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-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: [email protected]
Originator-Key-Asymmetric:
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MIC-Info: RSA-MD5,RSA,
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<SEC-DOCUMENT>0001047469-04-023905.txt : 20040723
<SEC-HEADER>0001047469-04-023905.hdr.sgml : 20040723
<ACCEPTANCE-DATETIME>20040722125720
ACCESSION NUMBER: 0001047469-04-023905
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 12
CONFORMED PERIOD OF REPORT: 20040531
FILED AS OF DATE: 20040722
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: AAR CORP
CENTRAL INDEX KEY: 0000001750
STANDARD INDUSTRIAL CLASSIFICATION: AIRCRAFT & PARTS [3720]
IRS NUMBER: 362334820
STATE OF INCORPORATION: DE
FISCAL YEAR END: 0531
FILING VALUES:
FORM TYPE: 10-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-06263
FILM NUMBER: 04926022
BUSINESS ADDRESS:
STREET 1: 1100 N WOOD DALE RD
CITY: WOOD DALE
STATE: IL
ZIP: 60191
BUSINESS PHONE: 6302272000
MAIL ADDRESS:
STREET 1: 1100 N WOOD DALE RD
CITY: WOOD DALE
STATE: IL
ZIP: 60191
FORMER COMPANY:
FORMER CONFORMED NAME: ALLEN AIRCRAFT RADIO INC
DATE OF NAME CHANGE: 19700204
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>a2140220z10-k.htm
<DESCRIPTION>10-K
<TEXT>
<HTML>
<HEAD>
</HEAD>
<BODY BGCOLOR="#FFFFFF" LINK=BLUE VLINK=PURPLE>
<BR>
<FONT SIZE=3 ><A HREF="#04CHI3360_1">QuickLinks</A></FONT>
<font size=3> -- Click here to rapidly navigate through this document</font>
<P><FONT SIZE=2><I> <hr noshade width=100% align=left size=4>
<hr noshade width=100% align=left size=1> </I></FONT></P>
<P ALIGN="CENTER"><FONT SIZE=4><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR> </B></FONT><FONT SIZE=2><B>WASHINGTON, D.C. 20549 </B></FONT></P>
<HR NOSHADE ALIGN="CENTER" WIDTH="120">
<P ALIGN="CENTER"><FONT SIZE=4><B>FORM 10-K </B></FONT></P>
<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>(Mark One)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="4%"><FONT SIZE=2><B><FONT FACE="WINGDINGS">ý</FONT></B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="94%"><FONT SIZE=2><B>Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3 ALIGN="CENTER"><BR><FONT SIZE=2><B>For the fiscal year ended May 31, 2004</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="4%"><BR><FONT SIZE=2><B><FONT FACE="WINGDINGS">o</FONT></B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><B><BR> </B></FONT></TD>
<TD WIDTH="94%"><FONT SIZE=2><B><BR>
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934</B></FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=3 ALIGN="CENTER" VALIGN="TOP"><BR><FONT SIZE=2><B>For the transition period
from to
</B></FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->
<P ALIGN="CENTER"><FONT SIZE=2><B>Commission file number 1-6263 </B></FONT></P>
<P ALIGN="CENTER"><FONT SIZE=4><B>AAR CORP.<BR> </B></FONT><FONT SIZE=2>(Exact name of Registrant as specified in its charter) </FONT></P>
<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TD WIDTH="49%" ALIGN="CENTER" VALIGN="TOP"><BR><FONT SIZE=2><B>Delaware</B></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><B><BR> </B></FONT></TD>
<TD WIDTH="49%" ALIGN="CENTER" VALIGN="TOP"><FONT SIZE=2><B><BR>
36-2334820</B></FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="49%" ALIGN="CENTER" VALIGN="TOP"><FONT SIZE=2>(State or other jurisdiction of<BR>
incorporation or organization)<BR></FONT>
</TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="49%" ALIGN="CENTER" VALIGN="TOP"><FONT SIZE=2>(I.R.S. Employer Identification No.)</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->
<P ALIGN="CENTER"><FONT SIZE=2><B>One AAR Place, 1100 N. Wood Dale Road, Wood Dale, Illinois 60191<BR> </B></FONT><FONT SIZE=2>(Address of principal executive offices, including zip code)<BR>
<BR>
Registrant's telephone number, including area code: </FONT><FONT SIZE=2><B>(630) 227-2000</B></FONT><FONT SIZE=2><BR>
<BR>
Securities registered pursuant to Section 12(b) of the Act: </FONT></P>
<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="49%" ALIGN="CENTER"><BR><FONT SIZE=2><I><U>Title of Each Class</U></I></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><I><BR> </I></FONT></TD>
<TD WIDTH="49%" ALIGN="CENTER"><FONT SIZE=2><I><BR>
<U>Name of Each Exchange on Which Registered</U></I></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="49%" ALIGN="CENTER"><FONT SIZE=2><B>Common Stock, $1.00 par value</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="49%" ALIGN="CENTER"><FONT SIZE=2><B>New York Stock Exchange<BR>
Chicago Stock Exchange</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="49%" ALIGN="CENTER"><FONT SIZE=2><B><BR>
Common Stock Purchase Rights</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><B><BR> </B></FONT></TD>
<TD WIDTH="49%" ALIGN="CENTER"><FONT SIZE=2><B><BR>
New York Stock Exchange<BR>
Chicago Stock Exchange</B></FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->
<P ALIGN="CENTER"><FONT SIZE=2>Securities registered pursuant to Section 12(g) of the Act: </FONT><FONT SIZE=2><B>None</B></FONT></P>
<P><FONT SIZE=2> Indicate
by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
<FONT FACE="WINGDINGS">ý</FONT> No <FONT FACE="WINGDINGS">o</FONT> </FONT></P>
<P><FONT SIZE=2> Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of
the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
<FONT FACE="WINGDINGS">ý</FONT> </FONT></P>
<P><FONT SIZE=2> Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).<BR>
Yes <FONT FACE="WINGDINGS">ý</FONT> No <FONT FACE="WINGDINGS">o</FONT> </FONT></P>
<P><FONT SIZE=2> At November 28, 2003, the aggregate market value of the Registrant's voting stock held by nonaffiliates was approximately $301,972,993 (based upon the
closing price of the Common Stock at November 28, 2003 as reported on the New York Stock Exchange). The calculation of such market value has been made for the purposes of this report only and
should not be considered as an admission or conclusion by the Registrant that any person is in fact an affiliate of the Registrant. </FONT></P>
<P><FONT SIZE=2> On
July 1, 2004, there were 32,243,868 shares of Common Stock outstanding. </FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2><B>Documents Incorporated by Reference </B></FONT></P>
<P><FONT SIZE=2> Portions of the definitive proxy statement relating to the Registrant's 2004 Annual Meeting of Stockholders, to be held October 13, 2004, are incorporated
by reference in Part III to the extent described therein. </FONT></P>
<P><FONT SIZE=2><hr
noshade width=100% align=left size=1>
<hr noshade width=100% align=left size=4> </FONT></P>
<HR NOSHADE>
<P style='page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=1,EFW="2140220",CP="AAR CORP",DN="1",CHK=787154,FOLIO='blank',FILE='DISK026:[04CHI0.04CHI3360]BA3360A.;17',USER='SLYUBOM',CD='19-JUL-2004;19:59' -->
<!-- THIS IS THE END OF A COMPOSITION COMPONENT -->
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="page_bg3360_1_1"> </A> </FONT></P>
<!-- TOC_END -->
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="bg3360_table_of_contents"> </A>
<A NAME="toc_bg3360_1"> </A>
<BR></FONT><FONT SIZE=2><B>TABLE OF CONTENTS <BR> </B></FONT></P>
<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=2> </FONT></TH>
<TH WIDTH="78%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=2> </FONT></TH>
<TH WIDTH="6%" ALIGN="CENTER"><FONT SIZE=1><B>Page</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>PART I</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%"> </TD>
<TD WIDTH="10%"><BR><FONT SIZE=2> Item 1.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
Business</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
2</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%"> </TD>
<TD WIDTH="10%"><BR><FONT SIZE=2> Item 2.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
Properties</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
5</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%"> </TD>
<TD WIDTH="10%"><BR><FONT SIZE=2> Item 3.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
Legal Proceedings</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
6</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%"> </TD>
<TD WIDTH="10%"><BR><FONT SIZE=2> Item 4.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
Submission of Matters to a Vote of Security Holders</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
6</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2><BR>
</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
Supplemental Item—Executive Officers of the Registrant</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
7</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2><BR>
PART II</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM"><FONT SIZE=2><BR>
</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%"> </TD>
<TD WIDTH="10%"><BR><FONT SIZE=2> Item 5.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
8</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%"> </TD>
<TD WIDTH="10%"><BR><FONT SIZE=2> Item 6.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
Selected Financial Data</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
9</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%"> </TD>
<TD WIDTH="10%"><BR><FONT SIZE=2> Item 7.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
Management's Discussion and Analysis of Financial Condition and Results of Operations</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
10</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%"> </TD>
<TD WIDTH="10%"><BR><FONT SIZE=2> Item 7A.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
Quantitative and Qualitative Disclosures about Market Risk</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
18</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%"> </TD>
<TD WIDTH="10%"><BR><FONT SIZE=2> Item 8.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
Financial Statements and Supplementary Data</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
19</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%"> </TD>
<TD WIDTH="10%"><BR><FONT SIZE=2> Item 9.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
54</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%"> </TD>
<TD WIDTH="10%"><BR><FONT SIZE=2> Item 9A.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
Controls and Procedures</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
54</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2><BR>
PART III</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM"><FONT SIZE=2><BR>
</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%"> </TD>
<TD WIDTH="10%"><BR><FONT SIZE=2> Item 10.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
Directors and Executive Officers of the Registrant</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
55</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%"> </TD>
<TD WIDTH="10%"><BR><FONT SIZE=2> Item 11.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
Executive Compensation</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
55</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%"> </TD>
<TD WIDTH="10%"><BR><FONT SIZE=2> Item 12.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
55</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%"> </TD>
<TD WIDTH="10%"><BR><FONT SIZE=2> Item 13.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
Certain Relationships and Related Transactions</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
56</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%"> </TD>
<TD WIDTH="10%"><BR><FONT SIZE=2> Item 14.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
Principal Accountant Fees and Services</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
56</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2><BR>
PART IV</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM"><FONT SIZE=2><BR>
</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%"> </TD>
<TD WIDTH="10%"><BR><FONT SIZE=2> Item 15.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
Exhibits, Financial Statement Schedules, and Reports on Form 8-K</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
57</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2><BR>
SIGNATURES</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
58</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2><BR>
EXHIBIT INDEX</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> </FONT></TD>
<TD WIDTH="6%" VALIGN="BOTTOM"><FONT SIZE=2><BR>
</FONT></TD>
</TR>
</TABLE>
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<P ALIGN="CENTER"><FONT SIZE=2><A
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<BR></FONT><FONT SIZE=2><B>PART I <BR> </B></FONT></P>
<P><FONT SIZE=2><A
NAME="de3360_item_1._business_(dollars_in_thousands)"> </A>
<A NAME="toc_de3360_2"> </A></FONT> <FONT SIZE=2><B>ITEM 1. BUSINESS (Dollars in thousands) <BR> </B></FONT></P>
<P><FONT SIZE=2><B>General </B></FONT></P>
<P><FONT SIZE=2> AAR CORP. and its subsidiaries are referred to herein collectively as "AAR," "Company," "we," "us," and "our" unless the context indicates otherwise. We were
founded in 1951, organized in 1955 and were reincorporated in Delaware in 1966. We are a leading independent provider of products and services to the worldwide aviation/aerospace industry. We also
market and sell certain of our products and services to the U.S. Government, including various branches and agencies within the U.S. Military and their contractors. We conduct our business activities
primarily through five principal operating subsidiaries: AAR Parts Trading, Inc., AAR Aircraft & Engine Sales & Leasing, Inc., AAR Services, Inc., AAR
Manufacturing, Inc., and AAR International, Inc. Our international business activities are conducted primarily through AAR International, Inc. </FONT></P>
<P><FONT SIZE=2> We
report our activities in four business segments: (i) Inventory and Logistic Services, comprised primarily of business activities conducted through AAR Parts
Trading, Inc. and AAR Services, Inc., (ii) Maintenance, Repair and Overhaul, comprised primarily of business activities conducted through AAR Engine Services, Inc. and AAR
Allen Services, Inc., wholly-owned subsidiaries of AAR Parts Trading, Inc. and AAR Services, Inc., respectively, and AAR International, Inc., (iii) Manufacturing,
comprised primarily of business activities conducted through AAR Manufacturing, Inc., and (iv) Aircraft and Engine Sales and Leasing, comprised of business activities primarily conducted
through AAR Aircraft & Engine Sales & Leasing, Inc. </FONT></P>
<P><FONT SIZE=2><B>Inventory and Logistic Services </B></FONT></P>
<P><FONT SIZE=2> Activities in our Inventory and Logistic Services segment include the purchase and sale of a wide variety of new, overhauled and repaired engine and airframe
parts and components for the aviation aftermarket and military customers. We also provide customized inventory supply and management programs for engine and airframe parts and components in support of
customer maintenance activities. We are an authorized distributor for more than 125 leading aviation and aerospace product manufacturers. We acquire aviation products for the Inventory and Logistic
Services segment from domestic and foreign airlines, independent aviation service companies, aircraft leasing companies and original equipment manufacturers. In the Inventory and Logistic Services
segment, the majority of our sales are made pursuant to standard commercial purchase orders. In certain inventory supply and management programs, we supply products and services under agreements
reflecting negotiated terms and conditions. </FONT></P>
<P><FONT SIZE=2><B>Maintenance, Repair and Overhaul </B></FONT></P>
<P><FONT SIZE=2> Activities in our Maintenance, Repair and Overhaul segment include the maintenance, repair and overhaul and exchange of a wide variety of airframe and engine
parts and components for our commercial and military customers. Repair and overhaul capabilities include most commercial aircraft landing gear, a wide variety of avionics, instruments, electrical,
electronic, fuel, hydraulic and pneumatic components and a broad range of internal airframe components. We also operate an aircraft maintenance facility providing airframe maintenance, modification,
special equipment installation, painting services and aircraft terminal services for various models of commercial, military, regional, business and general aviation aircraft. We also operate an
aircraft storage facility. In June 2004, we entered into a long-term lease to occupy a portion of an airframe maintenance facility in Indianapolis, Indiana, significantly expanding
our maintenance and repair capacity and capabilities. The repair and overhaul of parts and components also support inventory management activities within the Inventory and Logistic Services segment.
We also provide turbine engine overhaul and parts supply services to industrial gas and steam turbine operators. In this segment, in addition to sales made under standard commercial purchase orders, a
portion of the segment's sales occur </FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>2</FONT></P>
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<P><FONT SIZE=2>pursuant
to contracts under which we agree to maintain, repair and overhaul parts, components and whole aircraft. In this segment, we purchase replacement parts from original equipment manufacturers
and suppliers that are used in various maintenance, repair and overhaul operations. We have ongoing arrangements with original equipment manufacturers (OEM) that provide us access to parts, repair
manuals and service bulletins in support of parts manufactured by the OEM. Although the terms of each arrangement vary, they typically are made on standard OEM terms as to duration, price and
delivery. When possible, we will obtain replacement parts used in repair and overhaul activities from operating units in our Inventory and Logistic Services segment. </FONT></P>
<P><FONT SIZE=2><B>Manufacturing </B></FONT></P>
<P><FONT SIZE=2> Activities in our Manufacturing segment include the manufacture and repair of a wide array of containers, pallets and shelters in support of military and
humanitarian tactical deployment activities. We also design, manufacture and install in-plane cargo loading and handling systems for commercial and military aircraft and helicopters. We
also design and manufacture advanced composite materials for commercial, business and military aircraft as well as advanced composite structures for the transportation industry. In this segment, sales
are made to customers pursuant to standard commercial purchase orders and contracts. In this segment, we purchase aluminum sheets, extrusions and castings and other necessary supplies from a number of
vendors. </FONT></P>
<P><FONT SIZE=2><B>Aircraft and Engine Sales and Leasing </B></FONT></P>
<P><FONT SIZE=2> Activities in our Aircraft and Engine Sales and Leasing segment include the sale or lease of used commercial jet aircraft and the sale or lease of a wide variety
of new and overhauled commercial jet engines. In this segment, each sale or lease is negotiated as a separate agreement which includes term, price, representations, warranties and lease return
provisions. Leases are fixed in regard to term; early termination by the lessee is not permitted except in the event of a breach by us. In this segment, we purchase aircraft and engines from domestic
and foreign airlines, aircraft and engine leasing companies and original equipment manufacturers. Activities in the Aircraft and Engine Sales and Leasing segment also include the formation and
operation of joint ventures with strategic and financial partners. The primary business of these joint ventures is the ownership and lease of aircraft to commercial airlines. Within this segment, we
also provide advisory services which consist of assistance in remarketing aircraft and engines, records management and storage maintenance. </FONT></P>
<P><FONT SIZE=2><B>Raw Materials </B></FONT></P>
<P><FONT SIZE=2> We historically have been able to obtain raw materials and other items for our inventories for each of our segments at competitive prices, terms and conditions
from numerous sources, and we expect to be able to continue to do so. </FONT></P>
<P><FONT SIZE=2><B>Terms of Sale </B></FONT></P>
<P><FONT SIZE=2> In the Inventory and Logistic Services, Maintenance, Repair and Overhaul and Manufacturing segments, we generally sell our products under standard
30-day terms. On occasion, certain customers (principally foreign customers) will negotiate extended payment terms
(60-90 days). Except for customary warranty provisions, customers do not have the right to return products nor do they have the right to extended financing. In the Aircraft and
Engine Sales and Leasing segment, we sell our products on a cash due at delivery basis, standard 30-day terms or on an extended term basis. </FONT></P>
<P><FONT SIZE=2><B>Customers </B></FONT></P>
<P><FONT SIZE=2> For each of our reportable segments, we furnish aviation products and services primarily through our own employees. The principal customers for our products and
services in the Inventory and Logistic </FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>3</FONT></P>
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<P><FONT SIZE=2>Services
and Maintenance, Repair and Overhaul segments are domestic and foreign commercial airlines, regional and commuter airlines, business and general aviation operators, aviation original
equipment manufacturers, aircraft leasing companies, domestic and foreign military organizations and independent aviation support companies. In the Manufacturing segment, our principal customers
include domestic and foreign military organizations, domestic and foreign commercial airlines, aviation original equipment manufacturers and other industrial entities. The principal customers in the
Aircraft and Engine Sales and Leasing segment include domestic and foreign commercial airlines and aircraft and engine finance and leasing companies. Sales of aviation products and services to
commercial airlines are generally affected by such factors as the number, type and average age of aircraft in service, the levels of aircraft utilization (e.g., frequency of schedules), the number of
airline operators and the level of sales of new and used aircraft. </FONT></P>
<P><FONT SIZE=2><B>Licenses </B></FONT></P>
<P><FONT SIZE=2> We have 14 Federal Aviation Administration (FAA) licensed repair stations in the United States and Europe. Of the 14 FAA repair stations, eight are also Joint
Aviation Authorities (JAA) licensed repair stations. Such licenses, which are ongoing in duration, are required in order for us to perform authorized maintenance, repair and overhaul services for our
customers and are subject to revocation by the government for non-compliance with applicable regulations. Of the 14 FAA licensed repair stations, one is held in the Inventory and Logistic
Services segment, nine are held in the Maintenance, Repair and Overhaul segment, and four are held in the Manufacturing segment. Of the eight JAA licensed repair stations, seven are held in the
Maintenance, Repair and Overhaul segment and one is held in the Manufacturing segment. We believe that we possess all licenses and certifications that are material to the conduct of our business. </FONT></P>
<P><FONT SIZE=2><B>Competition </B></FONT></P>
<P><FONT SIZE=2> Competition in the worldwide aviation/aerospace industry is based on quality, ability to provide a broad range of products and services, speed of delivery and
price. Competitors in both the Inventory and Logistic Services and the Maintenance, Repair and Overhaul segments include original equipment manufacturers, the service divisions of large commercial
airlines and other independent suppliers of parts and services. In our Aircraft and Engine Sales and Leasing segment, we face competition from financial institutions, syndicators, commercial and
specialized leasing companies and other entities that provide financing. Our pallet, container and shelter manufacturing activities in our Manufacturing segment compete with several large and small
companies, and our cargo systems competitors include a number of divisions of large corporations. Although certain of our competitors have substantially greater financial and other resources than we
do, in each of our four reportable segments we believe that we have maintained a satisfactory competitive position through our responsiveness to customer needs, our attention to quality and our unique
combination of market expertise and technical and financial capabilities. </FONT></P>
<P><FONT SIZE=2><B>Backlog </B></FONT></P>
<P><FONT SIZE=2> At May 31, 2004, backlog believed to be firm was approximately $162,400 compared to $102,700 at May 31, 2003. Approximately $148,200 of this backlog
is expected to be filled within the next 12 months. The increase in our backlog reflects orders in our Manufacturing segment for products that support the U.S. Military's rapid deployment needs
and cargo systems. </FONT></P>
<P><FONT SIZE=2><B>Employees </B></FONT></P>
<P><FONT SIZE=2> At May 31, 2004, we employed approximately 2,300 persons worldwide. </FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>4</FONT></P>
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<P><FONT SIZE=2><B>Sales to U.S. Government </B></FONT></P>
<P><FONT SIZE=2> Sales to the U.S. Government, its agencies and its contractors were $222,558 (34.1% of total sales), $170,191 (28.1% of total sales), and $163,173 (25.5% of total
sales) in fiscal years 2004, 2003 and 2002,
respectively. Because such sales are subject to competitive bidding and government funding, no assurance can be given that such sales will continue at levels previously experienced. The majority of
our government contracts are for aviation products and services used for ongoing routine military logistic support activities; unlike weapons systems and other high-technology military
requirements, these products and services are less likely to be affected by significant changes in defense spending. Our government contracts are subject to termination at the election of the
government; in the event of such a termination we would be entitled to recover from the government all allowable costs incurred by us through the date of termination. </FONT></P>
<P><FONT SIZE=2><B>Additional Information </B></FONT></P>
<P><FONT SIZE=2> For additional information concerning our business segments, see Item 7, "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business Segment Information" in Note 13 of Notes to Consolidated Financial Statements. </FONT></P>
<P><FONT SIZE=2> Our
internet address is </FONT><FONT SIZE=2><I>www.aarcorp.com</I></FONT><FONT SIZE=2>. We make available free of charge through our web site our annual report on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish such material to the SEC. Information contained on our
web site is not a part of this report. </FONT></P>
<P><FONT SIZE=2><A
NAME="de3360_item_2._properties"> </A>
<A NAME="toc_de3360_3"> </A>
<BR></FONT><FONT SIZE=2><B>ITEM 2. PROPERTIES <BR> </B></FONT></P>
<P><FONT SIZE=2> Our principal activities in the Aircraft and Engine Sales and Leasing and Inventory and Logistic Services segments are conducted from a building owned by us in
Wood Dale, Illinois, subject to a mortgage. In addition to warehouse space, this facility includes executive, sales and administrative offices. We also lease facilities in Atlanta and Macon, Georgia
and Jacksonville, Florida to support activities in the Inventory and Logistic Services segment. </FONT></P>
<P><FONT SIZE=2> Maintenance,
Repair and Overhaul activities are conducted in buildings owned by us located in Frankfort, New York; Windsor, Connecticut (subject to an industrial revenue bond) and near
Schiphol International Airport in The Netherlands. This segment also conducts overhaul and repair activities in buildings leased by the Company in Miami, Florida; Garden City, New York; London,
England; Roswell, New Mexico; and Oklahoma City, Oklahoma. In June 2004, we agreed to lease a portion of an aircraft maintenance facility in Indianapolis, Indiana. </FONT></P>
<P><FONT SIZE=2> Our
activities in the Manufacturing segment are conducted at facilities owned by us in Clearwater, Florida (subject to an industrial revenue bond) and Cadillac and Livonia, Michigan. </FONT></P>
<P><FONT SIZE=2> We
believe that our owned and leased facilities are suitable and adequate for our operational requirements. </FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>5</FONT></P>
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<P><FONT SIZE=2><A
NAME="dg3360_item_3._legal_proceedings_(dollars_in_thousands)"> </A>
<A NAME="toc_dg3360_1"> </A>
<BR></FONT><FONT SIZE=2><B>ITEM 3. LEGAL PROCEEDINGS (Dollars in thousands) <BR> </B></FONT></P>
<P><FONT SIZE=2> Except as described below, we are not a party to any material, pending legal proceeding (including any governmental or environmental proceedings) other than
routine litigation incidental to our existing business. </FONT></P>
<P><FONT SIZE=2> AAR
Manufacturing, Inc., a subsidiary of the Company ("subsidiary") received an Administrative Order for Response Activity ("Order") dated August 7, 2003, from the Michigan
Department of Environmental Quality ("MDEQ") relating to environmental conditions at and in the vicinity of our subsidiary's Cadillac, Michigan plant. The Order requires our subsidiary to perform
environmental investigatory work, prepare a feasibility study and a remedial action plan, and perform interim response actions. The interim response actions include continuation of the response
activities our subsidiary is performing under a 1985 Consent Decree, operation of a soil vapor extraction system our subsidiary had previously installed and operated, determination of the need to
provide alternate water supplies to off-site properties (and if it is so determined then to actually provide it), removal of any free phase liquids encountered in the ground, providing
notices of groundwater contamination migration to off-site property owners, and other actions determined by the MDEQ or our subsidiary to be appropriate. A letter dated June 14,
2002 from the MDEQ further demands payment of environmental response costs already incurred by the MDEQ in the amount of $525 plus interest plus unspecified costs to be incurred in the future by the
MDEQ. The Order and the letter which accompanies the Order threaten the imposition of civil fines up to $25 for each day of violation of the Order plus exemplary damages up to three times the costs
incurred by the MDEQ if our subsidiary does not comply with the Order. The Order may require the implementation of the remedial action plan although it is not clear on that point. The Order requires
the implementation of emergency response action if a release of hazardous substances, threat of a release, or exacerbation of existing contamination occurs during the pendency of the Order. </FONT></P>
<P><FONT SIZE=2> Our
subsidiary advised the MDEQ that it will perform the requirements of the Order to the extent those requirements apply to the allegation by the MDEQ that a release of hazardous
substances occurred after the execution of the 1985 Consent Decree. Our subsidiary declined to perform work required under the Order which our subsidiary believes is based on claims resolved in the
1985 Consent Decree. The MDEQ responded to our subsidiary by saying that the MDEQ "will be taking appropriate action to protect public health, safety and welfare and the environment, and gain AAR's
compliance with Part 201." </FONT></P>
<P><FONT SIZE=2> Our
subsidiary has spent approximately $100 in performing environmental investigations under the Order. Our subsidiary may conduct work under the Order in addition to the work to be
performed noted above. We believe the work performed by our subsidiary since the issuance of the Order supports the positions previously taken by our subsidiary regarding the movement of groundwater
in the vicinity of our subsidiary's plant and the ongoing capture of groundwater for treatment by our subsidiary. However, there continues to be disagreement between our subsidiary and the MDEQ
concerning the conclusions to be drawn from the data from that work. No action has been taken by the MDEQ to enforce the Order against our subsidiary, although the MDEQ has retained contractors to
perform environmental investigations in the vicinity of our subsidiary's plant. </FONT></P>
<P><FONT SIZE=2><A
NAME="dg3360_item_4._submission_of_m__dg302396"> </A>
<A NAME="toc_dg3360_2"> </A>
<BR></FONT><FONT SIZE=2><B>ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS <BR> </B></FONT></P>
<P><FONT SIZE=2> No matter was submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this report. </FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>6</FONT></P>
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<P><FONT SIZE=2><B>Supplemental Item: </B></FONT></P>
<P><FONT SIZE=2><B>EXECUTIVE OFFICERS OF THE REGISTRANT </B></FONT></P>
<P><FONT SIZE=2> Information concerning each of our executive officers is set forth below: </FONT></P>
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<TH WIDTH="3%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="5%" ALIGN="CENTER"><FONT SIZE=1><B>Age</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="60%" ALIGN="LEFT"><FONT SIZE=1><B>Present Position with the Company<BR> </B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="30%"><FONT SIZE=2>David P. Storch</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>51</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="60%"><FONT SIZE=2>President and Chief Executive Officer, Director</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="30%"><FONT SIZE=2>Howard A. Pulsifer</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>61</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="60%"><FONT SIZE=2>Vice President, General Counsel, Secretary</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="30%"><FONT SIZE=2>Timothy J. Romenesko</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>47</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="60%"><FONT SIZE=2>Vice President and Chief Financial Officer</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="30%"><FONT SIZE=2>James J. Clark</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>44</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="60%"><FONT SIZE=2>Group Vice President, Maintenance, Repair and Overhaul</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="30%"><FONT SIZE=2>J. Mark McDonald</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>44</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="60%"><FONT SIZE=2>Group Vice President, Manufacturing</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->
<P><FONT SIZE=2> </FONT><FONT
SIZE=2><B>Mr. Storch</B></FONT><FONT SIZE=2> has served as President of the Company since 1989 and Chief Executive Officer since 1996. Previously, he
served as Chief Operating Officer from 1989 to 1996 and as a Vice President of the Company from 1988 to 1989. Mr. Storch joined the Company in 1979 and served as president of a major subsidiary
from 1984 to 1988. Mr. Storch has been a director of the Company since 1989. Mr. Storch is Ira A. Eichner's son-in-law. Mr. Eichner is Chairman of the
Board and a Director of the Company. </FONT></P>
<P><FONT SIZE=2> </FONT><FONT
SIZE=2><B>Mr. Pulsifer</B></FONT><FONT SIZE=2> has served as Vice President, General Counsel and Secretary of the Company since 1990. Previously, he served as Vice
President (since 1990) and General Counsel (since 1987). He was previously with United Airlines, Inc. for 14 years, most recently as Senior Counsel. </FONT></P>
<P><FONT SIZE=2> </FONT><FONT
SIZE=2><B>Mr. Romenesko</B></FONT><FONT SIZE=2> has served as Vice President and Chief Financial Officer since 1994. Previously, he served as Controller of the
Company from 1991 to 1995 and in various other positions since joining the Company in 1981. </FONT></P>
<P><FONT SIZE=2> </FONT><FONT
SIZE=2><B>Mr. Clark</B></FONT><FONT SIZE=2> has served as Group Vice President, Maintenance, Repair and Overhaul since 2000. Previously, he was General Manager of
AAR Aircraft Component Services—Amsterdam from 1995 to 2000 and in various other positions since joining the Company in 1982. </FONT></P>
<P><FONT SIZE=2> </FONT><FONT
SIZE=2><B>Mr. McDonald</B></FONT><FONT SIZE=2> has served as Group Vice President, Manufacturing since 2003. Previously, he served as General Manager of AAR Mobility
Systems from 2000 to 2003 and as Vice President of Operations from 1996 to 2003. He was previously with General Electric in various positions from 1984 to 1996. </FONT></P>
<P><FONT SIZE=2> Each
executive officer is elected annually by the Board of Directors at the first meeting of the Board held after the annual meeting of stockholders. Executive officers continue to hold
office until their successors are duly elected or until their death, resignation, termination or reassignment. </FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>7</FONT></P>
<HR NOSHADE>
<P style='page-break-before:always'></p>
<!-- ZEQ.=2,SEQ=8,EFW="2140220",CP="AAR CORP",DN="1",CHK=169905,FOLIO='7',FILE='DISK026:[04CHI0.04CHI3360]DG3360A.;10',USER='DINGRAM',CD='19-JUL-2004;19:18' -->
<!-- THIS IS THE END OF A COMPOSITION COMPONENT -->
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="page_di3360_1_8"> </A> </FONT></P>
<!-- TOC_END -->
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="di3360_part_ii"> </A>
<A NAME="toc_di3360_1"> </A>
<BR></FONT><FONT SIZE=2><B>PART II <BR> </B></FONT></P>
<P><FONT SIZE=2><A
NAME="di3360_item_5._market_for_registrant___ite06506"> </A>
<A NAME="toc_di3360_2"> </A></FONT> <FONT SIZE=2><B>ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES<BR> (Dollars in thousands, except per share amounts)
<BR> </B></FONT></P>
<P><FONT SIZE=2> Our Common Stock is traded on the New York Stock Exchange and the Chicago Stock Exchange. On July 1, 2004 there were approximately 7,000 holders of
Common Stock, including participants in security position listings. </FONT></P>
<P><FONT SIZE=2> Certain
of our financing arrangements contain provisions restricting the payment of dividends or repurchase of our shares. See Note 3 of Notes to Consolidated Financial Statements
included herein. Under the most restrictive of these provisions, we may not pay dividends (other than stock dividends) or acquire our capital stock if, after giving effect to the aggregate amounts
paid on or after June 1, 1995, such amounts exceed the sum of $20,000 plus 50% of Consolidated Net Income (Loss) after June 1, 1994. We are currently prohibited from paying dividends or
purchasing our shares pursuant to this provision, and during fiscal 2004 and 2003 we did not purchase any of our equity securities. </FONT></P>
<P><FONT SIZE=2> The
table below sets forth for each quarter of the fiscal year indicated the reported high and low market prices of our Common Stock on the New York Stock Exchange and the quarterly
dividends declared. We suspended payment of dividends in October 2002. </FONT></P>
<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="36%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER"><FONT SIZE=1><B>Fiscal 2004</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER"><FONT SIZE=1><B>Fiscal 2003</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="36%" ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Per Common Share</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" ROWSPAN=2><FONT SIZE=1> </FONT></TH>
<TH COLSPAN=5 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Market Prices</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="2%" ROWSPAN=2><FONT SIZE=1> </FONT></TH>
<TH COLSPAN=5 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Market Prices</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="2%" ROWSPAN=2><FONT SIZE=1> </FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Quarterly<BR>
Dividends</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" ROWSPAN=2><FONT SIZE=1> </FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Quarterly<BR>
Dividends</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="36%" ALIGN="CENTER"><FONT SIZE=1><B>Quarter</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>High</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Low</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>High</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Low</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="36%"><FONT SIZE=2>First</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>8.34</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>4.72</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>.000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>11.15</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>6.00</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>.025</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="36%"><FONT SIZE=2>Second</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>11.38</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>7.30</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>.000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>6.11</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>3.20</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>.000</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="36%"><FONT SIZE=2>Third</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>16.37</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>10.25</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>.000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>6.09</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>4.45</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>.000</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="36%"><FONT SIZE=2>Fourth</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>13.09</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>8.72</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>.000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>4.50</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>3.70</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>.000</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="36%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="36%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>.000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>.025</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="36%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE>
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