1
FORM 11-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ____________ to ______________
Commission File Number 1-2380
A. Full title of the Plan and the address of the Plan, if different from that
of the issuer named below:
Aviall, Inc. Employee Savings Plan
B. Name of the issuer of the securities held pursuant to the Plan and the
address of its principal executive office:
Aviall, Inc.
2055 Diplomat Drive
Dallas, Texas 75234-8989
Page 1 of 21
The Exhibit Index appears on Page 20.
2
REQUIRED INFORMATION
The financial statements listed in the accompanying index on page 3 are filed
as part of this Form 11-K.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Benefits Administration Committee of the Plan has duly caused this annual
report to be signed on its behalf by the undersigned hereunto duly authorized.
AVIALL, INC. EMPLOYEE SAVINGS PLAN
By: /s/ Jeffrey J. Murphy
---------------------------------------------
Jeffrey J. Murphy
Chairman, Aviall, Inc. Employee Savings Plan
By: /s/ Jacqueline K. Collier
---------------------------------------------
Jacqueline K. Collier
Vice President and Controller, Aviall, Inc.
Date: June 28, 1996
2
3
AVIALL, INC.
EMPLOYEE SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
- --------------------------------------------------------------------------------
Page
----
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Financial Statements:
Statement of Net Assets Available for Plan Benefits with Fund Information
as of December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Statement of Net Assets Available for Plan Benefits with Fund Information
as of December 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Statement of Changes in Net Assets Available for Plan Benefits with
Fund Information for the Year Ended December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Statement of Changes in Net Assets Available for Plan Benefits with
Fund Information for the Year Ended December 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Supplemental Schedules:
Item 27a - Schedule of Assets Held for Investment Purposes
as of December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Item 27d - Schedule of Reportable Transactions for the Year Ended
December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
All other schedules required by Section 2520.103-10 of the Department of Labor
Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974 have been omitted because they are not
applicable, are not required, or the information required to be set forth
therein is included in the financial statements or the accompanying notes.
3
4
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of
the Aviall, Inc. Employee Savings Plan
In our opinion, the financial statements listed in the accompanying index
present fairly, in all material respects, the net assets available for plan
benefits of the Aviall, Inc. Employee Savings Plan at December 31, 1995 and
December 31, 1994 and the changes in net assets available for plan benefits for
each of the years ended December 31, 1995 and December 31, 1994, in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the Plan's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information included in
the supplemental schedules is presented for purposes of additional analysis and
is not a required part of the basic financial statements but is additional
information required by ERISA. The Fund Information in the statement of net
assets available for plan benefits and the statement of changes in net assets
available for plan benefits is presented for purposes of additional analysis
rather than to present the net assets available for plan benefits and the
changes in net assets available for plan benefits of each fund. The
supplemental schedules and the Fund Information have been subjected to the
auditing procedures applied in the audits of the basic financial statements
and, in our opinion, are fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
PRICE WATERHOUSE LLP
Dallas, Texas
June 25, 1996
4
5
AVIALL, INC.
EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
Fund A Fund B Fund D Fund E
------------ ---------- ---------- ----------
ASSETS
Investments:
Guaranteed investment contracts $ - $ - $ - $ -
Pooled investment funds - 12,104,974 6,899,364 5,714,552
Common stock of participating employer 1,831,525 - - -
Participant loans receivable - - - -
Interest rates:
High-11.5%/Low-6.0%
------------ ---------- ---------- ----------
Total investments 1,831,525 12,104,974 6,899,364 5,714,552
Contributions receivable and other 48 74 271 93
------------ ---------- ---------- ----------
Total assets $ 1,831,573 $12,105,048 $6,899,635 $5,714,645
------------ ---------- ---------- ----------
LIABILITIES
Other liabilities $ 433 $ 7,104 $ 7,491 $ 3,372
------------ ---------- ---------- ----------
Total liabilities 433 7,104 7,491 3,372
------------ ---------- ---------- ----------
Net assets available for Plan benefits $ 1,831,140 $12,097,944 $6,892,144 $5,711,273
============ ========== ========== ==========
Fund F Loan Fund Total
------------ ------------- --------------
ASSETS
Investments:
Guaranteed investment contracts $ 7,516,038 $ - $ 7,516,038
Pooled investment funds 1,189,571 - 25,908,461
Common stock of participating employer - - 1,831,525
Participant loans receivable - 2,512,905 2,512,905
Interest rates:
High-11.5%/Low-6.0%
------------ ------------- --------------
Total investments 8,705,609 2,512,905 37,768,929
Contributions receivable and other 12 - 498
------------ ------------- --------------
Total assets $ 8,705,621 $ 2,512,905 $ 37,769,427
------------ ------------- --------------
LIABILITIES
Other liabilities $ 3,584 $ - $ 21,984
------------ ------------- --------------
Total liabilities 3,584 0 21,984
------------ ------------- --------------
Net assets available for Plan benefits $ 8,702,037 $ 2,512,905 $ 37,747,443
============ ============= ==============
The accompanying notes are an integral part of these financial statements.
5
6
AVIALL, INC.
EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
DECEMBER 31, 1994
- --------------------------------------------------------------------------------
Fund A Fund B Fund C Fund D
------------ ------------ ----------- -------------
ASSETS
Investments:
Guaranteed investment contracts $ - $ - $ - $ -
Pooled investment funds - 10,102,727 - 5,689,791
Common stock of participating employer 1,225,923 - - -
Other common stock - - 605,501 -
Participant loans receivable - - - -
Interest rates:
High-11.5%/Low-6.0%
------------ ------------ ----------- -------------
Total investments 1,225,923 10,102,727 605,501 5,689,791
Contributions receivable and other 10,248 48,318 - 31,764
------------ ------------ ----------- -------------
Total assets $ 1,236,171 $ 10,151,045 $ 605,501 $ 5,721,555
------------ ------------ ----------- -------------
LIABILITIES
Other liabilities $ - $ - $ - $ -
Transfer payable to Aviation Sales Plan 2,195 351,264 10,365 242,808
------------ ------------ ----------- -------------
Total liabilities 2,195 351,264 10,365 242,808
------------ ------------ ----------- -------------
Net assets available for Plan benefits $ 1,233,976 $ 9,799,781 $ 595,136 $ 5,478,747
============ ============ =========== =============
Fund E Fund F Loan Fund Total
------------- ------------ ------------- -------------
ASSETS
Investments:
Guaranteed investment contracts $ - $ 10,365,301 $ - $ 10,365,301
Pooled investment funds 6,331,372 391,515 - 22,515,405
Common stock of participating employer - - - 1,225,923
Other common stock - - - 605,501
Participant loans receivable - - 2,246,881 2,246,881
Interest rates:
High-11.5%/Low-6.0%
------------- ------------ ------------- -------------
Total investments 6,331,372 10,756,816 2,246,881 36,959,011
Contributions receivable and other 42,898 19,328 - 152,556
------------- ------------ ------------- -------------
Total assets $ 6,374,270 $ 10,776,144 $ 2,246,881 $ 37,111,567
------------- ------------ ------------- -------------
LIABILITIES
Other liabilities $ - $ 10,012 $ - $ 10,012
Transfer payable to Aviation Sales Plan 201,462 737,537 66,860 1,612,491
------------- ------------ ------------- -------------
Total liabilities 201,462 747,549 66,860 1,622,503
------------- ------------ ------------- -------------
Net assets available for Plan benefits $ 6,172,808 $ 10,028,595 $ 2,180,021 $ 35,489,064
============= ============ ============= =============
The accompanying notes are an integral part of these financial statements.
6
7
AVIALL, INC.
EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND
INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1995
- --------------------------------------------------------------------------------
Fund A Fund B Fund C Fund D
------------- ------------ ------------ -------------
Beginning balance $ 1,233,976 $ 9,799,781 $ 595,136 $ 5,478,747
Investment income:
Dividends 15,896 639,981 - 452,983
Interest - - - -
------------- ------------ ------------ -------------
15,896 639,981 0 452,983
Net appreciation (depreciation)
in fair value of investments 361,919 2,880,638 61,970 1,451,464
Contributions:
Employer contributions 36,387 156,141 - 107,237
Employee contributions 297,684 1,384,788 - 932,538
------------- ------------ ------------ -------------
334,071 1,540,929 0 1,039,775
Participant loan repayments 56,858 256,339 - 217,300
Interfund transfers 119,594 347,095 (428,286) 219,964
------------- ------------ ------------ -------------
Total additions 888,338 5,664,982 (366,316) 3,381,486
Distributions and other (67,683) (1,130,592) (85,432) (568,765)
Plan fees and expenses (1,266) (10,796) (278) (6,306)
Loans to participants (81,771) (541,993) (11,156) (317,999)
------------- ------------ ------------ -------------
Total deductions (150,720) (1,683,381) (96,866) (893,070)
Net increase (decrease) in
Plan assets 737,618 3,981,601 (463,182) 2,488,416
Transfer to Dallas Airmotive Plan (140,454) (1,683,438) (131,954) (1,075,019)
------------- ------------ ------------ -------------
Net assets at end of period $ 1,831,140 $ 12,097,944 $ 0 $ 6,892,144
============= ============ ============ =============
Fund E Fund F Loan Fund Total
-------------- ------------- -------------- -------------
Beginning balance $ 6,172,808 $ 10,028,595 $ 2,180,021 $ 35,489,064
Investment income:
Dividends 312,402 606,430 - 2,027,692
Interest - - 137,100 137,100
-------------- ------------- -------------- -------------
312,402 606,430 137,100 2,164,792
Net appreciation (depreciation)
in fair value of investments 472,208 - - 5,228,199
Contributions:
Employer contributions 131,671 119,281 - 550,717
Employee contributions 1,060,448 872,833 - 4,548,291
-------------- ------------- -------------- -------------
1,192,119 992,114 0 5,099,008
Participant loan repayments 191,221 187,178 (908,896) 0
Interfund transfers (680,092) 421,725 - 0
-------------- ------------- -------------- -------------
Total additions 1,487,858 2,207,447 (771,796) 12,491,999
Distributions and other (561,432) (1,567,199) (190,542) (4,171,645)
Plan fees and expenses (6,482) (122) - (25,250)
Loans to participants (340,187) (439,350) 1,732,456 0
-------------- ------------- -------------- -------------
Total deductions (908,101) (2,006,671) 1,541,914 (4,196,895)
Net increase (decrease) in
Plan assets 579,757 200,776 770,118 8,295,104
Transfer to Dallas Airmotive Plan (1,041,292) (1,527,334) (437,234) (6,036,725)
-------------- ------------- -------------- -------------
Net assets at end of period $ 5,711,273 $ 8,702,037 $ 2,512,905 $ 37,747,443
============== ============= ============== =============
The accompanying notes are an integral part of these financial statements.
7
8
AVIALL, INC.
EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND
INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1994
- --------------------------------------------------------------------------------
Fund A Fund B Fund C Fund D
------------- ------------- -------------- -------------
Beginning balance $ 286,341 $ 4,884,485 $ 1,308,011 $ -
Investment income:
Dividends 27,859 425,179 - 278,926
Interest - - - -
------------- ------------- -------------- -------------
27,859 425,179 0 278,926
Net appreciation (depreciation)
in fair value of investments (669,494) 49,529 (150,463) (142,111)
Contributions:
Employer contributions 46,729 160,160 - 54,358
Employee contributions 389,111 1,709,458 - 1,007,408
------------- ------------- -------------- -------------
435,840 1,869,618 0 1,061,766
Participant loan repayments 56,096 198,111 833 127,772
Interfund transfers 1,199,845 3,471,776 (474,344) 4,780,873
------------- ------------- -------------- -------------
Total additions 1,050,146 6,014,213 (623,974) 6,107,226
Distributions and other (40,451) (405,977) (50,554) (203,262)
Plan fees and expenses (2,792) (7,551) (1,013) (525)
Loans to participants (57,073) (334,125) (26,969) (181,884)
------------- ------------- -------------- -------------
Total deductions (100,316) (747,653) (78,536) (385,671)
Net increase (decrease) in
Plan assets 949,830 5,266,560 (702,510) 5,721,555
Transfer to Aviation Sales Plan (2,195) (351,264) (10,365) (242,808)
------------- ------------- -------------- -------------
Net assets at end of period $ 1,233,976 $ 9,799,781 $ 595,136 $ 5,478,747
============= ============= ============== =============
Fund E Fund F Loan Fund Subtotal
-------------- ------------ ------------- --------------
Beginning balance $ - $ - $ 1,795,429 $ 8,274,266
Investment income:
Dividends 205,857 - - 937,821
Interest - 699,876 89,803 789,679
-------------- ------------ ------------- --------------
205,857 699,876 89,803 1,727,500
Net appreciation (depreciation)
in fair value of investments (64,093) - - (976,632)
Contributions:
Employer contributions 64,307 39,386 - 364,940
Employee contributions 1,227,686 875,013 - 5,208,676
-------------- ------------ ------------- --------------
1,291,993 914,399 0 5,573,616
Participant loan repayments 138,433 155,569 (859,242) (182,428)
Interfund transfers 5,081,707 10,031,962 - 24,091,819
-------------- ------------ ------------- --------------
Total additions 6,653,897 11,801,806 (769,439) 30,233,875
Distributions and other (81,629) (717,541) (72,912) (1,572,326)
Plan fees and expenses (565) (11,198) - (23,644)
Loans to participants (197,433) (306,935) 1,293,803 189,384
-------------- ------------ ------------- --------------
Total deductions (279,627) (1,035,674) 1,220,891 (1,406,586)
Net increase (decrease) in
Plan assets 6,374,270 10,766,132 451,452 28,827,289
Transfer to Aviation Sales Plan (201,462) (737,537) (66,860) (1,612,491)
-------------- ------------ ------------- --------------
Net assets at end of period $ 6,172,808 $ 10,028,595 $ 2,180,021 $ 35,489,064
============== ============ ============= ==============
The accompanying notes are an integral part of these financial statements.
8
9
AVIALL, INC.
EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND
INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
Subtotal Fund G Fund H Fund I
--------------- -------------- ------------- --------------
Beginning balance $ 8,274,266 $ 13,064,237 $ 980,782 $ 1,712,215
Investment income:
Dividends 937,821 - - 7,737
Interest 789,679 255,419 8,130 -
--------------- -------------- ------------- --------------
1,727,500 255,419 8,130 7,737
Net appreciation (depreciation)
in fair value of investments (976,632) - - (54,316)
Contributions:
Employer contributions 364,940 183,647 18,827 26,986
Employee contributions 5,208,676 528,550 46,340 312,533
--------------- -------------- ------------- --------------
5,573,616 712,197 65,167 339,519
Participant loan repayments (182,428) 105,339 9,241 14,994
Interfund transfers 24,091,819 (13,710,362) (1,034,435) (2,002,277)
--------------- -------------- ------------- --------------
Total additions 30,233,875 (12,637,407) (951,897) (1,694,343)
Distributions and other (1,572,326) (310,793) (14,105) (6,199)
Plan fees and expenses (23,644) (14,551) (3,006) (3,788)
Loans to participants 189,384 (101,486) (11,774) (7,885)
--------------- -------------- ------------- --------------
Total deductions (1,406,586) (426,830) (28,885) (17,872)
Net increase (decrease) in Plan assets 28,827,289 (13,064,237) (980,782) (1,712,215)
Transfer to Aviation Sales Plan (1,612,491) - - -
--------------- -------------- ------------- --------------
Net assets at end of period $ 35,489,064 $ 0 $ 0 $ 0
=============== ============== ============= ==============
Fund J Fund K Total
-------------- --------------- ---------------
Beginning balance $ 4,321,963 $ 2,858,241 $ 31,211,704
Investment income:
Dividends 2,209 1,963 949,730
Interest - - 1,053,228
-------------- --------------- ---------------
2,209 1,963 2,002,958
Net appreciation (depreciation)
in fair value of investments (54,479) (25,676) (1,111,103)
Contributions:
Employer contributions 59,703 41,128 695,231
Employee contributions 181,309 111,554 6,388,962
-------------- --------------- ---------------
241,012 152,682 7,084,193
Participant loan repayments 32,306 20,548 0
Interfund transfers (4,379,680) (2,965,065) 0
-------------- --------------- ---------------
Total additions (4,158,632) (2,815,548) 7,976,048
Distributions and other (108,596) (19,618) (2,031,637)
Plan fees and expenses (5,485) (4,086) (54,560)
Loans to participants (49,250) (18,989) 0
-------------- --------------- ---------------
Total deductions (163,331) (42,693) (2,086,197)
Net increase (decrease) in Plan assets (4,321,963) (2,858,241) 5,889,851
Transfer to Aviation Sales Plan - - (1,612,491)
-------------- --------------- ---------------
Net assets at end of period $ 0 $ 0 $ 35,489,064
============== =============== ===============
The accompanying notes are an integral part of these financial statements.
9
10
AVIALL, INC.
EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
1. DESCRIPTION OF PLAN
The following description of the Aviall, Inc. Employee Savings Plan (the
"Plan") is provided for general information purposes only. Participants
should refer to the Plan agreement for more complete information.
GENERAL
The Plan was established on December 7, 1993 in accordance with and subject
to the provisions of the Employee Retirement Income Security Act of 1974
("ERISA"). The Plan was created due to the spin-off by Ryder System, Inc.
("Ryder") of its aviation segment to form a new company, Aviall, Inc. (the
"Company") as of December 7, 1993. All participants of the aviation
segment in the Ryder Employee Savings Plan were automatically enrolled in
the new Plan. The participants' investment balances were transferred to
the new Plan at its inception.
The Plan is a defined contribution plan and, as such, is subject to some,
but not all, of the provisions of ERISA. It is excluded from coverage
under Title IV of ERISA, which generally provides for guaranty and
insurance of retirement benefits, and it is not subject to the funding
requirements of Title I of ERISA. The Plan is, however, subject to those
provisions of Title I and II of ERISA which, among other things, require
that each participant be furnished with an annual financial report and a
comprehensive description of the participants' rights under the Plan, set
minimum standards of responsibility applicable to fiduciaries of the Plan,
and establish minimum standards for participation and vesting.
Participation in the Plan is voluntary. However, to participate in the
Plan, an employee must meet certain eligibility requirements related to
employment date, age and service hours. In general, new employees of the
Company are eligible to participate in the Plan; however, any employee who
is in a unit of employees represented by a collective bargaining agent is
excluded from participation in the Plan unless the unit has negotiated
coverage under the Plan.
PLAN INVESTMENT
Effective April 1, 1994, Putnam Investments became the Plan trustee and
custodian of Plan assets. Putnam Investments maintains Plan assets in
separate investment funds. Participants may elect to contribute to, or
transfer among, any of the funds. Earnings are allocated based on number
of shares attributed to participants' accounts. The Plan's previous
trustee, Bankers Trust Company, allocated earnings monthly based on units
of investment.
Investment Fund A ("Fund A") - Company Stock Fund: Fund A consists of
Aviall, Inc. common stock, which is purchased on a regular and continuous
basis on the open market. All dividends, including dividends from the
Ryder Stock Fund (Fund C), are automatically reinvested in the Aviall
common stock.
10
11
AVIALL, INC.
EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
Investment Fund B ("Fund B") - Putnam Voyager Fund: Fund B consists
primarily of common or capital stock, though it may invest in other types
of securities, including convertible bonds, convertible preferred stock,
warrants, preferred stock, or debt securities.
Investment Fund C ("Fund C") - Ryder Stock Fund: Fund C was invested in
Ryder System, Inc. common stock. This fund's balance was transferred from
the Ryder Employee Savings Plan. No contributions have been made to this
fund and any balances herein not transferred to other funds prior to
December 31, 1995 were reinvested in Fund A, Company Stock Fund. Since
Plan inception, all dividends have been reinvested in Fund A.
Investment Fund D ("Fund D") - The Putnam Fund for Growth and Income:
Fund D consists primarily of investments in attractively priced stocks that
offer long-term growth potential while also providing income. This fund
was created in 1994 as a result of the change in trustee.
Investment Fund E ("Fund E") - Putnam Global Growth Fund: Fund E
consists primarily of investments in the Pacific Rim, across Europe, within
the Americas and elsewhere in the world to pursue a wide range of growth
potential. This fund was created in 1994 as a result of the change in
trustee.
Investment Fund F ("Fund F") - Stable Value Fund: Fund F consists of
investments in high-quality annuity (or similar) investment contracts
issued by insurance companies or banks. This fund was created in 1994 as a
result of the change in trustee.
Investment Fund G ("Fund G") - Guaranteed Investment Contracts: Fund G
consists of funding accounts established by guaranteed investment contracts
with various insurance companies. Participants' accounts are credited with
interest based on a pooling of the returns of the various funding accounts.
Funding accounts generally continue for a period of two to five years after
their inception. All guaranteed investment contracts include benefit
responsive terms. Such terms provide a guarantee by the issuer to pay
principal plus accrued interest in response to benefit related requests for
payment. This fund was liquidated in 1994 in connection with the change in
trustee.
Investment Fund H ("Fund H") - Short-Term Investment Fund: Fund H is a
temporary short-term investment account established with Bankers Trust
Company, which primarily invests in various income-producing short-term
investments and accrues interest daily at the federal fund rate. This fund
was liquidated in 1994 in connection with the change in trustee.
Investment Fund I ("Fund I") - Conservative Growth Fund: Fund I may
normally be invested in a variety of common, preferred, or capital stocks,
but may include investments in bonds or securities convertible into common
or capital stocks, similar types of equity investments and bonds. Since
Plan inception, this fund has been invested solely in shares of the Lord
Abbett Affiliated Fund. This fund was liquidated in 1994 in connection
with the change in trustee.
Investment Fund J ("Fund J") - Capital Appreciation Fund: Fund J consists
of securities issued by U.S. based companies that are selling below book
value. Up to 50% of the fund's portfolio may consist of securities of
companies involved in prospective mergers, consolidations, liquidations,
and
11
12
AVIALL, INC.
EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
reorganizations. The fund may also engage in covered call option
writing. The primary objective of the fund is capital appreciation and
not necessarily the attainment of a balanced investment program. Since
Plan inception, this fund has been invested solely in shares of the Mutual
Series Fund, Inc., Qualified Income Fund. This fund was liquidated in 1994
in connection with the change in trustee.
Investment Fund K ("Fund K") - Global Fund: Fund K consists of investments
in all types of securities, including stocks and debt securities of
companies and governments of all nations. The fund may also invest in
other global funds. The fund's investment objective is long-term capital
growth. Since Plan inception, this fund has been invested solely in shares
of the Templeton World Fund. This fund was liquidated in 1994 in
connection with the change in trustee.
CONTRIBUTIONS
The Plan was established in accordance with Sections 401(a) and 401(k) of
the Internal Revenue Code. The Plan entitles non-highly compensated
employees to defer up to 15% of their pre-tax compensation. Highly
compensated employees as defined under IRC Section 414(q) may defer pre-tax
compensation only up to the percentage allowed pursuant to the
non-discrimination tests. The maximum employee contribution for 1995 and
1994 is $9,240 and is limited by law. The Company matches 50% of the
employee's annual contribution up to $400 per person based on certain
requirements. However, pursuant to certain union contracts, union
employees are limited to a maximum matching contribution of $200 annually
for Carter Field union employees and $300 annually for Love Field union
employees.
Participants are immediately 100% vested in the earnings of their
individual contributions to the Plan. Participants vest 25% per year in
Company contributions and the earnings attributable to such contributions
beginning with their second year of service, and are 100% vested in their
fifth year of service. Upon a distribution to a participant, related,
non-vested Company contributions are forfeited and are used to offset
future Company contributions. At December 31, 1995, no forfeited amounts
remained unallocated to participant accounts.
All contributions to the Plan are deposited with the trustee. At the
employee's option, contributions are directed into separate investment
funds, as discussed above.
Effective January 1, 1996, the Plan was amended to allow employees to begin
making elective contributions to the Plan on the later of their date of
hire or January 1, 1996. Employees must still be 21 and have 1 year of
qualified service before receiving employer matching contributions.
ROLLOVERS
Distributions from another qualified plan can be transferred into the Plan.
In 1995 and 1994, rollover accounts in the amount of $79,766 and $108,821,
respectively, were transferred into the Plan and are included in employee
contributions on the statement of changes in net assets available for Plan
benefits.
12
13
AVIALL, INC.
EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
PAYMENT OF BENEFITS
In the event of a participant's termination of employment, disability or
death, the participant or beneficiary shall receive an amount equal to the
vested value of their account in a lump-sum payment. Upon disability or
death, a participant's Plan account balance immediately becomes fully
vested. The payment shall be made within 90 days of the distribution value
date for amounts less than $3,500. For amounts greater than $3,500,
consent of the participant or beneficiary is required.
Upon a participant's attainment of retirement age, a participant's Plan
account balance immediately becomes fully vested and nonforfeitable.
Retirement age is defined as the earlier of the date on which a participant
attains age 65 or the date on which a participant has both attained age 55
and completed at least 10 years of service. A lump-sum payment of the
participant's account balance shall be made within 90 days of the
distribution value date.
The Plan allows hardship withdrawals for the following reasons:
(1) Payment of medical expenses;
(2) Purchase of a principal residence;
(3) Payment of tuition of post secondary education;
(4) Payments to prevent the eviction or foreclosure of principal
residence;
(5) Payment of income taxes;
(6) Payments for custodial rights expenses;
(7) Payments for expenses incurred by natural disaster;
(8) Payment of funeral expenses;
(9) Loss of income resulting from bad health or disability; and
(10) Any other reason deemed a financial hardship by the IRS.
Certain restrictions are placed on participants taking a withdrawal from
the Plan. Such restrictions include:
(1) The amount withdrawn may not exceed the amount of immediate
financial need.
(2) The participant must obtain all non-taxable loans available under
the Plan prior to applying for hardship withdrawal.
(3) The participant must limit tax-deferred and other elective
contributions under the Plan for the next taxable year to the
applicable limit under section 402(g) of the Internal Revenue
Code, minus the employee's elective contributions for the year of
the hardship distribution.
(4) The participant may not make tax-deferred contributions and other
elective or voluntary contributions to the Plan for at least 12
months after receipt of the hardship withdrawal.
There were no distributions or withdrawals which had been approved but
remained unpaid as of December 31, 1995 and 1994.
13
14
AVIALL, INC.
EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
As of January 1, 1995, the Plan's withdrawal rules were amended to conform
to the Internal Revenue Service safe harbor provisions.
LOANS
After participating in the Plan, or a combination of the Plan and another
employer's qualified Plan for a minimum of 24 months, a participant may
borrow from their vested account balance. Loans are limited to 50% of the
vested account balance, not to exceed $50,000 nor less than $1,000. In
general, loans must be repaid within five years through payroll deductions,
unless utilized for a principal residence, in which case the Retirement
Committee of the Plan determines the term. Loans accrue interest at a rate
which is comparable to that of most major lending institutions. All
principal and interest repayments are allocated to the Plan's investment
funds based on the participant's investment elections at the time of
repayment. Loans which are granted and repaid in compliance with the Plan
provisions will not be considered distributions to the participant for tax
purposes.
Effective January 1, 1996, the Plan's loan provisions were amended to allow
participants to have no more than one loan outstanding at a given time.
Participants with more than one loan outstanding prior to January 1, 1996
are not required to consolidate existing loans.
PLAN TERMINATION
The Company expects to continue the Plan indefinitely but the Company
reserves the right to terminate the Plan at any time and for any reason.
Upon termination of the Plan, all benefits shall be nonforfeitable and
fully vested, and each participant shall be entitled to the entire amount
credited to his account. Payments shall be made by the trustee in a
nondiscriminatory manner as directed by the Retirement Committee.
TRANSFER OF PLAN ASSETS
In March 1995, the Plan sponsor closed the sale of its business aviation
engine overhaul and aircraft and terminal services operations. Effective
as of the closing date, all employees of this business unit were terminated
and their active participation and benefit accrual under the Plan ceased.
The Plan assets relating to these employees totaled $6,036,725 and were
transferred to the purchaser's qualified 401(k) plan in May 1995.
In November 1994, the Plan sponsor closed the sale of its aircraft parts
redistribution operation. Effective as of the closing date, all employees
of this business unit were terminated and their active participation and
benefit accrual under the Plan ceased. The Plan assets relating to these
employees totaled $1,612,491. This amount was transferred in 1995 and is
reflected in the Plan's financial statements at December 31, 1994 as a
payable to the purchaser's qualified 401(k) plan.
14
15
AVIALL, INC.
EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan are prepared on the accrual basis of
accounting. Plan assets, except for guaranteed investment contracts and
participant loans receivable, are stated at current value as determined by
the Plan's trustee. Purchases and sales of securities are recorded on a
trade date basis. Cost is determined based on historical average cost.
PLAN FEES AND EXPENSES
All commissions, brokerage fees and expenses incident of the income or
assets of the trust and the purchase or sale of securities by the trustee
were paid with Plan assets. Trustee fees, basic recordkeeping fees and
administrative expenses were also paid with Plan assets. Certain
administrative services were performed by the Company at no cost to the
Plan.
PARTICIPANT LOANS RECEIVABLE
Participant loans receivable represent cash advances to participants of the
Plan.
INVESTMENT VALUATION
The trustee uses quoted market values to value all investments other than
Guaranteed Investment Contracts ("GICs") and participant loans receivable.
Due to the nature of GICs, no estimable market value is available;
therefore, these investments are valued at contract value. The trustee has
considered the credit quality of the issuer of guaranteed investment
contracts in determining the requirement for a potential valuation
allowance. No allowance has been provided at December 31, 1995 and 1994.
Participant loans receivable are valued at cost which approximates fair
value.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME
Gains and losses on securities transactions are recorded on a current value
basis. For purposes of reporting under ERISA, gains and losses on
investments sold are calculated as sales proceeds less current value of
such investments at the beginning of the Plan year or acquisition cost if
acquired during the Plan year. Unrealized gains and losses are calculated
as current value of investments at the end of the Plan year less current
value at the beginning of the Plan year or acquisition cost if acquired
during the Plan year.
15
16
AVIALL, INC.
EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
3. INVESTMENTS
Investments held by the Plan at December 31, 1995 and 1994 consisted of the
following:
1995 1994
-------------------------------- ------------------------------
Current Current
Cost Value Cost Value
----------- ----------- ----------- -----------
Guaranteed investment contracts $7,516,038 $7,516,038 $10,365,301 $10,365,301
Pooled investment funds 21,874,205 25,908,461 22,379,044 22,515,405
Common stock 1,937,498 1,831,525 2,493,481 1,831,424
Participant loans receivable 2,512,905 2,512,905 2,246,881 2,246,881
----------- ----------- ----------- -----------
$33,840,646 $37,768,929 $37,484,707 $36,959,011
=========== =========== =========== ===========
For the years ended December 31, 1995 and 1994, the fair value of the
Plan's investments appreciated by $5,228,199 and depreciated by $1,111,103,
respectively.
For the years ended December 31, 1995 and 1994, the average annual yield
earned on the guaranteed investment contracts was 6.91% and 7.33%,
respectively.
The fair value of individual investments representing 5 percent or more of
the Plan's net assets at December 31, 1995 was as follows:
Number of Current
Description of Investment Shares Value
------------------------- --------- -----------
The Putnam Fund for Growth and Income 426,150 $ 6,899,364
Putnam Global Growth Fund 572,027 $ 5,714,552
Putnam Voyager Fund 793,769 $12,104,974
4. TAX STATUS OF THE PLAN
Management believes that the Plan is designed and is operated in accordance
with the applicable requirements of the Internal Revenue Code (the "Code").
The trust established under the Plan to hold the Plan's assets is exempt
from taxation under Code section 501(a). The Plan received a favorable tax
determination letter dated September 1, 1995 from the Internal Revenue
Service, and the Plan sponsor believes that the Plan as amended continues
to qualify and operate as designed. Generally, contributions to a
qualified plan are deductible by the Company when made, earnings of the
trust are tax exempt and participants are not taxed on their benefits until
withdrawn from the Plan.
16
17
AVIALL, INC.
EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
Management is unaware of any material variations in the operation of the
Plan from the terms of the plan documents. Management believes the Plan is
qualified under the applicable sections of the Code and ERISA. The Plan
has complied with the fidelity bonding requirements of ERISA.
5. SUBSEQUENT EVENTS
In May 1996, the Plan sponsor closed the sale of its accessory services
repair operation. Effective as of the closing date, all employees of this
business unit were terminated and their active participation and benefit
accrual under the Plan ceased. The Plan assets relating to these
employees are estimated at $1.5 million and are expected to be transferred
to the purchaser's qualified 401(k) plan by July 1996.
In June 1996, the Plan sponsor closed the sale of its engine services
repair operations. Effective as of the closing date, all employees of this
business unit were terminated and their active participation and benefit
accrual under the Plan ceased. The Plan assets relating to these
employees are estimated at $18 million and are expected to be transferred
to the purchaser's qualified 401(k) plan by January 1997.
17
18
AVIALL, INC.
EMPLOYEE SAVINGS PLAN
ITEM 27a FORM 5500 - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1995
- -------------------------------------------------------------------------------
(c)
(a) (b) Description of Investment including (e)
Party in Identity of Issue, Borrower, Lessor Maturity Date, Rate of Interest, (d) Current
Interest or Similar Party Collateral, Par or Maturity Value Cost Value
-------- ---------------------------------------- --------------------------------------- ---------- -------------
Corporate Common Stocks:
* Aviall, Inc. 195,363 shares $1,937,498 $1,831,525
Mutual Funds:
* The Putnam Fund for Growth and Income 426,150 shares 5,844,633 6,899,364
* Putnam Global Growth Fund 572,027 shares 5,392,908 5,714,552
* Putnam Voyager Fund 793,769 shares 9,447,093 12,104,974
* Putnam Stable Value Fund 1,189,571 shares 1,189,571 1,189,571
* Participant Loans Interest rates range from 6.0% to 11.5% 2,512,905 2,512,905
Guaranteed Investment Contracts:
Allstate GAC #GA-5404A, 6.650%, due 07/01/97 469,043 469,043
Principal Mutual GAC #4-10090, 8.400%, due 6/30/96 1,167,026 1,167,026
Aetna Life Insurance GAC #LT-14162, 7.850%, due 12/31/97 1,529,095 1,529,095
Lincoln National Life GAC #GA-9630V1, 5.000%, due 6/30/98 726,047 726,047
Life of Virginia GAC #GS 2746, 6.820%, due 12/31/97 349,757 349,757
Royal MacCabees Life GAC #930178, 8.850%, due 6/30/96 348,232 348,232
Hartford Life GAC #9861, 9.000%, due 1/20/96 509,771 509,771
Protective Life GAC #GA 717-Cl, 6.910%, due 12/31/97 578,336 578,336
Provident Life GAC #627-05606, 6.350%, due 12/31/96 686,848 686,848
Continental Assurance GAC #GP12933, 5.170%, due 6/30/98 728,536 728,536
Life of Virginia GAC #GS 2752, 4.890%, due 12/31/97 423,347 423,347
----------- -----------
Total Assets Held for Investment $33,840,646 $37,768,929
=========== ===========
18
19
AVIALL, INC.
EMPLOYEE SAVINGS PLAN
ITEM 27d FORM 5500 - SCHEDULE OF REPORTABLE TRANSACTIONS (1)
FOR THE YEAR ENDED DECEMBER 31, 1995
- -------------------------------------------------------------------------------
(a) Number of (c) (d) (e)
Identity of (b) Purchases Purchase Selling Lease
Party Involved Description of Asset or Sales Price Price Rental
- ---------------- ---------------------------- ----------- ----------------- ------------- -----------
Putnam Investments Putnam Global Growth Fund 402 $ - $ 1,858,861 $ -
Putnam Investments Putnam Voyager Fund 311 $ 2,167,737 $ - $ -
Putnam Investments Putnam Voyager Fund 410 $ - $ 2,513,208 $ -
Putnam Investments Putnam Stable Value Fund 371 $ 3,156,419 $ - $ -
Putnam Investments Putnam Stable Value Fund 410 $ - $ 3,104,463 $ -
(h)
(f) Current Value
(a) Expense (g) of Asset on
Identity of (b) Incurred with Cost of Transaction (i)
Party Involved Description of Asset Transaction Asset Date Net Gain
- ---------------- ---------------------------- ------------- ----------- ----------------- ---------------
Putnam Investments Putnam Global Growth Fund $ - $ - $ 1,803,859 $ 55,002
Putnam Investments Putnam Voyager Fund $ - $ - $ 2,167,737 $ -
Putnam Investments Putnam Voyager Fund $ - $ - $ 2,130,906 $ 382,302
Putnam Investments Putnam Stable Value Fund $ - $ - $ 3,156,419 $ -
Putnam Investments Putnam Stable Value Fund $ - $ - $ 3,104,463 $ -
(1) Transactions in excess of five percent of the current value of the Plan's
assets as of December 31, 1994 as defined in Section 2520.103-6 of the
Department of Labor Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974.
19
20
AVIALL, INC.
EMPLOYEE SAVINGS PLAN
INDEX TO EXHIBITS
Exhibit
No. Description Page
- ------ ------------------- ----
23 Consent of Independent Accountants 21
20