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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, 1997
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: June 26, 1998
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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, 1997.................................................................5
Statement of Net Assets Available for Plan Benefits, with Fund Information
as of December 31, 1996.................................................................6
Statement of Changes in Net Assets Available for Plan Benefits, with
Fund Information for the Year Ended December 31, 1997...................................7
Statement of Changes in Net Assets Available for Plan Benefits, with
Fund Information for the Year Ended December 31, 1996...................................8
Notes to Financial Statements................................................................9
Supplemental Schedules:
Item 27a - Schedule of Assets Held for Investment Purposes
as of December 31, 1997................................................................17
Item 27d - Schedule of Reportable Transactions for the Year Ended
December 31, 1997......................................................................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.
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of
the Aviall, Inc. Employee Savings Plan
In our opinion, the accompanying statements of net assets available for plan
benefits and the related statements of changes in net assets available for plan
benefits present fairly, in all material respects, the net assets available for
plan benefits of the Aviall, Inc. Employee Savings Plan at December 31, 1997 and
1996, 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
June 19, 1998
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AVIALL, INC.
EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
FUND INFORMATION
---------------------------------------------------------------------------
Aviall Putnam Putnam Putnam Putnam OTC
Stock Fund Voyager Fund G&I Fund GG Fund & EG Fund
----------- ------------ ----------- ----------- -----------
ASSETS
Investments:
Mutual funds $ -- $10,406,532 $ 6,741,840 $ -- $ 707,014
Guaranteed investment contracts -- -- -- -- --
Pooled investment funds -- -- -- -- --
Common stock of participating employer 2,449,186 -- -- -- --
Participant loans receivable -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Total investments 2,449,186 10,406,532 6,741,840 0 707,014
Contributions receivable and other 4,492 18,898 12,268 -- 4,540
----------- ----------- ----------- ----------- -----------
Total assets 2,453,678 10,425,430 6,754,108 0 711,554
----------- ----------- ----------- ----------- -----------
LIABILITIES
Other liabilities -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Total liabilities 0 0 0 0 0
----------- ----------- ----------- ----------- -----------
Net assets available for Plan benefits $ 2,453,678 $10,425,430 $ 6,754,108 $ 0 $ 711,554
=========== =========== =========== =========== ===========
FUND INFORMATION
------------------------------------------------------------
Putnam Divf'd Putnam Putnam Stable
Inc Trust Int'l Gr Fund Value Fund Loan Fund Total
------------- ------------- ------------- ----------- -----------
ASSETS
Investments:
Mutual funds $ 280,639 $ 764,957 $ -- $ -- $18,900,982
Guaranteed investment contracts -- -- 1,072,656 -- 1,072,656
Pooled investment funds -- -- 4,943,358 -- 4,943,358
Common stock of participating employer -- -- -- -- 2,449,186
Participant loans receivable -- -- -- 954,876 954,876
----------- ----------- ----------- ----------- -----------
Total investments 280,639 764,957 6,016,014 954,876 28,321,058
Contributions receivable and other 623 2,553 12,081 (12,637) 42,818
----------- ----------- ----------- ----------- -----------
Total assets 281,262 767,510 6,028,095 942,239 28,363,876
----------- ----------- ----------- ----------- -----------
LIABILITIES
Other liabilities -- -- -- -- 0
----------- ----------- ----------- ----------- -----------
Total liabilities 0 0 0 0 0
----------- ----------- ----------- ----------- -----------
Net assets available for Plan benefits $ 281,262 $ 767,510 $ 6,028,095 $ 942,239 $28,363,876
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements.
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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
Stock Fund Voyager Fund G&I Fund GG Fund
---------- ------------ ---------- -----------
ASSETS
Investments:
Mutual funds $ -- $10,259,183 $5,597,010 $3,639,516
Guaranteed investment contracts -- -- -- --
Pooled investment funds -- -- -- --
Common stock of participating employer 982,988 -- -- --
Participant loans receivable -- -- -- --
-------- ----------- ---------- ----------
Total investments 982,988 10,259,183 5,597,010 3,639,516
Contributions receivable and other 2,686 23,816 12,464 --
-------- ----------- ---------- ----------
Total assets 985,674 10,282,999 5,609,474 3,639,516
-------- ----------- ---------- ----------
LIABILITIES
Other liabilities 474 35,471 29,764 --
-------- ----------- ---------- ----------
Total liabilities 474 35,471 29,764 0
-------- ----------- ---------- ----------
Net assets available for Plan benefits $985,200 $10,247,528 $5,579,710 $3,639,516
======== =========== ========== ==========
FUND INFORMATION
---------------------------
Putnam Stable
Value Fund Loan Fund Total
------------- ----------- -----------
ASSETS
Investments:
Mutual funds $ -- $ -- $19,495,709
Guaranteed investment contracts 4,847,929 -- 4,847,929
Pooled investment funds 521,745 -- 521,745
Common stock of participating employer -- -- 982,988
Participant loans receivable -- 1,192,710 1,192,710
---------- ----------- -----------
Total investments 5,369,674 1,192,710 27,041,081
Contributions receivable and other 20,698 (13,391) 46,273
---------- ----------- -----------
Total assets 5,390,372 1,179,319 27,087,354
---------- ----------- -----------
LIABILITIES
Other liabilities 33,408 -- 99,117
---------- ----------- -----------
Total liabilities 33,408 0 99,117
---------- ----------- -----------
Net assets available for Plan benefits $5,356,964 $ 1,179,319 $26,988,237
========== =========== ===========
The accompanying notes are an integral part of these financial statements.
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AVIALL, INC.
EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND
INFORMATION FOR THE YEAR ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------------
FUND INFORMATION
--------------------------------------------------------------------------------
Aviall Putnam Putnam Putnam Putnam OTC
Stock Fund Voyager Fund G&I Fund GG Fund & EG Fund
----------- ------------ ----------- ------------ ----------
Net assets available for Plan benefits at
beginning of period $ 985,200 $ 10,247,528 $ 5,579,710 $ 3,639,516 $ --
----------- ------------ ----------- ------------ ---------
Investment income:
Dividends -- 611,992 848,044 -- --
Interest -- -- -- -- --
Net appreciation (depreciation) in fair
value of investments 712,954 1,673,711 497,141 (43,268) 44,813
Contributions:
Employer 8,389 53,916 32,490 -- 7,903
Employee 116,284 562,159 336,915 -- 95,694
Participant loan repayments 17,914 135,674 67,941 167 22,972
Interfund transfers 758,062 (874,994) 627,974 (3,595,902) 724,692
----------- ------------ ----------- ------------ ---------
Total additions 1,613,603 2,162,458 2,410,505 (3,639,003) 896,074
----------- ------------ ----------- ------------ ---------
Distributions and other (131,559) (1,866,306) (1,169,451) -- (168,035)
Plan fees and expenses (650) (2,161) (1,240) -- (186)
Loans to participants (12,916) (116,089) (65,416) (513) (16,299)
----------- ------------ ----------- ------------ ---------
Total deductions (145,125) (1,984,556) (1,236,107) (513) (184,520)
----------- ------------ ----------- ------------ ---------
Net increase (decrease) in Plan assets 1,468,478 177,902 1,174,398 (3,639,516) 711,554
----------- ------------ ----------- ------------ ---------
Net assets available for Plan benefits
at end of period $ 2,453,678 $ 10,425,430 $ 6,754,108 $ 0 $ 711,554
=========== ============ =========== ============ =========
FUND INFORMATION
-----------------------------------------------------------
Putnam Divf'd Putnam Putnam Stable
Inc Trust Int'l Gr Fund Value Fund Loan Fund Total
------------- ------------- ------------- ----------- -----------
Net assets available for Plan benefits at
beginning of period $ -- $ -- $ 5,356,964 $ 1,179,319 $ 26,988,237
--------- --------- ----------- ----------- ------------
Investment income:
Dividends 16,520 44,703 -- -- 1,521,259
Interest -- -- 440,957 73,566 514,523
Net appreciation (depreciation) in fair
value of investments 4,514 72,758 -- -- 2,962,623
Contributions:
Employer 783 3,516 46,546 -- 153,543
Employee 11,337 77,056 332,530 -- 1,531,975
Participant loan repayments 878 12,910 92,619 (351,075) 0
Interfund transfers 248,256 683,545 1,428,367 -- 0
--------- --------- ----------- ----------- ------------
Total additions 282,288 894,488 2,341,019 (277,509) 6,683,923
--------- --------- ----------- ----------- ------------
Distributions and other (986) (114,183) (1,607,706) (243,445) (5,301,671)
Plan fees and expenses (17) (137) (2,222) -- (6,613)
Loans to participants (23) (12,658) (59,960) 283,874 0
--------- --------- ----------- ----------- ------------
Total deductions (1,026) (126,978) (1,669,888) 40,429 (5,308,284)
--------- --------- ----------- ----------- ------------
Net increase (decrease) in Plan assets 281,262 767,510 671,131 (237,080) 1,375,639
--------- --------- ----------- ----------- ------------
Net assets available for Plan benefits
at end of period $ 281,262 $ 767,510 $ 6,028,095 $ 942,239 $ 28,363,876
========= ========= =========== =========== ============
The accompanying notes are an integral part of these financial statements.
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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
Stock Fund Voyager Fund G&I Fund GG Fund
---------- ------------ ---------- ----------
Net assets available for Plan benefits at
beginning of period $1,831,140 $12,097,944 $6,892,144 $5,711,273
---------- ----------- ---------- ----------
Investment income:
Dividends 1,662 649,623 540,933 269,500
Interest -- -- -- --
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
Employee 130,103 916,580 567,151 586,584
Participant loan repayments 53,415 287,401 191,108 177,992
Interfund transfers (296,955) 838,061 132,848 (758,578)
---------- ----------- ---------- ----------
Total additions (142,210) 3,755,367 2,370,133 947,218
---------- ----------- ---------- ----------
Distributions and other (300,933) (2,188,545) (1,317,601) (1,039,371)
Plan fees and expenses (1,614) (8,924) (5,190) (4,398)
Loans to participants (45,793) (343,320) (200,549) (208,488)
Transfers/withdrawals related to GASI (322,817) (2,651,651) (1,866,101) (1,524,314)
Transfers/withdrawals related to Maple Leaf (8,581) (29,984) (21,016) (22,613)
Transfer to Curtiss-Wright Plan (23,992) (383,359) (272,110) (219,791)
---------- ----------- ---------- ----------
Total deductions (703,730) (5,605,783) (3,682,567) (3,018,975)
---------- ----------- ---------- ----------
Net decrease in Plan assets (845,940) (1,850,416) (1,312,434) (2,071,757)
---------- ----------- ---------- ----------
Net assets available for Plan benefits
at end of period $ 985,200 $10,247,528 $5,579,710 $3,639,516
========== =========== ========== ==========
FUND INFORMATION
----------------------------
Putnam Stable
Value Fund Loan Fund Total
----------- ----------- -----------
Net assets available for Plan benefits at
beginning of period $8,702,037 $ 2,512,905 $37,747,443
---------- ----------- -----------
Investment income:
Dividends -- -- 1,461,718
Interest 507,316 160,171 667,487
Net appreciation (depreciation) in fair
value of investments -- -- 2,334,847
Contributions:
Employer 61,056 -- 369,289
Employee 419,771 -- 2,620,189
Participant loan repayments 178,690 (888,606) 0
Interfund transfers 84,624 -- 0
---------- ----------- -----------
Total additions 1,251,457 (728,435) 7,453,530
---------- ----------- -----------
Distributions and other (2,002,757) (726,934) (7,576,141)
Plan fees and expenses (6,422) -- (26,548)
Loans to participants (209,782) 1,007,932 0
Transfers/withdrawals related to GASI (1,741,722) (757,076) (8,863,681)
Transfers/withdrawals related to Maple Leaf (55,846) (2,801) (140,841)
Transfer to Curtiss-Wright Plan (580,001) (126,272) (1,605,525)
---------- ----------- -----------
Total deductions (4,596,530) (605,151) (18,212,736)
---------- ----------- -----------
Net decrease in Plan assets (3,345,073) (1,333,586) (10,759,206)
---------- ----------- -----------
Net assets available for Plan benefits
at end of period $5,356,964 $ 1,179,319 $26,988,237
========== =========== ===========
The accompanying notes are an integral part of these financial statements.
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AVIALL, INC.
EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
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1. SALE OF BUSINESSES / TRANSFER OF PLAN ASSETS
In June and September 1996 Aviall, Inc. ("Aviall" or the "Company"), the
sponsor of the Aviall, Inc. Employee Savings Plan (the "Plan"), 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, Aviall 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 in 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.
2. DESCRIPTION OF PLAN
The following description of the Plan is provided for general information
purposes only. Participants should refer to the Plan agreement for more
complete information.
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AVIALL, INC.
EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
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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 be 21 years of age. Participants may make elective
contributions to the Plan beginning their date of hire but must have one
year of qualified service before receiving employer matching
contributions. In general, new employees of the Company are eligible to
participate in the Plan; however, employees of certain businesses sold
(Note 1) who were in a unit represented by a collective bargaining agent
were excluded from participation in the Plan unless the unit had
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.
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.
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. The
fund was liquidated in January 1997.
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AVIALL, INC.
EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
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Putnam OTC Emerging Growth Fund (Putnam OTC & EG Fund): The fund consists
primarily of investments in over-the-counter stocks of small to
medium-sized emerging growth companies. The fund was introduced in
January 1997.
Putnam Diversified Income Trust (Putnam Divf'd Inc Trust): Invests
primarily in interest-paying bonds from the U.S. government, high-yield,
and international sectors. Seeks current income consistent with capital
preservation. The fund was introduced in January 1997.
Putnam International Growth Fund (Putnam Int'l Gr Fund): The fund
consists primarily of investments in stocks of companies located outside
of the United States to seek capital appreciation. The fund was
introduced in January 1997.
Putnam Stable Value Fund: The fund consists of investments in
high-quality annuity (or similar) investment contracts issued by
insurance companies or banks.
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 1997
and 1996 is $9,500 each year 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.
Additionally, in 1997 the Plan was amended to allow the Company to make
discretionary contributions of Company common stock to the Plan. Such
contributions, when made, are fully-vested and nonforfeitable. There were
no discretionary contributions of Aviall stock in 1997.
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.
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AVIALL, INC.
EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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.
ROLLOVERS
Distributions from another qualified plan can be transferred into the
Plan. In 1997 and 1996, rollover accounts in the amount of $91,568 and
$49,355, 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 automatically 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").
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AVIALL, INC.
EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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.
(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, 1997 and 1996.
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 10.0% for loans
outstanding at December 31, 1997. 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.
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AVIALL, INC.
EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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.
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, 1997 and 1996.
Participant loans receivable are valued at cost which approximates fair
value.
14
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AVIALL, INC.
EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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.
4. INVESTMENTS
Investments held by the Plan at December 31, 1997 and 1996 consisted of
the following:
1997 1996
------------------------------- -------------------------------
Current Current
Cost Value Cost Value
----------- ----------- ----------- -----------
Mutual funds $14,887,523 $18,900,982 $16,065,112 $19,495,709
Guaranteed investment contracts 1,072,656 1,072,656 4,847,929 4,847,929
Pooled investment funds 4,943,358 4,943,358 521,745 521,745
Common stock 1,882,109 2,449,186 1,059,325 982,988
Participant loans receivable 954,876 954,876 1,192,710 1,192,710
----------- ----------- ----------- -----------
$23,740,522 $28,321,058 $23,686,821 $27,041,081
=========== =========== =========== ===========
For the years ended December 31, 1997 and 1996, the average annual yield
earned on the guaranteed investment contracts was 5.78% and 6.72%,
respectively.
The fair value of individual investments representing 5 percent or more
of the Plan's net assets at December 31, 1997 was as follows:
Number of Current
Description of Investment Shares Value
------------------------- --------- ------------
Aviall Stock Fund 163,962 $ 2,449,186
Putnam Voyager Fund 546,275 10,406,532
The Putnam Fund for Growth and Income 345,028 6,741,840
Putnam Stable Value Fund Cusip MFPFTC 4,943,358 4,943,358
15
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AVIALL, INC.
EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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 has subjected 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.
6. LIQUIDATION OF GLOBAL GROWTH FUND
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.
7. SUBSEQUENT EVENTS
On July 1, 1998, the Plan trustee and custodian of Plan assets will
change from Putnam Investments to the 401(K) Company.
16
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AVIALL, INC.
EMPLOYEE SAVINGS PLAN
ITEM 27a FORM 5500 - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
(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. 163,962 shares $ 1,882,109 $ 2,449,186
Mutual Funds:
* The Putnam Fund for Growth and Income 345,028 shares 5,619,107 6,741,840
* Putnam Voyager Fund 546,275 shares 7,612,254 10,406,532
* Putnam OTC and Emerging Growth Fund 43,887 shares 653,284 707,014
* Putnam Diversified Income Trust 22,308 shares 276,278 280,639
* Putnam International Growth Fund 45,888 shares 726,600 764,957
Pooled Investment Funds:
* Putnam Stable Value Fund 4,943,358 shares 4,943,358 4,943,358
* Participant Loans Interest rates range from 6.0% to 10.0% 954,876 954,876
Guaranteed Investment Contracts:
Lincoln National Life CUSIP GA-9630, 5.00%, due 6/30/98 266,836 266,836
Continental Assurance CUSIP GP12933, 5.17%, due 6/30/98 805,820 805,820
Total Assets Held for Investment $ 23,740,522 $28,321,058
------------ -----------
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AVIALL, INC.
EMPLOYEE SAVINGS PLAN
ITEM 27d FORM 5500 - SCHEDULE OF REPORTABLE TRANSACTIONS (1)
FOR THE YEAR ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------------
(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 6 $ -- $ 3,596,416 $ --
Putnam Investments Putnam Voyager Fund 188 $ 2,646,826 $ -- $ --
Putnam Investments Putnam Voyager Fund 333 $ -- $ 4,173,189 $ --
Putnam Investments Putnam Stable Value Fund 334 $ 6,404,164 $ -- $ --
Putnam Investments Putnam Stable Value Fund 406 $ -- $ 5,757,824 $ --
Putnam Investments The Putnam Fund for Growth and Income 201 $ 3,006,059 $ -- $ --
Putnam Investments The Putnam Fund for Growth and Income 310 $ -- $ 2,358,370 $ --
(h)
(f) Current Value
(a) Expense (g) of Asset on (i)
Identity of Incurred with Cost of Transaction Net Gain
Party Involved Transaction Asset Date (Loss)
- ------------------ -------------- ----------- ------------- ---------
Putnam Investments $ -- $ 3,260,189 $ 3,596,416 $ 336,227
Putnam Investments $ -- $ 2,646,826 $ 2,646,826 $ 0
Putnam Investments $ -- $ 3,300,213 $ 4,173,189 $ 872,976
Putnam Investments $ -- $ 6,404,164 $ 6,404,164 $ 0
Putnam Investments $ -- $ 5,757,824 $ 5,757,824 $ 0
Putnam Investments $ -- $ 3,006,059 $ 3,006,059 $ 0
Putnam Investments $ -- $ 1,926,413 $ 2,358,370 $ 431,957
(1) Transactions in excess of five percent of the current value of the Plan's
assets as of December 31, 1996 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
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AVIALL, INC.
EMPLOYEE SAVINGS PLAN
INDEX TO EXHIBITS
Exhibit
No. Description Page
- ------- ----------- ----
23 Consent of Independent Accountants 20
19