<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------------------------
FORM 11-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
- -------- EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
- -------- SECURITIES EXCHANGE ACT OF 1934
Commission File Number 33-43100
A. Full title of the plan and the address of the plan, if different from that
of issuer named below:
Amended and Restated Banner Aerospace, Inc.
Profit Sharing/401(k) Plan and Trust
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
Banner Aerospace, Inc.
P.O. Box 20260
Washington, DC 20041
<PAGE> 2
AMENDED AND RESTATED
BANNER AEROSPACE, INC.
PROFIT SHARING/401(k)
PLAN AND TRUST.
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1996 AND 1995
TOGETHER WITH REPORT OF
INDEPENDENT PUBLIC ACCOUNTANTS
<PAGE> 3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of Banner Aerospace, Inc.:
We have audited the accompanying statements of net assets available for plan
benefits, including the schedule of investments, of the Amended and Restated
Banner Aerospace, Inc. Profit-Sharing/401(k) Plan and Trust as of December 31,
1996 and 1995, and the related statements of changes in net assets available
for plan benefits for the year ended December 31, 1996. These financial
statements are the responsibility of the Plan's administrator. 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 net assets available for benefits of the Plan as of
December 31, 1996 and 1995, and the changes in net assets available for
benefits for the year ended December 31, 1996, in conformity with generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of
investments and reportable transactions are presented for the purpose of
additional analysis and are not a required part of the basic financial
statements but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The Fund Information in the statement
of net assets available for plan benefits and the statement of changes in net
assets available for plan benefits is presented for purposes of additional
analysis rather than to present the net assets available for plan benefits and
changes
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Page 2
in net assets available for plan benefits of each fund. The supplemental
schedules and Fund Information have been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion,
are fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
ARTHUR ANDERSEN LLP
Washington, D.C.
May 30, 1997
<PAGE> 5
AMENDED AND RESTATED BANNER AEROSPACE, INC.
PROFIT SHARING/401(k) PLAN AND TRUST
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
As of December 31, 1996 and 1995 1
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
For the Year Ended December 31, 1996 2
NOTES TO FINANCIAL STATEMENTS AND SCHEDULES
As of December 31, 1996 and 1995 3
ITEM 27(a) - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
As of December 31, 1996 7
ITEM 27(d) - SCHEDULE OF REPORTABLE TRANSACTIONS
For the Year Ended December 31, 1996 8
</TABLE>
<PAGE> 6
AMENDED AND RESTATED BANNER AEROSPACE, INC.
PROFIT-SHARING/401(k) PLAN AND TRUST
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
INVESTMENTS, at market value:
Common/Collective Trusts-
PNC Bank Investment Contract Fund $ 1,077,974 $ 1,067,553
Mutual Funds-
Compass Capital Managed Income Portfolio 1,181,415 1,512,535
Fidelity Advisor Balanced Portfolio 4,805,142 4,616,532
Fidelity Advisor Equity Growth Portfolio 2,258,586 793,141
Fidelity Advisor Overseas Portfolio 554,703 101,521
Fidelity Advisor High Yield Portfolio 2,883,256 2,238,911
Common Stock-
Banner Aerospace, Inc. 552,374 208,266
----------- -----------
Total investments 13,313,450 10,538,459
----------- -----------
RECEIVABLES:
Dividend receivable 67,917 --
Contributions receivable 152,423 105,950
Participant loans receivable 669,063 676,005
----------- -----------
Total receivables 889,403 781,955
----------- -----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $14,202,853 $11,320,414
=========== ===========
</TABLE>
-1-
The accompanying notes to financial statements
are an integral part of this statement.
<PAGE> 7
AMENDED AND RESTATED BANNER AEROSPACE, INC.
PROFIT-SHARING/401(k) PLAN AND TRUST
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
COMPASS
PNC BANK CAPITAL FIDELITY
INVESTMENT MANAGED FIDELITY EQUITY
CONTRACT INCOME BALANCED GROWTH
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
INCREASES:
Contributions-
Employees $ 99,391 $ 126,420 $ 431,074 $ 320,500
Employer 33,247 52,703 168,772 107,043
Other 17,948 63,696 478,524 793,322
Interest and dividend income 5,868 77,617 212,281 76,422
Unrealized appreciation (decline) in market value of investments 37,201 (20,604) 214,278 79,210
Realized gain (loss) on the sale of investments 30,793 (15,060) (12,821) 46,193
Other, net 17,526 -- -- --
----------- ----------- ----------- ----------
Total increases 241,974 284,772 1,492,108 1,422,690
----------- ----------- ----------- ----------
DECREASES:
Distributions to participants 498,971 527,323 664,927 38,740
----------- ----------- ----------- ----------
Total decreases 498,971 527,323 664,927 38,740
----------- ----------- ----------- ----------
NET INCREASE (DECREASE) (256,997) (242,551) 827,181 1,383,950
TRANSFERS BETWEEN FUNDS 267,128 (82,708) (630,524) 102,218
NET ASSETS AVAILABLE FOR PLAN BENEFITS, beginning of period 1,076,894 1,525,949 4,651,926 808,716
----------- ----------- ----------- ----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS, end of period $ 1,087,025 $ 1,200,690 $ 4,848,583 $2,294,884
=========== =========== =========== ==========
<CAPTION>
FIDELITY FIDELITY BANNER
ADVISOR HIGH COMMON PARTICIPANT
OVERSEAS YIELD STOCK LOANS TOTAL
-------- ----------- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
INCREASES:
Contributions-
Employees $ 80,886 $ 300,502 $ 61,765 $ $ 1,420,538
Employer 27,629 117,596 23,628 -- 530,618
Other 210,332 305,186 65,737 -- 1,934,745
Interest and dividend income 25,546 312,899 811 -- 711,444
Unrealized appreciation (decline) in market value of investments 9,689 57,555 89,861 -- 467,190
Realized gain (loss) on the sale of investments 2,107 9,480 30,516 -- 91,208
Other, net -- 195 -- -- 17,721
-------- ----------- -------- --------- -----------
Total increases 356,189 1,103,413 272,318 -- 5,173,464
-------- ----------- -------- --------- -----------
DECREASES:
Distributions to participants 10,681 309,830 23,362 217,191 2,291,025
-------- ----------- -------- --------- -----------
Total decreases 10,681 309,830 23,362 217,191 2,291,025
-------- ----------- -------- --------- -----------
NET INCREASE (DECREASE) 345,508 793,583 248,956 (217,191) 2,882,439
TRANSFERS BETWEEN FUNDS 115,872 (81,468) 99,233 210,249 --
NET ASSETS AVAILABLE FOR PLAN BENEFITS, beginning of period 104,266 2,264,331 212,327 676,005 11,320,414
-------- ----------- -------- --------- -----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS, end of period $565,646 $ 2,976,446 $560,516 $ 669,063 $14,202,853
======== =========== ======== ========= ===========
</TABLE>
-2-
The accompanying notes to financial statements
are an integral part of this statement.
<PAGE> 8
AMENDED AND RESTATED BANNER AEROSPACE, INC.
PROFIT-SHARING 401(k) PLAN AND TRUST
NOTES TO FINANCIAL STATEMENTS AND SCHEDULES
AS OF DECEMBER 31, 1996 AND 1995
1. SUMMARY OF PLAN:
The following description of the Amended and Restated Banner Aerospace, Inc.
Profit-Sharing/401(k) Plan and Trust (the "Plan") provides only general
information. Participants should refer to the Plan agreement for a more
complete description of the Plan's provisions.
GENERAL
The Plan is a defined contribution plan which was established July 1, 1990 by
Banner Aerospace, Inc. and Subsidiaries (the Company). The purpose of the Plan
is twofold as it serves as a profit-sharing plan and a 401(k) salary reduction
benefit plan. It is subject to the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA").
The Plan covers certain employees of the Company not covered by a collective
bargaining agreement, who have completed at least three (3) consecutive months
of service. Participation in the Plan shall commence on the earlier of January
1, April 1, July 1, or October 1 concurrent with or immediately following the
eligibility date.
CONTRIBUTIONS
Participants may elect to contribute up to 16% of their total salary or wages,
including bonuses, commissions and overtime pay. The Company will make a
matching contribution equal to 50% of the participant's contribution, provided
that such matching contribution shall only apply to that portion of such
participant's elective contribution which does not exceed 6% of the
participant's compensation. Each fiscal year, the Company may also contribute
an amount determined at the discretion of the Board of Directors.
VESTING
Participants are immediately vested in their voluntary contributions plus
actual earnings thereon. Vesting in the remainder of their accounts is based on
years of completed service, as follows:
<TABLE>
<CAPTION>
COMPLETED YEARS VESTED
OF SERVICE PERCENTAGE
--------------------------- --------------
<S> <C>
Less than 3 years - %
3 years 20
4 years 40
5 years 60
6 years 80
7 years or more 100
</TABLE>
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<PAGE> 9
PAYMENT OF BENEFITS
Upon termination of service, at the direction of the plan administrator, a
participant can receive a lump-sum payment. Any participant who remains in the
employ of the Company, yet is required to receive a distribution, shall have
that distribution made over a fixed term designated by the participant which
satisfies both the minimum distribution rules and the minimum distribution
incidental benefit rules of Code Section 401(a)(9) and which does not exceed
the joint and last survivor life expectancy of the participant and a designated
beneficiary.
PARTICIPANT'S ACCOUNTS
Each participant's account is credited with the participant's contribution and
an allocation of (a) the Company's contribution and (b) plan earnings.
Allocations are based on participant earnings or account balances, as defined.
INVESTMENTS
As specified by the Plan, participants have a choice of investing all or a
portion of their contributions into seven investment funds - the PNC Bank
Investment Contract Fund, the Compass Capital Managed Income Portfolio, the
Fidelity Advisor Balanced Portfolio, the Fidelity Advisor Equity Growth
Portfolio, the Fidelity Advisor Overseas Portfolio, the Fidelity Advisor High
Yield Portfolio and/or the Banner Common Stock Fund. PNC Bank acts as trustee
of all investments of the Plan.
The PNC Bank Investment Contract Fund buys investment contracts from insurance
companies and banks on behalf of its investors. These contracts are designed to
pay a specified rate of interest to the fund while providing for the return of
principal. The Compass Capital Managed Income Portfolio invests primarily in a
wide range of bonds. The Fidelity Advisor Balanced Portfolio seeks both income
and growth of capital by investing in a diversified portfolio of equity and
fixed income securities. The Fidelity Advisor Equity Growth Portfolio seeks
capital appreciation through investments in the stocks of companies that are
experiencing or have above average growth potential. The Fidelity Advisor
Overseas Portfolio seeks growth of capital primarily through investments in
foreign securities. The Fidelity Advisor High Yield Portfolio seeks a
combination of a high level of income and the potential for capital gains. The
Banner Common Stock Fund invests in the common stock of Banner Aerospace, Inc.
LOANS TO PARTICIPANTS
The Trustee may make loans to participants at the direction of the plan
administrator. The loan program is equally applied to all participants on a
uniform and nondiscriminatory basis. Loan payments are to be made not less
frequently than quarterly. The loan period shall not be in excess of five years
from the date of loan unless the proceeds are used for the purpose of
acquiring, constructing or rehabilitating the principal residence of the
participant or member of his family. The plan administrator shall determine the
length of these loan terms. Loans shall bear a rate of interest which is
equivalent to 1 percent plus the Prime Rate on the first day of the month in
which the loan is granted.
-4-
<PAGE> 10
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF ACCOUNTING
The accompanying financial statements and schedules have been prepared on the
accrual basis of accounting. Realized and unrealized gains/losses on
investments are based on the market value of the investments at the beginning
of the plan year or initial cost if purchased during the year.
INVESTMENTS
Investments are stated at the current market value. Changes in the current
market value throughout the year are reflected in the statements of changes in
net assets available for plan benefits as they occur.
The Investment Contract Fund is a collective investment fund of PNC Bank, not a
portfolio of the PNC Fund. Investments in the guaranteed investment contracts
("GIC"s) are valued at fair value as determined in good faith by the Trustee,
based on contractual terms, credit worthiness of the GIC issuer, current market
conditions, and comparison to similar instruments with readily ascertainable
market values. The fair value of the GICs was determined by the Trustee to be
equal to cost plus accrued interest.
ADMINISTRATIVE EXPENSES
Expenditures for trustee fees, audit fees, legal fees and other administrative
expenses of the Plan are to be paid by the Plan to the extent that the Company
does not pay such expenses. The Company paid all administrative expenses in the
years ended December 31, 1996 and 1995.
3. TAX STATUS:
The Internal Revenue Service issued a determination letter dated December 13,
1995, stating that the Plan was designed in accordance with applicable sections
of the Internal Revenue Code ("IRC"). The Plan has been amended since receiving
the determination letter. However, the Plan administrator believes that the
Plan is currently designed and is being operated in compliance with the
applicable requirements of the IRC. Therefore, the Plan administrator believes
that the Plan was qualified and the related trust was tax-exempt as of the
financial statement dates.
4. PLAN TERMINATION:
Although it is the intention of the Company to keep the Plan in operation
indefinitely, the Company has the right under the Plan to discontinue its
contributions at any time and to terminate the Plan subject to the provisions
of ERISA. In the event of Plan termination, participants will become 100%
vested in their accounts.
-5-
<PAGE> 11
5. INFORMATION CERTIFIED BY TRUSTEE:
Information as to the Plan's assets as of December 31, 1996 and 1995, and the
transactions in such assets for the year ended December 31, 1996, including
income on investments, investment transactions, gain or loss on the sale of
securities and market values, has been certified as complete and accurate to
the plan administrator by PNC Bank.
-6-
<PAGE> 12
SCHEDULE I
AMENDED AND RESTATED BANNER AEROSPACE, INC.
PROFIT-SHARING/401(k) PLAN AND TRUST
ITEM 27(a) - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
MARKET
IDENTITY OF ISSUE DESCRIPTION VALUE COST
- ------------------------------------------ --------------------- ----------- -----------
<S> <C> <C> <C>
* PNC Bank Investment Contract Fund Guaranteed Investment
Contract (Note 2) $ 1,077,974 $ 986,943
* Compass Capital Managed Income Portfolio Mutual Fund 1,181,415 1,141,067
Fidelity Advisor Balanced Portfolio Mutual Fund 4,805,142 4,403,319
Fidelity Advisor Equity Growth Portfolio Mutual Fund 2,258,586 2,130,260
Fidelity Advisor Overseas Portfolio Mutual Fund 554,703 539,415
Fidelity Advisor High Yield Portfolio Mutual Fund 2,883,256 2,737,354
* Banner Aerospace, Inc. Common Stock 552,374 431,470
----------- -----------
$13,313,450 $12,369,828
=========== ===========
</TABLE>
* Represents a party-in interest
-7-
<PAGE> 13
SCHEDULE II
AMENDED AND RESTATED BANNER AEROSPACE, INC.
PROFIT-SHARING/401(k) PLAN AND TRUST
ITEM 27(d) - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
NUMBER OF PURCHASE SELLING COST OF NET GAIN
IDENTITY OF PARTY INVOLVED TRANSACTIONS PRICE PRICE ASSET OR (LOSS)
- -------------------------------------------------------- ------------ -------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
PURCHASES:
PNC Bank Investment Contract 76 $ 906,825 $ $ $
Compass Capital Managed Income Portfolio 58 398,098 -- -- --
Fidelity Advisor Balanced Portfolio 77 1,607,965 -- -- --
Fidelity Equity Growth Portfolio 86 2,049,605 -- -- --
Fidelity Advisor High Yield Portfolio 88 1,128,855 -- -- --
SALES:
PNC Bank Investment Contract 73 -- 964,397 918,421 45,976
Compass Capital Managed Income Portfolio 64 -- 693,555 675,696 17,859
Fidelity Advisor Balanced Portfolio 109 -- 1,620,812 1,554,062 66,750
Fidelity Equity Growth Portfolio 50 -- 709,564 679,011 30,553
Fidelity Advisor High Yield Portfolio 88 -- 550,630 525,368 25,262
</TABLE>
-8-
<PAGE> 14
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
Amended and Restated Banner Aerospace, Inc.
Profit-Sharing/401(k) Plan and Trust
By: /s/ Warren D. Persavich
-------------------------
Warren D. Persavich
Chief Financial Officer
Date: June 27, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 0
<SECURITIES> 13,313,450
<RECEIVABLES> 889,403
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 14,202,863
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
