<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
AERO SERVICES
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
<PAGE>
AERO SERVICES INTERNATIONAL, INC.
660 Newtown-Yardley Road
Newtown, Pennsylvania 18940
-------------------------
NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS OF
AERO SERVICES INTERNATIONAL, INC.
to be held on Tuesday, September 22, 1998
-------------------------
To the Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders of
Aero Services International, Inc., a Louisiana corporation (the "Company"), is
hereby called to be held at the Ramada Inn on Market Square, 23 South Second
Street, Harrisburg, Pennsylvania 17101, on Tuesday, September 22, 1998 at 9:00
a.m., for the following purposes:
1. To elect directors to serve for a term of one year and until their
successors are elected and qualified;
2. To ratify the selection of BDO Seidman, LLP as the Company's
independent certified accountant; and
3. To transact such other business as may lawfully come before the
meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on September
8, 1998 as the record date for the determination of shareholders entitled to
notice of and to vote at such meeting.
Your vote is important. Even if you plan to attend the Annual Meeting
in person, please mark, sign, date and return the enclosed proxy so that your
shares will be represented at the meeting. A postage pre-paid, self-addressed
return envelope is enclosed for your convenience in returning the proxy.
PAUL R. SLACK
Secretary
Dated: September 11, 1998
<PAGE>
AERO SERVICES INTERNATIONAL, INC.
660 NEWTOWN-YARDLEY ROAD
NEWTOWN, PENNSYLVANIA 18940
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement and accompanying proxy card is furnished on or
about September 11, 1998 to the shareholders of Aero Services International,
Inc. (the "Company") in connection with the solicitation of proxies by the
Board of Directors ("Board") of the Company for use at the Annual Meeting of
Shareholders to be held at the Ramada Inn on Market Square, 23 South Second
Street, Harrisburg, Pennsylvania 17101, on Tuesday, September 22, 1998 at 9:00
a.m., and at any adjournment or adjournments thereof (the "Annual Meeting"). A
Notice of Annual Meeting also is attached hereto. Shares can be voted only if
the shareholder is present in person or is represented by proxy.
When a proxy in the accompanying form is properly executed and
returned in time to be voted at the Annual Meeting, and not subsequently
revoked, the shares represented thereby will be voted at the Annual Meeting in
accordance with the instructions marked thereon. All executed but unmarked
proxies that are returned will be voted FOR the election of each of the
director nominees for whom the shares represented by such proxy are entitled
to vote, and FOR the election of BDO Seidman, LLP as the Company's independent
certified accountant. If any other matters are properly brought before the
Annual Meeting, the person(s) named in the accompanying proxy will vote the
shares represented by such proxy in accordance with their own judgment on such
matters.
The expense of the solicitation of proxies for the meeting, including
the cost of mailing, will be borne by the Company. In addition to mailing
copies of the enclosed proxy materials to stockholders, the Company may
request persons, and reimburse them for their expenses with respect thereto,
who hold stock in their names or custody or in the names of nominees for
others to forward copies of such materials to those persons for whom they hold
stock of the Company and to request authority for the execution of the
proxies. In addition to the solicitation of proxies by mail, it is expected
that some of the officers, directors, and regular employees of the Company,
without additional compensation, may solicit proxies on behalf of the Board by
telephone, telefax, personal interview, and electronic mail.
Any shareholder giving a proxy has the power to revoke it at any time
before it is voted by submitting a later-dated proxy, by giving written notice
of such revocation to the Secretary of the Company, provided that such written
notice is received by the Secretary prior to the Annual Meeting, or upon
request if the shareholder is present at the Annual Meeting and chooses to
vote in person.
VOTING SECURITIES AND RECORD DATE
The Board of Directors has fixed the close of business on September
8, 1998 as the record date for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting (the "Record Date"). As of the
Record Date, there were outstanding, Six Million, Nine Hundred Ninety-Eight
Thousand, Fifty-Two (6,998,052) shares of the Company's common stock, no par
value ("Common Stock"), and Two Hundred Sixty-Nine Thousand, One Hundred
Eighty-Five (269,185) shares of the Company's Series A Cumulative Convertible
Preferred Stock ("Preferred Stock"). As of the Record Date, no shares of the
Company's Series B Convertible Preferred Stock were outstanding. Each share of
Common Stock is entitled to one vote on all matters to be presented at the
Annual Meeting except the election of two (2) designated directors as
described herein. The holders of Preferred Stock, voting separately as a
class, are entitled to the exclusive right to elect the two (2) directors to
serve as designated directors. In all other respects, the Preferred Stock is
non-voting at the meeting. See "Election of Directors."
<PAGE>
ELECTION OF DIRECTORS
Five (5) directors are to be elected at the Annual Meeting to serve
terms of one year or until their successors are duly elected and qualified.
The Articles of Incorporation and Bylaws of the Company provide for holders of
Common Stock to elect between five (5) and eleven (11) regular directors in
one election; however, the Board has only nominated five (5). Holders of
Preferred Stock will elect two (2) directors in a separate election to serve
in the designated director positions. A plurality of the votes cast, in person
or by proxy, is required for election. Absent contrary instructions, shares
represented by properly executed proxies in the accompanying form will be
voted FOR the nominees named below. Any shareholder who wishes to withhold
authority from the proxy holders to vote for the election of directors or to
withhold authority to vote for any additional individual nominee may do so by
marking his proxy to that effect.
All persons named herein as nominees for director have consented to
serve and it is not contemplated that any nominee will be unable to serve as a
director. If such event should occur, however, the proxies will be voted by
the proxy holders for such other person or persons as may be designated by the
present Board.
The names of the Board's nominees and certain information about them
are set forth below. All nominees are presently serving as directors of the
Company.
Nominees for Regular Directors:
NAME AGE DIRECTOR SINCE
R. Theodore Brant 52 1994
Alice F. Buford 50 1998
Maurice Lawruk 67 1994
Nominees for Designated Directors:
NAME AGE DIRECTOR SINCE
Bobby Ray Adkins 51 1994
James R. Affleck, Jr. 57 1998
Bobby Ray Adkins Mr. Adkins is Assistant Secretary of Transtech
Holding Company, Inc. ("Transtech") Mr. Adkins has served as Assistant
Secretary of Valley Air Services, Inc. ("Valley Air") since 1989. Mr. Adkins
served as Assistant Secretary of Transportech Corp. ("Transportech") from
January 31, 1994 until July 23, 1998, when Carlyle-Transportech Merger Sub,
Inc. was merged into Transportech. Mr. Adkins is a fifty percent (50%) owner
in a real estate development/management company, Appalachian Properties, Inc.
Mr. Adkins holds Associate degrees in Accounting, Business Administration and
Law Enforcement, and is a licensed commercial pilot and certified flight
instructor.
James R. Affleck, Jr. Mr. Affleck began his employment with the
Company in September 1987 as Manager of Special Projects. Mr. Affleck's duties
have included investor relations, vendor relations, cash management, and
insurance management. In 1994, Mr. Affleck was elected Assistant Secretary and
Assistant Treasurer. In 1997, Mr. Affleck was appointed Vice President. Mr.
Affleck is a graduate of Princeton University.
R. Theodore Brant Mr. Brant was appointed Chairman and Chief
Executive Officer on May 31, 1994. Mr. Brant has been a Director and Vice
Chairman of Piedmont Aviation Services, Inc. since 1992 and President and
Chief Executive Officer of Valley Air, a position he has held since Valley
Air's inception. Mr. Brant also served as President and Director of
Transportech until July 23, 1998, when Carlyle-Transportech Merger Sub, Inc.
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was merged into Transportech. Mr. Brant is also President and Director of
Transtech. Mr. Brant has experience in industrial, construction, and
engineering management and holds a B.S. degree in Mechanical Engineering from
West Virginia University. Mr. Brant holds a pilot license.
Alice F. Buford Ms. Buford is Secretary/Treasurer and fifty percent
(50%) owner in a real estate development/management company, Appalachian
Properties, Inc. Ms. Buford is also a shareholder and Secretary of Valley Air.
Ms. Buford is a shareholder of Transtech. Ms. Buford graduated from Roanoke
Business College. Ms. Buford's duties include administrative support,
management and accounting oversight.
Maurice Lawruk Mr. Lawruk is Vice President of Valley Air, and serves
on the Board of Transtech and Piedmont Aviation Services, Inc. Mr. Lawruk
served as Vice President and Director of Transportech until July 23, 1998,
when Carlyle-Transportech Merger Sub, Inc. was merged into Transportech. Mr.
Lawruk also serves as Chairman of the construction company which he founded in
1967. Mr. Lawruk previously served for eight years on the Board of the
Pennsylvania Industrial Development Authority.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH
OF THE BOARD'S NOMINEES FOR DIRECTOR.
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
Composition of the Board of Directors
The Board is constituted by three (3) regular directors and two (2)
designated directors. Regular directors are elected by the holder's of the
Company's Common Stock. Designated directors are elected by the holders of the
Company's Series A Preferred Stock, as hereinafter described. On May 17, 1995,
Mr. Adkins, Mr. Brant, Mr. Wallace E. Congdon and Mr. Lawruk were elected at
the annual meeting of the Company as regular directors, and Mr. Adkins and Mr.
William R. Dimeling were elected as designated directors. On November 8, 1995,
Mr. Congdon resigned as a member of the Board. On June 30, 1997, Mr. Dimeling
resigned as a member of the Board. On August 20, 1998, Mr. Affleck was
appointed by the Board to fill one of the vacancies on the Board. On September
3, 1998, Ms. Buford was appointed, by the Board, to fill another vacancy on
the Board. The Board is currently composed of Messrs. Adkins, Affleck, Brant,
and Lawruk, and Ms. Buford.
Meetings of the Board of Directors
During the fiscal years ended September 30, 1995, 1996, and 1997, the
Company's records indicate the Board met, or acted by written consent, six (6)
times, three (3) times and six (6) times, respectively. In each fiscal year,
each director attended more than seventy-five percent (75%) of the meetings of
the Board held, and participated in one hundred percent (100%) of the actions
by written consent taken, during the period for which he served as a director.
Each director attended more than seventy-five percent (75%) of the meetings,
and participated in one hundred percent (100%) of the actions by written
consent, of the committees on which he served during the period for which he
served as a director.
Compensation of Directors
On May 31, 1994, the Board suspended indefinitely any compensation
for directors in their capacity as directors, excluding only Mr. Dimeling, who
had been accruing compensation under a previous arrangement. Since Mr.
Dimeling's resignation, no member of the Board has received any compensation
in their capacity as directors.
Committees of the Board of Directors
The Board has an Executive Committee, a Human Resources/Compensation
Committee, and an Audit Committee.
3
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Executive Committee. The Executive Committee is authorized to act in
the absence of the Chief Executive Officer. On May 31, 1994, Mr. Brant was
elected to serve as Chief Executive Officer. On May 31, 1994, Mr. Brant was
also appointed as a member of the Executive Committee which then consisted of
Messrs. Brant and Dimeling. Since Mr. Dimeling's resignation, Mr. Brant has
been the only member of the Executive Committee. The Board has determined that
while an individual serves as Chief Executive Officer the Executive Committee
shall be inactive.
Human Resources/Compensation Committee. The HumanResources/Compensation
Committee advises the Board with respect to human resources and compensation
matters, including compensation of officers and directors. On May 17, 1995,
the committee was comprised of Messrs. Brant, Dimeling and Congdon. The
committee continued to be comprised of these members until Mr. Congdon's
resignation as President of the Company effective November 8, 1995. Upon Mr.
Dimeling's resignation, Mr. Brant was the only member of this committee. On
September 1, 1998 Mr. Brant resigned his position as a member of this
committee and Messrs. Adkins and Affleck were appointed by the Board. The
committee is now comprised of Messrs. Adkins and Affleck. This committee did
not meet during the fiscal years ended September 30, 1995, 1996 or 1997.
Audit Committee. The Audit Committee reviews the Company's financial
statements, financial systems and internal audit controls, reviews the
activities and fees of the Company's independent auditor, and performs such
other activities in connection with the Company's financial controls as may be
directed by the Board. On May 17, 1995, the Committee was comprised of Messrs.
Dimeling and Lawruk. Upon Mr. Dimeling's resignation, Mr. Lawruk was the only
member. On September 3, 1998, Mr. Lawruk resigned his position as a member of
this committee and Ms. Buford and Mr. Brant were appointed by the Board. Ms.
Buford and Mr. Brant now constitute the Audit Committee. This committee did
not meet during the fiscal years ended September 30, 1995, 1996 or 1997.
EXECUTIVE OFFICERS OF THE COMPANY
The following information is provided for the current executive
officers of the Company. The executive officers are appointed annually by the
Board and serve at the discretion of the Board.
Name Age Office
R. Theodore Brant 52 Chief Executive Officer; President
Chairman of the Board of Directors;
Director
Bobby Ray Adkins 51 Chief Operating Officer;
Director
James R. Affleck, Jr. 57 Vice President; Assistant Treasurer;
Assistant Secretary;
Director
Paul R. Slack 57 Treasurer; Secretary;
Chief Accounting Officer;
Controller
4
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Paul R. Slack joined the Company in December 1987 as Senior Internal
Auditor and was named Controller in May 1989. In February 1991, the Board
named Mr. Slack as Chief Accounting Officer and Controller. Subsequently, in
November 1991, Mr. Slack was named Assistant Secretary of the Company. On May
31, 1994, in addition to his other offices, Mr. Slack was named Treasurer and
Assistant Secretary of the Company. On March 5, 1997, Mr. Slack was named
Secretary of the Company. Mr. Slack received his B.S. degree in accounting
from Rider College.
For additional information regarding Messrs. Brant, Adkins, and
Affleck please refer to the "Election of Directors" section of this Proxy
Statement.
EXECUTIVE COMPENSATION
The following table sets forth information regarding the annual
compensation for services in all capacities to the Company for the fiscal
years ended September 30, 1995, 1996 and 1997 of the Chief Executive Officer.
Also shown is the compensation for Mr. Congdon, who was the most highly
compensated executive officer of the Company until 1996.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
====================================================================================================================================
Long-Term
Annual Compensation Compensation
====================================================================================================================================
Name and Principal Position Year Salary Bonus Other Annual Awards All Other
Compensation Options/SARS Compensation
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
R. Theodore Brant, 1997 $12,046 -0- -0- -0- -0-
Chief Executive Officer; President 1996 $12,046 -0- -0- -0- -0-
Chairman of the Board of 1995 $ 6,000 -0- -0- -0- -0-
Directors; Director
- ------------------------------------------------------------------------------------------------------------------------------------
Wallace E. Congdon, 1997 -0- -0- -0- -0- -0-
President and Chief Operating 1996 $10,154 -0- -0- -0- -0-
Officer(2) 1995 $80,100 $100 -0- -0- -0-
====================================================================================================================================
</TABLE>
- ------
(1) Mr. Brant was appointed Chairman and Chief Executive Officer on
May 31, 1994, and served in those capacities without compensation
through the end of 1994.
(2) Mr. Congdon resigned his positions on November 9, 1995.
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<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
AGGREGATE OPTION/SAR EXERCISES IN THE LAST FISCAL YEAR FISCAL YEAR-END OPTION/SAR VALUE
====================================================================================================================================
Number of
Securities Value(1) of
Underlying Unexercised
Unexercised in-the-Money
Options/SARs Options/SARs
Name at Fiscal at Fiscal
Shares Year-End (#) Year-End ($)
Acquired on Value Exercisable/ Exercisable/
Exercise (#) Realized ($) Unexercisable Unexercisable
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
R. Theodore Brant,
Chief Executive Officer; President -0- -0- 0/0 $0.00/$0.00
Chairman of the Board of
Directors; Director
- -------------------------------------------------------------------------------------------------------------------------
John L. Pugh,
(former) Chairman, Member of -0- -0- 150,000/0 $0.00/$0.00
Executive
Committee(2)
- -------------------------------------------------------------------------------------------------------------------------
Larry Ulrich(3) -0- -0- 120,000/0 $0.00/$0.00
(former) Vice President, Marketing
=========================================================================================================================
</TABLE>
(1) Market Value of underlying securities at exercise, minus the
exercise or base price. "Spread" calculated by subtracting the
exercise or base price ($.1410) from the bid price of underlying
securities ($.0625) as of the fiscal year-end of September 30,
1997.
(2) Effective January 1, 1994, the Human Resources/Compensation
Committee authorized the extension of the term of Mr. Pugh's
options for five years.
(3) Mr. Ulrich resigned as Vice President, Marketing and entered into
a one year consulting agreement with the Company on April 1,
1994.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Commencing on November 20, 1995 through June 30, 1997, the Company's
Human Resources/Compensation Committee ("Committee") consisted of Messrs.
Brant and Dimeling. Upon Mr. Dimeling's resignation, the Committee was
comprised of Mr. Brant alone. On September 1, 1998, Mr. Brant resigned from
the Committee and the Board appointed Messrs. Adkins and Affleck. Mr. Adkins
is a designated director of the Company, and is the Airport Manager at New
River Valley Airport, Dublin, Virginia. Neither Mr. Adkins nor Mr. Affleck
receive compensation from the Company by virtue of their positions as
directors or members of the Committee. Mr. Adkins is employed by the Company,
and received compensation in that capacity for the fiscal years ended
September 30, 1995, 1996 and 1997. Mr. Affleck is employed by the Company, and
received compensation in that capacity for the fiscal years ended September
30, 1995, 1996 and 1997. Messrs. Adkins and Affleck are directors of the
Company. No member of the Human Resources committee had any direct or indirect
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material interest in any transaction or proposed transaction to which the
Company was a party, except that Mr. Adkins has a seven percent (7%) equity
interest in Transtech and he was an officer of Transportech. Transtech is a
holding company managed by individuals with management experience and
ownership (direct and indirect) of airport fueling and repair facilities
similar to the Company. See "Related Transactions," and "Election of
Directors."
COMPENSATION PURSUANT TO PLANS
The Company has an Employees Tax Sheltered Retirement Plan meeting
the requirements of Section 401(k) of the Internal Revenue Code (the "Plan").
All regular, full time employees with one or more years of service are
eligible to participate in the Plan. The Plan provides for voluntary
contributions by a participant of up to fifteen percent (15%) of the
participant's salary subject to the maximum amounts allowable from time to
time by the Internal Revenue Service. The Company makes a matching
contribution of twenty-five percent (25%) of that portion of the participant's
contribution which does not exceed two percent (2%) of the participant's
salary. Employee contributions are fully vested. Participants become vested in
Company contributions after one (1) year of participation in the Plan. In
general, subject to provisions permitting hardship withdrawals and certain
loans, the vested amount in a participant's account may only be withdrawn
after the participant reaches age 59 1/2, or upon the participant's death,
termination of employment, disability or retirement. The Company contributed
$7,429 to the plan for the fiscal year ended September 30, 1995. The Company's
contributions to the plan for the fiscal years ended September 30, 1996 and
1997 were $2,845 and $1,921 respectively.
The Company has also provided for the payment of two (2) types of
bonuses to selected employees of the Company. First, the Company has
established an incentive plan for operating managers, including department
managers, general managers, and vice presidents. Under this plan, each
operating manager is eligible to earn incentive payments based on achievement
of certain operating and revenue targets established at the beginning of the
fiscal year. For targets achieved during fiscal years ended September 30,
1995, 1996 and 1997, the Company granted $8,402, $36,559 and $23,993,
respectively to one (1) operating manager. Second, the Board may authorize
additional bonuses for certain executive and selected staff employees based on
achievement of specified operating or programmatic objectives established at
the beginning of the fiscal year. The Company granted no bonuses under this
plan during fiscal years ended September 30, 1995, 1996 and 1997.
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS
The following tables set forth, as of the Record Date, information
with respect to stock ownership in the Company by each person known by the
Company to be the beneficial owner of more than five percent (5%) of the
Company's outstanding Common Stock or Preferred Stock.
7
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<TABLE>
<CAPTION>
====================================================================================================================================
Amount and
Amount and Nature of Percent
Nature of Percent Ownership of of Class of
Beneficial of Class Series A Series A
Name and Address Ownership of of Common Preferred Preferred
of Beneficial Owner(1) Common Stock Stock Stock(2) Stock
====================================================================================================================================
<S> <C> <C> <C> <C>
Transtech Holding Company, Inc. 3,407,693(3) 42% 93,947 35%
1331 Twelfth Avenue, Suite 109
Altoona, PA 16601
Triton Energy Corporation 538,374(4) 7% 134,593 50%
6688 North Central Expressway
Suite 1400
Dallas, TX 75206
Robert L. Starer 801,000(5) 11% -0- -0-
6555 Skyline Drive
Delray Beach, FL 33446
John F. Bricker 401,038 6% -0- -0-
826 Union Street, Suite 300
New Orleans, LA 70112
</TABLE>
- -------
(1) Except as otherwise noted, the shareholders listed exercise sole
voting and investment power, subject to community property laws
where applicable. Information with respect to beneficial
ownership is based upon information furnished by each
shareholder.
(2) On or about June 30, 1988, the holders of Preferred shares became
entitled (pursuant to the Articles of Incorporation of the
Company), voting separately as a class, to elect two (2)
directors, to serve on the Board in designated positions as a
result of the Company's failure to pay six (6) quarterly
dividends on the Preferred Stock. Under the Articles of
Incorporation, the holders of Preferred Stock cannot vote their
holdings of Common Stock for the election of the Company's
regular directors while entitled to elect directors to serve in
the designated positions.
(3) Includes 1,500,000 shares of Common Stock issued to Triton Energy
Corporation ("Triton") on May 20, 1994 on the conversion of
250,000 shares of Series B Preferred Stock. Also includes 375,788
shares of Common Stock issuable on conversion of 93,947 shares of
Preferred Stock.
(4) Includes 538,372 shares of Common Stock issuable on conversion of
134,593 shares of Preferred Stock, which shares are owned by
Triton.
(5) Includes (i) 800,000 shares of Common Stock that Mr. Starer has a
right to acquire pursuant to stock options and (ii) 1,000 shares
of Common Stock acquired by Mr. Starer in open market purchases.
8
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of the Record Date, information
with respect to ownership of Common Stock and Preferred Stock by (i) each
director and director-nominee of the Company, and (ii) all officers and
directors of the Company as a group. This information was furnished to the
Company by its officers and directors or is based upon public SEC filings.
<TABLE>
<CAPTION>
====================================================================================================================================
Amount and
Amount and Nature of Percent
Nature of Percent Ownership of of Class of
Beneficial of Class Series A Series A
Ownership of of Common Preferred Preferred
Name of Beneficial Owner(1) Common Stock Stock Stock Stock
====================================================================================================================================
<S> <C> <C> <C> <C>
Bobby Ray Adkins -0-(2) -0- -0-(3) -0-
James R. Affleck, Jr. -0- -0- -0- -0-
R. Theodore Brant -0-(4) -0- -0-(5) -0-
Alice F. Buford -0- -0- -0- -0-
Maurice Lawruk -0-(6) -0- -0-(7) -0-
Paul R. Slack 20,000(8) * -0- -0-
All Officers and 20,000(9) * -0- *
Directors as a group
(includes 6 persons)
</TABLE>
*Denotes ownership of less than one percent (1%) of the indicated class.
- -----------------
(1) Except as otherwise noted, the shareholders listed exercise
sole voting and investment power, subject to community
property laws where applicable. With respect to each person
or group, the number of shares and percentages are
calculated based on the number of shares outstanding plus
shares that such person or group may acquire within sixty
(60) days upon the exercise of stock options.
(2) Does not include 3,407,693 shares of Common Stock (which
includes 375,788 shares of Common Stock issuable on
conversion of 93,937 shares of Preferred Stock) owned by
Transtech, in which Mr. Adkins owns a seven percent (7%)
equity interest. Mr. Adkins disclaims the beneficial
ownership of these shares.
(3) Does not include 93,937 shares of Preferred Stock owned by
Transtech, in which Mr. Adkins owns a seven percent (7%)
equity interest. Mr. Adkins disclaims the beneficial
ownership of these shares.
(4) Does not include 3,407,693 shares of Common Stock (which
includes 375,788 shares of Common Stock issuable on
conversion of 93,937 shares of Preferred Stock) owned by
Transtech, in which Mr. Brant owns a forty percent (40%)
equity interest. Mr. Brant disclaims the beneficial
ownership of these shares.
9
<PAGE>
(5) Does not include 93,937 shares of Preferred Stock owned by
Transtech, in which Mr. Brant owns a forty percent (40%)
equity interest. Mr. Brant disclaims the beneficial
ownership of these shares.
(6) Does not include 3,407,693 shares of Common Stock (which
includes 375,788 shares of Common Stock issuable on
conversion of 93,937 shares of Preferred Stock) owned by
Transtech, in which Mr. Lawruk owns a forty percent (40%)
equity interest. Mr. Lawruk disclaims the beneficial
ownership of these shares.
(7) Does not include 93,937 shares of Preferred Stock) owned by
Transtech, in which Mr. Lawruk owns a forty percent (40%)
equity interest. Mr. Lawruk disclaims the beneficial
ownership of these shares.
(8) Includes 20,000 shares with respect to outstanding vested
stock options.
(9) Includes 20,000 shares with respect to outstanding vested
stock options for one officer. Does not include 3,031,905
shares of Common Stock owned of record by Transtech or
375,788 shares of Common Stock issuable to Transtech on
conversion of 93,947 shares of Preferred Stock.
CERTAIN TRANSACTIONS WITH MANAGEMENT
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent (10%) of its Common Stock to file reports of ownership and changes in
ownership with the SEC. Officers, directors and greater than ten percent (10%)
stockholders are required by the SEC to furnish the Company with copies of all
Section 16(a) forms they file.
The Company believes that, based solely on its review of records of
the transfer agent that no reports were required for those persons, during
fiscal years ended September 30, 1995, 1996 and 1997 all filing requirements
applicable to its officers, directors and greater than ten percent (10%)
stockholders were complied with.
Related Transactions
For the fiscal years ended September 30, 1995, 1996 and 1997, there
have been no transactions between the Company and any executive officer,
director, five percent (5%) beneficial owner of the Company's Common Stock, or
member of the immediate family of the foregoing persons in which one of the
foregoing persons had an interest of more than Sixty Thousand Dollars
($60,000) except for the following:
In May 1994 Triton sold the majority of its equity in the Company to
Transtech. At September 30, 1997, Transtech owned 42.2% of the Company's
common stock and 34.9% of the Company's preferred. The Company is also
indebted to Transtech in the amount of $15,610,000 in the form of notes that
were purchased from Triton. During fiscal year 1996, $1,488,000 of interest
expense was recorded against the $15,610,000 loans due to Transtech, of which
$375,000 was paid and $962,000 was forgiven and reclassified as Additional
Paid-in Capital. During fiscal year 1997, the Company paid $248,000 of the
demand loans, and $1,470,000 of interest expense was recorded against these
loans of which $806,000 was paid. At September 30, 1997 the Company has
$1,347,000 of accrued interest due to Transtech recorded on the balance sheet.
During the fiscal years ended September 30, 1995, 1996 and 1997, the
Company provided accounting services to Transportech, a wholly owned
subsidiary of Transtech. The Company received a monthly fee of $900.
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On November 8, 1995 the Company assigned its interest in the sublease
and purchase option agreement at Houston's Hobby Airport, together with fixed
assets situated at the facility, to TigerAir, Inc., a Texas corporation formed
by Mr. Wallace E. Congdon, the then President of the Company. In consideration
of the assignment, TigerAir paid $250,000 in the form of a non-interest
bearing promissory note. Effective as of the closing, Mr. Congdon resigned as
President and as a Director of the Company.
On May 31, 1994 the Board of Directors appointed Christopher M.
Cicconi, Esquire as the Company's Corporate Secretary. They also selected the
law firm of Eckert Seamans Cherin & Mellott, LLC, of which Mr. Cicconi is a
partner, as the Company's chief legal counsel. During fiscal 1996, the Company
was billed $145,000 for legal services. In March 1997, Mr. Cicconi resigned as
the Company's Corporate Secretary, but his law firm remains as the Company's
chief legal counsel.
In July 1996 the Company purchased a 1975 Cessna Citation 500
aircraft owned by Mr. R. Theodore Brant, the Chairman of the Board and Chief
Executive Officer of the Company for $708,000. As part of the purchase
agreement the Company will make monthly payments directly to Cessna
Corporation on the existing loan, the balance being $533,000 at September 30,
1996. From June 1995 to March of 1996 the Company engaged in charter
operations using the Cessna belonging to Mr. Brant. The Company was to pay all
related operating expenses and to receive a commission on all charters.
Charters were made through Piedmont Aviation Services, Inc., Winston-Salem,
NC. All expenses and income, less the Company's commission, were charged to a
balance sheet account. In March 1996, the Company was owed $36,000. At that
time total management of the aircraft reverted to Piedmont with the expenses
and charter income continuing to be processed by the Company. At the time of
the purchase, the Company was due $128,000. The difference between the
purchase price and the note balance assumed was charged to the owner's
account. During the period ended September 30, 1997, the aircraft continued to
be managed by Piedmont which was the exclusive agent for scheduling the
aircraft usage. Piedmont operated as an air taxi operator and leased aircraft
in connection with its business. The Company received seventy-five percent
(75%) of the net billings. Piedmont provided the flight crew and the Company
was responsible for fuel and maintenance. Mr. Brant was, at that time, also a
director and Vice-Chairman of Piedmont. In August 1997 one of the airplane's
engines required an overhaul which cost $240,000. Mr. Brant increased the note
with Cessna by $200,000 and personally paid the additional $40,000, with the
$240,000 being charged to a fixed asset account. At September 30, 1997 the
Company owed Mr. Brant $76,000.
The Company periodically uses an aircraft owned by Valley Air for
travel by its employees, primarily management. Valley Air bills the Company an
hourly rate based on flight time. The President and Chief Executive Officer of
Valley Air is Mr. R. Theodore Brant. During 1997 the Company was billed
$93,000 for use of the aircraft.
In January 1996 the Company purchased forty percent (40%) interest in
a company called Peakwood, L.L.C. for $150,000. $115,000 of this amount was
borrowed from the following related parties: Transportech, a wholly owned
subsidiary of Transtech, $20,000; Mr. Lawruk, $40,000; Mr. Affleck, $34,000;
Mr. Brant, $15,000; Mr. Adkins, $4,000; and Ms. Buford, $2,000. Ms. Buford
also is a shareholder of Transtech. The Company issued promissory notes
bearing an interest rate of ten percent (10%) per annum with principal and
interest due in February 1997, at which time the Company exercised its option
to extend the payment date for one additional year. All interest due through
the renewal date was paid.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
On November 14, 1997, the Company retained BDO Seidman, LLP as the
independent certified accountant to examine the financial statements of the
Company and to perform the annual audit. The engagement of BDO Seidman, LLP
was approved by the Company's Board on November 14, 1997.
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APPOINTMENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
BDO Seidman, LLP audited the Company's financial statements for the
fiscal years ended September 30, 1997 and the Board has reappointed BDO
Seidman, LLP as the independent certified public accountants to examine the
financial statements and to perform the annual audit for the year ending
September 30, 1998, such appointment to continue at the pleasure of the Board.
Absent contrary instructions, shares represented by properly executed proxies
in the accompanying form will be voted FOR the ratification of BDO Seidman,
LLP as the independent certified accounting firm for the Company.
THE BOARD RECOMMENDS A VOTE "FOR" RATIFICATION OF THE APPOINTMENT OF
BDO SEIDMAN, LLP AS THE INDEPENDENT ACCOUNTANTS FOR THE COMPANY.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
The Company has changed its independent accountant on November 14,
1997. The Company is unaware of any disagreements with BDO Seidman, LLP on
accounting and financial disclosure. In addition, the rules of the SEC require
the Company to inform you that:
KPMG Peat Marwick, LLP audited the Company's financial statements for
the fiscal years ended September 30, 1994 through 1996. On November 14, 1997
the Company (i) advised KPMG Peat Marwick, LLP that its engagement would not
be renewed the Company, and (ii) engaged BDO Seidman, LLP as the independent
certified public accountants to examine the financial statements and to
perform the annual audit for the year ending September 30, 1997. The
engagement of BDO Seidman, LLP was authorized by the Company's Board of
Directors on November 14, 1997. The Company selected BDO Seidman as part of
the Company's ongoing efforts to reduce costs. The Company expects the
retention of BDO Seidman, LLP to reduce the costs of auditing its financial
statements.
On November 14, 1997, the Company informed KPMG Peat Marwick, LLP of
its selection of BDO Seidman, LLP as the certified independent accountants for
the Company. The reports of KPMG Peat Marwick, LLP on the Company's financial
statements for the fiscal year ending September 30, 1996 did contain a
disclaimer of opinion. In their report to the Stockholders and Board of
Directors of the Company, KPMG Peat Marwick, LLP cited the Company's recurring
losses from operations and net capital deficiencies at September 30, 1996 as
factors that raised substantial doubt about the Company's ability to continue
as a going concern.
This qualification was due to factors expressed in Note "B" of the
audited financial statements of the Company for the period ending September
30, 1996 ("Financial Statements"). Note "B" indicates, in paragraph 12,
entitled "Concentration of Credit Risk and Fair Value of Financial
Instruments" that the "fair value of the Industrial Bond is also impractical
to determine." The Company was obligated on two (2) industrial bonds: (1) the
Arapahoe County, Colorado Floating Rate Monthly Demand Industrial Bonds (CSX
Beckett Aviation, Inc.) ("CO Bonds"); and (2) City of Chicago Floating Rate
Monthly Demand Airport Special Facility Revenue Bonds (CSX Beckett Aviation,
Inc. Project ("Chicago Bonds"). The CO Bonds and Chicago Bonds also are
discussed more fully in Note "D" to the Financial Statements.
The liability in connection with the payment of principal, interest,
and related fees on the CO Bonds was contractually assumed by the purchaser of
the Company's Denver, CO facility in February, 1994. The purchaser is a
privately held company, and KPMG was unable to review the purchaser's
financial records to determine its ability to fulfill its payment obligations.
As a result, KMPG was unable to determine the extent of liability, if any,
that accrued to the Company as a result of the CO Bonds.
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The Chicago Bonds continue to be an obligation of the Company. The
Chicago Bonds are supported by a letter of credit, which originally was
scheduled to expire several months from the time the Financial Statements were
prepared. There also was some uncertainty surrounding the renewal of the
letter of credit at that time. The original letter of credit bank had ceased
issuing letters of credit for this type of transaction, and had expressed an
unwillingness to renew the then existing letter. If the Company was unable to
obtain a substitute letter of credit prior to the expiration of the original
letter of credit, the Chicago Bonds would have been subject to mandatory
redemption, and the Three Million Five Hundred Thousand Dollar ($3,500,000)
face amount of the Chicago Bonds would become a current obligation of the
Company. Since the preparation of the Financial Statements, the Company has
been able to obtain a replacement letter of credit for the Chicago Bonds that
has a scheduled expiration date of November 15, 2002.
Other than as described above, the reports of KPMG Peat Marwick, LLP
did not contain an adverse opinion, and were not qualified or modified as to
uncertainty, audit scope or accounting principles.
During the two most recent fiscal years of the Company and the
subsequent period prior to engagement of BDO Seidman, LLP there were no
disagreements with KPMG Peat Marwick, LLP on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure or "reportable events" as that term is defined in Item 304(a)(1)(v)
of Regulation S-K.
During the two most recent fiscal years of the Company and the
subsequent period prior to the engagement of BDO Seidman, LLP, neither the
Company nor anyone acting on its behalf has consulted BDO Seidman, LLP
regarding either the application of accounting principles to any transaction
or the type of audit opinion that might be rendered on the Company's financial
statements.
Representatives of BDO Seidman, LLP are neither expected to be
present at the annual meeting nor to be available to respond to shareholders
questions at the annual meeting. Representatives of BDO Seidman, LLP will have
the opportunity to make a statement at the annual meeting if they desire to do
so.
FINANCIAL DISCLOSURE
Attached hereto are copies of the Company's Forms 10-KSB, without
exhibits, for the fiscal years ended September 30, 1995, 1996 and 1997.
Shareholders are encouraged to read these Forms 10-KSB. They contain
information on the Company's operations, markets, products and services, as
well as the Company's audited financial statements.
In addition, the rules of the SEC require the Company to report any
disposals of segments of its business and extraordinary, unusual, or
infrequently occurring items within the two (2) most recent fiscal years.
On May 10, 1996 the Company sold to Jason IV, owner of a competitor
FBO on the airport, its leasehold interest at New Orleans' Lakefront Airport
for $900,000. The Company received $300,000 cash at settlement and two
promissory notes for the balance. A note in the amount of $100,000, bearing
interest at the rate of eight percent (8%) per annum is due and payable on
April 30, 1997. A note in the amount of $500,000 bearing interest at the rate
of nine percent (9%) per annum is due and payable on March 31, 1999. Interest
on both notes is being paid monthly.
The regulatory environment, particularly in terms of environmental
regulation, has changed dramatically over the last five to ten years for all
operators in the industry. In September 1988, for example, the Environmental
Protection Agency ("EPA") issued regulations for underground storage tanks
("USTs") that has had a substantial economic affect on the industry and the
Company. The effective commencement date for newly installed USTs was December
22, 1988 with all USTs having to conform to the new standards by December
1998. During 1996 and 1995, the Company incurred expenses of $1,000 and
$241,000, respectively, in complying with these EPA
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regulations. However, from 1988 through 1996, the Company has incurred
$3,152,000 of expenses in complying with these same regulations. At September
30, 1996, the Company's financial statements include accruals of $457,000 for
any known clean-up and remediation liabilities associated with complying with
EPA regulations.
OTHER BUSINESS
The Board does not presently intend to bring any other business
before the Annual Meeting, and, so far as is known to the Board, no matters
are to be brought before the Annual Meeting except as specified in the notice
of the Annual Meeting. As to any business that may properly come before the
Annual Meeting, however, it is intended that proxies, in the form enclosed,
will be voted in respect thereof in accordance with the judgment of the
persons voting such proxies.
MISCELLANEOUS INFORMATION
Shareholder Proposals
Proposals that shareholders desire to have included in the Company's
proxy statement for the 1999 annual meeting should be received by the Company
at its offices at 660 Newtown-Yardley Road, Newtown, PA 18940 on or before
December 1, 1998. Any such proposal must comply with Rule 14a-8 of Regulation
14A of the Proxy Solicitation Rules of the Securities and Exchange Commission.
Expense of Solicitation of Proxies
The cost of soliciting proxies in the accompanying form, including
any and all professional fees paid to attorneys and accountants in connection
with the preparation and filing with the SEC of these proxy materials and the
financial statements and information included herein and the cost of printing
and mailing these proxy materials, will be borne solely by the Company. To the
extent necessary, in order to assure sufficient representation, directors,
officers and regular employees of the Company may request the return of
proxies personally, or by mail, telephone, telegraph, or otherwise, but such
persons will not be compensated for such services. Brokerage firms, banks,
fiduciaries and other nominees will be requested to forward the soliciting
material to each beneficial owner of stock held of record by them. The Company
will also reimburse brokerage firms, banks, and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in furnishing proxy
materials to certain beneficial owners of the Company's voting stock.
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Form 10-K Exhibits
COPIES OF EXHIBITS TO THE SEC FORM 10-K ARE AVAILABLE ON PREPAYMENT
OF COPYING CHARGES OF $20.00. REQUESTS AND CHECKS AS APPROPRIATE SHOULD BE
ADDRESSED TO AERO SERVICES INTERNATIONAL, INC., 660 NEWTOWN-YARDLEY ROAD,
NEWTOWN, PENNSYLVANIA 18940.
BY ORDER OF THE BOARD OF DIRECTORS
PAUL R. SLACK
Secretary
ALL STOCKHOLDERS ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING
PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE. THANK YOU FOR YOUR PROMPT
ATTENTION TO THIS MATTER.
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