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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NO. 1-8461
GULFSTREAM AEROSPACE CORPORATION
DELAWARE 13-3554834
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P. O. BOX 2206
500 GULFSTREAM ROAD
SAVANNAH, GEORGIA
31402-2206
(912) 965-3000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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COMMON STOCK, $.01 PAR VALUE NEW YORK STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. X
The aggregate market value of the shares of common stock held by
non-affiliates of the registrant (based on the closing price for the common
stock on the New York Stock Exchange on March 1, 1999 was $2,605,156,713.
For purposes of this computation, shares held by affiliates and by
directors of the registrant have been excluded. Such exclusion of shares
held by directors is not intended, nor shall it be deemed, to be an
admission that such persons are affiliates of the registrant.
As of March 1, 1999, there were outstanding 72,765,418 shares of the
registrant's common stock, par value $.01, which is the only class of
common stock of the registrant.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Stockholders for the
fiscal year ended December 31, 1998 (the "1998 Annual Report") are
incorporated by reference in Parts II and IV of this Form 10-K. Portions of
the Registrant's definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on May 19, 1999 (the "1999 Proxy Statement") are
incorporated by reference in Part III of this Form 10-K to the extent
stated herein. Except with respect to information specifically incorporated
by reference in this Form 10-K, neither the Annual Report nor the Proxy
Statement is deemed to be filed as a part hereof.
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PART I
ITEM 1. BUSINESS
GENERAL
Gulfstream Aerospace Corporation (the "Company") is recognized
worldwide as a leading designer, developer, manufacturer and marketer of
advanced intercontinental business aircraft. Since 1966, when the Company
created the large cabin business jet category with the introduction of the
Gulfstream II, the Company has dominated this segment of the market,
capturing a cumulative market share of approximately 60%. The Company has
manufactured and sold over 1,000 large business aircraft since the
introduction of the Gulfstream product line in 1958.
The Company operates principally in three segments: New Aircraft,
Aircraft Services and Pre-owned Aircraft. Within New Aircraft, the
Company's current product offerings are the Gulfstream IV-SP, the
Gulfstream V, Gulfstream Shares(R) (fractional ownership interest in
Gulfstream IV-SPs and Gulfstream Vs), and Gulfstream LeaseSM. Also, the
Company's financial services subsidiary, Gulfstream Financial Services
Corporation, through its private label relationship with third-party
aircraft financing providers, offers customized products to finance the
worldwide sale of Gulfstream aircraft. Within it's Aircraft Services
segment, the Company offers aftermarket maintenance services, spare parts,
engine overhaul and auxiliary power unit service and overhaul for both
Gulfstream and other business aircraft. The Company's Pre-owned Aircraft
segment markets and sells pre-owned Gulfstream aircraft and other business
aircraft, acquired in trade, to a worldwide market.
On October 16, 1996, the Company sold 4,559,100 shares of the
Company's Common Stock, and certain partnerships (the "Forstmann Little
Partnerships") formed by Forstmann Little & Co. ("Forstmann Little") and
certain option holders of the Company's common stock, sold 37,940,900
shares of the Company's common stock, in an initial public offering at a
price of $24.00 per share. In May 1998, the Forstmann Little Partnerships
and certain stockholders and option holders completed the sale of 18
million shares of common stock in a secondary offering at a price of $43.00
per share. As of March 1, 1999, the Forstmann Little Partnerships owned
approximately 22.8% of the outstanding shares of the Company's common
stock.
ACQUISITION OF K-C AVIATION
On August 19, 1998, the Company completed the acquisition of K-C
Aviation, Inc. for approximately $250 million, including acquisition costs.
The acquisition is a key part of Gulfstream's growth strategy and has
allowed the Company to obtain a skilled workforce, as well as add
additional capacity to accelerate its aircraft completions business,
diversify and grow its aircraft maintenance and parts business, and
strongly establish the Gulfstream name in the aircraft engine and auxiliary
power unit service market.
K-C Aviation was a leading provider of business aviation services and
the largest independent completion center for business aircraft in North
America. The acquisition has provided the Company with the capacity for
approximately 21 additional aircraft interior completions. In addition to
custom aircraft interiors, K-C Aviation was the second largest independent
aircraft engine service center in the United States and also offered
maintenance services, spare parts, auxiliary power unit service, avionics
retrofit, non-destructive testing and component overhaul.
NEW AIRCRAFT
The Company's New Aircraft segment operates in the business aircraft
market which is generally divided into four segments -- light, medium,
large and ultra-long range. These market segments are defined on the basis
of range, cabin volume and gross operating weight. The Company sells new
aircraft on a completed basis, including exterior paint, installation of
customer selected interiors and optional avionics. The Company's principal
product offerings are discussed below:
GULFSTREAM V
The Company's newest aircraft product is the Gulfstream V, which
serves the ultra-long range market. The Company believes the Gulfstream V
provides the longest range, fastest cruising speed and most technologically
advanced avionics of any ultra-long range business jet aircraft currently
in operation. The Gulfstream V received final type certification from the
Federal Aviation Administration ("FAA") on April 11, 1997. Deliveries of
the first outfitted aircraft to customers began in 1997. To date, the
Gulfstream V has set 55 world and national records. The Company had
received a total of 121 orders, 136 including options, for the Gulfstream V
and had manufactured and delivered 61 Gulfstream Vs through 1998. As
confirmation of the product's innovative design and outstanding
performance, the Gulfstream V received the 1997 Robert J. Collier Trophy
for aeronautical achievement and was selected by the United States Air
Force to provide intercontinental transportation for senior government
officials and dignitaries.
The Gulfstream V has a maximum operating speed of Mach .885. It can
accommodate up to 19 passengers and has a range of up to 6,500 nautical
miles. These capabilities permit routine intercontinental travel at
cruising speeds comparable to commercial airline cruising speeds, while
operating efficiently at altitudes as high as 51,000 feet, flying above
most commercial airline traffic and adverse weather. The Gulfstream V is
versatile enough to fly long-range missions, such as New York to Tokyo in
approximately 14 hours, as well as high-speed missions, such as New York to
London, in approximately six hours.
The Gulfstream V is equipped with two 14,750-pound-thrust BR710
engines built by BMW Rolls-Royce GmbH, which were specifically designed for
use on the Gulfstream V and for which Gulfstream was the launch customer.
The sound levels of the Gulfstream V's engines are well below FAA Stage 3
and ICAO/Chapter 3 regulatory requirements (the FAA's and ICAO's most
stringent noise abatement regulations). These engines are designed to
operate 7,000 flight hours between major overhauls and, due to fuel
efficiency, operate at a lower cost than the engines of the Gulfstream
IV-SP.
The aircraft utilizes dual cabin pressurization systems to minimize
cabin altitude. At its cruising altitude of 51,000 feet, the Gulfstream V
cabin altitude is only 6,000 feet, the lowest cabin altitude of any jet
aircraft in its class. This low cabin altitude, together with a 100% fresh
air ventilation system (instead of a recirculating air system),
significantly reduces passenger fatigue.
The advanced flight systems on the Gulfstream V include automatic
throttle systems, an integrated performance computer system, an engine
information crew advisory system, a dual global positioning system and
independent inertial reference systems. These systems provide accurate
flight planning, as well as automatic control, throughout the planned
flight profile. For maximum safety, a Traffic Collision Avoidance System,
turbulence and wind shear-detecting radar and an Enhanced Ground Proximity
Warning System are also standard. An additional safety feature of the
Gulfstream V is an optional heads-up display ("HUD"). The HUD optimizes
pilot performance and improves flight safety, especially in low visibility
conditions, by reducing the pilot's dependence on the instrument panel,
thus allowing the pilot to direct his vision outside the cockpit.
In order to reduce the business risk associated with the design and
manufacture of the Gulfstream V, the Company entered into revenue sharing
agreements with Northrop Grumman Corporation for the wing and Fokker
Aviation B.V. (a subsidiary of Stork B.V.) for the empennage. Under these
agreements, the revenue share partner is responsible for the detailed
design, tooling and manufacture of the systems in exchange for a fixed
percentage of revenues of each Gulfstream V sold (which the Company records
as a cost of goods sold upon an aircraft delivery). Thus, in addition to
financing the development, manufacture and delivery of its components, each
manufacturer shares in the risk of fluctuations in demand and market price
of the Gulfstream V.
The list price for a completed Gulfstream V is expected to be
approximately $39.5 million depending upon selected options, escalation and
availability. The Company provides a purchaser of a Gulfstream V with a 20
year or 20,000 flight hour warranty (whichever comes first) on the airframe
structure and a six-year warranty on components (other than the engines).
BMW Rolls-Royce GmbH provides a direct five-year or 2,500 flight hour
warranty (whichever comes first) on the engines to purchasers of a
Gulfstream V.
GULFSTREAM IV-SP
The New Aircraft segment's other principal aircraft product is the
Gulfstream IV-SP, serving the large cabin business jet market. The Company
believes that the Gulfstream IV-SP offers the best combination of large
cabin size, long range, fast cruising speed and technologically advanced
avionics of any large business jet aircraft in its market segment. The
Gulfstream IV-SP is an enhanced version of the Gulfstream IV. In total, the
Company has manufactured and sold 359 Gulfstream IV/IV-SPs from 1985 to
1998, making it the best selling large cabin business jet in the history of
business aviation.
The Gulfstream IV-SP can accommodate up to 19 passengers, has a range
of up to 4,220 nautical miles and a cruising speed of up to Mach .85. These
capabilities permit routine intercontinental travel at cruising speeds
comparable to commercial airline cruising speeds, while operating
efficiently at altitudes as high as 45,000 feet, flying above most
commercial airline traffic and adverse weather. The Gulfstream IV/IV-SP is
the holder of over 70 distance, altitude and speed records for aircraft of
its class including east-bound and west-bound around-the-world speed
records (36 hours and 8 minutes (east-bound) and 45 hours and 25 minutes
(west-bound)).
The Gulfstream IV-SP is equipped with two Rolls-Royce Tay fan jet
engines which have commercial airline-proven reliability and performance.
The Tay engines can operate 8,000 flight hours between major overhauls,
producing aircraft operating costs for the Gulfstream IV-SP that the
Company believes are comparable to those of its competitors. Additionally,
the Gulfstream IV-SP, together with the Gulfstream IV and the Gulfstream V,
combine an electronic "all glass cockpit" and an advanced avionics suite
consisting of a fully integrated computerized flight management system,
including a performance computer and automatic throttle systems.
The list price for a Gulfstream IV-SP, is expected to be approximately
$29.5 million depending upon selected options, escalation and availability.
The Company provides a purchaser of a Gulfstream IV-SP with a 15 year or
15,000 flight hour warranty (whichever comes first) on the airframe
structure and a 30 month warranty on most other parts (other than the
engines). Rolls-Royce provides a direct 5 year or 2,500 flight hour
warranty (whichever comes first) on the engines to purchasers of a new
Gulfstream IV-SP.
GULFSTREAM SHARES(R)
The Company has offered customers fractional ownership in Gulfstream
IV-SP aircraft through a program established by the Company in 1995 in
conjunction with Executive Jet ("EJ"). In 1998, the Company and EJ
announced the expansion of that program to include Gulfstream V aircraft.
This program is designed to provide customers with the benefits of aircraft
ownership at a substantially lower cost than the purchase of an entire
aircraft. The program significantly expands the market for Gulfstream IV-SP
and Gulfstream V aircraft to include those customers whose aircraft usage
patterns or financial resources do not justify or permit the direct
purchase of a Gulfstream aircraft. The Gulfstream Shares program, by
teaming Gulfstream and EJ, has brought the Gulfstream name, quality,
reputation and marketing infrastructure together with the operational
experience and reputation of the founder and leader in the business jet
aircraft fractional ownership market.
The Gulfstream Shares program is marketed by the Company. EJ purchases
Gulfstream IV-SPs and Gulfstream Vs from the Company and then sells
fractional ownership interests in such aircraft generally in one-eighth or
one-quarter increments for which the customer receives 100 or 200 hours of
flying time per year, respectively, with a guaranteed response time for
pick-up of ten hours or six hours, respectively. As of December 31, 1998,
the Company had contracted to deliver to EJ 44 Gulfstream IV-SPs and 12
Gulfstream Vs in connection with the North American Gulfstream Shares
program, plus options for additional 12 Gulfstream Vs. Of these, 18
Gulfstream IV-SPs are in service, and the remaining 50 Gulfstream IV-SPs
and Gulfstream Vs are scheduled for delivery through 2007. The customers
enter into management and operating contracts with EJ which provide
guaranteed services and operating costs. EJ's agreement with its customers
provides for a term of five years with certain termination and renewal
rights. There is no recourse to the Company under the provisions of these
agreements or under the Company's contractual agreement with EJ.
The Gulfstream aircraft are maintained by the Company under a
maintenance agreement with EJ. Further, under a lease arrangement, the
Company provides EJ up to 3 pre-owned Gulfstream IV aircraft (which are
included in the Company's pre-owned aircraft inventory) which make up EJ's
core fleet and are used to facilitate EJ's meeting its response time and
service guarantees. In 1998, EJ exercised an option to purchase three new
aircraft to replace these core-fleet aircraft. The Company has a
proprietary agreement with EJ relating to the marketing activities and
provision of the core fleet, pursuant to which the Company is reimbursed
for certain marketing expenses and earns royalty fees on certain EJ
revenues. The Company's marketing services agreement for Gulfstream Shares
has a term of five years to 2003 and can be extended by mutual agreement of
the parties.
In 1998, the Company expanded the Shares Program into the Middle East,
with a 12 aircraft $335 million contract with a group of Middle East
investors. The first Middle East Shares aircraft was delivered green in the
third quarter of 1998 and will enter service in the second quarter of 1999.
SPECIAL MISSION AIRCRAFT
The Company has designed and manufactured several derivatives of the
Gulfstream V and Gulfstream IV-SP which are utilized for military and
government Special Mission applications. These derivatives include the
cargo door equipped Gulfstream IV/IV-SP aircraft in service with the U. S.
Navy and Japanese Air Force which are designated the C-20G and U-4,
respectively, and the long established U. S. Air Force C-20H Special Air
Mission Gulfstream IV-SPs. Additional Special Mission derivatives are in
military and government use throughout the world in diverse roles including
signal intelligence, reconnaissance, medical evacuation, hurricane
tracking, airways flight inspection and priority transport.
In 1997, a Gulfstream V derivative was selected by the U. S. Air Force
for its VCX high priority transport program. With the 1998 order for a
Gulfstream V for the U. S. Army and the additional C-37 option exercised in
February 1999, the program currently includes four firm orders and three
options for Gulfstream V C-37A aircraft. The C-37A aircraft will be
operated by the U. S. Air Force Special Air Mission Wing and the U. S.
Army.
There are currently 49 Gulfstream IV/IV-SP and four Gulfstream V
aircraft in military or government service in 34 countries, with an
additional 13 Special Mission aircraft to be delivered. The Company
believes the Special Mission derivatives of the Gulfstream IV-SP and
Gulfstream V will continue to be important products for meeting the needs
of government operators, military organizations, civil authorities and
intelligence gathering agencies.
GULFSTREAM LEASE
In 1998, Gulfstream announced Gulfstream Lease, a venture between the
Company and GATX Capital. The venture, Gulfstream GATX Leasing Company, LLC
("GGLC"), has signed a contract to purchase six aircraft (five Gulfstream
Vs and one Gulfstream IV-SP) and options to purchase an additional three
Gulfstream Vs and three Gulfstream IV-SPs. GGLC is owned 85% by GATX
Capital and 15% by Gulfstream. This program is expected to provide an
important vehicle for new Gulfstream aircraft sales, by offering customers
an additional solution for their interim aircraft operating needs and
introducing customers with less initial capital to Gulfstream's product
offerings. Gulfstream will market the leases and provide maintenance
services, while GATX Capital will provide account management services.
GULFSTREAM CHARTER AND AIRCRAFT MANAGEMENT SERVICES
The Company has developed Gulfstream Charter Services to provide its
customers with easy access to the Gulfstream charter market. The program
helps customers meet their interim and supplemental lift requirements by
connecting potential Gulfstream charter customers with operators through a
private label relationship with a charter services manager. In addition,
Gulfstream, in conjunction with Chrysler Pentastar Aviation, Inc., offers
Gulfstream Management Services, a program for the management of Gulfstream
aircraft. Through this service, individual and corporate owners of
Gulfstream aircraft can receive aircrew, dispatch and maintenance
management services.
AIRCRAFT FINANCING
The Company, through its subsidiary Gulfstream Financial Services
Corporation ("GFSC"), provides customers with access to customized
financial products to support the worldwide sale of Gulfstream new and
pre-owned aircraft. GFSC representatives typically consult with potential
customers to develop the most effective means of financing the purchase of
a Gulfstream aircraft for each such customer's specialized needs.
The financial products (including capital and operating leases, loans,
tax advantaged leases, like-kind exchange options and Export-Import Bank
support) are provided on a competitive basis through a proprietary, private
label relationship with a prominent provider of aircraft financing (the
"Financing Provider"), that has full credit review and approval rights and
assumes all credit risk with no recourse to the Company. Additionally, the
Company and the Financing Provider have entered into a re-marketing
arrangement which enables the Company to manage the resale of any
Gulfstream aircraft whose lease financing period has ended. This private
label agreement has a term of five years from 1996 with a minimum lending
commitment of $250 million annually, and can be extended by mutual
agreement of the parties.
The Company believes that the access provided by GFSC to financing
sources for customers throughout the world serves to expedite and increase
sales of new and pre-owned aircraft and also enables the Company to
effectively manage the residual values of the Gulfstream fleet.
TRAINING
The Company provides pilot and maintenance training services to its
customers as an integral component of the sale of new Gulfstream IV-SP,
Gulfstream V and pre-owned Gulfstream aircraft. The Company has long-term
agreements with FlightSafety International ("FSI") for the provision of
this high quality training service.
FSI maintains and operates training facilities co-located with the
Company's Savannah and Long Beach operations. In 1997, FSI completed a new
65,000 square foot training facility adjacent to the Gulfstream Service
Center in Savannah. This facility, which became operational in January
1998, contains 21 classrooms, 16 briefing rooms and four CPM (cockpit
procedures modules) rooms. In addition, it houses simulators supporting the
entire Gulfstream product line (Gulfstream I through Gulfstream V).
Gulfstream facilitates the operation of a Customer Training Advisory Board
which provides direct customer and original equipment manufacturer input to
FSI's training curriculums and course content.
Additionally, pilot and maintenance training services are provided to
Gulfstream owners and operators by SimuFlite Training International
("SimuFlite") located at Dallas-Fort Worth International Airport, Texas.
SimuFlite provides training services for Gulfstream II, Gulfstream III and
Gulfstream IV aircraft. Gulfstream, in conjunction with SimuFlite,
facilitates the operation of a Customer Training Advisory Board which
provides direct customer and original equipment manufacturer input to
SimuFlite training curriculums and course content.
MATERIALS AND COMPONENTS
Approximately 70% of the production costs of both the Gulfstream IV-SP
and the Gulfstream V consist of purchased materials and equipment. Many
materials and items of equipment used in the production of the Company's
aircraft, such as the engines, wings, landing gear and avionics systems,
are purchased from manufacturers, generally pursuant to long-term purchase
orders. For the Gulfstream V, the Company has entered into revenue sharing
agreements for the wing and empennage. Under these agreements, the revenue
share partner is responsible for the detailed design, tooling and
manufacture of the systems in exchange for a fixed percentage of revenues
of each Gulfstream V sold. The terms of the revenue share agreements with
Northrop Grumman Corporation for the wing and Fokker Aviation B.V. for the
empennage continue so long as the Company is manufacturing the Gulfstream V
and prices are determined as a function of the sale price of the Gulfstream
aircraft.
As is typical among general aviation aircraft manufacturers, the
Company relies on single source suppliers for complex aircraft components
and systems. These single sources are selected based on overall aircraft
systems requirements, quality and certification requirements and
competitiveness in the market. The Company's major suppliers include
Rolls-Royce Commercial Aero Engines Limited (Gulfstream IV-SP engines), BMW
Rolls-Royce GmbH (Gulfstream V engines), Honeywell Incorporated (Gulfstream
IV-SP and Gulfstream V flight management systems/avionics), The
Aerostructures Corporation (Gulfstream IV-SP wing), Northrop Grumman
Corporation (Gulfstream V wing revenue share partner and Gulfstream IV-SP
nacelle supplier), Fokker Aviation B.V., a subsidiary of Stork B.V.,
(Gulfstream V empennage revenue share partner), The B.F. Goodrich Co.
(Gulfstream IV-SP and Gulfstream V landing gears and air speed sensors),
Sundstrand Corp. (Gulfstream V electrical system and actuators) and
AlliedSignal, Inc. (Gulfstream IV-SP and Gulfstream V auxiliary power unit
and environmental control systems and Gulfstream IV-SP electrical systems).
The Company has negotiated multi-year agreements with its major Gulfstream
IV-SP and Gulfstream V suppliers. All of the agreements, with the exception
of the revenue share agreements, allow schedule flexibility and have no
cost termination clauses at the Company's option, subject to certain
conditions and prior notification periods.
Suppliers are selected on the basis of their ability to produce high
quality systems and components at competitive prices on a timely basis.
While the Company's production activities have not been materially affected
by the inability to obtain essential components, and while it maintains
business interruption insurance in the event that such a disruption should
occur, the failure of certain suppliers or subcontractors to meet the
Company's performance specifications, quality standards or delivery
schedules could adversely impact the Company's operations. In addition, the
Company's ability to significantly increase its production rate could be
limited by the ability of its key suppliers to increase their delivery
rates; however, in the past, the Company's ability to maintain or increase
production has not been significantly limited by suppliers' performance. In
addition, under many of its supply contracts, the Company is permitted to
increase or decrease the quantity of components or systems being ordered at
no cost on six months' notice.
AIRCRAFT SERVICES
Within its Aircraft Services segment, the Company offers aftermarket
maintenance services, spare parts, engine overhaul and auxiliary power unit
service and overhaul for both Gulfstream and other business jets.
As part of its customer-oriented strategy, the Company is committed to
supporting and servicing the Gulfstream aircraft fleet, which presently
numbers over 900 aircraft in service. The Company provides worldwide
service and support by integrating a network of Company-owned service
centers, three levels of authorized third-party service providers,
worldwide parts depots, worldwide service representatives and 24 hour-a-day
technical/AOG (aircraft on the ground) support.
The Company also provides airframe and engine service and parts
support for non-Gulfstream aircraft. As a result of the K-C Aviation
acquisition in 1998, Gulfstream now offers services for Challenger, Hawker,
Falcon and other aircraft types at their Appleton, WI; Dallas, TX; and
Westfield, MA locations. In addition to the incremental revenues and
margins that these services generate, they provide the Company with an
additional channel to establish new customer relationships with aircraft
owners/operators that could ultimately result in the sale of new Gulfstream
aircraft.
The Company has license agreements with Marshalls of Cambridge
(Cambridge, England), Chrysler's Pentastar Aviation subsidiary (Ypsilanti,
Michigan) and Jet Aviation (Singapore) to provide service, maintenance and
repairs for Gulfstream aircraft. The licensees provide additional
geographic service locations for the expanding Gulfstream fleet. In
addition, Jet Aviation Business Jets (Geneva and Basel, Switzerland), Jamco
(Japan) and Linden Airtaxi (Sao Paulo, Brazil) serve as authorized warranty
centers.
Parts are provided worldwide to Gulfstream and non-Gulfstream aircraft
owners and maintenance facilities through a network of nine distribution
centers. Sales force initiatives include aggressive new aircraft provision
sales, replacement, modification and enhancement sales to existing airframe
and engine customers.
The Company markets aircraft support publications and technical
documents to its customers and to third party service facilities.
Additionally, a proprietary computerized maintenance program ("CMP") is
offered as a subscription service to customers for the management and
tracking of the maintenance status of their aircraft. Approximately 95% of
the Company's customers utilize this service. The Company has instituted a
policy requiring third-party maintenance facilities to purchase factory
technical support for scheduled maintenance performed on customer aircraft.
Additionally, the Company provides, through its ServiceCareSM program,
a comprehensive airframe, engine and avionics maintenance program, which
provides customers of new Gulfstream IV-SPs with scheduled and unscheduled
maintenance at guaranteed costs. Coverage is provided on a world-wide
basis, with all work to be accomplished at Gulfstream or Gulfstream
authorized service centers.
The Company has developed a proactive marketing and sales effort in
its maintenance services operations. This has resulted in an increase in
the Gulfstream maintenance service market share to approximately 75% in
1998. The Company's estimated market share was approximately 60% in 1997.
PRE-OWNED AIRCRAFT
Pre-owned aircraft are routinely accepted in trade to facilitate the
sale of new Gulfstream IV-SPs and Gulfstream Vs. The Company backs
pre-owned Gulfstream aircraft with a five year warranty on the airframe
structure and a 12 month warranty on virtually all other parts, including
the engines under a separate warranty from Rolls-Royce Commercial Aero
Engines Limited.
Trade-in values for pre-owned aircraft are based on estimated fair
market value ("FMV") at the trade-in date. If the trade-in date is greater
than twelve months into the future, the Company's current practice is to
reserve the right to determine FMV not more than six months prior to
delivery of the green aircraft. Trade-in aircraft are always entered into
inventory at the lower of cost or estimated realizable value. Any excess
value offered to a customer above estimated realizable value is recognized
as a reduction in the revenue received in the new aircraft sale
transaction.
Through its trade-in agreements, the Company reserves the right to
pre-market the trade-in aircraft prior to acceptance of title from the
customer. Over the past several years, the Company has been successful in
entering sales agreements on trade-in aircraft prior to acceptance of
title. If market conditions change, however, no assurances can be made that
the Company can continue this practice.
The Company has provided a portion of its Gulfstream V customers whose
contracts are currently in backlog with an option to trade in a Gulfstream
aircraft at the time of their Gulfstream V aircraft delivery. These options
may be at a specified dollar amount or at FMV "to be determined six months
prior to green delivery" of the Gulfstream V. The Company continues to
assess those options which are at a fixed dollar amount in light of market
conditions and has determined such fixed dollar options are less than the
FMV estimated for the time of Gulfstream V aircraft delivery. Although no
assurance can be given that the fixed dollar trade-in aircraft values will
remain at or below FMV at the time of trade, any adjustments required for
values in excess of FMV will be appropriately reflected in the new aircraft
sales transaction and the pre-owned inventory will be stated on the
Company's books at the lower of cost or estimated realizable value.
BACKLOG
At December 31, 1998, the Company had a financial contract backlog of
approximately $3.3 billion, representing a total of 50 contracts for
Gulfstream IV-SPs, 56 contracts for Gulfstream Vs, compared with $2.8
billion at the end of 1997, representing a total of 43 contracts for
Gulfstream IV-SPs and 45 contracts for Gulfstream Vs. Including the 11
undelivered aircraft in the Middle East Shares contract, the Company had a
total of 117 aircraft, valued at approximately $3.6 billion of potential
future revenues, under contract at December 31, 1998. This excludes 18
options valued at $0.7 billion.
During the third quarter of 1998, Gulfstream GATX Leasing Company
executed agreements to purchase five Gulfstream Vs and one Gulfstream
IV-SP, valued at approximately $210 million, with deliveries from 1999
through 2001. It also executed options to purchase three Gulfstream Vs and
three Gulfstream IV-SPs, valued at approximately $200 million, with
potential deliveries from 2001 through 2004.
During the first quarter of 1998, the Company signed a $335 million
contract for 12 Gulfstream IV-SPs to expand its highly successful
Gulfstream Shares fractional ownership program to the Middle East region.
The first green aircraft delivery for the Middle East Shares Program
occurred during the third quarter of 1998. The remaining 11 undelivered
aircraft are not included in the Company's financial contract backlog. In
1993, the Company established very stringent deposit requirements for
recording aircraft into its backlog. The contract for the Middle East
Shares expansion includes modestly different deposit requirements early in
the program. The Company has decided for the initial phase of the program
to record these orders into backlog when the aircraft are delivered.
As of December 31, 1998, the Company had contracted to deliver to EJ
44 Gulfstream IV-SPs and 12 Gulfstream Vs in connection with the North
American Gulfstream Shares program plus options for additional 12
Gulfstream Vs. Of these, 18 Gulfstream IV-SPs are in service, with the
remaining 50 Gulfstream IV-SPs and Gulfstream Vs to be delivered through
2007.
The Company includes an order in financial contract backlog only if
the Company has entered into a purchase contract (with no contingencies)
with a customer and has received a significant (generally non-refundable)
deposit from the customer. Approximately 50% of the Company's contractual
backlog is scheduled for delivery beyond 1999. Approximately 80% of the
Company's backlog is North American and approximately 20% is international.
Generally, at the signing of a Gulfstream IV-SP or Gulfstream V
contract, a customer makes a non-refundable deposit with the Company, and
subsequently makes a series of significant progress payments, prior to
delivery of the aircraft. The Company monitors the condition of its backlog
and believes, based on the nature of its customers and its historical
experience, that there will not be a significant number of cancellations.
However, to the extent that there is a lengthy period of time between a
customer's aircraft order and its expected delivery date, there may be
increased uncertainty as to changes in business and economic conditions
which may affect customer cancellations.
CUSTOMERS AND MARKETING
The majority of the Company's aircraft are sold to national and
multinational corporations and governments. Gulfstream's aircraft are
operated by customers in a wide spectrum of industries and customer groups,
including: pharmaceuticals, consumer goods, high technology, energy,
industrial manufacturing, finance, insurance, real estate, mining,
transportation, communications, public utilities, retail trade, the United
States government, other sovereign entities and individuals. Seventy-seven
percent of the Gulfstream fleet is based in North America and 23% of the
fleet is based in 50 countries worldwide. Current owners of Gulfstream
aircraft include 32 of the Fortune 50 companies and 119 of the Fortune 500
companies. In addition, the United States government, including all
branches of the United States military, and 33 foreign governments operate
Gulfstream aircraft. Gulfstream aircraft provide air transportation for the
President, Vice President and other senior members of the United States
government. Over 40 Gulfstream aircraft are currently in operation with
various United States government agencies, including the FAA.
The diverse Gulfstream customer base combined with wide geographic
distribution requires an integrated marketing, communications and sales
approach. The Company's marketing and communications program is designed to
create general awareness of the Company, and its products and services,
while the sales approach is highly personalized and focused on the key
decision makers, as well as flight departments and other managers within
the customer's organization.
Gulfstream operates an International Advisory Board of 16 prominent
international business executives and senior statesmen to advise the
Company on international activities in support of the Company's strategic
initiatives to further penetrate the international markets.
The Company's marketing and communications program is a carefully
integrated combination of business and trade advertising, direct mail,
press coverage, trade shows and special events. These activities are
specifically developed to create personal selling opportunities for the
sales team and senior management with assistance from the Board of
Directors and International Advisory Board.
The Company has 28 sales executives located both in North America and
around the world. Internationally, the Company also utilizes independent
agents who facilitate transactions in selected local markets.
The Company's revenues by geographic area are included on page 38 of
Gulfstream's 1998 Annual Report, which information is incorporated herein
by reference. During 1996, revenues from one customer, Executive Jet,
included in the New Aircraft and Aircraft Services reportable segments,
represented approximately 11.7% of the Company's total revenues.
COMPETITION
The business aircraft market generally is divided into four segments
- -- (light, medium, large and ultra-long range) of aircraft either designed
or converted for business use.
The Gulfstream IV-SP competes in the large cabin business aircraft
market segment, principally with Dassault Aviation S.A.'s Falcon 900 EX and
900B. The Gulfstream V competes in the ultra-long range business aircraft
market segment, primarily with Bombardier's Global Express, and, to a
lesser extent, corporate versions of the Boeing 737 and Airbus A319. The
Company's competitors may have access to greater resources (including, in
certain cases, governmental subsidies) than are available to the Company.
The Company believes, however, that it competes favorably with its
competitors on the basis of the performance characteristics of its
aircraft, the quality, range and timeliness of the service it provides and
its innovative marketing techniques. In addition, the Company was able to
certify the Gulfstream V significantly in advance of its competition. The
Company believes its aircraft's operating costs are comparable to or lower
than those of its competitors and that its products are competitively
priced.
RESEARCH AND DEVELOPMENT
The Company conducts an internally funded research and development
program primarily for the enhancement of the existing Gulfstream aircraft
fleet, through product and process improvement to satisfy changing customer
needs and changing regulatory requirements. The Company's research and
development efforts have focused on improving operating efficiencies,
performance, safety and reliability, reducing pilot workloads, realizing
environmental benefits, reducing weight and improving ease of manufacture.
The Company believes that its emphasis on technology and product
improvements for aircraft in the Gulfstream fleet has provided and will
continue to provide added value for the Gulfstream customer. For aircraft
already produced and in service, aircraft changes, which incorporate
product improvements, are generally made available for purchase by existing
owners of Gulfstream aircraft.
In 1998, the Company announced plans, in collaboration with a division
of the Lockheed Martin Corp., to study the feasibility of a supersonic
business jet. The study is expected to take 18-24 months and require only
an insignificant level of research and development spending. The companies
expect that if they do decide to develop such a jet it would not be
introduced to the market for at least eight to ten years.
Information regarding the Company's research and development
expenditures is contained on page 22 of Gulfstream's 1998 Annual Report,
which information is incorporated herein by reference.
REGULATION
In order for an aircraft model to be manufactured for sale, the FAA
must issue a Type Certificate and a Production Certificate for the aircraft
model and, in order for an individual aircraft to be operated, an
Airworthiness Certificate. Type Certificates are issued by the FAA when an
aircraft model is determined to meet certain performance, environmental,
safety and other technical criteria. The Production Certificate ensures
that the aircraft is built to specifications approved under the Type
Certificate. An Airworthiness Certificate is issued for a particular
aircraft when it is certified to have been built in accordance with
specifications approved under the Type Certificate for that particular
model aircraft. Gulfstream has never had a Type Certificate or a Production
Certificate suspended, nor had any jet aircraft grounded as the result of
regulatory action.
All of the Company's aircraft models comply with all currently
applicable federal laws and regulations pertaining to aircraft noise and
engine emissions. Due to their weight (under 75,000 pounds), all Gulfstream
II, III, IV and IV-SP aircraft are currently exempt from the FAA Stage 3
noise requirements. Notwithstanding federal requirements, foreign and local
jurisdictions and airport authorities may establish more stringent
restrictions pertaining to aircraft noise. Such local and foreign
regulations in several locations currently restrict the operation of
certain jet aircraft, including the Gulfstream II, IIB and III and certain
of their competitors from landing or taking off during late evening and
early morning hours. Each of the Gulfstream IV, IV-SP and V aircraft
produce noise levels below the FAA's Stage 3 and ICAO's Chapter 3 noise
ceilings.
EMPLOYEES
At March 1, 1999, the Company employed approximately 7,740 people, of
whom approximately 4,410 were employed at the Company's Savannah, Georgia
facility, 130 at the Brunswick, Georgia facility, 630 at the Bethany,
Oklahoma facility, 810 at the Long Beach, California facility, 730 at the
Dallas, Texas facility, 370 at the Appleton, Wisconsin facility, 130 at the
Westfield, Massachusetts and 530 at the Mexicali, Mexico facility. In 1996,
the Company entered into a 5-year contract with the International Union of
United Automobile, Aerospace & Agricultural Implement Workers of America,
which represents certain employees at the Company's Bethany, Oklahoma
plant. The Company considers its overall employee relations to be good.
ENVIRONMENTAL
The Company's operations, in common with those of the industry
generally, are subject to various laws and regulations governing, among
other things, the handling and disposal of solid and hazardous materials,
wastewater discharges and the remediation of contamination associated with
the use and disposal of hazardous substances. Because of the nature of its
business, the Company has incurred, and will continue to incur, costs
relating to compliance with such environmental laws. Although the Company
believes that it is in substantial compliance with such environmental
requirements, and has not in the past been required to incur material costs
in connection therewith, there can be no assurance that the Company's costs
to comply with such requirements will not increase in the future. Although
the Company is unable to predict what legislation or regulations may be
adopted in the future with respect to environmental protection and waste
disposal, compliance with existing legislation and regulations has not had,
and is not expected to have, a material adverse effect on its capital
expenditures, results of operations, or competitive position.
The Company's expenses for remedial environmental matters and capital
outlays for environmental compliance were less than $2.0 million in 1998.
The Company has been named as a Potentially Responsible Party with
respect to two cleanup sites, one operated by the Mountaineer Refinery and
the other operated by Omega Chemical Company. Based on the Company's
limited involvement with such sites, the Company believes that it will not
incur material costs in respect of such cleanup sites.
The Company is currently engaged in the monitoring and cleanup of
certain groundwater at its Savannah facility under the oversight of the
Georgia Department of Natural Resources. The continuing expenses for the
cleanup are not expected to be material. The Company believes other aspects
of the Savannah facility, as well as other Gulfstream properties, are being
carefully monitored and are in substantial compliance with current federal,
state and local environmental regulations.
The Savannah facility has been in existence for over 30 years. Like
the Savannah facility, certain of the Company's other facilities have been
in operation for a number of years and, over such time, these facilities
have used substances or generated and disposed of wastes which are or may
be considered hazardous. As a result, it is possible that the Company could
become subject to additional environmental liabilities in the future in
connection with these sites.
ITEM 2. PROPERTIES
The locations and square footage of the Company's principal operating
properties at March 1, 1999, are indicated in the following table:
Approximate Lease
Square Expiration
Location Purpose Footage Date
- --------------------------------------------------------------------------------------
Savannah, Georgia Corporate offices, 1,500,000 Owned
principal manufacturing
facility, aircraft
services and engineering
Brunswick, Georgia Aircraft services and
completions 53,000 May 31, 1999
Long Beach, California Aircraft services and
completions 250,000 Owned
Aircraft services and
completion 62,000 August 14, 1999
Aircraft completions 22,000 March 31, 2000
Aircraft painting 59,000 Owned
Dallas, Texas Aircraft services and
completions 200,000 Owned
Aircraft services and
completions 35,000 January 1, 2003
Aircraft services and
completions 57,000 October 31, 2001
Engine and auxiliary power
unit maintenance and
overhaul 48,000 April 30, 2002
Appleton, Wisconsin Aircraft services and
completions 120,000 Owned
Aircraft services 35,000 August 31, 2001
Westfield, Aircraft services 50,000 Owned
Massachusetts Aircraft services 20,000 July 31, 2000
Oklahoma City, Manufacturing operations 500,000 December 31, 2007
Oklahoma
Mexicali, Mexico Manufacturing operations 75,000 December 31, 1999
Any prolonged disruptions in the use of a major facility due to
destruction of or material damage to such facility, or other reasons, could
have an adverse effect on the Company's operations. The Company maintains
property and business interruption insurance to protect against any such
disruption, but there can be no assurance that the proceeds of such
insurance would be adequate to repair or rebuild its facilities in such
event or to compensate the Company for losses incurred during the period of
any such disruption.
ITEM 3. LEGAL PROCEEDINGS
The Company is a defendant in a lawsuit instituted on December 12,
1992 and pending in Oklahoma styled KMC Leasing, Inc. et al. v. Gulfstream
Aerospace Corporation et al. (District Court, State of Oklahoma, Oklahoma
County, Case No. CJ 92 10313). This action arises from claims relating to
potential damage from corrosion and fatigue fractures on wing spars and
requirements to inspect and possibly replace wing spars in certain
aircraft. These aircraft were part of a product line which was discontinued
in 1985 and sold during 1989. This lawsuit is not an insured claim. Other
than an allegation that the plaintiffs' damages exceed jurisdictional
requirements, the plaintiffs have not specified a dollar value of the
extent of their damages. The Company believes it has meritorious defenses
to all these claims based upon the facts that underlie them. Class
certification has been denied, but plaintiffs have filed an appeal. The
Company does not expect the results in this action to have a material
adverse effect on its financial condition or results of operations.
Although there are other lawsuits pending involving the Company's
discontinued light aircraft product lines, those claims are (i) covered by
the General Aviation Revitalization Act of 1994, which is a federal statute
of repose, (ii) the responsibility of the purchasers of those light
aircraft product lines, or (iii) covered by the Company's product liability
insurance. There are no accident or incident claims pending with respect to
any Gulfstream jet aircraft.
The Company maintains product liability insurance coverage of $500
million per occurrence and in the aggregate per year, subject to $10
million of self-insurance retention. Management believes this coverage is
adequate.
The Company is involved in tax audits by the Internal Revenue Service
covering the years 1990 through 1994. The revenue agent's reports include
several proposed adjustments involving the deductibility of certain
compensation expense, items relating to the initial capitalization of the
Company, the allocation of the original purchase price for the acquisition
by the Company of the Gulfstream business, including the treatment of
advance payments with respect to the cost of aircraft that were in backlog
at the time of the acquisition, and the amortization of amounts allocated
to intangible assets. The Company believes that the ultimate resolution of
these issues will not have a material adverse effect on its financial
statements because the financial statements already reflect what the
Company currently believes is the expected loss of benefit arising from the
resolution of these issues. However, because the revenue agent's reports
are proposing adjustments in amounts materially in excess of what the
Company has reflected in its financial statements and because it may take
several years to resolve the disputed matters, the ultimate extent of the
Company's expected loss of benefit and the liability with respect to these
matters cannot be predicted with certainty and no assurance can be given
that the Company's financial position or results of operations will not be
adversely affected.
The Company is also involved in other litigation, including product
and general liability matters, and governmental proceedings arising in the
ordinary course of its business, the ultimate disposition of which in the
opinion of the Company's management, will not have a material adverse
effect on the financial position or results of operations of the Company.
See also -- Item 1. "Business -- Environmental."
FORWARD-LOOKING INFORMATION IS SUBJECT TO RISKS AND UNCERTAINTY
Certain statements contained in or incorporated by reference in this Form
10-K contain forward-looking information. These forward-looking statements
are subject to risks and uncertainties. Actual results might differ
materially from those projected in the forward-looking statements.
Additional information concerning factors that could cause actual results
to materially differ from those contained in the forward-looking statements
is contained in Exhibit 99, CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE
HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
to the Company's Securities and Exchange Commission filings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security holders
during the last quarter of the year ended December 31, 1998.
ADDITIONAL ITEM. EXECUTIVE OFFICERS OF THE COMPANY
The following paragraphs set forth the name, age and offices with the
Company of each present executive officer of the Company, the period during
which each executive officer has served as such and each executive
officer's business experience during the past five years:
Theodore J. Forstmann, age 59, has served as Chairman of the Board of
the Company since November 1993 and as Chief Executive Officer since
December 1998. Mr. Forstmann has been a general partner of FLC
Partnership, L.P. since he co-founded Forstmann Little & Co. in 1978.
He is also a director of General Instrument Corporation. Theodore J.
Forstmann and Nicholas C. Forstmann are brothers.
W.W. Boisture, Jr., age 54, has served as President and Chief
Operating Officer of the Company since December 1998 and as a director
since February 1995 and is a member of the Office of the Chief
Executive. Mr. Boisture served as Executive Vice President from
February 1994 to December 1998. Prior to joining the Company, he was
President and Chief Executive Officer of British Aerospace Corporate
Jets from October 1992 through 1993, where he was responsible for the
"Hawker" business jet product line and its worldwide marketing, sales
and support organization. From early 1990 to 1992, Mr. Boisture was
Chairman, President and Chief Executive Officer of Butler Aviation, a
nationwide aviation services company.
Chris A. Davis, age 48, has served as Executive Vice President and
Chief Financial Officer of the Company since July 1993, Secretary
since August 1996, Chief Administrative Officer since December 1998
and a director since March 1997 and is a member of the Office of the
Chief Executive. She is also President and Chief Operating Officer of
Gulfstream Financial Services Corporation. Ms. Davis served in
increasingly senior financial management positions at General Electric
Company from 1978 to 1993, most recently as chief financial officer of
its Electronic Systems Division. Ms. Davis is also a director of
Wolverine Tube, Inc.
Bryan T. Moss, age 59, has served as Vice Chairman and a director of
the Company since March 1995. Prior to joining the Company, he was
President of Bombardier Business Aircraft Division, where he was
responsible for the Challenger and Global Express business jet
programs from 1989 to March 1995.
Ira P. Berman, age 37, has served as Senior Vice President and General
Counsel of the Company since March 1997. Before joining the Company,
Mr. Berman was a partner in the corporate department of the law firm
of Fried, Frank, Harris, Shriver & Jacobson, New York, New York, from
September 1997 to March 1998, and an associate from June 1996 to
September 1997.
G. Kenneth Burckhardt, age 44, has served as Senior Vice President,
Finance of the Company since December 1998. Mr. Burckhardt served as
Vice President, Finance from June 1996 to December 1998 and Director
of Finance from December 1994 to June 1996. Prior to joining the
Company, he was Director, Financial Planning & Analysis of a division
of GE Capital Corp. from September 1991 to December 1994.
Patrick C.G. Coulter, age 58, has served as the Company's Senior Vice
President, Corporate Communications since January 1999. Prior to
joining the Company, he was Vice President of Communications for The
Boeing Company Commercial Airplane Group from July 1997 to December
1998. Mr. Coulter was Vice President of Corporate Communications for
Bell Atlantic Corporation from July 1995 to June 1997, and Director of
Corporate Communications of The Raytheon Company from January 1991 to
July 1995.
Larry R. Flynn, age 47, has served as Senior Vice President, Aircraft
Services since December 1998. Mr. Flynn was Vice President, Aircraft
Services from June 1995 to December 1998. Prior to joining the
Company, Mr. Flynn served as Vice President of Stevens Aviation from
April 1993 to May 1995.
Preston A. Henne, age 51, has served as the Company's Senior Vice
President, Programs since September 1994. He was employed by McDonnell
Douglas Corporation from July 1969 to August 1994, most recently as
Vice President & General Manager.
Joseph T. Lombardo, age 51, has served as Senior Vice President,
Operations of the Company since December 1998. Mr. Lombardo served as
Vice President, Co-Production from June 1996 to December 1998. Prior
to joining the Company, he was Director of Twin-Jet Production at
McDonnell Douglas from February 1993 to June 1996.
Joseph K. Walker, age 45, has served as Senior Vice President, Sales &
Marketing of the Company since December 1998. Mr. Walker served as the
Company's Senior Vice President, International Sales from September
1997 to December 1998, and as Vice President, North American Sales
from 1995 to September 1997. Prior to joining the Company, Mr. Walker
served as Vice President, Worldwide Sales of Cessna Aircraft, Inc.
from 1994 to 1995.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Information required by this Item is contained on page 40 of
Gulfstream's 1998 Annual Report, which information is incorporated herein
by reference. At December 31, 1998, the Company's Credit Agreement
prohibited the payment of dividends.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item is included under the caption
"Selected Financial Data" on page 41 of Gulfstream's 1998 Annual Report,
and that information is hereby incorporated by reference in this Form 10-K.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Information required by this Item is included in "Management's
Discussion and Analysis" on pages 20 to 25 of Gulfstream's 1998 Annual
Report, incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required by this Item is included in the Consolidated
Financial Statements of the Company for the years ended December 31, 1998,
1997 and 1996, the Notes to the Consolidated Financial Statements, and the
independent auditors' report thereon on pages 26 to 39 of the 1998 Annual
Report, and in the Company's unaudited quarterly financial data for the
years ended December 31, 1998 and 1997 on page 40 of Gulfstream's 1998
Annual Report, incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information required by this Item is included in the 1999 Proxy
Statement in the section captioned "Election of Directors," and such
information is incorporated herein by reference. Information required by
this Item concerning compliance with Section 16(a) of the Securities
Exchange Act of 1934 is included in the 1999 Proxy Statement in the section
captioned "Section 16(a) Beneficial Ownership Reporting Compliance," and
such information is incorporated herein by reference. Information
concerning executive officers required by this Item 10 is located under
Part I, Additional Item on pages 14 and 15 of this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
Information required by this Item is included in the 1999 Proxy
Statement in the sections captioned "Further Information Concerning the
Board of Directors and Committees -- Compensation Committee Interlocks and
Insider Participation" and "-- Director Compensation" and in the section
captioned "Compensation of Executive Officers" (other than the subsections
thereof captioned "Committee Reports on Executive Compensation" and
"Performance Graph"), and such information (other than the subsections
thereof captioned "Committee Reports on Executive Compensation" and
"Performance Graph") is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required by this Item is included in the 1999 Proxy
Statement in the section captioned "Security Ownership of Certain
Beneficial Owners and Management," and such information is incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by this Item is included in the 1999 Proxy
Statement in the sections captioned "Further Information Concerning the
Board of Directors and Committees -- Compensation Committee Interlocks and
Insider Participation" and "Related Party Transactions," and such
information is incorporated herein by reference. See also, Note 12 to the
Consolidated Financial Statements on page 37 of Gulfstream's 1998 Annual
Report.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
1998
FORM 10-K ANNUAL REPORT
(PAGE) (PAGE)
------------- --------------
(a) FINANCIAL STATEMENTS
Consolidated Statements of Income for the
years ended December 31, 1998, 1997, and 26
1996
Consolidated Balance Sheets at December
31, 1998 and December 31, 1997 27
For the years ended December 31, 1998,
1997, and 1996:
Consolidated Statements of Stockholders' 28
Equity
Consolidated Statements of Cash Flows 29
Notes to Consolidated Financial 30-38
Statements
Independent Auditors' Report 39
Supplementary Information (Unaudited)
Quarterly Financial Results for 1998 40
and 1997
FINANCIAL STATEMENT SCHEDULES
Independent Auditors' Report 19
I. Condensed financial information 20-21
II. Valuation and qualifying 22
accounts
All other schedules have been omitted because they are not applicable,
not required or the information required is included in the consolidated
financial statements or notes thereof.
EXHIBITS
The exhibits are listed in the accompanying Index to Exhibits on pages
26 to 30.
(b) REPORTS ON FORM 8-K
None in the fourth quarter of 1998.
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Gulfstream Aerospace Corporation:
We have audited the consolidated balance sheets of Gulfstream
Aerospace Corporation and subsidiaries (the "Company") as of December 31,
1998 and 1997 and the related consolidated statements of income,
stockholders' equity and cash flows for the three years in the period ended
December 31, 1998, and have issued our report thereon dated February 1,
1999 (March 1, 1999 as to Note 16); such financial statements and report
are included in the Company's 1998 Annual Report and are incorporated
herein by reference. Our audits also included the consolidated financial
statement schedules of the Company, listed in Item 14 of Form 10-K. These
consolidated financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion based on
our audits. In our opinion, such consolidated financial statement
schedules, when considered in relation to the basic consolidated financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
DELOITTE & TOUCHE LLP
Atlanta, Georgia
February 1, 1999
GULFSTREAM AEROSPACE CORPORATION
(PARENT COMPANY ONLY)
SCHEDULE I -- CONDENSED FINANCIAL INFORMATION
BALANCE SHEETS
AS OF DECEMBER 31, 1998 AND 1997
(IN THOUSANDS, EXCEPT FOR SHARE AMOUNTS)
ASSETS
1998 1997
------------ -----------
------------ -----------
Investment in subsidiary $ 310,538 $ 200,895
============ ===========
Total Assets 310,538 200,895
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
1998 1997
------------ -----------
Payable to subsidiary $ 14,858 $ 8,138
Note Payable to subsidiary 100,000 100,000
------------ -----------
Total liabilities 114,858 108,138
------------ -----------
Stockholders' equity:
Preferred stock; Series A, 7% Cumulative; $.01
par value; 20,000,000 shares authorized; - -
no shares outstanding
Common stock, $.01 par value;
300,000,000 shares authorized;
Shares issued: 89,818,774 and 86,522,089 898 865
Additional paid-in capital 444,301 370,258
Accumulated deficit (672) (225,960)
Accumulated other comprehensive income (2,441) (762)
Unamortized stock plan expense (52) (1,155)
Less: Treasury stock: 17,244,581 and 11,978,439 (246,354) (50,489)
shares
------------ -----------
Total stockholders' equity 195,680 92,757
============ ===========
Total Liabilities and Stockholders' Equity $ 310,538 $ 200,895
============ ===========
- --------------
Notes:
(1) The Company accounts for its investment in its subsidiary using the
equity method of accounting.
(2) The Company received cash dividends in 1996 of approximately $355.0
million from its subsidiary in satisfaction of intercompany balances.
See notes to Consolidated Financial Statements included in the 1998 Annual
Report, incorporated herein by reference.
GULFSTREAM AEROSPACE CORPORATION
(PARENT COMPANY ONLY)
SCHEDULE I -- CONDENSED FINANCIAL INFORMATION
STATEMENTS OF INCOME
(IN THOUSANDS)
YEAR ENDED DECEMBER 31,
----------------------------------
1998 1997 1996
---------- ---------- ----------
Interest expense $ (6,720) $ (6,720) $ (1,418)
Net income of subsidiary 232,008 249,731 48,383
---------- ---------- ----------
Net income $ 225,288 $243,011 $ 46,965
Other comprehensive income,
net of tax (1,679) 702 (14)
---------- ---------- ----------
Total comprehensive income $ 223,609 $243,713 $ 46,951
========== ========== ==========
- ----------------
Statements of cash flows are not presented since the Parent Company had no
cash flows from operations.
See notes to Consolidated Financial Statements included in the 1998 Annual
Report, incorporated herein by reference.
GULFSTREAM AEROSPACE CORPORATION
SCHEDULE II -- CONDENSED SCHEDULE OF VALUATION AND QUALIFYING
ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 1996, 1997, AND 1998
(IN THOUSANDS)
BALANCE CHARGED
AT CHARGED TO BALANCE
BEGINNING TO OTHER AT END
OF COSTS AND ACCOUNTS DEDUCTIONS OF
DESCRIPTION PERIOD EXPENSES (1) (2) PERIOD
- ------------------------- --------- ---------- ---------- ------------ ---------
Allowance for Doubtful
Accounts:
Year ended December $ 3,437 $ 344 $ - $ 538 $ 3,243
31, 1996
Year ended December 3,243 (1,588) - 511 1,144
31, 1997
Year ended December 1,144 326 1,484 429 2,525
31, 1998
- --------------
<FN>
(1) The amount of $1,484 represents amounts assumed in connection with the
acquisition of K-C Aviation. See Note 2 to the Consolidated Financial
Statements included in the 1998 Annual Report, incorporated herein by
reference.
(2) Deductions from the allowance for doubtful accounts represent the
write-off of uncollectible accounts.
</FN>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized on this
29th day of March 1999.
GULFSTREAM AEROSPACE CORPORATION
By: /s/Chris A. Davis
-------------------------------------------
Chris A. Davis
Executive Vice President &
Chief Financial & Administrative Officer
and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- -------------------------------- ---------------------------- --------------
/s/Theodore J. Forstmann Chairman of the Board, Chief March 29, 1999
- -------------------------------- Executive Officer and
Theodore J. Forstmann Director
/s/W. W. Boisture, Jr. President, Chief Operating March 29, 1999
- -------------------------------- Officer and Director
W. W. Boisture, Jr.
/s/Chris A. Davis Executive Vice President, March 29, 1999
- -------------------------------- Chief Financial
Chris A. Davis & Administrative Officer,
Secretary and
Director (Principal
Financial Officer and
Principal Accounting
Officer)
/s/Bryan T. Moss Vice Chairman of the Board March 29, 1999
- -------------------------------- and Director
Bryan T. Moss
/s/Robert Anderson Director March 29, 1999
- --------------------------------
Robert Anderson
/s/Charlotte L. Beers Director March 29, 1999
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Charlotte L. Beers
/s/Thomas D. Bell, Jr. Director March 29, 1999
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Thomas D. Bell, Jr.
/s/Lynn Forester Director March 29, 1999
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Lynn Forester
/s/Nicholas C. Forstmann Director March 29, 1999
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Nicholas C. Forstmann
/s/Sandra J. Horbach Director March 29, 1999
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Sandra J. Horbach
/s/James T. Johnson Director March 29, 1999
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James T. Johnson
/s/Henry A. Kissinger Director March 29, 1999
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Henry A. Kissinger
/s/Drew Lewis Director March 29, 1999
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Drew Lewis
/s/Mark H. McCormack Director March 29, 1999
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Mark H. McCormack
/s/Michael S. Ovitz Director March 29, 1999
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Michael S. Ovitz
/s/Allen E. Paulson Director March 29, 1999
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Allen E. Paulson
/s/Roger S. Penske Director March 29, 1999
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Roger S. Penske
/s/Colin L. Powell Director March 29, 1999
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Colin L. Powell
/s/Gerard R. Roche Director March 29, 1999
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Gerard R. Roche
/s/Donald H. Rumsfeld Director March 29, 1999
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Donald H. Rumsfeld
/s/George P. Shultz Director March 29, 1999
- --------------------------------
George P. Shultz
/s/Robert S. Strauss Director March 29, 1999
- --------------------------------
Robert S. Strauss
GULFSTREAM AEROSPACE CORPORATION
INDEX TO EXHIBITS
Exhibit Description
2.1 Agreement of Purchase and Sale, dated as of July 23, 1998 by and
between Kimberly-Clark Corporation and Gulfstream Aerospace
Corporation. (Incorporated herein by reference to Exhibit 10.28 of
Registrant's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1998.)
3.1 Restated Certificate of Incorporation of the Company. (Incorporated
herein by reference to Exhibit 3.1 of Registrant's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1996.)
3.2 Restated By-Laws of the Company. (Incorporated herein by reference to
Exhibit 3.2 of Registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996.)
4.1 Specimen Form of Company's Common Stock Certificate. (Incorporated
herein by reference to Exhibit 4.1 of Registrant's Registration
Statement on Form S-1, No. 333-09897.)
10.1 Gulfstream Aerospace Corporation Pension Plan, amended and restated
January 1, 1989, as amended ("GAC Pension Plan"). (Incorporated
herein by reference to Exhibit 10.1 of Registrant's Registration
Statement on Form S-1, No. 333-09897.) **
10.2 First Amendment to GAC Pension Plan, dated December 10, 1996.
(Incorporated herein by reference to Exhibit 10.2 of Registrant's
Annual Report on Form 10-K for the year ended December 31,
1996.)**
10.3 Gulfstream Aerospace Corporation Supplemental Executive Retirement
Plan, effective as of April 1, 1991. (Incorporated herein by
reference to Exhibit 10.2 of Registrant's Registration Statement on
Form S-1, No. 333-09897.)**
10.4 Gulfstream Aerospace Corporation November 1, 1991 Supplemental
Executive Retirement Plan. (Incorporated herein by reference to
Exhibit 10.3 of Registrant's Registration Statement on
Form S-1, No. 333-09897.)**
10.5 Form of Indemnification Agreement between the Company and its
directors and executive officers. (Incorporated herein by reference
to Exhibit 10.4 of Registrant's Registration Statement on
Form S-1, No. 333-09897.)
10.6 Form of Outside Director Stock Option Agreement. (Incorporated herein
by reference to Exhibit 10.5 of Registrant's Registration Statement
on Form S-1, No. 333-09897.)**
10.7 Form of Outside Director Stockholder's Agreement. (Incorporated
herein by reference to Exhibit 10.6 of Registrant's Registration
Statement on Form S-1, No. 333-09897.)**
10.8 [Reserved]
10.9 Form of Employee Stock Option Agreement. (Incorporated herein by
reference to Exhibit 10.9 of Registrant's Annual Report on Form
10-K for the year ended December 31, 1996.)**
10.10 Form of Employee Stockholder's Agreement. (Incorporated herein by
reference to Exhibit 10.10 of Registrant's Annual Report on Form
10-K for the year ended December 31, 1996.)**
10.11 Lease Agreement, dated as of February 22, 1995, between Oklahoma City
Airport Trust and Gulfstream Aerospace Corporation. (Incorporated
herein by reference to Exhibit 10.11 of Registrant's Annual Report
on Form 10-K for the year ended December 31, 1997.)
10.12 Lease Agreement, dated as of March 14, 1989, between City of Long
Beach and 7701 Woodley Avenue Corporation d/b/a Gulfstream
Aerospace. (Incorporated herein by reference to Exhibit 10.12 of
Registrant's Registration Statement on Form S-1, No. 333-09897.)
10.13 Form of Lease Agreements, dated January 1, 1994 between Immuebles El
Vigia, S.A., and Interiores Aeros, S.A. De C.V. (Incorporated
herein by reference to Exhibit 10.13 of Registrant's Registration
Statement on Form S-1, No. 333-09897.)
10.14 Lease Agreement, dated May 1, 1996, between Immuebles El Vigia, S.A.,
and Interiores Aeros, S.A. De C.V. (Incorporated herein by
reference to Exhibit 10.14 of Registrant's Registration Statement
on Form S-1, No. 333-09897.)
10.15 Sublease Agreement, dated June 1, 1992, between Brunswick and Glynn
County Development Authority and Gulfstream Aerospace Corporation.
(Incorporated herein by reference to Exhibit 10.15 of Registrant's
Registration Statement on Form S-1, No. 333-09897.)
10.16 Credit Agreement, dated as of October 16, 1996, among Gulfstream
Delaware Corporation, The Chase Manhattan Bank, and the banks and
other financial institutions parties thereto (including guaranty
and pledge agreement). (Incorporated herein by reference to
Exhibit 10.16 of Registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996.)
10.17 Registration Rights Agreement, among Gulfstream Aerospace Corporation,
Gulfstream Delaware Corporation, Gulfstream Partners, Gulfstream
Partners II, L.P., and MBO-IV. (Incorporated herein by reference
to Exhibit 10.17 of Registrant's Registration Statement on Form
S-1, No. 333-09897.)
10.18 Repurchase Agreement, dated as of May 15, 1996, between Gulfstream
Aerospace Corporation and MBO-IV. (Incorporated herein by
reference to Exhibit 10.18 of Registrant's Registration Statement
on Form S-1, No. 333-09897.)
10.19 Repurchase Agreement, dated as of August 8, 1996, between Gulfstream
Aerospace Corporation and MBO-IV. (Incorporated herein by
reference to Exhibit 10.19 of Registrant's Registration Statement
on Form S-1, No. 333-09897.)
10.20 Amendment No. 1 to Sublease Agreement, dated May 23, 1996, by and
between Brunswick and Glynn County Development Authority and
Gulfstream Aerospace Corporation. (Incorporated herein by
reference to Exhibit 10.20 of Registrant's Registration Statement
on Form S-1, No. 333-09897.)
10.21 Amendment No. 2 to Sublease Agreement, dated May 25, 1996, by and
between Brunswick and Glynn County Development Authority and
Gulfstream Aerospace Corporation. (Incorporated herein by
reference to Exhibit 10.21 of Registrant's Registration Statement
on Form S-1, No. 333-09897.)
10.22 Agreement, effective August 9, 1996, between Gulfstream Aerospace
Technologies and the International Union, United Automobile,
Aerospace and Agricultural Implement Workers of America Local
#2130. (Incorporated herein by reference to Exhibit 10.22 of
Registrant's Registration Statement on Form S-1, No. 333-09897.)
10.23 Lease Agreement, dated as of August 27, 1996, between Long Beach
Million Air, Inc. and Gulfstream Aerospace Corporation.
(Incorporated herein by reference to Exhibit 10.23 of Registrant's
Registration Statement on Form S-1, No. 333-09897.)
10.24 Outfitted Gulfstream V Sales Agreement dated June 13, 1997 between
Gulfstream Aerospace Corporation and Allen E. Paulson.
(Incorporated herein by reference to Exhibit 10.24 of
Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997.)
10.25 Marketing Services Agreement dated June 13, 1997 between
Gulfstream Aerospace Corporation and Allen E. Paulson.
(Incorporated herein by reference to Exhibit 10.25 of
Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997.)
10.26 Gulfstream IV Aircraft Purchase Agreement and amendment to
Outfitted Gulfstream V Sales Agreement dated August 1, 1997
between Gulfstream Aerospace Corporation and Allen E. Paulson.
(Incorporated herein by reference to Exhibit 10.26 of
Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997.)
10.27 Amended and Restated Gulfstream Aerospace Corporation 1990 Stock
Option Plan, as further amended through July 30, 1997.
(Incorporated herein by reference to Exhibit 10.27 of
Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997.)**
10.28 Amendment dated December 24, 1997 to Credit Agreement among
Gulfstream Delaware Corporation, The Chase Manhattan Bank, and
the banks and other financial institutions parties thereto.
(Incorporated herein by reference to Exhibit 10.28 of
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1997.)
10.29 Agreement dated December 24, 1997 between Gulfstream Aerospace
Corporation and its wholly owned subsidiaries, Gulfstream
Delaware Corporation, Gulfstream Aerospace Corporation, a
Georgia Corporation and the Pension Benefit Guaranty
Corporation. (Incorporated herein by reference to Exhibit
10.29 of Registrant's Annual Report on Form 10-K for the year
ended December 31, 1997.)
10.30 Lease Agreement, dated April 11, 1997, between Aeroplex Aviation
and Gulfstream Aerospace Corporation. (Incorporated herein by
reference to Exhibit 10.30 of Registrant's Annual Report on
Form 10-K for the year ended December 31, 1997.)
10.31 Amendment dated February 26, 1998 to Credit Agreement among
Gulfstream Delaware Corporation, The Chase Manhattan Bank, and
the banks and other financial institutions parties thereto.
(Incorporated herein by reference to Exhibit 10.31 of
Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998.)
10.32 Amendment dated July 15, 1998 to Credit Agreement among Gulfstream
Delaware Corporation, The Chase Manhattan Bank, and the banks
and other financial institutions parties thereto.
(Incorporated herein by reference to Exhibit 10.32 of
Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1998.)
10.33 Amendment dated October 6, 1998 to Credit Agreement among
Gulfstream Delaware Corporation, The Chase Manhattan Bank, and
the banks and other financial institutions parties thereto.
(Incorporated herein by reference to Exhibit 10.33 of
Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998.)
10.34 Lease Agreement, dated January 1, 1998, by and between Immuebles
El Vigia, S.A., and Interiores Aeroes, S.A. De C.V.
(Incorporated herein by reference to Exhibit 10.34 of
Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998.)
10.35 Amendment No. 3 to Sublease Agreement, dated February 23, 1998, by
and between the Brunswick and Glynn County Development
Authority and Gulfstream Aerospace Corporation. (Incorporated
herein by reference to Exhibit 10.35 of Registrant's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1998.)
10.36 Amendment No. 4 to Sublease Agreement, dated March 23, 1998, by
and between the Brunswick and Glynn County Development
Authority and Gulfstream Aerospace Corporation. (Incorporated
herein by reference to Exhibit 10.36 of Registrant's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1998.)
10.37 Lease Agreement, dated January 25, 1968, by and between Outagamie
County, Wisconsin and K-C Aviation Incorporated which was
assigned to K-C Aviation on October 9, 1980; as amended by
Addendum No. 1, dated December 24, 1980, Addendum No. 2, dated
February 9, 1988, Addendum No. 3 dated January 26, 1989,
Addendum No. 4 dated October 22, 1996, and Addendum No. 5 to
Lease Agreement, dated March 11, 1997. (Incorporated herein by
reference to Exhibit 10.37 of Registrant's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1998.)
10.38 Lease Agreement, dated February 1, 1978, by and between City of
Dallas and K-C Aviation, Incorporated for lease of land and
facility at Dallas Love Field; as amended by Agreement
Amending Lease dated October 28, 1981, Second Amendment dated
June 1, 1989, and that certain letter from the City of Dallas
to K-C Aviation dated December 9, 1997. (Incorporated herein
by reference to Exhibit 10.38 of Registrant's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1998.)
10.39 Sublease Agreement, dated January 17, 1989, by and between Dalfort
Aviation Services, a division of Dalfort Corporation and K-C
Aviation, Incorporated, as amended by that certain First
Additional Agreement effective January 17, 1989. (Incorporated
herein by reference to Exhibit 10.39 of Registrant's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1998.)
10.40 Sublease Agreement, dated December 1, 1996, by and between Dallas
Airmotive, Incorporated and K-C Aviation, Incorporated.
(Incorporated herein by reference to Exhibit 10.40 of
Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998.)
10.41 Lease Agreement, dated May 1, 1997, by and between Carpenter
Freeway Properties and K-C Aviation, Incorporated.
(Incorporated herein by reference to Exhibit 10.41 of
Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998.)
10.42 Amendment dated December 2, 1998 to the Amended and Restated
Gulfstream Aerospace Corporation 1990 Stock Option Plan.* **
10.43 Form of Stock Option Agreement effective December 1998.* **
10.44 Form of Stock Option Agreement for partners or employees of FLC
Partnership effective December 1998.* **
10.45 Fifth Amendment dated March 1, 1999 to Credit Agreement among
Gulfstream Delaware Corporation, The Chase Manhattan Bank, and
the banks and other financial institutions parties thereto.*
10.46 Secured Promissory Note dated November 30, 1998 between Gulfstream
Aerospace Corporation and The CIT Group/Equipment Financing,
Inc.*
10.47 Secured Promissory Note dated November 30, 1998 between Gulfstream
Aerospace Corporation and The CIT Group/Equipment Financing,
Inc.*
10.48 Secured Promissory Note dated November 30, 1998 between Gulfstream
Aerospace Corporation and The CIT Group/Equipment Financing,
Inc.*
10.49 Form of Security Agreement, dated as of November 30, 1998 by and
between Gulfstream Aerospace Corporation, as Borrower and The
CIT Group/Equipment Financing, Inc., as Secured Party.*
10.50 Form of Guaranty Agreement, dated November 30, 1998, given in
connection with the Security Agreement and Promissory Note,
between Gulfstream Aerospace Corporation, as Borrower and The
CIT Group/Equipment Financing, Inc., as Secured Party.*
13.1 Annual Report to Stockholders for fiscal year ended December 31,
1998. (The 1998 Annual Report, except for those portions
thereof which are expressly incorporated by reference in this
Annual Report on Form 10-K, is being furnished for the
information of the Commission and is not to be deemed "filed"
as part of the Form 10-K.)*
21.1 Subsidiaries of the Company.*
27.1 Financial Data Schedule - Fiscal 1998.*
99.1 Cautionary Statement for Purpose of the "Safe Harbor" Provisions of The
Private Securities Litigation Reform Act of 1995.*
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** Management contract or compensatory plan.
* Filed herewith.