.
In October 1996, the Company consummated the sale to Airborne, a member of
the OEC and a wholesale customer of the Company for over 10 years, of 304,688
shares of Common Stock for an aggregate consideration of $2.0 million. See
"Certain Transactions."
The Company presently anticipates utilizing the net proceeds of this
Offering (i) to expand into existing and emerging markets by acquiring ownership
interests or increasing existing participation interests in local service
providers, the amount and timing of which use of proceeds cannot be determined
at this time (ii) approximately $0.75 million to open additional SHOP THE WORLD
DIRECT catalog centers, (iii) approximately $1.0 million in technology and
systems infrastructure in order to introduce logistics management services, and
(iv) approximately $2.0 million to acquire additional vehicles for operation of
domestic and cross border ground transportation. The balance of the net proceeds
of this Offering will be used for working capital and general corporate
purposes, including funding accounts receivable. See "Use of Proceeds" and
"Business." Other than the foregoing, the Company presently does not have any
material commitment for capital expenditures in the next 12 months.
In management's opinion, proceeds from this Offering coupled with cash flows
from operations and borrowing capacity anticipated to be available to the
Company following the Offering, will provide adequate flexibility for financing
the Company's expansion plans.
IMPACT OF INFLATION AND CURRENCY FLUCTUATIONS
The Company does not believe that inflation or currency fluctuations has had
a material adverse effect on revenues and results of operations. However, demand
for the Company's services is influenced by general economic conditions,
including inflation and currency fluctuations. Periods of economic recession,
high inflation or the devaluation of currencies in countries in which the
Company operates could have a material adverse effect on the express and freight
forwarding industry and the Company's results of operations.
EFFECTIVE CORPORATE TAX RATES
The Company's consolidated effective tax rate was 13.7% and 28.3% for 1995
and 1994, respectively. The principal differences between the effective tax
rates and the statutory tax rate applicable in the United States of 35% are
exemptions from income taxes of many of the Company's subsidiaries operating in
the Middle East and lower statutory rates at certain other locations.
OTHER
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123 "Accounting for Stock-Based Compensation." This standard encourages, but
does not require, recognition of compensation expense based on the fair value of
equity instruments granted to employees. The Company does not plan to adopt the
recognition provisions of this standard. The disclosures required by this
standard will be included in a note to the 1997 financial statements.
The Company has adopted statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and For Long-Lived Assets to
be Disposed of" ("SFAS 121"). SFAS 121 requires the assessment of certain
long-lived assets for possible impairment when events or circumstances indicate
their carrying amounts may not be recoverable. Adoption of this standard had no
material effect on the Company's financial statements.
27
<PAGE>
BUSINESS
THE COMPANY
Aramex provides express delivery and freight forwarding services from its
main hubs in Dubai, London, New York and Amman primarily to, from and within
destinations in the Middle East and the Indian Sub-Continent. Aramex has over
800 full-time employees and operates through a network of 36 stations/offices
and 11 service providers located in 29 countries, and holds a majority interest
in its MED direct marketing and mail order business, which operates five SHOP
THE WORLD DIRECT catalog centers. The Company's strategy is to focus on its core
business and to expand its services to include (i) warehouse management in
designated free trade zone locations; (ii) multi-modal regional transportation
and distribution (offering the options of express air freight forwarding and
ground distribution); (iii) inventory management; and (iv) local warehousing in
certain areas of the Middle East. From 1991 to 1995, the Company's revenues grew
from $17.2 million to $43.6 million. The Company generated revenues of $43.6
million and $35.9 million, with corresponding net income of $1.5 million and
$1.4 million, for the year ended December 31, 1995 and the Nine Month Period,
respectively. Aramex uses commercial airline service to carry its express
parcels and freight, resulting in lower capital expenditures and greater pricing
flexibility. Aramex is a founding member of OEC, which is a global alliance
among certain leading independent express companies that functions as a
worldwide delivery network for its members. In October 1996, Airborne, a member
of the OEC, invested $2.0 million in the Company's Common Stock.
The Company has been operating in the Middle East since 1982. It has been
estimated that real GDP for the Middle East will grow at approximately 3.5% per
year to $740 billion by 2015. Because of its strategic location at the
crossroads of Asia, Europe and Africa, the Middle East is becoming a major
center for world air freight distribution. In early 1996, Boeing reported that
air traffic and transshipments from Dubai, where the Company operates one of its
major hubs, increased 23% and 41% from 1995, respectively. The Company believes
it is well positioned to benefit from the economic growth forecasted for the
Middle East which it believes should result in an increased demand for express
freight forwarding and regional trucking services.
INDUSTRY BACKGROUND
EXPRESS. The international express delivery market has grown rapidly in
recent years. In the United States, the express segment of the domestic air
freight market has averaged 25% growth per year since 1977, accounting for a
reported 60% of the U.S. domestic market in 1995. Boeing reports in its
1996/1997 WORLD AIR CARGO FORECAST, that international express has grown more
than 25% from its 1993 level to achieve a 5% market share in 1994. Boeing also
estimates that the international express market will average an annual growth
rate of 18% to achieve a 31% market share of the world air cargo market in 2014.
INTERNATIONAL EXPRESS MARKET SHARE
[CHART]
Source: 1996/1997 WORLD AIR CARGO FORECAST (The Boeing Commercial Airplane
Group)
28
<PAGE>
The Company believes that a number of factors have contributed to the
increase in demand for express services. Such factors include the growing need
for timely delivery of documents, small packages, and other time-sensitive items
in an information and service-oriented economy and the development of
centralized distribution systems.
The Company believes that the Middle East's strategic location at the
crossroads of Asia, Europe and Africa, positions it to become a major center for
air distribution. Markets in which the Company operates, including, but not
limited to, Dubai, Lebanon, Jordan, Saudi Arabia, Syria, and Qatar are growing
rapidly. The Middle East market has grown at an average rate of 15% per year
since since 1995.
FREIGHT FORWARDING (CARGO). In its 1996/1997 WORLD AIR CARGO FORECAST,
Boeing estimates an annual growth rate of 6.6% for worldwide air cargo traffic
through 2015.
WORLD AIR CARGO TRAFFIC
[CHART]
Source: 1996/1997 WORLD AIR CARGO FORECAST (The Boeing Commercial Airplane
Group)
Boeing estimates that the international market growth will continue to
outpace U.S. domestic growth, exceeding 80% of total revenue tonne kilometers
(RTKs), a measure used in the industry to compare performance, by the year 2014.
According to Boeing, the U.S. airline share of the world market is expected to
decline from 32% in 1994 to 29% in the year 2014. According to Boeing, in
contrast to the U.S., Middle Eastern world air traffic increased nearly 18%
during 1994.
DOMESTIC. The Middle East also fosters relatively little cross-border
ground transportation of packages and shipments, due largely to complex
regulations and time-consuming customs procedures that accompany such shipments.
Management believes that this regional attribute, coupled with the generally
inefficient public postal systems in the region, gives Aramex, which has an
established network, future growth potential.
THE COMPANY'S PRODUCTS AND SERVICES
INTERNATIONAL SMALL PARCEL EXPRESS SERVICE. Express shipments consist of
small packages, typically ranging in weight between 0.5 and 50 kilograms, with
time-sensitive delivery requirements. The Company offers its express delivery
services on an international basis to both retail and wholesale express accounts
and offers its customers the ability to track their shipments on the world wide
web through the Company's web site (www.aramex.com). At September 30, 1996, the
Company had approximately 20,000 retail express accounts and 640 wholesale
express accounts.
The Company's experience is that customers require rapid tracing of express
shipments, which in the case of Aramex is provided instantaneously worldwide by
an on-line system linking all the Company's offices. Express customers pay a
premium for the level of service provided for deliveries, especially on
international shipments.
From 1982 to 1987, Aramex built its revenue base and its station base in the
Middle East on the strength of its local delivery services for a few large
wholesale express accounts. Wholesale customers
29
<PAGE>
consist primarily of express delivery companies (such as Airborne Express,
Emery, Purolator Canada, UPS), which originate express packages that have a
Middle Eastern destination and require Aramex's network in the region to deliver
their shipments. The end-user remains a customer of Aramex's wholesale client.
Based upon its knowledge of the Middle East market, management believes that the
Company is the leading independent wholesaler to the Middle East. Revenues from
wholesale accounts were $11.6 million (or 27% of total revenues) and $9.5
million (or 26% of total revenues) for 1995 and the Nine Month Period,
respectively.
Beginning in 1987, in order to diversify and strengthen its express customer
base into retail accounts, Aramex began to develop sales and marketing
capability at all of its offices. Retail express customers include trading
companies, pharmaceutical companies, banks, service and information companies
and manufacturing and regional distribution companies. Revenues from retail
accounts were $13.7 million (or 31% of total revenues) and $11.7 million (or 32%
of total revenues) for 1995 and the Nine Month Period, respectively. The Company
currently has over 20,000 retail customers worldwide, none of whom accounted for
more than 1.2% of the Company's total revenues for 1995 or the Nine Month
Period, respectively.
The Aramex express business, especially with the increasing strength of the
retail portion, serves as a foundation for the development of additional revenue
sources. The retail express customer often becomes a freight forwarding or
customized special services customer. The Company can also market services such
as its SHOP THE WORLD DIRECT catalog centers to its express customer base.
The Company is a founding member of the OEC, which is a global alliance
among certain leading independent express companies that functions as a
worldwide delivery network for its members. The OEC was formed in 1990 by
Airborne Express, Aramex, Purolator Courier--Canada, International Bonded
Couriers and Trans Africa Express. The current OEC board members are Airborne
Express, Airborne Express Japan, Aramex, I.B.C. (International Bonded Couriers),
Purolator Canada, Servicio Urgente de Transportes S.A. ("SEUR") and Ziegler, a
Belgian company. The OEC sets rates for deliveries by members in each of the
member markets and establishes standards for service and performance. OEC
members, who each have valuable knowledge of their respective markets, conduct
joint marketing efforts and participate in committees that meet periodically to
address the operations of the network as a whole. The OEC in aggregate employs
more than 30,000 people in 180 countries.
The six OEC members serve these areas:
<TABLE>
<CAPTION>
OEC BOARD MEMBER REGION SERVED
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
Airborne Express U.S., U.K., Far East & Holland
Airborne Express Japan Japan
Aramex Middle East & Indian Sub-continent
I.B.C. (International Bonded Couriers) South & Central America
Purolator Canada Canada
Seur Spain
Ziegler France, Belgium, Luxembourg, Switzerland & Denmark
</TABLE>
FREIGHT FORWARDING. The Company offers a wide range of freight forwarding
(i.e. cargo delivery) services, including air and ocean freight forwarding
consolidation, warehousing, customs clearance and breakbulk services. Aramex
provides full "door to door" service from, to and within the Middle East and the
Indian Sub-Continent. A significant portion of the Company's freight forwarding
business involves consignee sales (imports) and, to a lesser extent exports.
Freight forwarding shipments (or "cargo" shipments) typically have gross weights
in excess of 50 kilograms, often require more handling and are normally less
time-sensitive than express shipments.
Aramex launched its freight forwarding business in 1987 at selected stations
in order to build upon the strength of its wholesale and retail express
operation, and to satisfy demand for that service by its express customers.
Freight forwarding sales were introduced in 1993 at every Aramex station.
Revenues from the
30
<PAGE>
Company's freight forwarding operations were $14.3 million (or 33% of total
revenues) and $10.4 million (or 29.0% of total revenues) for 1995 and the Nine
Month Period, respectively. Of the Company's more than 500 accounts, none
exceeded 1% of the total 1995 or Nine Month Period freight forwarding revenues,
respectively. Whereas express shipments in the Aramex network virtually always
pass through one of its four international hubs (Dubai, London, New York,
Amman), cargo shipments are routed direct from sender to destination by way of
the commercial carrier routing that is best suited to the size, weight and time
sensitivity of the shipment.
SHOP THE WORLD DIRECT CATALOG CENTERS (MED). Aramex launched MED, a direct
marketing and mail order catalog service in Amman, Jordan in 1995 with the
objective of developing distribution and sales of international mail order
products throughout the Middle East. At September 30, 1996, MED had exclusive
Middle East rights to sell and distribute products offered by approximately 20
catalogs including Brooks Brothers, The Chef's Catalog, Hammacher Schlemmer,
J.C. Penney, and Littlewoods (UK) and others (with the exception of Saudi
Arabia, Kuwait and the Gulf States in the case of J.C. Penney). The Company
operates SHOP THE WORLD DIRECT catalog centers in Jordan, Kuwait, Egypt, Lebanon
and Qatar, where the Company sells, processes and delivers mail order products
to its customers. The Company receives a commission on each MED product sale and
generates revenue on the delivery of the product to the customer. Revenue
generated from such sales by MED accounted for $0.6 million (or 2.0% of total
revenue) in the Nine Month Period.
CATALOGUES SERVICED BY MED
<TABLE>
<S> <C> <C>
Barrie Pace Hammacher Schlemmer La Costa Spa
Brooks Brothers Harolds Littlewoods (UK)
Bullocks and Jones J.C. Penney The Reader's Catalog
The Chef's Catalog Johnston & Murphy The Right Start
Collections Jos A. Bank Self Care
Domestications Kenneth Cole Sundance
Kideo
</TABLE>
The Company developed MED in response to Middle Eastern client requests to
receive goods marketed through foreign catalogs. A typical MED catalog center is
located adjacent to or near an Aramex station, is 50 square meters and carries
approximately 20 catalogs from which the customer can order through Aramex. The
Company takes delivery of all orders at airport locations in New York City and
London (UK) and delivers the product to the customer.
Each MED catalog center is staffed by one or two salespersons who assist the
customer in placing orders. Customers may also place orders by telephone by
calling the Company's customer service representatives. The Company offers a
limited guarantee on each purchase.
DOMESTIC AND REGIONAL GROUND EXPRESS TRANSPORTATION SERVICES. The Company
has developed an extensive network for the delivery of small parcels for its
customers including local distributors, pharmaceutical companies, banks and a TV
home shopping network. Domestic revenues accounted for $2.0 million (or 4.6% of
total revenues) and $2.1 million (or 6.0% of total revenues) for 1995 and the
Nine Month Period, respectively. Aramex plans to expand its ground
transportation network to offer cross-border trucking and ground transportation
for small parcels and fast-moving consumer goods in the region, servicing what
the Company perceives to be a highly underdeveloped market. By developing a
parcel shuttle service linking the main cities in the Middle East, Aramex would
be able to lower the cost of linehauling by reducing air freight movement and
thereby offering customers the option of deferred service at lower prices. This
service will be an extension of Aramex's logistics management service.
Management believes the addition of such complementary businesses should help
strengthen the core business of Aramex.
31
<PAGE>
GROWTH STRATEGY
The Company's strategy is to provide a full range of express, freight
forwarding, logistics, ground transportation, and mail order services to its
customers. The Company believes that it competes in an industry and a region
characterized by a growing need among customers for more comprehensive services.
By offering a wide range of distinct delivery and transportation services at a
reasonable price, the Company plans to position itself as a leading provider of
express, freight forwarding and logistics services in its core markets.
The express, transportation and logistics services businesses are very
information technology intensive businesses. The Company historically has made
significant investments in technology systems to provide a strong platform for
enhanced service and future growth. The Company currently has implemented a re-
design and reengineering plan of its office and has a number of ongoing
technological initiatives including (i) an agreement with Computer Associates
which has commenced installing its accounting software in all of the Company's
offices; (ii) a global LAN access agreement with Societe Internationale de
Transport Aerien ("SITA"), the global airline communications network of which
Aramex is a member, permitting all of the Company's offices to be linked
together on-line in real time; (iii) an agreement with Symbol Technologies to
provide Aramex with scanner technology for all its offices around the world; and
(iv) an agreement with Soligitics to develop a new software program for Aramex
to manage its express and air freight which includes a customer connectivity
feature to permit customers' electronic interface "EDI."
The Aramex management team has been carefully building the Company's
infrastructure, creating the technology and management systems, employee base
and strategic alliances required both to support future growth in the Company's
current business lines and to serve as a platform for the expansion of the
Company's services in the Middle East and emerging markets to include:
LOGISTICS. Corporations increasingly purchasing materials from sources
throughout the world contract for or perform manufacturing and assembly
operations in different countries, distribute their products globally, and rely
on just-in-time inventory management practices. As the volume and cost of
international freight have increased, so have the importance and complexity of
effectively managing international freight transportation logistics. To
effectively manage their shipping needs, many corporations use freight
forwarders to provide logistics management services. Aramex is planning to
introduce logistics management as a new Aramex service product that will target
a new clientele base, in addition to certain categories of Aramex existing
customers. Worldwide logistics management is expected to be one of the fastest
growth areas in the next five to ten years, providing multi-modal alternative
solutions to customers.
Items to be handled will typically be high value and time sensitive, such as
mail order items, spare parts and consumer electronics. The target market for
this service will consist of:
- Aviation, automobile, computer and electronics companies
- Light assembly factories
- Local companies interested in outsourcing some or all of their logistics
operations
- Wholesale freight forwarders
The range of products to be offered to customers will include: (i) free
trade zone warehouse management in locations such as Jebel Ali, Dubai Airport
and Amman Queen Alia Airport; (ii) multi-modal regional transportation and
distribution (offering the options of express air freight, air freight
forwarding and ground distribution); (iii) inventory management; and (iv) local
warehousing in Saudi Arabia, Egypt and Syria.
GEOGRAPHIC EXPANSION. The Company is implementing a strategy focused on
expanding its geographic presence in the Middle East, the Indian Sub-Continent,
and other emerging markets such as North Africa and certain former Soviet
Central Asian Republics. Each of these emerging markets is characterized by
large populations and growing economies which are liberalizing and opening their
markets to the
32
<PAGE>
private sector and to foreign investors. By expanding its distribution network
in these regions, Aramex management believes it can (i) enhance its regional
market share and presence; (ii) expand its customer base; and (iii) further
reduce its geographic revenue concentration. The Company has targeted a portion
of the proceeds from the Offering to acquire an equity interest in the
operations of its current service providers and joint ventures located in India,
Sri Lanka, Pakistan and Turkey. Recently the Company entered into an agreement
with a service provider in Uzbekistan to commence operations in early 1997 and
plans to commence joint ventures in certain North African countries and other
Central Asian Republics, such as Kazakhstan and Azerbaijan.
ADDITIONAL MED SHOP THE WORLD DIRECT CATALOG CENTERS AND ADVERTISING. In an
effort to add additional sources of revenue and as a natural extension of the
basic express business, the Company plans to open additional MED catalog centers
with a portion of the proceeds from the Offering and to commence local
advertising of its mail order services. The Company's goal is to open at least
five additional MED centers in the next twelve months with a long-term view to
including an MED showroom in or near each of its stations in the Middle East.
The Company plans to continue to seek to offer similar value-added customized
special services to its growing customer base.
MARKETS FOR THE COMPANY'S PRODUCTS AND SERVICES
Aramex sells its products and services mainly to customers in the Middle
East, Europe and North America. Revenues are generally recognized at the source,
I.E., by the station which invoices the ultimate customer. The table below shows
the geographic breakdown of revenues by geographic region for 1995 and the Nine
Month Period.
GEOGRAPHIC BREAKDOWN OF REVENUES
(DOLLARS IN MILLIONS)
1995
<TABLE>
<CAPTION>
FREIGHT FORWARDING DOMESTIC & OTHER
EXPRESS (59%) (32%) (9%) TOTAL COMPANY
-------------------- -------------------- -------------------- --------------------
REGION $ % $ % $ % $ %
- ---------------------------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Middle East................. 27.7 72 9.2 65 3.6 94 40.6 71
Europe...................... 8.0 21 2.1 14 .1 3 10.1 18
North America............... 3.0 7 3.0 21 .1 3 6.1 11
Elimination(1).............. (13.2) -- -- -- -- -- (13.2) --
--------- --------- --------- --------- --- --------- --------- ---------
Total 1995 Revenues..... $ 25.5 100% $ 14.3 100% $ 3.8 100% $ 43.6 100%
--------- --------- --------- --------- --- --------- --------- ---------
--------- --------- --------- --------- --- --------- --------- ---------
</TABLE>
NINE MONTH PERIOD
<TABLE>
<CAPTION>
FREIGHT FORWARDING DOMESTIC & OTHER
EXPRESS (60%) (29%) (11%) TOTAL COMPANY
-------------------- -------------------- -------------------- --------------------
REGION $ % $ % $ % $ %
- ---------------------------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Middle East................. 23.8 73 7.3 70 3.7 91 34.8 74
Europe...................... 6.3 19 1.5 14 .1 2 7.9 17
North America............... 2.4 8 1.6 16 .3 7 4.3 9
Elimination(1).............. (11.1) -- - -- -- -- (11.1) --
--------- --------- --------- --------- --- --------- --------- ---------
Total Nine Month Period
Revenues.............. $ 21.4 100% $ 10.4 100% $ 4.1 100% $ 35.9 100%
--------- --------- --------- --------- --- --------- --------- ---------
--------- --------- --------- --------- --- --------- --------- ---------
</TABLE>
- ------------------------
(1) Revenues between stations that are wholly-owned subsidiaries are priced at
cost. Transactions with other affiliated stations are priced at cost plus
10%. All intercompany transactions have been eliminated in consolidation.
33
<PAGE>
According to Boeing, the Middle East, Europe and North American air freight
markets are estimated to grow at annual rates of 6%, 4.5% and 5.5%,
respectively.
MIDDLE EASTERN AIRBORNE GROWTH
[CHART]
Source: 1996/1997 WORLD AIR CARGO FORECAST (The Boeing Commercial Airplane
Group)
While the express market is generally less developed in the Middle East than
in Europe and North America, the Middle East airborne markets reportedly
experienced growth of approximately 10% during 1994 and 12% during 1995. The
Middle East's strategic location between the manufacturers of the Far East and
the consumer markets of the West have contributed to the growth of new
international trade hubs such as Dubai. Boeing reports total air traffic through
Dubai in early 1996 increased 23% and transshipments increased 41% from 1995.
Aramex maintains a strong presence in Dubai, one of the most active ocean and
air freight ports in the world.
The growth in the Middle East air freight market is attributable to economic
expansion in the region. Middle East real GDP is expected to grow at about 3.5%
per year to reach nearly $740 billion by 2015. Many countries comprising the
Middle East, such as the UAE, are also developing trade as a basis for their
economies to reduce the effect of lower oil prices.
Saudi Arabia represents the largest market in the Middle East, accounting
for nearly 28% of the region's GDP and, together with the UAE, for the majority
of its air trade traffic. Aramex has maintained a limited presence in Saudi
Arabia's three major cities since 1985. However, in June 1996, the Company
acquired a permit to operate in the Kingdom. The Company plans to utilize a
portion of the proceeds to upgrade the operations in Saudi Arabia and
aggressively market its services there.
On a broad scale, the Middle East is a net importer of goods and services.
This "import" orientation has shaped Aramex's express and freight forwarding
marketing and sales efforts in very different ways. Express provides a valuable
delivery network for Aramex and OEC packages incoming from worldwide
destinations. The Company's freight forwarding service, from its inception, has
focused on generating "routings" or consignee sales from importers, which are
then fulfilled by Aramex stations in Europe and the United States, the two major
exporters to the Middle East. In addition, Aramex is expanding its retail
customer base.
According to Boeing, Europe represents approximately 40% of the Middle
East's air market while North America represents approximately 60% of such
market. Air traffic between Europe and the Middle East has grown 15.6% per year.
This success reflects Europe's relative proximity to the Middle East as well as
its long history of involvement and investment in the region.
34
<PAGE>
For Aramex, the European market serves as: (i) a facilitator in the delivery
network wherein most of the system's express packages pass through London; and
(ii) an important source of wholesale express revenue. Other than wholesale
express accounts generated from the GSO based in Amman, Paris and London are the
largest wholesale revenue sources for Aramex. Aramex has a long-established
presence in those two cities, which represent very important trade gateways to
the Middle East.
The North American express market is the world's largest and most developed.
Its sheer size creates wholesale and retail express sales opportunities for
Aramex. Aramex is increasingly conducting sales and marketing efforts in the
U.S., targeting Arab companies or organizations with interests and activities in
the Middle East.
From the perspective of freight forwarding, the U.S. is the single largest
exporter of goods to the Middle East, creating freight forwarding "routings" for
Aramex throughout the country. Aramex has a well established position in New
York's JFK airport, which represents the most important gateway for Middle East
trade, as well as in Washington, D.C.
EXPANSION INTO NEW MARKETS. Aramex is planning to expand horizontally into
the following new and emerging geographic markets in order to: (i) enhance its
regional market share and presence; (ii) expand its customer base; and (iii)
further reduce its revenue sensitivity and exposure:
- THE INDIAN SUB-CONTINENT.
India is a very large market for both express and freight forwarding.
Aramex is the OEC board member serving the Indian Sub-Continent and has
negotiated a major partnership in India that establishes a full operation
network there. In Sri Lanka and Pakistan, Aramex has had a presence
through service providers operations. Aramex plans to increase its
ownership in those operations.
- NORTH AFRICA.
Morocco, Tunisia and Algeria are three emerging markets that are
liberalizing and opening their markets to the private sector and to
foreign investors. Their economies are growing at a rapid pace.
Historically, all three markets have been closed and remain closed to
express companies. In Morocco, only one express company is allowed to have
full service into and out of the country. In Tunisia and Algeria, the
government-owned company has a monopoly. The Company plans to expand in
these markets once they are liberalized and opened to the private sector
and to foreign investors.
- FORMER SOVIET CENTRAL REPUBLICS.
Uzbekistan, Kazakhstan and Azerbaijan are emerging markets. The Company
believes that due to the economic policies their governments are pursuing,
their reasonable political stability, their vast raw resources and their
diversified industrial base, economic recovery is expected. The inflow of
foreign capital and technological expertise has already commenced making
this region a major world supplier of oil, natural gas and raw materials.
The Company believes that Uzbekistan, Kazakhstan and Azerbaijan are
currently poorly served by freight and express companies and therefore
sees potential for expansion in the area. Aramex believes that its
multi-cultural inclination and its Middle East background will be very
helpful to penetrate these nations. The Company recently entered into an
agreement with a service provider in Uzbekistan to commence operations in
early 1997.
35
<PAGE>
CUSTOMERS
Aramex has a diverse customer base, totaling over 20,000 accounts, which
spans a broad geographic area worldwide and includes companies in a wide range
of industries. Its customers, both retail and wholesale, are also diverse in
terms of their service needs. Aramex's broad product mix has developed in
response to the growing diversity of its customers. Aramex customers make
increasing use of the high value-added services provided by Aramex, from
reliable express services to cost effective door-to-door air freight forwarding
to customized special services.
Aramex has both retail and wholesale customers. Retail customers, I.E.,
those who are serviced and billed directly by Aramex, include both express and
freight forwarding accounts. Wholesale customers consist primarily of express
accounts.
OPERATIONS
GENERAL. Aramex is a very decentralized company, permitting each station a
necessary degree of flexibility and independence in running its operations to
accommodate local customers' needs. The Company's GSO, which is located in
Amman, oversees all shipments throughout Aramex's distribution network and
charges local offices accordingly. The GSO provides general corporate,
marketing, advertising, auditing, and strategic and technical support to the
stations. The following table shows Aramex stations and service providers by
country and office.
<TABLE>
<CAPTION>
ARAMEX STATIONS ARAMEX SERVICE PROVIDERS
- -------------------------------------------- ------------------------------------------
<S> <C> <C> <C> <C> <C>
PRINCIPAL PRINCIPAL OTHER
COUNTRY STATION OTHER OFFICES COUNTRY STATIONS OFFICES
- ------------- ------------- -------------- ------------ -------------- ------------
Bahrain Manama Ethiopia Addis Ababa
Canada Montreal Sri Lanka Colombo
Cyprus Nicosia Larnaca, Switzerland Geneva
Limassol
Egypt Cairo Main Cairo Down Pakistan Karachi Islamabad,
Office Town, 10th of Lahore
Ramadan, India Bombay
Alexandria,
Heliopolis
France Paris Sudan Khartoum
Greece Athens Thessaloniki Oman Muscat
Jordan Amman Aqaba Yemen Sana'a Aden
Kuwait Kuwait Bulgaria Sofia
Lebanon Beirut Ain Mreisseh, Iran Tehran Ahwaz,
Jounieh Shiraz,
Mashhad,
Tabriz,
Kish Island
Qatar Doha Bangladesh Dhaka
Saudi Arabia Jeddah, Hong Kong Hong Kong
Riyadh,
Dhahran Uzbekistan Samarkand
Syria Damascus Lattakia,
Homs, Aleppo
Turkey Istanbul
UAE Dubai, Abu Fujeirah,
Dhabi Alain, Jebel
Ali
UK London
USA New York,
Washington
Jerusalem Ramallah
</TABLE>
36
<PAGE>
Aramex has commenced a major re-engineering effort designed to transform the
structure of its stations from a department setup (E.G., express, freight
forwarding, etc.) into cross-functional personalized customer teams. Those
teams, each specializing in the different market segments to which Aramex's
customers belong to, will be the main vehicle to providing a "One Stop Shop"
service. Aramex started the re-engineering effort in 1994 with the Amman station
as a pilot site. Management believes that this model has created significant
improvements in the delivery of Aramex service and has improved market
penetration.
The interactive structure of the GSO provides a natural environment for
effective management and problem-solving. As importantly, it has improved the
information flow within Aramex and between the Company and its markets and
customers. In addition, the structure builds and fosters creativity among the
entire GSO middle management team.
COMPUTER SYSTEMS. Aramex currently utilizes the SITA system for its
communications needs with both its stations and customers around the world. The
SITA system is widely used by airlines and related companies around the world.
For tracking and tracing of its express shipments worldwide, Aramex utilizes the
FOCUS tracking system which is owned and operated by Airborne Express. All OEC
members utilize the FOCUS system for express package tracking.
Aramex has engaged Andersen Consulting to conduct a study of its information
systems needs and to develop Aramex's own private communication network and
integrated information system, develop a centralized information bank, provide
customers and suppliers with direct electronic connectivity to the Aramex
network, and acquire bar coding technology to replace manual process. Management
believes that its investments in technology should yield improvements in its
operations and overall quality of service.
COMPETITION
The express and freight forwarding industry is highly competitive. The
principal competitive factors within the express and freight forwarding industry
include price, frequency and capacity of scheduled service, extent of geographic
coverage and reliability. Many of the Company's competitors have well
established reputations and possess substantially greater financial, marketing,
personnel and other resources than the Company. The Company's principal
competitors are DHL Worldwide Express, Federal Express and TNT Express, Inc. In
addition, the Company competes against other express and freight forwarding
companies, such as United Parcel Service, who wish to establish or broaden their
presence in the Middle Eastern express and freight forwarding markets. The
Company competes primarily by seeking to offer customers competitive pricing, a
high level of service and on-time delivery. The Company believes its competitive
position is enhanced by (i) its knowledge of the Middle East based upon its 14
year presence in the region; (ii) its decentralized operation which allows local
management to respond to local market requirements quickly; (iii) its strong
management team; and (iv) its emphasis on operating cost controls.
EMPLOYEES
As of September 30, 1996, the Company had approximately 800 employees with
165 in administration, 433 in operations and 236 in service and sales. The
Company also uses temporary employees as necessary. The Company's future success
will depend, in part, on its ability to attract, retain and motivate qualified
personnel. The Company believes that relations with its employees are
satisfactory. None of the Company's employees are covered by labor contracts or
other collective bargaining agreements.
SALES AND MARKETING
The Company markets its services through the efforts of its sales force of
over 100 persons. Sales representatives educate consumers and businesses as to
the Company's services through in-person meetings and demonstrations. The
Company believes its personalized service differentiates it from its competition
and provides the Company with a competitive advantage in its core markets. The
Company has
37
<PAGE>
undergone a two year quality review in order to be awarded an ISO 9002
Certification, an international quality standard. The Company's Jordanian and
U.K. operations are currently certified. The Company anticipates that an
additional 8 locations will be certified by the Spring of 1997.
Aramex in Jordan acts as the General Sales Agent worldwide for Marriott
Hotels. The Company's Amman office makes a commission on every Marriott
reservation it makes for travelers outbound from Jordan.
The Company also generates brand awareness of its services and educates
consumers as to the timeliness, reliability and costs of its services through
targeted advertising. The Company advertises in regional print media. The
Company maintains agreements with various regional publications whereby the
Company provides courier services in exchange for advertising space. The Company
plans to use a portion of the proceeds from the Offering to increase its
advertising through print and other media.
The Company receives positive publicity through its participation and
sponsorship of business, charity and sporting events. The Company sponsors and
manages a Jordanian basketball club which is comprised of six teams including
the female national champions for the past three years, a men's team which
competes in the national league and a children's team. The popularity of
basketball and the success of the Company sponsored teams has given the Company
publicity and media exposure and increased the Company's name recognition. The
Company believes that continued participation and sponsorship of such events
will increase consumer awareness of the Company's services.
FACILITIES
The Company's principal executive offices are located at Amman, Jordan. Such
offices are leased by the Company under a one year lease, renewable annually,
commencing January 1996, for approximately 1200 square meters of office space.
Annual rent payments under the lease are approximately $70,000. See "Certain
Transactions."
The Company also leases 53 other facilities aggregating approximately 10,948
square meters of office space in 16 countries. The terms of such leases range
from one to six years with the last lease to expire in December 2000. The
aggregate annual rental under such leases is approximately $0.9 million for
1996.
The Company believes it will have access to facilities adequate to meet its
needs for the foreseeable future. Should the Company need additional space for
its business activities in the foreseeable future, management believes it will
be able to secure such facilities on reasonable forms. The Company believes its
facilities are sufficient to conduct its operations.
GOVERNMENT REGULATION
The Company's operations require and will require various licenses, permits
and approvals in each jurisdiction where it operates. The loss or revocation of
any existing licenses, permits or approvals or the failure to obtain any
necessary licenses, permits or approvals in new jurisdictions where the Company
intends to do business would have an adverse effect on the ability of the
Company to conduct its business and/or on its ability to expand into such
jurisdictions. Authorization to commence operations will be required in each
country in which the Company intends to operate. No assurance can be given that
the Company will obtain such authorization, licenses or necessary approvals. In
addition, countries in which the Company wishes to operate may have regulatory
systems that impose other impediments on the Company's operations. There can be
no assurance that the Company will be able to profitably operate in light of
these restrictions.
INTELLECTUAL PROPERTY
The Company believes that its Aramex trade name is material to its business
and takes steps to protect it where it deems appropriate.
LEGAL PROCEEDINGS
The Company is involved in pending and threatened legal actions and
proceedings arising in the ordinary course of its business. In the opinion of
management, the outcome of such legal actions or proceedings will not have a
material adverse effect on the Company.
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<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the directors and executive officers of the
Company, their ages and the positions held by them with the Company.
<TABLE>
<CAPTION>
NAME AGE POSITIONS HELD
- ------------------------------------- --- --------------------------------------------------------------
<S> <C> <C>
William Kingson 56 Chairman of the Board
Fadi Ghandour 37 President, Deputy Chairman,
Chief Executive Officer and Director
Hazem Malhas 36 Vice President-COO Express
Safwan Tannir 47 Vice President-COO Freight Forwarding
Camille Tam Nasrallah 50 Vice President-Corporate Affairs
Emad Shishtawi 38 Accounting and Finance Manager
Yousef Ghandour 47 Managing Director of MED
Rula Ghandour 38 Director
</TABLE>
Pursuant to a Stock Purchase Agreement, Airborne was granted the right to
appoint one director to the Company's Board of Directors for so long as it owns
at least half of the shares acquired in the Airborne Stock Purchase. Airborne
has not designated a Board appointee as of the date hereof. Upon consummation of
the Offering, the Representative has been granted the right to designate one
director acceptable to the Company for a three year term. The Representative has
not designated a Board appointee as of the date hereof.
The Company has a classified Board of Directors currently consisting of
three members. The directors are divided into three classes consisting of one
director in each class. The term of office of the directors expires following
the date of this Prospectus as follows: Class 1, at the first annual meeting of
shareholders; Class 2, at the second annual meeting of shareholders; and Class
3, at the third annual meeting of shareholders. Thereafter, the term of office
of each director will expire at the third annual meeting of shareholders
following his or her election. Ms. Rula Ghandour is a Class 1 director, Mr.
William Kingson is a Class 2 director and Mr. Fadi Ghandour is a Class 3
director. As soon as practicable, but not later than 90 days following the
completion of the Offering, the Company's Board of Directors intends to increase
the size of the Board to five members and to elect two new members who are not
paid employees of the Company and who will qualify as independent directors for
purposes of the Nasdaq National Market. Each newly elected director will be a
Class 1 or Class 2 director, respectively. Having a classified Board of
Directors may be viewed as inhibiting a change of control of the Company and
having a possible anti-takeover effect because it would take at least two annual
meetings to change control of the Board of Directors by shareholder vote.
The business experience of each of the Company's directors and executive
officers during at least the past five years is set forth below.
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
WILLIAM KINGSON has been the Company's Chairman since 1982. Mr. Kingson is
President of New York based DHX Group, Ltd., co-Chairman and President of The
Pointe Group and has had long and extensive involvement in the airline and
aerospace industries. He has served on the board of numerous airlines, and has
had many years' experience in the leasing and sale of aircraft, trading in parts
and instruments, especially in Asia and the Far East, including dealings with
Cathay Pacific, Korean Air, China Airlines and Singapore Airlines. Mr. Kingson
was formerly a joint-venture partner of E.F. Hutton. While at E.F. Hutton, Mr.
Kingson initiated and accomplished financial transactions with Gulfstream
Aerospace and
39
<PAGE>
Summit Air, in both of which he was a major shareholder. Mr. Kingson co-founded
Aramex with Mr. Ghandour in 1982, has been an active member of management and
has, along with Mr. Ghandour, been instrumental in the overall development of
the business. Mr. Kingson pilots his own airplanes and holds eighteen world
and/or national speed records for type and class of aircraft. Mr. Kingson holds
a B.S. in Economics from the University of Rhode Island.
FADI GHANDOUR has been the Company's President, Deputy Chairman and Chief
Executive Officer since 1982, when he co-founded Aramex with Mr. Kingson. Mr.
Ghandour has been largely responsible for the creation of the Aramex network in
the Middle East and Gulf region, Europe and the United States. Mr. Ghandour
serves on the Board of the OEC network and is Chairman of the Express
Association of the Middle East ("EAME"), a group which consists of TNT, UPS,
FedEx and Aramex and acts to protect the interests of express companies
throughout the region. Mr. Ghandour holds a B.A. in Political Science from the
George Washington University.
HAZEM MALHAS has been the Company's Vice President and Chief Operating
Officer Express since 1993. Mr. Malhas began his career with Aramex in 1986 when
he held the position of Freight Forwarding Sales Manager, based in the Amman
office. In 1987, he became Country Manager for Jordan. From 1987 to 1993 Mr.
Malhas shared responsibility for Aramex's strategic and operations planning in
his position as Vice President-Operations and Planning. As part of his current
position, in 1994, Mr. Malhas oversaw the extensive re-engineering of the
General Services Office into a cross-functional team structure. Mr. Malhas also
implemented a team-structured sales organization in a pilot program in the Amman
station, which is being introduced throughout the Aramex organization. Prior to
joining Aramex he worked in engineering and construction management positions
with two different Amman-based companies. Mr. Malhas holds a B.S. in Civil
Engineering from the University of Texas, Austin.
SAFWAN TANNIR has been the Company's Vice President and Chief Operating
Officer Freight Forwarding since 1991. Mr. Tannir began his career in the air
transportation industry in 1976 with Trans Mediterranean Airways ("TMA"), a
Lebanon-based international air-cargo airline, where he served as Assistant
Manager of the Taiwan office and Country Manager--Italy. He served in strategic
planning, sales and operations positions and traveled to many of the Company's
offices worldwide during his 10 years with TMA. After several years in sales and
marketing management positions (Jordan Marketing Corp.-- Amman and Banari
Packaging - Jeddah), Mr. Tannir joined Aramex in 1986 as General Manager of Air
Cargo Jordan, the predecessor to the Company's freight forwarding network. While
developing the freight forwarding operations, he held positions as Vice
President--Marketing and Sales and Vice President Middle East until 1990 when he
assumed responsibility for all North America operations. In his current
position, Mr. Tannir has been largely responsible for establishing freight
forwarding operations in all of Aramex's stations worldwide. Mr. Tannir holds a
B.A. in Political Studies & Public Administration from The American University
of Beirut.
CAMILLE TAM NASRALLAH has been the Company's Vice President - Corporate
Affairs since 1993. Mr. Nasrallah began his 30-year career in the air
transportation industry with Trans Mediterranean Airways, where he served in
various sales, reservations, traffic and financial capacities for eight years
beginning in 1966. He later served as Manager for Airlink International Ltd., as
Managing Director of the Zakhour Agency, a Beirut-based freight forwarding and
ticketing company, and as Branch Manager for the Saudi General Transport
Company, where he established trucking operations in Jeddah. He served in
various management positions from 1982 to 1988 in the freight forwarding
operations of Al Zouman Aviation, a combination carrier. Mr. Nasrallah joined
Aramex in 1988, where he first served as General Manager-U.A.E., then later as
Vice President-Gulf and Indian Sub-continent.
EMAD SHISHTAWI has been the Company's Accounting and Finance Manager since
1994. After graduating from Jordan University in Amman, Mr. Shishtawi worked as
an accountant for the Jordanian National Army and, later, for Royal Jordanian
Airlines. He conducted audits of industrial and financial companies in Amman
with the local affiliate of Arthur Andersen & Company from 1982 to 1984.
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<PAGE>
Mr. Shishtawi joined Aramex in 1984 as Accountant in the Amman headquarters and
was later promoted to Financial Manager. He was Controller from 1988 to 1992
during which time he (i) supervised the conversion of the accounting to its
current format and technology; (ii) established the Internal Audit Department;
and (iii) managed and supervised a staff of ten and the reporting from all of
Aramex's stations worldwide. He is responsible for the financial reporting,
management, standards and policies of Aramex and acts as financial consultant
and advisor to the President. Mr. Shishtawi holds a B.A. in Accounting from the
University of Jordan.
YOUSEF GHANDOUR has been Managing Director of MED since 1994 and is
responsible for the implementation and management of MED's growth strategy
worldwide. Prior to such time, Mr. Ghandour was Vice President of International
Trading and Development Company based in Jordan. Mr. Ghandour holds a Masters
degree in Philosophy from Georgetown University.
RULA GHANDOUR has been a principal stockholder and manager of Silsal, a
pottery company, for over five years. Ms. Ghandour holds a B.A. in Sociology
from Santa Clara University and an M.A. in International Affairs from Georgetown
University.
Directors currently do not receive any additional remuneration for services
on the Board of Directors. Except for Mr. Fadi Ghandour and Ms. Rula Ghandour
being husband and wife and Mr. Yousef Ghandour being Mr. Fadi Ghandour's uncle,
there are no family relationships among directors or executive officers of the
Company. The Company may compensate directors who are not employees of the
Company. Members of the Board of Directors will also be eligible for the grant
of options under the Stock Option Plan.
COMMITTEES OF THE BOARD
The Board has an Executive Committee which consists of two directors. The
Executive Committee can exercise all of the powers of the Board between meetings
of the Board. The present members of the Executive Committee are Messrs. Kingson
and Ghandour.
Effective upon consummation of the Offering and election of the two new
directors, the Board will establish an Audit Committee which will consist of
four directors, at least two of whom cannot be an employee of the Company. The
Audit Committee will be responsible for the engagement of the Company's
independent auditors and will review with them the scope and timing of their
audit services and any other services they are asked to perform, their report on
the Company's financial statements following completion of their audit and the
Company's policies and procedures with respect to internal accounting and
financial controls. The members of the Audit Committee will be Messrs. Kingson
and Ghandour and two other directors.
See "--Stock Option Plan" for a description of the Committee administering
the Company's Stock Option Plan.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid to the Company's
President and Chief Executive Officer for the year ended December 31, 1995 (the
"Named Executive Officer"). No other executive officer of the Company received a
total annual salary and bonus in excess of $100,000 during the year ended
December 31, 1995.
41
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION
-------------
<S> <C>
NAME AND PRINCIPAL POSITION SALARY
- --------------------------------------------------------------------------------------------------- -------------
Fadi Ghandour $ 42,000
President, Deputy Chariman and Chief Executive Officer(1)
All Directors and Officers as a Group (8 persons) $ 279,900
</TABLE>
- ------------------------
(1) Mr. Ghandour will enter into an employment agreement which provides for an
increase in his annual salary upon completion of the offering. See
"--Employment Agreements."
STOCK OPTION PLAN
The Company's Stock Option Plan (the "Plan") permits the granting of both
incentive stock options (which are entitled to certain favorable treatment under
the Internal Revenue Code of 1986) and nonqualified stock options (I.E., options
which are not intended to be incentive stock options). A total of 400,000 shares
of Common Stock has been authorized for issuance pursuant to options granted
under the Plan. Employees and consultants of the Company and its subsidiaries
and non-employee members of the Board of Directors of the Company are eligible
to be selected to receive one or more options.
The Plan is administered by a committee of nonemployee members of the Board
of Directors (the "Committee"). Subject to the terms of the Plan, the Committee
has the sole discretion to determine the employees and consultants to whom
options will be granted and the terms and conditions of such options. However,
the exercise price of any option granted under the Plan cannot be less than 100%
of the fair market value (on the date of grant) of the shares covered by the
option (110% of fair market value in the case of certain incentive stock
options).
Pursuant to the Plan, Mr. Kingson has been granted incentive stock options
to purchase 100,000 shares of Common Stock at an exercise price of 110% of the
initial public offering price. Each of Mr. Kingson's options are exercisable for
a period of five years from the date of vesting.
Mr. Ghandour has been granted non-qualified stock options to purchase
100,000 shares of Common Stock at an exercise price of 100% of the initial
public offering price per share. Mr. Ghandour's options are exercisable for a
period of ten years from the date of vesting.
In connection with the Offering, stock options to purchase an additional
aggregate 100,000 shares of Common Stock at an exercise price equal to 100% of
the initial public offering price per share will be issued to certain of the
Company's executive officers and station managers. Such options will vest over a
five-year period on the basis of one-quarter each year following the first year
anniversary of the grant of such option.
INDEMNIFICATION; LIMITATION OF LIABILITY
Bermuda law permits a company to indemnify its directors and officers,
except for any act of fraud or dishonesty. The Company has provided in its
Bye-Laws that the directors and officers of the Company will be indemnified and
held harmless against any expenses, judgments, fines, settlements and other
amounts incurred by reason of any act or omission in the discharge of their
duty, other than in the case of fraud or dishonesty.
Bermuda law and the Bye-Laws of the Company also permit the Company to
purchase insurance for the benefit of directors and officers against any
liability incurred by them for the failure to exercise the requisite care,
diligence and skill in the exercise of their powers and the discharge of their
duties, or indemnifying them in respect of any loss arising or liability
incurred by them by reason of negligence,
42
<PAGE>
default, breach of duty or breach of trust. The Company intends to purchase a
directors' and officers' liability insurance policy upon consummation of this
Offering.
The Company intends to enter into indemnification agreements with the
Company's officers and directors. To the extent permitted by law, the
indemnification agreements may require the Company, among other things, to
indemnify such officers and directors against certain liabilities that may arise
by reason of their status or service as directors or officers (other than
liabilities arising from fraud or dishonesty) and to advance their expenses
incurred as a result of any proceeding against them as to which they could be
indemnified.
At present, there is no pending material litigation or proceeding involving
a director or officer of the Company where indemnification will be required or
permitted. In addition, the Company is not aware of any threatened material
litigation or proceeding that may result in a claim for such indemnification.
Bermuda law requires that every officer, including all directors, of the
Company in discharging his duties act honestly and in good faith with a view to
the best interests of the Company, and exercise the care, diligence and skill
that a reasonably prudent person would exercise in comparable circumstances,
including compliance with the Companies Act 1981 of Bermuda (the "Act"), the
regulations thereunder and the Company's Bye-laws. The Company's Bye-laws
provide, however, that no director of the Company shall be liable to the Company
or its shareholders for breach of such director's fiduciary duty as a director,
except for any fraud or dishonesty of which he may be guilty in relation to the
Company.
EMPLOYMENT AGREEMENTS
Effective upon consummation of the Offering, the Company and Mr. Kingson
will enter into a two year employment agreement providing for his employment as
the Company's Chairman of the Board at an initial salary of $85,000. At the same
time, Mr. Ghandour will enter into a two year employment agreement providing for
his employment as the Company's President and Chief Executive Officer at a base
salary of $115,000. Each of the employment agreements provide that in the event
of termination: (i) as a result of a major event (defined to include, but not
limited to, a change of control whereby "any person" (other than persons who
beneficially own more than 30% of the capital stock of the Company on a fully
diluted and as converted basis on the date thereof) becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 30% or more of the Company's outstanding capital stock on a fully
diluted and as converted basis at such time, the liquidation, dissolution or
sale of all or substantially all of the Company's assets), without cause or by
Mr. Kingson or Mr. Ghandour for good reason (defined to include, but not limited
to, a reduction in base salary, a relocation of the Company's principal
executive offices and any material breach by the Company of any material
provision in such employment agreements), or by Mr. Kingson or Mr. Ghandour for
cause, Mr. Kingson or Mr. Ghandour, as the case may be, will receive a lump sum
severance allowance in an amount equal to 2.99 times his then annual salary;
(ii) as a result of the disability or incapacity of Mr. Kingson or Mr. Ghandour,
Mr. Kingson or Mr. Ghandour, as the case may be, will be entitled to receive 75%
of his salary during the two years following the termination notice; and (iii)
as a result of the death of Mr. Kingson or Mr. Ghandour, Mr. Kingson or Mr.
Ghandour (or their respective estates), as the case may be will be entitled to
receive a lump sum payment equal to his then annual base salary. Each agreement
includes a one-year non-compete covenant commencing on the termination of
employment.
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<PAGE>
PRINCIPAL AND SELLING SHAREHOLDERS
The following table sets forth information with respect to beneficial
ownership of the Common Stock, the only class of capital stock of the Company of
which shares will be outstanding after this Offering, on a comparative basis, as
of November 1, 1996 and as adjusted to reflect the sale of Common Stock offered
hereby (in each case) by (i) all persons who beneficially own, to the knowledge
of the Company, 5% or more of the Common Stock, (ii) the Selling Shareholders,
(iii) each director of the Company individually, (iv) each Named Executive
Officer that owns stock, and (v) all directors and executive officers of the
Company as a group.
<TABLE>
<CAPTION>
PERCENTAGE OF
OWNERSHIP
NUMBER OF STOCK --------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY BEFORE AFTER
OR NUMBER OF PERSONS IN GROUP OWNED OFFERING OFFERING(1)
------------------------------------------ ----------------- ----------- -------------
<S> <C> <C> <C>
William Kingson(2)(6)................................................... 1,662,500 47.1% 36.7%
Fadi Ghandour(3)(6)..................................................... 1,662,500 47.1% 36.7%
Rula Ghandour(4)(6)..................................................... 1,662,500 47.1% 36.7%
Airborne Freight Corporation(5)(6)...................................... 304,688 8.9% 6.9%
All directors and executive officers as a group
(8 persons)(2)(3)(6).................................................. 3,325,000 91.6% 71.8%
</TABLE>
- ------------------------
(1) Assuming full exercise of the Underwriters' Over-Allotment Option, Mr.
Kingson, Mr. Ghandour and Ms. Ghandour will each beneficially own 1,587,500
shares of Common Stock, or 35.0% after the Offering.
(2) Includes 100,000 shares of Common Stock issuable upon exercise of five year,
incentive stock options held by Mr. Kingson having an initial exercise price
equal to 110% of the initial public offering price per share. Mr. Kingson's
address is c/o Suite 451, 866 United Nations Plaza, New York, New York
10017.
(3) Includes (a) 781,250 shares of Common Stock owned by Mr. Fadi Ghandour's
spouse, Ms. Rula Ghandour and (b) 100,000 shares of Common Stock issuable
upon exercise of ten year, non-qualified options held by Mr. Ghandour having
an exercise price equal to the initial offering price per share. The address
of Mr. Ghandour is in care of the Company at 2 Badr Shaker, Alsayyab Street,
Um Uthayna, Amman, Jordan.
(4) Includes (a) 100,000 shares of Common Stock issuable upon exercise of ten
year, non-qualified options held by Mr. Ghandour having an exercise price
equal to the initial offering price per share and (b) 781,250 shares of
Common Stock held of record by Ms. Ghandour's spouse, Mr. Fadi Ghandour. The
address of Ms. Ghandour is in care of the Company at 2 Badr Shaker, Alsayyab
Street, Um Uthayna, Amman, Jordan.
(5) The address of Airborne Freight Corporation is 3101 Western Avenue, Seattle,
Washington 98121.
(6) Each of the Company's existing shareholders have entered into a Shareholders
Agreement which provides for certain restrictions on transfer and other
rights described in "Certain Transactions."
44
<PAGE>
CERTAIN TRANSACTIONS
Aramex Bermuda has subscribed for 100 Ordinary Shares of Aramex Hong Kong
and each share of Aramex Hong Kong outstanding prior to such subscription was
converted by a special resolution of the shareholders of Aramex Hong Kong into
non-voting Deferred Shares. The Deferred Shares do not carry voting rights and
are effectively subordinated to the Ordinary Shares (all of which are held by
Aramex Bermuda) in respect of all dividends, distributions and liquidation
rights until such as the holders of Ordinary Shares have received $100 billion.
Pursuant to the Reorganization, Aramex Bermuda became the parent holding company
of Aramex Hong Kong. The existing shareholders of Aramex Hong Kong will retain a
nominal interest in Aramex Hong Kong through their ownership of the Deferred
Shares. Aramex Hong Kong will act as an intermediate holding company of the
Company's subsidiaries until Aramex Bermuda completes its reorganization plan to
transfer assets from Aramex Hong Kong to Aramex Bermuda or its subsidiary
companies.
In connection with the Airborne Stock Purchase, Mr. William Kingson, Mr.
Fadi Ghandour, Ms. Rula Ghandour and Airborne Freight Corporation entered into a
Shareholders Agreement, as amended on December 11, 1996 and December 12, 1996,
which, among other things, provides that in the event the Company transfers (as
defined in the Shareholders Agreement) any shares of Common Stock to certain
listed competitors to Airborne or any other company primarily engaged in the
transportation of air freight or air express shipments, Airborne has the right
to sell all of its shares of Common Stock to the Company on the same terms and
conditions as the sale to such other company. In the event that Messrs. Kingson
and Ghandour and/or Ms. Rula Ghandour transfer any shares of Common Stock to
certain listed competitors to Airborne or any other company primarily engaged in
the transportation of air freight or air express shipments, it shall be a
condition of such transfer that Airborne shall be offered the right to sell to
such competitor all of its shares of Common Stock on the same terms and
conditions as the sale by Messrs. Kingson and Ghandour and/or Ms. Rula Ghandour.
In addition, the Shareholders Agreement contains certain other provisions which
terminate upon consummation of this Offering, including: (i) a right of first
refusal in favor of the Company in the event Airborne transfers (as defined in
the Shareholders Agreement) its shares to a company or companies, their
subsidiaries, parents or known affiliates primarily engaged in the
transportation of air freight or air express shipments and (ii) a similar right
of first refusal in favor of Airborne in the event the Company, Mr. Kingson, Mr.
Ghandour or Ms. Ghandour transfer shares to certain listed competitors of
Airborne or to any other Company primarily engaged in the transportation of air
freight or air express shipments. "Transfer" is defined to mean the direct or
indirect, through intermediaries or otherwise, sale, transfer, distribution,
assignment, bequest, pledge, hypothecation, encumbrance, grant of security
interest in, or grant, issuance, sale or conveyance of any option, warrant or
right to acquire, grant of a proxy to vote, or other disposition of shares of
Common Stock of the Company and is defined to exclude a sale on the open market
or the Transfer of shares by the Company in connection with a strategic
acquisition or similar transaction where the Company (directly or through one or
more subsidiaries) is the acquiring party. In connection with the Airborne Stock
Purchase, Airborne was granted certain "piggyback" registration rights relating
to their shares of Common Stock. In addition, under the terms of the Airborne
Stock Purchase, Airborne shall be entitled to appoint one Director to the
Company's Board of Directors.
MED was organized under the laws of the Isle of Jersey in 1996. Of the 100
shares of MED currently outstanding, Aramex owns 75 shares, Yousef Ghandour owns
20 shares and Hazem Malhas owns 5 shares. In connection with this Offering, Mr.
Malhas will transfer his shares of MED to the Company. Mr. Yousef Ghandour is
Mr. Fadi Ghandour's uncle.
The Company leases the premises currently occupied by the Company's London
operations from Mr. Ali Ghandour, the father of Mr. Fadi Ghandour, at an annual
rental of $76,000 pursuant to a lease which renews annually. The Company
believes that the terms of the lease are at least as favorable to the Company as
those available from unaffiliated third parties.
45
<PAGE>
The Company leases the premises currently occupied by the Company's
corporate offices in Amman, Jordan, from ARAM, an investment company controlled
by the Ghandour family at an annual rental of $70,000. The lease renews
annually. The Company believes that the terms of the lease are at least as
favorable to the Company as those available from unaffiliated third parties.
From time to time, Mr. Fadi Ghandour has personally guaranteed lines of
credit and bank overdrafts on behalf of the Company. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
Note 8 to Notes to Consolidated Financial Statements. To the extent any of the
proceeds from the Offering are used to repay such indebtedness, the personal
guarantee of Mr. Ghandour will be extinguished.
Messrs. William Kingson and Fadi Ghandour have at various times made
non-interest bearing loans to the Company which at December 31, 1995 aggregated
$395,697. During the Nine Month Period, the loans were repaid.
In addition, see "Management" for a discussion of employment agreements and
option agreements with Messrs. Kingson and Ghandour.
The Company has entered into nominee shareholder agreements with Fadi
Ghandour and Raghida Ghandour, the sister of Fadi Ghandour, the owners of 78%
and 22% of the share capital of Arab American International Express Company
(Aramex) Limited, the entity through which the Company conducts its Jordanian
operations. Mr. Ghandour and Ms. Ghandour have held their shares in Arab
American International Express Company (Aramex) Limited as nominees for the
Company since inception of its operations on April 3, 1982. However, in January
1995, the Company formalized the arrangement with Mr. Ghandour and Ms. Ghandour
pursuant to nominee shareholder agreements which have been subsequently amended
in connection with the Reorganization. Pursuant to such agreements, Mr. and Ms.
Ghandour confirm that they are holding their respective shares in the name of
the Company and that they will abide by any written instructions given by the
Company concerning the shares. The Company agreed that they will reimburse and
indemnify Mr. and Ms. Ghandour for all expenses incurred in acquiring and
holding the shares. Arab American International Express Company (Aramex) Limited
has been included in the consolidated financial statements of the Company as a
wholly-owned subsidiary for all periods presented herein.
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DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 15,000,000 shares of
Common Stock, par value $.01 per share and 5,000,000 shares of Preferred Stock,
par value $.01 per share. As of the date of this Prospectus, 3,429,688 shares of
Common Stock are outstanding. After giving effect to the sale of the shares of
Common Stock offered hereby, there will be 4,429,688 shares of Common Stock
outstanding.
COMMON STOCK
The holders of shares of Common Stock are entitled to one vote per share on
all matters submitted to a vote at a meeting of shareholders. Each shareholder
may exercise such vote either in person or by proxy. Shareholders are not
entitled to cumulate their votes for the election of directors, which means that
the holders of more than 50% of the Common Stock voting for the election of
directors can elect all of the directors to be elected by holders of Common
Stock, in which event the holders of the remaining Common Stock voting will not
be able to elect any director. The Company has a staggered Board of Directors.
Subject to preferences to which holders of Preferred Stock issued after the sale
of the Common Stock offered hereby may be entitled, the holders of Common Stock
are entitled to receive ratably such dividends, if any, as may be declared from
time to time by the Board out of funds legally available therefor. The Company
does not presently anticipate paying cash dividends in the foreseeable future.
See "Dividend Policy." In the event of a liquidation, dissolution or winding up
of the Company, the holders of Common Stock are entitled to share ratably in all
assets of the Company which are legally available for distribution to
shareholders, subject to the prior rights on liquidation of creditors and to
preferences to which holders of Preferred Stock issued after the sale of the
Common Stock offered hereby may be entitled. The holders of Common Stock have no
preemptive, subscription, redemption or sinking fund rights. The Common Stock
currently outstanding, and the Common Stock offered hereby, is and will be
validly issued, fully paid and nonassessable.
PREFERRED STOCK
The Board has the authority to issue Preferred Stock in one or more series
and to fix the rights, preferences, privileges and restrictions thereof,
including dividend rights, dividend rates, conversion rights, voting rights,
terms of redemption (including sinking fund provisions), redemption prices and
liquidation preferences, and the number of shares constituting and the
designation of any such series, without further vote or action by the
shareholders. At present, the Company has no plans to issue any of the Preferred
Stock and is not aware of any pending or proposed transaction that would be
affected by such an issuance.
BERMUDA LAW
The following discussion is based upon the advice of Conyers, Dill &
Pearman, Bermuda counsel for the Company.
Prior to the effective date of the Registration Statement of which this
Prospectus is a part, the Reorganization was effected. See "The Company's
Organization" and "Certain Transactions." The Company is an exempted company
under the Companies Act 1981 of Bermuda (the "Act"). The rights of the Company's
shareholders, including those persons who will become shareholders of the
Company in connection with this Offering, are governed by Bermuda law and the
Company's Memorandum of Association and Bye-laws. The Act differs in certain
material respects from laws generally applicable to United States corporations
and their shareholders. The following is a summary of certain provisions of
Bermuda law and the Company's organizational documents. This summary is not a
comprehensive description of such laws and documents and is qualified in its
entirety by appropriate reference to Bermuda law and to the organizational
documents of the Company which are filed as exhibits to the Registration
Statement of which this Prospectus is a part.
DIVIDENDS. Under Bermuda law, a company may pay such dividends as are
declared from time to time by its board of directors unless there are reasonable
grounds for believing that the company is or would, after the payment, be unable
to pay its liabilities as they become due or that the realizable value of
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its assets would thereby be less than the aggregate of its liabilities and
issued share capital and share premium accounts.
VOTING RIGHTS. Under Bermuda law, save as otherwise provided in the Act or
the Bye-laws of the Company, questions brought before a general meeting of
shareholders are decided by a majority vote of shareholders present at the
meeting. The Company's Bye-laws provide that, subject to the provisions of the
Act, any questions proposed for the consideration of the shareholders will be
decided by a simple majority of the votes cast, on a show of hands, with each
shareholder present and each person holding proxies for any shareholder entitled
to one vote, unless a poll is requested. If a poll is requested, each
shareholder present in person or by proxy has one vote for each share held. A
poll may only be requested under the Company's Bye-laws by (i) the Chairman of
the meeting, (ii) at least three shareholders present in person or by proxy,
(iii) any shareholder or shareholders, present in person or by proxy, holding
between them not less than 10% of the total voting rights of all shareholders
having the right to vote at such meeting or (iv) a shareholder or shareholders
present in person or by proxy holding voting shares in the company on which an
aggregate sum has been paid equal to not less than 10% of the total sum paid up
on all such voting shares.
RIGHTS IN LIQUIDATION. Under Bermuda law and the Bye-laws, in the event of
liquidation or winding up of a company, after satisfaction in full of all claims
of creditors and subject to the preferential rights accorded to any series of
preferred shares, the proceeds of such liquidation or winding up are distributed
PRO RATA among the holders of common shares.
MEETINGS OF SHAREHOLDERS. Under Bermuda law, a company is required to
convene at least one general shareholders' meeting per calendar year. The
Company will hold its annual general meeting in the United States. Bermuda law
provides that a special general meeting may be called by the board of directors
and must be called upon the request of shareholders holding not less than 10% of
the paid-up capital of the company carrying the right to vote. Bermuda law also
requires that shareholders be given at least five days' advance notice of a
general meeting but the accidental omission to give notice to any person does
not invalidate the proceedings at a meeting. Under the Bye-laws of the Company,
at least ten days' notice of the annual general meeting and of any special
general meeting must be given to each shareholder.
Under Bermuda law, the number of shareholders constituting a quorum at any
general meeting of shareholders is determined by the bye-laws of a company. The
Company's Bye-laws provide that the presence in person or by proxy of the
holders of more than 50% of the voting capital stock of the Company constitutes
a quorum.
ACCESS TO BOOKS AND RECORDS AND DISSEMINATION OF INFORMATION. Members of
the general public have the right to inspect the public documents of a company
available at the office of the Registrar of Companies in Bermuda. These
documents include a company's Certificate of Incorporation, its Memorandum of
Association (including its objects and powers) and any alteration to its
Memorandum of Association. The shareholders have the additional right to inspect
the bye-laws of the company, minutes of general meetings and the company's
audited financial statements, which must be presented at the annual general
meeting. The register of shareholders of a company is also open to inspection by
shareholders without charge and by members of the general public on the payment
of a fee. A company is required to maintain its share register in Bermuda but
may, subject to the provisions of the Act, establish a branch register outside
Bermuda. The Company intends to maintain a share register in New York, New York.
A company is required to keep at its registered office a register of its
directors and officers which is open for inspection for not less than two hours
in each day by members of the public without charge. Bermuda law does not,
however, provide a general right for shareholders to inspect or obtain copies of
any other corporate records.
ELECTION OR REMOVAL OF DIRECTORS. Under Bermuda law and the Company's
Bye-laws, directors are elected or appointed at the annual general meeting and
shall serve until re-elected or re-appointed or until their successors are
elected or appointed, unless they are earlier removed or resign. The Company has
a staggered Board of Directors.
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Under Bermuda law and the Bye-laws of the Company, a director may be removed
at a special general meeting of shareholders specifically called for that
purpose, provided the director is served with at least 14 days' notice. The
director has a right to be heard at such meeting. Any vacancy created by the
removal of a director at a special general meeting may be filled at such meeting
by the election of another director in his or her place or, in the absence of
any such election, by the Board of Directors.
AMENDMENT OF MEMORANDUM OF ASSOCIATION AND BYE-LAWS. Bermuda law provides
that the Memorandum of Association of a company may be amended by a resolution
passed at a general meeting of shareholders of which due notice has been given.
An amendment to the Memorandum of Amalgamation other than an amendment which
alters or reduces a company's share capital as provided in the Act, also
requires the approval of the Bermuda Minister of Finance, who may grant or
withhold approval at his discretion. The Bye-laws may be amended by the Board of
Directors if such amendment is approved by the shareholders by a resolution
passed by a majority of votes cast at a general meeting.
Under Bermuda law, the holders of an aggregate of no less than 20% in par
value of a company's issued share capital or any class thereof have the right to
apply to the Bermuda Court for an annulment of any amendment of the Memorandum
of Association adopted by shareholders at any general meeting, other than an
amendment which alters or reduces a company's share capital as provided in the
Act. Where such an application is made, the amendment becomes effective only to
the extent that it is confirmed by the Bermuda Court. An application for the
annulment of an amendment of the Memorandum of Association must be made within
21 days after the date on which the resolution altering the company's memorandum
is passed and may be made on behalf of the persons entitled to make the
application by one or more of their number as they may appoint in writing for
the purpose. No such application may be made by persons voting in favor of the
amendment.
APPRAISAL RIGHTS AND SHAREHOLDER SUITS. Under Bermuda law, in the event of
an amalgamation of two Bermuda companies, a shareholder who is not satisfied
that fair value has been paid for his stock may apply to the Bermuda Court to
appraise the fair value of his shares. The amalgamation of a company with
another company requires the amalgamation agreement to be approved by the board
of directors and, exept where the amalgamation is between a holding company and
one or more of its wholly owned subsidiaries or between two or more wholly owned
subsidiaries of the stock, by meetings of the holders of shares of each company
and of each class of such shares. Under Bermuda law, an amalgamation also
requires the consent of the Bermuda Minister of Finance, who may grant or
withhold such consent at his discretion.
Class actions and derivative actions are generally not available to
shareholders under Bermuda law. The Bermuda courts, however, would ordinarily be
expected to permit a shareholder to commence an action in the name of a company
to remedy a wrong done to the company where the act complained of is alleged to
be beyond the corporate power of the company or is illegal or would result in
the violation of the company's Memorandum of Association or Bye-laws.
Furthermore, consideration would be given by the Court to acts that are alleged
to constitute a fraud against the minority shareholders or, for instance, where
an act requires the approval of a greater percentage of the company's
shareholders than that which actually approved it.
When the affairs of a company are being conducted in a manner oppressive or
prejudicial to the interests of some part of the shareholders, one or more
shareholders may apply to the Bermuda Court for an order regulating the
company's conduct of affairs in the future or compelling the purchase of the
stock by any shareholder, by other shareholders or by the company.
TRANSFER AGENT AND BRANCH REGISTRAR
The Transfer Agent and Branch Registrar for the Common Stock is the
Continental Stock Transfer and Trust Company, New York, New York.
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STOCK ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has not been any public market for the Common
Stock of the Company. No prediction can be made as to the effect, if any, that
market sales of shares or the availability of shares for sale will have on the
market price prevailing from time to time. Nevertheless, sales of substantial
amounts of Common Stock of the Company in the public market after the
restrictions described below lapse, or the perception that such sales could
occur, could adversely affect the market price of the Common Stock.
Upon completion of this offering, the Company will have outstanding
4,429,888 shares of Common Stock. Of these shares, all of the 1,000,000 shares
sold in this offering will be freely tradeable without restriction or further
registration under the Securities Act, unless purchased by "affiliates" of the
Company, as that term is defined under the Securities Act. The remaining
3,429,888 shares of Common Stock outstanding upon completion of the Offering
will be "restricted securities" as that term is defined by Rule 144 promulgated
under the Securities Act. Those restricted securities may be sold in the public
market only if registered or if they qualify for an exemption from registration
under Rule 144, which is summarized below. In addition, Airborne has been
granted certain "piggyback" registration rights in connection with the Airborne
Stock Purchase. See "Certain Transactions."
In general, under Rule 144, as currently in effect, after two years have
elapsed since the later of the date of acquisition of restricted stock from the
Company or from an affiliate of the Company, the acquirer or subsequent holder
will be entitled to sell in any three-month period the number of shares that
does not exceed the greater of (i) 1% of the then outstanding number of Common
Stock, or (ii) the average weekly trading volume of the Common Stock during the
four calendar weeks immediately preceding the date on which notice of the sale
is filed with the Commission. The Commission has proposed certain amendments to
Rule 144 which would reduce the requisite holding period from two years to one
year. Sales pursuant to Rule 144 also are subject to certain other requirements
relating to manner of sale, notice and availability of current public
information about the Company. A person (or persons whose shares are aggregated)
who is not deemed to have been an affiliate of the Company at any time during
the three months immediately preceding a sale of restricted securities is
entitled to sell the securities pursuant to Rule 144(k) without regard to the
volume limitations described above, provided that three years have expired since
the later of the date on which such restricted shares were first acquired from
the Company or from an affiliate of the Company.
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CERTAIN FOREIGN ISSUER CONSIDERATIONS
The following discussion is based on the advice of Conyers, Dill & Pearman,
Bermuda counsel to the Company.
The Company has been designated as a non-resident for exchange control
purposes by the Bermuda Monetary Authority ("BMA"). Consent under the Exchange
Control Act 1972 (and regulations promulgated thereunder) has been obtained from
the BMA for the sale or transfer to non-residents of Bermuda for exchange
control purposes of the Common Stock being offered pursuant to the Offering. In
addition, prior to this Offering, this Prospectus will be filed with the
Registrar of Companies in Bermuda in accordance with Bermuda law.
IT MUST BE DISTINCTLY UNDERSTOOD THAT, IN GRANTING SUCH CONSENT AND
ACCEPTING THIS PROSPECTUS FOR FILING, THE BMA AND THE REGISTRAR OF COMPANIES IN
BERMUDA WILL ACCEPT NO RESPONSIBILITY FOR THE FINANCIAL SOUNDNESS OF ANY
PROPOSAL OR FOR THE CORRECTNESS OF ANY OF THE STATEMENTS MADE OR OPINIONS
EXPRESSED HEREIN.
Under Bermuda law, there are no limitations on the rights of non-Bermuda
owners of the Common Stock to hold or vote their shares. Because the Company has
been designated as a non-resident for Bermuda exchange control purposes, there
are no restrictions on its ability to transfer funds in and out of Bermuda or to
pay dividends to United States residents who are holders of the Company's Common
Stock, other than in respect of local Bermuda currency.
In the case of an applicant acting in a special capacity (for example, as an
executor or trustee), certificates may, at the request of the applicant, record
the capacity in which the applicant is acting. Notwithstanding the recording of
any such special capacity, the Company is not bound to investigate or see to the
execution of a trust pursuant to which any of its shares are held. The Company
will take no notice of any trust applicable to any of its shares whether or not
it had notice of such trust.
Under Bermuda law, the Company is an exempted company (that is, it is
exempted from the provisions of Bermuda law which stipulate that at least 60% of
the equity must be beneficially owned by Bermudians). Consents under The
Exchange Control Act 1972 of Bermuda and the regulations made thereunder have
been obtained for the issue and all subsequent transfers of the shares of Common
Stock offered by this Prospectus to and among persons not resident in Bermuda
for exchange control purposes. Persons regarded as residents of Bermuda for
exchange control purposes require specific consent under The Exchange Control
Act 1972 to acquire securities issued by the Company. The Act permits companies
to adopt bye-law provisions relating to the transfer of securities. Neither
Bermuda law, the Memorandum of Association nor the Bye-laws of the Company
impose limitations on the right of foreign nationals or nonresidents of Bermuda
to hold shares of the Company or vote such shares. Pursuant to the provisions of
Section 28 of the Companies Act 1981 of Bermuda, there is no minimum
subscription which must be raised by the issue of the Common Stock to provide
the funds required to be provided in respect of the matters set forth in that
section.
As an exempted company, the Company may not participate in certain business
transactions, including: (1) the acquisition or holding of land in Bermuda
(except that required for its business and held by way of lease or tenancy for
terms of not more than 21 years) without the express authorization of the
Bermuda legislature; (2) the taking of mortgages on land in Bermuda to secure an
amount in excess of $50,000 without the consent of the Bermuda Minister of
Finance; or (3) the carrying on of business of any kind in Bermuda, except in
furtherance of the business of the Company carried on outside Bermuda or under a
license granted by the Bermuda Minister of Finance. In addition, present BMA
policy permits no more than 20% of the share capital of an exempted Company to
be held by Bermudians.
The Bermuda government actively encourages foreign investment in exempted
entities like the Company that are based in Bermuda but do not operate in
competition with local business. In addition to
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having no restrictions on the degree of foreign ownership, the Company is
subject neither to taxes on its income or dividends nor to any foreign exchange
controls in Bermuda. In addition, there is no capital gains tax in Bermuda, and
profits can be accumulated by the Company, as required, without limitation.
The following is a summary of the law relating to the enforcement of foreign
judgements in Jordan and represents the opinion of Ali Sharif Zu'bi & Sharif Ali
Zu'bi Law Firm, Jordan counsel to the Company, that the enforcement of foreign
judgements in Jordan is governed by Law No. 8 of 1952. Basically, a foreign
judgement may be enforced in Jordan by means of an application to the competent
court without retrial and re-examination of the merits or issues of the case.
Jordanian courts may, however, decline to enforce a foreign judgement (i) if the
court which passed the judgement was without competent jurisdiction, (ii) if the
defendant has not carried on any business within the jurisdiction of the court
which passed the judgement or was not resident within its jurisdiction and did
not willfully appear before the court or did not recognize its jurisdiction,
(iii) if the defendant was not notified to appear before the court which issued
the judgement or was not duly or properly served with notice, (iv) if the
judgement has been passed in a fraudulent manner, (v) if the defendant is able
to persuade the court that the judgement is not final, (vi) if the judgement
contravenes Jordanian public policy, and (vii) if the laws of the country of the
court which passed the judgement do not recognize and enforce judgements of
Jordanian courts.
TAXATION
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary describes certain of the principal United States
federal income tax consequences relating to an investment in the Common Stock as
of the date hereof and represents the opinion of Orrick, Herrington & Sutcliffe
LLP, special United States counsel to the Company. The summary is based on the
Internal Revenue Code of 1986 (the "Code"), and existing final, temporary and
proposed Treasury Regulations, Revenue Rulings and judicial decisions, all of
which are subject to prospective and retroactive changes. The Company will not
seek a ruling from the Internal Revenue Service (the "IRS") with regard to the
United States federal income tax treatment relating to an investment in the
Common Stock and, therefore, there can be no assurance that the IRS will agree
with the conclusions set forth below. The summary does not purport to address
all federal income tax consequences that may be relevant to particular
investors. For example, the summary applies only to holders who hold the Common
Stock as a capital asset within the meaning of Section 1221 of the Code, and
does not address the tax consequences that may be relevant to investors in
special tax situations (including, for example, life insurance companies,
tax-exempt organizations, dealers in securities or currency, banks or other
financial institutions, or investors that hold the Common Stock as part of a
hedge, straddle or conversion transaction). Further, it does not address the
alternative minimum tax consequences of an investment in the Common Stock or the
indirect consequences to holders of equity interests in investors in the Common
Stock. ACCORDINGLY, PERSONS CONSIDERING THE PURCHASE OF THE COMMON STOCK SHOULD
CONSULT THEIR OWN TAX ADVISORS CONCERNING THE APPLICATION OF UNITED STATES
FEDERAL INCOME TAX LAWS, AS WELL AS THE LAWS OF ANY STATE, LOCAL OR FOREIGN
TAXING JURISDICTION, TO THEIR PARTICULAR SITUATIONS.
For purposes of this discussion, "Company" refers to Aramex International
Limited and "U.S. Holder" means a holder of Common Stock that is a citizen or
resident of the United States, a partnership or corporation created or organized
in the United States or any State thereof (including the District of Columbia),
or an estate or trust the income of which is subject to United States federal
income tax regardless of its source. The term "non-U.S. Holder" refers to any
holder of Common Stock other than a U.S. Holder.
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TAXATION OF THE COMPANY
The Company believes that most of the Company's income currently is and,
according to the Company's plans set forth in "Business" above, will be from
sources outside the United States and will not be effectively connected with the
conduct by the Company of a trade or business within the United States. However,
the Company may decide in the future to directly engage in a trade or business
within the United States. The Company generally will not be subject to United
States federal income tax on its income from sources outside the United States
that is not effectively connected with the conduct of a trade or business within
the United States. If the Company is treated as engaged in the conduct of a
trade or business within the United States it will be subject to United States
federal income tax on its United States effectively connected income in the same
manner as if it were a United States corporation, and will be subject to a
United States branch profits tax equal to 30% of such effectively connected
income, subject to adjustments.
In addition, the Company may be classified as a personal holding company (a
"PHC") for United States federal income tax purposes if both of the following
tests are satisfied: (i) at any time during the last half of the Company's
taxable year, five or fewer individuals (without regard to their citizenship or
residency) own or are deemed to own under certain attribution rules more than
50% of the stock of the Company by value (the "PHC Ownership Test") and (ii) the
Company receives 60% or more of its United States related gross income, as
specifically adjusted, from certain passive sources (the "PHC Income Test"). A
corporation classified as a PHC is taxed (currently at a rate of 39.6%) on
certain of its undistributed United States source income (e.g., dividends from
United States corporations) and United States effectively connected income, to
the extent such income is not distributed to shareholders.
Prior to and after this Offering, five or fewer individuals likely will own
or be deemed to own more than 50% of the Common Stock. Furthermore, the Company
likely will receive distributions from United States corporations after this
Offering. As a result, the PHC Ownership Test and the PHC Income Test likely
will be satisfied after this Offering. The Company currently intends to manage
its affairs so as to minimize liability for the PHC tax, but there can be no
assurance that the Company will be successful in minimizing such tax. Further,
in the future the Company may determine that the Company's funds are better used
for purposes other than making the distributions required to minimize such tax.
TAXATION OF U.S. HOLDERS
DISTRIBUTIONS OF COMMON STOCK. Distributions made by the Company with
respect to Common Stock generally will constitute dividends for federal income
tax purposes and will be taxable to a U.S. Holder as ordinary income to the
extent of the Company's undistributed current or accumulated earnings and
profits (as determined for United States federal income tax purposes).
Distributions in excess of the Company's current or accumulated earnings and
profits will be treated first as a nontaxable return of capital reducing the
U.S. Holder's tax basis in the Common Stock, thus increasing the amount of any
gain (or reducing the amount of any loss) which might be realized by such holder
upon the sale or exchange of such Common Stock. Any such distributions in excess
of the U.S. Holder's tax basis in the Common Stock will be treated as capital
gain to the U.S. Holder and will be either long-term or short-term capital gain
depending upon the U.S. Holder's federal income tax holding period for the
Common Stock. Dividends paid by the Company generally will not be eligible for
the dividends received deduction available to certain United States corporate
shareholders under Code Sections 243 and 245.
SALE OR EXCHANGE OF COMMON STOCK. A U.S. Holder of Common Stock generally
will recognize capital gain or loss upon the sale or exchange of the Common
Stock measured by the difference between the amount realized and the U.S.
Holder's tax basis in the Common Stock. The gain or loss on such disposition
will be long term capital gain or loss if the Common Stock has been held for
more than one year.
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PASSIVE FOREIGN INVESTMENT COMPANY. A foreign corporation generally will be
treated as a passive foreign investment company (a "PFIC") if, after applying
certain "look-through" rules, either (i) 75% or more of its gross income is
passive income or (ii) 50% or more of the average value of its assets is
attributable to assets that produce or are held to produce passive income.
Passive income for this purpose generally includes dividends, interest, rents,
royalties and gains from securities and commodities transactions. The
look-through rules require a foreign corporation that owns at least 25%, by
value, of an operating subsidiary to treat that proportion of the subsidiary's
assets and income as held or received directly by the foreign parent.
The Company does not believe that it is currently a PFIC nor does it
anticipate that it will be a PFIC in the future because it expects that less
than 75% of its annual gross income will be passive income and less than 50% of
its assets will be passive assets, based on the look-through rules, the current
income and assets of the Company and its subsidiaries, and the manner in which
the subsidiaries are anticipated to conduct their businesses in the future.
However, there can be no assurance that the Company is not or will not be
treated as a PFIC in the future. If the Company were to be treated as a PFIC,
all U.S. Holders may be required, in certain circumstances, to pay an interest
charge together with tax calculated at maximum rates on certain "excess
distributions," including any gain on the sale of Common Stock. Alternatively, a
U.S. Holder may be permitted to make a "qualified electing fund" election, in
which case, in lieu of such treatment would be required to include in their
taxable income certain undistributed amounts of the Company's income. Neither
the Company nor its advisors have the duty to or will undertake to inform U.S.
Holders of changes in circumstances that would cause the Company to become a
PFIC. U.S. Holders should consult their own tax advisors concerning the status
of the Company as a PFIC at any point in time after the date of this Prospectus.
There can be no assurance that the Company will be willing or able to take the
action necessary for a U.S. Holder to make a "qualified electing fund" election
in the event the Company is determined to be a PFIC.
CONTROLLED FOREIGN CORPORATION. If more than 50% of the stock (vote or
value) of the Company is owned, directly or indirectly, by U.S. Holders, each of
whom owns or is deemed to own under certain attribution rules 10% or more of the
total combined voting power of all classes of stock of the Company ("10%
Shareholder"), the Company will be treated as a "controlled foreign corporation"
(a "CFC") under Subpart F of the Code. One of the Company's existing
shareholders who is a 10% Shareholder may be considered as owning approximately
36% of the Common Stock immediately after this Offering. It is unclear how
controlling blocks of stock will be valued for these purposes. Accordingly, an
investor who purchases Common Stock and becomes a 10% Shareholder may result in
the Company being treated as a CFC for United States federal income tax
purposes.
The Company does not believe that it is a CFC and it is not anticipated that
the Company will become a CFC as a result of this Offering; however, no
assurance can be given that the Company will not be a CFC immediately after this
Offering or that it will not become a CFC as a result of future changes in its
ownership. If the Company were to be treated as a CFC, each 10% Shareholder
would be required to include in its taxable income as a deemed dividend its PRO
RATA share of certain undistributed income of the Company (which possibly could
be substantial) and certain investments by the Company in United States
property, and all or a portion of the gain from the sale or exchange of Common
Stock may be treated under Section 1248 of the Code as dividend income. Neither
the Company nor its advisors have the duty to or will undertake to inform U.S.
Holders of changes in circumstances that would cause the Company to become a
CFC. U.S. Holders should consult their own tax advisors concerning the status of
the Company as a CFC at any point in time after the date of this Prospectus.
FOREIGN PERSONAL HOLDING COMPANY. A foreign corporation may be classified
as a foreign personal holding company (a "FPHC") for federal income tax purposes
if both of the following tests are satisfied: (i) at any time during the taxable
year five or fewer individuals who are United States citizens or residents own
or are deemed to own (under certain attribution rules) more than 50% of its
stock (vote or value) and (ii) at least 60% (50% for years subsequent to the
year in which it becomes a FPHC) of its gross income
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(regardless of its source), as specifically adjusted, is "foreign personal
holding company income," which includes dividends, interest, rents, royalties
and gain from the sale of stock or securities.
The Company does not believe that it is currently a FPHC nor does it
anticipate that it will be a FPHC in the future; however, no assurance can be
given that the Company is not or will not become a FPHC as a result of future
changes of ownership or changes in the nature of the income of the Company. If
the Company were to be classified as a FPHC, each U.S. Holder would be required
to include in income as a taxable constructive dividend its PRO RATA share of
the Company's undistributed foreign personal holding company income.
FORM 5471. Any U.S. Holder who owns 5% or more in value of the stock of the
Company may be required to file IRS Form 5471 with the IRS to report certain
acquisitions or dispositions of stock of the Company. In addition, annual
filings of IRS Form 5471 would be required (i) by any U.S. Holder of 10% or more
in value of the stock of the Company, if the Company were treated as a CFC or
FPHC, and (ii) by any U.S. Holder owning more than 50%, in voting power or
value, of the stock of the Company.
FORM 926. U.S. Holders may be required to report an investment in the
Common Stock to the IRS on IRS Form 926, and that nonreporting may subject the
U.S. Holder to substantial penalties. Recently enacted Code Section 1494(c)
imposes a 35 percent penalty on certain reportable property transfers between
United States persons and foreign persons. Property transfers subject to
reporting literally appear potentially to include transfers of cash through the
purchase of a security such as the Common Stock; if reportable but not reported,
the purchase would subject the U.S. Holder to a penalty equal to 35 percent of
the Common Stock's cost. Any such penalty for nonreporting would not be subject
to reimbursement by the Company. The Code generally requires that a return be
filed with respect to reportable property transfers on the date of the transfer;
however, the IRS recently announced its intention to issue guidance with respect
to this reporting requirement before the end of 1996, and also announced that it
would not impose a penalty if any required return is filed within 60 days after
the issuance of that guidance. Accordingly, prospective U.S. Holders should take
precautions to ensure compliance with applicable reporting requirements, whether
by currently filing a protective return with respect to an investment in the
Common Stock or by complying with such guidance as ultimately may be issued by
the IRS.
TAXATION OF NON-U.S. HOLDERS
DISTRIBUTIONS ON COMMON STOCK. Distributions made by the Company with
respect to the Common Stock to non-U.S. Holders who are not engaged in the
conduct of a trade or business within the United States will be subject to
United States federal income tax only if 25% or more of the gross income of the
Company (from all sources for the three-year period ending with the close of the
taxable year preceding the declaration of the distribution) was effectively
connected with the conduct of a trade or business in the United States by the
Company. The Company does not anticipate engaging in the conduct of a trade or
business within the United States, except through its subsidiaries. However, if
the 25% threshold for such period is exceeded, a portion of any distribution
paid by the Company to a non-U.S. Holder could be subject to federal income tax
withholding at the rate of 30%; the portion of the distribution that could be
subject to withholding would correspond to the portion of the Company's gross
income for the period that is effectively connected to its conduct of a trade or
business within the United States.
SALE OR EXCHANGE OF COMMON STOCK. A non-U.S. Holder will not be subject to
United States federal income tax on any gain realized upon the sale or exchange
of the Common Stock if such holder has no connection with the United States
other than holding the Common Stock and in particular (i) such gain is not
effectively connected with a trade or business in the United States of the
non-U.S. Holder, (ii) in the case of a non-U.S. Holder who is an individual
which has a "tax home" (as defined in Section 911(d)(3) of the Code) in the
United States, such non-U.S. Holder is not present in the United States for 183
days or more in the taxable year of such disposition, and (iii) the Company is
not and has not been at any time
55
<PAGE>
within 5 years preceding such disposition a "U.S. real property holding
corporation" (a "USRPHC") for federal income tax purposes.
The Company believes that it is not and does not currently intend to become
a USRPHC, but no assurance can be given that the Company is not or will not
become a USRPHC in the future. In general, if the Company is determined to be a
USRPHC then non-U.S. Holders may be subject to United States federal income tax
on the sale or exchange of the Common Stock, and to withholding at a rate of 10%
on any such disposition. However, a non-U.S. Holder will not be subject to these
special rules even if the Company is determined to be a USRPHC provided that (i)
such non-U.S. Holder did not at any time during the five years ending on the
date of sale or disposition actually or constructively own more than 5% of the
Common Stock of the Company and (ii) the Common Stock is then "regularly traded"
on an established securities market in the United States. Since it is expected
that the Common Stock will be traded on the Nasdaq stock market and it is
expected that it will be regularly quoted by broker dealers, the Common Stock
should be considered to be "regularly traded" on an established securities
market. However, it is possible to interpret the current Temporary Regulations
as concluding that the Common Stock will not be considered "regularly traded" at
any time during which 50% or more thereof is owned by 100 or fewer persons,
which will be the case after this Offering and for some time to come.
UNITED STATES BUSINESS. A non-U.S. Holder engaged in a trade or business in
the United States whose income from the Common Stock (including gain from the
sale or exchange thereof) is effectively connected with the conduct of such
trade or business will generally be subject to regular United States federal
income tax on such income in the same manner as if it were a U.S. Holder. In
addition, if such a holder is a foreign corporation, it may be subject to a
branch profits tax equal to 30% of its effectively connected earnings and
profits for the taxable year, subject to adjustments.
BACKUP WITHHOLDING
Distributions made by the Company with respect to the Common Stock and the
gross proceeds received from the disposition of the Common Stock may be subject
to certain information reporting to the IRS and to a 31% backup withholding tax.
However, backup withholding generally will not apply to payments made to certain
exempt recipients (such as a corporation or financial institution) or to a
holder who furnishes a correct taxpayer identification number or provides a
certificate of foreign status and provides certain other required information.
If backup withholding applies, the amount withheld is not an additional tax, but
is credited against such holder's United States federal income tax liability.
CERTAIN BERMUDA TAX CONSIDERATIONS
This section is a summary of the principal Bermuda tax considerations that
may be relevant to prospective purchasers of the Common Stock. Conyers, Dill &
Pearman, special Bermuda counsel to the Company has delivered an opinion to the
Company to the effect that the discussion set forth below, to the extent that it
relates to matters of Bermuda tax consideration, is accurate in all material
respects. At the present time, there is no Bermuda income or profits tax,
withholding tax, capital gains tax, capital transfer tax, estate duty or
inheritance tax payable by a Bermuda company or its shareholders, other than
shareholders ordinarily resident in Bermuda. The Company has obtained an
assurance from the Minister of Finance under the Exempted Undertakings Tax
Protection Act 1966 that, in the event that any legislation is enacted in
Bermuda imposing any tax computed on profits or income, or computed on any
capital asset, gain or appreciation, or any tax in the nature of an estate duty
or inheritance tax, such tax shall not, until March 28, 2016, be applicable to
the Company or to any of its operations or to the shares, debentures or other
obligations of the Company except insofar as such tax applies to persons
ordinarily resident in Bermuda or any tax payable pursuant to the Land Tax Act
1967 in relation to any land leased to the Company. Therefore, there will be no
Bermuda tax consequences with respect to the sale of the Common Stock or the
Warrants or with respect to distributions in respect of the Common Stock or the
Warrants. As an exempted company, the Company is liable to pay in Bermuda an
annual fee based upon its
56
<PAGE>
authorized share capital and the premium on its shares. The annual fee payable
by the Company in 1996 will be $1,680 being 50% of the fee otherwise payable
since the Company was incorporated after August 31.
OTHER COUNTRIES
The Company (and its subsidiaries) will likely be subject to tax on income
earned in each of the countries in which it does business (directly or through
subsidiaries or joint ventures). In addition, dividends from the Company's
subsidiaries may be subject to withholding tax when paid to the Company. The
Company has not to date analyzed the tax consequences of doing business in any
jurisdiction other than those described above.
57
<PAGE>
UNDERWRITING
The Underwriters named below (the "Underwriters"), for which Commonwealth
Associates is acting as representative (the "Representative"), have agreed,
severally but not jointly, subject to the terms and conditions contained in the
underwriting agreement among the Company, the Selling Shareholders and the
Underwriters (the "Underwriting Agreement"), to purchase from the Company and
the Company has agreed to sell to the several Underwriters, an aggregate of
1,000,000 shares of Common Stock. The number of shares of Common Stock that each
Underwriter has agreed to purchase is set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- ----------------------------------------------------------------------------------- ----------
<S> <C>
Commonwealth Associates............................................................
----------
Total........................................................................ 1,000,000
----------
----------
</TABLE>
The Underwriters are committed on a "firm commitment" basis to purchase and
pay for all the shares of Common Stock offered hereby (other than shares offered
by the Selling Shareholders pursuant to the Underwriters' Over-Allotment
Option), if any shares are purchased. The shares are being offered by the
Underwriters, subject to prior sale, when, as, and if delivered to and accepted
by the Underwriters and subject to approval of certain legal matters by counsel
and to certain other conditions.
Through the Representative, the Underwriters have advised the Company that
the Underwriters propose to offer the shares of Common Stock to the public at
the public offering price set forth on the cover page of this Prospectus and the
Underwriters may allow to certain dealers who are members of the National
Association of Securities Dealers, Inc. (the "NASD") concessions not in excess
of $0. per share, of which not in excess of $0. per share may be
reallowed to other dealers who are members of the NASD. After commencement of
the Offering, the public offering price, the concessions, and reallowance may be
changed by the Underwriters. The Underwriters have informed the Company that
they do not expect any sales of the shares of Common Stock offered hereby to be
made to discretionary accounts of the Underwriters.
The Selling Shareholders have granted to the Underwriters an option
exercisable for 45 days from the date of this Prospectus to purchase up to an
additional 150,000 shares of Common Stock at the public offering price set forth
on the cover page of this Prospectus, less the underwriting discounts and
commissions. The Underwriters may exercise this option in whole or, from time to
time, in part, solely for the purpose of covering over-allotments, if any, made
in connection with the sale of the shares of Common Stock offered hereby.
The Company has agreed to pay the Representative, in its individual rather
than representative capacity, a non-accountable expense allowance equal to 1% of
the gross proceeds of the Offering, including any proceeds derived from the sale
of the Over-allotment Stock, in connection with certain expenses incurred by the
Representative and to reimburse the Representative for certain other expenses
incurred by the Representative.
The Company has agreed to sell, for an aggregate purchase price of $100, to
the Representative and its designees warrants (the "Representative's Warrants")
to purchase up to 100,000 shares of Common Stock at an exercise price per share
equal to 120% of the public offering price set forth on the cover of this
Prospectus. The Representative's Warrants are not redeemable and may not be
sold, transferred, assigned, pledged or hypothecated for a period of one year
from the date of this Prospectus, except that they may be assigned, in whole or
in part, to any successor, officer or partner of the Representative, or to
officers or
58
<PAGE>
partners of any such successor or partner, and are exercisable during the
four-year period commencing one year after the effective date of the
Registration Statement of which this Prospectus is a part (the "Warrant Exercise
Term"). During the Warrant Exercise Term, the holders of the Representative's
Warrants are given, at nominal cost, the opportunity to profit from a rise in
the market price of the Common Stock. To the extent that the Representative's
Warrants are exercised or exchanged, dilution to the interests of the Company's
shareholders will occur. Further, the terms upon which the Company will be able
to obtain additional equity capital may be adversely affected since the holders
of the Representative's Warrants can be expected to exercise or exchange them at
a time when the Company would, in all likelihood, be able to obtain any needed
capital on terms more favorable to the Company than those provided in the
Representative's Warrants. Any profit realized by the Representative on the sale
of the Representative's Warrants or the underlying shares of Common Stock may be
deemed additional underwriting compensation. The Representative's Warrants
provide, subject to certain conditions, for a period of four years commencing
one year from the effective date of the Registration Statement of which this
Prospectus is a part, one "demand" registration right and will provide, subject
to certain conditions, for a period of three years commencing two years from the
effective date of the Registration Statement of which this Prospectus is a part,
certain "piggyback" registration rights.
In addition, the Company has agreed to pay the Representative a corporate
finance advisory fee of $35,000 plus 3% of the gross proceeds of this Offering,
the unpaid balance of which is payable at the closing of this Offering.
Upon completion of the Offering, the Company has agreed, for a period of
three years from the date of this Prospectus, if so requested by the
Representative, to nominate and use best efforts to elect a designee of the
Representative acceptable to the Company as director of the Company.
The Company, the Selling Shareholders and the Underwriters have agreed to
indemnify each other against certain liabilities, including liabilities under
the Securities Act.
Except for the 150,000 shares of Common Stock to be sold by the Selling
Shareholders pursuant to the Over-Allotment Option, all of the Company's
officers, directors and shareholders and all holders of any options, warrants or
other securities convertible into or exercisable for, shares of Common Stock
have agreed that they will not, directly or indirectly, offer, sell, offer to
sell, contract to sell, pledge, grant any option to purchase or otherwise sell
or dispose of any shares of Common Stock or other capital stock of the Company,
or any securities convertible into, or exercisable or exchangeable for, any
shares of Common Stock or other capital stock of the Company without the prior
written consent of the Representative, on behalf of the Underwriters, for a
period of 12 months after the effective date of the Registration Statement of
which this Prospectus is a part, provided, however, that (i) any such person may
make private sales or bona fide gifts of securities of the Company during such
period if the proposed transferee agrees to be bound by the above restrictions
and (ii) such restrictions shall not apply with respect to the laws of descent
and distribution.
Prior to the Offering, there has been no public market for the Common Stock.
The initial public offering price has been arbitrarily determined by negotiation
between the Company and the Underwriters. In determining the offering price the
Underwriters and the Company considered, among other things, market prices of
similar securities of comparable publicly traded companies, the financial
condition and operating information of companies engaged in activities similar
to those of the Company, the financial condition and prospects of the Company
and the general condition of the securities market.
The foregoing includes a summary of the principal terms of the Underwriting
Agreement and does not purport to be complete. Reference is made to the copy of
the Underwriting Agreement that is on file as an exhibit to Registration
Statement of which this Prospectus is a part.
59
<PAGE>
LEGAL MATTERS
The validity of the Stock of Common Stock offered hereby and certain other
matters of Bermuda law will be passed upon for the Company by Conyers, Dill &
Pearman, located at Clarendon House, Church Street, Hamilton HM CX Bermuda.
Allen & Overy, located at Three Exchange Square, 8 Connaught Place, Hong Kong,
has acted as special counsel to the Company with respect to certain legal
matters of Hong Kong law. Ali Sharif Zu'bi & Sharif Ali Zu'bi Law Firm, located
at Astra Building, Jebel, Amman, 11180, Jordan, has acted as counsel to the
Company with respect to certain matters of Jordanian law. Certain legal matters
with respect to United States law will be passed upon for the Company by Orrick,
Herrington & Sutcliffe LLP, located at 666 Fifth Avenue, New York, New York
10103. Certain legal matters will be passed upon for the Underwriters by Morgan
Lewis & Bockius LLP, located at 101 Park Avenue, New York, New York 10178-6070.
EXPERTS
The financial statements included in this prospectus and elsewhere in the
registration statement, to the extent and for the periods indicated in their
reports, have been audited by Arthur Andersen and Khleif & Co., a member firm of
KPMG Peat Marwick, independent public accountants, and are included herein in
reliance upon the authority of said firms as experts in giving said reports.
With respect to the financial statements for 1993, 1994 and 1995, the report of
each firm states that with respect to certain subsidiaries its report is based
on the reports of other independent public accountants, including Dr. Mohamed
Al-Amri & Co., Mehta & Tengra, Edward Isaacs & Company, LLP, Talal Abu-Ghazaleh
& Co., Bish & Haffey, P.C., Frank E. Stanley III & Co. (the "Prior Auditor"),
and Irene P. Tse, J.D. The financial statements for 1993, 1994 and 1995 referred
to above have been included herein in reliance, in part, upon the authority of
those firms as experts in giving said reports.
60
<PAGE>
<TABLE>
<CAPTION>
1993
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
% OF % OF
TOTAL TOTAL
AUDITOR SUBSIDIARY REVENUES ASSETS
- -------------------------------- ----------------------------------------------- ----------- -----------
Khleif & Co..................... Arab American Express Company, Ltd. (Amman, 58.4 64.0
Jordan); Aramex Egypt (Cairo, Egypt);
Secretarial & Business Services Co., (Aramex)
LLC (Dubai, UAE); Al Khalida International
Trading Group Co. (Abu Dhabi, UAE); Global
Venture Group for Trading (Kuwait); Amathus
Navigation Co., Ltd. (Nicosia, Cyprus); Al Mana
Trading Company (Doha, Qatar); Mr. Rateb Hajem
Fallouh (Damascus, Syria); Yusef Bin Ahmed
Kanoo WLL (Bahrain); Aramex International
Courier France Sarl (Paris, France); Aramex
International Courier Inc. (Montreal, Canada)
Edward Isaacs & Company LLP..... Aramex International Courier, Ltd. (New York); 12.3 5.8
Aramex International Courier of N.J. Inc. (New
Jersey)
Mehta & Tengra.................. Aramex (UK) International Courier Ltd. (London, 11.4 10.5
U.K.)
Talal Abu-Ghazaleh & Co......... Arab American Express Courier Company 9.8 9.9
(Lebanon); Aramex Sarl (Lebanon)
Bish & Haffey................... Aramex International Courier of Virginia 2.3 1.3
(Washington D.C.)
Dr. Mohamed Al-Amri & Co........ Al-Awsat International Transport Company 1.8 6.8
Limited (Jeddah, Saudi Arabia)
Irene P. Tse, J.D............... Aramex International Courier of Los Angeles, 2.5 0.5
Inc. (Los Angeles, California)
Frank E. Stanley III & Co....... Aramex International Courier - Texas, Ltd. 1.5 1.2
(Houston, Texas)
<CAPTION>
1994
- -----------------------------------------------------------------------------------------------------------
% OF % OF
TOTAL TOTAL
AUDITOR SUBSIDIARY REVENUES ASSETS
- -------------------------------- ----------------------------------------------- ----------- -----------
<S> <C> <C> <C>
Arthur Andersen................. Arab American Express Company, Ltd. (Amman, 61.8 62.4
Jordan); Aramex Egypt (Cairo, Egypt);
Secretarial & Business Services Co., (Aramex)
LLC (Dubai, UAE); Al Khalida International
Trading Group Co. (Abu Dhabi, UAE); Global
Venture Group for Trading (Kuwait); Aramex
Hellas International S.A. (Athens, Greece);
Aramex International Courier France Sarl
(Paris, France); Aramex International Courier
Inc.; (Montreal, Canada) Amathus Navigation
Co., Ltd. (Nicosia, Cyprus); Al Mana Trading
Company (Doha, Qatar); Mr. Rateb Hajem Fallouh
(Damascus, Syria); Yusef Bin Ahmed Kanoo WLL
(Bahrain); Arab American Express Courier
Company (Lebanon); Aramex Sarl (Lebanon)
</TABLE>
61
<PAGE>
<TABLE>
<CAPTION>
1994
- -----------------------------------------------------------------------------------------------------------
% OF % OF
TOTAL TOTAL
AUDITOR SUBSIDIARY REVENUES ASSETS
- -------------------------------- ----------------------------------------------- ----------- -----------
<S> <C> <C> <C>
Edward Isaacs & Co. LLP......... Aramex International Courier, Ltd. (New York); 18.1 12.8
Aramex International Courier of N.J., Inc. (New
Jersey); Aramex International Courier of Los
Angeles Inc. (Los Angeles, California); Aramex
International Courier - Texas Ltd. (Houston,
Texas); Aramex International Courier of
Virginia (Washington D.C.)
Mehta & Tengra.................. Aramex (UK) International Courier Ltd. (London, 13.0 16.5
UK)
Dr. Mohamed Al-Amri & Co........ Al-Awsat International Transport Company 7.1 8.3
Limited (Jeddah, Saudi Arabia)
<CAPTION>
1995
- -----------------------------------------------------------------------------------------------------------
% OF % OF
TOTAL TOTAL
AUDITOR SUBSIDIARY REVENUES ASSETS
- -------------------------------- ----------------------------------------------- ----------- -----------
<S> <C> <C> <C>
Arthur Andersen................. Arab American Express Company, Ltd. (Amman, 61.5 59.1
Jordan); Aramex Egypt (Cairo, Egypt);
Secretarial & Business Services Co., (Aramex)
LLC (Dubai, UAE); Al Khalida International
Trading Group Co. (Abu Dhabi, UAE); Global
Venture Group for Trading (Kuwait); Aramex
Hellas International SA (Athens, Greece); Arab
American Express Courier Company (Lebanon);
Aramex S.a.r.l. (Lebanon); Amathus Navigation
Co., Ltd. (Nicosia, Cyprus); Al Mana Trading
Company (Doha, Qatar); Mr. Rateb Hajem Fallouh
(Damascus, Syria); Yusef Bin Ahmed Kanoo WLL
(Bahrain); Aramex International Courier Inc.
(Montreal, Canada)
Mehta & Tengra.................. Aramex (UK) International Courier Ltd. (London, 19.6 26.4
UK); Aramex International Courier France Sarl
(Paris, France)
Edward Isaacs & Company LLP..... Aramex International Courier, Ltd. (New York); 12.7 8.5
Aramex International Courier of N.J., Inc. (New
Jersey); Aramex International Courier - Texas
Ltd. (Houston, Texas); Aramex International
Courier of Virginia (Washington D.C.)
Dr. Mohamed Al-Amri & Co........ Al-Awsat International Transport Company 6.2 6.0
Limited (Jeddah, Saudi Arabia)
</TABLE>
The Company has agreed to indemnify the Prior Auditor for the payment of
legal costs and expenses incurred in its successful defense of a legal action or
proceeding that arises as a result of the consent of the Prior Auditor to the
inclusion of its audit report on the financial statements of Aramex
International Courier-Texas Ltd. in this Prospectus. With respect to such
indemnification, legal costs and expenses must be actually and reasonably
incurred by the Prior Auditor in connection with the defense or settlement of
such action or proceeding if the Prior Auditor acted in good faith and in a
manner in or not opposed to the best interests of the Company, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which the Prior Auditor shall have been determined to be liable to the Company
or for
62
<PAGE>
which the Prior Auditor was unsuccessful in its defense. A successful defense in
this context would be one in which the Prior Auditor (or any of its members) is
determined to have been neither culpable nor obligated to pay any part of the
plaintiff's damages as a result of a judgment or settlement with respect to any
such action or proceeding.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C. 20549, a registration statement on Form F-1
(together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act").
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted from this Prospectus
in accordance with the Commission's rules and regulations. For further
information, reference should be made to the Registration Statement and to the
exhibits filed thereto. For further information with respect to the Company and
the Common Stock, reference is made to the Registration Statement and the
exhibits and schedules thereto which may be inspected without charge or copied
at the public reference facilities of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, 7 World Trade Center, 13th Floor, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can be obtained from the Commission's
Public Reference Section at prescribed rates. Registration statements
transmitted through the Commission's Electronic Data Gathering, Analysis and
Retrieval System are also publicly available through the Commission's Internet
site on the World Wide Web (http://www.sec.gov). Descriptions contained in this
Prospectus as to the contents of any contract or other documents filed as an
exhibit to the Registration Statement are not necessarily complete and each such
description is qualified by reference to such contract or document. In addition,
it is anticipated that the Common Stock will be quoted on the Nasdaq National
Market under the symbol "ARMXF." Reports and other information concerning the
Company may be inspected at the offices of The Nasdaq Stock Market, Inc., 1735 K
Street, N.W., Washington, D.C. 20006.
The Company intends to furnish its shareholders with annual reports
containing audited financial statements and an opinion thereon expressed by
independent certified public accountants and quarterly reports for the first
three quarters of each fiscal year containing unaudited financial information.
Such audited financial statements and unaudited quarterly financial information
will be prepared in accordance with International Accounting Standards (with
reconciliations to generally accepted accounting principles in the United
States). While the Company is exempt from the rules under the Exchange Act
prescribing the content and distribution of proxy statements, it intends to
substantially comply with the rules governing the preparation of proxy
statements and the solicitation of proxies (excluding provisions requiring
disclosures relating to corporate reorganizations, and the inclusion of
shareholder proposals in proxy materials prepared by the Company) to the extent
deemed advisable by the Company under the circumstances of particular
solicitations. In addition, requirements with regard to the accuracy of proxy
disclosures will be governed by certain Bye-law provisions interpreted under
Bermuda law. The Company has been advised that, under Bermuda law, the record
owners of Common Stock will, to the extent indicated in the Company's Bye-laws,
also be bound by such principles incorporated from Commission rules relating to
proxy statements and the solicitation of proxies. See "Description of Capital
Stock-- Periodic Reports and Proxy Statements."
63
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Condensed Consolidated Balance Sheets as of September 30, 1996 (unaudited) and December 31, 1995......... F-2
Condensed Consolidated Statements of Income for the nine-month periods ended
September 30, 1996 and 1995 (unaudited)................................................................ F-3
Statement of Changes in Shareholders' Equity for the nine-month period ended
September 30, 1996..................................................................................... F-4
Condensed Consolidated Statements of Cash Flows for the nine-month periods ended
September 30, 1996 and 1995 (unaudited)................................................................ F-5
Notes to Unaudited Interim Consolidated Financial Statements............................................. F-6
Report of Independent Public Accountants................................................................. F-8
Auditors' Report......................................................................................... F-9
Consolidated Balance Sheets at December 31, 1995 and 1994................................................ F-10
Consolidated Statements of Income for the years ended December 31, 1995, 1994 and 1993................... F-11
Statements of Changes in Shareholders' Equity for the years ended December 31, 1995, 1994 and 1993....... F-12
Consolidated Statements of Cash Flows for the years ended December 31, 1995, 1994 and 1993............... F-13
Notes to Consolidated Financial Statements............................................................... F-14
Other Auditors' Reports on certain Consolidated Financial Statements (separate financial statements not
included herein)....................................................................................... F-26
</TABLE>
F-1
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
(IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996 DECEMBER 31, 1995
------------------- -----------------
<S> <C> <C>
UNAUDITED
ASSETS
CURRENT ASSETS
Cash on hand and at banks................................................ 1,361 1,341
Receivables.............................................................. 10,889 8,922
Deferred income taxes.................................................... 20 20
Other current assets..................................................... 2,188 1,038
------ ------
TOTAL CURRENT ASSETS................................................. 14,458 11,321
Property, plant and equipment............................................ 2,620 2,655
Investment in affiliates, at cost........................................ 67 67
Other assets............................................................. 368 301
------ ------
TOTAL ASSETS......................................................... 17,513 14,344
------ ------
------ ------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Due to banks............................................................. 1,014 777
Current portion of notes payable......................................... 78 115
Payables................................................................. 5,868 4,690
Other current liabilities................................................ 3,698 2,872
------ ------
TOTAL CURRENT LIABILITIES............................................ 10,658 8,454
------ ------
Long term notes payable.................................................. 15 30
Deferred income taxes.................................................... 27 27
Other liabilities........................................................ 679 1,138
------ ------
721 1,195
------ ------
MINORITY INTERESTS IN SUBSIDIARIES......................................... 284 291
------ ------
SHAREHOLDERS' EQUITY
Share capital............................................................ 31 31
Additional paid in capital in excess of par.............................. 228 228
Cumulative translation adjustment........................................ (146) (144)
Retained earnings........................................................ 5,737 4,289
------ ------
TOTAL SHAREHOLDERS' EQUITY........................................... 5,850 4,404
------ ------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY........................... 17,513 14,344
------ ------
------ ------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-2
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND 1995
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996 SEPTEMBER 30, 1995
------------------ ------------------
<S> <C> <C>
UNAUDITED UNAUDITED
Revenues.................................................................. 35,896 31,760
Shipping costs............................................................ (18,623) (17,109)
------------------ ------------------
Gross profit.......................................................... 17,273 14,651
Operating expenses........................................................ (6,456) (5,803)
Selling, general and administrative expenses.............................. (9,050) (7,774)
------------------ ------------------
Operating income...................................................... 1,767 1,074
------------------ ------------------
Other income (expenses):
Interest expense.......................................................... (10) (13)
Loss on sale of property, plant and equipment............................. -- (39)
Exchange (losses) gains................................................... (6) 84
Other income (loss)....................................................... 1 (26)
------------------ ------------------
(15) 6
------------------ ------------------
Income before income taxes............................................ 1,752 1,080
Provision for income taxes................................................ (180) (233)
Minority interests........................................................ (124) (95)
------------------ ------------------
Net income............................................................ 1,448 752
------------------ ------------------
------------------ ------------------
Earnings per share........................................................ 0.46 0.24
------------------ ------------------
------------------ ------------------
Weighted average number of shares outstanding............................. 3,125,000 3,125,000
------------------ ------------------
------------------ ------------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1996
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
RETAINED EARNINGS
SHARE CAPITAL ADDITIONAL CUMULATIVE ------------------------- TOTAL
--------------------- PAID IN TRANSITION LEGAL UNAPPROPRIATED SHAREHOLDERS'
SHARES AMOUNT CAPITAL ADJUSTMENTS RESERVE EARNINGS EQUITY
---------- --------- ----------- ----------- --------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1996........ 3,125,000 31 228 (144) 50 4,239 4,404
Net income...................... -- -- -- -- -- 1,448 1,448
Translation adjustment.......... -- -- -- (2) -- -- (2)
---------- --------- ----------- ----------- --------- -------------- -------------
BALANCE AT SEPTEMBER 30, 1996..... 3,125,000 31 228 (146) 50 5,687 5,850
---------- --------- ----------- ----------- --------- -------------- -------------
---------- --------- ----------- ----------- --------- -------------- -------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND 1995
(IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
1996 1995
------------- -------------
<S> <C> <C>
UNAUDITED UNAUDITED
CASH FLOWS FROM OPERATING ACTIVITIES:
Income before income taxes.......................................................... 1,752 1,080
Adjustment to reconcile income before tax to net cash from operating activities:
Depreciation...................................................................... 665 616
Loss on sale of property, plant and equipment..................................... -- 39
------------- ------
2,417 1,735
Increase in receivables............................................................. (1,967) (1,138)
Increase in other current assets.................................................... (1,364) (454)
(Decrease) increase in payables..................................................... 1,177 (534)
(Decrease) increase in other liabilities............................................ (63) 14
Increase in other current liabilities............................................... 734 820
------------- ------
CASH GENERATED FROM OPERATIONS.................................................. 934 443
Income taxes paid................................................................... (86) (33)
------------- ------
NET CASH FROM OPERATING ACTIVITIES.............................................. 848 410
------------- ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment........................................... (707) (425)
Proceed from sale of property, plant and equipment.................................. 92 35
Increase in other assets............................................................ (67) (108)
------------- ------
NET CASH USED IN INVESTING ACTIVITIES........................................... (682) (498)
------------- ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Due to banks, net................................................................... 236 378
Proceed from notes payable.......................................................... -- 5
Repayment of notes payable.......................................................... (52) (5)
Proceeds from issue of common stock to minority interests........................... 214 266
Payments to minority interests...................................................... (137) (751)
Due to shareholders, net............................................................ (396) 94
------------- ------
NET CASH USED IN FINANCING ACTIVITIES........................................... (135) (13)
------------- ------
Effect of exchange rate changes on cash on hand and at banks........................ (11) (2)
------------- ------
Net increase (decrease) in cash on hand and at banks................................ 20 (103)
CASH ON HAND AND AT BANKS, BEGINNING OF PERIOD...................................... 1,341 994
------------- ------
CASH ON HAND AND AT BANKS, END OF PERIOD............................................ 1,361 891
------------- ------
------------- ------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA)
1. BASIS OF PRESENTATION
The accompanying interim condensed consolidated balance sheet of ARAMEX
International Limited, a Bermuda company, and subsidiaries (ARAMEX or the
"Company") as of September 30, 1996 and the related interim consolidated
statement of changes in shareholders' equity for the nine-month period ended
September 30, 1996 and interim consolidated statements of income and cash flows
for the nine-month periods ended September 30, 1996 and 1995 are unaudited. In
the opinion of management, all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of these interim financial
statements have been included therein. Interim results are not necessarily
indicative of results for the entire year.
Aramex International Limited was incorporated under the laws of Bermuda in
October 1996 to be the successor to Aramex International, Limited, a Hong Kong
company which was incorporated in February 1986 ("Aramex Hong Kong"). On
December 13, 1996, Aramex Bermuda subscribed for 100 shares of Aramex Hong Kong
(the "Ordinary Shares") and each share of Aramex Hong Kong outstanding prior to
such subscription has been converted by a special resolution of the shareholders
of Aramex Hong Kong into non-voting deferred shares (the "Deferred Shares")
(collectively, the "Reorganization"). The Deferred Shares do not carry voting
rights (other than in respect of resolutions affecting their class rights) and
are effectively subordinated to the Ordinary Shares (all of which are held by
Aramex Bermuda) in respect of all dividends, distributions and liquidation
rights until such time as the holders of Ordinary Shares have received $100
billion. Accordingly, no value has been assigned to the Deferred Shares.
Pursuant to the Reorganization, Aramex Bermuda became the parent holding company
of Aramex Hong Kong. The existing shareholders of Aramex Hong Kong will retain a
nominal interest in Aramex Hong Kong through their ownership of the Deferred
Shares. Aramex Hong Kong will act as an intermediate holding company of the
Company's subsidiaries until the Company completes its reorganization plan to
transfer all of its assets from Aramex Hong Kong to Aramex Bermuda or into other
subsidiary companies. The accompanying condensed interim consolidated financial
statements have been presented to give effect to the Reorganization as if it had
taken place as of the beginning of the earliest period presented.
The interim consolidated financial statements included herein have been
prepared on a basis consistent with that of the audited consolidated financial
statements presented elsewhere in this document, in accordance with
international accounting standards (IAS). For purposes of these interim
consolidated financial statements, there are no significant differences between
the Company's accounting principles utilized and the accounting principles
generally accepted in the United States.
For the purposes of these interim consolidated financial statements, certain
information and disclosures normally included in financial statements prepared
in accordance with IAS have been condensed or omitted. These unaudited interim
financial statements should be read in conjunction with the audited consolidated
financial statements and notes thereto at December 31, 1995 and 1994.
2. COMMITMENTS AND LITIGATION
Information with respect to the Company's commitments and litigation matters
at December 31, 1995 is presented in Notes 12 and 14, respectively, to the 1995
audited consolidated financial statements.
In the opinion of management, no developments have occurred since December
31, 1995 which would require an adjustment to those financial statements.
F-6
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1996
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA)
3. MIDDLE EAST DIRECT MARKETING
Effective January 1, 1996, the Company formally inaugurated its direct
marketing and mail order catalog service at certain stations in the Middle East.
The service, called Middle East Direct ("MED"), provides assistance to customers
in selecting, ordering and delivering merchandise through catalogs of retail
companies based principally in the United States and Western Europe. Revenues
from this service includes a service charge paid by the customer and a discount
provided by the retailer to the Company.
The Company recognized revenues from MED upon delivery of merchandise to the
customer. Such revenues were $0.6 million for the nine-month period ended
September 30, 1996.
4. SUBSEQUENT EVENTS
Subsequent to September 30, 1996, the following events took place:
On October 21, 1996, ARAMEX International, Limited, a Hong Kong company
("ARAMEX Hong Kong"), sold 195 shares of common stock (304,688 shares after the
reorganization) to Airborne Freight Corporation ("Airborne") for an aggregate
consideration of $2,000 ("the Airborne stock purchase"). In connection with such
purchase, the shareholders of ARAMEX Hong Kong entered into a Shareholders
Agreement, as amended on December 11, 1996 and December 12, 1996, (the
"Shareholders Agreement") which provides, among other things, that in the event
the Company, transfers (as defined in the Shareholders Agreement) any shares of
common stock to certain listed competitors of Airborne or any other company
primarily engaged in the transportation of air freight or air express shipments,
Airborne has the right to sell all of its shares of common stock to the Company
on the same terms and conditions as the sale to such other company. In the event
Messrs. Kingson and Ghandour and/or Ms. Rula Ghandour transfer any shares of
Common Stock to certain listed competitors to Airborne or any other Company
primarily engaged in the transportation of air freight or express shipments, it
shall be a condition of such transfer that Airborne shall be offered the right
to sell to such competitors all of its shares of Common Stock on the same terms
and conditions as the sale by Messrs. Kingson and Ghandour and/or Ms. Rula
Ghandour. In addition, the Shareholders Agreement contains certain other
provisions which terminate upon consummation of an initial public offering,
including: (i) a right of first refusal in favor of the Company in the event
Airborne transfers (as defined in the Shareholders Agreement) its shares to a
company or companies, their subsidiaries, parents or known affiliates primarily
engaged in the transportation of air freight or air express shipments and (ii) a
similar right of first refusal in favor of Airborne in the event the Company,
Mr. Kingson, Mr. Ghandour or Ms. Ghandour transfer shares to certain listed
competitors of Airborne or any other company primarily engaged in the
transportation of air freight or air express shipments. In connection with the
Airborne stock purchase, Airborne was granted certain "piggyback" registration
rights relating to their shares of common stock. In addition, under the terms of
the Airborne stock purchase, Airborne is entitled to appoint one director to the
Company's Board of Directors for as long as Airborne continues to own at least
half of the shares it acquired in the Airborne stock purchase.
The Company plans to adopt a stock option plan (the "Plan"). The Plan
provides for the grant of options to acquire up to 400,000 shares of common
stock at an exercise price equal to the fair value of the stock at the date of
grant. No options have been granted to date; however, the Company plans to grant
approximately 300,000 of such options prior to its planned initial public
offering.
In October 1996, the Company has commenced planning for an initial public
offering of 1,000,000 shares of its common stock.
F-7
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF
ARAMEX INTERNATIONAL LIMITED
We have audited the accompanying consolidated balance sheets of ARAMEX
International Limited (a Bermuda Corporation as defined in Note 1 to
consolidated financial statements) and subsidiaries as of December 31, 1995 and
1994 and the related consolidated statements of income, changes in shareholders'
equity and cash flows for the years then ended. These consolidated financial
statements, as revised (see Note 2), are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits. We did not audit the financial
statements of certain subsidiaries operating in Saudi Arabia, United Kingdom,
United States and France (1995 only), which reflect total assets and total
revenue of 41 percent and 39 percent in 1995, and 38 percent and 38 percent in
1994, respectively, of the consolidated totals. Those statements were audited by
other auditors whose reports have been furnished to us, and our opinion, insofar
as it relates to the amounts included for those entities is based solely on the
reports of the other auditors.
We conducted our audits in accordance with International Auditing Standards
which are substantially consistent with those in the United States. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts (including the conversions of the financial statements of the
subsidiaries referred to above to international accounting standards) 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 statements presentation. We believe that our
audits and the reports of other auditors provide a reasonable basis for our
opinion.
In our opinion, based on our audits and the reports of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of ARAMEX International
Limited and subsidiaries as of December 31, 1995 and 1994 and the consolidated
results of the operations and the consolidated cash flows for the years then
ended in conformity with International Accounting Standards.
ARTHUR ANDERSEN
Certified Public Accountants
Manama--Bahrain
October 31, 1996
(except with respect to the "Reorganization" discussed
in the first paragraph of Note 1 and in the third
paragraph of Note 17 and except with respect to the
December 11, 1996 amendment to the Shareholders
Agreement discussed in the second paragraph of Note 17,
as to which the date is December 13, 1996)
F-8
<PAGE>
AUDITORS' REPORT
TO THE SHAREHOLDERS OF
ARAMEX INTERNATIONAL LIMITED
We have audited the accompanying consolidated balance sheet of ARAMEX
International Limited [as defined in Note 1 to consolidated financial
statements] as at December 31, 1993, and the related consolidated statements of
income and cash flows for the year then ended. 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 audit. We did not audit
the financial statements of Beirut, Jeddah, London and the United States
stations, which statements reflect total assets and revenues of 36% and 42%
respectively of the consolidated totals. Those statements were audited by other
auditors whose reports have been furnished to us, and our opinion, in so far as
it relates to the amounts included for those stations, is based solely on the
report of the other auditors.
We conducted our audit in accordance with International Standards on Auditing
which are substantially consistent with those in the United States. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts (including the conversions of the financial statements of the
subsidiaries referred to above to international accounting standards) 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 and the report of other auditors provide a reasonable basis for our
opinion.
In our opinion, based on our audit and the reports of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of ARAMEX International
Limited as at December 31, 1993 and the consolidated results of its operations
and its consolidated cash flows for the year then ended in accordance with
International Accounting Standards.
Khleif & Co.
Adnan J. Khleif
License no. 332 (A)
/s/ A. J. KHLEIF
Amman, Jordan
29 October 1996
F-9
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1995 AND 1994
(IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
NOTES 1995 1994
----- --------- ---------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash on hand and at banks............................................................ 1,341 994
Receivables.......................................................................... 3 8,922 8,438
Due from minority interest holder.................................................... 15 214 0
Deferred income taxes................................................................ 13 20 7
Other current assets................................................................. 4 824 699
--------- ---------
TOTAL CURRENT ASSETS............................................................. 11,321 10,138
Property, plant and equipment.......................................................... 5 2,655 2,854
Investments in affiliates, at cost..................................................... 67 66
Other assets........................................................................... 301 120
--------- ---------
TOTAL ASSETS..................................................................... 14,344 13,178
--------- ---------
--------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Due to banks......................................................................... 8 777 342
Current portion of notes payable..................................................... 9 115 117
Payables............................................................................. 6 4,690 5,756
Other current liabilities............................................................ 7 2,872 2,008
--------- ---------
TOTAL CURRENT LIABILITIES........................................................ 8,454 8,223
--------- ---------
Long term notes payable................................................................ 9 30 118
Deferred income taxes.................................................................. 13 27 1
Other liabilities...................................................................... 2 742 1,048
Due to shareholders.................................................................... 15 396 325
--------- ---------
1,195 1,492
--------- ---------
MINORITY INTERESTS IN SUBSIDIARIES..................................................... 291 574
--------- ---------
SHAREHOLDERS' EQUITY
Share capital........................................................................ 31 31
Additional paid in capital in excess of par.......................................... 228 228
Cumulative translation adjustment.................................................... (144) (137)
Retained earnings.................................................................... 4,289 2,767
--------- ---------
TOTAL SHAREHOLDERS' EQUITY....................................................... 4,404 2,889
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY....................................... 14,344 13,178
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-10
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA)
<TABLE>
<CAPTION>
NOTES 1995 1994 1993
----- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues..................................................... 10 43,602 38,129 28,814
Shipping costs............................................... 11 (23,045) (19,992) (13,676)
Gross profit............................................. 20,557 18,137 15,138
Operating expenses........................................... (7,986) (6,877) (6,099)
Selling, general and administrative expenses................. (10,664) (10,232) (7,885)
------------- ------------- -------------
Operating income......................................... 1,907 1,028 1,154
------------- ------------- -------------
Other income (expenses):
Interest expense............................................. (61) (46) (4)
(Loss) gain on sale of property, plant and equipment......... (1) (4) 7
Exchange gain (loss)......................................... 31 (55) (182)
Other income (loss).......................................... 69 (123) (200)
------------- ------------- -------------
38 (228) (379)
------------- ------------- -------------
Income before income taxes............................... 1,945 800 775
Provision for income taxes................................... 13 (266) (227) (56)
Minority interests........................................... (157) (278) (633)
------------- ------------- -------------
Net income............................................... 1,522 295 86
------------- ------------- -------------
------------- ------------- -------------
Earnings per share........................................... 0.49 0.09 0.03
------------- ------------- -------------
------------- ------------- -------------
Weighted average number of shares outstanding................ 3,125,000 3,125,000 3,125,000
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-11
<PAGE>
ARAMEX INTERNATIONAL, LIMITED AND SUBSIDIARIES
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
RETAINED EARNINGS
SHARE CAPITAL ADDITIONAL CUMULATIVE ------------------------- TOTAL
--------------------- PAID IN TRANSITION LEGAL UNAPPROPRIATED SHAREHOLDERS'
SHARES AMOUNT CAPITAL ADJUSTMENTS RESERVE EARNINGS EQUITY
---------- --------- ----------- ----------- --------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1993........ 3,125,000 31 228 (133) 4 2,382 2,512
Net income...................... -- -- -- -- 17 69 86
Translation adjustment.......... -- -- -- 14 -- -- 14
---------- --------- ----------- ----------- --------- -------------- -------------
BALANCE AT DECEMBER 31, 1993...... 3,125,000 31 228 (119) 21 2,451 2,612
Net income...................... -- -- -- -- 25 270 295
Translation adjustment.......... -- -- -- (18) -- -- (18)
---------- --------- ----------- ----------- --------- -------------- -------------
BALANCE AT DECEMBER 31, 1994...... 3,125,000 31 228 (137) 46 2,721 2,889
Net income...................... -- -- -- -- 4 1,518 1,522
Translation adjustment.......... -- -- -- (7) -- -- (7)
---------- --------- ----------- ----------- --------- -------------- -------------
BALANCE AT DECEMBER 31, 1995...... 3,125,000 31 228 (144) 50 4,239 4,404
---------- --------- ----------- ----------- --------- -------------- -------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-12
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income taxes............................................... 1,945 800 775
Adjustments to reconcile income before tax to net cash from operating
activities --
Depreciation........................................................... 891 515 361
Loss on sale of property, plant and equipment.......................... -- 5 --
Deferred income taxes.................................................. 14 (7) --
Provisions for closure of stations and bad debt........................ -- -- 605
----------- ----------- -----------
2,850 1,313 1,741
Increase in receivables.................................................. (484) (2,358) (2,583)
(Increase) decrease in other current assets.............................. (125) (274) 184
(Decrease) increase in payables.......................................... (1,065) 2,086 1,374
(Decrease) increase in other liabilities................................. (307) 734 48
Increase in other current liabilities.................................... 659 174 1,069
----------- ----------- -----------
CASH GENERATED FROM OPERATIONS....................................... 1,528 1,675 1,833
Income taxes paid........................................................ (62) (200) (24)
----------- ----------- -----------
NET CASH FROM OPERATING ACTIVITIES................................... 1,466 1,475 1,809
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment................................ (757) (1,366) (1,152)
Proceed from sale of property, plant and equipment....................... 67 5 --
Increase in other assets................................................. (180) (27) --
----------- ----------- -----------
NET CASH USED IN INVESTING ACTIVITIES................................ (870) (1,388) (1,152)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Due to banks, net........................................................ 435 62 134
Proceed from notes payable............................................... 5 36 --
Repayment of notes payable............................................... (95) (53) --
Proceeds from issue of common stock to minority interests................ 266 -- --
Payments to minority interests........................................... (929) (442) (434)
Due to shareholders, net................................................. 71 (331) 54
----------- ----------- -----------
NET CASH USED IN FINANCING ACTIVITIES................................ (247) (728) (246)
----------- ----------- -----------
Effect of exchange rate changes on cash on hand and at banks............. (2) 14 14
----------- ----------- -----------
Net increase (decrease) in cash on hand and at banks..................... 347 (627) 425
CASH ON HAND AND AT BANKS, BEGINNING OF YEAR............................. 994 1,621 1,196
----------- ----------- -----------
CASH ON HAND AND AT BANKS, END OF YEAR................................... 1,341 994 1,621
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-13
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA)
1. BUSINESS AND ORGANIZATION
ARAMEX International Limited ("ARAMEX" or the "Company") was incorporated
under the laws of Bermuda on October 31, 1996 to be the successor to Aramex
International, Limited, a Hong Kong company which was incorporated in February
1986 ("Aramex Hong Kong"). On December 13, 1996, ARAMEX subscribed for 100
shares of Aramex Hong Kong (the "Ordinary Shares") and each share of Aramex Hong
Kong outstanding prior to such subscription was converted by a special
resolution of the shareholders of Aramex Hong Kong into non-voting deferred
shares (the "Deferred Shares") (collectively, the "Reorganization"). The
Deferred Shares do not carry voting rights (other than in respect of resolutions
affecting their class rights) and are effectively subordinated to the Ordinary
Shares (all of which are held by ARAMEX) in respect of all dividends,
distributions and liquidation rights until such time as the holders of Ordinary
Shares have received $100 billion. Accordingly, no value has been assigned to
the Deferred Shares. Pursuant to the Regorganization, ARAMEX became the parent
holding company of Aramex Hong Kong. The existing shareholders of Aramex Hong
Kong will retain a nominal interest in Aramex Hong Kong through their ownership
of the Deferred Shares. Aramex Hong Kong will act as an intermediate holding
company of the Company's subsidiaries until the Company completes its
reorganization plan to transfer all of its assets from Aramex Hong Kong to
ARAMEX or into other subsidiary companies.
ARAMEX is authorized to issue 15,000,000 shares of common stock with a par
value of $0.01 per share. After giving effect to the Reorganization described
above, at December 31, 1995, the share ownership is expected to be detailed as
follows:
<TABLE>
<CAPTION>
OWNER SHARES OWNED
- ------------------------------------------------------------------------------- -------------
<S> <C>
Mr. Bill Kingson............................................................... 1,562,500
Mr. Fadi Ghandour.............................................................. 781,250
Mrs. Rula Ghandour............................................................. 781,250
-------------
3,125,000
-------------
-------------
</TABLE>
The Company is also authorized to issue 5,000,000 shares of preferred stock
with a par value of $0.01 per share none of which has been issued or is
outstanding. On October 22, 1996, the Company issued 304,688 shares of capital
stock to Airborne Freight Corporation, see note (17) for further discussion.
The accompanying consolidated financial statements have been presented to
give effect to the reorganization as if it had taken place as of the beginning
of the earliest period presented.
PRINCIPAL ACTIVITIES
ARAMEX provides express delivery and freight forwarding services from its
main stations (hubs) in Dubai, London, New York and Amman primarily to, from and
within destinations in the Middle East. ARAMEX's operations are controlled
through a regional office which was registered in Jordan on March 15, 1988 under
the name of ARAMEX International Limited (the "Regional Office") pursuant to the
foreign companies law No. (58) of 1985. The operations of the Regional Office
are facilitated by the hubs of the ARAMEX network.
F-14
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA)
2. SIGNIFICANT ACCOUNTING POLICIES
A. BASIS OF PRESENTATION
The consolidated financial statements of the Company have been prepared in
accordance with International Accounting Standards (IAS). For purposes of these
financial statements, there are no significant differences between the Company's
accounting principles utilized and the accounting principles generally accepted
in the United States.
B. PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and all of its subsidiaries that are controlled directly and indirectly through
agreements that provide the Company with authority to govern the financial and
operating affairs of the subsidiaries. All significant intercompany accounts and
transactions have been eliminated.
Following is a listing of the subsidiaries, comprising the consolidated
financial statements together with the respective percentage and investment
amounts owned by ARAMEX International Limited:
<TABLE>
<CAPTION>
INVESTMENT OWNERSHIP
-------------------- -------------------------------
SUBSIDIARIES 1995 1994 1995 1994 1993
- -------------------------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
% % %
Amman............................................. AMM 249 249 100 100 100
Damascus.......................................... DAM 6 6 60 60 60
Beirut............................................ BEY*** 0 0 50 50 50
Beirut CGO........................................ BEY CGO*** 1 1 50 50 50
Cairo............................................. CAI*** 8 8 49 49 49
Dubai............................................. DXB 245 245 100 100 100
Abu Dhabi......................................... AUH 75 75 100 100 100
Doha.............................................. DOH 20 20 100 100 100
Bahrain........................................... BAH 3 3 100 100 100
Jeddah............................................ JED*** 80 53 50 33 33
Nicosia........................................... NIC 0 0 100 100 49
Paris............................................. PAR 19 16 100 85 85
London............................................ LON 804 804 100 100 100
Washington, D.C................................... DCA 15 15 100 100 100
New York.......................................... JFK 1,000 1,000 100 100 100
Texas............................................. HOU* 0 30 0 99 49
Montreal.......................................... YUL*** 7 7 19.5 19.5 19.5
Kuwait............................................ KWI 0 0 100 100 50
New Jersey........................................ EWR** 5 5 51 51 51
Athens............................................ ATH** 192 49 100 51 --
</TABLE>
- ------------------------
* The Houston station was closed in 1995.
** Subsidiaries that are indirectly controlled.
*** Controlled through shareholder agreements.
F-15
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. USE OF ESTIMATES
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures 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 amounts could differ from those estimates.
D. CONCENTRATION OF RISK IN GEOGRAPHIC AREA
The Company derived approximately 71%, 69% and 72%, respectively, of 1995,
1994 and 1993 revenues from operations in the Middle East. The risk of doing
business in this region could adversely affect the Company, as the region has
been subject to many destabilizing political and economic factors over the
years.
E. REVENUE RECOGNITION
Revenues are recognized when shipments are completed. For door-to-door
shipments, revenues are recognized upon delivery of freight at the destination.
For other shipments, revenues are recognized upon delivery of freight to the air
carrier, at which time, the revenue process is completed.
Certain customers pay in advance, giving rise to deferred revenue.
F. TRANSLATION OF THE FINANCIAL STATEMENTS OF FOREIGN STATIONS
The Company's functional currency is the United States Dollar. The financial
statements of foreign subsidiaries where the local currency is the functional
currency (substantially all stations) are translated into U.S dollars using
exchange rates in effect at period end for assets and liabilities and average
exchange rates during each reporting period for results of operations.
Adjustments resulting from translation of financial statements are reflected as
a separate component of shareholders' equity.
Exchange gains and losses resulting from transactions of the Company and its
subsidiaries which are made in currencies different from their own are included
in income as they occur.
G. FIXED ASSETS
Fixed assets are recorded at cost and are depreciated over their estimated
useful lives using primarily the straight line method.
The estimated useful lives of these assets are:
<TABLE>
<S> <C>
Furniture and fixtures............................................. 7 years
Office equipment................................................... 7 years
Computers.......................................................... 5 years
Vehicles........................................................... 5 years
</TABLE>
F-16
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
H. INCOME TAXES
The Company provides income taxes in accordance with IAS 12. As an offshore
company incorporated in Bermuda, profits from operations of foreign subsidiaries
are not subject to Bermudan taxes. For certain operations in the Middle East,
the Company is exempt from income taxes. For other operations, deferred income
taxes have been provided, using the liability method under IAS 12, for the
difference between the book and tax bases of assets and liabilities.
Deferred income taxes have not been provided on the undistributed earnings
of subsidiaries operating outside of Bermuda, as such earnings are expected to
be indefinitely reinvested or, if distributed, are expected to be distributed
tax free.
I. EMPLOYEE TERMINATION INDEMNITIES
Certain of the Company's subsidiaries are required, by the labor law of each
related country, to provide indemnity payments upon termination of relationship
with their employees. The benefit accrues to employees on a pro-rata basis
during their employment period and is based on each employee's current salary.
Other liabilities in the accompanying consolidated financial statements reflects
the maximum amounts of the indemnities as of the balance sheet dates of $638 and
$507, respectively, at December 31, 1995 and 1994.
J. REVISIONS TO FINANCIAL STATEMENTS
The Company has restated its previously published financial statements to
recognize the effects of certain additional information that became available to
the Company subsequent to the date of the original statements. The adjustments,
which are principally related to intercompany accounts and deferred income
taxes, reduced net income and earnings per share for the years ended December
31, 1995, 1994 and 1993, as follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Net Income......................................................... $ 431 $ 772 $ 1,709
--------- --------- ---------
--------- --------- ---------
Earnings per share................................................. $ 0.14 $ 0.25 $ 0.55
--------- --------- ---------
--------- --------- ---------
</TABLE>
3. RECEIVABLES
This item consists of the following:
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Trade receivables............................................................ 9,050 8,598
Employee advances............................................................ 307 240
Other........................................................................ 525 460
--------- ---------
9,882 9,298
Less: Allowance for doubtful accounts........................................ (960) (860)
--------- ---------
8,922 8,438
--------- ---------
--------- ---------
</TABLE>
F-17
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA)
3. RECEIVABLES (CONTINUED)
All employee advances bear no interest and are due within one year.
Geographic concentrations of accounts receivables as of December 31, 1995
are the following:
<TABLE>
<S> <C>
Middle East........................................................... 65.2%
Europe................................................................ 25.2%
North America......................................................... 9.6%
</TABLE>
Management believes that all receivables, net of related allowances, will be
collected in due course.
Movements in the allowance for doubtful accounts are as follows:
<TABLE>
<CAPTION>
1995 1994
---------- ---------
<S> <C> <C>
Balance--Beginning of the year......................................... 860 530
Provision.............................................................. 268 417
Write-offs............................................................. (168) (87)
---------- ---------
Balance--End of the year............................................... 960 860
---------- ---------
---------- ---------
</TABLE>
4. OTHER CURRENT ASSETS
This item consists of the following:
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Prepaid expenses........................................................ 414 361
Refundable deposits..................................................... 164 133
Advances................................................................ 10 2
Tax withholdings........................................................ 31 28
Supplies and stationary................................................. 41 48
Other................................................................... 164 127
--------- ---------
824 699
--------- ---------
--------- ---------
</TABLE>
5. PROPERTY, PLANT AND EQUIPMENT
This item consists of the following:
<TABLE>
<CAPTION>
AT THE AT THE END
BEGINNING DIFFERENCES OF THE
OF THE YEAR PURCHASES DISPOSALS OF EXCHANGE YEAR
--------------- ----------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Furniture and fixtures...... 1,053 112 (6) 1 1,160
Office equipment............ 575 129 (20) 1 685
Computers................... 1,175 198 (12) -- 1,361
Vehicles.................... 1,327 318 (192) 4 1,457
--------------- ----------- ----------- ----- ----------
4,130 757 (230) 6 4,663
--------------- ----------- ----------- ----- ----------
--------------- ----------- ----------- ----- ----------
</TABLE>
F-18
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA)
5. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Accumulated depreciation:
<TABLE>
<CAPTION>
AT THE AT THE END
BEGINNING DEPRECIATION DIFFERENCES OF THE
OF THE YEAR EXPENSE DISPOSALS OF EXCHANGE YEAR
--------------- ------------ ----------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Furniture and fixtures.... 279 218 (5) -- 493
Office equipment.......... 178 103 (14) 1 268
Computers................. 403 250 (5) 1 648
Vehicles.................. 416 320 (138) 1 599
--------------- ------------ ----------- ----- ----------
1,276 891 (162) 3 2,008
--------------- ------------ ----------- ----- ----------
--------------- ------------ ----------- ----- ----------
Net book value............ 2,854 2,655
--------------- ----------
--------------- ----------
</TABLE>
6. PAYABLES
This item consists of the following:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Trade payables...................................................... 4,357 5,372
Due to employees*................................................... 104 103
Other............................................................... 229 281
---------- ----------
4,690 5,756
---------- ----------
---------- ----------
</TABLE>
- ------------------------
* Amounts represent reimbursements owed to employees for travel and
entertainment expenses.
7. OTHER CURRENT LIABILITIES
This item consists of the following:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Accrued expenses.................................................... 1,104 752
Deferred revenue.................................................... 546 488
Income taxes payable................................................ 407 216
Social securities payable........................................... 551 317
Sales taxes and other............................................... 189 22
Provision for closure of station.................................... -- 73
Other............................................................... 75 140
---------- ----------
2,872 2,008
---------- ----------
---------- ----------
</TABLE>
F-19
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA)
8. DUE TO BANKS
ARAMEX and its subsidiaries maintain lines of credit with various banks in
the aggregate of $580 and $460, respectively, at December 31, 1995 and 1994. At
December 31 1995 and 1994, the Company had $554 and $239 outstanding under these
lines of credit. The lines of credit are personally guaranteed by one of the
shareholders of the Company. The weighted average interest rates on the
Company's lines of credit were 11.3% and 10.3% at December 31, 1995 and 1994,
respectively. The remaining balances of $223 and $103 in Due to Banks as of
December 31, 1995 and 1994, respectively, represent bank overdrafts.
9. LONG TERM NOTES PAYABLE
This item consists of the following:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Various vehicle notes payable in monthly installments with original
average maturities of three years, at interest rates ranging from
6.75% to 13 %....................................................... 145 235
Less: current maturities.............................................. (115) (117)
---------- ----------
Long term portion..................................................... 30 118
---------- ----------
---------- ----------
</TABLE>
The aggregate amounts of annual principal maturities of long-term
obligations are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
------------
<S> <C>
1996............................................................................ 115
1997............................................................................ 20
1998............................................................................ 10
</TABLE>
Long term debt including current maturities are payable in various
currencies including the U.S. Dollar.
10. REVENUES
This item consists of the following:
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Express............................................. 25,491 22,349 19,802
Freight forwarding.................................. 14,306 13,104 6,544
Domestic............................................ 2,007 1,291 833
Other*.............................................. 1,798 1,385 1,635
------------ ------------ ------------
43,602 38,129 28,814
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
- ------------------------
* Amounts represent revenues from other services which the Company renders
such as airline ticketing and travel. All related costs are reflected in
shipping costs.
F-20
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA)
11. SHIPPING COSTS
This item consists of the following:
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Linehaul expenses--Express.......................... 5,608 4,597 4,800
Distribution expenses--Express...................... 4,347 3,429 3,406
Inbound costs--Express.............................. 949 1,083 --
Freight forwarding and related expenses............. 11,279 10,197 4,727
Other............................................... 862 686 743
------------ ------------ ------------
23,045 19,992 13,676
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
12. COMMITMENTS
The Company leases office space and office and transportation equipment
under various operating leases, some of which are renewable annually. Rent
expense related to these leases amounted to $892, $867 and $595 for the years
ended December 31, 1995, 1994 and 1993, respectively. The Company believes that
most operating leases should be renewable at comparable rates to the expiring
leases.
The approximate minimum annual rental commitments of the Company under the
existing lease agreements are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1995
-----------------
<S> <C>
1996....................................................................... 540
1997....................................................................... 230
1998....................................................................... 170
1999....................................................................... 153
2000....................................................................... 127
Thereafter................................................................. 11
</TABLE>
13. INCOME TAXES
The provision for income taxes on results of operations of foreign
subsidiaries is comprised of the following:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Current...................................................... 252 234 56
Deferred..................................................... 14 (7) --
--------- --------- ---------
266 227 56
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-21
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA)
13. INCOME TAXES (CONTINUED)
Deferred income taxes are provided in accordance with the liability method
under IAS 12, for the temporary differences between the financial reporting
basis and the tax basis of the Company's assets and liabilities. The composition
of deferred taxes reflected on the balance sheet is as follows:
<TABLE>
<CAPTION>
ASSETS (LIABILITIES)
1995 1994
---------- -----------
<S> <C> <C>
Current --
Provision for doubtful accounts...................................... 1 3
Termination indemnities.............................................. 14 1
Donation carryover................................................... 5 3
---------- -----------
20 7
---------- -----------
Non-current --
Depreciation......................................................... (7) (12)
Organizational costs................................................. (103) (51)
Net operation losses carryforward.................................... 433 246
Other................................................................ 6 --
Valuation allowance.................................................. (356) (184)
---------- -----------
(27) (1)
---------- -----------
(7) 6
---------- -----------
---------- -----------
</TABLE>
At December 31, 1995, the Company and its subsidiaries had net operating
losses carryforward of approximately $1,400 which expire between 1998 and 2009.
The Company's consolidated effective tax rate was 13.7%, 28.4% and 7.2% for
1995, 1994 and 1993, respectively. The principal difference between these
effective rates and the statutory tax rate applicable in the United States of
35% are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Computed tax at U.S. rate of 35%........................................................... 681 280 271
Effects of tax exemptions.................................................................. (228) (144) (90)
Effect of lower rates in certain countries................................................. (518) (224) (221)
Losses not benefited....................................................................... 253 251 93
Other...................................................................................... 78 64 3
--- --- ---
Provisions for income taxes................................................................ 266 227 56
--- --- ---
--- --- ---
</TABLE>
In certain countries the tax returns have not yet been reviewed by the tax
authorities. However, the Company is satisfied that adequate provisions have
been provided for potential tax contingencies.
At December 31, 1995, approximately $1,829 of retained earnings of
subsidiaries have not been distributed to the Company. Such earnings are
expected to be indefinitely reinvested or if distributed, are expected to be
distributed tax free.
F-22
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA)
14. LITIGATION
In September 1995, an action was brought by a station manager against the
Company, claiming $1,000 in damages for certain breaches of contracts and other
matters. The Company's legal counsel has filed a motion for summary judgment,
however the litigation is in its preliminary stages and the outcome cannot
presently be determined. Management believes that this action should not have a
material adverse effect on the financial position or results of operations of
the Company.
15. RELATED PARTY TRANSACTIONS
Due to shareholders represents various advances from shareholders. These
advances are interest free.
On January 4, 1995, the Company purchased the minority interest of one of
its Middle Eastern stations and immediately sold it to another third party for
$640. As part of the transaction, the new minority shareholder paid during 1995
$266 in cash, $160 is to be netted against any future dividend payments, and the
balance of $214 is to be paid during 1996. The current outstanding balance at
December 31, 1995 was $374. The station subsequent to year end has received the
$214.
Payments to minority interests in the accompanying statements of cash flows
represent dividends paid to minority shareholders in subsidiaries and, in 1995,
the cost of purchasing the Middle Eastern Stations discussed above.
The Company leases the premises currently occupied by the Company's London
operations from Mr. Ali Ghandour, the father of Mr. Fadi Ghandour (CEO), at an
annual rental of $76 (GBP 50). The lease is open-ended and is renewed annually.
The Company believes that the terms of the lease are at least as favorable to
the Company as those available from unaffiliated third parties.
During 1996, the Company leased the premises currently occupied by the
Company's corporate offices in Amman, Jordan, from ARAM, an investment company
controlled by the CEOs family at an annual rental of $70 (JD 50). The lease is
open-ended and is renewed annually. The Company believes that the terms of the
lease are at least as favorable to the Company as those available from
unaffiliated third parties.
Mr. Fadi Ghandour has personally guaranteed bank overdrafts in Jordan in the
aggregate amount of $180. To the extent any of the proceeds from the Company's
initial public offering is used to repay such indebtedness, it is anticipated
that following the offering, the personal guarantee of Mr. Fadi Ghandour will be
extinguished.
16. RESTRICTIONS ON UNAPPROPRIATED EARNINGS
The legal reserve of the Company represents earnings restricted from payment
of dividends in accordance with the local laws of the domiciles of certain
subsidiaries. The law dictates that a fixed percentage which is 10% of the net
income of the applicable subsidiary must be annually appropriated.
F-23
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA)
17. SUBSEQUENT EVENTS
Subsequent to December 31, 1995, the following events took place:
On October 21, 1996, ARAMEX International, Limited, a Hong Kong company
(ARAMEX Hong Kong), sold 195 shares of common stock (304,688 shares after the
Reorganization) to Airborne Freight Corporation (Airborne) for an aggregate
consideration of $2,000 (the Airborne stock purchase). In connection with such
purchase, the stockholders of ARAMEX Hong Kong entered into a Shareholders
Agreement (the Shareholders Agreement), as amended on December 11, 1996 which
provides, among other things, that in the event the Company transfer (as defined
in the Shareholders Agreement) any shares of common stock to certain listed
competitors of Airborne or any other company primarily engaged in the
transportation of air freight or air express shipments, Airborne has the right
to sell all of its shares of common stock to the Company on the same terms and
conditions as the sale to such other company. In the event that Messrs. Kingson
and Ghandour and/or Ms. Rula Ghandour transfer any shares of Common Stock to
certain listed competitors to Airborne or any other company primarily engaged in
the transportation of air freight or air express shipments, it shall be a
condition of such transfer that Airborne shall be offered the right to sell to
such competitor all of its shares of Common Stock on the same terms and
conditions as the sale by Messrs. Kingson and Ghandour and/or Ms. Rula Ghandour.
In addition, the Shareholders Agreement contains certain other provisions which
terminate upon consummation of an initial public offering, including: (i) a
right of first refusal in favor of the Company in the event Airborne transfers
(as defined in the Shareholders Agreement) its shares to a company or companies,
their subsidiaries, parents or known affiliates primarily engaged in the
transportation of air freight or air express shipments and (ii) a similar right
of first refusal in favor of Airborne in the event the Company, Mr. Kingson, Mr.
Ghandour or Ms. Ghandour transfer shares to certain listed competitors of
Airborne or any other company primarily engaged in the transportation of air
freight or air express shipments. In connection with the Airborne stock
purchase, Airborne was granted certain piggyback registration rights relating to
their shares of common stock. In addition, under the terms of the Airborne stock
purchase, Airborne is entitled to appoint one director to the Company's Board of
Directors for as long as Airborne continues to own at least half of the shares
it acquired in the Airborne stock purchase.
On December 13, 1996, the Company effected the Reorganization discussed in
Note 1. The officers and directors of the Company remained in office after the
Reorganization.
The Company plans adopt a stock option plan (the Plan). The Plan provides
for the grant of options to acquire up to 400,000 shares of common stock at an
exercise price equal to the fair value of the stock at the date of grant. No
options have been granted to date, however, the Company plans to grant
approximately 300,000 of such options prior to its planned initial public
offering.
In October 1996, the Company commenced planning for an initial public
offering of 1,000,000 shares of its common stock.
F-24
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA)
18. INDUSTRY SEGMENT AND GEOGRAPHIC AREA
The Company operates predominantly in a single industry as a courier and
cargo freight forwarder. The following is a summary of financial data by
geographic area:
<TABLE>
<CAPTION>
1995 1994 1993
------------- ------------- -------------
<S> <C> <C> <C>
REVENUES(1)
Middle East...................................... 40,580 34,245 27,709
North America.................................... 6,097 7,379 5,799
Europe........................................... 10,148 7,719 5,055
Eliminations..................................... (13,223) (11,214) (9,749)
------------- ------------- -------------
Total revenues............................... 43,602 38,129 28,814
------------- ------------- -------------
------------- ------------- -------------
OPERATING PROFIT (LOSS)
Middle East...................................... 2,017 1,239 933
North America.................................... (51) (94) (45)
Europe........................................... (44) (117) 266
Eliminations..................................... (15) -- --
------------- ------------- -------------
Total operating profit....................... 1,907 1,028 1,154
------------- ------------- -------------
------------- ------------- -------------
IDENTIFIABLE ASSETS
Middle East...................................... 16,359 13,575
North America.................................... 1,345 1,801
Europe........................................... 4,321 4,132
------------- -------------
Total identifiable assets.................... 22,025 19,508
Eliminations..................................... (7,748) (6,395)
Investments in affiliates........................ 67 65
------------- -------------
Total assets................................. 14,344 13,178
------------- -------------
------------- -------------
</TABLE>
- ------------------------
(1) Revenues between stations that are wholly-owned subsidiaries are priced at
cost. Transactions with other affiliated stations are priced at cost plus
10%. All intercompany transactions have been eliminated in consolidation.
19. SUPPLEMENTAL FINANCIAL STATEMENT DISCLOSURES
A. DISCLOSURES ABOUT FAIR VALUES OF FINANCIAL INSTRUMENTS:
The carrying amounts of cash, current receivables, accounts payable,
payables, due to banks and long term notes payable approximate their fair market
values.
F-25
<PAGE>
ARAMEX (UK) INTERNATIONAL COURIER LIMITED
REPORT OF THE AUDITORS
We have audited the accompanying balance sheet of Aramax (UK) International
Courier Ltd. as of 31 December 1993 and the related statements of income and
cash flows for the year then ended. The company's directors are responsible for
the preparation of the financial statements. It is our responsibility to form an
independent opinion, based on our audit, on those financial statements and to
report our opinion to you.
BASIS OF OPINION
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board in the United Kingdom, which are accepted as
substantially consistent with those in the United States. An audit includes
examination, on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements. It also includes an assessment of the
significant estimates and judgements made by the directors in the preparation of
the financial statements, and of whether the accounting policies are appropriate
to the group's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
OPINION
In our opinion the financial statements give a true and fair view of the
state of affairs of the company at 31 December 1993 and of its profit, total
recognised gains and statement of cash flows for the year then ended and have
been properly prepared in accordance with the Companies Act 1985.
<TABLE>
<S> <C>
/s/ MEHTA & TENGRA
- ---------------------------------------------
Mehta & Tengra
Chartered Accountants
Registered Auditors
4 Wellington Terrace
Bayswater Road
London W2 4LW
</TABLE>
Date: 15 August, 1994 [except with respect to the
cash flow statements as to which
the date is 23 December 1996]
F-26
<PAGE>
ARAMEX (UK) INTERNATIONAL COURIER LIMITED
REPORT OF THE AUDITORS
We have audited the accompanying balance sheet of Aramax (UK) International
Courier Ltd. as of 31 December 1994 and the related statements of income and
cash flows for the year then ended. The company's directors are responsible for
the preparation of the financial statements. It is our responsibility to form an
independent opinion, based on our audit, on those financial statements and to
report our opinion to you.
BASIS OF OPINION
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board in the United Kingdom, which are accepted as
substantially consistent with those in the United States. An audit includes
examination, on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements. It also includes an assessment of the
significant estimates and judgements made by the directors in the preparation of
the financial statements, and of whether the accounting policies are appropriate
to the company's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
OPINION
In our opinion the financial statements give a true and fair view of the
state of affairs of the company at 31 December 1994 and of its profit and
statement of cash flows for the year then ended and have been properly prepared
in accordance with the Companies Act 1985.
<TABLE>
<S> <C>
/s/ MEHTA & TENGRA
- ---------------------------------------------
Mehta & Tengra
Chartered Accountants
Registered Auditors
4 Wellington Terrace
Bayswater Road
London W2 4LW
</TABLE>
Date: 25 May 1995 [except with respect to the
cash flow statements as to which
the date is 23 December 1996]
F-27
<PAGE>
ARAMEX (UK) INTERNATIONAL COURIER LIMTED
REPORT OF THE AUDITORS
We have audited the accompanying balance sheet of Aramax (UK) International
Courier Ltd. as of 31December 1995 and the related statements of income and cash
flows for the year then ended. The company's directors are responsible for the
preparation of the financial statements. It is our responsibility to form an
independent opinion, based on our audit, on those financial statements and to
report our opinion to you.
BASIS OF OPINION
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board in the United Kingdom, which are accepted as
substantially consistent with those in the United States. An audit includes
examination, on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements. It also includes an assessment of the
significant estimates and judgements made by the directors in the preparation of
the financial statements, and of whether the accounting policies are appropriate
to the company's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
OPINION
In our opinion the financial statements give a true and fair view of the
state of affairs of the company at 31December 1995 and of its profit and
statement of cash flows for the year then ended and have been properly prepared
in accordance with the Companies Act 1985.
<TABLE>
<S> <C>
/s/ MEHTA & TENGRA
- ---------------------------------------------
Mehta & Tengra
Chartered Accountants
Registered Auditors
4 Wellington Terrace
Bayswater Road
London W2 4LW
</TABLE>
Date: 18 April 1996 [except with respect to the
cash flow statements as to which the date is
23 December 1996]
F-28
<PAGE>
ARAMEX INTERNATIONAL COURIER FRANCE SARL
REPORT OF THE AUDITORS
We have audited the accompanying balance sheet of Aramax International
Courier France Sarl as of 31 December 1995 and the related statements of income
and cash flows for the year then ended. The accounts for the year ended 31
December 1994 were not audited by us. The company's manager is responsible for
the preparation of the financial statements. It is our responsibility to form an
independent opinion, based on our audit, on those financial statements and to
report our opinion to you.
BASIS OF OPINION
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board in the United Kingdom, which are accepted as
substantially consistent with those in the United States. An audit includes an
examination on a test basis of evidence relevant to the amounts and disclosures
in the financial statements. It also includes an assessment of the significant
estimates and judgements made by the manager in the preparation of the financial
statements, and of whether the accounting policies are appropriate to the
company's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
OPINION
In our opinion the financial statements give a true and fair view of the
state of affairs of the company at 31 December 1995 and of its profit and
statement of cash flows for the year then ended and have been properly prepared
in accordance with generally accepted accounting standards in the United
Kingdom.
<TABLE>
<S> <C>
/s/ MEHTA & TENGRA
- ---------------------------------------------
Mehta & Tengra
Chartered Accountants
Registered Auditors
4 Wellington Terrace
Bayswater Road
London W2 4LW
</TABLE>
Date: 30 December 1996
F-29
<PAGE>
AUDITORS' REPORT
TO: THE PARTNERS OF
ALAWSAT INTERNATIONAL
TRANSPORT COMPANY LIMITED
(A SAUDI LIMITED LIABILITY COMPANY)
JEDDAH-SAUDI ARABIA
We have audited the accompanying balance sheet of Alawsat International
Transport Company Limited (A Saudi Limited Liability Company) as of December 31,
1993 and the related statements of income and retained earnings and cash flows
for the period from April 25, 1993 to December 31, 1993, including the related
notes from No. 1 to No. 12, we have also audited the transactions for the period
from January 1, 1993 to April 24, 1993, which results are summarized in Note 12
of the accompanying financial statements) which was the period preceding the
legal incorporation of the Company, results of this period are summarized in
Note 12, which form an integral part of these financial statements. These
financial statements are the responsibility of Alawsat International Transport
Company Limited's management and were prepared to comply with applicable
articles of regulations for companies. We have obtained all information and
explanations which we considered necessary for our audit.
We conducted our audit in accordance with the Saudi and other generally
accepted auditing standards. Those standards require that we plan and perform
the audit which includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles, as well as evaluating the overall financial
statements presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements taken as a whole:
-- Present fairly the financial position of Alawsat International
Transport Company Limited (A Saudi Limited Liability Company) as of
December 31, 1993 and the results of its operations and cash flows
for the period then ended in conformity with generally accepted
accounting principles in Saudi Arabia and the accounting policies
relevant to the company's activities mentioned in note (2) and,
-- Comply with requirements of the regulations for companies and Alawsat
International Transport Company Limited articles of association with
respect to the preparation and presentation of financial statements.
-- The company decided that the financial year will be according to the
explanation mentioned in note (1).
For Dr. Mohamed Al-Amri & Co.
/s/ Mohamed A. Al-Amri
Dr. Mohamed A. Al-Amri
Certified Public Accountant Date: 15.10.1414 (H)
Registration No. (60) 27.03.1994 (G)
(except with respect
to the cash flow
statement as to which
the date is 24 December
1996)
Jeddah, The Kingdom of
Saudi Arabia
F-30
<PAGE>
AUDITORS' REPORT
TO: THE PARTNERS OF
AL-AWSAT INTERNATIONAL
TRANSPORT COMPANY LIMITED
(A LIMITED LIABILITY COMPANY)
We have audited the accompanying consolidated balance sheet of Al-Awsat
International Transport Company Limited as of December 31, 1994 and the
consolidated statements of income and retained earnings and cash flows for the
year then ended, including the related notes from No. 1 to No. 11. These
consoldiated financial statements are the responsibility of the Company's
management and were prepared to comply with applicable articles of regulations
for companies. We have obtained all information and explanations which we
considered necessary for our audit.
We conducted our audit in accordance with generally accepted auditing
standards. 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, as well as evaluating the overall
financial statements presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements taken as a whole:
-- Present fairly the consolidated financial position of Al-Awsat
International Transport Company Limited as of December 31, 1994 and
the results of its operations and cash flows for the year then ended
in conformity with generally accepted accounting principles in Saudi
Arabia and,
-- Comply with requirements of the Regulations for Companies and the
Company's Articles of Association with respect to the preparation and
presentation of consolidated financial statements.
* These financial statements include the accounts of the head office in
Jeddah and Riyadh branch.
For Dr. Mohamed Al-Amri & Co.
/s/ Mohamed A. Al-Amri
Dr. Mohamed A. Al-Amri
Certified Public Accountant Date: Shawal 28, 1415 (H)
Registration No. (60) March 29, 1995 (G)
Jeddah, The Kingdom of
Saudi Arabia
F-31
<PAGE>
AUDITORS' REPORT
TO: THE PARTNERS OF
AL-AWSAT INTERNATIONAL
TRANSPORT COMPANY LIMITED
(A LIMITED LIABILITY COMPANY)
We have audited the accompanying consolidated balance sheet of Al-Awsat
International Transport Company Limited as of December 31, 1995 and the
consolidated statements of income (loss) and retained earnings (deficit) and
cash flows for the year then ended including the related notes from No. 1 to No.
10. These consolidated financial statements are the responsibility of the
company's management and were prepared to comply with applicable articles of
regulations for companies. We have obtained all information and explanations
which we considered necessary for our audit.
We conducted our audit 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 the
management, as well as evaluating the overall financial statements presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements taken as a whole:
-- Present fairly the financial position of Al-Awsat International
Transport Company Limited as of December 31, 1995 and the results of
its operations and cash flows for the year then ended in conformity
with generally accepted accounting principles in Saudi Arabia; and,
-- Comply with requirements of the Regulations for Companies and the
Company's Articles of Association with respect to the preparation and
presentation of consolidated financial statements.
* The previous partners sold their total shares to new partners as Note
No. 8 indicates.
For Dr. Mohamed Al-Amri & Co.
/s/ Mohamed A. Al-Amri
Dr. Mohamed A. Al-Amri
Certified Public Accountant Shawal 07, 1416 (H)
Registration No. (60) February 25, 1996 (G)
Jeddah, The Kingdom of
Saudi Arabia
F-32
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
Aramex International Courier of Virginia, Inc.
Falls Church, Virginia
We have audited the balance sheets of Aramex International Courier of
Virginia, Inc. as of December 31, 1995 and 1994, and the related statements of
income and retained earnings, and cash flows for the years then ended (none of
which are shown separately herein). 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 audits 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, the financial statements referred to above present fairly,
in all material respects, the financial position of Aramex International Courier
of Virginia, Inc. as of December 31, 1995 and 1994, and the results of its
operations and cash flows for the years then ended in conformity with generally
accepted accounting principles.
/s/ EDWARD ISAACS & COMPANY LLP
New York, New York
February 23, 1996
F-33
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
Aramex International Courier, Ltd.
New York, New York
We have audited the consolidated balance sheets of Aramex International
Courier, Ltd. and subsidiary, Aramex International Courier of N.J., Inc. as of
December 31, 1995, 1994 and 1993, and the related consolidated statements of
operations and accumulated deficit, and cash flows for each of the three years
in the period ended December 31, 1995 (none of which are shown separately
herein). These consolidated financial statements are the responsibility of the
Companies' 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 audits 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, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Aramex
International Courier, Ltd. and subsidiary as of December 31, 1995, 1994 and
1993, and the results of their operations and cash flows for the each of the
years in the period ended December 31, 1995 in conformity with generally
accepted accounting principles.
/s/ EDWARD ISAACS & COMPANY LLP
New York, New York
March 30, 1996
F-34
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners
Aramex International Courier--Texas, Ltd.
Houston, Texas
We have audited the balance sheet of Aramex International Courier--Texas,
Ltd. (a partnership) as of December 31, 1994, and the related statements of
operations and partners' equity deficiency and cash flows for the year then
ended (none of which are shown separately herein). These financial statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Aramex International
Courier--Texas, Ltd. as of December 31, 1994, and the results of its operations
and cash flows for the year then ended in conformity with generally accepted
accounting principles.
/s/ EDWARD ISAACS & COMPANY LLP
New York, New York
March 14, 1995
F-35
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
Aramex International Courier of California
Inglewood, California
We have audited the balance sheet of Aramex International Courier of
California as of December 31, 1994, and the related statements of income and
accumulated deficit, and cash flows for the year then ended. These financial
statements (none of which are shown separately herein) are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Aramex International of
California as of December 31, 1994, and the results of its operations and cash
flows for the year then ended in conformity with generally accepted accounting
principles.
/S/ EDWARD ISAACS & COMPANY LLP
New York, New York
May 4, 1995
F-36
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners
Aramex International Courier -- Texas, Ltd.
Houston, Texas
We have audited the statements of operations and changes in partners' equity
deficiency and cash flows of Aramex International Courier -- Texas, Ltd. (a
partnership) for the nine months ended September 30, 1995 (date of dissolution).
These financial statements (none of which are shown separately herein) are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, results of operations and cash flows of Aramex
International Courier -- Texas, Ltd. for the nine months ended September30, 1995
in conformity with generally accepted accounting principles.
/S/ EDWARD ISAACS & COMPANY LLP
New York, New York
December 1, 1995
F-37
<PAGE>
INDEPENDENT AUDITORS' REPORT
March 9, 1994
Board of Directors
Aramex International Courier of Virginia
Falls Church, Virginia
We have audited the accompanying balance sheet of Aramex International
Courier of Virginia of December 31, 1993, and the related statements income and
accumulated deficit and cash flows for the year then ended. 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, the financial statements referred to above present fairly,
in all material respects, the financial position of Aramex International Courier
of Virginia as of December 31, 1993, and the results of its operations and its
cash flows for the years then ended in conformity with generally accepted
accounting principles.
BISH & HAFFEY
/s/ Bish & Haffey
Alexandria, Virginia
F-38
<PAGE>
AUDITOR'S REPORT
To the Shareholders of
Aramex International Courier of Los Angeles Inc.
We have audited the balance sheet as of December 31, 1993 of Aramex
International Courier of Los Angeles Inc. (Aramex LAX Station), and the related
statements of operations, and cash flows for the period ended December 31, 1993.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on the financial statements based on
our audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements present fairly, in all material
respects, the financial position of Aramex International Courier of Los Angeles
Inc. at December 31, 1993, and the results of their operations and their cash
flows for the period ended December 31, 1993 in conformity with generally
accepted accounting principles.
/S/ IRENE P. TSE, J.D.
MONTEBELLO, CALIFORNIA
JUNE 18, 1994
F-39
<PAGE>
AUDITORS' REPORT
Messers. Partners of Arab-American Express Courier
A Limited Liability Company
Beirut Branch
Beirut - Lebanon
We have audited the accompanying balance sheet of the Arab-American Express
Courier - a Limited Liability Company, Beirut branch as at December 31, 1993 and
related statements of income and cash flow for the year then ended. These
financial statements were prepared by the Company's management and under their
responsibility. Our responsibility is to express an opinion on these financial
statements, based on our auditing procedures.
We conducted our audit 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
misstatements. 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 Messrs. partners of
Arab-American Express Courier estimates made by management, as well as
evaluating the overall financial statements presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion the financial statements give a true and fair view of the
financial position of Arab American Express Courier Beirut Branch as at 31
December 1993 and the results of its operations for the year then ended in
accordance with International Accounting Standards and as adapted to comply with
the Lebanese General Accounting plan.
Without qualifying our opinion above, we draw attention to note 14 which
refers to the modification of the policy of calculating revenues from direct
services, as realized revenues are recorded in the income statement, while
unrealized sales of coupons are considered as deferred income.
/s/ Talal Abu GhaZaleh & Co.
AL DAR AUDIT BUREAU
(TALAL ABU-GHAZALEH & Co.)
Beirut on 30 June, 1994
F-40
<PAGE>
AUDITORS' REPORT
Messes. Partners of Aramex s.a.r.l.
Beirut--Lebanon
We have audited the accompanying balance sheet of Aramex s.a.r.l. as of
December 31, 1993 and the related statements of income and cash flow for the
year then ended. 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 audit.
We conducted our audit 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
misstatements. 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 the significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
1 With reference to note 5 to the financial statements clients Accounts
maintained in foreign currency were not translated at year end official
closing rates.
2 No Audited financial statements were issued for 1992.
In our opinion, except for the effect of notes 1 and 2 mentioned above on
the financial statements, the financial statements give a true and fair view of
the financial position of Aramex s.a.r.l. as of December 31, 1993 and the
results of its operations for the year then ended in accordance with Generally
Accepted Accounting Standards and as adapted to comply with the Lebanese General
Accounting Plan.
Beirut on September 1, 1994
/S/ TALAL ABU-GHAZALEH & CO.
Al Dar Audit Bureau
(Talal Abu-Ghazaleh & Co.)
F-41
<PAGE>
INDEPENDENT AUDITOR'S REPORT
ARAMEX INTERNATIONAL COURIER - TEXAS, LTD:
We have audited the accompanying balance sheets of Aramex International
Courier - Texas, LTD as of December 31, 1993, and the related statments of
income and partners' equity and statements of cash flows for the year then
ended. These financial statements are the responsibility of the partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audit 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, the financial statements referred to above present fairly,
in all material respects, the financial position of Aramex International Courier
- -Texas, LTD as of December 31, 1993, and the results of its operations and its
cash flows for the years then ended in conformity with generally accepted
accounting principles.
/s/ Frank E. Stanley III & Co.
March 24, 1994
Houston, Texas
F-42
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING
SHAREHOLDERS OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE
SECURITIES TO WHICH IT RELATES OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY ANY SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER
OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO
THE DATE HEREOF.
--------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
The Company's Organization................................................ 10
Risk Factors.............................................................. 12
Use of Proceeds........................................................... 19
Dilution.................................................................. 20
Dividend Policy........................................................... 20
Capitalization............................................................ 21
Selected Consolidated Financial Data...................................... 22
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 23
Business.................................................................. 28
Management................................................................ 39
Principal and Selling Shareholders........................................ 44
Certain Transactions...................................................... 45
Description of Capital Stock.............................................. 47
Stock Eligible for Future Sale............................................ 50
Certain Foreign Issuer Considerations..................................... 51
Taxation.................................................................. 52
Underwriting.............................................................. 58
Legal Matters............................................................. 60
Experts................................................................... 60
Additional Information.................................................... 63
Index to Financial Statements............................................. F-1
</TABLE>
------------------------
UNTIL JANUARY , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATIONS OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
1,000,000 SHARES
[LOGO]
[LOGO]
ARAMEX
INTERNATIONAL
LIMITED
COMMON STOCK
---------------------
PROSPECTUS
---------------------
COMMONWEALTH ASSOCIATES
JANUARY , 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following are the estimated expenses expected to be incurred by the
Company (on behalf of itself and the Selling Shareholders) in connection with
this offering.
<TABLE>
<CAPTION>
NATURE OF FEES AND EXPENSES AMOUNT(1)
- ------------------------------------------------------------------------------- -------------
<S> <C>
SEC Registration Fee........................................................... $ 2,962.12
NASD Filing Fee................................................................ 1,477.50
Nasdaq National Market Listing Fee............................................. 30,199.22
Accounting Fees and Expenses................................................... 110,000.00
Legal Fees and Expenses........................................................ 200,000.00
Blue Sky Qualification Fees and Expenses....................................... 15,000.00
Transfer Agent and Registrar Fees.............................................. 5,000.00
Printing Expenses.............................................................. 75,000.00
Miscellaneous.................................................................. 10,361.16
-------------
Total.................................................................... $ 450,000.00
-------------
-------------
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
(i) Section 98 of The Companies Act 1981 of Bermuda renders void any
provisions, whether contained in a company's bye-laws or in any contract between
the company and any officer thereof, exempting such officer from, or
indemnifying such officer against, any liability which by virtue of any rule of
law would otherwise attach to him in respect of any fraud or dishonesty of which
he may be guilty in relation of the company; provided, that a, company may
indemnify such officer against any liability incurred by him in defending any
proceedings, criminal or civil, in which judgment is given in such officer's
favor or in which he is acquitted or when relief is granted to such officer by
the Supreme Court of Bermuda as provided for by The Companies Act 1981.
(ii) Section 98A of The Companies Act 1981 of Bermuda provides that a
company may purchase and maintain insurance for the benefit of any officer of
the Company against any liability incurred by him in his capacity as an officer
of the company with respect to a violation of his duty to exercise the care,
diligence and skill that a reasonably prudent person would exercise in
comparable circumstances or indemnifying such officer in respect of any loss
arising or liability attaching to him by virtue of any rule of law in respect of
any negligence, default, breach of duty or breach of trust of which the officer
may be guilty in relation to the company or any subsidiary and that no provision
of the Companies Act 1981 shall render any such insurance policy void or
voidable. The registrant intends to obtain such an insurance policy prior to the
closing of the offering pursuant to this registration statement.
(iii) The Bye-laws of the registrant provide that the directors, secretary
and other officers for the time being of the Company and the liquidatory or
trustees (if any) for the time being acting in relation to any of the affairs of
the Company and every one of them, and their heirs, executors and
administrators, shall be indemnified and secured harmless out of the assets of
the Company from and against all actions, costs, charges, losses, damages and
expenses which they or any of them, their heirs, executors or administors, shall
or may incur or sustain by or by reason of any act done, concurred in or omitted
in or about the execution of their duty, or supposed duty, or in their
respective offices or trusts, and none of them shall be answerable for the acts,
receipts, neglects or defaults of the others of them or for joining in any
receipts for the sake of conformity, or for any bankers or other persons with
whom any moneys or effects belonging to the Company shall or may be lodged or
deposited for safe custody, or for the insufficiency or deficiency of
II-1
<PAGE>
any security upon which any moneys or or belonging to the Company shall be
placed out on or invested, or for any other loss, misfortune or damage which may
happen in the execution of their respective offices or trusts, or in relation
thereto, PROVIDED THAT this indemnity shall not extend to any matter in respect
of any fraud or dishonesty which may attach to any of said persons.
The Bye-laws also provide that the registrant may purchase insurance on
behalf of any person, including officers and directors, serving at the request
of the registrant against any liability asserted against such person.
The registrant intends to enter into agreements with its directors and
executive officers which provide for indemnification of such persons against
judgments, fines, penalties, charges and expenses suffered or incurred by them
in their capacity as representatives of the registrant. The agreements will
provide that, in certain circumstances, the registrant may reimburse or advance
funds to any person m respect of expenses incurred in advance of the final
disposition of any suit, claim or proceeding.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
(a) (i) On October 22, 1996, Aramex International, Limited, a Hong Kong
company ("Aramex Hong Kong"), and the Company's predecessor sold 195 shares (or
304,688 shares giving effect to the Reorganization) of common stock to Airborne
Freight Corporation for an aggregate consideration of $2 million. The shares
were offered in reliance on Section 4(2) of the Securities Act of 1933.
(ii) On December 13, 1996, Aramex International Limited subscribed for 100
shares of Aramex Hong Kong and each share of Aramex Hong Kong outstanding prior
to such subscription was converted by a special resolution of the shareholders
of Aramex Hong Kong into non-voting deferred shares.
(iii) Prior to the effective date of this Offering, Messrs. William Kingson,
Fadi Ghandour, Ms. Rula Ghandour and Airborne Freight Corporation subscribed for
an aggregate of 3,125,688 shares of Aramex Bermuda.
(b) There were no underwriters, brokers or finders employed in connection
with any of the transactions set forth in Item 15(a).
II-2
<PAGE>
INDEX TO EXHIBITS
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The exhibits listed in the following table have been filed as part of
this registration statement.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement**
3.1 Memorandum of Association of Aramex International Limited**
3.2 Bye-laws of Aramex International Limited**
4.1 Specimen of Common Stock Certificate**
4.2 Form of Underwriter's Warrant Agreement including form of Redeemable Warrant Certificate**
5.1 Opinion of Conyers, Dill & Pearman**
8.1 Opinion of Conyers, Dill & Pearman relating to tax matters**
8.2 Opinion of Orrick, Herrington & Sutcliffe LLP relating to tax matters**
10.1 Stock Option Plan**
10.2 Form of Agreement granting a license to use the "Aramex" name**
10.3 Form of Management Agreement**
10.4 Form of Agreement with each of the Company's Middle East (MED) Mail Order Catalog Companies**
10.5 Employment Agreement dated as of November 4, 1996 between Aramex International Limited and William
Kingson**
10.6 Employment Agreement dated as of November 4, 1996 between Aramex International Limited and Fadi
Ghandour**
10.7 Form of Indemnification Agreement, between Aramex International Limited and members of the Board of
Directors**
10.8 Stock Purchase Agreement dated as of October 22, 1996 between Aramex International Limited and Airborne
Freight Corporation**
10.9 Shareholders Agreement dated October 22, 1996 between William Kingson, Fadi Ghandour, Rula Ghandour and
Airborne Freight Corporation**
10.10 Amendment No. 1 to Shareholders Agreement dated as of December 11, 1996 between William Kingson, Fadi
Ghandour, Rula Ghandour and Airborne Freight Corporation as amended by Agreement dated as of December 12,
1996**
10.11 Nominee Shareholder Agreement dated January 1, 1995 by and between Raghida Ali Ghandour and Aramex
International Limited**
10.12 Nominee Shareholder Agreement dated January 1, 1995 by and between Fadi Ali Ghandour and Aramex
International Limited**
10.13 Amendment No. 1 to each of the Nominee Shareholder Agreements dated as of December 23, 1996.**
21.1 List of subsidiaries of Aramex International Limited**
23.1 Consent of Conyers, Dill & Pearman (included in Exhibit 5.1)**
23.2 Consent of Allen & Overy**
23.3 Consent of Arthur Andersen**
23.4 Consent of Khleif & Co.**
23.5 Consent of Mehta & Tengra
23.6 Consent of Dr. Mohamed Al-Amri & Co.**
23.7 Consent of Edward Isaacs & Co. LLP
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
23.8 Consent of Bish & Haffey PC**
23.9 Consent of Irene P. TSE, J.D.**
23.10 Consent of Talal Abu-Ghazaleh & Co.
23.11 Consent of Talal Abu-Ghazaleh & Co.
23.12 Consent of Frank E. Stanley III & Co.**
23.13 Consent of Orrick, Herrington & Sutcliffe LLP**
23.14 Supplemental Letter from Dr. Mohamed Al-Amri & Co.**
23.15 Consent of Ali Sharif Zu'bi & Sharif Ali Zu'bi**
24.1 Powers of attorney executed by certain officers and directors of the Registrant (included on signature
page)
</TABLE>
- ------------------------
** Previously filed.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned registrant hereby undertakes to provide to the Underwriters
at the closing specified in the underwriting agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under
II-4
<PAGE>
the Securities Act shall be deemed to be part of this registration statement as
of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form F-1, and has duly caused this Amendment
No. 4 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, on January 8,
1997.
ARAMEX INTERNATIONAL LIMITED
By: /s/ WILLIAM KINGSON
-----------------------------------------
William Kingson
CHAIRMAN OF THE BOARD
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 4 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
SIGNATURE TITLE OF CAPACITIES DATE
- ------------------------------ --------------------------- -------------------
/s/ WILLIAM KINGSON Chairman of the Board
- ------------------------------ (Principal Executive January 8, 1997
William Kingson Officer)
/s/ FADI GHANDOUR* President, Deputy Chairman
- ------------------------------ and January 8, 1997
Fadi Ghandour Chief Executive Officer
/s/ RULA GHANDOUR* Director
- ------------------------------ January 8, 1997
Rula Ghandour
Accounting and Finance
/s/ EMAD SHISTAWI* Manager
- ------------------------------ (Principal Financial and January 8, 1997
Emad Shistawi Accounting Officer)
*By:/s/ WILLIAM KINGSON
as attorney-in-fact
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement**
3.1 Memorandum of Association of Aramex International Limited**
3.2 Bye-laws of Aramex International Limited**
4.1 Specimen of Common Stock Certificate**
4.2 Form of Underwriter's Warrant Agreement including form of Redeemable Warrant Certificate**
5.1 Opinion of Conyers, Dill & Pearman**
8.1 Opinion of Conyers, Dill & Pearman relating to tax matters**
8.2 Opinion of Orrick, Herrington & Sutcliffe LLP relating to tax matters**
10.1 Stock Option Plan**
10.2 Form of Agreement granting a license to use the "Aramex" name**
10.3 Form of Management Agreement**
10.4 Form of Agreement with each of the Company's Middle East (MED) Mail Order Catalog Companies**
10.5 Employment Agreement dated as of November 4, 1996 between Aramex International Limited and William
Kingson**
10.6 Employment Agreement dated as of November 4, 1996 between Aramex International Limited and Fadi
Ghandour**
10.7 Form of Indemnification Agreement, between Aramex International Limited and members of the Board of
Directors**
10.8 Stock Purchase Agreement dated as of October 22, 1996 between Aramex International Limited and Airborne
Freight Corporation**
10.9 Shareholders Agreement dated October 22, 1996 between William Kingson, Fadi Ghandour, Rula Ghandour and
Airborne Freight Corporation**
10.10 Amendment No. 1 to Shareholders Agreement dated as of December 11, 1996 between William Kingson, Fadi
Ghandour, Rula Ghandour and Airborne Freight Corporation as amended by Agreement dated as of December
12, 1996**
10.11 Nominee Shareholder Agreement dated January 1, 1995 by and between Raghida Ali Ghandour and Aramex
International Limited**
10.12 Nominee Shareholder Agreement dated January 1, 1995 by and between Fadi Ali Ghandour and Aramex
International Limited**
10.13 Amendment No. 1 to each of the Nominee Shareholder Agreements dated as of December 23, 1996.**
21.1 List of subsidiaries of Aramex International Limited**
23.1 Consent of Conyers, Dill & Pearman (included in Exhibit 5.1)**
23.2 Consent of Allen & Overy**
23.3 Consent of Arthur Andersen**
23.4 Consent of Khleif & Co.**
23.5 Consent of Mehta & Tengra
23.6 Consent of Dr. Mohamed Al-Amri & Co.**
23.7 Consent of Edward Isaacs & Co. LLP
23.8 Consent of Bish & Haffey PC**
23.9 Consent of Irene P. TSE, J.D.**
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
23.10 Consent of Talal Abu-Ghazaleh & Co.
23.11 Consent of Talal Abu-Ghazaleh & Co.
23.12 Consent of Frank E. Stanley III & Co.**
23.13 Consent of Orrick, Herrington & Sutcliffe LLP**
23.14 Supplemental Letter from Mohamed Al-Amri**
23.15 Consent of Ali Sharif Zu'bi & Sharif Ali Zu'bi**
24.1 Powers of attorney executed by certain officers and directors of the Registrant (included on signature
page)
</TABLE>
- ------------------------
** Previously filed.
<PAGE>
[Letterhead of Mehta & Tengra]
EXHIBIT 23.5
8 JANUARY 1997
The Directors
Aramex International Limited
Regional Office
PO Box 960913
Amman
Jordan
Dear Sirs
ARAMEX (UK) INTERNATIONAL COURIER LTD AND ARAMEX INTERNATIONAL COURIER FRANCE
SARL
As Auditors to the above Companies, we hereby consent to the (i) use of our
reports dated 15 August 1994, 25 May 1995 and 18 April 1996 respectively (except
with respect to the cash flow statement as to which the date is 23 December
1996) for the years ended 31 December 1993, 31 December 1994 and 31 December
1995, respectively, relating to Aramex (U.K.) International Courier Ltd. and our
report dated 30 December 1996 for the year ended 31 December 1995 relating to
the financial statements of Aramex International Courier France Sarl, and (ii)
all references of our firm included in or made a part of the Registration
Statement on Form F-1 and related prospectus of Aramex International Limited.
We confirm that we are independent Auditors to Aramex (U.K.) International
Courier Ltd and to Aramex International Courier France Sarl within the meaning
of the Securities Act of 1933 and the applicable published rules and regulations
thereunder.
Yours faithfully
/s/ Mehta & Tengra
MEHTA & TENGRA
London, United Kingdom
<PAGE>
[LETTERHEAD OF EDWARD ISAACS & COMPANY LLP]
EXHIBIT 23.7
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the use in this Amendment No. 3 to Registration Statement No.
333-15639 of our reports dated March 30, 1996, February 23, 1996, March 14,
1995, May 4, 1995 and December 1, 1995 (relating to the financial statements of
Aramex International Courier, Ltd., and subsidiary, Aramex International Courier
of N.J., Inc., Aramex International Courier of Virginia, Inc., Aramex
International Courier-Texas, Ltd., Aramex International Courier of California
and Aramex International Courier-Texas, Ltd., respectively, not presented
separately herein) and to all references to our firm included in or made a part
of the Registration Statement on Form F-1 and related prospectus of Aramex
International Limited.
/s/ Edward Isaacs & Co. LLP
New York, New York
January 8, 1997
<PAGE>
[Letterhead of Talal Abu-Ghazaleh & Co.]
EXHIBIT 23.10
BEIRUT 8 JANUARY 1997
"TO WHOM IT MAY CONCERN"
As independent public accountants, we hereby consent to the use of our
report dated June 30, 1994 and to all references made to the mentioned Audited
Financial Statements.
We are independent auditors with respect to the ARAB AMERICAN EXPRESS
"Courier Company-LTD" and its Beirut Branch affiliates within the meaning of the
Securities ACT of 1933 and the applicable published rules and regulations
thereunder and conducted our audit in compliance with the International Auditing
Standards which are substantially consistent with U.S. generally accepted
auditing standards.
Talal Abu-Ghazaleh & Co.
/s/ Fouad Najem & Co.
- ---------------------------
Fouad Najem
Managing Partner
<PAGE>
[Letterhead of Talal Abu-Ghazaleh & Co.]
EXHIBIT 23.11
8 JANUARY 1997
"TO WHOM IT MAY CONCERN"
"As independent public accountants, we hereby consent to the use of our
report dated September 1, 1994 and to all references made to the mentioned
Audited Financial Statements.
We are independent auditors with respect to the Aramex S.A.R.L. (LEBANON)
and its affiliates within the meaning of the Securities Act of 1933 and the
applicable published rules and regulations thereunder and conducted our audit in
compliance with the International Auditing Standards which are substantially
consistent with U.S. generally accepted auditing standards."
Talal Abu-Ghazaleh & Co.
/s/ FOUAD NAJEM
Fouad Najem
Managing Partner
