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, 1996
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 20 The Exhibit
Index appears on Page 19.
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: July 11, 1997
----------------------
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, 1996.................................................................5
Statement of Net Assets Available for Plan Benefits, with Fund Information
as of December 31, 1995.................................................................6
Statement of Changes in Net Assets Available for Plan Benefits, with
Fund Information for the Year Ended December 31, 1996...................................7
Statement of Changes in Net Assets Available for Plan Benefits, with
Fund Information for the Year Ended December 31, 1995...................................8
Notes to Financial Statements................................................................9
Supplemental Schedules:
Item 27a - Schedule of Assets Held for Investment Purposes
as of December 31, 1996................................................................17
Item 27d - Schedule of Reportable Transactions for the Year Ended
December 31, 1996......................................................................18
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 or are not required.
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, 1996 and
1995, and the changes in net assets available for plan benefits for each of the
years then ended, 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 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
July 8, 1997
4
5
AVIALL, INC.
EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
FUND INFORMATION
----------------------------------------------------------------------------------
Aviall Putnam Putnam Putnam Putnam Stable
Stock Fund Voyager Fund G&I Fund GG Fund Value Fund Loan Fund
----------- ------------ ----------- ----------- ----------- -----------
ASSETS
Investments:
Mutual funds $ -- $10,259,183 $ 5,597,010 $ 3,639,516 $ -- $ --
Guaranteed investment contracts -- -- -- -- 4,847,929 --
Pooled investment funds -- -- -- -- 521,745 --
Common stock of participating employer 982,988 -- -- -- -- --
Participant loans receivable -- -- -- -- -- 1,192,710
----------- ----------- ----------- ----------- ---------- -----------
Total investments 982,988 10,259,183 5,597,010 3,639,516 5,369,674 1,192,710
Contributions receivable and other 2,686 23,816 12,464 -- 20,698 (13,391)
----------- ----------- ----------- ----------- ---------- -----------
Total assets 985,674 10,282,999 5,609,474 3,639,516 5,390,372 1,179,319
----------- ----------- ----------- ----------- ---------- -----------
LIABILITIES
Other liabilities 474 35,471 29,764 -- 33,408 --
----------- ----------- ----------- ----------- ---------- -----------
Total liabilities 474 35,471 29,764 0 33,408 0
----------- ----------- ----------- ----------- ---------- -----------
Net assets available for Plan benefits $ 985,200 $10,247,528 $ 5,579,710 $ 3,639,516 $ 5,356,964 $ 1,179,319
=========== =========== =========== =========== ========== ===========
Total
-----------
ASSETS
Investments:
Mutual funds $19,495,709
Guaranteed investment contracts 4,847,929
Pooled investment funds 521,745
Common stock of participating employer 982,988
Participant loans receivable 1,192,710
-----------
Total investments 27,041,081
Contributions receivable and other 46,273
-----------
Total assets 27,087,354
-----------
LIABILITIES
Other liabilities 99,117
-----------
Total liabilities 99,117
-----------
Net assets available for Plan benefits $26,988,237
===========
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, 1995
- --------------------------------------------------------------------------------
FUND INFORMATION
---------------------------------------------------------------------------------
Aviall Putnam Putnam Putnam Putnam Stable
Stock Fund Voyager Fund G&I Fund GG Fund Value Fund Loan Fund
----------- ----------- ----------- ----------- ----------- -----------
ASSETS
Investments:
Mutual funds $ -- $12,104,974 $ 6,899,364 $ 5,714,552 $ -- $ --
Guaranteed investment contracts -- -- -- -- 7,516,038 --
Pooled investment funds -- -- -- -- 1,189,571 --
Common stock of participating employer 1,831,525 -- -- -- -- --
Participant loans receivable -- -- -- -- -- 2,512,905
----------- ----------- ----------- ----------- ----------- -----------
Total investments 1,831,525 12,104,974 6,899,364 5,714,552 8,705,609 2,512,905
Contributions receivable and other 48 74 271 93 12 --
----------- ----------- ----------- ----------- ----------- -----------
Total assets 1,831,573 12,105,048 6,899,635 5,714,645 8,705,621 2,512,905
----------- ----------- ----------- ----------- ----------- -----------
LIABILITIES
Other liabilities 433 7,104 7,491 3,372 3,584 --
----------- ----------- ----------- ----------- ----------- -----------
Total liabilities 433 7,104 7,491 3,372 3,584 0
----------- ----------- ----------- ----------- ----------- -----------
Net assets available for Plan benefits $ 1,831,140 $12,097,944 $ 6,892,144 $ 5,711,273 $ 8,702,037 $ 2,512,905
=========== =========== =========== =========== =========== ===========
Total
-----------
ASSETS
Investments:
Mutual funds $24,718,890
Guaranteed investment contracts 7,516,038
Pooled investment funds 1,189,571
Common stock of participating employer 1,831,525
Participant loans receivable 2,512,905
-----------
Total investments 37,768,929
Contributions receivable and other 498
-----------
Total assets 37,769,427
-----------
LIABILITIES
Other liabilities 21,984
-----------
Total liabilities 21,984
-----------
Net assets available for Plan benefits $37,747,443
===========
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, 1996
- --------------------------------------------------------------------------------
FUND INFORMATION
------------------------------------------------------------------------------------
Aviall Putnam Putnam Putnam Putnam Stable
Stock Fund Voyager Fund G&I Fund GG Fund Value Fund Loan Fund
------------ ------------ ------------ ------------ ------------ ------------
Net assets available for Plan benefits at
beginning of period $ 1,831,140 $ 12,097,944 $ 6,892,144 $ 5,711,273 $ 8,702,037 $ 2,512,905
------------ ------------ ------------ ------------ ------------ ------------
Investment income:
Dividends 1,662 649,623 540,933 269,500 -- --
Interest -- -- -- -- 507,316 160,171
Net appreciation (depreciation) in fair
value of investments (50,331) 941,970 856,122 587,086 -- --
Contributions:
Employer 19,896 121,732 81,971 84,634 61,056 --
Employee 130,103 916,580 567,151 586,584 419,771 --
Participant loan repayments 53,415 287,401 191,108 177,992 178,690 (888,606)
Interfund transfers (296,955) 838,061 132,848 (758,578) 84,624 --
------------ ------------ ------------ ------------ ------------ ------------
Total additions (142,210) 3,755,367 2,370,133 947,218 1,251,457 (728,435)
------------ ------------ ------------ ------------ ------------ ------------
Distributions and other (300,933) (2,188,545) (1,317,601) (1,039,371) (2,002,757) (726,934)
Plan fees and expenses (1,614) (8,924) (5,190) (4,398) (6,422) --
Loans to participants (45,793) (343,320) (200,549) (208,488) (209,782) 1,007,932
Transfers/withdrawals related to GASI (322,817) (2,651,651) (1,866,101) (1,524,314) (1,741,722) (757,076)
Transfers/withdrawals related to Maple Leaf (8,581) (29,984) (21,016) (22,613) (55,846) (2,801)
Transfer to Curtiss-Wright Plan (23,992) (383,359) (272,110) (219,791) (580,001) (126,272)
------------ ------------ ------------ ------------ ------------ ------------
Total deductions (703,730) (5,605,783) (3,682,567) (3,018,975) (4,596,530) (605,151)
------------ ------------ ------------ ------------ ------------ ------------
Net decrease in Plan assets (845,940) (1,850,416) (1,312,434) (2,071,757) (3,345,073) (1,333,586)
------------ ------------ ------------ ------------ ------------ ------------
Net assets available for Plan benefits
at end of period $ 985,200 $ 10,247,528 $ 5,579,710 $ 3,639,516 $ 5,356,964 $ 1,179,319
============ ============ ============ ============ ============ ============
Total
------------
Net assets available for Plan benefits at
beginning of period $ 37,747,443
------------
Investment income:
Dividends 1,461,718
Interest 667,487
Net appreciation (depreciation) in fair
value of investments 2,334,847
Contributions:
Employer 369,289
Employee 2,620,189
Participant loan repayments 0
Interfund transfers 0
------------
Total additions 7,453,530
------------
Distributions and other (7,576,141)
Plan fees and expenses (26,548)
Loans to participants 0
Transfers/withdrawals related to GASI (8,863,681)
Transfers/withdrawals related to Maple Leaf (140,841)
Transfer to Curtiss-Wright Plan (1,605,525)
------------
Total deductions (18,212,736)
------------
Net decrease in Plan assets (10,759,206)
------------
Net assets available for Plan benefits
at end of period $ 26,988,237
============
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, 1995
- --------------------------------------------------------------------------------
FUND INFORMATION
----------------------------------------------------------------------------
Aviall Putnam Ryder Putnam Putnam
Stock Fund Voyager Fund Stock Fund G&I Fund GG Fund
------------ ------------ ------------ ------------ ------------
Net assets available for Plan benefits
at beginning of period $ 1,233,976 $ 9,799,781 $ 595,136 $ 5,478,747 $ 6,172,808
------------ ------------ ------------ ------------ ------------
Investment income:
Dividends 15,896 639,981 -- 452,983 312,402
Interest -- -- -- -- --
Net appreciation in fair value of
investments 361,919 2,880,638 61,970 1,451,464 472,208
Contributions:
Employer 36,387 156,141 -- 107,237 131,671
Employee 297,684 1,384,788 -- 932,538 1,060,448
Participant loan repayments 56,858 256,339 -- 217,300 191,221
Interfund transfers 119,594 347,095 (428,286) 219,964 (680,092)
------------ ------------ ------------ ------------ ------------
Total additions 888,338 5,664,982 (366,316) 3,381,486 1,487,858
------------ ------------ ------------ ------------ ------------
Distributions and other (67,683) (1,130,592) (85,432) (568,765) (561,432)
Plan fees and expenses (1,266) (10,796) (278) (6,306) (6,482)
Loans to participants (81,771) (541,993) (11,156) (317,999) (340,187)
Transfer to Dallas Airmotive Plan (140,454) (1,683,438) (131,954) (1,075,019) (1,041,292)
------------ ------------ ------------ ------------ ------------
Total deductions (291,174) (3,366,819) (228,820) (1,968,089) (1,949,393)
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in
Plan assets 597,164 2,298,163 (595,136) 1,413,397 (461,535)
------------ ------------ ------------ ------------ ------------
Net assets available for Plan
benefits at end of period $ 1,831,140 $ 12,097,944 $ 0 $ 6,892,144 $ 5,711,273
============ ============ ============ ============ ============
FUND INFORMATION
-----------------------------
Putnam Stable
Value Fund Loan Fund Total
------------ ------------ ------------
Net assets available for Plan benefits
at beginning of period $ 10,028,595 $ 2,180,021 $ 35,489,064
------------ ------------ ------------
Investment income:
Dividends -- -- 1,421,262
Interest 606,430 137,100 743,530
Net appreciation in fair value of
investments -- -- 5,228,199
Contributions:
Employer 119,281 -- 550,717
Employee 872,833 -- 4,548,291
Participant loan repayments 187,178 (908,896) 0
Interfund transfers 421,725 -- 0
------------ ------------ ------------
Total additions 2,207,447 (771,796) 12,491,999
------------ ------------ ------------
Distributions and other (1,567,199) (190,542) (4,171,645)
Plan fees and expenses (122) -- (25,250)
Loans to participants (439,350) 1,732,456 0
Transfer to Dallas Airmotive Plan (1,527,334) (437,234) (6,036,725)
------------ ------------ ------------
Total deductions (3,534,005) 1,104,680 (10,233,620)
------------ ------------ ------------
Net increase (decrease) in
Plan assets (1,326,558) 332,884 2,258,379
------------ ------------ ------------
Net assets available for Plan
benefits at end of period $ 8,702,037 $ 2,512,905 $ 37,747,443
============ ============ ============
The accompanying notes are an integral part of these financial statements.
8
9
AVIALL, INC.
EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
1. SALE OF BUSINESSES / TRANSFER OF PLAN ASSETS
In June and September 1996, the Plan sponsor sold its engine services
repair operations and its aerospace hardware division to Greenwich Air
Services, Inc. ("GASI") and Maple Leaf Aerospace, Inc. ("Maple Leaf"),
respectively. Effective as of the respective closing dates, all
employees of these business units were terminated and their active
participation and benefit accrual under the Plan ceased. Plan
participants of these business units were given the following options
related to their Plan accounts:
(1) Participants with balances in the Plan less than $3,500
could elect to either roll over their balance to another
qualified plan or take a taxable distribution.
(2) Participants with balances in the Plan of $3,500 or more
could elect to remain in the Aviall Plan, rollover their
account balance to another qualified Plan, or take a
taxable distribution.
Plan assets related to former employees of the engine services division
and the aerospace hardware division totaled $8,863,681 and $140,841,
respectively, and were distributed out of the Plan in 1996 as described
above.
In May 1996, the Plan sponsor sold 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. Plan assets relating to these employees
totaled $1,605,525 and were transferred to the purchaser's,
Curtiss-Wright, qualified 401(k) plan by August 1996.
As a result of the above, employees of business units sold and those who
terminated from the Company during the period January 31, 1996 through
December 31, 1996 were automatically 100% vested in Company
contributions in accordance with the terms of the Plan.
In March 1995, the Plan sponsor sold 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. Plan assets relating to these employees totaled $6,036,725 and
were transferred to the purchaser's, Dallas Airmotive, qualified 401(k)
plan in May 1995.
2. 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.
9
10
AVIALL, INC.
EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
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 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 INVESTMENTS
Putnam Investments is 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.
Aviall Stock Fund: The fund consists of Aviall, Inc. common stock, which
is purchased on a regular and continuous basis on the open market. All
dividends are automatically reinvested in Aviall common stock.
Putnam Voyager Fund: The fund 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.
Ryder Stock Fund: The fund 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 the Aviall Stock Fund. Since Plan inception, all
dividends have been reinvested in the Aviall Stock Fund.
Putnam Fund for Growth and Income (Putnam G&I Fund): The fund consists
primarily of investments in attractively priced stocks that offer
long-term growth potential while also providing income.
10
11
AVIALL, INC.
EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
Putnam Global Growth Fund (Putnam GG Fund): The fund 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.
Putnam Stable Value Fund: The fund consists of investments in
high-quality annuity (or similar) investment contracts issued by
insurance companies or banks.
On January 2, 1997, three new funds, the Putnam OTC Emerging Growth
Fund, the Putnam International Growth Fund and the Putnam Diversified
Income Trust were introduced into the Plan.
CONTRIBUTIONS, VESTING AND FORFEITURES
The Plan was established in accordance with Sections 401(a) and 401(k)
of the Internal Revenue Code ("IRC"). 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 1996
and 1995 is $9,500 and $9,240, respectively, and is limited by law. The
Company matches 50% of the employee's annual contribution up to $400 per
person based on certain requirements. Union employees of certain
businesses sold (Note 1) were limited in the amount of matching
contributions for which they were eligible. Such employees are no longer
active participants in the Plan due to the sale of the related business.
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. Vesting in Company contributions
also occurs upon attainment of retirement age, death or disability.
During 1996, participants employed by businesses sold were 100% vested
in Company contributions. Upon a distribution to a participant,
non-vested Company contributions are forfeited and are used to offset
future Company contributions.
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
make 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.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's
contribution, the Company's matching contribution, as eligible, and the
allocation of the investment fund earnings, as well as charged with the
allocation of Plan administrative expenses.
11
12
AVIALL, INC.
EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
ROLLOVERS
Distributions from another qualified plan can be transferred into the
Plan. In 1996 and 1995, rollover accounts in the amount of $49,355 and
$79,766, respectively, were transferred into the Plan and are included
in employee contributions on the statement of changes in net assets
available for Plan benefits.
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 lump-sum 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
Internal Revenue Service ("IRS").
Certain restrictions are placed on participants withdrawing 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 IRC, minus
the employee's elective contributions for the year of the
hardship distribution.
12
13
AVIALL, INC.
EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
(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, 1996 and 1995.
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, and must be greater than
$1,000 but less than $50,000. 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. Such rates range from 6.0% to 11.5% for
loans outstanding at December 31, 1996. 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 were not required to consolidate existing loans. Participants
with loans outstanding issued after January 1, 1996 may obtain new loans
provided that the proceeds of the new loan are used to repay the old
loan.
Loans to participants and participant loan repayments as included on the
statement of changes in net assets available for plan benefits represent
new borrowings and repayments, respectively, but do not include new
borrowings to refinance existing loans.
PLAN TERMINATION
The Company expects to continue the Plan indefinitely but 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 of the
sponsor.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan are prepared on the accrual basis
of accounting. Purchases and sales of securities are recorded on a trade
date basis, cost is determined based on historical average cost, and
dividends are reinvested at the date-of-record market price.
13
14
AVIALL, INC.
EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
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. Other administrative expenses such
as trustee fees and recordkeeping fees are paid by either the Company or
the Plan. Additionally, 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 less any payments made.
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
which is historical cost plus accrued interest. 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, 1996 and 1995.
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.
USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires the use of estimates and
assumptions that affect the reported amounts of net assets available for
Plan benefits and the related changes in net assets available for Plan
benefits. Actual results could differ from those estimates.
14
15
AVIALL, INC.
EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
4. INVESTMENTS
Investments held by the Plan at December 31, 1996 and 1995 consisted of
the following:
1996 1995
---------------------------- ---------------------------
Current Current
Cost Value Cost Value
------------ ------------- ----------- -------------
Mutual funds $16,065,112 $19,495,709 $20,684,634 $24,718,890
Guaranteed investment contracts 4,847,929 4,847,929 7,516,038 7,516,038
Pooled investment funds 521,745 521,745 1,189,571 1,189,571
Common stock 1,059,325 982,988 1,937,498 1,831,525
Participant loans receivable 1,192,710 1,192,710 2,512,905 2,512,905
----------- ----------- ----------- -----------
$23,686,821 $27,041,081 $33,840,646 $37,768,929
=========== =========== =========== ===========
For the years ended December 31, 1996 and 1995, the average annual yield
earned on the guaranteed investment contracts was 6.72% and 6.91%,
respectively.
The fair value of individual investments representing 5 percent or more
of the Plan's net assets at December 31, 1996 was as follows:
Number of Current
Description of Investment Shares Value
------------------------- --------------- ----------------
The Putnam Fund for Growth and Income 310,600 $ 5,597,010
Putnam Global Growth Fund 336,369 3,639,516
Putnam Voyager Fund 636,426 10,259,183
Aetna Life Insurance GIC GAC #LT-14162 N/A 1,637,257
5. TAX STATUS OF THE PLAN
The IRS granted a favorable letter of determination under the applicable
section of the IRC on September 1, 1995 and, therefore, the trust is
exempt from taxation under Section 501(a) of the IRC. Once qualified, the
Plan is required to operate in conformity with the IRC to maintain its
qualification. 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.
During 1997, the Plan sponsor determined that the Plan was not in
compliance with certain regulatory requirements in prior years. As a
result, the Plan sponsor intends to subject the Plan to a Voluntary
Compliance Review (VCR) with the IRS. While the outcome of the VCR
cannot be predicted, the Plan sponsor does not believe these matters
will adversely affect the Plan's tax status.
15
16
AVIALL, INC.
EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
6. SUBSEQUENT EVENTS
On December 31, 1996, the Global Growth Fund was scheduled to be
liquidated and all shares in the fund were to be transferred into the
Stable Value Fund. The shares in Global Growth did not transfer on
December 31, as intended. The transfer occurred on January 2, 1997. The
change in effective date resulted in a price decrease of $.13 per share.
To assure participants received the value of their accounts at December
31, 1996, the Plan sponsor made an additional Plan deposit of $44,198 in
April 1997 to make up the $.13 per share difference plus accrued
interest. Earnings were calculated using the Stable Value Fund interest
rate. The deposit was credited to the Stable Value Fund.
16
17
AVIALL, INC.
EMPLOYEE SAVINGS PLAN
ITEM 27a FORM 5500 - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
(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. 106,269 shares $ 1,059,325 $ 982,988
Mutual Funds:
* The Putnam Fund for Growth and Income 310,600 shares 4,539,462 5,597,010
* Putnam Global Growth Fund 336,369 shares 3,260,009 3,639,516
* Putnam Voyager Fund 636,426 shares 8,265,641 10,259,183
Pooled Investment Funds:
* Putnam Stable Value Fund 521,745 shares 521,745 521,745
* Participant Loans Interest rates range from 6.0% to 11.5% 1,192,710 1,192,710
Guaranteed Investment Contracts:
Allstate GAC #GA-5404A, 6.650%, due 07/01/97 500,234 500,234
Aetna Life Insurance GAC #LT-14162, 7.850%, due 12/31/97 1,637,257 1,637,257
Lincoln National Life GAC #GA-9630V1, 5.000%, due 6/30/98 508,258 508,258
Life of Virginia GAC #GS 2746, 6.820%, due 12/31/97 373,610 373,610
Protective Life GAC #GA 717-Cl, 6.910%, due 12/31/97 618,311 618,311
Continental Assurance GAC #GP12933, 5.170%, due 6/30/98 766,210 766,210
Life of Virginia GAC #GS 2752, 4.890%, due 12/31/97 444,049 444,049
----------- -----------
Total Assets Held for Investment $23,686,821 $27,041,081
=========== ===========
17
18
AVIALL, INC.
EMPLOYEE SAVINGS PLAN
ITEM 27d FORM 5500 - SCHEDULE OF REPORTABLE TRANSACTIONS (1)
FOR THE YEAR ENDED DECEMBER 31, 1996
- -------------------------------------------------------------------------------
(f)
(a) Number of (c) (d) (e) Expense
Identity of (b) Purchases Purchase Selling Lease Incurred with
Party Involved Description of Asset or Sales Price Price Rental Transaction
- ------------------ -------------------------------------- ----------- ------------- ------------ ---------- -------------
Putnam Investments Putnam Global Growth Fund 429 $ - $ 4,059,545 $ - $ -
Putnam Investments Putnam Voyager Fund 317 $ 3,775,437 $ - $ - $ -
Putnam Investments Putnam Voyager Fund 441 $ - $ 6,642,372 $ - $ -
Putnam Investments Putnam Stable Value Fund 421 $ 2,735,483 $ - $ - $ -
Putnam Investments Putnam Stable Value Fund 450 $ - $ 6,056,175 $ - $ -
Putnam Investments The Putnam Fund for Growth and Income 273 $ 2,169,920 $ - $ - $ -
Putnam Investments The Putnam Fund for Growth and Income 415 $ - $ 4,365,457 $ - $ -
(h)
Current Value
(a) (g) of Asset on (i)
Identity of (b) Cost of Transaction Net Gain
Party Involved Description of Asset Asset Date (Loss)
- ------------------ -------------------------------------- ------------ ------------- --------------
Putnam Investments Putnam Global Growth Fund $ 3,509,537 $ 4,059,545 $ 550,008
Putnam Investments Putnam Voyager Fund $ 3,775,437 $ 3,775,437 $ 0
Putnam Investments Putnam Voyager Fund $ 4,956,861 $ 6,642,372 $ 1,685,511
Putnam Investments Putnam Stable Value Fund $ 2,735,483 $ 2,735,483 $ 0
Putnam Investments Putnam Stable Value Fund $ 6,056,175 $ 6,056,175 $ 0
Putnam Investments The Putnam Fund for Growth and Income $ 2,169,920 $ 2,169,920 $ 0
Putnam Investments The Putnam Fund for Growth and Income $ 3,475,113 $ 4,365,457 $ 890,344
(1) Transactions in excess of five percent of the current value of the
Plan's assets as of December 31, 1995 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.
18
19
AVIALL, INC.
EMPLOYEE SAVINGS PLAN
INDEX TO EXHIBITS
Exhibit
No. Description Page
- ------- ----------- ----
23 Consent of Independent Accountants 20
19