SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
Amendment No. 1
[ 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
For the transition period from ____________ TO _____________ .
COMMISSION FILE NUMBER: 0-29490
HAWKER PACIFIC AEROSPACE
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-3528840
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11240 SHERMAN WAY, SUN VALLEY, CALIFORNIA 91352
(Address of principal executive offices) (Zip code)
(818) 765-6201
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, NO PAR VALUE
(Title of each class)
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 ]
This amendment provides the information required under Part III of Form 10-K.
Part III incorporates information by reference to the registrant's definitive
Proxy Statement, to be filed with the Securities and Exchange Commission in June
1999.
PART III
ITEM 10 -- DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information with respect to the directors and
executive officers of the Company.
Name Age Position
- -------------------- --- ------------------------------------------------------
Daniel J. Lubeck....... 37 Chairman of the Board (1)(2)(4) and Secretary
David L. Lokken........ 52 President, Chief Executive Officer and Director (2)(4)
Philip M. Panzera...... 49 Vice President and Chief Financial Officer
Brian S. Carr.......... 42 Managing Director of Sun Valley Operations
Dennis M. Biety........ 51 Managing Director of United Kingdom Operations
Michael A. Riley....... 53 Vice President-Hydromechanical Business Unit
Mellon C. Baird........ 68 Director (3)(4)
Scott W. Hartman....... 36 Director (2)
John G. Makoff......... 36 Director
Joel F. McIntyre....... 60 Director (1)(3)
Daniel C. Toomey, Jr... 35 Director (1)(3)
- --------------------
(1) Member of Compensation Committee
(2) Member of Nominating Committee
(3) Member of Audit Committee
(4) Member of Executive Committee
Daniel J. Lubeck, 37, has served as Chairman of the Board since January 1999.
Mr. Lubeck has been a director and the Company's Secretary since December 1996.
Since July 1996, Mr. Lubeck has served as a Managing Director of Unique
Investment Corporation ("Unique"). Mr. Lubeck has served as the Chief Executive
Officer of a private manufacturing concern, and also sits on the Boards of
various private companies. From March 1993 until he joined Unique, Mr. Lubeck
was an attorney with McIntyre, Lubeck, Borgess & Burns, a multi-service law
firm. He has also served as an attorney with Paul, Hastings, Janofsky & Walker
from 1987 until 1992, and with Manatt, Phelps & Philips, LLP from 1992 until
1993. Mr. Lubeck earned a B.A. in Economics from the University of California-
San Diego, and a J.D. from the University of Southern California.
David L. Lokken, 52, joined the Company in May 1989 as Executive Vice
President and Chief Operating Officer. He has served as President and Chief
Executive Officer of the Company since June 1993, and as a Director of the
Company since 1994. From November 1985 until he joined the Company, Mr. Lokken
served as Vice President and General Manager of Cleveland Pneumatic's Product
Service Division. Mr. Lokken previously served as Vice President, Technical
Operations, for the Flying Tiger cargo airline. He has also held avionics and
product engineering positions with Western Airlines and the Sperry Flight
Systems Division. Mr. Lokken holds a B.S. in Electrical Engineering from North
Dakota State University and an M.B.A. from Arizona State University.
Philip M. Panzera, 49, joined the Company in October 1998 as Vice President of
Corporate Development, and since March 1999 has served as Vice President and
Chief Financial Officer. Mr. Panzera has held a number of senior management
positions as Chief Financial Officer, Chief Operating Officer, President and
Director in both private and public companies. He has worked as an attorney,
specializing in tax and corporate law, and business planning, and has also
served with Coopers & Lybrand. Mr. Panzera received a B.A. from Methodist
College, an M.B.A. from the Rutgers University Graduate School of Management,
and a J.D. from the Rutgers University School of Law.
Brian S. Carr, 42, became Managing Director of Sun Valley Operations in
November 1997 after having served as Vice President of the Landing Gear Business
Unit since he joined the Company in January 1993. From 1980 until he joined the
Company, Mr. Carr held various engineering, technical sales and management
positions with Cleveland Pneumatic's Product Service Division and Dowty
Aerospace. Mr. Carr holds a B.S. in Aerospace Engineering Technology from Kent
State University.
-2-
Dennis M. Biety, 51, joined the Company in November 1998 as the Managing
Director of the Hawker Pacific Aerospace Ltd. subsidiary in the United Kingdom.
Mr. Biety has served as Vice President, Landing Gear and Hydromechanical
Products, and then President with Messier Services America. He has held other
senior positions in marketing and program management, and has also served as a
corporate counsel in several organizations. Mr. Biety has a B.A. from the
University of Illinois, and a J.D. from Wake Forest University.
Michael A. Riley, 53, joined the Company's predecessor as Vice President of
Marketing in October 1989 and has served as Vice President of the
Hydromechanical Business Unit since January 1994. From 1982 until he joined the
Company, Mr. Riley held various positions in the aerospace/aircraft industry
with Abex Aerospace and Dunlop Aviation. Mr. Riley served as a helicopter pilot
in the United States Navy after receiving a B.S. in Engineering from the United
States Naval Academy, Annapolis, Maryland.
Mellon C. Baird, 68, became a director of the Company in March 1998. Mr.
Baird is serving as Chief Executive Officer of Titan Systems and Senior Vice
President of the Titan Corporation. He was Chairman, President and Chief
Executive Officer of Delfin Systems, a private company, from 1990 until 1998.
From 1987 to 1989, Mr. Baird served as President and Chief Executive Officer of
Tracor, Inc., a privately-held company. From 1986 until 1987, Mr. Baird served
as President, Chief Operating Officer and a director of Tracor, a publicly-held
company. Mr. Baird currently serves on the Board of Directors of Software
Spectrum, Inc. and EDO Corporation, which are both publicly-held companies. Mr.
Baird received a B.B.A. and an M.B.A. from the University of North Texas in 1956
and 1961, respectively.
Scott W. Hartman, 36, became a director of the Company in December 1996, and
served as Chairman of the Board from March 1997 to January 1999. Since March
1995, Mr. Hartman has served as a Managing Director of Unique. From December
1993 until he joined Unique, Mr. Hartman served as Chief Executive Officer of
Nucor World Industries, a private holding company. From December 1991 until
December 1993, Mr. Hartman served as a Vice President of Business Development
for City National Bank, and from May 1983 until he joined City National Bank, he
held various management positions with Emerson Electric Company. Mr. Hartman
earned a B.S. from Indiana University.
John G. Makoff, 36, became a director of the Company in December 1996. Mr.
Makoff founded Unique in June 1993 and currently serves as one of its Managing
Directors. From June 1991 until he founded Unique, Mr. Makoff served as Manager
for Computerland of Pasadena, Inc., a computer reseller. Mr. Makoff holds a
B.A. from Lewis & Clark University.
Joel F. McIntyre, 60, became a director of the Company in February 1998. From
1963 through 1993, Mr. McIntyre was an attorney with the law firm of Paul,
Hastings, Janofsky and Walker. In 1993, Mr. McIntyre founded his own law firm,
specializing in merger and acquisition transactions. Mr. McIntyre currently
serves on the Board of Directors of International Aluminum Corporation, a
publicly-held company. Mr. McIntyre received a B.A. from Stanford University in
1960, and a J.D. from the University of California- Los Angeles in 1963.
Daniel C. Toomey, Jr., 35, became a director of the Company in February 1998.
Since January 1998, Mr. Toomey has served as the President and Chief Executive
Officer of Nomadix, LLC. Mr. Toomey served as Vice President and Chief
Financial Officer of Eltron International, Inc., a publicly-held company, from
October 1992 until December 1997. From 1987 until he joined Eltron, Mr. Toomey
was employed with Arthur Andersen LLP, where he served as Manager in the
Enterprise Division of its Woodland Hills, California office. Mr. Toomey
received a B.A. from the University of California-Los Angeles in 1986.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, as well as persons who own more than ten
percent of the Company's common stock, to file with the Securities and Exchange
Commission ("SEC") initial reports of beneficial ownership and reports of
changes in beneficial ownership of the common stock. Directors, executive
officers and greater-than-ten-percent shareholders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on a review of copies of reports filed with the SEC and submitted
to the Company, the Company believes that all of the Company's directors,
executive officers and greater-than-ten-percent shareholders filed all required
reports on a timely basis.
-3-
ITEM 11 -- EXECUTIVE COMPENSATION
The following table sets forth certain compensation earned or accrued during
the years ended December 31, 1996, 1997 and 1998 by the Company's Chief
Executive Officer and the Company's other highly compensated executive officers
whose total salary and bonus during the year ended December 31, 1998 exceeded
$100,000 (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
Long-term Compensation
----------------------
Awards Payouts
-------------------- -------
Securities
Restricted Underlying All Other
Annual Compensation Stock Options/ LTIP Compen-
----------------------------------
Name and Principal Position Year Salary Bonus(1) Other Awards SARs (#) Payouts sation
- ----------------------------------------- ---- -------- ---------- ---------- ------- -------- ------- ------
David L. Lokken.......................... 1998 $222,351 $22,431 - - - - -
Chief Executive Officer 1997 233,147 44,358 - - - - -
1996 192,566 67,125 $173,220(2) - - - -
Brian S. Aune............................ 1998 $135,885 $10,669 - - - - -
Chief Financial Officer 1997 117,302 21,097 - - - - -
1996 98,440 28,763 - - - - -
Brian S. Carr............................ 1998 $136,022 $10,669 - - - - -
Managing Director of Sun Valley 1997 125,156 21,097 - - - - -
Operations 1996 111,258 26,910 - - - - -
Michael A. Riley......................... 1998 $115,003 $ 9,438 - - - - -
Vice PresidentHydromechanical Business 1997 113,430 18,663 - - - - -
Unit 1996 95,584 23,550 - - - - -
- -----------
(1) Bonus amounts are shown in the year accrued.
(2) Nonrecurring payment made for services rendered in connection with BTR
Dunlop, Inc.'s, sale of the Company, of which 31% was paid in 1996 and 69%
was paid in 1997.
Employment Arrangements
In November 1996, the Company entered into an employment agreement with David
L. Lokken pursuant to which Mr. Lokken agreed to serve as the Company's
President and Chief Executive Officer. The employment agreement is for an
initial term of five years and as amended in 1997 provides for an annual base
salary of $205,000, a performance bonus to be awarded in accordance with the
terms and conditions of a separate Management Incentive Compensation Plan, and a
monthly automobile allowance of $1,500. Pursuant to the employment agreement,
the Company may terminate Mr. Lokken's employment with or without cause at any
time before its term expires upon providing written notice. In the event the
Company terminates Mr. Lokken's employment without cause, Mr. Lokken would be
entitled to receive a severance amount equal to his annual base salary for the
greater of two years or the balance of the term of his employment agreement, and
a bonus for the year of termination. In the event of a termination by reason of
Mr. Lokken's death or permanent disability, his legal representative will be
entitled to receive his annual base salary for the remaining term of his
employment agreement.
In November 1996, the Company entered into employment agreements with Brian S.
Carr, the Company's Managing Director of Sun Valley Operations, and Michael A.
Riley, the Company's Vice President-Hydromechanical Business Unit. The
employment agreements are each for an initial term of three years and as amended
in 1997 provide for annual base salaries of $130,000 and $115,000, respectively,
performance bonuses to be awarded in accordance with the terms and conditions of
a separate Management Incentive Compensation Plan, and monthly automobile
allowances of $750. In February 1999, Mr. Carr's employment contract was further
amended to increase his base salary to $160,000. In the event the Company
terminates their employment without cause, Messrs. Carr and Riley would each be
entitled to receive a severance amount equal to his respective annual base
salary for the greater of one year or the balance of the term of his employment
agreement, and a bonus for the year of termination. In the event of a
termination by reasons of Messrs. Carr's or Riley's death or permanent
disability, his legal representative will be entitled to receive his annual base
salary for the remaining term of his employment agreement.
-4-
In November 1996, the Company entered into an employment agreement with Brian
S. Aune, the Company's former Vice President and Chief Financial Officer. The
terms of Mr. Aune's employment during 1998 were identical to those provided in
Mr. Carr's employment contract, as amended in 1997. In March 1999, Mr. Aune's
employment with the Company was terminated without cause. In accordance with his
employment contract, Mr. Aune received a severance payment equal to one year's
salary and certain benefits.
In addition, pursuant to each of their amended employment agreements, in the
event of, or termination following, a change in control of the Company, as
defined in the agreements, Mr. Lokken and each of Messrs. Carr and Riley would
be entitled to receive 18 and 12 months salary, respectively, based on the total
annual salary then in effect, paid according to a schedule to be determined at
the time such event occurs.
Compensation of Directors
Messrs. Baird, McIntyre and Toomey receive a cash fee of $1,500 per regular
and special Board meeting attended in person, or $1,000 per telephonic Board
meeting, plus an additional $500 per month for being a member of one or more
committees of the Board. At the discretion of the Board, these three directors
may also be granted stock options.
In January 1998, Messrs. McIntyre and Toomey were each granted five-year
options to purchase up to 14,861 shares, exercisable at $8.00 per share, vesting
33 1/3% per year beginning on the first anniversary of the effective date of the
initial public offering. In March 1998, the Company granted Mr. Baird five-year
options to purchase up to 14,861 shares, exercisable at the then current market
price, vesting 33 1/3% per year beginning on the first anniversary of the date
of grant. Directors are also reimbursed for expenses incurred in connection with
the performance of services as directors.
Option/SAR Grants
The following table sets forth information on stock options granted by the
Company to the Named Executive Officers during the fiscal year ended December
31, 1998.
OPTION GRANT TABLE
Potential realizable value at
assumed annual rates of stock
Individual grants price appreciation for option term
- --------------------------------------------------------------------------------- --------------------------------------
Number of
Shares of % of Total
Common Stock Options Exercise
Underlying Granted to of base
Options Employees in Price Expiration
Name Granted Fiscal Year ($/Sh)(3) Date 5% 10%
- ------------------- --------------------- ----------- --------- --------------------------- ------- -------
David L. Lokken 187,471 (1) 0% $ 3.56 72,105 on November 14, 2002 53,319 119,132
8.00 115,366 on November 14, 2007 508,836 1,253,288
Brian S. Aune 43,261 (2) 0% $ 3.56 14,420 on November 14, 2002 11,063 23,825
8.00 28,841 on November 14, 2007 127,207 313,317
Brian S. Carr 43,261 (2) 0% $ 3.56 14,420 on November 14, 2002 11,063 23,825
8.00 28,841 on November 14, 2007 127,207 313,317
Michael A. Riley 43,261 (2) 0% $ 3.56 14,420 on November 14, 2002 11,063 23,825
8.00 28,841 on November 14, 2007 127,207 313,317
- ------------------
(1) 72,105 of these options were fully vested and exercisable on the date of
grant and are for a term of five years. 115,366 of these options are for a
term of ten years, subject to earlier termination in certain events related
to termination of employment, and vest at the rate of 5% every three months
after the grant date so that all of the options will be fully vested and
exercisable on the fifth anniversary of the grant date.
-5-
(2) 14,420 of these options were fully vested and exercisable on the date of
grant and are for a term of five years. 28,841 of these options are for a
term of ten years, subject to earlier termination in certain events related
to termination of employment, and vest at the rate of 5% every three months
after the grant date so that all of the options will be fully vested and
exercisable on the fifth anniversary of the grant date.
(3) The exercise price and tax withholding related to exercise may be paid by
delivery of already owned shares or by offset of the underlying shares,
subject to certain conditions. With respect to options granted under the
Company's 1997 Stock Option Plan, the Compensation Committee retains
discretion, subject to plan limits, to modify the terms of outstanding
options and to reprice the options.
Employee Defined Benefit Plan
The following table sets forth the estimated monthly benefits under the
pension Plan, without regard to any offsetting benefit which may be payable from
the Defined Benefit Pension Plans of the Company's predecessors for service
prior to January 1, 1997, based on the current benefit structure and assuming
the participant's current age is 50.
PENSION PLAN TABLE
Years of Service
--------------------------------------------
Remuneration 15 20 25 30 35
- ----------------------------------- ------ ------ ------ ------ ------
$125,000........................... $1,694 $2,294 $2,868 $3,442 $4,015
150,000........................... 2,132 2,842 3,553 4,264 4,974
175,000........................... 2,307 3,076 3,845 4,614 5,383
200,000........................... 2,307 3,076 3,845 4,614 5,383
225,000........................... 2,307 3,076 3,845 4,614 5,383
250,000........................... 2,307 3,076 3,845 4,614 5,383
300,000........................... 2,307 3,076 3,845 4,614 5,383
400,000........................... 2,307 3,076 3,845 4,614 5,383
450,000........................... 2,307 3,076 3,845 4,614 5,383
500,000........................... 2,307 3,076 3,845 4,614 5,383
The compensation covered by the Pension Plan includes basic salary or wages,
overtime payments, bonuses, commissions and all other direct current
compensation but does not include contributions by the Company to Social
Security, benefits from stock options (whether qualified or not), contributions
to this or any other retirement plans or programs or the value of any other
fringe benefits provided at the expense of the Company. For benefit calculation
purposes, a "highest five-year" average of compensation is used. Benefits are
paid as straight-life annuities with no subsidies or effects. The compensation
covered by the Pension Plan for all of the Named Executive Officers was limited
to $160,000.
The years of credited service for each Named Executive Officer who
participates in the Pension Plan are as follows.
Name Years
----------------------- ---------
David L. Lokken 10 years
Brian S. Aune 7 years
Brian S. Carr 6 years
Michael A. Riley 9 years
-6-
Report on Repricing of Options/SARs
In October 1998, the Compensation Committee granted stock options to many
members of middle management. The Compensation Committee felt it would be
appropriate to reprice certain options of the named Executive Officers in order
to be consistent with the options granted to middle management. The repriced
options were issued pursuant to exemptions available under Section 3(9) of the
Securities Act of 1933, as amended. The strike price for these options was
established at the $3.56 closing price of the Company's common stock on the date
issued.
TEN-YEAR OPTION/SAR REPRICINGS
Number of Length of
securities Market price Exercise original option
underlying of stock at price at remaining at
options/SARs time of time of New date of
repriced or repricing or repricing or exercise repricing or
Name Date amended (#) amendment amendment price amendment
- ------------------- ---------------- ------------ ------------ ------------ -------- ---------------
David L. Lokken October 28, 1999 72,105 $3.56 $8.00 $3.56 47 months
Brian S. Aune October 28, 1999 14,420 $3.56 $8.00 $3.56 47 months
Brian S. Carr October 28, 1999 14,420 $3.56 $8.00 $3.56 47 months
Michael A. Riley October 28, 1999 14,420 $3.56 $8.00 $3.56 47 months
Compensation Committee Interlocks and Insider Participation
Messrs. McIntyre, Hartman and Toomey served on the Compensation Committee of
the Company's Board of Directors during 1998. Mr. McIntyre serves as the
Chairman of the committee. During 1998, Mr. Hartman also served as Chairman of
the Board. In January 1999, Mr. Lubeck replaced Mr. Hartman on the committee.
Mr. McIntyre, who is a Director of the Company and also a member of its Audit
Committee, is a member of the firm of Law Offices of Joel McIntyre. During
1998, the Company paid Mr. McIntyre's firm approximately $268 for legal services
rendered.
Compensation Committee Report
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is a standing committee
comprised of three outside directors. One of the Compensation Committee's
functions is to recommend to the Board of Directors base salary, incentive
compensation and stock option awards for the executive officers of the Company.
Each of the principal executive officers of the Company is presently employed
pursuant to a written Employment Agreement. The Employment Agreement with Mr.
Lokken provides for a term ending on October 31, 2001. Each Employment Agreement
provides for the payment of a base salary and participation by the executive
officer in the Company's Management Incentive Compensation Plan pursuant to a
Management Incentive Compensation Agreement executed by the Company and the
executive officer. Stock option awards are made pursuant to the Company's 1997
Stock Option Plan. No member of the Compensation Committee is eligible to
participate in any of the plans or programs which it administers.
Compensation Philosophy. The Compensation Committee's primary objective is to
craft a compensation package for the Company's executive officers that aligns
the interest of management with the long-term interests of the Company's
shareholders. This is accomplished by tying major portions of executive
compensation to the achievement of both individual and Company performance
objectives which are directed at enhancing shareholder value. A second goal of
the Compensation Committee is to implement a compensation philosophy that will
both attract and retain the experienced and talented individuals who are
essential to the Company's long-term success. The Committee regularly reviews
publicly available information regarding compensation programs and philosophies
of the Company's competitors, and other entities of a comparable size with the
Company, with the objective of ensuring that the Company's compensation
philosophy and programs remain competitive and appropriate.
-7-
Each executive officer's compensation package is comprised of three principal
components: (i) base salary; (ii) annual incentive compensation; and (iii) stock
options.
Base Salary. The current base salary of each of the Company's principal
executive officers is set forth in the Employment Agreement between the Company
and such executive officer. As a general principle, the Compensation Committee
will attempt to establish and maintain base salaries within the range of
salaries for companies of a size and engaged in a business comparable to the
Company. Among the specific factors which are considered in establishing base
salary levels for the Company's principal executive officers are (i) the
executive officer`s recent and long-term performance; (ii) identifiable
contribution by the executive officer to the Company's achievement of its
performance objectives; (iii) level of responsibility; and (iv) years of service
with the Company. Performance goals for each principal executive officer are
established prior to the beginning of each fiscal year. These goals are
established by the Chief Executive Officer with respect to other officers and by
the Compensation Committee with respect to the Chief Executive Officer.
Management Incentive Compensation Plan. Certain employees of the Company
(including the Company's principal executive officers) are participants in the
Company's Management Incentive Compensation Plan (the "Plan") pursuant to which
they are entitled to receive performance based bonuses. Under the Plan, bonuses
are based on the Company's actual percentage achievement (versus forecast) with
respect to revenue, net income and return on net assets (calculated based upon
operating income and average net assets). Under the Plan, the President and
Vice Presidents have the potential of receiving bonuses equal to forty percent
(40%) and thirty percent (30%) of their base salaries for the fiscal year,
respectively, which can be doubled if the Company achieves between one hundred
percent (100%) and one hundred twenty percent (120%) of forecast net income and
at least one hundred percent (100%) of forecast revenues and return on net
assets.
Stock Options. Stock options are granted to principal executive officers
under the Company's 1997 Stock Option Plan. The purpose of the 1997 Plan is to
encourage and facilitate stock ownership by participants and to provide
incentives to participants to remain in the employ of the Company and contribute
to enhancing shareholder value over the long-term. The 1997 Plan is
administered by the Board of Directors which has the discretion to select
optionees and the terms and conditions of each option, subject to the provisions
of the 1997 Plan. Options granted under the 1997 Plan may be either incentive
stock options or nonqualified options.
The foregoing report on executive compensation is provided by the following
members of the Compensation Committee of the Board of Directors:
Joel F. McIntyre, Chairman of the Compensation Committee
Scott W. Hartman
Daniel C. Toomey, Jr.
-8-
Performance Measurement Comparison
The chart below depicts the cumulative total return to the Company's
shareholders of a hypothetical $100 investment in the Company's common stock
from January 29, 1998, the date of the Company's initial public offering,
through December 31, 1998. Hypothetical investments of $100 in the NASDAQ
Composite Index and the Standard and Poor's Small Cap Aerospace/Defense Index
are shown for comparison.
The Company does not believe that an appropriate industry index or peer group
exists that would provide a meaningful comparison to the Company's common stock
performance. There is no other public company in the United States of a similar
size that provides similar services to the aerospace industry. All of the
Company's principal competitors are either privately held, foreign based,
significantly different in size or services offered, or divisions of much larger
companies.
This chart does not reflect the Company's forecast of future financial or
market performance.
GRAPH APPEARS HERE
1/29/98 12/31/98
- -----------------------------------------------------------------------------------------------
Hawker Pacific Aerospace $ 100 $ 43.75
S&P Small Cap Aerospace/Defense $ 100 $ 110.07
NASDAQ Composite $ 100 $ 135.90
- -----------------------------------------------------------------------------------------------
-9-
ITEM 12 -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Company's
common stock as of April 20, 1999, by: (i) each person known by the Company to
beneficially own 5% or more of the outstanding shares of common stock; (ii) each
director of the Company; (iii) each Named Executive Officer of the Company; and
(iv) all directors and executive officers of the Company as a group.
Number of Shares of Percentage of
Name and Address(1) Common Stock (2) Outstanding (2)
- -------------------------------------------------- -------------------- ---------------
Melanie L. Bastian................................ 961,252 15.4%
John G. Makoff.................................... 444,943 7.1%
Daniel J. Lubeck.................................. 330,120 5.3%
Scott W. Hartman.................................. 330,120 5.3%
David L. Lokken (3)............................... 250,244 4.0%
Brian S. Aune (4)................................. 50,336 *
Brian S. Carr (5)................................. 51,778 *
Michael A. Riley (5).............................. 51,778 *
Mellon C. Baird................................... 6,954 *
Joel F. McIntyre (6).............................. 6,954 *
Daniel C. Toomey, Jr.............................. 6,954 *
All directors and executive officers as a group
(12 persons).................................... 1,537,401 24.6%
- -------------
* Less than 1%
(1) The address for all persons is c/o the Company at 11240 Sherman Way, Sun
Valley, California 91352-4942.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to the securities. Shares of common stock
subject to options currently exercisable, or exercisable within 60 days of
March 31, 1999, are deemed outstanding for computing the percentage of any
other person. Except as indicated by footnote and subject to community
property laws where applicable, the persons named in the table have sole
voting and investment power with respect to all shares of common stock
shown as beneficially owned by them.
(3) Includes 106,714 shares issuable upon exercise of vested options to
purchase common stock, and 143,530 shares held by the David L. Lokken and
Susan M. Lokken Revocable Trust Dated 3-20-98, of which Mr. Lokken is a co-
trustee.
(4) Includes 21,630 shares issuable upon exercise of vested options to purchase
common stock.
(5) Includes 23,072 shares issuable upon exercise of vested options to purchase
common stock.
(6) Consists of 2,000 shares held by Paul, Hastings, Janofsky & Walker for the
benefit of Joel F. McIntyre as a self-directed retirement account.
ITEM 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Commencing in January, 1999, the Company began paying monthly management fees
of $12,500 to Unique pursuant to a November, 1997, management services
agreement. The management services agreement will terminate when the Company
completes an additional underwritten public offering in which selling
shareholders offer 25% or more of the aggregate amount of securities available
in such offering.
The Company has a $2.5 million long-term loan balance with Unique. Interest
paid on this loan during 1998 amounted to $601,000. Unique also received
$40,510 in 1998 for reimbursed expenses related to services performed by Unique,
and its principals who serve as directors of the Company.
During 1998 the Company paid Mr. McIntyre's law firm approximately $268 for
legal services rendered.
-10-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Annual Report to
be signed on its behalf by the undersigned, thereunto duly authorized.
HAWKER PACIFIC AEROSPACE
By /s/ Philip M. Panzera
-------------------------
Philip M. Panzera
Vice President & Chief Financial Officer
Date: April 29, 1999
-11-