TRISTAR AEROSPACE CO, 424B1, 1998-04-30

TRISTAR AEROSPACE CO
424B1, 1998-04-30
MACHINERY, EQUIPMENT & SUPPLIES

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<PAGE>
FILED PURSUANT TO RULE 424(b)(1)

REGISTRATION FILE NO. 333-46335

13,276,858 SHARES

[LOGO]

TRISTAR AEROSPACE CO.

COMMON STOCK
-----------

Of the 13,276,858 shares of Common Stock (the "Common Stock") of TriStar
Aerospace Co. (the "Company") offered hereby, 11,276,858 shares are being
offered in the United States and Canada (the "U.S. Offering") and 2,000,000
shares are being offered in a concurrent international offering outside the
United States and Canada (the "International Offering," and together with the
U.S. Offering, the "Offering"). The initial public offering price and
underwriting discount per share for the U.S. Offering and the International
Offering are identical. See "Underwriting." All of the 13,276,858 shares of
Common Stock offered hereby are being sold by certain stockholders of the
Company (the "Selling Stockholders"). See "Principal and Selling Stockholders."
The Company will not receive any of the proceeds from the sale of shares of
Common Stock in the Offering. See "Underwriting" for a discussion of the factors
considered in determining the initial public offering price. The Common Stock
has been approved for listing on the New York Stock Exchange under the symbol
"TSX."
--------------

SEE "RISK FACTORS" BEGINNING ON PAGE 9 HEREOF FOR A DISCUSSION OF CERTAIN
MATTERS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
-------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
PRICE UNDERWRITING PROCEEDS TO
TO DISCOUNTS AND SELLING
PUBLIC COMMISSIONS STOCKHOLDERS(1)
<S> <C> <C> <C>
Per share.......................................... $16.00 $1.00 $15.00
Total(2)........................................... $212,429,728 $13,276,858 $199,152,870
</TABLE>

(1) The Selling Stockholders will bear all of the expenses of registration and
distribution of the shares of Common Stock offered hereby.

(2) Certain stockholders of the Company have granted the Underwriters a 30-day
option to purchase up to 1,991,276 additional shares of Common Stock solely
to cover over-allotments, if any. To the extent that the options are
exercised, the Underwriters will offer the additional shares to the public
at the Price to Public shown above. If such options are exercised in full,
the total Price to Public, Underwriting Discounts and Commissions and
Proceeds to Selling Stockholders will be $244,290,144, $15,268,134 and
$229,022,010, respectively. See "Underwriting."
--------------

The shares of Common Stock are offered by the several U.S. Underwriters,
subject to prior sale, when, as and if delivered to and accepted by them, and
subject to the right of the U.S. Underwriters to reject any order in whole or in
part. It is expected that delivery of the shares of Common Stock will be made at
the offices of BT Alex. Brown Incorporated, Baltimore, Maryland, on or about May
5, 1998.

BT ALEX. BROWN SBC WARBURG DILLON READ INC.

THE DATE OF THIS PROSPECTUS IS APRIL 30, 1998.
<PAGE>
Map of TriStar Aerospace Operations and Programs

[Global map shows the location of the Company's headquarters, central
distribution facilities and customer facilities where the Company maintains Just
in Time programs or has sales and agent representatives.]

The Company intends to distribute to its stockholders annual reports
containing financial statements audited by its independent public accountants
and will make available copies of quarterly reports for the first three quarters
of each fiscal year containing unaudited financial statements.
--------------

CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SPECIFICALLY, THE UNDERWRITERS MAY OVER-ALLOT IN CONNECTION WITH THE OFFERING
AND MAY BID FOR AND PURCHASE SHARES OF THE COMMON STOCK IN THE OPEN MARKET. FOR
A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

2
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND THE FINANCIAL STATEMENTS AND
NOTES THERETO APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS THE CONTEXT
OTHERWISE REQUIRES, REFERENCES IN THIS PROSPECTUS TO "THE COMPANY" OR "TRISTAR"
REFER COLLECTIVELY TO TRISTAR AEROSPACE CO. AND ITS SUBSIDIARIES. UNLESS
OTHERWISE INDICATED, THE INFORMATION CONTAINED IN THIS PROSPECTUS (I) ASSUMES NO
EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION AND (II) GIVES EFFECT TO A
158-FOR-1 STOCK SPLIT OF THE COMMON STOCK. THIS PROSPECTUS CONTAINS, IN ADDITION
TO HISTORICAL INFORMATION, FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
DISCUSSED HEREIN. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES
INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN THE SECTIONS ENTITLED "RISK
FACTORS," "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS," "BUSINESS" AND ELSEWHERE IN THIS PROSPECTUS.

THE COMPANY

GENERAL

The Company is both a leading distributor of aerospace fasteners, fastening
systems and related hardware (collectively, "aerospace hardware") and a leading
provider of customized inventory management services to original equipment
manufacturers ("OEMs") of aircraft and aircraft components, to commercial
airlines and to aircraft maintenance, repair and overhaul ("MRO") facilities,
based on annual sales by the Company and its competitors in the aerospace
hardware industry. While approximately 59% of the Company's revenues for fiscal
1997 were derived from traditional distribution sales and services
("conventional sales"), a substantial and growing percentage of the Company's
revenues are derived from sales of aerospace hardware pursuant to long-term
inventory management agreements under which TriStar performs a wide variety of
value-added services (commonly referred to as "JIT services"). For fiscal 1997,
JIT revenues represented approximately 41% of the Company's total revenues. The
Company's JIT services are provided through comprehensive and flexible
outsourcing programs under which the Company provides some or all of the
material management functions necessary to procure and manage aerospace hardware
for its customers. The Company derives income from its JIT services principally
through margins earned on products sold under its JIT agreements. The Company
believes that it was a pioneer of JIT services in the aerospace hardware
industry and that today the Company is a leading provider of inventory
management services to this industry. TriStar currently provides JIT services
under long-term agreements to a number of leading aerospace and aircraft-related
companies including, among others, Boeing (including former McDonnell Douglas
and Rockwell International facilities), Northrop Grumman, Bell Helicopter,
Gulfstream, United Airlines, British Airways and Federal Express. Through its
JIT programs and conventional sales, the Company processed over 950,000
transactions involving over 78,000 stockkeeping units ("SKUs") in fiscal 1997,
resulting in over $140 million of sales to over 2,000 customers.

Historically, the procurement and management of aerospace hardware by
aircraft OEMs, airlines and MRO facilities have been highly inefficient due to
certain industry characteristics including (i) the high number of SKUs (in
excess of 250,000) used in the manufacture and repair of aircraft, (ii) the cost
structures of aerospace hardware manufacturers, which favor long production runs
that require large quantity purchases by end users, (iii) the limited capacity
of aerospace hardware manufacturers during cyclical upturns, which creates long
lead times for products and (iv) the very low per-unit costs of aerospace
hardware parts, which make it uneconomical for end users to manage aerospace
hardware inventories in-house. Multiple SKU requirements, large purchase
quantities and long lead times create inefficiencies in the supply chain for
aerospace hardware, resulting in shortages of critical parts, which lead to
costly production stoppages for end users and the over-production of
non-critical parts requiring increased working capital investment by end users.
In addition, many end users incur significant annual expenses for personnel,
facilities and systems necessary to manage the complexities associated with the
procurement and management of their aerospace hardware requirements. In many
instances, these process costs exceed the low per-unit costs of the parts
themselves.

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TriStar's JIT services are designed to provide solutions for its customers
by overcoming the inefficiencies inherent in the supply chain for aerospace
hardware. Under the terms of its JIT agreements, the Company's personnel,
processes and management information systems enable customers to outsource all
or a portion of the planning, purchasing, receiving, documentation, inspection,
storage, shipment, quality assurance and other functions associated with the
procurement and management of aerospace hardware. The Company's substantial
experience in developing and implementing JIT services enables it to create
programs specifically tailored to the needs of its customers. In many cases, the
Company assigns its own trained personnel to work on-site at the customer's
facilities. By outsourcing the procurement and management of aerospace hardware
to TriStar, the Company's customers can realize significant cost savings and
production efficiencies principally as a result of (i) the elimination of
process costs relating to the planning, purchasing and expediting of aerospace
hardware, (ii) a reduction in carrying costs, including labor, financing and
overhead charges, (iii) a reduction in parts shortages, which can lead to costly
production line stoppages and (iv) a reduction in product costs.

TriStar's leading market position as a provider of value-added inventory
management services provides it with large amounts of information on its
customers' usage patterns with respect to individual aerospace hardware parts.
This information is recorded electronically through the Company's order and
fulfillment processes. The Company compiles usage data from each of its
customers and analyzes the data in the context of historical usage trends to
forecast aggregate and customer-specific demand for individual aerospace
hardware parts. The Company uses these demand forecasts when ordering aerospace
hardware to ensure efficient and reliable delivery to its customers while
optimizing its own inventory. In addition, TriStar intends to utilize these
forecasts to provide its primary suppliers with reliable demand data to allow
them to better schedule their manufacturing processes.

Recognizing the benefits that outsourcing could provide to end users of
aerospace hardware, in 1990 the Company's predecessor developed new sales
efforts, operating processes and systems to provide these services. By 1991 it
had secured its first JIT agreement with Rockwell International, and by the end
of 1993 had secured JIT agreements with Grumman, Beech Aircraft and Gulfstream.
Today the Company has expanded its JIT programs to include 19 agreements with 10
companies servicing over 25 facilities in the United States, Canada, France and
England. In addition, JIT revenues have grown at a compound annual rate of 51.9%
from January 1, 1996 through September 30, 1997 to $57.6 million, representing
approximately 41% of the Company's total revenues for fiscal 1997. Strong growth
in the Company's JIT programs enabled it to increase revenues at a time when the
aerospace industry was experiencing a significant downturn in the early and
mid-1990's. The Company believes that OEMs, airlines and MRO facilities will
continue to outsource their aerospace hardware procurement and management needs
in order to focus on their core businesses and reduce costs. The Company
believes that its status as a leading provider of JIT services favorably
positions it to benefit from this trend and to increase its share of the
aerospace hardware market.

COMPANY STRENGTHS

The Company believes it has a number of core strengths which have resulted
in consistent growth of sales and earnings despite the historically cyclical
nature of the aerospace industry. The principal factors contributing to
TriStar's emergence as a market leader are:

- LEADING PROVIDER OF JIT SERVICES. The Company's long-term JIT agreements
provide it with the following competitive advantages: (i) JIT programs
provide TriStar with growth opportunities which are not directly tied to
the aerospace industry cycle, (ii) JIT programs enable TriStar to
aggregate purchases of hardware across multiple customers, thereby
reducing acquisition costs and improving margins, (iii) JIT programs
provide TriStar with reliable real-time data regarding the usage patterns
of aerospace hardware across a wide customer base, allowing the Company to
better forecast and manage its aerospace hardware needs and those of its
customers, (iv) JIT programs typically result in the Company receiving
additional conventional sales opportunities due to its status as a
preferred

4
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supplier to the customer and (v) JIT programs integrate the Company with
its customers' operations, which management believes creates significant
switching costs for its customers.

- DATABASE OF HISTORICAL USAGE INFORMATION. TriStar has developed an
in-depth database of its customers' historical usage patterns relating to
all of the aerospace hardware in the Company's inventory. By continually
analyzing this information, the Company is able to gain insight into the
likely future usage patterns of each particular part it distributes,
allowing the Company to better forecast and manage its own aerospace
hardware needs as well as those of its customers. The Company believes
this usage information and its experience in managing customers'
inventories add stability to its JIT customer base by providing a
foundation of knowledge unique to its customers and unmatched by its
competitors.

- QUALITY ASSURANCE AND RELIABILITY. The Company's quality assurance
programs include physical inspection of substantially all incoming
shipments as well as electronic storage of manufacturers' certifications
to allow for instant traceability. In addition, the Company's processes
and systems have been designed to ensure the timely and consistent
delivery of products and services, which have allowed the Company to
establish a reputation for reliability with its customers.

- SIGNIFICANT ECONOMIES OF SCALE RELATING TO SIZE. As one of the largest
aerospace hardware distributors, TriStar makes significant annual
purchases of inventory on behalf of its many customers. As a result, the
Company believes that it is one of the largest customers of many of its
suppliers, allowing it to take advantage of price reductions associated
with large volume purchases.

- STRONG RELATIONSHIPS WITH LEADING FASTENER MANUFACTURERS. TriStar has
long-established relationships with substantially all of the major
suppliers of aerospace hardware, including Fairchild, Huck, SPS, Kaynar
and Hi-Shear. TriStar has been designated an Authorized Distributor by
more than 65 manufacturers of aerospace hardware, including most of the
major fastener manufacturers.

GROWTH STRATEGY

Management has identified the following strategies which it believes provide
specific opportunities for growth:

- JIT SERVICES EXPANSION. The Company's strong growth has been generated
internally and has been due in large part to the success of its JIT
programs. The Company intends to continue to expand its JIT business by
(i) increasing the number of SKUs, services and products offered and the
number of facilities covered under existing JIT agreements and (ii)
targeting additional JIT customers, including airlines, air cargo
companies, MRO facilities and smaller OEMs.

- INCREASED AFTERMARKET PENETRATION. The Company intends to increase its
penetration of non-OEM segments of its marketplace, including the airline
and MRO facility segments, by (i) further expanding its product offerings
in response to the inventory needs of participants in these market
segments, (ii) continuing to tailor its JIT services to meet the specific
demands of these participants, and (iii) increasing its sales and
marketing efforts to these participants.

- INTERNATIONAL EXPANSION. The Company plans to expand its presence and
increase its market penetration in Europe and Asia through expansion of
its product offerings to include additional European standard (i.e.,
Airbus) parts. The Company believes its increased presence in Europe, as a
result of a recent supply agreement with Aerospatiale, a member of the
Airbus consortium, will help to position the Company as a supplier of
aerospace hardware to the Airbus aftermarket and assist in attracting
other European aerospace customers. The Company also plans to pursue
strategic alliances in the Pacific Rim and Asia.

- SUPPLY CHAIN MANAGEMENT. The Company acts as a conduit between its
customers and suppliers to minimize imbalances in the supply and demand of
aerospace hardware. By utilizing its historical

5
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database of customer usage patterns to provide manufacturers with demand
forecasts, the Company believes it can alleviate a portion of the supply
chain disruptions, usually associated with the cyclicality of the
aerospace industry, which have adversely affected the Company's customers
and suppliers in the past.

- STRATEGIC ACQUISITIONS. The aerospace hardware distribution industry is
comprised of a small number of large companies, such as TriStar, and
numerous small, local and regional businesses. The Company believes that
opportunities exist to consolidate the aerospace hardware industry through
strategic acquisitions and to broaden its product line and enter new
and/or under-penetrated markets through the acquisition of certain of its
competitors.

HISTORY OF THE COMPANY; SALE OF COMMON STOCK BY MAJORITY STOCKHOLDER

The Company was incorporated under the name "Maple Leaf Aerospace, Inc." in
Delaware on August 21, 1996 by Odyssey Partners, L.P. ("Odyssey") to acquire the
outstanding stock of Tri-Star Aerospace, Inc. (the "Predecessor") and the assets
of the Aviall Aerospace business unit of Aviall Services, Inc. and of Aviall
(Canada) Ltd. (together "Aviall Aerospace"). Founded in 1973, the Predecessor
was a leading distributor of aerospace hardware products and a pioneer of JIT
services in the aerospace hardware industry. The annual revenues of the
Predecessor increased from $14.3 million in 1985 to $65.6 million in 1995. In
addition, as a result of its JIT programs, the Predecessor experienced revenue
growth each year from 1990 through 1995 despite an economic downturn in the
aerospace industry. Aviall Aerospace was a distributor of aerospace hardware to
commercial and military aircraft OEMs. The acquisition of Aviall Aerospace
provided the Company an expanded product line and access to a larger customer
base. On February 24, 1998, the Company changed its name to "TriStar Aerospace
Co."

The Company's executive offices are located at 2527 Willowbrook Road,
Dallas, Texas 75220-4420, and its telephone number is (214) 956-3400.

Odyssey is currently the record owner of 69.9% of the outstanding Common
Stock of the Company. In connection with its previously announced dissolution
and liquidation, Odyssey intends to sell the Common Stock of the Company owned
by it in the Offering. Odyssey will receive an estimated $157.3 million of the
$199.2 million of aggregate proceeds to be received by the Selling Stockholders,
net of underwriting discounts and commissions, as a result of the Offering
($174.0 million of the $229.0 million of aggregate proceeds if the Underwriters'
over-allotment option is exercised in full).

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Selling Stockholders:
U.S. Offering......................................... 11,276,858
International Offering................................ 2,000,000

Common Stock outstanding after the Offering............. 16,787,974 shares(1)

Use of proceeds......................................... The Company will not receive any
of the proceeds from the sale of
shares of Common Stock in the
Offering, all of which proceeds
will be received by the Selling
Stockholders.

New York Stock Exchange symbol.......................... TSX
</TABLE>

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

(1) Excludes (i) 2,958,152 shares of Common Stock issuable upon exercise of
outstanding options under the Company's 1996 Stock Option Plan, all of which
will be exercisable following consummation of the Offering, and (ii) shares
reserved for issuance under the Company's proposed stock option plan. See
"Management--Stock Option Plans."

6
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SUMMARY HISTORICAL FINANCIAL AND OPERATING DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

THE COMPANY AND THE PREDECESSOR(1)

<TABLE>
<CAPTION>
PREDECESSOR(2)
-------------------------------------------- COMPANY
-----------------------------------------------
PERIOD PERIOD YEAR
YEAR ENDED DECEMBER 31, ENDED ENDED ENDED
--------------------------------- SEPT. 19, SEPT. 30, SEPT. 30,
1994 1995 1996 1996(3) 1997(4)
--------- --------- --------- --------- ---------- THREE MONTHS ENDED
DECEMBER 31,
------------------------
1993 1996 1997
----------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues...................... $ 43,135 $ 50,725 $ 65,579 $ 55,186 $ 3,555 $ 140,719 $ 30,966 $ 42,635
Gross profit.................. 14,583 14,905 18,816 15,696 1,113 44,326 9,958 13,219
Selling, general and
administrative.............. 9,773 10,785 12,488 8,897 463 21,048 4,447 6,040
Compensation expense of stock
options..................... -- -- -- -- -- -- -- 354
Operating income.............. 4,810 4,120 6,328 6,799 650 23,278 5,511 6,825
Interest expense.............. 1,682 2,017 2,251 1,512 184 5,263 1,547 1,204
Provision for income
taxes(5).................... -- -- -- -- 177 6,559 1,520 2,150
Net income.................... 3,175 2,200 4,104 5,306 289 11,603 2,444 3,522
Earnings per share:
Basic....................... $ .02 $ 0.73 $ 0.16 $ .21
Diluted..................... .02 0.70 0.16 .19
Weighted average shares
outstanding:
Basic....................... 15,118 15,897 15,118 16,583
Diluted..................... 15,118 16,509 15,118 18,158
</TABLE>

<TABLE>
<CAPTION>
PREDECESSOR(2)
--------------------------------- COMPANY
-----------------------------------------------
DECEMBER 31, SEPTEMBER 30,
--------------------------------- ---------------------
1994 1995 1996(6) 1997(4)
--------- --------- --------- ---------- DECEMBER 31,
------------------------
1996 1997
1993 ----------- -----------
----------- (UNAUDITED) (UNAUDITED)
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Current assets............. $ 50,758 $ 50,376 $ 58,962 $ 86,611 $ 99,680 $ 89,178 $ 110,151
Total assets............... 54,408 51,504 59,970 97,216 110,235 99,405 120,668
Current liabilities........ 11,044 10,078 33,548 22,308 28,076 23,162 31,633
Long-term debt, less
current maturities....... 20,266 16,929 -- 55,500 49,000 53,500 52,000
Stockholders' equity....... 21,704 23,103 25,027 19,408 33,159 22,743 37,035
</TABLE>

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

(1) The financial information for the Company is not comparable to the financial
information of the Predecessor due to the acquisition of Aviall Aerospace,
the impact of applying the purchase method of accounting to the acquisitions
of Predecessor and Aviall Aerospace and the change in tax status of the
Predecessor from a Subchapter S corporation to a C corporation.

(2) Tri-Star Aerospace, Inc. and subsidiary and affiliate.

(3) Reflects the results of operations for the 11 day period ended September 30,
1996.

(4) Following the acquisitions of the Predecessor and Aviall Aerospace, the
Company changed the fiscal year end of the Predecessor from December 31 to
September 30.

(5) The Predecessor's stockholders elected to be taxed under the provisions of
Subchapter S of the Internal Revenue Code of 1986, as amended. As a
Subchapter S corporation, the earnings of the Predecessor were taxable to
the individual stockholders, and therefore, the Predecessor did not record a
provision for income taxes.

(6) The amounts shown as of September 30, 1996 reflect the consolidated balance
sheet of the Company following the acquisitions of the Predecessor and
Aviall Aerospace. The acquisitions have been accounted for under the
purchase method of accounting and, accordingly, the consolidated balance
sheet reflects the results of combined operations from the acquisition date.

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AVIALL AEROSPACE

<TABLE>
<CAPTION>
PERIOD
YEAR ENDED DECEMBER 31, ENDED
--------------------------------- SEPT. 19,
1994 1995 1996(1)
1993 --------- --------- ---------
-----------
(UNAUDITED)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.......................................................... $ 11,884 $ 17,229 $ 25,580 $ 23,085
Gross profit...................................................... 3,156 2,945 5,802 5,035
Selling, general and administrative(2)............................ 5,803 5,654 5,884 4,730
Operating income (loss)........................................... (2,647) (2,709) (82) 305

BALANCE SHEET DATA:
Current assets.................................................... $ 8,357 $ 6,680 $ 17,022 $ 20,528
Total assets...................................................... 9,869 8,011 18,345 21,790
Current liabilities............................................... 535 2,778 5,145 3,195
Long-term debt.................................................... -- -- -- --
Intercompany debt................................................. 9,334 5,233 13,200 18,595
</TABLE>

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

(1) Aviall Aerospace was acquired by the Company on September 19, 1996 and
accordingly, the operating results of Aviall Aerospace have been included in
the Company's results of operations since September 20, 1996.

(2) During the periods presented, Aviall Aerospace was not operated or accounted
for as a separate entity. As a result, intercompany allocations of certain
expense items from Aviall Services, Inc., including corporate overhead, were
reflected in the financial statements of Aviall Aerospace.

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RISK FACTORS

IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, THE
FOLLOWING FACTORS SHOULD BE CAREFULLY CONSIDERED IN EVALUATING AN INVESTMENT IN
THE COMMON STOCK.

DEPENDENCE ON COMMERCIAL AIRCRAFT INDUSTRY. The worldwide commercial
aircraft industry is the primary market for the products distributed by the
Company and the Company's services. Historically, demand from this industry has
been subject to cyclical fluctuations, with orders from OEMs and other customers
for aerospace hardware typically increasing or decreasing in advance of
corresponding changes in the deliveries of new aircraft. The demand for new
aircraft historically has been closely related to the financial performance of
airlines, which in turn has been closely related to general economic conditions
and changes in business cycles. Changes in the commercial airline market
resulting in a reduction in the rate of future aircraft deliveries, including
cancellations or deferrals of scheduled deliveries, could have a material
adverse effect on the Company's results of operations and financial condition.

CUSTOMER CONCENTRATION; DEPENDENCE ON JIT AGREEMENTS. A significant portion
of the Company's business is dependent upon a limited number of large
manufacturers of commercial aircraft and defense products. Direct sales to
Boeing and Northrop Grumman, for example, accounted for approximately 24.8%
(including 11.3% from former McDonnell Douglas facilities and 7.1% from former
Rockwell International facilities) and 11.7% of the Company's fiscal 1997 net
sales, respectively. In addition, under the terms of several of the Company's
JIT agreements, the customer may terminate the agreement, subject to prior
notice and/or other provisions, before the expiration of such agreement. The
termination or renegotiation of any such agreement or the loss of one or more
significant customers for any reason could have a material adverse effect on the
Company's results of operations and financial condition. Furthermore, because of
the relatively small number of customers for certain of the Company's products,
such customers may be able to influence the Company's prices and other terms of
sale with respect to such products.

AVAILABILITY OF HARDWARE. As is customary in the aerospace hardware
industry, the Company does not currently have long-term contracts with any of
its suppliers. Any material disruption in the Company's sources of supply,
particularly of the most commonly sold items, could have a material adverse
effect upon the Company's results of operations and financial condition.

GROWTH STRATEGY IMPLEMENTATION; ABILITY TO MANAGE GROWTH. The Company's
growth strategy includes (i) expanding its JIT services, (ii) expanding its
presence in non-OEM segments of the marketplace, (iii) increasing its
international business, (iv) further implementing supply chain management
initiatives, and (v) exploring acquisition opportunities. The Company's ability
to execute its growth strategy will depend on a number of factors, including
existing and emerging competition, the ability to maintain profit margins in the
face of competitive pressures, the continued recruitment, training and retention
of employees, the strength of demand for its services and the availability of
capital to support its growth.

Conducting business outside of the United States is subject to various
risks, including changing economic and political conditions in the United States
and abroad, major work stoppages, currency fluctuations, armed conflicts and
unexpected changes in United States and foreign laws relating to tariffs,
exchange controls, trade restrictions, transportation regulations, foreign
investments and taxation. The Company has no control over most of these risks
and may be unable to anticipate changes in international economic and political
conditions and, therefore, may be unable to alter its business practices in time
to avoid the adverse effect of any such changes.

From time to time, the Company may evaluate or pursue opportunistic
acquisitions of all or portions of other independent aerospace hardware and
service providers whose assets or product lines would complement or expand the
Company's existing operations. There can be no assurance that the Company will
succeed in identifying appropriate acquisition candidates, arranging financing
for acquisitions, consummating acquisitions on satisfactory terms or efficiently
integrating acquired businesses.

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<PAGE>
To manage anticipated growth, the Company must continuously evaluate the
adequacy of its existing resources, systems and processes, including, among
others, its management resources, management information systems and financial
and accounting systems. There can be no assurance that management will
adequately anticipate all of the changing demands that growth will impose on the
Company's resources, systems and processes. Any failure to adequately anticipate
and respond to such changing demands could have a material adverse effect on the
Company's growth strategy. Any such adverse effect could result in the Company's
growth and anticipated results of operations being less than management's
expectations. See "Business--Growth Strategy."

FLUCTUATIONS IN OPERATING RESULTS. The Company's operating results are
affected by many factors, including the timing of orders from large customers,
the timing of expenditures for employees hired in anticipation of future sales
and the mix of customers purchasing products in a particular period. Any of
these factors, or any cancellations, reductions or delays in orders by a
significant customer or group of customers, could have a material adverse effect
on the Company's results of operations and financial condition.

DEPENDENCE ON KEY PERSONNEL. The continued success of the Company is
dependent to a significant degree upon the services of its executive officers
and upon the Company's ability to attract and retain qualified personnel
experienced in the various phases of the Company's business. Loss of the
services of such employees, particularly Quentin Bourjeaurd, President and Chief
Executive Officer of the Company, and Charles Balchunas, Chief Operating Officer
of the Company, could adversely affect the operations of the Company. The
Company has entered into executive employment agreements with a number of its
key personnel, including Messrs. Bourjeaurd and Balchunas. See
"Management--Employment Agreements." The Company does not maintain key man life
insurance on the lives of any of its executive officers or key employees.

COMPETITION. Numerous companies manufacture and/or distribute fasteners,
fastening systems and related components that compete with the products the
Company distributes. Certain of these competitors have greater financial
resources than the Company. There can be no assurance that competitive pressures
in any of the markets to which the Company distributes products will not have a
material adverse effect on the Company's results of operations and financial
condition. See "Business--Competition."

DEPENDENCE ON MANAGEMENT INFORMATION SYSTEMS; YEAR 2000 COMPLIANCE. The
Company believes that the successful operation of the Company's business is
dependent in part on its computerized inventory management, order processing and
distribution systems and other computer software programs and operating systems.
These systems will require modification, improvement or replacement as the
Company grows. The Company may, from time to time, experience delays,
complications or expenses in integrating and operating these systems, any of
which could have a material adverse effect upon the Company's results of
operations and financial condition.

The Company has been evaluating its computer software programs and operating
systems to identify any as to which there may be a "Year 2000" issue and is
currently taking steps to modify or replace its systems that are not Year 2000
compliant. While the Company believes that it will be able to achieve such Year
2000 compliance through a combination of modification and/or replacement of its
existing programs and systems, no assurance can be given that these efforts will
be successful or that such efforts will be completed on a timely basis. The
failure to successfully complete such implementation on a timely basis may cause
interruptions in operations which could have a material adverse effect on the
Company's results of operations and financial condition. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--Year
2000 Compliance."

PRODUCT LIABILITY; CLAIMS EXPOSURE. The nature of the products distributed
by the Company exposes it to potential liabilities resulting from the failure of
an airframe, aircraft engine or other aircraft part manufactured with aerospace
hardware supplied by the Company. The Company maintains product

10
<PAGE>
liability insurance to protect it from such liabilities; however, no assurance
can be given that claims will not arise in the future or that such insurance
coverage will be adequate. Additionally, there can be no assurance that
insurance coverage can be maintained in the future at an acceptable cost. Any
such liability not covered by insurance, or for which third party
indemnification is not available, could have a material adverse effect on the
Company's results of operations and financial condition. See "Business--Product
Liability and Legal Proceedings."

GOVERNMENT REGULATION. While the Company's business is not currently
regulated, the aerospace hardware it distributes must be accompanied by
documentation which enables its customers to comply with applicable regulatory
requirements. There can be no assurance that new and more stringent government
regulations will not be adopted in the future or that any such new regulations,
if enacted, would not have a material adverse effect on the Company's results of
operations and financial condition.

EMPLOYEE RELATIONS. Although none of the Company's employees is subject to
a collective bargaining agreement, the Company may be subject to future
unionization efforts. On March 25, 1998, the Company received a notice from the
National Labor Relations Board in connection with a petition filed by a union
organizer seeking a vote of the Company's warehouse employees for the Transport
Workers Union of America to organize and represent such employees for collective
bargaining purposes. The unionization of the Company's workforce could result in
higher employee compensation and working condition demands that could increase
the Company's operating costs or constrain its operating flexibility. See
"Business-- Employees."

NO PRIOR PUBLIC 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 after the Offering or,
if a trading market does develop, that it will be sustained or that shares of
Common Stock could be resold at or above the initial public offering price. The
initial public offering price of the Common Stock offered hereby was determined
through negotiations among the Company, the Selling Stockholders and the
representatives of the Underwriters and may not be an indication of the actual
value of the stock or of the price at which the Common Stock will actually trade
after the Offering. After completion of the Offering, the market price of the
Common Stock could be subject to significant variation due to fluctuations in
the Company's operating results, changes in earnings estimates by securities
analysts, the degree of success the Company achieves in implementing its
business strategy, changes in business or regulatory conditions affecting the
Company, its customers or its competitors, and other factors. In addition, the
financial markets may experience volatility that affects the market prices of
companies in ways unrelated to the operating performance of such companies, and
such volatility may adversely affect the market price of the Common Stock.

BENEFITS OF OFFERING TO EXISTING STOCKHOLDERS. Odyssey is selling an
aggregate of 10,484,707 shares of Common Stock in the Offering (11,598,780
shares if the Underwriters' over-allotment option is exercised in full) in
connection with the previously announced dissolution and liquidation of Odyssey.
Odyssey will receive an estimated $157.3 million in proceeds from the sale of
such shares based upon the initial public offering price of $16.00 per share and
after deducting the estimated underwriting discounts and commissions, reflecting
a net gain of $13.53 per share over the original cost of such shares to Odyssey
and an aggregate net gain of approximately $141.9 million. In the event the
Underwriters' over-allotment option is exercised in full, Odyssey will sell all
of the shares of Common Stock currently owned of record by it. Stephen Berger,
Muzzafar Mirza and William Hopkins, members of the Company's Board of Directors,
are partners or principals of Odyssey and will be resigning from the Company's
Board of Directors as soon as practicable after consummation of the Offering. In
addition, several other Selling Stockholders presently serve or formerly served
as directors and/or executive officers of the Company, including Richard P.
Small, who will also resign from his position as Vice Chairman of the Company's
Board of Directors as soon as practicable after consummation of the Offering.
See "Principal and Selling Stockholders" and "Management--Composition of the
Board of Directors after the Offering."

11
<PAGE>
The existing stockholders of the Company will receive certain benefits from
the sale of the Common Stock offered hereby. The Offering will establish a
public market for the Common Stock and will provide increased liquidity to the
existing stockholders for the shares of Common Stock they will own after the
Offering, subject to certain limitations. See "Shares Eligible For Future Sale."
Furthermore, the consummation of the Offering will cause certain of the stock
options held by management of the Company to vest and become immediately
exercisable. See "Management--Executive Compensation" and "--Stock Option
Plans--1996 Stock Option Plan."

IMMEDIATE AND SUBSTANTIAL DILUTION. The initial public offering price of
the Common Stock will be substantially higher than the net tangible book value
per share of Common Stock. Accordingly, purchasers of Common Stock in the
Offering will experience immediate and substantial dilution. See "Dilution."

SHARES ELIGIBLE FOR FUTURE SALE. Future sales of shares of Common Stock by
existing stockholders (including shares issued upon exercise of stock options),
or the perception that such sales could occur, could adversely affect prevailing
market prices for the Common Stock. Upon completion of the Offering, the Company
will have outstanding 16,787,974 shares of Common Stock. Of such shares, the
13,276,858 shares sold in the Offering will be freely tradeable without
restriction or limitation under the Securities Act of 1933, as amended (the
"Securities Act"), unless purchased by "affiliates" of the Company, as that term
is defined in Rule 144 under the Securities Act. Subject to Rule 144 under the
Securities Act (as currently in effect), after expiration of the lock-up periods
described below (or earlier with the consent of the representative of the
Underwriters), the remaining 3,511,116 shares will become eligible at various
times for sale in the public marketplace. In addition, upon completion of the
Offering, 2,958,152 shares of Common Stock will be issuable upon exercise of
outstanding options under the Company's stock option plans and additional shares
of Common Stock will be reserved for issuance under such plans. See
"Management--Stock Option Plans."

To the extent that the Underwriters' over-allotment option is not exercised
fully, the Company has agreed to file a registration statement on Form S-8
following the expiration of the lock-up periods described below covering any
shares subject to options granted to G. Bruce McInnis, one of the Selling
Stockholders, under the Company's 1996 Stock Option Plan. Shares registered
under such registration statement which are issued upon the exercise of options
will be freely transferable in the open market.

The Company, its directors and executive officers and current stockholders
have agreed that, for a period of 180 days after the consummation of the
Offering, they will not, without the prior written consent of BT Alex. Brown
Incorporated, offer, sell or otherwise dispose of, any shares of Common Stock.
See "Underwriting" and "Shares Eligible for Future Sale."

CERTAIN CHARTER, BYLAW AND STATUTORY ANTI-TAKEOVER PROVISIONS. The
Company's Amended and Restated Certificate of Incorporation (the "Certificate")
and Bylaws provide for a classified Board of Directors, restrict the ability of
stockholders to call special meetings or take stockholder action by written
consent, and contain advance notice requirements for stockholder proposals and
nominations and special voting requirements for the amendment of the Certificate
and Bylaws. These provisions could delay or hinder the removal of incumbent
directors and could discourage or make more difficult a proposed merger, tender
offer or proxy contest involving the Company or may otherwise have an adverse
effect on the market price of the Common Stock. The Company also will be subject
to provisions of Delaware corporate law that will restrict the Company from
engaging in certain business combinations with an interested stockholder, unless
certain conditions are met or the business combination is approved by the
Company's Board of Directors and/or stockholders in a prescribed manner. These
provisions also could render more difficult or discourage a merger, tender offer
or other similar transaction. See "Description of Capital Stock."

The Certificate authorizes the issuance of 10,000,000 shares of preferred
stock, none of which is currently outstanding. Shares of preferred stock may be
issued on such terms as the Company's Board of

12
<PAGE>
Directors may determine. The rights of the holders of Common Stock will be
subject to, and may be adversely affected by, any preferred stock that may be
issued in the future. The issuance of preferred stock, while providing desirable
flexibility in connection with possible acquisitions, financings and other
corporate transactions, could have the effect of discouraging, or making more
difficult, a third party's acquisition of a majority of the Company's
outstanding voting stock. The Company has no plans to issue any shares of
preferred stock. See "Description of Capital Stock--Preferred Stock."

USE OF PROCEEDS

The Company will not receive any proceeds from the sale of Common Stock in
the Offering, all of which proceeds will be received by the Selling
Stockholders.

DIVIDEND POLICY

The Company has never declared or paid any cash dividends on its Common
Stock and currently intends to retain all earnings for the foreseeable future
for use in the operation and expansion of its business. Accordingly, the Company
currently has no plans to pay dividends on its Common Stock. Under the terms of
the Company's credit agreement, the Company is prohibited from paying dividends
on its Common Stock. The payment of any future dividends will be determined by
the Board of Directors of the Company in light of conditions then existing,
including the Company's earnings, financial condition and capital requirements,
restrictions in financing agreements, business conditions and other factors.

13
<PAGE>
CAPITALIZATION

The following table sets forth the capitalization of the Company as of
December 31, 1997. This table should be read in conjunction with the
Consolidated Financial Statements and related Notes thereto of the Company
included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
DECEMBER 31,
1997(1)
------------------
(IN THOUSANDS)
<S> <C>
Total debt.................................................................................... $ 52,500
Stockholders' equity:
Preferred stock............................................................................. --
Common stock................................................................................ 166
Additional paid-in capital.................................................................. 21,455
Retained earnings........................................................................... 15,414
-------
Total stockholders' equity................................................................ $ 37,035
-------
Total capitalization.......................................................................... $ 89,535
-------
-------
</TABLE>

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

(1) The Selling Stockholders will bear all of the expenses of registration and
distribution of the shares of Common Stock sold in the Offering. The Company
will receive up to approximately $2.7 million in proceeds from the exercise
of options relating to shares of Common Stock included in the Offering
(including proceeds from the exercise of options relating to shares included
in the Underwriters' over-allotment option), which the Company will use for
working capital and general corporate purposes.

DILUTION

The net tangible book value of the Company as of December 31, 1997 was $28.3
million or $1.43 per share of Common Stock. Net tangible book value is the
Company's total tangible assets (total assets less intangible assets) less total
liabilities at December 31, 1997. Net tangible book value per share is
determined by dividing the net tangible book value by the number of outstanding
shares of Common Stock, including the assumed exercise of all vested options,
after consummation of the Offering. The net tangible book value dilution per
share shown below represents the difference between the amount per share paid by
purchasers of Common Stock in the Offering and the net tangible book value per
share of Common Stock. The following table illustrates the per share dilution:

<TABLE>
<CAPTION>
<S> <C>
Initial public offering price per share.......................................... $ 16.00
Net tangible book value per share................................................ 1.43
---------
Net tangible book value dilution per share....................................... $ 14.57
---------
---------
</TABLE>

14
<PAGE>
SELECTED HISTORICAL FINANCIAL AND OPERATING DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

THE COMPANY AND THE PREDECESSOR(1)

The following table sets forth selected historical financial data for the
Company and the Predecessor. The selected financial data for the Predecessor for
the year ended December 31, 1993, were derived from the unaudited combined
financial statements of the Predecessor. The selected financial data for the
Predecessor for the years ended December 31, 1994 and 1995, and for the period
ended September 19, 1996, were derived from the audited combined financial
statements of the Predecessor. The selected financial data for the Company for
the period ended September 30, 1996, and for the year ended September 30, 1997,
were derived from the audited consolidated financial statements of the Company.
The selected financial data for the Company for the three-month periods ended
December 31, 1996 and 1997 were derived from the unaudited consolidated
financial statements of the Company included elsewhere herein, and, in the
opinion of management of the Company, contain all adjustments, consisting only
of normal recurring adjustments, necessary for a fair presentation of results of
operations and financial condition.

The selected consolidated financial and operating information set forth
below should be read in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the historical financial
statements and notes thereto of the Company and the Predecessor and other
financial information included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PREDECESSOR(2)
---------------------------------------------- COMPANY
-----------------------------------
PERIOD PERIOD PERIOD
YEAR ENDED DECEMBER 31, ENDED ENDED ENDED
--------------------------------- SEPT. 19, SEPT. 30, SEPT. 30, THREE
1994 1995 1996 1996(3) 1997(4) MONTHS
--------- --------- ----------- ----------- --------- ENDED
DECEMBER
31,
1993 -----------
-----------
(UNAUDITED) 1996
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues............................... $ 43,135 $ 50,725 $ 65,579 $ 55,186 $ 3,555 $ 140,719 $ 30,966
Gross profit........................... 14,583 14,905 18,816 15,696 1,113 44,326 9,958
Selling, general and administrative.... 9,773 10,785 12,488 8,897 463 21,048 4,447
Compensation expense of stock options.. -- -- -- -- -- -- --
Operating income....................... 4,810 4,120 6,328 6,799 650 23,278 5,511
Interest expense....................... 1,682 2,017 2,251 1,512 184 5,263 1,547
Provision for income taxes(5).......... -- -- -- -- 177 6,559 1,520
Net income............................. 3,175 2,200 4,104 5,306 289 11,603 2,444
Earnings per share:
Basic................................ $ .02 $ 0.73 $ 0.16
Diluted.............................. .02 0.70 0.16
Weighted average shares outstanding:
Basic................................ 15,118 15,897 15,118
Diluted.............................. 15,118 16,509 15,118

-----------
(UNAUDITED)

<S> <C>
STATEMENT OF OPERATIONS DATA:
Revenues............................... $ 42,635
Gross profit........................... 13,219
Selling, general and administrative.... 6,040
Compensation expense of stock options.. 354
Operating income....................... 6,825
Interest expense....................... 1,204
Provision for income taxes(5).......... 2,150
Net income............................. 3,522
Earnings per share:
Basic................................ $ 0.21
Diluted.............................. 0.19
Weighted average shares outstanding:
Basic................................ 16,583
Diluted.............................. 18,158
</TABLE>
<TABLE>
<CAPTION>
PREDECESSOR(2)
--------------------------------- COMPANY
-----------------------------------
DECEMBER 31, SEPTEMBER 30,
--------------------------------- ----------------------
1994 1995 1996(6) 1997(4)
--------- --------- ----------- --------- DECEMBER
31,
-----------
1993 1996
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Current assets................................... $ 50,758 $ 50,376 $ 58,962 $ 86,611 $ 99,680 $ 89,178
Total assets..................................... 54,408 51,504 59,970 97,216 110,235 99,405
Current liabilities.............................. 11,044 10,078 33,548 22,308 28,076 23,162
Long-term debt, less current maturities.......... 20,266 16,929 -- 55,500 49,000 53,500
Stockholders' equity............................. 21,704 23,103 25,027 19,408 33,159 22,743

-----------

<S> <C>
BALANCE SHEET DATA:
Current assets................................... $ 110,151
Total assets..................................... 120,668
Current liabilities.............................. 31,633
Long-term debt, less current maturities.......... 52,000
Stockholders' equity............................. 37,035
</TABLE>

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

(2) Tri-Star Aerospace, Inc. and subsidiary and affiliate.

(3) Reflects the results of operations for the 11 day period ended September 30,
1996.

(4) Following the acquisitions of the Predecessor and Aviall Aerospace, the
Company changed the fiscal year end of the Predecessor from December 31 to
September 30.

15
<PAGE>
AVIALL AEROSPACE

The following table sets forth selected historical financial data for Aviall
Aerospace, a business unit of Aviall Services, Inc. The selected financial data
for Aviall Aerospace for the year ended December 31, 1993, were derived from the
unaudited financial statements of Aviall Aerospace. The selected financial data
for Aviall Aerospace for the years ended December 31, 1994 and 1995 and the
period ended September 19, 1996 were derived from the audited financial
statements of Aviall Aerospace. The selected financial information set forth
below should be read in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the historical financial
statements and notes thereto of Aviall Aerospace and other financial information
included elsewhere in the Prospectus.

<TABLE>
<CAPTION>
PERIOD
YEAR ENDED DECEMBER 31, ENDED
------------------------------- SEPT. 19,
1993 1994 1995 1996(1)
--------- --------- --------- -----------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues................................................................. $ 11,884 $ 17,229 $ 25,580 $ 23,085
Gross profit............................................................. 3,156 2,945 5,802 5,035
Selling, general and administrative(2)................................... 5,803 5,654 5,884 4,730
Operating income (loss).................................................. (2,647) (2,709) (82) 305

BALANCE SHEET DATA:
Current assets........................................................... $ 8,357 $ 6,680 $ 17,022 $ 20,528
Total assets............................................................. 9,869 8,011 18,345 21,790
Current liabilities...................................................... 535 2,778 5,145 3,195
Long-term debt........................................................... -- -- -- --
Intercompany debt........................................................ 9,334 5,233 13,200 18,595
</TABLE>

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

16
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED
FINANCIAL STATEMENTS AND RELATED NOTES THERETO INCLUDED ELSEWHERE IN THIS
PROSPECTUS.

GENERAL

The Company was formed on August 21, 1996 and began operations on September
19, 1996, when it acquired the Predecessor and Aviall Aerospace through
simultaneous transactions. The acquisitions were accounted for under the
purchase method of accounting and, accordingly, the operating results beginning
September 20, 1996 reflect combined operations. Following consummation of the
acquisitions, the Company changed the fiscal year end of the Predecessor from
December 31 to September 30.

The Company generates a portion of its revenues from sales to customers
outside of the United States. The Company's revenues from foreign customers
represented $19.2 million in its fiscal year ended September 30, 1997, or
approximately 13.6% of total revenues. All of the Company's revenues are
invoiced in United States dollars.

The Company recognizes revenues from JIT services and conventional sales.
Revenues are recognized at the time of shipment. The principal elements
comprising TriStar's cost of goods sold are costs of aerospace hardware, freight
charges and a provision for excess and obsolete inventory. TriStar does not
manufacture or alter the products that it distributes and, therefore, does not
incur significant labor or overhead costs associated with product sales. Gross
profit represents revenues less cost of goods sold. TriStar's selling, general
and administrative expenses are comprised mainly of labor and benefit costs and
operating and occupancy expenses associated with the corporate office and the
Company's warehousing and distribution facilities.

MATTERS AFFECTING COMPARABILITY

For the year ended September 30, 1997, the financial statements of the
Company include the results of the Predecessor and Aviall Aerospace combined for
a full year of operations. The periods from January 1, 1996 to September 19,
1996 for the Predecessor and Aviall Aerospace represent the stand-alone
operations of each entity for less than a full year of operations. The years
ended December 31, 1995 for the Predecessor and Aviall Aerospace represent the
stand-alone operations of each entity for a full year of operations. Due to the
differences in the length of the various periods and the acquisition of the
Predecessor and Aviall Aerospace by the Company, comparison of periods may not
be meaningful and are not necessarily indicative of future results.

17
<PAGE>
RESULTS OF OPERATIONS OF THE COMPANY AND THE PREDECESSOR

The following table sets forth for the periods indicated the percentage of
revenues represented by certain items in the statements of operations of the
Company and the Predecessor:

<TABLE>
<CAPTION>
PREDECESSOR COMPANY
-------------------- -------------------------------
YEAR PERIOD YEAR THREE MONTHS ENDED
ENDED ENDED ENDED DECEMBER 31,
DEC. 31, SEPT. 19, SEPT. 30, --------------------
1995 1996 1997 1996 1997
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues.................................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of goods sold.......................................... 71.3% 71.6% 68.5% 67.8% 69.0%
--------- --------- --------- --------- ---------
Gross profit................................................ 28.7% 28.4% 31.5% 32.2% 31.0%
Selling, general and administrative......................... 19.0% 16.1% 15.0% 14.4% 15.0%
--------- --------- --------- --------- ---------
Operating income............................................ 9.7% 12.3% 16.5% 17.8% 16.0%
Interest expense............................................ 3.4% 2.7% 3.7% 5.0% 2.8%
Other income................................................ 0.0% 0.0% (0.1%) 0.0% (0.1%)
--------- --------- --------- --------- ---------
Income before taxes......................................... 6.3% 9.6% 12.9% 12.8% 13.3%
Provision for income taxes.................................. 0.0% 0.0% 4.7% 4.9% 5.0%
--------- --------- --------- --------- ---------
Net income.................................................. 6.3% 9.6% 8.2% 7.9% 8.3%
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

THE COMPANY

THREE MONTH PERIOD ENDED DECEMBER 31, 1997 COMPARED TO THREE MONTH PERIOD
ENDED DECEMBER 31, 1996.

REVENUES--Revenues increased $11.6 million, or 37.4%, to $42.6 million for
the three month period ended December 31, 1997, compared to $31.0 million for
the same period in 1996. The Company's revenues have increased primarily due to
growth in customer demand resulting from increased commercial aircraft build
rates.

GROSS PROFIT--Gross profit increased $3.2 million, or 32.0%, to $13.2
million for the three month period ended December 31, 1997, compared to $10.0
million for the same period in 1996. The increase in gross profit was primarily
due to an increase in revenues, as discussed above, partially offset by a
decrease in gross margin to 31.0% for the three months ended December 31, 1997
from 32.2% for the same period in 1996. The decrease in the gross margin was
primarily due to a retroactive price increase of approximately $400,000
collected from a major JIT customer in December 1996.

SELLING, GENERAL AND ADMINISTRATIVE--Selling, general and administrative
expenses, including compensation expense of stock options, increased $2.0
million, or 43.8%, to $6.4 million for the three month period ended December 31,
1997, compared to $4.4 million for the same period in 1996. The increase was
primarily due to increased personnel costs necessary to support the growth in
revenues, including $354,000 of compensation expense for the issuance of stock
options at a discount from the fair market value at the date of grant. Selling,
general and administrative expenses as a percentage of revenues were 15.0% for
the three month period ended December 31, 1997, compared to 14.4% for the same
period in 1996.

INTEREST EXPENSE--Interest expense decreased approximately $343,000, or
22.9%, to $1.2 million for the three months ended December 31, 1997, compared to
$1.5 million for the same period in 1996. The decrease in interest expense was
primarily due to lower debt levels resulting from positive cash flows from
operations and the conversion of a note payable to Common Stock on January 15,
1997.

NET INCOME--Net income increased $1.1 million, or 45.8%, to $3.5 million for
the three months ended December 31, 1997, compared to $2.4 million for the same
period in 1996. The increase in net income was primarily due to an increase in
revenues and a decrease in interest expense, partially offset by a decrease in
gross margin.

18
<PAGE>
THE COMPANY AND THE PREDECESSOR

THE COMPANY'S YEAR ENDED SEPTEMBER 30, 1997 COMPARED TO THE PREDECESSOR'S
PERIOD BEGINNING
JANUARY 1, 1996 AND ENDED SEPTEMBER 19, 1996.

REVENUES--Revenues increased $85.5 million, or 154.9%, to $140.7 million for
the year ended September 30, 1997, compared to $55.2 million for the
Predecessor's period ended September 19, 1996. The increase was primarily due to
the acquisition of Aviall Aerospace, the 1997 amount representing a full year of
operations and growth in customer demand resulting from increased commercial
aircraft build rates, as well as the expansion of SKUs sold under JIT agreements
with six of the Company's major customers resulting from their increased
acceptance of the Company's JIT services.

GROSS PROFIT--Gross profit increased $28.6 million, or 182.2%, to $44.3
million for the year ended September 30, 1997, compared to $15.7 million for the
Predecessor's period ended September 19, 1996. The increase was due primarily to
the increase in revenues, as discussed above. In addition, the gross margin
increased 3.1% to 31.5% for the year ended September 30, 1997, compared to 28.4%
for the Predecessor's period ended September 19, 1996. The increase was
primarily a result of a lower provision for excess and obsolete inventory during
1997 versus 1996, due to the Company's ability to better manage inventory
turnover and the general economic upturn in the aerospace industry, as well as a
retroactive price increase collected from a major JIT customer in December 1996
and a general improvement in pricing.

SELLING, GENERAL AND ADMINISTRATIVE--Selling, general and administrative
expenses increased $12.1 million, or 136.0%, to $21.0 million for the year ended
September 30, 1997, compared to $8.9 million for the Predecessor's period ended
September 19, 1996. The increase was primarily due to the acquisition of Aviall
Aerospace, the 1997 amount representing a full year of operations and growth in
revenues. Selling, general and administrative expenses as a percentage of
revenues decreased 1.1% to 15.0% for the year ended September 30, 1997, compared
to 16.1% for the period ended September 19, 1996, primarily due to overhead
efficiencies resulting from the acquisitions of the Predecessor and Aviall
Aerospace.

INTEREST EXPENSES--Interest expense increased $3.8 million, or 253.3%, to
$5.3 million for the year ended September 30, 1997, compared to $1.5 million for
the Predecessor's period ended September 19, 1996. The increase was primarily
due to the effect of the financing required to complete the acquisitions of the
Predecessor and Aviall Aerospace and the 1997 amount representing a full year of
operations. See "Liquidity and Capital Resources."

PROVISION FOR INCOME TAXES--The provision for income taxes for the year
ended September 30, 1997 increased $6.6 million over the Predecessor's period
ended September 19, 1996. This increase was due to the results of operations for
the period ended September 19, 1996 including only the operations of the
Predecessor, which elected to be treated under the provisions of Subchapter S of
the Internal Revenue Code of 1986, as amended. As a Subchapter S corporation,
the earnings of the Predecessor were taxable to the stockholders of the
Predecessor and, therefore, the Predecessor did not record a provision for
income taxes. During 1997, the Company was subject to corporate income taxes.

NET INCOME--Net income increased $6.3 million, or 118.9%, to $11.6 million
for the year ended September 30, 1997, compared to $5.3 million for the
Predecessor's period ended September 19, 1996. The increase was primarily due to
the acquisition of Aviall Aerospace, the 1997 amount representing a full year of
operations and the growth of revenues, offset by the effects of the Company
being subject to income taxes which were not applicable to the Predecessor as a
Subchapter S corporation.

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<PAGE>
THE PREDECESSOR

PERIOD BEGINNING JANUARY 1, 1996 AND ENDED SEPTEMBER 19, 1996 COMPARED TO THE
YEAR ENDED DECEMBER 31, 1995.

REVENUES--Revenues decreased $10.4 million, or 15.9%, to $55.2 million for
the period ended September 19, 1996, compared to $65.6 million for the year
ended December 31, 1995. The decrease was primarily due to the 1995 revenue
amount representing a full year of operations. However, average daily sales
during the period ended September 19, 1996 increased by 17.2% over average daily
sales during the year ended December 31, 1995, primarily resulting from a growth
in demand resulting from increased commercial aircraft build rates, as well as
the expansion of SKUs sold under JIT agreements with three of the Company's
major customers resulting from their increased acceptance of the Company's JIT
services.

GROSS PROFIT--Gross profit decreased $3.1 million, or 16.5%, to $15.7
million for the period ended September 19, 1996, compared to $18.8 million for
the year ended December 31, 1995. The decrease in gross profit was primarily due
to the 1995 amount representing a full year of operations, partially offset by
the increase in average daily sales, as discussed above. Additionally, the gross
margin decreased 0.3% to 28.4% for the period ended September 19, 1996, compared
to 28.7% for the year ended December 31, 1995.

SELLING, GENERAL AND ADMINISTRATIVE--Selling, general and administrative
expenses decreased $3.6 million, or 28.8%, to $8.9 million for the period ended
September 19, 1996, compared to $12.5 million for the year ended December 31,
1995. The decrease was primarily due to the 1995 amount representing a full year
of operations. Selling, general and administrative expenses as a percentage of
revenues was 16.1% for the period ended September 19, 1996, compared to 19.0%
for the year ended December 31, 1995. The decrease was primarily due to the
increase in average daily sales, as discussed above, without a proportional
increase in selling, general and administrative expenses, due to operating
efficiencies realized by the Company.

INTEREST EXPENSE--Interest expense decreased approximately $739,000, or
32.1%, to $1.5 million for period ended September 19, 1996, compared to $2.3
million for the year ended December 31, 1995. The decrease was primarily due to
the 1995 amount representing a full year of interest expense.

NET INCOME--Net income increased $1.2 million, or 29.3%, to $5.3 million for
the period ended September 19, 1996, compared to $4.1 million for the year ended
December 31, 1995. The increase in net income was primarily due to the increase
in average daily sales without a proportional increase in selling, general and
administrative expense, as discussed above, partially offset by 1995
representing a full year of operations.

RESULTS OF OPERATIONS OF AVIALL AEROSPACE

The following table sets forth for the periods indicated the percentage of
revenues represented by certain items in the statements of operations of Aviall
Aerospace:

<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
DECEMBER 31, SEPTEMBER 19,
1995 1996
------------ -------------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.................................................................. 100.0% 100.0%
Cost of goods sold........................................................ 77.3% 78.2%
------------ -------------
Gross profit.............................................................. 22.7% 21.8%
Selling, general and administrative....................................... 23.0% 20.5%
------------ -------------
Operating income (loss)................................................... (0.3%) 1.3%
------------ -------------
------------ -------------
</TABLE>

20
<PAGE>
PERIOD BEGINNING JANUARY 1, 1996 AND ENDED SEPTEMBER 19, 1996 COMPARED TO THE
YEAR ENDED DECEMBER 31, 1995

REVENUES--Revenues decreased $2.5 million, or 9.8%, to $23.1 million for the
period ended September 19, 1996, compared to $25.6 million for the year ended
December 31, 1995. The decrease was due to the 1995 revenue amount representing
a full year of operations. However, average daily sales during the period ended
September 19, 1996 increased by 25.6% over average daily sales during the year
ended December 31, 1995. This increase was primarily attributable to higher
sales under two of Aviall Aerospace's JIT agreements.

GROSS PROFIT--Gross profit decreased approximately $767,000, or 13.2%, to
$5.0 million for the period ended September 19, 1996, compared to $5.8 million
for the year ended December 31, 1995. The decrease in gross profit was primarily
due to the 1995 amount representing a full year of operations, partially offset
by the increase in average daily sales, as discussed above. Additionally, the
gross margin decreased 0.9% to 21.8% for the period ended September 19, 1996,
compared to 22.7% for the year ended December 31, 1995. The decrease in the
gross margin was primarily due to price increases for certain aerospace hardware
parts which were not passed on to customers.

SELLING, GENERAL AND ADMINISTRATIVE--Selling, general and administrative
expenses decreased $1.2 million, or 20.3%, to $4.7 million for the period ended
September 19, 1996, compared to $5.9 million for the year ended December 31,
1995. The decrease in expenses was primarily due to the 1995 amount representing
a full year of operations. Selling, general and administrative expenses as a
percentage of revenues was 20.5% for the period ended September 19, 1996,
compared to 23.0% for the year ended December 31, 1995. The decrease was
primarily due to the increase in average daily sales, as discussed above,
without a proportional increase in selling, general and administrative expenses.
Because Aviall Aerospace was an operating division of Aviall Services, Inc.
("Aviall Services") during the periods presented and was not accounted for as a
separate entity, the amounts for selling, general and administrative expenses
above include allocations of Aviall Service's corporate overhead to Aviall
Aerospace in the amounts of $1.2 million and $1.7 million for the periods ended
September 19, 1996 and the year ended December 31, 1995, respectively.

OPERATING INCOME (LOSS)--Operating income (loss) increased $387,000 to
$305,000 for the period ended September 19, 1996, compared to ($82,000) for the
year ended December 31, 1995. The increase in operating income was primarily due
to the increase in average daily sales without a proportional increase in
selling, general and administrative expenses, as discussed above.

LIQUIDITY AND CAPITAL RESOURCES

The Company's liquidity requirements consist primarily of working capital
needs, capital expenditures and scheduled payments of interest on its
indebtedness under the Credit Agreement referred to below. The Company's working
capital requirements have increased as a result of higher accounts receivable
and inventory levels needed to support its growth in revenues. The Company's
working capital was $78.5 million as of December 31, 1997.

In connection with the acquisitions of the Predecessor and Aviall Aerospace,
on September 19, 1996, the Company entered into a credit agreement with a
syndicate of lenders (as amended, the "Credit Agreement"). Simultaneously with
the execution of the Credit Agreement, the Company executed term notes (the
"Term Notes") in the aggregate amount of $50.0 million. The Term Notes require
quarterly interest payments based on a specified "Base Rate" or the Eurodollar
rate plus a spread and annual principal payments of $500,000 due September 1997
through 2002 with the remaining principal balance due September 30, 2003.

The Company also has a $30.0 million revolving credit facility (the
"Revolver") under the Credit Agreement. As of December 31, 1997, the Company had
borrowings of $3.0 million outstanding under the

21
<PAGE>
Revolver. Interest on borrowings under the Revolver is payable quarterly based
upon the Base Rate or the Eurodollar Rate plus a spread. The commitments under
the Revolver must be reduced by $15.0 million in September 2000 and 2001.

The Term Notes and Revolver provide for borrowings of up to $80.0 million of
which the Company had total borrowings of $65.5 million at April 24, 1998. The
Company's debt is collateralized by substantially all the assets of the Company
and its subsidiaries and is subject to certain financial covenants.

For the year ended September 30, 1997, net cash provided by operating
activities was $9.6 million. The cash flows from operations for fiscal 1997
consisted primarily of net income of $11.6 million and non-cash charges of $2.5
million, less changes in working capital items of $4.5 million.

The Company's capital expenditures were $1.0 million in fiscal 1997. In
1996, the Company also used $70.0 million in cash in connection with the
acquisitions of the Predecessor and Aviall Aerospace. The Company's net cash
used by financing activities in fiscal 1997 was $5.4 million, consisting
primarily of payments made on the Revolver.

The Company expects to spend approximately $3.0 million for capital
expenditures in fiscal 1998. These capital expenditures will relate principally
to computer system (both software and hardware) upgrades, conversion and
implementation costs. Additional costs related to the conversion and
implementation will be incurred throughout 1999 and are currently estimated to
be approximately $2.0 million.

The Company believes internally generated cash flow and amounts that may be
available under the Revolver will provide adequate funds to meet its working
capital needs, planned capital expenditures and debt service obligations.

YEAR 2000 COMPLIANCE

The Company has been evaluating its computer software programs and operating
systems to identify any as to which there may be a "Year 2000" issue and is
currently taking steps to modify or replace its systems that are not Year 2000
compliant. The so-called "Year 2000" issue is the result of computer programs
being written using two digits (rather than four) to define the applicable year,
resulting in incorrect calculations for the year 2000 and beyond. Based on
present information, the Company believes that it will be able to achieve such
Year 2000 compliance through a combination of modifications to some existing
programs and systems, and the replacement of other programs and systems.
Anticipated expenses to design and implement the modifications or replacement
systems are not expected to exceed $200,000 and will be incurred in fiscal 1998
and 1999.

EFFECTS OF INFLATION

The Company does not believe that inflation has had a significant impact on
its results of operations in recent years. However, there can be no assurance
that the Company's business will not be affected by inflation in the future.

NEW ACCOUNTING PRONOUNCEMENTS

In February 1997, the Financial Accounting Standards Board (the "FASB")
issued Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per
Share," which the Company adopted in its first quarter fiscal 1998 financial
statements. This new standard establishes methods for computing and presenting
earnings per share ("EPS") and also simplifies the previous standards found in
APB Opinion No. 15, "Earnings Per Share." It requires dual presentation of basic
and diluted EPS on the Statements of Consolidated Operations. The adoption of
this standard did not have a significant impact on the Company's earnings per
share calculations.

22
<PAGE>
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income," which is effective in fiscal year 1999. This new statement establishes
standards for reporting and displaying comprehensive income and its components
(revenues, expenses, gains, and losses) in a full set of general-purpose
financial statements. The statement requires that an enterprise (i) classify
items of other comprehensive income by their nature in a financial statement and
(ii) display the accumulated balance of other comprehensive income separately
from retained earnings and additional paid-in capital in the equity section of a
statement of financial position. The Company does not expect the impact of this
new statement to have a material impact on its consolidated financial
statements.

In June 1997, the FASB also issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information," which is effective in fiscal year
1999. This new statement revises standards for public companies to report
information about segments of their business and also requires disclosure of
selected segment information in quarterly financial reports. The statement also
establishes standards for related disclosures about products and services,
geographic areas and major customers. The Company has not yet determined the
impact this new statement may have on disclosures in its consolidated financial
statements.

RECENT RESULTS

On April 27, 1998, the Company reported its unaudited preliminary financial
results for the three-month and six-month periods ended March 31, 1998. For the
three-month period ended March 31, 1998, net income was $4.0 million, or $0.24
per basic share and $0.22 per diluted share, on revenue of $45.8 million,
compared with net income of $2.7 million, or $0.18 per basic and diluted share,
on revenue of $34.5 million for the three-month period ended March 31, 1997. For
the six-month period ended March 31, 1998, net income was $7.5 million, or $0.45
per basic share and $0.41 per diluted share, on revenue of $88.4 million,
compared with net income of $5.2 million, or $0.34 per basic and diluted share,
on revenue of $65.5 million for the six-month period ended March 31, 1997.

23
<PAGE>
INDUSTRY OVERVIEW

The aerospace hardware industry is highly fragmented and is comprised of a
large number of manufacturers and an even greater number of distributors. The
Company estimates the worldwide market for aerospace hardware to be
approximately $1.5 billion, which is divided into approximately $750 million of
direct sales by manufacturers and $750 million of sales by distributors. The
Company believes that the percentage of sales made by distributors directly to
end users has and will continue to increase. Although there are more than 100
manufacturers of aerospace hardware, the top 20 manufacturers represent a
substantial portion of aerospace hardware manufacturing sales. Many of these
manufacturers have experienced significant sales growth over the past two years
due largely to the growth in commercial aircraft build rates. The distribution
segment of the aerospace hardware industry is even more fragmented than the
manufacturing segment; however, the four largest distributors based on annual
sales (including the Company) account for a significant portion of total sales.

Distributors continue to play an increasingly important role in the
aerospace hardware industry due to supply and demand disruptions which
characterize the industry and are caused by (i) the high number of SKUs (in
excess of 250,000) required to manufacture and repair aircraft, (ii) the
economics of fastener manufacturing, which tend to favor long production runs
which allow for more efficient amortization of fixed set-up costs and (iii)
manufacturing inefficiencies (i.e., batch and queue processes). The high number
of SKUs makes forecasting an extremely complex task for end users who must
decide on the optimal quantity and timing of orders. It also requires end users
to invest heavily in personnel and systems to manage the constant flow of
products. Therefore, to meet their inventory needs, end users are required to
invest in costly infrastructures to procure and manage tens of thousands of SKUs
and millions of parts. The second and third factors cited above (long production
runs and manufacturing inefficiencies) create a divergence between the quantity
of aerospace hardware demanded by customers (based on forecasted usage) and the
quantity which must be produced by manufacturers to derive a profit. As a
result, end users experience both shortages of critical product and excess
supply of non-critical product.

The maintenance of the material management infrastructures cited above can
generate total processing costs which exceed the low per-unit cost of the part
itself. In addition, to minimize costly production stoppages caused by parts
shortages, end users have been forced to invest valuable working capital into
excess inventories. Aerospace hardware distributors act as a conduit to minimize
these potential supply chain disruptions by aggregating demand from a large
number of end users and sourcing hardware from multiple suppliers, thereby
smoothing the disparity in the supply and demand requirements of the
marketplace. As a result, the Company believes that breadth of supplier and
customer bases and, most importantly, access to reliable usage data which can be
used to forecast customer and supplier requirements are key competitive
advantages in the aerospace distribution marketplace.

24
<PAGE>
BUSINESS

GENERAL

Based on annual sales by the Company and its competitors in the aerospace
hardware industry, the Company is both a leading distributor of aerospace
hardware and a leading provider of customized inventory management services to
OEMs of aircraft and aircraft components, to commercial airlines and to MRO
facilities. While approximately 59% of the Company's revenues for fiscal 1997
were derived from conventional sales, a substantial and growing percentage of
the Company's revenues are derived from sales of aerospace hardware pursuant to
long-term JIT agreements under which TriStar performs a wide variety of
value-added services. For fiscal 1997, JIT revenues represented approximately
41% of the Company's total revenues. The Company's JIT services are provided
through comprehensive and flexible outsourcing programs under which the Company
provides some or all of the material management functions necessary to procure
and manage aerospace hardware for its customers. The Company derives income from
its JIT services principally through margins earned on products sold under its
JIT agreements. The Company believes that, through the Predecessor, it was a
pioneer of JIT services in the aerospace hardware industry and that today the
Company is a leading provider of inventory management services to this industry.
TriStar currently provides JIT services under long-term agreements to a number
of leading aerospace and aircraft-related companies including, among others,
Boeing (including former McDonnell Douglas and Rockwell International
facilities), Northrop Grumman, Bell Helicopter, Gulfstream, United Airlines,
British Airways and Federal Express. Through its JIT programs and conventional
sales, the Company processed over 950,000 transactions involving over 78,000
SKUs in fiscal 1997, resulting in over $140 million of sales to over 2,000
customers.

TriStar's JIT services are designed to provide solutions for its customers
by overcoming the inefficiencies inherent in the supply chain for aerospace
hardware. Under the terms of its JIT agreements, the Company's personnel,
processes and management information systems enable customers to outsource all
or a portion of the planning, purchasing, receiving, documentation, inspection,
storage, shipment, quality assurance and other functions associated with the
procurement and management of aerospace hardware. The Company's substantial
experience in developing and implementing JIT services enables it to create
programs specifically tailored to the needs of its customers. In many cases, the
Company assigns its own trained personnel to work on-site at the customer's
facilities. By outsourcing the procurement and management of aerospace hardware
to TriStar, the Company's customers can realize significant cost savings and
production efficiencies principally as a result of (i) the elimination of
process costs relating to the planning, purchasing and expediting of aerospace
hardware, (ii) a reduction in carrying costs, including labor, financing and
overhead charges, (iii) a reduction in parts shortages, which can lead to costly
production line stoppages and (iv) a reduction in product costs.

Recognizing the benefits that outsourcing could provide to end users of
aerospace hardware, in 1990 the Predecessor developed new sales efforts,
operating processes and systems to provide these services. By 1991 it had
secured its first JIT agreement with Rockwell International, and by the end of
1993 had secured JIT agreements with Grumman, Beech Aircraft and Gulfstream.
Today the Company has expanded its JIT programs to include 19 agreements with 10
companies servicing over 25 facilities in the United States, Canada, France and
England. In addition, JIT revenues have grown at a compound annual rate of 51.9%
from January 1, 1996 through September 30, 1997 to $57.6 million, representing
approximately 41% of the Company's total revenues for fiscal 1997. Strong growth
in the Company's JIT programs enabled it to

25
<PAGE>
increase revenues at a time when the aerospace industry was experiencing a
significant downturn in the early and mid-1990's. The Company believes that
OEMs, airlines and MRO facilities will continue to outsource their aerospace
hardware procurement and management needs in order to focus on their core
businesses and reduce costs. The Company believes that its status as a leading
provider of JIT services favorably positions it to benefit from this trend and
to increase its share of the aerospace hardware market.

COMPANY STRENGTHS

- LEADING PROVIDER OF JIT SERVICES. The Company's long-term JIT agreements
provide it with a number of competitive advantages. JIT programs provide
TriStar with growth opportunities which are not directly tied to aerospace
industry cycles. By expanding the products and services under existing JIT
agreements and establishing new JIT agreements, TriStar should be able to
increase its share of the aerospace hardware market even during cyclical
downturns in the aerospace industry. JIT programs enable TriStar to
aggregate purchases of hardware across multiple customers, thereby
reducing acquisition costs and improving margins. JIT programs provide
TriStar with reliable real-time data regarding the usage patterns of
aerospace hardware across a wide customer base since they typically
encompass all of the customer's purchases of a particular part. By
aggregating and analyzing this data, TriStar is better able to forecast
and manage its own aerospace hardware needs and those of its customers.
JIT programs typically result in the Company receiving additional
conventional sales opportunities due to its status as a preferred supplier
to the customer. In addition, JIT programs integrate the Company's
programs and systems with the operations of its customers. As a result,
management believes its customers would incur significant switching costs
and inconvenience in replacing the Company's programs and systems in the
event they were to engage another supplier.

- DATABASE OF HISTORICAL USAGE INFORMATION. TriStar has made significant
investments in information systems which have enabled the Company to
develop an in-depth database of its customers' historical usage patterns
relating to all of the aerospace hardware in the Company's inventory. This
database includes historical usage patterns for each of the Company's JIT
and conventional sales customers, as well as lists of acceptable
substitutes for each aerospace hardware part in its inventory according to
each customer's specifications. By continually analyzing this information,
the Company is able to gain insight into the likely future usage patterns
of each particular part it distributes. Accordingly, the database provides
TriStar with an important tool in managing its own inventory positions as
well as those of its customers. The Company believes that its accumulation
of historical information and its experience in managing inventories add
stability to its JIT customer base by providing a foundation of knowledge
unique to its customers and unmatched by its competitors.

- QUALITY ASSURANCE AND RELIABILITY. Management believes that one of the
key factors which has contributed to the Company's success and position
within its industry is its quality assurance program and its reputation
for reliability. The Company's quality assurance program includes physical
inspection of substantially all incoming shipments as well as electronic
storage of manufacturers' certifications. The Company scans all required
documentation received from manufacturers into its optical imaging system
which allows such documentation to be electronically retrieved for instant
traceability. In addition, the Company's processes and systems have been
designed to ensure the timely and consistent delivery of products and
services. These processes and systems have allowed the Company to
establish a reputation for reliability with its customers which has
contributed to its growth, particularly with respect to its JIT programs.

- SIGNIFICANT ECONOMIES OF SCALE RELATING TO SIZE. The Company maintains an
on-hand inventory of over 100,000 SKUs for its customers' diverse
aerospace hardware requirements. This inventory is supported by
sophisticated order processing, inventory management and reporting
systems. As one of the largest aerospace hardware distributors, TriStar
makes significant annual purchases of

26
<PAGE>
inventory on behalf of its many customers. As a result, the Company
believes that it is one of the largest customers of many of its suppliers,
allowing it to take advantage of price reductions associated with large
volume purchases. The Company believes that it is favorably positioned, as
customers are reducing the number of aerospace hardware suppliers to those
that are technologically sophisticated and well-capitalized and which can
provide full service and a broad range of products.

GROWTH STRATEGY

Management has identified the following strategies which it believes provide
specific opportunities for profitable growth:

- JIT SERVICES EXPANSION. The Company's strong growth has been generated
internally and has been due in large part to the success of its JIT
programs. The Company intends to continue to expand its JIT business by
increasing the number of SKUs, services and products offered and the
number of facilities covered under existing JIT agreements. In addition,
the Company has targeted additional JIT customers which include airlines,
air cargo companies, MRO facilities and smaller OEMs. For example, the
Company recently signed a five-year agreement to provide JIT services to
Federal Express.

- INCREASED AFTERMARKET PENETRATION. The Company intends to increase its
penetration of non-OEM segments of its marketplace, including the airline
and MRO facility segments, by (i) further expanding its product offerings
in response to the inventory needs of participants in these market
segments, (ii) continuing to tailor its JIT services to meet the specific
demands of these participants and (iii) increasing its sales and marketing
efforts to these participants. The Company has recently established an
airline marketing group to focus on increasing market penetration of that
sector.

- INTERNATIONAL EXPANSION. The Company plans to expand its presence and
increase its market penetration in Europe and Asia through expansion of
its product offerings to include additional European standard (i.e.,
Airbus) parts. The Company recently entered into a supply agreement with
Aerospatiale, a member of the Airbus consortium, and plans to establish
sales, JIT services and warehousing operations in France in the near
future. The Company anticipates that this recent supply agreement will
help to position the Company as a supplier of aerospace hardware to the
Airbus aftermarket and assist in attracting other European aerospace
customers. The Company also plans to pursue strategic alliances in the
Pacific Rim and Asia.

- SUPPLY CHAIN MANAGEMENT. The Company acts as a conduit between its
customers and suppliers to minimize imbalances in the supply and demand of
aerospace hardware. The Company's database of its customers' historical
usage patterns, including the types and quantities of aerospace hardware
used and the timing of purchases, is a valuable asset which the Company
utilizes to forecast aggregate and customer specific demand. The Company
has long-standing relationships with its key suppliers and believes that
an opportunity exists to achieve greater efficiency in the aerospace
hardware supply chain through the establishment of long-term agreements
with suppliers. By utilizing its historical database to provide
manufacturers with demand forecasts, the Company believes it can alleviate
a portion of the supply chain disruptions usually associated with the
cyclicality of the aerospace industry, which have adversely affected the
Company's customers and suppliers in the past.

- STRATEGIC ACQUISITIONS. The aerospace hardware distribution industry is
comprised of a small number of large companies, such as TriStar, and
numerous small, local and regional businesses. The Company believes that
opportunities exist to consolidate the aerospace hardware industry through
strategic acquisitions. In addition, the Company believes that the
acquisition of certain of its

27
<PAGE>
competitors would enable it to broaden its product line and enter new
and/or under-penetrated markets.

AEROSPACE HARDWARE DISTRIBUTION SERVICES

The Company's business can be separated into two broad categories: JIT
services and conventional sales, as discussed below.

JIT SERVICES

Under the terms of its JIT agreements, the Company's personnel, processes
and management information systems enable customers to outsource all or a
portion of the planning, purchasing, receiving, documentation, inspection,
storage, shipment and quality assurance functions associated with the
procurement and management of aerospace hardware. The Company's substantial
experience in developing and implementing JIT services enables it to create
programs specifically tailored to the needs of its customers. In many cases, the
Company assigns its own trained personnel to work on-site at the customer's
facilities to place orders, monitor inventory bins and manage receipts. Under a
typical JIT program, TriStar first analyzes the historical and projected usage
patterns of the aerospace hardware parts included in the JIT agreement. The
Company then establishes bar-coded inventory bins at the customer's
manufacturing facility located at strategic points along the production line. If
needed, the Company will establish a forward stocking location ("FSL") near the
customer's manufacturing facility which is stocked with the required aerospace
hardware. TriStar representatives inspect the floor bins on a regular basis and
scan those bins requiring replenishment using bar-code technology. This
information is transferred via electronic data interchange to the Company's
management information systems to determine restocking needs, update usage
rates, assess adequacy of available stocks and calculate optimal reorder points.
The Company's systems then create a replenishment order at the customer's FSL
that results in delivery of the needed product to the customer's bins, usually
within one working day. JIT agreements are either fixed price or fixed mark-up
agreements and typically have a term of between three and five years. The
Company derives income from its JIT services principally through margins earned
on products sold under its JIT agreements. The Company's JIT sales were $57.6
million in fiscal 1997 or approximately 41% of total sales.

CONVENTIONAL SALES

Conventional sales consist of providing customers with high-quality
aerospace hardware at reasonable prices on an as-ordered basis. TriStar
typically receives thousands of bid requests each month from large and small
OEMs, airlines and MRO facilities. The key competitive factors which have an
impact on conventional sales are: (i) availability of inventory, (ii) price and
(iii) reputation for quality and reliability. Demand for conventional sales is
generated by the inability of hardware manufacturers to quickly respond to
changing customer demand due to their own capacity constraints and pricing
strategies. Specifically, many manufacturers require long lead times (typically,
8-52 weeks) to provide products, even though the actual required production time
is much shorter, due to queuing requirements and capacity issues. In addition,
many manufacturers enforce minimum order quantities and set prices based on
volume of purchases due to the efficiencies associated with long production
runs. Therefore, unplanned demand or a long-term requirement for low volumes of
a specific part make it advantageous for customers to purchase through
distributors. The Company's strategically located facilities and the quality of
its customer usage information are key competitive advantages in the
conventional sales market. These strengths allow the Company to place
significant orders for products at advantageous prices and schedule deliveries
to correspond with market demand. As a result, the Company can provide its
customers with aerospace hardware on an as-ordered basis at prices generally
below what they would pay by ordering small quantities directly from
manufacturers. The Company's conventional sales were $83.1 million in fiscal
1997, or approximately 59% of total sales.

28
<PAGE>
OPERATIONS

TriStar's JIT services and conventional sales require the Company to
routinely execute over 2,500 transactions daily involving the receipt and
shipment of products. In addition, the Company provides demand forecasting,
purchasing, quality assurance and, when applicable, documentation services on
all parts received for its customers. The Company's processes and functions are
described below:

FORECASTING AND PURCHASING

The Company's management information systems allow it to forecast estimated
future demand for all of the aerospace hardware items in its inventory by
analyzing a variety of inputs, including, among other things, historical usage,
the number of acceptable substitutes and the variability of historical demand
for each part number. The key to the Company's ability to accurately forecast
future usage is the database of historical information it maintains on every
item it distributes.

Usage forecasts are reviewed automatically by the Company's systems on a
daily basis and compared with the in-stock availability of each part, as well as
applicable manufacturer lead times and customer minimum stock requirements to
determine the timing of optimal reorder quantities. When required, the system
generates an order slip which is delivered to the Company's material managers
who have long-standing relationships with key manufacturers. Each material
manager is responsible for specific product groups. Following the receipt of
system-generated purchase order documents, the appropriate material manager
conducts an independent review to verify the need for additional products.
Specifically, each part is assigned a three-letter code which indicates the
number of customers for that part over the last 12 months (an indicator of
liquidity) and its degree of profitability. These liquidity and profitability
codes allow the material managers to focus on the fastest turning, highest
margin products. The material management group consisted of 31 employees as of
March 28, 1998.

INSPECTION AND QUALITY ASSURANCE

The Company's quality assurance group inspects substantially all shipments
upon receipt by the Company. Initial inspection involves count and dimension
validation, and review of manufacturers' certifications and required test
results, to ensure that the correct part number and quantities have been
received and that all required test results and verifications have been
provided. In addition, a statistical sample of the shipment is physically
inspected to assure no damage to the parts is evident and that the physical
attributes (i.e., dimensions, finish, etc.) comply with specifications. Any
parts not adhering to required standards are rejected, segregated and returned
to the supplier.

The Company has been C.A.S.E. registered and awarded Qualified Suppliers
List status by the U.S. Department of Defense. In addition, the Company is
working to achieve ISO 9000 certification. TriStar is certified as a qualified
supplier by Boeing, Aerospatiale, Lockheed, Northrop Grumman, Bell Helicopter
and others.

TriStar employed 33 inspectors in its quality assurance group as of March
28, 1998. Each inspector is required to complete an education program that was
designed by the Company and the Tulsa Technology Center specifically for TriStar
employees. The program teaches blueprint reading, metrology and quality
assurance principles.

DOCUMENTATION

Once an incoming lot has passed the Company's quality inspection, the
manufacturer's name, certifications, test reports and other information required
to assure source-to-customer traceability are scanned into an optical imaging
system and stored in the Company's computer system. This system also provides a
record of TriStar's compliance with contractual quality assurance obligations to
its customers. In addition, a unique bar-coded label is affixed to each
container in the lot linking it to a specific receipt, part and lot number in
inventory to ensure accessibility of all data related to that lot. These
computerized, fully integrated inventory functions permit source-to-customer
tracking by lot control number and manufacturer on all products sold. To ensure
proper safekeeping of traceability data, the original received documentation, as
well as backup copies on CD ROM digital imaging disks, are maintained off-site.

29
<PAGE>
ORDER ENTRY AND FULFILLMENT

On-hand inventory is maintained in a system of warehouses which include two
central distribution facilities ("CDFs"), which also function as FSLs, and eight
additional FSLs. This inventory is backed up by parts on order with suppliers in
quantities and on delivery schedules established to meet planned stocking and
consumption levels. A logistics plan is recalculated every night and
requirements for new buys, transfers and expedited deliveries are presented to
the Company's operations department daily.

Personnel at the CDFs (i) receive and inspect all incoming shipments and
review and store required documentation, (ii) process (i.e., pick, pack and
ship) all conventional sales orders (approximately 1,300 daily) and (iii)
process all FSL replenishment requirements. The FSL replenishment process
ensures that only customer-qualified (as to manufacturer, revision level, type
of documents needed, alternate part numbers, etc.) stock gets placed in the
FSLs, thereby avoiding any need for inspection at the FSLs. FSLs usually are
located in close proximity to the supported customer and contain only those
items used by that customer. The FSLs process (i.e., pick, pack and ship) all
JIT sales orders (approximately 1,500 daily).

Returns of products distributed by the Company have historically been
immaterial. Generally, it is the Company's policy to charge a customer returning
a product a fee based upon a percentage of the sales price of the returned
product if the product is infrequently stocked and distributed by the Company.
If the returned product is frequently stocked and distributed by the Company,
the Company generally issues a full refund to the customer.

JIT SERVICES

Through its JIT services, the Company is able to replicate every aspect of
the supply chain for aerospace hardware and to manage the movement of products
from the manufacturer's shipping dock to the bins on the customer's factory
floor.

- Orders are received electronically via bar code scanning,
computer-to-computer interface with the customer ordering system, other
electronic commerce networks and direct customer manual input into the
TriStar system.

- As orders are received, they are batch processed, picked, packed and
shipped by the FSL, usually within one working day. The FSL order
processing system documents stocks available at the FSL, creates data
files needed to invoice the customer, records all data needed to maintain
traceability of the items delivered, provides waybill and shipping data
and updates all consumption data for planning and historical tracking
purposes.

- Quantities to be delivered in response to each order for an item are
calculated frequently based upon customer consumption and reorder
frequency to develop cost-effective delivery solutions. This, in turn,
affects the overall FSL stock and replenishment plan.

- As an FSL reaches a predetermined minimum stocking level, the CDF
automatically receives an order to replenish the FSL. That order
identifies not only the specific quantity needed but also the specific
stock at the CDF that is approved by the customer as to manufacturer,
revision level and documentation, including alternate part numbers that
may be used to fulfill such customer requirements.

CONVENTIONAL SALES

Through its conventional sales, the Company provides its customers with
high-quality aerospace hardware at reasonable prices on an as-ordered basis.

- Orders are received from customers either as a result of specific
contracts that establish prices for groups of products, or as a result of
having provided price and delivery data based upon a request for quotation
from the customer.

- On receipt of an order, a sales representative checks for stock
availability. If stock is available, the order is entered to a CDF
creating a picking request within seconds from the time it is entered. The
picking request contains all data needed to fulfill the order, including
customer quality requirements, pricing, packaging and shipping
instructions. Routine orders are usually shipped within two working days.
Priority orders received before noon are usually shipped the same day.
Rush orders

30
<PAGE>
are usually ready for shipment within two hours. A label is generated and
attached to each outgoing package which contains all data needed to
maintain traceability.

- If stock is not immediately available, the sales representative informs
the customer and provides the estimated delivery date. At the customer's
request, a sale order is entered creating a "buy" requirement that is
received and executed by the Company's purchasing department, typically
within one working day.

- Orders may be scheduled that are held for picking until the date required
by the customer. On, but not before the date specified, the system
generates the required picking request.

- Receipts of stock at the CDF trigger an automatic search for open customer
and FSL replenishment requirements, grouping incoming items into "Routine"
and "Expedite" categories. As stock is accepted by the inspection process,
picking requests are automatically generated to rapidly move inventory
from the dock through order fulfillment or FSL replenishment.

SALES AND MARKETING

JIT SERVICES

The Company's JIT marketing and contract group consists of national account
executives and regional business development representatives, assisted by
planners who are product sourcing, pricing, and implementation specialists. This
group, as well as individual local sales representatives, identify opportunities
to provide contractual sales or JIT services. Additionally, customers will
solicit proposals for JIT services through which they specify the services to be
contracted and the products to be delivered. Upon identification of a JIT
opportunity, the Company prepares a tailored presentation of its JIT systems,
potential cost benefit analysis and service level analysis which is typically
given to senior management members of the customers' materials, purchasing,
quality, finance and management information systems departments. The Company
then performs an evaluation of the customer's facility, which includes
documentation of appropriate levels of systems and processes. This evaluation
also includes production floor bin mapping to identify the required locations
and estimated usage patterns of individual aerospace hardware parts. The Company
then develops a proposal which sets forth products and services to be provided
and pricing, taking into account consumption levels, frequency of delivery and
minimum stock requirements. In addition to the proposal, the Company provides an
impact analysis of the potential savings as a result of adoption of the
proposal.

CONVENTIONAL SALES

The Company's conventional sales utilize a traditional organization made up
of 98 sales personnel, as of March 28, 1998, divided into four geographical
regions encompassing 11 offices, each with its own sales manager. Within
regions, individual sales personnel are assigned smaller territories and are
responsible for the customers in their areas. In addition to calling on
customers, these sales personnel respond daily to customer requests by quoting
prices, placing product orders and suggesting acceptable substitutes. In
addition, some of these sales personnel have been designated as key account
representatives for the Company's largest customers and are responsible for
identifying new sales opportunities and for addressing customer issues.

CUSTOMERS

The Company has over 2,000 customers, which include OEMs of aircraft and
aircraft components, commercial airlines and MRO facilities. During fiscal 1997,
the Company's top ten customers accounted for approximately 59.3% of total
sales, with Boeing (including former McDonnell Douglas and Rockwell
International facilities) and Northrop Grumman accounting for approximately
24.8% and 11.7% of total sales, respectively.

MANAGEMENT INFORMATION SYSTEMS

The Company's management information systems provide for automation of all
order management, demand forecasting, inventory management, purchasing, pricing,
billing and accounts payable functions. The Company's electronic data scanning
and optical imaging systems provide accurate and rapid retrieval

31
<PAGE>
of inventory traceability documents required by the Company's customers in order
for them to comply with applicable regulations. The Company's systems routinely
process over 2,500 transactions per day, allowing the Company to provide
relatively short order-to-delivery cycle times. Management believes speed and
accuracy are critical in the highly competitive aerospace hardware distribution
industry. In addition, approximately 68% of the orders received from the
Company's customers are transmitted electronically.

The Company believes electronic commerce conducted over the Internet will
grow in importance in the future and is developing its own interactive web site
(tristar-aero.com) and an Intranet. The Company intends to make electronic
product catalogs available both over the Internet and in CD-ROM versions.
Management plans to continue to invest in technology to improve the quality,
reliability and cost-effectiveness of its operations.

PRODUCTS

TriStar stocks a wide variety of aerospace hardware ranging from small,
commodity hardware items such as washers and pins to larger, structural
fasteners and close-tolerance engineered fastening systems used throughout an
aircraft and its undercarriage. These products require sophisticated technology
and extensive testing to assure that they can endure the high speed stress loads
of the aircraft. The Company's major products include:

- High strength structural bolts and nuts.

- High strength/heat resistant engine bolts and nuts made from specialty
materials.

- Screws and nut plates.

- Rivets (solid and blind).

- Specialty fasteners.

- Other products, including bearings, valves and safety hardware.

The Company typically stocks approximately 100,000 SKUs to support its
customers' diverse aerospace hardware requirements.

SUPPLIERS

TriStar purchases fastener products from a variety of manufacturers and is
an Authorized Distributor for over 65 suppliers, including Fairchild, Huck,
Kaynar, SPS and Hi-Shear. TriStar believes it is one of the largest customers of
most of these manufacturers. The Company's top 10 suppliers accounted for $59.7
million of TriStar's purchases in fiscal 1997, representing approximately 62.5%
of total purchases of $95.5 million.

COMPETITION

The aerospace hardware industry is fragmented, with numerous companies which
manufacture and/or distribute fasteners, fastening systems and related
components that compete with the products the Company distributes. Competition
is generally based on product quality, including documentation, availability of
inventory, reliability and price. Certain of these competitors have greater
financial and other resources than the Company.

EMPLOYEES

As of March 28, 1998, the Company employed 409 full-time employees. The
Company is not a party to any collective bargaining agreements and management
considers its employee relations to be good. None of the Company's employees is
subject to a collective bargaining agreement. However, on March 25, 1998, the
Company received a notice from the National Labor Relations Board in connection
with a petition filed by a union organizer seeking a vote of the Company's
warehouse employees for the Transport Workers Union of America to organize and
represent such employees for collective bargaining purposes.

32
<PAGE>
PROPERTIES

The Company's executive offices are located in Dallas, Texas. The Company
considers its properties to be well-maintained and adequate for its current
operations. All of the Company's properties are leased.

The following table identifies the principal properties utilized by the
Company.

<TABLE>
<CAPTION>
SQUARE EXPIRATION
FACILITY DESCRIPTION LOCATION FOOTAGE DATE
- --------------------------------------------------------- ----------------------------- --------- ------------
<S> <C> <C> <C>
Corporate Headquarters and Central Warehouse............. Dallas, TX 77,554 9-30-1999
Sales Office and Central Warehouse....................... Tulsa, OK 53,588 8-31-2000
Sales Office and Warehouse............................... Deerfield Beach, FL 20,520 12-31-1999
Sales Office and Warehouse............................... Long Beach, CA 19,878 4-30-2000
Warehouse................................................ Bridgeton, MO 16,500 2-29-2000
Warehouse................................................ Augusta, KS 10,000 5-12-1998
Sales Office and Warehouse............................... Mississauga, Ontario 7,871 4-30-1998
Sales Office and Warehouse............................... Lachine, Quebec 4,268 7-31-1998
Sales Office and Warehouse............................... London, England 3,906 12-31-2010
Sales Office and Warehouse............................... Macon, GA 3,750 3-31-2001
Sales Office............................................. Auburn, WA 2,640 4-30-2002
Sales Office............................................. Fort Worth, TX 2,250 3-31-2000
Sales Office............................................. Sherman Oaks, CA 1,776 10-15-2003
Sales Office............................................. Cornwall, NY 1,300 2-2-2000
</TABLE>

PRODUCT LIABILITY AND LEGAL PROCEEDINGS

The Company currently provides no express warranties as to the performance
of the products it distributes pursuant to its conventional sales. Although the
Company's JIT agreements typically provide express warranties that the products
sold thereunder are free from defects, comply with applicable specifications and
are fit for the use intended, the Company has not, to date, experienced material
claims with respect to such warranties. However, the nature of the Company's
business exposes it to possible claims for personal injury or death which may
result from a failure of aerospace hardware distributed by it. The Company
maintains what it believes is adequate product liability insurance to protect it
from such claims. See "Risk Factors--Product Liability; Claims Exposure."

On April 9, 1998, Textron Aerospace Fasteners ("TAF"), a division of
Textron, Inc., which currently is not a supplier to the Company, filed a
complaint in the United States District Court for the Western District of
Tennessee alleging that the Company has improperly used certain trademarks held
by TAF in the sale of products to certain of the Company's customers. The
complaint does not state an amount in damages which TAF seeks to recover. The
Company believes that it has not improperly used TAF's trademarks as alleged by
TAF and is currently engaged in discussions with TAF to resolve this matter. The
Company can give no assurance that it will be able to resolve this matter on
terms acceptable to the Company or that lengthy litigation proceedings will not
result from this matter.

Subject to the foregoing paragraph, the Company is not presently involved in
any material legal proceedings. From time to time the Company may be named as a
defendant in suits for product defects, breach of implied warranty of
merchantability, or other actions relating to products which it distributes
which are manufactured by others. The Company believes that this exposure is
adequately covered by its product liability insurance and/or third party
indemnification.

33
<PAGE>
MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table and biographies set forth information concerning those
individuals who are currently serving as members of the Board of Directors or as
executive officers of the Company.

<TABLE>
<CAPTION>
NAME AGE* PRINCIPAL POSITIONS WITH THE COMPANY
- ----------------------------------------------------- ----- ----------------------------------------------------
<S> <C> <C>
Stephen Berger....................................... 58 Chairman of the Board of Directors
Quentin Bourjeaurd................................... 40 Director, President and Chief Executive Officer
Charles Balchunas.................................... 53 Director, Executive Vice President and Chief
Operating Officer
Douglas E. Childress................................. 40 Executive Vice President, Chief Financial Officer,
Treasurer and Secretary
Louis F. Partenza.................................... 40 Senior Vice President, Sales and Marketing
John R. King, Jr..................................... 49 Vice President, Information Technology
Richard P. Small..................................... 68 Vice Chairman of the Board of Directors
Muzzafar Mirza....................................... 40 Director
William Hopkins...................................... 34 Director
Brian E. Barents..................................... 54 Director Nominee
Cindy B. Brown....................................... 40 Director Nominee
</TABLE>

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

* As of December 31, 1997

STEPHEN BERGER has served as Chairman of the Board of Directors of the
Company since the Company's formation in 1996. Mr. Berger is a member of Odyssey
Investment Partners, LLC, a private investment firm, and is also a general
partner of Odyssey. From 1990 to 1993 Mr. Berger was employed by GE Capital
Corp. where he served as Chairman and CEO of FGIC and subsequently was an
Executive Vice President of GE Capital Corp.

QUENTIN BOURJEAURD has served on the Board of Directors of the Company since
September 19, 1996. Mr. Bourjeaurd has served as President of the Company since
September 19, 1996 and as the Chief Executive Officer of the Company since
December 2, 1996. From June 1993 to September 19, 1996, Mr. Bourjeaurd was the
Vice President and General Manager of Aviall Aerospace, then a business unit of
Aviall Services, Inc. Mr. Bourjeaurd formed Bourjeaurd Specialty Products, Inc.
in June 1983 and was the President and sole stockholder of such company until
its acquisition by Aviall Services, Inc. in June 1993.

CHARLES BALCHUNAS has served on the Board of Directors of the Company and as
Executive Vice President and Chief Operating Officer of the Company since
September 19, 1996. Mr. Balchunas joined the Predecessor in August 1990 as a
customer service manager, subsequently becoming the Executive Vice President and
Chief Operating Officer of the Predecessor. Prior to joining the Predecessor,
Mr. Balchunas served as a Lieutenant Colonel with the United States Marine
Corps. During his 22 years of service with the Marine Corps, Mr. Balchunas
gained extensive experience in aviation, aviation maintenance and logistics
systems management as an aircraft maintenance manager, an airfield operations
manager and the Commanding Officer, Headquarters of the Marine Corps Air Station
in Iwakuni, Japan.

DOUGLAS E. CHILDRESS joined the Company as the Vice President-Finance and
Treasurer on August 29, 1997 and became an Executive Vice President, the Chief
Financial Officer and the Secretary of the Company on January 15, 1998. Prior to
joining the Company, Mr. Childress served as the Director of Accounting,
Consulting and Evaluation Services of Interstate Battery System of America from
October 1994 to August 1997 and as an Audit and Consulting Manager with the KL
Real Estate Group of Ernst & Young from July 1993 to October 1994. Mr. Childress
co-founded the consulting firm Worldwide Holdings Corporation in 1990 prior to
which time he had been employed as an audit manager with Ernst & Young. Mr.
Childress is a certified public accountant and an accredited member of the
American Society of Appraisers.

LOUIS F. PARTENZA has served as the Senior Vice President, Sales and
Marketing of the Company since March 31, 1997. Prior to joining the Company, Mr.
Partenza was the Senior Vice President of Sales, Marketing and Purchasing with
Solair, Inc., a subsidiary of Banner Aerospace, Inc., which he joined in May
1995. From June 1991 to May 1995, Mr. Partenza was employed in the Accessory
Services division of

34
<PAGE>
UNC, Inc., starting as a General Manager and subsequently becoming Vice
President of Sales and Marketing. From 1986 to June 1991, Mr. Partenza was a
General Manager and Vice President of Finance with Barocas Aircraft Parts prior
to which time Mr. Partenza had worked as an auditor since 1981 with Coopers &
Lybrand and Deloitte & Touche.

JOHN R. KING, JR. has served as the Company's Vice President, Information
Technology since April 7, 1997. Prior to joining the Company, Mr. King had
served as the Vice President of Operations of FFSC Inc. (formerly Fitz & Floyd)
since 1987. In such capacity Mr. King oversaw approximately 350 employees with
the FFSC Inc.'s MIS, Inventory Control, Warehouse and Distribution, Customer
Service and Retail department reporting to him. From 1984 to 1987 Mr. King was
the Vice President of Systems Applications with Benton Schneider & Associates, a
software and consulting firm. Mr. King is certified in production and inventory
management by the American Production and Inventory Control Society.

RICHARD P. SMALL has served as the Vice Chairman of the Board of Directors
of the Company since September 19, 1996. Prior to that date, Mr. Small had been
the controlling shareholder, Chairman of the Board, and Chief Executive Officer
of the Predecessor since 1984.

MUZZAFAR MIRZA has served on the Board of Directors of the Company since the
Company's formation in 1996. Mr. Mirza is a member of Odyssey Investment
Partners, LLC and has been a principal in the private equity investing group of
Odyssey since 1993. From 1988 to 1993, Mr. Mirza was employed by the merchant
banking group of GE Capital Corp.

WILLIAM HOPKINS has served on the Board of Directors of the Company since
October 3, 1996. Mr. Hopkins is a member of Odyssey Investment Partners, LLC and
has been a principal in the private equity investing group of Odyssey since
1994. Prior to joining Odyssey, Mr. Hopkins was a member of the merchant banking
group of GE Capital Corp. Mr. Hopkins began his financial career as a corporate
lending officer with the Wells Fargo Bank.

BRIAN E. BARENTS has agreed to serve on the Board of Directors of the
Company upon consummation of the Offering. Mr. Barents has been President and
Chief Executive Officer of Galaxy Aerospace since 1996. From 1990 to 1996, Mr.
Barents was the President and Chief Executive Officer of Learjet Inc.

CINDY B. BROWN has agreed to serve on the Board of Directors of the Company
upon consummation of the Offering. Ms. Brown has been Senior Vice
President--Finance of Blockbuster Entertainment Group since 1997. From 1980 to
1997, Ms. Brown was employed by Dr. Pepper/Seven-Up North America where she
served in several capacities, including Director--Treasury and Strategic
Planning and Vice President-- Information Services.

COMPOSITION OF THE COMPANY'S BOARD OF DIRECTORS AFTER THE OFFERING

Upon or shortly before the Offering, the Board of Directors of the Company
will be divided into three classes, each having members who will serve for a
staggered three-year term. Messrs. Hopkins and Small will initially serve in the
class whose term expires in 1999, Messrs. Mirza and Balchunas will initially
serve in the class whose term expires in 2000 and Messrs. Berger and Bourjeaurd
will initially serve in the class whose term expires in 2001. As soon as
practicable after the Offering, each of Messrs. Berger, Mirza, Hopkins and Small
will resign from the Company's Board of Directors. The Company anticipates that,
upon or shortly after consummation of the Offering, Mr. Bourjeaurd will become
the Chairman of the Board of Directors and Mr. Childress will be elected to the
Board of Directors to replace Mr. Small. In addition, the Company anticipates
that the Board of Directors will elect three outside directors to the Board to
replace Messrs. Berger, Mirza and Hopkins, each of whom will resign upon the
election of his successor. As of the date of this Prospectus, the Company has
identified Mr. Barents and Ms. Brown, and Mr. Barents and Ms. Brown have agreed,
to serve as directors after consummation of the Offering. Mr. Barents and Ms.
Brown will replace Messrs. Berger and Hopkins. The Company is currently engaged
in a search for another individual not presently associated with the Company to
replace Mr. Mirza. However, the Company may not be able to complete its search
until after the Offering. Mr. Mirza presently intends to remain on the Board of
Directors until his successor has been identified and has agreed to serve as a
director.

35
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors has a Compensation Committee that until the
consummation of the Offering will continue to be comprised of Messrs. Berger,
Mirza and Hopkins. There are no Compensation Committee interlocks which are
required to be disclosed by the rules promulgated under the Securities Act. The
Board of Directors intends to establish an Audit Committee effective upon
closing of this Offering. The Audit Committee will recommend the independent
accountants to be appointed by the Board of Directors to audit the financial
statements of the Company, which includes an inspection of the books and
accounts of the Company, and will review with such accountants the scope of
their audit and their report thereon, including any questions and
recommendations that may arise relating to such audit and report or the
Company's internal accounting and auditing procedures.

DIRECTOR COMPENSATION

Members of the Board of Directors currently receive no compensation for
services rendered in their capacity as such other than reimbursement for
out-of-pocket expenses incurred in connection with their attendance at meetings
or otherwise in their capacity as a director.

EXECUTIVE COMPENSATION

The following table sets forth information concerning the compensation of
the Chief Executive Officer of the Company and each of the other executive
officers of the Company receiving over $100,000 in compensation during fiscal
1997 (the "Named Executive Officers"):

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION -------------
---------------------------------------------------- SECURITIES
OTHER ANNUAL ALL OTHER UNDERLYING
SALARY BONUS COMPENSATION COMPENSATION OPTIONS
NAME AND PRINCIPAL POSITION ($) ($) ($) ($)(1) (#)
- ---------------------------------------------- --------- --------- ------------- --------------- -------------

<S> <C> <C> <C> <C> <C>
Quentin Bourjeaurd............................ 202,706 350 -- 1,256 1,853,340
President and Chief Executive Officer

Charles Balchunas............................. 161,927 100,350 16,215(2) 3,569 723,325
Executive Vice President and Chief Operating
Officer

G. Bruce McInnis(3)........................... 133,846 100,350 66,935(2) 525 723,325
Assistant to the Chairman

Louis F. Partenza............................. 70,000 50,250 46,650(2) 221 158,000
Senior Vice President, Sales and Marketing
</TABLE>

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

(1) Represents (i) amounts paid for term life insurance premiums on behalf of
Messrs. Bourjeaurd, Balchunas, McInnis and Partenza in the amounts of $526,
$329, $525 and $221, respectively, (ii) amounts paid for whole life
insurance premiums on behalf of Mr. Balchunas in the amount of $677 and
(iii) contributions to the Company's 401(k) plan on behalf of Mr. Bourjeaurd
and Mr. Balchunas in the amounts of $730 and $2,563, respectively.

(2) Represents reimbursement of expenses incurred by Messrs. Balchunas, McInnis
and Partenza in relocating to Dallas, Texas in connection with their
commencement of employment with the Company in fiscal 1997.

(3) During fiscal 1997, Mr. McInnis served as the Chief Financial Officer and
Executive Vice President-- Administration of the Company. As of January 15,
1998, Mr. McInnis resigned from such positions to become Assistant to the
Chairman of the Board of Directors of the Company.

36
<PAGE>
The following table sets forth information concerning stock option grants
made to each of the Named Executive Officers during fiscal 1997:

OPTION GRANTS IN FISCAL 1997

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
------------------------------- AT ASSUMED ANNUAL RATES OF
NUMBER OF PERCENT OF STOCK PRICE APPRECIATION
SECURITIES TOTAL OPTIONS FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(1)
OPTIONS EMPLOYEES IN PRICE EXPIRATION --------------------------
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ------------------------------- -------------- --------------- ----------- ----------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
Quentin Bourjeaurd............. 1,853,340(2) 48.68 1.47 9/18/06 1,705,073 4,336,816
Charles Balchunas.............. 361,505(3) 9.50 1.47 9/18/06 332,585 845,922
72,364(4) 1.90 2.91 9/18/06 (37,629) 65,128
72,364(5) 1.90 5.09 9/18/06 (195,383) (92,626)
72,364(6) 1.90 7.34 9/18/06 (358,202) (255,445)
72,364(7) 1.90 9.93 9/18/06 (545,625) (442,868)
72,364(8) 1.90 12.75 9/18/06 (749,691) (646,934)
G. Bruce McInnis............... 361,505(3) 9.50 1.47 9/18/06 321,739 806,156
72,364(4) 1.90 2.91 9/18/06 (39,800) 57,168
72,364(5) 1.90 5.09 9/18/06 (197,554) (100,586)
72,364(6) 1.90 7.34 9/18/06 (360,373) (263,405)
72,364(7) 1.90 9.93 9/18/06 (547,795) (450,828)
72,364(8) 1.90 12.75 9/18/06 (751,862) (654,894)
Louis F. Partenza.............. 79,000(9) 2.08 1.47 9/18/06 67,940 169,850
15,800(4) 0.42 2.91 9/18/06 (9,164) 11,218
15,800(5) 0.42 5.09 9/18/06 (43,608) (23,226)
15,800(6) 0.42 7.34 9/18/06 (79,158) (58,776)
15,800(7) 0.42 9.93 9/18/06 (120,080) (99,698)
15,800(8) 0.42 12.75 9/18/06 (164,636) (144,254)
</TABLE>

Under the terms of the grant letters relating to the options, options which
are not exercisable at the date of grant become "available" in the Company's
fiscal years 1997 through 2001 depending on satisfaction by the Company of
certain performance targets. Once "available," 25% of such options may be
exercised immediately with 25% of the remaining options becoming exercisable at
the end of each of the next three fiscal years. The availability and
exercisability of the options are subject to acceleration in certain
circumstances. As a result of the Offering, all of the options which are
"available" prior to the Offering will become immediately exercisable. In
addition, 80% of the options eligible to become "available" in fiscal years
ending subsequent to the Offering will become immediately exercisable as a
result of the Offering. The options which are not accelerated as described in
the foregoing sentence will terminate upon consummation of the Offering. See
"Management--Stock Option Plans--1996 Stock Option Plan."

Although Messrs. Bourjeaurd and Balchunas were granted options prior to
fiscal 1997, the information relating to such grants has been included for
purposes of the table above.

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

(1) These amounts are based on calculations at hypothetical 5% and 10%
compounded annual appreciation rates prescribed by the Securities and
Exchange Commission (the "Commission") and, therefore, are not intended to
forecast possible future appreciation, if any, of the Common Stock. Solely
for purposes of calculating the potential realizable value of the indicated
options, the Company has assumed the value of the underlying Common Stock on
the date of each grant to be $1.47, the per share price paid by Odyssey for
the Common Stock on September 19, 1996. Messrs. Bourjeaurd's and Balchunas's
options were granted on September 19, 1996. Messrs. McInnis's and Partenza's
options were granted on January 14, 1997 and March 31, 1997, respectively.

37
<PAGE>
(2) Of the options granted, 21.31% were eligible to become "available" in fiscal
1997 and 19.67% are eligible to become available in each of the Company's
fiscal years 1998, 1999, 2000 and 2001 depending on satisfaction by the
Company of certain performance targets. The Compensation Committee has
determined that 93% of the options eligible to become available in fiscal
year 1997 actually became available.

(3) Of the options granted, 20% became "available" under the terms of the
specific grant letters on the date of grant, and up to 20% are eligible to
become "available" in each of the Company's fiscal years 1998, 1999, 2000
and 2001 depending on the satisfaction by the Company of certain performance
targets.

(4) The options reflected were eligible to become "available" depending on the
satisfaction by the Company of certain performance targets for fiscal year
1997. The Compensation Committee has determined that 93% of the options
reflected became available based on the Company's performance in fiscal
1997.

(5) The options reflected are eligible to become "available" depending on the
satisfaction by the Company of certain performance targets for fiscal 1998.

(6) The options reflected are eligible to become "available" depending on the
satisfaction by the Company of certain performance targets for fiscal 1999.

(7) The options reflected are eligible to become "available" depending on the
satisfaction by the Company of certain performance targets for fiscal 2000.

(8) The options reflected are eligible to become "available" depending on the
satisfaction by the Company of certain performance targets for fiscal 2001.

(9) Of the options granted, 20% were eligible to become "available" in fiscal
1997 and 20% are eligible to become available in each of the Company's
fiscal years 1998, 1999, 2000 and 2001 depending on satisfaction by the
Company of certain performance targets. The Compensation Committee has
determined that 93% of the options eligible to become available in 1997
actually became available.

The Named Executive Officers did not exercise any options for shares of
Common Stock during fiscal 1997. The following table sets forth certain
information concerning the value of unexercised options held by the Named
Executive Officers at the end of fiscal 1997:

FISCAL 1997 YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END
----------------------------- ----------------------------
NAME EXERCISABLE/UNEXERCISABLE(#)(1) EXERCISABLE/UNEXERCISABLE($)(1)
- ----------------------------------------------------- ----------------------------- ----------------------------
<S> <C> <C>
Quentin Bourjeaurd................................... 91,838/1,761,502 1,334,406/25,594,624
Charles Balchunas.................................... 89,126/634,199 1,270,773/7,019,736
G. Bruce McInnis..................................... 89,126/634,199 1,270,773/7,019,736
Louis F. Partenza.................................... 7,348/150,652 101,476/1,709,678
</TABLE>

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

(1) Solely for purposes of calculating the value of the indicated options as of
September 30, 1997, as required by the rules of the Commission, the Company
has assigned to the Common Stock a value of $16.00 per share, the initial
public offering price per share in the Offering.

38
<PAGE>
EMPLOYMENT AGREEMENTS

QUENTIN BOURJEAURD EXECUTIVE EMPLOYMENT AGREEMENT. Mr. Bourjeaurd entered
into an executive employment agreement with the Company on September 19, 1996.
Pursuant to his employment agreement, Mr. Bourjeaurd will serve as President of
the Company through September 19, 2001, unless earlier terminated as provided
therein. Under his employment agreement, Mr. Bourjeaurd receives an annual
salary of $200,000 and is entitled to medical and other benefits generally
available to senior executives of the Company. On July 1, 1997 the Compensation
Committee increased Mr. Bourjeaurd's annual compensation to $225,000.

Mr. Bourjeaurd's employment agreement also provides that if Mr. Bourjeaurd's
employment is terminated by the Company other than for Cause (as defined
therein), Mr. Bourjeaurd will continue to receive his salary and benefits (as
severance) until the earlier to occur of (i) the expiration of the term of his
employment agreement or (ii) the second anniversary of the date of termination;
provided that such continued salary and benefits will cease upon commencement by
Mr. Bourjeaurd of other full-time employment. In the event Mr. Bourjeaurd's
employment is terminated for Cause or by reason of death or Disability (as
defined therein), no further compensation will be payable by the Company.
Additionally, Mr. Bourjeaurd's employment agreement contains a non-competition
provision pursuant to which Mr. Bourjeaurd has agreed not to engage in any
business activity, without the consent of the Company, which would be in
competition with any business engaged in by the Company during his employment
and thereafter for as long as he continues to receive any of the severance
payments described above.

CHARLES BALCHUNAS EXECUTIVE EMPLOYMENT AGREEMENT. Mr. Balchunas entered
into an executive employment agreement with the Company on February 1, 1997.
Pursuant to his employment agreement, Mr. Balchunas will serve as Chief
Operating Officer of the Company through December 31, 1999, unless earlier
terminated as provided therein. Under his employment agreement, Mr. Balchunas
receives an annual salary of $200,000, is eligible for such discretionary
bonuses as the Compensation Committee may determine and is entitled to medical
and other benefits generally available to senior executives of the Company.

Mr. Balchunas's employment agreement also provides that if Mr. Balchunas's
employment is terminated other than for Cause (as defined therein), Mr.
Balchunas will continue to receive his salary and benefits (as severance) for a
period of two years following the Date of Termination (as defined therein) of
his employment; provided that such continued salary and benefits will cease upon
commencement by Mr. Balchunas of other full-time employment. In the event Mr.
Balchunas's employment is terminated for Cause or by reason of death or
Disability (as defined therein), no further compensation will be payable by the
Company. Additionally, Mr. Balchunas's employment agreement contains a
non-competition provision pursuant to which Mr. Balchunas has agreed not to
engage in any business activity, without the consent of the Company, which would
be in competition with any business engaged in by the Company during his
employment and for two years thereafter.

G. BRUCE MCINNIS EMPLOYMENT AGREEMENT. Mr. McInnis and the Company are
parties to an amended and restated employment agreement dated as of January 15,
1998. Pursuant to such employment agreement, Mr. McInnis will serve as Assistant
to the Chairman of the Board of Directors of the Company through January 15,
2000, unless earlier terminated as provided therein. Under his employment
agreement, Mr. McInnis receives an annual salary of $200,000 and is entitled to
receive medical and other benefits generally available to senior executives of
the Company.

Mr. McInnis's employment agreement provides that if the Company terminates
Mr. McInnis's employment other than for Cause (as defined therein), Mr. McInnis
will continue to receive his salary and benefits (as severance) until the
earlier of (i) January 15, 2000 or (ii) the occurrence of certain triggering
events relating to the sale and transferability of Mr. McInnis's shares of
Common Stock. In the event Mr. McInnis's employment is terminated for Cause or
by reason of death or Disability (as defined therein), no further compensation
will be payable by the Company. Additionally, Mr. McInnis's employment

39
<PAGE>
agreement contains a non-competition provision pursuant to which Mr. McInnis has
agreed not to engage in any business activity, without the consent of the
Company, which would be in competition with any business engaged in by the
Company during his employment and thereafter for as long as he continues to
receive any of the severance payments described above.

Mr. McInnis's employment agreement also provides that the Company will use
its best efforts to have the shares of Common Stock held by Mr. McInnis or
subject to exercisable options held by him included in the Offering (subject to
certain exclusion and cut-back provisions) and, if all such shares are not
included in the Offering, to use its best efforts to file, within 30 days
following the lock-up period set forth in the Underwriting Agreement, a Form S-8
relating to all exercisable options to purchase shares of Common Stock then held
by Mr. McInnis. The Company has also agreed not to terminate Mr. McInnis's
employment other than for Cause during a specified period following the Offering
relating to the sale and transferability of his Common Stock.

LOUIS F. PARTENZA EMPLOYMENT AGREEMENT. Mr. Partenza entered into an
employment agreement with the Company on March 17, 1997. Pursuant to his
employment agreement, Mr. Partenza will serve as Senior Vice President, Sales
and Marketing of the Company through December 31, 1999, unless earlier
terminated as provided therein. Under his employment agreement, Mr. Partenza
receives an annual salary of $140,000, is eligible to receive a bonus of up to
50% of his salary and is entitled to medical and other benefits generally
available to senior executives of the Company.

Mr. Partenza's employment agreement also provides that if Mr. Partenza's
employment is terminated other than for Cause (as defined therein), Mr. Partenza
will continue to receive his salary and benefits (as severance) for a period of
two years following the Date of Termination (as defined therein) of his
employment; provided that such continued salary and benefits will cease upon
commencement by Mr. Partenza of other full-time employment. In the event Mr.
Partenza's employment is terminated for Cause or by reason of death or
Disability (as defined therein), no further compensation will be payable by the
Company. Additionally, Mr. Partenza's employment agreement contains a
non-competition provision pursuant to which Mr. Partenza has agreed not to
engage in any business activity, without the consent of the Company, which would
be in competition with any business engaged in by the Company during his
employment and for two years thereafter, provided that Mr. Partenza continues to
receive any of the severance payments described above.

EXECUTIVE AND KEY EMPLOYEE INCENTIVE PLAN

The Company's Executive and Key Employee Incentive Plan provides for a
maximum annual bonus amount payable to certain executives and key employees
equal to a percentage of such executive's annual compensation. For each
executive, the bonus amount is determined by the Compensation Committee based
upon the following factors: (1) the achievement by the Company of certain
financial objectives; (2) the achievement by the executive's department of
certain quantifiable objectives; and (3) individual performance criteria.

STOCK OPTION PLANS

1996 STOCK OPTION PLAN

The Company's Amended and Restated 1996 Stock Option Plan (the "1996 Plan")
authorizes the issuance of up to 3,950,000 shares of common stock of the Company
pursuant to stock options granted to key employees, non-employee directors and
consultants of the Company. The 1996 Plan does not provide for stock
appreciation rights.

The 1996 Plan will expire on September 18, 2006, unless earlier terminated
by the Company's Board of Directors. The authorized number of shares, the
exercise price of outstanding options and the number of shares under options are
subject to appropriate adjustment in the event of any change in the number of

40
<PAGE>
outstanding shares of the Company's common stock through merger, consolidation,
reorganization, recapitalization, stock dividend, stock split, reverse split,
split-up, split-off, spin-off, combination of shares, exchange of shares or
other like change in the capital structure of the Company.

The 1996 Plan is administered by the Compensation Committee which selects
the optionees and determines the terms and provisions of each option grant
within the parameters set forth in the 1996 Plan.

In general, in the event of a "change of control" of the Company (as defined
in the 1996 Plan), each option will terminate within a specified number of days
after notice to the holder of such option, and each such holder will receive an
amount equal to the excess of the aggregate fair market value of the shares of
Common Stock subject to the option over the exercise price, payable in the same
consideration as received by the stockholders of the Company upon the closing of
such transaction. Although the Offering will not constitute a "change of
control" under the 1996 Plan, the grant letters pursuant to which the
outstanding options were granted provide that all options not subject to
acceleration by virtue of the consummation of the Offering will terminate
following consummation of the Offering. See "Management--Executive
Compensation--Option Grants in Fiscal 1997" for a description of the
acceleration provisions relating to the Offering.

Options may not be transferred except by will or the laws of descent and
distribution and may be exercised only by the holder during the lifetime of such
holder.

The options granted under the 1996 Plan are evidenced by stock option
agreements and are intended to be options that do not meet the requirements for
"incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended. The exercise price of options must be at least
the fair market value of the Company's common stock on the date the option is
granted, and each option must expire no later than September 18, 2006. To
exercise an option, the optionee must deliver to the Company full payment for
the shares purchased, provided that the Compensation Committee may in its
discretion (i) accept as payment shares of the Company's common stock having a
fair market value equal to the purchase price of the shares being purchased or
(ii) accept such other payment as the Compensation Committee shall permit in its
sole discretion at the time of exercise. The Compensation Committee is empowered
to amend the 1996 Plan, subject to stockholder approval in certain
circumstances.

As of December 31, 1997, options to purchase 3,807,170 shares of Common
Stock were outstanding under the 1996 Plan, of which 337,528 options were
exercisable on such date. As a result of the Offering, 2,825,392 of the 1996
Plan options outstanding at December 31, 1997 will accelerate and become
immediately exercisable. The remaining 644,250 options outstanding at December
31, 1997 which were not then exercisable will not be accelerated and will
terminate upon consummation of the Offering pursuant to the provisions of the
grant letters under which such options were granted. Following the exercise by a
certain Selling Stockholder of options to purchase 204,768 shares of Common
Stock and the sale of such shares in the Offering, 2,958,152 options under the
1996 Plan will be outstanding after the Offering, all of which will be
immediately exercisable.

1998 STOCK OPTION PLAN

The Company's 1998 Stock Option (the "1998 Plan") authorizes the issuance of
up to 2,000,000 shares of common stock of the Company pursuant to stock options
granted to key employees, non-employee directors and consultants of the Company.
The 1998 Plan does not provide for stock appreciation rights.

The 1998 Plan will expire on April 1, 2008 unless earlier terminated by the
Company's Board of Directors. The authorized number of shares, the exercise
price of outstanding options and the number of shares under options are subject
to appropriate adjustment in the event of any change in the number of
outstanding shares of the Company's common stock through merger, consolidation,
reorganization,

41
<PAGE>
recapitalization, stock dividend, stock split, reverse split, split-up,
split-off, spin-off, combination of shares, exchange of shares or other like
change in the capital structure of the Company.

The 1998 Plan is administered by the Compensation Committee which selects
the optionees and determines the terms and provisions of each option grant
within the parameters set forth in the 1998 Plan.

In the event of a "change of control" of the Company (as defined in the 1998
Plan), the Compensation Committee has the discretion (i) to accelerate the
vesting of each option not then currently exercisable, (ii) to cause each option
to terminate within a period of time after delivery of notice and (iii) to cause
each option holder to receive, in respect of each share for which such option is
exercisable, an amount equal to the excess of the fair market value of such
share over the exercise price per share, payable in a form of consideration as
determined by the Compensation Committee.

Options may not be transferred (other than to a member of a holder's
immediate family or to a trust for the benefit of a holder or a member of a
holder's family), except by will or the laws of the descent and distribution.

42
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS

GENERAL

The table below and the notes thereto set forth as of January 31, 1998 and
after giving effect to the Offering (assuming no exercise of the Underwriters'
over-allotment option, except as otherwise disclosed in the footnotes to the
table) certain information concerning the beneficial ownership (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934) of the Company's Common
Stock by (i) each person known by the Company to own beneficially more than 5%
of the outstanding Common Stock, (ii) each director of the Company and each
Named Executive Officer and (iii) all directors and executive officers and
directors of the Company as a group. Additionally, the table names each Selling
Stockholder and specifies the number of shares of Common Stock to be sold by
each. Except as indicated in the footnotes to the table, the persons named in
the table have sole voting and investment power with respect to all shares of
Common Stock shown as beneficially owned by them, subject to community property
laws where applicable.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES BENEFICIALLY
OWNED
BEFORE OFFERING SHARES BEING AFTER THE OFFERING
------------------------- SOLD IN ------------------------
NAME AND ADDRESS NUMBER PERCENT THE OFFERING NUMBER PERCENT
- ----------------------------------------------- ------------ ----------- -------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Odyssey Partners, L.P(1)....................... 19,063,882 96.54 10,484,707 1,114,073 6.64
31 West 52nd Street
New York, NY 10019
Stephen Berger(1).............................. 19,063,882 96.54 10,484,707 1,114,073 6.64
Muzzafar Mirza................................. -- -- -- -- --
William Hopkins................................ -- -- -- -- --
Richard P. Small(2)............................ 2,046,732 12.34 1,850,142 196,590 1.17
7434 South Gary
Tulsa, OK 74136
Quentin Bourjeaurd(3).......................... 3,006,266 16.59 120,527 2,885,739 15.75
Charles Balchunas(4)........................... 738,788 4.30 -- 738,788 4.25
Louis F. Partenza(5)........................... 198,764 1.19 -- 198,764 1.17
All directors and executive officers as a group 19,063,882 96.54 12,455,376 5,301,129 27.63
(11 persons)(6)..............................
G. Bruce McInnis(7)............................ 807,044 4.70 204,768 602,276 3.59
BT Investment Partners, Inc.(8)................ 682,244 4.11 616,714 65,530 *
Brian E. Barents............................... -- -- -- -- --
Cindy B. Brown................................. -- -- -- -- --
</TABLE>

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

* Less than one percent.

(1) Includes (i) 11,598,780 shares owned of record by Odyssey and (ii) 7,465,102
shares (including 337,528 shares subject to options which are currently
exercisable and 2,825,392 shares subject to options which will become
exercisable upon consummation of the Offering) over which Odyssey has a
proxy and power of attorney pursuant to the Stockholders Agreement described
below. See "Certain Transactions--Management Stockholders' and
Optionholders' Agreement." If the Underwriters' over-allotment option is
exercised in full, Odyssey will beneficially own no shares after the
Offering. Messrs. Stephen Berger, Jack Nash, Leon Levy, Brian Wruble and
Joshua Nash are general partners of Odyssey and, accordingly, may be deemed
to own beneficially the shares beneficially owned by Odyssey. Each such
general partner disclaims beneficial ownership of the shares beneficially
owned by Odyssey.

43
<PAGE>
(2) Includes (i) 1,643,200 shares owned of record by R.P. Small Corp., of which
Mr. Small is the sole stockholder and (ii) 403,532 shares owned of record by
The Richard P. and Norma T. Small Foundation, a not-for-profit corporation
of which Mr. Small is a director. If the Underwriters' over-allotment option
is exercised in full, Mr. Small will beneficially own no shares after the
Offering.

(3) Includes (i) 1,472,244 shares owned of record by Mr. Bourjeaurd, (ii) 91,838
shares subject to options which are currently exercisable and (iii)
1,442,184 shares subject to options which will become exercisable as a
result of the Offering. If the Underwriters' over-allotment option is
exercised in full, Mr. Bourjeaurd will beneficially own 2,872,932, or
15.35%, of the shares of Common Stock outstanding after the Offering. Mr.
Bourjeaurd's business address is 2527 Willowbrook Road, Dallas, Texas 75220.

(4) Includes (i) 136,512 shares owned of record by Mr. Balchunas, (ii) 89,126
shares subject to options which are currently exercisable and (iii) 513,150
shares subject to options which will become exercisable as a result of the
Offering.

(5) Includes (i) 68,256 shares owned of record by Mr. Partenza, (ii) 7,348
shares subject to options which are currently exercisable and (iii) 123,160
shares subject to options which will become exercisable as a result of the
Offering.

(6) Includes (i) 11,598,780 shares owned of record by Odyssey and (ii) 7,465,102
shares (including shares subject to options which will be exercisable after
the Offering) over which Odyssey has a proxy and power of attorney pursuant
to the Stockholders Agreement. Mr. Berger, the Chairman of the Board of
Directors of the Company, is a general partner of Odyssey and may be deemed
to own beneficially the shares beneficially owned by Odyssey (see note 1
above). The shares being sold in the Offering include shares to be sold by
Odyssey and Messrs. Small and Bourjeaurd. The shares beneficially owned
after the Offering include (i) 1,114,073 shares owned of record by Odyssey
which may be deemed to be beneficially owned by Mr. Berger, (ii) 196,590
shares beneficially owned by Mr. Small as the sole stockholder of R.P. Small
Corp. (see note 2 above) and (iii) 3,990,466 shares beneficially owned by
the remaining directors and officers of the Company. If the Underwriters'
over-allotment option is exercised in full, Odyssey and Mr. Small will
beneficially own no shares after the Offering and the remaining directors
and officers will own 3,977,569, or 20.31%, of the shares of Common Stock
outstanding after the Offering.

(7) Includes (i) 204,768 shares owned of record by Mr. McInnis, (ii) 89,126
shares subject to options which are currently exercisable, and (iii) 513,150
shares subject to options which will become exercisable as a result of the
Offering. If the Underwriters' over-allotment option is exercised in full,
Mr. McInnis will beneficially own no shares after the Offering.

(8) If the Underwriters' over-allotment option is exercised in full, BT
Investment Partners, Inc. will beneficially own no shares after the
Offering.

44
<PAGE>
CERTAIN TRANSACTIONS

MANAGEMENT STOCKHOLDERS' AND OPTIONHOLDERS' AGREEMENT

The Company, Odyssey, BT Investment Partners, Inc. ("BT Investments") and
each management stockholder and optionholder are parties to an Amended and
Restated Management Stockholders' and Optionholders' Agreement dated as of May
15, 1997 (the "Stockholders Agreement"). The Stockholders Agreement provides,
among other things, for certain limitations on transfers of the Common Stock,
for the grant of proxies and powers of attorney in favor of Odyssey, and for
certain "piggyback" registration rights in favor of the management stockholders
with respect to registered offerings of the Common Stock by the Company. Upon
consummation of the Offering, however, the Stockholders Agreement will
terminate, except with respect to the "piggyback" registration rights granted to
the management stockholders. The management stockholders party to the agreement
include Messrs. Bourjeaurd, Balchunas and Partenza, in addition to certain other
employees of the Company. Such management stockholders will own a total of
2,195,159 shares of the outstanding Common Stock following consummation of the
Offering (1,780,994 shares if the Underwriters' over-allotment option is
exercised in full).

REGISTRATION RIGHTS AGREEMENT

The Company and Odyssey are parties to a Registration Rights Agreement dated
as of November 7, 1996 (the "Registration Rights Agreement"). The Registration
Rights Agreement provides Odyssey with certain "demand" registration rights, as
well as certain "piggyback" registration rights with respect to registered
offerings of the Common Stock by the Company. In connection with the acquisition
of the Predecessor, of which Mr. Small was the controlling shareholder, Odyssey
and Mr. Small agreed that Mr. Small would have the right to purchase Common
Stock of the Company and would be entitled to the same registration rights as
given Odyssey pursuant to the Registration Rights Agreement. Accordingly, the
Company, Odyssey and R.P. Small Corp., a corporation wholly-owned by Mr. Small
and through which Mr. Small beneficially owns shares of the Company's Common
Stock, entered into a letter agreement (the "Small Agreement"), dated November
7, 1996, which grants R.P. Small Corp. the same "piggyback" registration rights
as those granted to Odyssey under the Registration Rights Agreement, as well as
certain rights to participate in "demand" registrations instituted by Odyssey.
In the event that Odyssey and R.P. Small Corp. sell all of the Common Stock
owned by them in the Offering, the Registration Rights Agreement and the Small
Agreement will be terminated.

INTEREST OF CERTAIN PERSONS IN THE OFFERING

Odyssey formed the Company on August 21, 1996 to facilitate the acquisition
of the Predecessor and Aviall Aerospace and currently owns of record 69.9% of
the outstanding Common Stock of the Company. In connection with its previously
announced dissolution and liquidation, Odyssey intends to sell the Common Stock
of the Company owned by it in the Offering. Odyssey will receive an estimated
$157.3 million of the $199.2 million of the aggregate proceeds to be received by
the Selling Stockholders, net of underwriting discounts and commissions, as a
result of the Offering ($174.0 million of the $229.0 million of the aggregate
proceeds if the Underwriters' over-allotment option is exercised in full).
Messrs. Stephen Berger, Muzzafar Mirza and William Hopkins, members of the
Company's Board of Directors, are partners or principals of Odyssey.

In addition, several other Selling Stockholders presently serve or formerly
served as directors and/or executive officers of the Company, including Messrs.
Richard P. Small and Quentin Bourjeaurd. Mr. Small, formerly the controlling
stockholder, Chairman of the Board and Chief Executive Officer of the
Predecessor and currently the Vice Chairman of the Company's Board of Directors,
intends to sell in the Offering all of the Common Stock owned by R.P. Small
Corp., of which Mr. Small is the sole stockholder. R.P. Small Corp. will receive
an estimated $21.7 million of the aggregate net proceeds to be received by the
Selling Stockholders as a result of the Offering ($24.6 million if the
Underwriters' over-allotment option is

45
<PAGE>
exercised in full). In addition, The Richard P. and Norma T. Small Foundation, a
not-for-profit corporation of which Mr. Small is a director, intends to sell all
of the Common Stock owned by it in the Offering and will receive an estimated
$6.1 million of the aggregate net proceeds to be received by the Selling
Stockholders as a result of the Offering. Mr. Bourjeaurd, the President and
Chief Executive Officer of the Company, is seeking to sell 120,527 shares of
Common Stock in the Offering (133,334 shares if the Underwriters' over-allotment
option is exercised in full) and will receive an estimated $1.8 million of the
aggregate net proceeds to be received by the Selling Stockholders as a result of
the Offering ($2.0 million if the Underwriters' over-allotment option is
exercised in full). See "Principal and Selling Stockholders."

EMPLOYEE STOCK PURCHASE PLAN

On April 29, 1997, the Company adopted an Employee Stock Purchase Plan (the
"Stock Purchase Plan"). Any employee, officer or director of the Company is
eligible to participate in the Stock Purchase Plan. The Stock Purchase Plan is
administered by the Board of Directors of the Company, which, in its sole
discretion, may determine the number of shares issuable to an eligible
purchaser, the purchase price thereof, vesting requirements and any other
additional terms as the Board of Directors deems appropriate.

On May 30, 1997, the Company issued and sold an aggregate of 660,598 shares
of its common stock, at a price of $1.47 per share, to 21 employees of the
Company pursuant to the Stock Purchase Plan. Such shares were issued in reliance
upon the exemption from registration provided by Rule 701 under the Securities
Act. Among the employees purchasing such shares were Messrs. Charles Balchunas,
G. Bruce McInnis, Louis F. Partenza and John R. King.

LOANS TO MANAGEMENT

On September 19, 1996, the Company loaned Mr. Bourjeaurd $200,000 at an
interest rate of 5.93% per annum, the proceeds of which were used to purchase
Common Stock of the Company. The entire principal and interest under such loan
was repaid by Mr. Bourjeaurd on December 11, 1997. On April 15, 1997, the
Company loaned an additional $100,000 to Mr. Bourjeaurd at an interest rate of
5.83% per annum, the proceeds of which were used to purchase additional Common
Stock. The entire principal and interest under such loan was repaid by Mr.
Bourjeaurd on December 11, 1997.

On May 30, 1997, the Company loaned Mr. Balchunas $75,000 at an interest
rate of 6.74% per annum, the proceeds of which were used, together with personal
funds, to purchase 136,512 shares of Common Stock of the Company at a purchase
price of $1.47 per share. Until all principal and interest is paid in full, Mr.
Balchunas is required to apply all proceeds from any sale or transfer of any
shares of Common Stock owned by him to the principal and interest then owing
under the loan. Interest is otherwise payable semi-annually. Interest of
$1,727.97 was accrued for the fiscal year ended September 30, 1997. All of the
136,512 shares purchased by Mr. Balchunas are pledged to the Company as security
for such loan.

On May 30, 1997, the Company loaned Mr. Partenza $75,000 at an interest rate
of 6.74% per annum, the proceeds of which were used, together with personal
funds, to purchase 68,256 shares of Common Stock of the Company at a purchase
price of $1.47 per share. Until all principal and interest is paid in full, Mr.
Partenza is required to apply all proceeds from any sale or transfer of any
shares of Common Stock owned by him to the principal and interest then owing
under the loan. Interest is otherwise payable semi-annually. Interest of
$1,727.97 was accrued for the fiscal year ended September 30, 1997. All of the
68,256 shares purchased by Mr. Partenza are pledged to the Company as security
for such loan.

TRANSACTIONS RELATING TO THE ACQUISITIONS OF THE PREDECESSOR AND AVIALL
AEROSPACE

Prior to the Company's acquisition of the Predecessor, the Predecessor
maintained a VEBA trust which held a life insurance policy on behalf of Mr.
Small, and through which the premiums for such policy were paid. As a result of
the acquisition of the Predecessor by merger, the Company succeeded the
Predecessor as the administrator of the VEBA trust. In connection with the
acquisition of the Predecessor,

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the Company entered into a letter agreement with Mr. Small whereby: (i) the
Company agreed to transfer the life insurance policies to Mr. Small in exchange
for a payment by Mr. Small to the VEBA trust of $660,000, the approximate cash
surrender value of the life insurance policies, and (ii) the Company agreed to
reimburse Mr. Small for such payment as cash was paid out of the VEBA trust for
premiums for medical, disability or other insurance maintained by the Company.
Pursuant to such agreement, the Company made a payment of $330,000 to Mr. Small
on October 16, 1997. Since October 16, 1997, no further payments have been made
to Mr. Small. The Company anticipates that the remaining funds in the VEBA trust
will be paid out for medical, disability or other insurance premiums in fiscal
1998 and, accordingly, that the remaining $330,000 due to Mr. Small under such
agreement will be paid to him shortly after the end of the Company's 1998 fiscal
year.

In connection with the acquisition of the Predecessor, the Company entered
into an employment agreement with Mr. Small providing for payments to Mr. Small
in the amount of $225,000 per year, of which $165,000 represents compensation
for advisory services provided by Mr. Small in connection with the acquisition
of the Predecessor and $60,000 represents annual compensation for services
provided by Mr. Small pursuant to such employment agreement.

As compensation for his services in coordinating, structuring and
consummating the simultaneous acquisitions of the Predecessor and Aviall
Aerospace, the Company agreed to pay Mr. Bourjeaurd a fee in the amount of
$2,560,000. Such fee was paid by the Company in installments as follows: $51,370
in May 1997, $500,000 in October 1997, $795,560 in December 1997 and $1,213,070
in February 1998. As compensation for his services in securing the equity to
consummate such acquisitions, the Company issued 790,000 shares of its Common
Stock to Mr. Bourjeaurd as a finder's fee at the closing of such acquisitions on
September 19, 1996.

As compensation for advisory services provided by Odyssey with respect to
coordinating, structuring, consummating and financing the simultaneous
acquisitions of the Predecessor and Aviall Aerospace, the Company paid Odyssey a
fee in the amount of $750,000. Such fee was paid by the Company at the closing
of such acquisitions on September 19, 1996.

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<PAGE>
DESCRIPTION OF CAPITAL STOCK

GENERAL

The authorized capital stock of the Company consists of 40,000,000 shares of
Common Stock, par value $0.01 per share, and 10,000,000 shares of Preferred
Stock, par value $0.01 per share (the "Preferred Stock"). As of the date of this
Prospectus, there are 16,583,206 shares of Common Stock outstanding and no
shares of Preferred Stock outstanding or reserved for issuance. Upon completion
of the Offering, 2,958,152 shares of Common Stock will be issuable upon exercise
of outstanding options under the Company's stock option plans and up to an
additional 2,000,000 shares of Common Stock will be reserved for issuance under
such plans.

The following description of the Company's capital stock is a summary of the
material terms of such stock. The following does not purport to be complete and
is subject in all respects to applicable Delaware law and to the provisions of
the Company's Amended and Restated Certificate of Incorporation (the
"Certificate") and Bylaws.

COMMON STOCK

Subject to the prior rights of any series of Preferred Stock which may from
time to time be authorized and outstanding, holders of Common Stock are entitled
to receive dividends out of funds legally available therefor when, as and if
declared by the Board of Directors and to receive pro rata net assets of the
Company legally available for distribution upon liquidation or dissolution.

Holders of Common Stock are entitled to one vote for each share of Common
Stock held on each matter to be voted on by the holders of Common Stock,
including the election of directors. The Common Stock has no preemptive rights
or cumulative voting rights and no redemption, sinking fund or conversion
provisions.

PREFERRED STOCK

The Preferred Stock may be issued by resolution of the Company's Board of
Directors from time to time without any action of the stockholders. The
Preferred Stock may be issued in one or more series and the Board of Directors
may fix the designation and relative powers, including voting powers,
preferences, rights, qualifications, limitations and restrictions of each series
so authorized. The issuance of any such series may have an adverse effect on the
rights of holders of Common Stock or impede the completion of a merger, tender
offer or other takeover attempt. The Company has no plans to issue shares of any
series of Preferred Stock.

CERTAIN CERTIFICATE AND BYLAW PROVISIONS

Certain provisions of the Certificate and the Bylaws could discourage
potential takeover attempts and could delay or prevent a change in control of
the Company. These provisions are intended to enhance the likelihood of
continuity and stability in the composition of the Board of Directors of the
Company and in the policies formulated by the Board of Directors and to
discourage certain types of transactions that may involve an actual or
threatened change of control of the Company. The provisions are designed to
reduce the vulnerability of the Company to an unsolicited proposal for a
takeover of the Company. The provisions are also intended to discourage certain
tactics that may be used in proxy fights. However, such provisions could have
the effect of discouraging others from making tender offers for the Company's
shares and, as a consequence, they may also inhibit fluctuations in the market
price of the Common Stock that often result from actual or rumored takeover
attempts. Such provisions may also have the effect of preventing changes in the
management of the Company.

CLASSIFIED BOARD OF DIRECTORS. There shall not be less than six nor more
than twelve directors. The Company presently has six directors. The Certificate
provides for the classification of the Board of

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Directors into three classes, each class to consist as nearly as possible of
one-third of the directors. The term of office of the first class of directors
will expire at the 1999 Annual Meeting of Stockholders; the term of the second
class of directors will expire at the 2000 Annual Meeting of Stockholders; and
the term of the third class of directors will expire at the 2001 Annual Meeting
of Stockholders. At each annual meeting, the class of directors to be elected at
such meeting will be elected for a three-year term and the directors in the
other two classes will continue in office. See "Management--Composition of the
Company's Board of Directors after the Offering."

The Certificate also permits the Board of Directors to create new
directorships and to elect new directors to serve for the full term of the class
of directors in which the new directorship was created. The Board of Directors
(or its remaining members, even though less than a quorum) is also empowered to
fill vacancies on the Board of Directors occurring for any reason for the
remainder of the term of the class of director in which the vacancy occurred.

SPECIAL STOCKHOLDERS' MEETINGS AND STOCKHOLDER ACTION. The Bylaws provide
that special meetings of the stockholders may be called only by the Chairman of
the Board or the President of the Company or upon a resolution adopted by a
majority of the entire Board of Directors. Stockholders are not permitted to
call, or to require that the Board of Directors call, a special meeting of
stockholders. Moreover, the business permitted to be conducted at any special
meeting of stockholders is limited to the business brought before the meeting
pursuant to the notice of the meeting given by the Company. In addition, the
Certificate provides that any action taken by the stockholders of the Company
must be effected at an annual or special meeting of stockholders and not by
written consent.

The provision of the Certificate prohibiting stockholder action by written
consent may have the effect of delaying consideration of a stockholder proposal
until the next annual meeting. This provision would also prevent the holders of
a majority of the outstanding Common Stock from unilaterally using the written
consent procedure to take stockholder action. Moreover, the provisions of the
Bylaws prevent a stockholder from forcing stockholder consideration of a
proposal over the opposition of the Board of Directors of the Company by calling
a special meeting of stockholders prior to the time the Board believes such
consideration to be appropriate.

PROCEDURES FOR STOCKHOLDER NOMINATIONS AND PROPOSALS. The Bylaws establish
an advance notice procedure for stockholders to nominate candidates for election
as directors or to bring other business before meetings of stockholders of the
Company (the "Stockholder Notice Procedure"). Only those stockholder nominees
who are nominated in accordance with the Stockholder Notice Procedure will be
eligible for election as directors of the Company. Under the Stockholder Notice
Procedure, notice of stockholder nominations to be made at an annual meeting (or
of any other business to be brought before such meeting) must be received by the
Company not less than 60 days nor more than 90 days prior to the first
anniversary of the previous year's annual meeting. Moreover, the Stockholder
Notice Procedure provides that if the Board of Directors of the Company has
determined that directors will be elected at a special meeting, a stockholder
must give written notice to the Secretary of the Company of any nominations to
be brought before a special meeting, not earlier than the 90th day prior to the
special meeting and not later than the later of the 60th day prior to the
special meeting or the 10th day following the first public announcement by the
Company of the date of the special meeting.

The Bylaws provide that only such business may be conducted at a special
meeting as is specified in the Company's notice of meeting. The Bylaws also
provide that at an annual meeting only such business may be conducted as has
been brought before the meeting (i) pursuant to the Company's notice of meeting,
(ii) by, or at the direction of, the Board of Directors or (iii) by a
stockholder who has given timely written notice pursuant to the Stockholder
Notice Procedure to the Secretary of the Company of such stockholder's intention
to bring such business before such meeting.

By requiring advance notice of nominations by stockholders, the Stockholder
Notice Procedure will afford the Board of Directors an opportunity to consider
the qualifications of the proposed nominees and,

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<PAGE>
to the extent deemed necessary or desirable by the Board of Directors, to inform
stockholders about such qualifications. By requiring advance notice of other
proposed business, the Stockholder Notice Procedure will provide a more orderly
procedure for conducting annual meetings of stockholders and, to the extent
deemed necessary or desirable by the Board of Directors, will provide the Board
of Directors with an opportunity to inform stockholders, prior to such meetings,
of any business proposed to be conducted at such meetings, together with the
Board of Directors' position regarding action to be taken with respect to such
business, so that stockholders can better decide whether to attend such a
meeting or to grant a proxy regarding the disposition of any such business.

Although the Bylaws do not give the Board of Directors any power to approve
or disapprove stockholder nominations for the election of directors or proposals
for action, they may have the effect of precluding a contest for the election of
directors or the consideration of stockholder proposals if the proper procedures
are not followed, and of discouraging or deterring a third party from conducting
a solicitation of proxies to elect its own slate of directors or to approve its
own proposal, without regard to whether consideration of such nominees or
proposals might be harmful or beneficial to the Company and its stockholders.

AMENDMENT OF THE CERTIFICATE. The Certificate provides that an amendment
thereof must first be approved by a majority of the Board of Directors and (with
certain exceptions) thereafter approved by the holders of a majority of the
total votes eligible to be cast by holders of voting stock with respect to such
amendment or repeal; provided that the affirmative vote of 75% of the total
votes eligible to be cast by holders of voting stock, voting together as a
single class, is required to (i) amend or repeal the provisions of the
Certificate with respect to (A) the election of directors, (B) the right of
stockholders to act by written consent and (C) amendment of the Bylaws, (ii)
adopt any provision inconsistent with such provisions and (iii) amend or repeal
the provisions of the Certificate with respect to amendments to the Certificate.

AMENDMENT OF BYLAWS. The Certificate provides that the Bylaws may be
amended or repealed by action of the Board of Directors or by the stockholders.
Such action by the Board of Directors requires the affirmative vote of a
majority of the directors then in office without action by the stockholders.
Such action by the stockholders requires the affirmative vote of the holders of
at least 75% of the total votes eligible to be cast by holders of voting stock
with respect to such amendment or repeal at an annual meeting of stockholders or
a special meeting called for such purposes, unless the Board of Directors
recommends that the stockholders approve such amendment or repeal at such
meeting, in which case such amendment or repeal shall only require the
affirmative vote of a majority of the total votes eligible to be cast by holders
of voting stock with respect to such amendment or repeal.

LIMITATIONS ON DIRECTORS' LIABILITY. The Certificate provides that a
director will not be personally liable to the Company or its stockholders for
monetary damages for any breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware law, which concerns unlawful payments of dividends,
stock purchases or redemptions or (iv) for any transaction from which the
director derived an improper personal benefit. If the Delaware law is
subsequently amended to permit further limitation of the personal liability of
directors, the liability of a director of the Company will be eliminated or
limited to the fullest extent permitted by the Delaware law as so amended.

SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW

The Company is subject to the provisions of Section 203 of the DGCL. That
section provides, with certain exceptions, that a Delaware corporation may not
engage in any of a broad range of business combinations with a person or
affiliate or associate of such person who is an "interested stockholder" for a
period of three years from the date that such person became an interested
stockholder unless: (i) the transaction resulting in a person's becoming an
interested stockholder, or the business combination, is

50
<PAGE>
approved by the board of directors of the corporation before the person becomes
an interested stockholder, (ii) upon consummation of the transaction that
resulted in the interested stockholder's becoming an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding shares owned by
persons who are both officers and directors of the corporation, and shares held
by certain employee stock ownership plans); or (iii) on or after the date the
person becomes an interested stockholder, the business combination is approved
by the corporation's board of directors and by the holders of at least 66 2/3%
of the corporation's outstanding voting stock at an annual or special meeting,
excluding shares owned by the interested stockholders. An "interested
stockholder" is defined as any person (other than the corporation or any direct
or indirect majority owned subsidiary of the corporation) that is (i) the owner
of 15% or more of the outstanding voting stock of the corporation or (ii) an
affiliate or associate of the corporation and was the owner of 15% or more of
the outstanding voting stock of the corporation at any time within the
three-year period immediately prior to the date on which it is sought to be
determined whether such person is an interested stockholder. Section 203 of the
DGCL could have the effect of discouraging prospective take-over attempts
because of the inability of a potential acquiror to combine the Company with
another entity.

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<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

No prediction can be made as to the effect, if any, that future sales of
Common Stock, or the availability of Common Stock for future sale, will have on
the market price of the Common Stock prevailing from time to time. Sales of
substantial amounts of Common Stock (including shares issued upon exercise of
options), or the perception that such sales could occur, may adversely affect
prevailing market prices for the Common Stock. See "Risk Factors--Shares
Eligible for Future Sale."

Upon completion of the Offering, the Company will have outstanding
16,787,974 shares of Common Stock. Of the shares of Common Stock that will be
outstanding after the Offering, the 13,276,858 shares sold in the Offering will
be freely tradeable without restriction or limitation under the Securities Act,
unless purchased by "affiliates" of the Company, as that term is defined in Rule
144 under the Securities Act. All of the remaining 3,511,116 shares of Common
Stock held by existing stockholders will be "restricted" securities within the
meaning of the Securities Act as a result of the issuance thereof in private
transactions not involving a public offering. The "restricted" securities may
not be resold unless they are registered under the Securities Act or are sold
pursuant to an available exemption from registration, including Rule 144 under
the Securities Act.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned shares for at least one
year (including the holding period of any prior owner except an "affiliate" (as
that term is defined in Rule 144)) is entitled to sell, within any three-month
period, a number of those shares that does not exceed the greater of (i) 1% of
the then outstanding shares of the Common Stock (167,880 shares immediately
after the Offering) or (ii) the average weekly trading volume in the Common
Stock during the four calendar weeks preceding the date on which notice of the
sale is filed with the Commission. Sales under Rule 144 are also subject to
certain manner of sale provisions, notice requirements and requirements as to
the availability of current public information concerning the Company. Rule 144
provides that 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 90 days
preceding a sale, and who has beneficially owned shares for at least two years
(including the holding period of any prior owner except an "affiliate") is
entitled to sell those shares under Rule 144(k) without regard to the
limitations described above.

After completion of the Offering and expiration of the 180-day lockup
agreement described under "Underwriting," 3,511,116 shares (1,917,348 shares if
the Underwriters' over-allotment options are exercised in full) of Common Stock
held by stockholders prior to the consummation of the Offering will be eligible
for sale on the open market under Rule 144 (as currently in effect), subject to
the volume and manner of sales limitations referred to above.

In May 1997, the Company sold shares of its Common Stock to certain of its
officers and employees under the provisions of Rule 701 under the Securities
Act. While such shares are "restricted" securities under Rule 144, the resale
provisions under Rule 701 permit non-affiliates to sell their Rule 701 shares
without complying with the notice provisions, public information, volume
limitations or holding period restrictions of Rule 144 and permit affiliates to
sell their Rule 701 shares without complying with the Rule 144 holding period
restrictions, in each case commencing 90 days after the date of this prospectus.
After the Offering, 660,598 of the 3,511,116 shares otherwise eligible for sale
under Rule 144 will be eligible for sale under Rule 701, subject to the
expiration of the 180-day lock-up agreement described under "Underwriting."

Upon completion of the Offering, 2,958,152 shares of Common Stock will be
issuable upon exercise of outstanding options under the Company's stock option
plans and up to an additional 2,000,000 shares of Common Stock will be reserved
for issuance under such plans. To the extent that the Underwriters' over-
allotment option is not exercised in full, the Company has agreed to file a
registration statement on Form S-8 following the expiration of the lock-up
agreement described under "Underwriting" covering any shares subject to options
granted to G. Bruce McInnis, one of the Selling Stockholders, under the
Company's

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<PAGE>
1996 stock option plan. Shares registered under such registration statement
which are issued upon the exercise of options will be freely transferable in the
open market.

Stockholders of the Company party to the Stockholders Agreement will have
certain "piggyback" registration rights with respect to registered offerings of
the Common Stock following consummation of the Offering. See "Certain
Transactions--Management Stockholders' and Optionholders' Agreement."

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<PAGE>
CERTAIN U.S. TAX CONSIDERATIONS APPLICABLE
TO NON-U.S. HOLDERS OF THE COMMON STOCK

The following is a general discussion of certain U.S. federal income and
estate tax consequences of the ownership and disposition of Common Stock
applicable to Non-U.S. Holders of such Common Stock who acquire and own such
Common Stock as a capital asset within the meaning of section 1221 of the
Internal Revenue Code of 1986, as amended (the "Code"). A "Non-U.S. Holder" is
any person other than (i) a citizen or resident of the United States, (ii)
except to the extent otherwise provided in regulations in the case of a
partnership, a corporation or partnership created or organized in the United
States or Under the laws of the United States or of any state, or (iii) an
estate whose income is includable in gross income for United States federal
income tax purposes regardless of its source, (iv) a trust if a court within the
United States is able to exercise primary supervision over the administration of
the trust and one or more U.S. persons have the authority to control all
substantial decisions of the trust, or (v) a person otherwise subject to United
States federal income tax on a net income basis in respect of its worldwide
taxable income.

The discussion does not consider specific facts and circumstances that may
be relevant to a particular Non-U.S. Holder's tax position (including the fact
that in the case of a Non-U.S. Holder that is a partnership, the U.S. tax
consequences of holding and disposing of shares of Common Stock may be affected
by certain determinations made at the partner level) and does not consider U.S.
state and local or non-U.S. tax consequences. Further, it does not consider
Non-U.S. Holders subject to special tax treatment under the federal income tax
laws (including banks and insurance companies, dealers in securities, and
holders of securities held as part of a "straddle," "hedge," or conversion
transaction)." The following discussion is based on provisions of the Code and
administrative and judicial interpretations as of the date hereof, all of which
are subject to change, possibly on a retroactive basis, and any change could
affect the continuing validity of this discussion. THE FOLLOWING SUMMARY IS
INCLUDED HEREIN FOR GENERAL INFORMATION. ACCORDINGLY, EACH PROSPECTIVE NON-U.S.
HOLDER IS URGED TO CONSULT A TAX ADVISOR WITH RESPECT TO THE UNITED STATES
FEDERAL TAX CONSEQUENCES OF HOLDING AND DISPOSING OF COMMON STOCK, AS WELL AS
ANY TAX CONSEQUENCES THAT MAY ARISE UNDER THE LAWS OF ANY U.S. STATE, LOCAL OR
OTHER NON-U.S. TAXING JURISDICTION.

NON-U.S. HOLDERS

For purposes of the following discussion, dividends and gain on the sale,
exchange or other disposition of Common Stock will be considered to be "U.S.
trade or business income" if such income or gain is (i) effectively connected
with the conduct of a U.S. trade or business or (ii) in the case of a treaty
resident, attributable to a permanent establishment (or, in the case of an
individual, a fixed base) in the United States.

DIVIDENDS

In general, dividends paid to a Non-U.S. Holder of Common Stock will be
subject to withholding of U.S. federal income tax at a 30% rate unless such rate
is reduced by an applicable tax treaty. Dividends that are U.S. trade or
business income, are generally subject to U.S. federal income tax on a net basis
at regular income tax rates, and are not generally subject to the 30%
withholding tax if the Non-U.S. Holder provides the appropriate form to the
payor. Any U.S. trade or business income received by a Non-U.S. Holder that is a
corporation may also, under certain circumstances, be subject to an additional
"branch profits tax" at a 30% rate or such lower rate as may be applicable under
a tax treaty. Dividends paid to an address in a foreign country generally are
presumed (absent actual knowledge to the contrary) to be paid to a resident of
such country for purposes of the withholding discussed above and for purposes of
determining the applicability of a tax treaty rate. Under U.S. Treasury
Regulations generally effective January 1, 2000, not currently in effect,
however, a Non-U.S. Holder of Common Stock who wishes to claim the benefit of an
applicable treaty rate would be required to satisfy certain certification and
other requirements, which may include the requirement that the Non-U.S. Holder
file a form containing the holder's name and address or provide certain
documentary evidence issued by foreign governmental authorities as proof of
residence in the foreign country.

A Non-U.S. Holder of Common Stock that is eligible for a reduced rate of
U.S. withholding tax pursuant to a tax treaty may obtain a refund of any excess
amounts currently withheld by filing an appropriate claim for a refund with the
Service.

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SALE, EXCHANGE, REDEMPTION OR OTHER DISPOSITION

Except as described below and subject to the discussion concerning backup
withholding, any gain realized by a Non-U.S. Holder on the sale, exchange,
redemption or other disposition of Common Stock generally will not be subject to
U.S. federal income tax, unless (i) such gain is U.S. trade or business income,
(ii) subject to certain exceptions, the Non-U.S. Holder is an individual who
holds the Common Stock as a capital asset, is present in the United States for
183 days or more during the taxable year of the disposition, and certain other
conditions are present, (iii) the Non-U.S. Holder is subject to tax under U.S.
tax law provision applicable to certain U.S. expatriates (including certain
former citizens or residents of the United States) or (iv) the Company is or has
been a "United States real property holding corporation" (a "USRPHC") for
federal income tax purposes and such Non-U.S. Holder has held, directly or
constructively, more than 5% of the outstanding Common Stock within the
five-year period ending on the date of the sale or exchange. The Company
believes that it has not been, is not currently, and is not likely to become, a
United States real property holding corporation. However, no assurance can be
given that the Company will not be a United States real property holding
corporation when a Non-U.S. Holder sells its shares of Common Stock.

FEDERAL ESTATE TAX

Common Stock owned or treated as owned by an individual who is not a citizen
or resident of the United States for U.S. federal estate tax purposes will be
included in such individual's gross estate for U.S. federal estate tax purposes
unless an applicable estate tax treaty otherwise provides.

INFORMATION REPORTING AND BACKUP WITHHOLDING

The Company must report annually to the Service and to each Non-U.S. Holder
any dividend income that is subject to withholding, or that is exempt from U.S.
withholding tax pursuant to a tax treaty. Copies of these information returns
may also be made available under the provisions of a specific treaty of
agreement to the tax authorities of the country in which the Non-U.S. Holder
resides.

The payment of proceeds from the disposition of Common Stock to or through
the United States office of any broker, U.S. or foreign, will be subject to
information reporting and possible backup withholding unless the owner certifies
as to its non-U.S. status under penalty of perjury or otherwise establishes its
entitlement to an exemption from information reporting and backup withholding,
provided that the broker does not have actual knowledge that the holder is a
U.S. person or that the conditions of an exemption are not, in fact, satisfied.
The payment of proceeds from the disposition of Common Stock to or through a
non-U.S. office, of a non-U.S. broker that is not a "U.S. related person" will
not be subject to information reporting or backup withholding. For this purpose,
a "U.S. related person" is a foreign person with one or more of certain
enumerated relationships with the United States.

In the case of the payment of proceeds from the disposition of Common Stock
to or through a non-U.S. office of a broker that is either a U.S. person or a
U.S. related person, the regulations require information reporting on the
payment unless the broker has documentary evidence in its files that the owner
is a Non-U.S. Holder and the broker has no knowledge to the contrary. Backup
withholding will not apply to payments made through the foreign office of a
broker that is not a U.S. person or a U.S. related person (absent actual
knowledge that the payee is a U.S. person).

Any amounts withheld under the backup withholding rules from a payment of a
Non-U.S. Holder will be allowed as a refund or a credit against such Non-U.S.
Holder's U.S. federal income tax liability provided the requisite procedures are
followed.

Recently promulgated Treasury Regulations, which will be effective for
payments made after December 31, 1998, make certain modifications to the
withholding, backup withholding and information procedures applicable to
non-U.S. Holders. Prospective investors should consult their tax advisors
regarding applicable requirements of backup withholding and information
reporting.

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UNDERWRITING

Subject to the terms and conditions set forth in the U.S. Underwriting
Agreement, the Underwriters named below (the "U.S. Underwriters"), through their
representatives, BT Alex. Brown Incorporated and SBC Warburg Dillon Read Inc.
(together, the "Representatives"), have severally agreed to purchase from the
Selling Stockholders, the following respective numbers of shares of Common Stock
at the public offering price less the underwriting discounts and commissions
shown on the cover page of this Prospectus:

<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITERS SHARES
- -------------------------------------------------------------------------------- ------------
<S> <C>
BT Alex. Brown Incorporated..................................................... 4,000,929
SBC Warburg Dillon Read Inc..................................................... 4,000,929
Furman Selz LLC................................................................. 250,000
Goldman, Sachs & Co............................................................. 250,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated.............................. 250,000
Smith Barney Inc................................................................ 250,000
William Blair & Company, L.L.C.................................................. 175,000
SunTrust Equitable Securities Corporation....................................... 175,000
EVEREN Securities, Inc.......................................................... 175,000
Gabelli & Company, Inc.......................................................... 175,000
Hoak Breedlove Wesneski & Co.................................................... 175,000
C.L. King & Associates, Inc..................................................... 175,000
Ladenburg Thalmann & Co. Inc.................................................... 175,000
Neuberger & Berman, LLC......................................................... 175,000
Ragen MacKenzie Incorporated.................................................... 175,000
Sanders Morris Mundy Inc........................................................ 175,000
Scott & Stringfellow, Inc....................................................... 175,000
The Seidler Companies Incorporated.............................................. 175,000
Southeast Research Partners, Inc................................................ 175,000
------------
Total....................................................................... 11,276,858
------------
------------
</TABLE>

Subject to the terms and conditions set forth in the International
Underwriting Agreement, the International Managers named below (the
"International Managers" and, collectively with the U.S. Underwriters, the
"Underwriters"), through their representatives, BT Alex. Brown International, a
division of Bankers Trust International plc, and Swiss Bank Corporation, acting
through its division SBC Warburg Dillon Read (together, the "Lead Managers"),
have severally agreed to purchase from the Selling Stockholders the following
respective numbers of shares of Common Stock at the public offering price less
the underwriting discounts and commissions shown on the cover page of this
Prospectus:

<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL MANAGERS SHARES
- --------------------------------------------------------------------------------- ----------
<S> <C>
BT Alex. Brown International, a division of
Bankers Trust International plc................................................ 1,000,000
Swiss Bank Corporation, acting through its division
SBC Warburg Dillon Read........................................................ 1,000,000
----------
Total........................................................................ 2,000,000
----------
----------
</TABLE>

The U.S. Underwriting Agreement and the International Underwriting Agreement
(collectively, the "Underwriting Agreements") provide that the obligations of
the Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase the total number of shares of Common Stock offered
hereby if any of such shares are purchased.

56
<PAGE>
The Selling Stockholders have been advised by the Representatives and Lead
Managers that the Underwriters propose to offer the shares of Common Stock to
the public at the initial public offering price set forth on the cover page of
this Prospectus and to certain dealers at such price less a concession not in
excess of $.58 per share. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of $.10 per share to certain other dealers.
After commencement of the initial public offering, this offering price and other
selling terms may be changed by the Representatives and Lead Managers.

Certain stockholders of the Company have granted the Underwriters options,
exercisable not later than 30 days after the date of this Prospectus, to
purchase up to 1,991,276 additional shares of Common Stock at the initial public
offering price set forth on the cover page of the Prospectus. To the extent that
the Underwriters exercise such options, each U.S. Underwriter or International
Manager, as the case may be, will have a firm commitment to purchase
approximately the same percentage thereof that the number of shares of Common
Stock to be purchased by it shown in the above table bears to the initial
commitment of the U.S. Underwriters or International Managers, as the case may
be, as indicated in the preceding tables, and the stockholders granting such
option will be obligated, pursuant to such option, to sell such shares to the
Underwriters. The U.S. Underwriters and International Managers may exercise such
option only to cover over-allotments made in connection with the sale of the
shares of Common Stock offered pursuant to the U.S. Offering and the
International Offering. If purchased, the Underwriters will offer such
additional shares on the same terms as those on which the shares are being
offered in the U.S. Offering and the International Offering.

To facilitate this offering of the Common Stock, the Underwriters may engage
in transactions that stabilize, maintain or otherwise affect the market price of
the Common Stock. Specifically, the Underwriters may over-allot shares of the
Common Stock in connection with this Offering, thereby creating a short position
in the Underwriters' syndicate account. Additionally, to cover such
over-allotments or to stabilize the market price of the Common Stock, the
Underwriters may bid for, and purchase, shares of Common Stock in the open
market. Any of these activities may maintain the market price of the Common
Stock at a level above that which might otherwise prevail in the open market.
The Underwriters are not required to engage in these activities, and, if
commenced, any such activities may be discontinued at any time. The
Representatives, on behalf of the U.S. Underwriters, and the Lead Managers, on
behalf of the International Managers, also may reclaim selling concessions
allowed to an Underwriter or dealer if the syndicate repurchases shares of
Common Stock distributed by that Underwriter or dealer.

The Underwriting Agreement contains covenants of indemnity and contribution
among the Underwriters, the Company and the Selling Stockholders regarding
certain liabilities, including liabilities under the Securities Act.

The Company, its directors and executive officers and current stockholders
have agreed not to offer, sell or otherwise dispose of any shares of Common
Stock, except upon the exercise of currently outstanding stock options, for a
period of 180 days from the date of this Prospectus without the prior written
consent of BT Alex. Brown Incorporated.

The Representatives and Lead Managers have advised the Company and the
Selling Stockholders that the Underwriters do not intend to confirm sales to any
account over which they exercise discretionary authority.

Pursuant to an Agreement between the U.S. Underwriters and the International
Managers (the "Agreement Between Syndicates"), each U.S. Underwriter has agreed
that, as part of the distribution of the 11,276,858 shares offered in the United
States and Canada pursuant to the U.S. Offering, (i) it is not purchasing any
such shares for the account of anyone other than a U.S. or Canadian Person (as
defined below) and (ii) it has not offered or sold, and will not offer, sell,
resell or deliver, directly or indirectly, any of such shares or distribute any
prospectus relating to the U.S. Offering outside the United States and Canada or
to anyone other than a U.S. or Canadian Person. In addition, each International
Manager has agreed that, as part of the distribution of the 2,000,000 shares
offered outside the United States and Canada pursuant to the International
Offering, (i) it is not purchasing such shares for the account of any

57
<PAGE>
U.S. or Canadian Person and (ii) it has not offered or sold, and will not offer,
sell, resell or deliver, directly or indirectly, any of such shares or
distribute any prospectus relating to the International Offering in the United
States and Canada or to any U.S. or Canadian Person.

The foregoing limitations do not apply to stabilization transactions or to
certain other transactions specified in the Underwriting Agreements and the
Agreement Between Syndicates, including (i) certain purchases and sales between
the U.S. Underwriters and the International Managers, (ii) certain offers,
sales, resales, deliveries or distributions to or through investment advisors or
other persons exercising investment discretion, (iii) purchases, offers or sales
by a U.S. Underwriter who is also acting as an International Manager or by an
International Manager who is also acting as a U.S. Underwriter, and (iv) other
transactions specifically approved by the Representatives and Lead Managers. As
used herein, "U.S. or Canadian Person" means any resident or national of the
United States or Canada, any corporation, partnership or other entity created or
organized in or under the laws of the United States or Canada (other than the
foreign branch of any U.S. or Canadian Person), or any state or trust the income
of which is subject to United States or Canadian income taxation regardless of
the source of its income, and includes any United States of Canadian branch of a
person other than a U.S. or Canadian Person.

Each International Manager has represented and agreed that (i) it has not
offered or sold, and will not offer or sell, any shares of Common Stock to
persons in the United Kingdom other than to persons whose ordinary business it
is to acquire, hold, manage or dispose of investments (as principal or agent),
except under circumstances which do not constitute an offer to the public in the
United Kingdom within the meaning of the Public Offers of Securities Regulations
1995 (the "Regulations"), (ii) it has complied with and will continue to comply
with all applicable provisions of the Financial Services Act 1986 and the
Regulations with respect to anything done by it in relation to the shares of
Common Stock in, from or otherwise involving the United Kingdom, and (iii) it
has issued or passed on, and will only issue or pass on, to any person in the
United Kingdom any document received by it in connection with the offer of the
shares of Common Stock if that person is of a kind described in Article 11(3) of
the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order
1995, or is a person to whom such document may otherwise lawfully be issued or
passed on.

Purchasers of the shares of Common Stock offered hereby may be required to
pay stamp taxes and other charges in accordance with the laws and practices of
the country of purchase in addition to the offering price set forth on the cover
page of this Prospectus.

Pursuant to the Agreement Between Syndicates, sales may be made between the
U.S. Underwriters and the International Managers of such number of shares of
Common Stock as may be mutually agreed. The price of any shares sold shall be
the public offering price as then in effect for shares being sold by the
Underwriters less all or any part of the selling concession, unless otherwise
determined by mutual agreement. To the extent that there are sales between the
U.S. Underwriters and International Managers pursuant to the Agreement Between
Syndicates, the number of shares initially available for sale by the U.S.
Underwriters and the International Managers may be more or less than the number
of shares appearing on the cover page of this Prospectus.

Prior to the Offering, there has been no public market for the Common Stock.
Consequently, the initial public offering price for the Common Stock was
determined by negotiation among the Company, the Selling Stockholders, the
Representatives and Lead Managers. Among the factors considered in such
negotiations were market conditions, the results of operations of the Company in
recent periods, the market capitalizations and stages of development of other
companies which the Company, the Representatives and Lead Managers believe to be
comparable to the Company, estimates of the business potential of the Company,
the state of the Company's development and other factors deemed relevant.

Bankers Trust Company, an affiliate of BT Alex. Brown Incorporated, one of
the Representatives, is the Agent and a lender under the Credit Agreement. In
addition, BT Investments will sell its interest in the Company to the extent the
Underwriters exercise the over-allotment option.

58
<PAGE>
LEGAL MATTERS

Certain legal matters in connection with the Offering will be passed upon
for the Company and the Selling Stockholders by Weil, Gotshal & Manges LLP, New
York, New York. Robert Todd Lang, the sole shareholder of a professional
corporation which is a partner of Weil, Gotshal & Manges LLP, is a limited
partner of Odyssey and, accordingly, has a fractional undivided interest in the
Common Stock of the Company owned by Odyssey. Certain legal matters in
connection with the Offering will be passed upon for the Underwriters by Piper &
Marbury L.L.P., Baltimore, Maryland.

EXPERTS

The audited financial statements included in this Prospectus and elsewhere
in the Registration Statement have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports.

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission in
Washington, D.C. a Registration Statement on Form S-1 (together with all
amendments thereto, the "Registration Statement"), under the Securities Act with
respect to the shares of Common Stock offered hereby. This Prospectus does not
contain all the information set forth in the Registration Statement and the
exhibits and schedules filed therewith, certain portions of which have been
omitted as permitted by the rules and regulations of the Commission. For further
information with respect to the Company and the Common Stock offered hereby,
reference is hereby made to the Registration Statement and to the exhibits and
schedules filed therewith. Statements contained in this Prospectus regarding the
contents of any contract or other document referred to are not necessarily
complete and, in each instance, reference is made to the copy of such contract
or other document filed as an exhibit to the Registration Statement, each such
statement being deemed to be qualified in its entirety by such reference. The
Registration Statement, including all exhibits and schedules thereto, may be
inspected without charge at the principal office of the Commission located at
450 Fifth Street, N.W., Washington, D.C. 20549, and at the Midwest Regional
Office of the Commission located at Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511 and at the Northeast Regional office of
the Commission located at Seven World Trade Center, Suite 1300, New York, New
York 10048. Copies of such material may be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Room 1204, Washington, D.C.
20549, at prescribed rates. The Commission also maintains an Internet web site
that contains reports, proxy and information statements and other information
regarding issuers that file electronically with the Commission. The address of
that site is http://www.sec.gov.

Prior to filing the Registration Statement of which this Prospectus is a
part, the Company was not subject to the reporting requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Upon effectiveness of the Registration Statement, the Company will become
subject to the informational and periodic reporting requirements of the Exchange
Act, and in accordance therewith, will file periodic reports, proxy statements,
and other information with the Commission. Such periodic reports, proxy
statements, and other information will be available for inspection and copying
at the public reference facilities and other regional offices referred to above.
The Company intends to register the securities offered by the Registration
Statement under the Exchange Act simultaneously with the effectiveness of the
Registration Statement and to furnish its stockholders with annual reports
containing audited financial statements and such other reports as may be
required from time to time by law and applicable stock exchange rules.

59
<PAGE>
TRISTAR AEROSPACE CO.
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
TRISTAR AEROSPACE CO.:

Report of Independent Public Accountants................................................................... F-2

Consolidated Balance Sheets--December 31, 1997 (unaudited) and September 30, 1997 and 1996................. F-3

Consolidated Statements of Operations--Three Months Ended December 31, 1997 and 1996 (unaudited), Year
Ended September 30, 1997 and Period from Inception (August 21, 1996) to September 30, 1996............... F-4

Consolidated Statements of Stockholders' Equity--Three Months Ended December 31, 1997 (unaudited), Year
Ended September 30, 1997 and Period from Inception (August 21, 1996) to September 30, 1996............... F-5

Consolidated Statements of Cash Flows--Three Months Ended December 31, 1997 and 1996 (unaudited), Year
Ended September 30, 1997 and Period from Inception (August 21, 1996) to September 30, 1996............... F-6

Notes to Consolidated Financial Statements................................................................. F-7

TRI-STAR AEROSPACE, INC. AND SUBSIDIARY (PREDECESSOR):

Report of Independent Public Accountants................................................................... F-17

Combined Statements of Operations--Period Ended September 19, 1996 and Year Ended December 31, 1995........ F-18

Combined Statements of Cash Flows--Period Ended September 19, 1996 and Year Ended December 31, 1995........ F-19

Notes to Combined Financial Statements..................................................................... F-20

AVIALL AEROSPACE BUSINESS UNIT OF AVIALL SERVICES, INC.:

Report of Independent Public Accountants................................................................... F-23

Statements of Operating Income (Loss)--Period Ended September 19, 1996 and Year Ended December 31, 1995.... F-24

Statements of Cash Flows--Period Ended September 19, 1996 and Year Ended December 31, 1995................. F-25

Notes to Financial Statements.............................................................................. F-26
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders
of TriStar Aerospace Co.:

We have audited the accompanying consolidated balance sheets of TriStar
Aerospace Co. (a Delaware corporation) and subsidiaries as of September 30, 1997
and 1996, and the related consolidated statements of operations, stockholders'
equity and cash flows for the year ended September 30, 1997, and the period from
inception (August 21, 1996) to September 30, 1996. 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 TriStar Aerospace Co. and
subsidiaries as of September 30, 1997 and 1996, and the results of their
operations and their cash flows for the year ended September 30, 1997, and the
period from inception to September 30, 1996 in conformity with generally
accepted accounting principles.

ARTHUR ANDERSEN LLP

Tulsa, Oklahoma

November 26, 1997 (except with
respect to the matters discussed in
Note 10, as to which the date is
February 11, 1998)

F-2
<PAGE>
TRISTAR AEROSPACE CO. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
SEPTEMBER 30,
DECEMBER 31, ------------------
1997 1997 1996
------------ -------- --------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash....................................... $ 3,201 $ 4,764 $ 1,522
Accounts receivable, net................... 28,824 24,305 16,470
Inventories, net........................... 76,214 69,085 68,521
Prepaid expenses........................... 394 149 98
Deferred tax asset......................... 1,518 1,377 --
------------ -------- --------
Total current assets................. 110,151 99,680 86,611

PROPERTY AND EQUIPMENT, net.................. 1,760 1,623 1,124

INTANGIBLES AND OTHER ASSETS, net............ 8,757 8,932 9,481
------------ -------- --------
$120,668 $110,235 $ 97,216
------------ -------- --------
------------ -------- --------

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt....... $ 500 $ 500 $ 1,500
Accounts payable........................... 22,123 18,308 12,819
Income taxes payable....................... 3,305 1,573 178
Accrued liabilities........................ 5,705 7,695 7,811
------------ -------- --------
Total current liabilities............ 31,633 28,076 22,308
------------ -------- --------
LONG-TERM DEBT, less current maturities...... 52,000 49,000 55,500
------------ -------- --------
COMMITMENTS AND CONTINGENCIES (Note 6)

STOCKHOLDERS' EQUITY, per accompanying
statements:
Preferred stock, $.01 par value, 10,000,000
shares authorized........................ -- -- --
Common stock, $.01 par value, 40,000,000
shares authorized........................ 166 166 151
Additional paid-in capital................. 21,455 21,101 18,968
Retained earnings.......................... 15,414 11,892 289
------------ -------- --------
Total stockholders' equity........... 37,035 33,159 19,408
------------ -------- --------
$120,668 $110,235 $ 97,216
------------ -------- --------
------------ -------- --------
</TABLE>

The accompanying notes are an integral part of these consolidated balance
sheets.

F-3
<PAGE>
TRISTAR AEROSPACE CO. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED
ENDED DECEMBER 31, SEPTEMBER PERIOD ENDED
------------------------ 30, SEPTEMBER 30,
1997 1996 1997 1996
----------- ----------- ----------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
REVENUES:
Product sales............................... $ 42,268 $ 30,663 $ 139,260 $ 3,488
Inventory management service fees........... 367 303 1,459 67
----------- ----------- ----------- ------
42,635 30,966 140,719 3,555

COSTS OF GOODS SOLD........................... 29,416 21,008 96,393 2,442
----------- ----------- ----------- ------
Gross profit................................ 13,219 9,958 44,326 1,113

SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES.................................... 6,040 4,447 21,048 463
COMPENSATION EXPENSE OF STOCK OPTIONS......... 354 -- -- --
----------- ----------- ----------- ------
Operating income............................ 6,825 5,511 23,278 650

INTEREST AND OTHER:
Interest expense............................ 1,204 1,547 5,263 184
Other income................................ (51) -- (147) --
----------- ----------- ----------- ------
Income before taxes......................... 5,672 3,964 18,162 466

PROVISION FOR INCOME TAXES.................... 2,150 1,520 6,559 177
----------- ----------- ----------- ------
NET INCOME.................................... $ 3,522 $ 2,444 $ 11,603 $ 289
----------- ----------- ----------- ------
----------- ----------- ----------- ------
EARNINGS PER SHARE (Note 2):
Basic....................................... $ 0.21 $ 0.16 $ 0.73 $ 0.02
----------- ----------- ----------- ------
----------- ----------- ----------- ------
Diluted..................................... $ 0.19 $ 0.16 $ 0.70 $ 0.02
----------- ----------- ----------- ------
----------- ----------- ----------- ------
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic....................................... 16,583 15,118 15,897 15,118
----------- ----------- ----------- ------
----------- ----------- ----------- ------
Diluted..................................... 18,158 15,118 16,509 15,118
----------- ----------- ----------- ------
----------- ----------- ----------- ------
</TABLE>

The accompanying notes are an integral part of these consolidated statements.

F-4
<PAGE>
TRISTAR AEROSPACE CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
---------------------- PAID-IN RETAINED STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS EQUITY
--------- ----------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C>
INCEPTION, August 21, 1996............................... -- $ -- $ -- $ -- $ --

INITIAL CONTRIBUTION OF CAPITAL.......................... 14,328 143 20,108 -- 20,251

EQUITY TRANSACTION EXPENSES.............................. -- -- (1,132) -- (1,132)

STOCK ISSUED FOR SERVICES (Note 8)....................... 790 8 (8) -- --

NET INCOME............................................... -- -- -- 289 289
--------- ----- ----------- --------- ------------
BALANCE, September 30, 1996.............................. 15,118 151 18,968 289 19,408

ISSUANCE OF STOCK........................................ 797 8 1,160 -- 1,168

CONVERSION OF NOTE PAYABLE............................... 682 7 993 -- 1,000

PURCHASE OF STOCK........................................ (14) -- (20) -- (20)

NET INCOME............................................... -- -- -- 11,603 11,603
--------- ----- ----------- --------- ------------
BALANCE, September 30, 1997.............................. 16,583 166 21,101 11,892 33,159

COMPENSATION EXPENSE FOR STOCK OPTIONS -- -- 354 -- 354

NET INCOME (unaudited)................................... -- -- -- 3,522 3,522
--------- ----- ----------- --------- ------------
BALANCE, December 31, 1997 (unaudited)................... 16,583 $ 166 $ 21,455 $ 15,414 $ 37,035
--------- ----- ----------- --------- ------------
--------- ----- ----------- --------- ------------
</TABLE>

The accompanying notes are an integral part of these consolidated statements.

F-5
<PAGE>
TRISTAR AEROSPACE CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS
ENDED DECEMBER 31, YEAR ENDED PERIOD ENDED
------------------------ SEPTEMBER SEPTEMBER
1997 1996 30, 1997 30, 1996
----------- ----------- ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income....................................... $ 3,522 $ 2,444 $ 11,603 $ 289
Adjustments to reconcile net income to net cash
provided by (used in) operating activities, net
of acquisitions--
Depreciation and amortization.................. 354 278 1,031 27
Provision for doubtful accounts................ 15 -- 549 --
Provision for excess and obsolete
inventories.................................. 707 502 2,338 --
Deferred income taxes.......................... (141) -- (1,377) --
Compensation expense for stock options 354 -- -- --
Changes in operating assets and liabilities--
Increase in accounts receivable................ (4,534) (2,012) (8,384) (1,375)
Increase in inventories........................ (7,836) (520) (2,902) (330)
(Increase) decrease in prepaid expenses and
other........................................ (217) (85) (60) 169
Increase (decrease) in accounts payable........ 3,815 554 5,489 (304)
Increase in income taxes payable............... 1,732 1,453 1,395 177
Decrease in accrued liabilities................ (1,990) (153) (116) (872)
----------- ----------- ------------ ------------
Net cash provided by (used in) operating
activities................................. (4,219) 2,461 9,566 (2,219)
----------- ----------- ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures............................. (344) (74) (972) (3)
Acquisitions, net of cash acquired............... -- -- -- (70,066)
----------- ----------- ------------ ------------
Net cash used in investing activities........ (344) (74) (972) (70,069)
----------- ----------- ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of stock................................ -- -- 1,168 20,251
Equity transaction expenses...................... -- -- -- (1,132)
Loan acquisition costs........................... -- -- -- (2,309)
Proceeds from initial borrowings................. -- -- -- 55,000
Borrowings on revolving facility................. 3,000 3,000 11,700 2,000
Payments on revolving facility................... -- (5,000) (17,700) --
Payments on term note borrowings................. -- -- (500) --
Purchase of stock................................ -- -- (20) --
----------- ----------- ------------ ------------
Net cash provided by (used in) financing
activities................................. 3,000 (2,000) (5,352) 73,810
----------- ----------- ------------ ------------
NET INCREASE (DECREASE) IN CASH.................... (1,563) 387 3,242 1,522
CASH, beginning of period.......................... 4,764 1,522 1,522 --
----------- ----------- ------------ ------------
CASH, end of period................................ $ 3,201 $ 1,909 $ 4,764 $ 1,522
----------- ----------- ------------ ------------
----------- ----------- ------------ ------------
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest........................... $ 1,239 $ 936 $ 4,385 $ 174
Cash paid for income taxes....................... 559 -- 6,539 --
</TABLE>

The accompanying notes are an integral part of these consolidated statements.

F-6
<PAGE>
TRISTAR AEROSPACE CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED AS TO INFORMATION FOR DECEMBER 31, 1997 AND 1996)

1. ORGANIZATION AND BUSINESS:

TriStar Aerospace Co. (formerly Maple Leaf Aerospace, Inc.--see Note 10) and
subsidiaries (the Company) is a single-source distributor of aerospace
fasteners, fittings and other related hardware, and is a provider of customized
inventory management services. The Company's major products include fasteners
(bolts, nuts, pins, washers, screws and rivets), fluid and hydraulic systems
parts (fittings, couplings and valves), bearings and related aerospace hardware.
The Company's inventory management services provide a comprehensive and flexible
outsourcing program under which the Company provides some or all of the material
management functions necessary to procure and manage aerospace hardware for its
customers. The Company has over 2,000 customers which include original equipment
manufacturers of aircraft and aircraft components, commercial airlines and
aircraft maintenance, repair and overhaul facilities.

The Company was formed on August 21, 1996, and began operations on September
19, 1996, when it acquired Tri-Star Aerospace, Inc. and its subsidiary
(Predecessor) and the Aviall Aerospace Business Unit of Aviall Services, Inc.
and Aviall (Canada) Ltd. (Aviall Aerospace). The Company acquired the
outstanding stock of Predecessor for $31.8 million, including $3 million of
contingent consideration and assumption of $20.6 million of Predecessor debt.
The contingent consideration was placed in escrow and is payable to the former
shareholders of Predecessor on September 19, 1999, to the extent that such
amount is not due the Company to satisfy certain indemnifications given the
Company by the former Predecessor shareholders (see Note 6). Simultaneous with
the acquisition of Predecessor, the Company acquired the assets of Aviall
Aerospace for cash of $18.6 million and assumption of $3.2 million of accounts
payable.

The acquisitions have been accounted for by the purchase method of
accounting and, accordingly, the purchase prices have been allocated to assets
acquired and liabilities assumed based on the fair market values at the date of
acquisition. The excess of purchase price over the fair market values of the net
assets acquired has been recorded as goodwill.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

BASIS OF PRESENTATION

The consolidated financial statements include accounts of TriStar Aerospace
Co. and its subsidiaries. TriStar Aerospace Co. is a holding company and all
assets and liabilities as well as results of operations of the Company are
recorded through its wholly-owned operating subsidiaries. The assets of the
holding company consist solely of the outstanding stock of the operating
subsidiaries. All significant intercompany accounts and transactions have been
eliminated in consolidation.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

F-7
<PAGE>
TRISTAR AEROSPACE CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED AS TO INFORMATION FOR DECEMBER 31, 1997 AND 1996)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
ACCOUNTS RECEIVABLE

Accounts receivable consist of the following:

<TABLE>
<CAPTION>
SEPTEMBER 30,
DECEMBER 31, --------------------
1997 1997 1996
------------ --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Accounts receivable...................................... $ 29,387 $ 24,854 $ 16,470
Less--allowance for doubtful accounts.................... 563 549 --
------------ --------- ---------
$ 28,824 $ 24,305 $ 16,470
------------ --------- ---------
------------ --------- ---------
</TABLE>

INVENTORIES

Inventories are stated at the lower of cost (specific identification method)
or market and consist of the following:

<TABLE>
<CAPTION>
SEPTEMBER 30,
DECEMBER 31, --------------------
1997 1997 1996
------------ --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Inventories.............................................. $ 79,253 $ 71,417 $ 68,521
Less--allowance for excess and obsolete
inventories............................................ 3,039 2,332 --
------------ --------- ---------
$ 76,214 $ 69,085 $ 68,521
------------ --------- ---------
------------ --------- ---------
</TABLE>

Adjustments to the allowance for excess and obsolete inventories consist of
the following:

<TABLE>
<CAPTION>
SEPTEMBER 30,
DECEMBER 31, --------------------
1997 1997 1996
------------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance, beginning of period............................... $ 2,332 $ -- $ --
Provision for excess and obsolete inventories.............. 707 2,338 --
Inventories written off.................................... -- (6) --
------ --------- ---------
Balance, end of period..................................... $ 3,039 $ 2,332 --
------ --------- ---------
------ --------- ---------
</TABLE>

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost and consist of leasehold
improvements, computer hardware and software, furniture and fixtures, machinery,
equipment and automobiles. Maintenance, repairs and betterments, including
replacement of minor items of physical properties, are charged to expense; major
additions to physical properties are capitalized. Property and equipment are
depreciated using the straight-line method over the estimated useful lives
ranging from three to fifteen years. Accumulated depreciation was approximately
$693,000 at December 31, 1997, and $483,000 and $11,000 at September 30, 1997
and 1996, respectively.

F-8
<PAGE>
TRISTAR AEROSPACE CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED AS TO INFORMATION FOR DECEMBER 31, 1997 AND 1996)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
INTANGIBLES AND OTHER ASSETS

Intangibles and other assets are stated at cost net of amortization computed
on the straight-line and effective interest methods. Components and useful lives
of intangibles and other assets are as follows:

<TABLE>
<CAPTION>
SEPTEMBER 30,
DECEMBER 31, --------------------
1997 1997 1996
------------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Goodwill (30 years)......................................... $ 7,111 $ 7,111 $ 7,111
Loan acquisition costs (7 years)............................ 2,309 2,309 2,309
Other....................................................... 59 87 78
------ --------- ---------
9,479 9,507 9,498
Less--accumulated amortization.............................. 722 575 17
------ --------- ---------
$ 8,757 $ 8,932 $ 9,481
------ --------- ---------
------ --------- ---------
</TABLE>

REVENUE RECOGNITION

Revenues are recognized from product sales when the product is shipped and
from inventory management service fees when the services are provided.

SEGMENT INFORMATION

During the year ended September 30, 1997, the Company had domestic revenues
of $121.5 million, export revenues of $12.1 million and revenues from foreign
operations of $7.1 million.

INCOME TAXES

The Company accounts for income taxes under Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes," which
requires the asset and liability method of accounting for income taxes. The
differences between the financial statement and tax bases of assets and
liabilities are determined annually. Deferred income tax assets and liabilities
are computed for those differences using currently enacted tax laws and rates
that apply to the periods in which they are expected to affect taxable income.

EARNINGS PER SHARE

The Company adopted SFAS No. 128, "Earnings Per Share," effective December
31, 1997, and all earnings per share amounts disclosed herein have been
calculated under the provisions of SFAS No. 128. Basic earnings per common share
were computed by dividing net income by the weighted average number

F-9
<PAGE>
TRISTAR AEROSPACE CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED AS TO INFORMATION FOR DECEMBER 31, 1997 AND 1996)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
of shares of common stock outstanding during the reporting period. A
reconciliation of net income and weighted average shares used in computing basic
and diluted earnings per share is as follows:

<TABLE>
<CAPTION>
THREE-MONTHS
ENDED
DECEMBER 31, YEAR ENDED PERIOD ENDED
-------------------- SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
--------- --------- ------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Basic earnings per share:
Net income................................ $ 3,522 $ 2,444 $ 11,603 $ 289
--------- --------- ------------- -------------
--------- --------- ------------- -------------
Weighted average common shares............ 16,583 15,118 15,897 15,118
--------- --------- ------------- -------------
--------- --------- ------------- -------------
Basic earnings per common share........... $ 0.21 $ 0.16 $ 0.73 $ 0.02
--------- --------- ------------- -------------
--------- --------- ------------- -------------
Diluted earnings per share:
Net income................................ $ 3,522 $ 2,444 $ 11,603 $ 289
--------- --------- ------------- -------------
--------- --------- ------------- -------------
Weighted average common shares............ 16,583 15,118 15,897 15,118
Dilutive effect of stock options.......... 1,575 -- 612 --
--------- --------- ------------- -------------
Weighted average common shares, assuming
dilutive effect of stock options........ 18,158 15,118 16,509 15,118
--------- --------- ------------- -------------
--------- --------- ------------- -------------
Diluted earnings per common share......... $ 0.19 $ 0.16 $ 0.70 $ 0.02
--------- --------- ------------- -------------
--------- --------- ------------- -------------
</TABLE>

3. CONCENTRATION OF BUSINESS RISK:

The Company serves the aerospace industry and grants unsecured credit to its
customers. Management's periodic evaluation of the adequacy of the allowance for
doubtful accounts is based on management's estimates of the creditworthiness of
its customers, the Company's past loss experience, known and inherent risks in
the customer base, adverse situations that may affect the customer's ability to
repay and current economic conditions. These estimates are reviewed periodically
and as adjustments become necessary, they are reported in earnings in the
periods in which they become known.

The Company provides a reserve for potentially excess and obsolete
inventory. This reserve is based on management's estimates of future sales
projections in the aerospace industry and its place in the industry, sales
price, available customers and age of the inventory. This reserve is reviewed
periodically and as adjustments become necessary, they are reported in earnings
in the periods in which they become known.

F-10
<PAGE>
TRISTAR AEROSPACE CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED AS TO INFORMATION FOR DECEMBER 31, 1997 AND 1996)

4. LONG-TERM DEBT:

Long-term debt consists of the following:

<TABLE>
<CAPTION>
SEPTEMBER 30,
DECEMBER 31, --------------------
1997 1997 1996
------------ --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
$30 million revolving credit facility, matures September
19, 2001, interest payable quarterly at the Bankers
Trust Base Rate plus a spread (10% at September 30,
1997), mandatory principal reductions of $15 million in
September 2000 and 2001................................ $ 3,000 $ -- $ 6,000

Bank term note, matures September 30, 2003, interest
payable quarterly at the Eurodollar rate plus a spread
(9% at September 30, 1997), principal payments of $0.5
million due annually September 1998 through 2002 with
the balance due at maturity............................ 49,500 49,500 50,000

Convertible note payable................................. -- -- 1,000
------------ --------- ---------
52,500 49,500 57,000
Current maturities of long-term debt..................... 500 500 1,500
------------ --------- ---------
$ 52,000 $ 49,000 $ 55,500
------------ --------- ---------
------------ --------- ---------
</TABLE>

Future maturities of long-term debt at September 30, 1997 were as follows
(in thousands):

<TABLE>
<CAPTION>
<S> <C>
1998............................................................................... $ 500
1999............................................................................... 500
2000............................................................................... 500
2001............................................................................... 500
2002............................................................................... 500
Thereafter......................................................................... 47,000
---------
49,500
Current maturities of long-term debt............................................... 500
---------
$ 49,000
---------
---------
</TABLE>

The revolving facility and term note provide for borrowings up to $80
million. All of the Company's debt is borrowed by an operating subsidiary and is
collateralized by substantially all assets of the operating subsidiaries of the
Company. The debt is subject to certain financial covenants and restricts
dividends or loans by the operating subsidiaries to the holding company. At
September 30, 1997, the Company was in compliance with the covenants.

During 1997, the majority shareholder converted a $1 million
noninterest-bearing note into 682,244 shares of Company stock. The conversion
was treated as a noncash transaction for purposes of the consolidated statement
of cash flows.

F-11
<PAGE>
TRISTAR AEROSPACE CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED AS TO INFORMATION FOR DECEMBER 31, 1997 AND 1996)

4. LONG-TERM DEBT: (CONTINUED)
Subsequent to year end, the revolving facility and term note agreement was
amended to adjust certain financial covenants and reduce the interest rate
spreads applicable to each of the facilities which vary depending on the
Company's leverage ratio.

Based on the borrowing rates currently available to the Company for bank
loans with similar terms and average maturities, the fair value of the long-term
debt approximates the carrying value.

5. INCOME TAXES:

The provision for income taxes includes the following components for the
periods ended September 30:

<TABLE>
<CAPTION>
1997 1996
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Federal:
Current.............................................................................. $ 6,714 $ 149
Deferred............................................................................. (1,236) --
State:
Current.............................................................................. 1,222 28
Deferred............................................................................. (141) --
--------- ---------
Provision for income taxes............................................................. $ 6,559 $ 177
--------- ---------
--------- ---------
</TABLE>

The provision for income taxes was at an effective rate of 36 percent and 38
percent in 1997 and 1996, respectively. The following reconciles the provision
for income taxes included in the consolidated statements of income with the
provision which would result from the application of the statutory federal tax
rate to pretax federal income:

<TABLE>
<CAPTION>
1997 1996
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Expected provision at federal statutory rate of 35% and 34% for 1997 and 1996,
respectively......................................................................... $ 6,357 $ 159
Increase (decrease) resulting from:
State income taxes, net of federal income tax benefit................................ 726 18
Issuance of stock as consideration................................................... (452) --
Other................................................................................ (72) --
--------- ---------
Provision for income taxes............................................................. $ 6,559 $ 177
--------- ---------
--------- ---------
</TABLE>

The Company's net deferred tax asset was as follows at September 30, 1997
(in thousands):

<TABLE>
<S> <C> <C>
Inventory valuation reserves............................... $ 912
Accrued compensation....................................... 138
Accounts receivable valuation reserves..................... 182
Accrued professional fees.................................. 76
Other...................................................... 69
---------
Net deferred tax asset................................... $ 1,377
---------
---------
</TABLE>

F-12
<PAGE>
TRISTAR AEROSPACE CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED AS TO INFORMATION FOR DECEMBER 31, 1997 AND 1996)

6. COMMITMENTS AND CONTINGENCIES:

OPERATING LEASES

The Company leases office and warehouse facilities and certain computer
equipment under operating leases expiring from December 1997 to April 2002.
Future minimum annual lease commitments at September 30, 1997 are approximately
as follows (in thousands):

<TABLE>
<S> <C>
1998................................................................ $ 706
1999................................................................ 465
2000................................................................ 309
2001................................................................ 71
2002................................................................ 57
Thereafter.......................................................... 31
---------
$ 1,639
---------
---------
</TABLE>

SALES AND PURCHASE CONTRACTS

The Company is a party to various sales contracts with airlines that require
the Company to provide certain parts at fixed prices. The contracts typically
have a two-year life. Generally, vendor purchases are made under distributorship
agreements which are cancelable upon 30-days notice.

EMPLOYEE BENEFIT PLANS

The Company sponsors a defined contribution profit sharing and 401(k)
savings plan which covers all employees with at least three months of service.
The Company matches 50 percent of employee contributions to the extent that the
employee's contributions do not exceed five percent of defined compensation.
Additional contributions may be made to the plan at the discretion of the Board.
Expenses related to the plan for the year ended September 30, 1997 and the
period ended September 30, 1996 were $110,000 and $2,000, respectively.

The Company has an employees' welfare benefit plan which is subject to the
provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The
plan provides death benefits covering substantially all employees of the
Company. The plan requires the Company to contribute to the trust such amounts
as the Board determines necessary to properly fund the benefits payable under
the plan. Expenses related to the plan for the year ended September 30, 1997 and
the period ended September 30, 1996 were $42,000 and $5,000, respectively.

LITIGATION

The Company is the defendant in two separate lawsuits for purchase of a
former Predecessor employee's stock in Predecessor and the rescission of a
certificate for stock in Predecessor. As discussed in Note 1, $3 million of the
purchase price of Predecessor was placed in escrow as indemnification to the
Company by the former shareholders of Predecessor to satisfy the liability, if
any, that the Company must pay. While the amount claimed in the lawsuits is
significant in the aggregate, management believes that the Company's ultimate
liability in excess of the indemnification, if any, will not be material to the
consolidated financial position or results of operations of the Company.

Various other lawsuits, claims and proceedings have been or may be
instituted or asserted against the Company. While the amounts claimed may be
substantial, the ultimate liability cannot now be determined because of the
considerable uncertainties that exist. Therefore, it is possible that results of
operations or

F-13
<PAGE>
TRISTAR AEROSPACE CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED AS TO INFORMATION FOR DECEMBER 31, 1997 AND 1996)

6. COMMITMENTS AND CONTINGENCIES: (CONTINUED)
liquidity in a particular period could be materially affected by certain
contingencies. However, based on facts currently available, management believes
it is remote that the matters pending or asserted will have a materially adverse
effect on the financial position of the Company.

7. SALES TO SIGNIFICANT CUSTOMERS:

During the year ended September 30, 1997, the Company had two customers that
accounted for 24.8 percent and 11.7 percent of consolidated revenues,
respectively.

8. RELATED PARTY TRANSACTIONS:

In conjunction with the acquisitions, an officer of the Company was issued
790,000 shares of common stock as consideration for services rendered in
connection with securing the equity to complete the transaction. The stock
issuance is recorded as a reduction in additional paid-in capital for the par
value of the shares issued in the consolidated statements of stockholders'
equity. This transaction was accounted for as a non-cash financing activity and,
therefore, is not included in the consolidated statement of cash flows.

As compensation for services rendered in coordinating, structuring and
consummating the simultaneous acquisitions of the Predecessor and Aviall
Aerospace, the Company agreed to pay an officer a fee of $2,560,000. The fee was
accrued as part of the purchase price accounting and was included in the
allocation of costs to the fair market value of assets acquired at September 19,
1996. As of September 30, 1997, the Company had paid $51,370 with the balance to
be paid during fiscal 1998.

9. EMPLOYEE STOCK PLANS:

STOCK PURCHASE PLAN

The Company adopted an employee stock purchase plan which reserves 790,000
shares of common stock for issuance to any employee, officer or director at the
discretion of the Board. The number of shares issued to each individual and the
price to be paid for the shares is determined solely by the Board. During 1997,
660,598 shares were issued under the plan at prices which approximated the fair
market value of the Company's stock on the date of commitment to issuance.

STOCK OPTION PLAN

The Company adopted a stock option plan which allows for the issuance of
3,950,000 options to key employees of the Company. The options become available
in equal annual portions through fiscal 2001 based on the attainment of certain
financial performance measures. Once available, 25 percent become vested
immediately, and the remaining options vest ratably over the following three
years. All options which do not become available through the attainment of the
performance measures become available and exercisable in June 2006. Under the
plan, options are to be granted with an exercise price equal to or greater than
the fair market value of the Company's common stock at the date of grant. In
December 1997, 158,000 options were issued to one employee at a discount from
the fair value at the date of grant. Of these shares, 31,600 became immediately
exercisable and the remaining options vest over a four year period or become
immediately exercisable upon the completion of an initial public offering. The
Company has recorded additional compensation of $354,000 in the three month
period ended December 31, 1997, for the discount from the fair value for the
31,600 shares exercisable at the grant date. Compensation expense of $1,416,000
will be recorded when the remaining options vest. All options expire in
September 2006. The

F-14
<PAGE>
TRISTAR AEROSPACE CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED AS TO INFORMATION FOR DECEMBER 31, 1997 AND 1996)

9. EMPLOYEE STOCK PLANS: (CONTINUED)
Company applies fixed plan accounting to the plan as both the number of options
and the exercise price of the options is known at the grant date. A summary of
the Company's stock option activity is as follows:

<TABLE>
<CAPTION>
SHARES WEIGHTED AVERAGE
UNDER PRICE PER
OPTION OPTION
---------- -----------------
<S> <C> <C>
Outstanding, August 21, 1996............................................. -- $ --
Granted, exercise price equal to market price.......................... 2,214,845 1.47
Granted, exercise price exceeds market price........................... 361,820 7.60
---------- -----
Outstanding, September 30, 1996.......................................... 2,576,665 2.33
Granted, exercise price equal to market price.......................... 571,960 1.71
Granted, exercise price exceeds market price........................... 500,545 7.60
---------- -----
Outstanding, September 30, 1997.......................................... 3,649,170 2.96
Granted, exercise price equal to market price.......................... 158,000 3.80
---------- -----
Outstanding, December 31, 1997........................................... 3,807,170 $ 2.99
---------- -----
---------- -----
</TABLE>

The following is a summary of stock options outstanding as of December 31,
1997:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- -------------------------------------------- ------------------------
OPTION REMAINING EXERCISE
OPTIONS EXERCISE CONTRACTUAL OPTIONS PRICE PER
OUTSTANDING PRICE LIFE EXERCISABLE SHARE
- -------------- ----------- --------------- ----------- -----------
<S> <C> <C> <C> <C>
2,715,075 $ 1.47 8.75 242,906 $ 1.47
172,473 2.91 8.75 40,102 2.91
71,730 3.37 8.75 22,920 3.37
158,000 3.80 8.75 31,600 3.80
172,473 5.09 8.75 -- 5.09
172,473 7.34 8.75 -- 7.34
172,473 9.93 8.75 -- 9.93
172,473 12.75 8.75 -- 12.75
- -------------- --- -----------
3,807,170 8.75 337,528
- -------------- --- -----------
- -------------- --- -----------
</TABLE>

The Company adopted the disclosure-only provisions of SFAS 123, "Accounting
for Stock-Based Compensation." Accordingly, no compensation cost has been
recognized for the stock option plan. However, pursuant to the requirements of
SFAS 123, the following disclosures are presented to reflect the Company's pro
forma net income for the year ended September 30, 1997, and the period ended
September 30, 1996, as if the fair value method of accounting prescribed by SFAS
123 had been used. Had compensation cost for the Company's stock option plan
been determined consistent with the provisions of

F-15
<PAGE>
TRISTAR AEROSPACE CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED AS TO INFORMATION FOR DECEMBER 31, 1997 AND 1996)

9. EMPLOYEE STOCK PLANS: (CONTINUED)
SFAS 123, the Company's net income and earnings per share would have been
reduced to the pro forma amounts indicated below:

<TABLE>
<S> <C> <C>
NET INCOME (in thousands): 1997 1996
--------- ---------
As reported....................................................... $ 11,603 $ 289
Pro forma......................................................... 11,474 289

BASIC EARNINGS PER SHARE:
As reported....................................................... $ 0.73 $ 0.02
Pro forma......................................................... 0.72 0.02

DILUTED EARNINGS PER SHARE:
As reported....................................................... $ 0.70 $ 0.02
Pro forma......................................................... $ 0.70 $ 0.02
</TABLE>

The fair value of each option grant is estimated on the date of grant using
the minimum value method with the following assumptions: dividend yield of 0
percent, weighted-average risk-free interest rate of 6.50 percent and 6.63
percent in 1997 and 1996, respectively, and expected lives of ten years.

10. SUBSEQUENT EVENT:

On February 11, 1998, the Company adopted a resolution to change its name
from Maple Leaf Aerospace, Inc. to TriStar Aerospace Co. Such name change has
been reflected herein.

On February 11, 1998, the Company declared a 158 for one stock split. The
earnings per share and share amounts in the consolidated financial statements
and the notes thereto have been restated to reflect the stock split.

F-16
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders
of TriStar Aerospace Co.:

We have audited the accompanying combined statements of operations and cash
flows of Tri-Star Aerospace, Inc. (a Florida corporation) and subsidiary and
affiliate for the periods ended September 19, 1996 and December 31, 1995. 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.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of Tri-Star
Aerospace, Inc. and subsidiary and affiliate for the periods ended September 19,
1996 and December 31, 1995, in conformity with generally accepted accounting
principles.

ARTHUR ANDERSEN LLP

Tulsa, Oklahoma
January 24, 1997

F-17
<PAGE>
TRI-STAR AEROSPACE, INC. AND SUBSIDIARY

COMBINED STATEMENTS OF OPERATIONS
(IN THOUSANDS)

<TABLE>
<CAPTION>
PERIOD ENDED YEAR ENDED
SEPTEMBER 19, DECEMBER 31,
1996 1995
------------- ------------
<S> <C> <C>
REVENUES............................................................................ $ 55,186 $ 65,579

COST OF GOODS SOLD.................................................................. 39,490 46,763
------------- ------------
Gross profit...................................................................... 15,696 18,816

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES........................................ 8,897 12,488
------------- ------------
Operating income.................................................................. 6,799 6,328

INTEREST EXPENSE.................................................................... 1,512 2,251

OTHER INCOME........................................................................ (19) (27)
------------- ------------
Net income........................................................................ $ 5,306 $ 4,104
------------- ------------
------------- ------------
</TABLE>

The accompanying notes are an integral part of these statements.

F-18
<PAGE>
TRI-STAR AEROSPACE, INC. AND SUBSIDIARY

COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
PERIOD ENDED YEAR ENDED
SEPTEMBER 19, DECEMBER 31,
1996 1995
------------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income........................................................................ $ 5,306 $ 4,104
Adjustments to reconcile net income to net cash provided by (used in) operating
activities--
Depreciation and amortization................................................... 356 480
Provision for excess and obsolete inventories................................... 1,961 1,850
Payment of dividends to minority interest owners................................ (272) --
Changes in operating assets and liabilities--
Increase in accounts receivable................................................. (499) (2,613)
Increase in inventories......................................................... (541) (8,548)
(Increase) decrease in prepaid expenses and other............................... (163) 27
Increase in trade accounts payable.............................................. 1,991 727
Increase (decrease) in integrated supply program contract payable............... 625 (202)
Increase in accrued liabilities................................................. 292 658
------------- ------------
Net cash provided by (used in) operating activities......................... 9,056 (3,517)
------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Repayment of notes receivable..................................................... 121 700
Capital expenditures.............................................................. (190) (381)
------------- ------------
Net cash provided by (used in) investing activities......................... (69) 319
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings.......................................................... 18,754 43,235
Payments on debt.................................................................. (23,294) (38,876)
Proceeds from borrowings from stockholder......................................... -- 500
Payments on debt to stockholder................................................... -- (500)
Distributions to stockholders..................................................... (3,832) (2,180)
Proceeds from other note.......................................................... -- 1,000
------------- ------------
Net cash provided by (used in) financing activities......................... (8,372) 3,179
------------- ------------

NET INCREASE (DECREASE) IN CASH..................................................... 615 (19)

CASH, beginning of period........................................................... 131 150
------------- ------------
CASH, end of period................................................................. $ 746 $ 131
------------- ------------
------------- ------------
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest............................................................ $ 1,646 $ 2,200
------------- ------------
------------- ------------
</TABLE>

The accompanying notes are an integral part of these statements.

F-19
<PAGE>
TRI-STAR AEROSPACE, INC. AND SUBSIDIARY

NOTES TO COMBINED FINANCIAL STATEMENTS

1. ORGANIZATION AND BUSINESS:

Tri-Star Aerospace, Inc. and subsidiary (the Company) is a single-source
distributor of aerospace fasteners, fittings, and other related hardware. The
Company's major products include fasteners (bolts, nuts, pins, washers, screws,
rivets), fluid and hydraulic systems parts (fittings, couplings, valves),
bearings and related aerospace hardware. The Company has over 2,000 customers
which include original equipment manufacturers of aircraft and aircraft
components, commercial airlines and aircraft maintenance, repair and overhaul
facilities.

The Company owns 73.8 percent of Tri-Star International, Inc. (an inactive
Interest Charge Domestic International Sales Corporation). Included in the
combined financial statements of the Company is Tri-Star Inventory Management
Services, Inc. (TIMS), a company under the common ownership and control of the
Company's stockholders.

The Company's central distribution facility is located in Tulsa, Oklahoma.
The Company has eight additional sales offices and six regional warehouses,
located within the United States, Canada and the United Kingdom.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

BASIS OF PRESENTATION

The combined financial statements include accounts of Tri-Star Aerospace,
Inc., Tri-Star International, Inc. and Tri-Star Inventory Management Service,
Inc. Intercompany transactions have been eliminated.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

REVENUE RECOGNITION

Revenues are recognized at the time of shipment.

INCOME TAXES

The Company's stockholders have elected to be taxed under the S Corporation
provisions of the Internal Revenue Code of 1986, as amended. As an S
Corporation, the earnings of the Company are taxable to the individual
stockholders, and therefore, the Company does not record deferred tax assets or
liabilities or income tax expense.

3. CONCENTRATION OF BUSINESS RISK:

F-20
<PAGE>
TRI-STAR AEROSPACE, INC. AND SUBSIDIARY

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

3. CONCENTRATION OF BUSINESS RISK: (CONTINUED)
current economic conditions. These estimates are reviewed periodically and as
adjustments become necessary, they are reported in earnings in the periods in
which they become known.

The Company also provides a reserve for potentially excess and obsolete
inventory. This reserve is based on management's estimates of future sales
projections in the aerospace industry and its place in the industry, sales
price, available customers and age of the inventory. This reserve is reviewed
periodically and as adjustments become necessary, they are reported in earnings
in the periods in which they become known.

During the period ended September 19, 1996, and the year ended December 31,
1995, the Company had three customers that individually accounted for more than
ten percent of revenues.

4. COMMITMENTS AND CONTINGENCIES:

OPERATING LEASES

The Company leases office and warehouse facilities and certain computer
equipment under operating leases expiring from September 1996 to November 2000.
Future minimum annual lease commitments (September 30 year-end) at September 19,
1996, are approximately as follows (in thousands):

<TABLE>
<CAPTION>
YEAR AMOUNT
- ------------------------------------------------------------------------------------- ---------
<S> <C>
1997................................................................................. $ 617
1998................................................................................. 611
1999................................................................................. 411
2000................................................................................. 171
2001................................................................................. 14
---------
$ 1,824
---------
---------
</TABLE>

SALES AND PURCHASE CONTRACTS

The Company is a party to various sales contracts with airlines that require
the Company to provide certain parts at fixed prices. The contracts generally
have a two-year life. Generally, vendor purchases are made under distributorship
agreements which are cancelable upon 30-days notice.

EMPLOYEE BENEFIT PLANS

The Company has an employee savings and investment plan (the Plan) which is
qualified under Section 401(k) of the Internal Revenue Code. The Plan is a
defined contribution plan covering all employees of the Company. All employees
hired as of the first day of the year may contribute, on a pre-tax basis, up to
the maximum amount allowable by law. The Company may, at the discretion of the
Board of Directors, make a contribution to the plan up to 10 percent of the
employee's base earnings. Only employees who worked a minimum of 1,000 hours in
the previous year are eligible for the Company's contribution. The Company
expensed $45,000 and $0 in 1996 and 1995, respectively, related to the Company's
contributions.

The Company has an employees' welfare benefit plan which is subject to the
provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The
Plan provides death benefits covering

F-21
<PAGE>
TRI-STAR AEROSPACE, INC. AND SUBSIDIARY

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

4. COMMITMENTS AND CONTINGENCIES: (CONTINUED)
substantially all employees of the Company. The Plan requires the Company to
contribute to the trust such amounts as the Board of Directors determines
necessary to properly fund the benefits payable under the Plan.

LITIGATION

The Company is the defendant in two separate lawsuits for purchase of a
former employee's stock in the Company and the rescission of a certificate for
stock in the Company. While the amount of the lawsuits is significant in the
aggregate, management believes that the Company's ultimate liability, if any,
will not be material to its combined financial position or results of combined
operations. The stockholders of the Company have indemnified TriStar Aerospace
Co. by accepting contingent consideration for a portion of the sales price (see
Note 5).

5. SUBSEQUENT EVENT:

On September 19, 1996, the Company was acquired by TriStar Aerospace Co.
(TriStar, formerly Maple Leaf Aerospace, Inc.) through a series of transactions
for approximately $31.8 million, including $3 million of contingent
consideration and assumption of 20.6 million in debt. Such contingent
consideration was placed in escrow and is payable to the shareholders of the
Company on September 19, 1999, to the extent that such amount is not due TriStar
to satisfy certain indemnifications given TriStar by the former shareholders.

F-22
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders
of TriStar Aerospace Co.:

We have audited the accompanying statements of operating income (loss) and
cash flows of the Aviall Aerospace Business Unit of Aviall, Inc. (a Delaware
corporation) for the periods ended September 19, 1996 and December 31, 1995.
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.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of the Aviall
Aerospace Business Unit of Aviall, Inc. for the periods ended September 19, 1996
and December 31, 1995, in conformity with generally accepted accounting
principles.

ARTHUR ANDERSEN LLP

Tulsa, Oklahoma

May 9, 1997

F-23
<PAGE>
AVIALL AEROSPACE BUSINESS UNIT OF AVIALL, INC.
STATEMENTS OF OPERATING INCOME (LOSS)
(IN THOUSANDS)

COST OF GOODS SOLD.................................................................. 18,050 19,778
------------- ------------
Gross profit...................................................................... 5,035 5,802
------------- ------------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Third-party expenses.............................................................. 3,541 4,213
Intercompany allocations.......................................................... 1,189 1,671
------------- ------------
4,730 5,884
------------- ------------
Operating income (loss)............................................................. $ 305 $ (82)
------------- ------------
------------- ------------
</TABLE>

The accompanying notes are an integral part of these statements.

F-24
<PAGE>
AVIALL AEROSPACE BUSINESS UNIT OF AVIALL, INC.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
PERIOD ENDED YEAR ENDED
SEPTEMBER 19, DECEMBER 31,
1996 1995
------------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Operating income (loss)........................................................... $ 305 $ (82)
Adjustments to reconcile operating income (loss) to net cash used in operating
activities--
Depreciation.................................................................... 304 388
Loss (gain) on sale of fixed assets............................................. 2 (2)
Provision for excess and obsolete inventories................................... 1,072 1,901
Changes in assets and liabilities--
Decrease (increase) in accounts receivable.................................... 607 (2,098)
Increase in inventories....................................................... (5,164) (10,443)
(Increase) decrease in prepaid expenses and other............................. (21) 305
(Decrease) increase in accounts payable....................................... (1,947) 2,333
(Decrease) increase in accrued liabilities.................................... (3) 34
------------- ------------
Net cash used in operating activities....................................... (4,845) (7,664)
------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures.............................................................. (245) (378)
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net intercompany borrowings....................................................... 5,090 8,049
------------- ------------
NET INCREASE IN CASH................................................................ -- 7

CASH, beginning of period........................................................... 22 15
------------- ------------
CASH, end of period................................................................. $ 22 $ 22
------------- ------------
------------- ------------
</TABLE>

The accompanying notes are an integral part of these statements.

F-25
<PAGE>
AVIALL AEROSPACE BUSINESS UNIT OF AVIALL, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND BUSINESS:

Aviall, Inc.'s (Aviall) aerospace business unit (Aviall Aerospace) is
engaged in the distribution of aerospace fasteners to major aircraft original
equipment manufacturers and their subcontractors, primarily in the United States
and Canada. Aviall Aerospace's principal location is a facility in Dallas, Texas
with additional stocking locations in Toronto, Montreal, Long Beach and St.
Louis. Prior to the sale of Aviall Aerospace, discussed in Note 6, the U.S.
operations were a portion of Aviall Services, Inc., a U.S. wholly owned
subsidiary of Aviall, and the stocking locations in Toronto and Montreal, Canada
were a portion of Aviall Ltd., a wholly owned foreign subsidiary of Aviall.

2. BASIS OF PRESENTATION:

The accompanying statements of operating income (loss) are intended to
present the results of Aviall Aerospace including allocations for corporate
level expenses (see Note 5) incurred by Aviall and allocated to Aviall
Aerospace. The statements are not intended to be a complete presentation of
Aviall Aerospace's results of operations. The losses of Aviall Aerospace were
included in Aviall's consolidated corporate tax return. No provision or benefit
for income taxes has been recorded in the statements of operating income (loss).

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

3. CONCENTRATION OF BUSINESS RISK:

Aviall Aerospace serves the aerospace industry and grants unsecured credit
to its customers. Management's periodic evaluation of the adequacy of the
allowance for doubtful accounts is based on management's estimates of the
creditworthiness of its customers, Aviall Aerospace's past loss experience,
known and inherent risks in the customer base, adverse situations that may
affect the customer's ability to repay and current economic conditions. These
estimates are reviewed periodically and as adjustments become necessary, they
are reported in earnings in the periods in which they become known.

Aviall Aerospace also provides a reserve for potentially excess or obsolete
inventory. This reserve is based on management's estimates of future sales
projections in the aerospace industry and its place in the industry, sales
price, available customers and age of the inventory. This reserve is reviewed
periodically and as adjustments become necessary, they are reported in earnings
in the periods in which they become known.

During the period ended September 19, 1996, and the year ended December 31,
1995, Aviall Aerospace had two customers that individually accounted for more
than ten percent of revenues.

4. COMMITMENTS:

Aviall Aerospace is a party to various sales contracts with airlines that
require Aviall Aerospace to provide certain parts at fixed prices. The contracts
generally have a two-year life. Generally, vendor purchases are made under
distributorship agreements which are cancelable upon 30 days notice.

F-26
<PAGE>
AVIALL AEROSPACE BUSINESS UNIT OF AVIALL, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. TRANSACTIONS WITH AFFILIATES:

Aviall Aerospace had sales of $1,254,000 and $2,139,000 in 1996 and 1995,
respectively, to Aviall affiliates. Corporate level expenses of $1,189,000 and
$1,671,000 were allocated to Aviall Aerospace in 1996 and 1995, respectively.
These corporate allocations include general corporate expenses such as
telephone, rent, utilities, maintenance, supplies, accounting, management
salaries and marketing.

6. SUBSEQUENT EVENT:

On September 19, 1996, certain net assets of Aviall Aerospace were purchased
by TriStar Aerospace Co. (formerly Maple Leaf Aerospace, Inc.) for approximately
$18.6 million and assumption of $3.2 million of accounts payable.

F-27
<PAGE>
Photographs and TriStar Logo

[Six photographs surround the TriStar logo. The photographs include (from
the top left hand corner, continuing clockwise): (i) airplane assembly facility
containing a partially assembled aircraft; (ii) various hardware which the
Company distributes; (iii) bar-code label machine; (iv) various hardware which
the Company distributes; (v) airplane assembly facility containing two partially
assembled aircraft; and (vi) a Company employee using a bar-code scanner.]
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY
JURISDICTION IN WHICH 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 THE INFORMATION HEREIN IS CORRECT AS
OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Summary Historical Financial and Operating Data........................... 7
Risk Factors.............................................................. 9
Use of Proceeds........................................................... 13
Dividend Policy........................................................... 13
Capitalization............................................................ 14
Dilution.................................................................. 14
Selected Historical Financial and Operating Data.......................... 15
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 17
Industry Overview......................................................... 24
Business.................................................................. 25
Management................................................................ 34
Principal and Selling Stockholders........................................ 43
Certain Transactions...................................................... 45
Description of Capital Stock.............................................. 48
Shares Eligible For Future Sale........................................... 52
Certain U.S. Tax Considerations Applicable to Non-U.S. Holders of the
Common Stock............................................................ 54
Underwriting.............................................................. 56
Legal Matters............................................................. 59
Experts................................................................... 59
Available Information..................................................... 59
Index to Financial Statements............................................. F-1
</TABLE>

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

UNTIL MAY 25, 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE SHARES OF COMMON STOCK OFFERED HEREBY, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

13,276,858 Shares

[LOGO]
TRISTAR AEROSPACE CO.
Common Stock

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

P R O S P E C T U S
--------------
BT ALEX. BROWN
SBC WARBURG DILLON READ INC.
APRIL 30, 1998

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