SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
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[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
AVIALL, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[AVIALL LOGO]
June 13, 2003
Dear Aviall Stockholders:
Enclosed is a supplement to the proxy statement of Aviall, Inc., dated
April 30, 2003, that was previously furnished to you in connection with the
solicitation of proxies to be voted at our 2003 Annual Meeting of Stockholders.
The Annual Meeting will be held at 11:00 a.m. (local time) on Thursday, June 26,
2003, at the Four Seasons Resort and Club, 4150 N. MacArthur Boulevard, Irving,
Texas 75038.
The purpose of the supplement is to update certain information contained in
the proxy statement as a result of the recent conversion by affiliates of The
Carlyle Group of all of the outstanding shares of our Series D Senior
Convertible Participating Preferred Stock into shares of our common stock.
Please note that the supplement does not change the proposals to be acted upon
at the Annual Meeting, which are described in the proxy statement.
It is important that your shares be represented at the Annual Meeting.
Accordingly, even if you plan to attend the Annual Meeting in person, please
complete, sign, date and promptly return the proxy card previously furnished to
you or use the telephone or Internet voting procedures contained on such proxy
card prior to the Annual Meeting. If you attend the Annual Meeting and wish to
vote in person, you may withdraw your proxy and vote in person.
Sincerely,
/s/ PAUL E. FULCHINO
Paul E. Fulchino
Chairman, President and Chief
Executive Officer
AVIALL, INC.
2750 Regent Boulevard
DFW Airport, Texas 75261
SUPPLEMENT TO PROXY STATEMENT FOR
2003 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 26, 2003
This is a supplement to the proxy statement, dated April 30, 2003, of
Aviall, Inc., a Delaware corporation (the "Company"), that was furnished to
stockholders of the Company in connection with the solicitation of proxies to be
voted at the Company's 2003 Annual Meeting of Stockholders (the "Annual
Meeting"). The supplement updates certain information contained in the proxy
statement as a result of the recent conversion by affiliates of The Carlyle
Group (the "Carlyle Investors") of all of the outstanding shares of the
Company's Series D Senior Convertible Participating Preferred Stock, par value
$0.01 per share ("Series D Preferred Stock"), into shares of the Company's
common stock, par value $0.01 per share ("Common Stock"). The supplement is
being mailed on or about June 17, 2003 to all stockholders of the Company
entitled to vote at the Annual Meeting.
Voting materials, which included a notice of the Annual Meeting, a proxy
statement and a proxy card, were previously mailed to all stockholders of the
Company entitled to vote at the Annual Meeting. Any stockholder who has executed
and returned a proxy may revoke such proxy at any time before it is voted by (i)
notifying the Secretary of the Company in writing at 2750 Regent Boulevard, DFW
Airport, Texas 75261, (ii) granting a subsequent proxy in accordance with the
voting procedures set forth in the proxy statement or (iii) appearing in person
and voting at the Annual Meeting. Attendance at the Annual Meeting will not in
and of itself constitute revocation of a proxy.
CONVERSION
On June 12, 2003, the Carlyle Investors converted all of the Series D
Preferred Stock into 11,100,878 shares of Common Stock, following the reduction
by the Company's Board of Directors (the "Board of Directors") of the conversion
price of the Series D Preferred Stock from $5.80 per share to approximately
$4.62 per share. The Company will account for this reduction as a one-time,
$24.3 million non-cash reduction to the Company's net earnings available to
common shareholders, similar to a non-cash dividend, for the quarter ending June
30, 2003. The shares of Common Stock issued to the Carlyle Investors as a result
of the conversion represent approximately 36.0% of the outstanding Common Stock.
At the time of the conversion, the outstanding shares of Series D Preferred
Stock had an aggregate liquidation preference, plus accrued and unpaid
dividends, of approximately $51.3 million and a 9.0% annual payment-in-kind
dividend rate. In addition, the Company was required to redeem the shares of
Series D Preferred Stock on June 21, 2008 and reflect its earnings per share
using the two class method.
Prior to the conversion, Peter J. Clare and Allan M. Holt, each a Managing
Director of The Carlyle Group, held seats on the Board of Directors as designees
of the holders of Series D Preferred Stock and were reelected annually by the
holders of Series D Preferred Stock. As a result of the conversion, the
contractual right of the holders of Series D Preferred Stock to elect two
members to the Board of Directors terminated.
Contemporaneously with the conversion, the Board of Directors increased the
size of the Board of Directors by two members and appointed Mr. Clare to the
class of directors with terms expiring at the Company's 2004 Annual Meeting of
Stockholders and Mr. Holt to the class of directors with terms expiring at the
Company's 2005 Annual Meeting of Stockholders. Mr. Clare serves as the chairman
of the Compensation Committee of the Board of Directors and as an advisor to the
Audit Committee of the Board of Directors, and Mr. Holt serves as a member of
the Nominating and Governance Committee of the Board of Directors.
The Company also entered into an investor rights agreement with the Carlyle
Investors. The investor rights agreement provides the Carlyle Investors with
certain rights and prohibits the Company from taking certain actions, including
the following, without the prior written consent of the Carlyle Investors:
- amending or waiving any provision of the Company's Restated Certificate
of Incorporation or Amended and Restated By-Laws in any manner adverse to
the Carlyle Investors;
- incurring more than $50.0 million in indebtedness in any 12-month period,
except refinancing existing indebtedness;
- authorizing or issuing capital stock of the Company that is senior to the
Common Stock;
- making specified payments and capital expenditures in excess of $50.0
million, except for certain inventory purchases;
- entering into certain transactions with affiliates of the Company; or
- effecting any voluntary liquidation, dissolution or winding-up of the
Company.
In addition, upon the occurrence of certain events, including if the
Carlyle Investors or their affiliates hold less than 10.0% of the outstanding
Common Stock, the rights of the Carlyle Investors under the investor rights
agreement will terminate.
The foregoing summary of the conversion and the investor rights agreement
is qualified in its entirety by reference to the Company's Form 8-K filed with
the Securities and Exchange Commission on June 13, 2003. A copy of the Form 8-K,
including other reports filed by the Company with the Securities and Exchange
Commission, may be obtained free of charge over the Internet through the
Investor Relations section of the Company's website, aviall.com, or through the
Securities and Exchange Commission's website, http://www.sec.gov.
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information which appears on pages 9-11 of the proxy statement under
the heading "Securities Ownership of Certain Beneficial Owners and Management"
should be revised in its entirety to read as follows:
DIRECTORS AND NAMED EXECUTIVE OFFICERS
The following table presents information known to the Company about the
beneficial ownership of the Common Stock as of June 12, 2003 by (i) each of the
named executive officers of the Company; (ii) each director and nominee for
director of the Company; and (iii) all of the directors and executive officers
as of June 12, 2003 as a group. For purposes of this Proxy Statement, Paul E.
Fulchino, Charles M. Kienzle, Dan P. Komnenovich, Jeffrey J. Murphy and James T.
Quinn are referred to as the "named executive officers" of the Company.
The number and percentage of shares of Common Stock beneficially owned is
determined under the rules of the SEC and is not necessarily indicative of
beneficial ownership for any other purpose. Under these rules, beneficial
ownership includes any shares of Common Stock for which a person has sole or
shared voting power or investment power and also any shares of Common Stock
underlying options, warrants or convertible securities that are exercisable or
convertible by that person within 60 days of June 12, 2003.
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Unless otherwise indicated in the footnotes, each person listed in the
following table has sole voting power and investment power over the shares of
Common Stock listed as beneficially owned by that person. Percentage of
beneficial ownership is based on 30,850,563 shares of Common Stock outstanding
on June 12, 2003.
Unless otherwise indicated in the footnotes, the address for each listed
person or entity is c/o Aviall, Inc., 2750 Regent Boulevard, DFW Airport, Texas
75261.
TOTAL SHARES OF PERCENTAGE OF
OWNED SHARES OF OPTION SHARES OF COMMON STOCK COMMON STOCK
NAME COMMON STOCK(1) COMMON STOCK(2) BENEFICIALLY OWNED BENEFICIALLY OWNED
---- --------------- ---------------- ------------------ ------------------
Paul E. Fulchino(3)......... 124,553 623,750 748,303 2.4%
Peter J. Clare(4)........... -- -- -- --
Alberto F. Fernandez........ -- -- -- --
Allan M. Holt(4)............ -- -- -- --
Donald R. Muzyka............ 20,655 9,000 29,655 *
Richard J. Schnieders....... 19,709 9,000 28,709 *
Jonathan M. Schofield....... 5,086 6,000 11,086 *
Arthur E. Wegner............ 4,902 9,000 13,902 *
Bruce N. Whitman............ 76,709 9,000 85,709 *
Charles M. Kienzle(5)....... 48,912 224,800 273,712 *
Dan P. Komnenovich(6)....... 44,763 101,150 145,913 *
Jeffrey J. Murphy(7)........ 52,600 214,850 267,450 *
James T. Quinn(8)........... 28,450 160,945 189,395 *
All current directors and
executive officers as a
group (17 persons)........ 518,923 1,827,260 2,346,183 7.2
---------------
* Less than one percent
(1) Represents shares of Common Stock beneficially owned by such individuals,
including shares beneficially owned pursuant to the Aviall, Inc. Employees'
Savings Plan and shares of restricted stock beneficially owned pursuant to
the Directors Stock Plan.
(2) Represents shares of Common Stock that may be acquired within 60 days of
June 12, 2003, through the exercise of stock options.
(3) Includes 61,853 shares of restricted Common Stock for which Mr. Fulchino has
sole voting power and no investment power.
(4) The address of this person is c/o The Carlyle Group, 1001 Pennsylvania
Avenue, N.W., Suite 220 South, Washington D.C. 20004-2505.
(5) Includes 23,040 shares of restricted Common Stock for which Mr. Kienzle has
sole voting power and no investment power.
(6) Includes 34,703 shares of restricted Common Stock for which Mr. Komnenovich
has sole voting power and no investment power.
(7) Includes 18,115 shares of Common Stock held jointly by Mr. Murphy and his
spouse. Mr. Murphy has shared voting and investment power with respect to
these shares. Also includes 23,703 shares of restricted Common Stock for
which Mr. Murphy has sole voting power and no investment power.
(8) Includes 20,433 shares of restricted Common Stock for which Mr. Quinn has
sole voting power and no investment power.
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BENEFICIAL OWNERS OF 5% OR MORE
The following table sets forth information regarding the number and
percentage of shares of Common Stock held by all persons and entities who are
known by the Company to beneficially own 5% or more of the outstanding Common
Stock. The information regarding beneficial ownership of Common Stock by the
entity identified below is included in reliance on reports filed with the SEC by
such entity and information known to the Company as of June 12, 2003, and the
percentage is based upon the Company's calculations made in reliance upon the
number of shares of Common Stock reported to be beneficially owned by such
entity in such reports and the number of shares of Common Stock outstanding on
June 12, 2003.
SHARES OF PERCENTAGE OF
COMMON STOCK COMMON STOCK
BENEFICIAL OWNER BENEFICIALLY OWNED BENEFICIALLY OWNED
---------------- ------------------ ------------------
TCG Holdings, L.L.C.(1)(2).................................. 11,363,378 36.5%
---------------
(1) TCG Holdings, L.L.C and certain affiliates beneficially own 11,363,378
shares of Common Stock by virtue of their beneficial ownership of 11,100,878
shares of Common Stock and a warrant exercisable for 262,500 shares of
Common Stock, consisting of (i) 9,499,027 shares of Common Stock owned of
record by Carlyle Partners III, L.P., (ii) 801,146 shares of Common Stock
owned of record by CP III Coinvestment, L.P., (iii) 554,504 shares of Common
Stock and a warrant currently exercisable for 262,500 shares of Common Stock
owned of record by Carlyle High Yield Partners, L.P. and (iv) 246,201 shares
of Common Stock owned of record by Carlyle-Aviall Partners II, L.P.
(2) TC Group III, L.P. is the sole general partner of Carlyle Partners III,
L.P., CP III Coinvestment, L.P. and Carlyle-Aviall Partners II, L.P. TC
Group III, L.L.C. is the sole general partner of TC Group III, L.P. TCG High
Yield, L.L.C. is the sole general partner of Carlyle High Yield Partners,
L.P. TCG High Yield Holdings, L.L.C. is the sole managing member of TCG High
Yield, L.L.C. TC Group, L.L.C. is the sole managing member of TC Group III,
L.L.C. and TCG High Yield Holdings, L.L.C. TCG Holdings, L.L.C. is the sole
managing member of TC Group, L.L.C. Accordingly, (i) TC Group III, L.P. and
TC Group III, L.L.C. each may be deemed to be a beneficial owner of shares
of Common Stock owned of record by each of Carlyle Partners III, L.P., CP
III Coinvestment, L.P. and Carlyle-Aviall Partners II, L.P.; (ii) TCG High
Yield, L.L.C. and TCG High Yield Holdings, L.L.C. each may be deemed to be a
beneficial owner of shares of Common Stock owned of record by Carlyle High
Yield Partners, L.P. and (iii) TC Group, L.L.C. and TCG Holdings, L.L.C.
each may be deemed to be a beneficial owner of the shares of Common Stock
owned of record by each of Carlyle Partners III, L.P., CP III Coinvestment,
L.P., Carlyle-Aviall Partners II, L.P. and Carlyle High Yield Partners, L.P.
William E. Conway, Jr., Daniel A. D'Aniello and David M. Ruberstein are
managing members of TCG Holdings, L.L.C. and, in such capacity, may be
deemed to share beneficial ownership of shares of Common Stock beneficially
owned by TCG Holdings, L.L.C. Such individuals expressly disclaim any such
beneficial ownership. The principal address and principal offices of TCG
Holdings, L.L.C. and certain affiliates is c/o The Carlyle Group, 1001
Pennsylvania Avenue, N.W., Suite 220 South, Washington, D.C. 20004-2505.
Each of the foregoing entities reports to have sole voting and investment
power over the shares of Common Stock reported to be beneficially owned by
such entity.
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