SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
[ X ] QUARTERLY REPORT UNDER SECTION 13 or 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended: June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission File No.: 33-62598
Fairfield Manufacturing Company, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 63-0500160
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
U. S. 52 South, Lafayette, IN 47905
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (765) 474-3474
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 X No
The number of shares outstanding of each of the issuer's classes of common
stock as of June 30, 1997 is as follows:
7,910,000 shares of Common Stock
FAIRFIELD MANUFACTURING COMPANY, INC.
Form 10-Q
June 30, 1997
PART I - FINANCIAL INFORMATION
Page
Number
Item 1 - Financial Statements:
Consolidated Balance Sheets, June 30, 1997 (Unaudited) and 3
December 31, 1996
Consolidated Statements of Operations for the three and six 4
months ended June 30, 1997 and 1996 (Unaudited)
Consolidated Statements of Cash Flows for the six months 5
ended June 30, 1997 and 1996 (Unaudited)
Consolidated Statement of Stockholder's Equity (Deficit) 6
for the six months ended June 30, 1997 (Unaudited)
Notes to Consolidated Financial Statements (Unaudited) 7-8
Item 2 - Management's Discussion and Analysis of Financial 9-10
Condition and Results of Operations
PART II - OTHER INFORMATION
Item 5 - Other Information 11
Item 6 - Exhibits and Reports on Form 8-K 11
SIGNATURE 12
EXHIBIT INDEX 13-18
FAIRFIELD MANUFACTURING COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, 1997 December 31,
1996
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 4,536 $ 6,185
Trade receivables, less allowance of $600 23,906 24,696
in 1997 and 1996
Inventory 21,073 18,918
Prepaid expenses 491 853
Total current assets 50,006 50,652
PROPERTY, PLANT AND EQUIPMENT, NET 68,438 70,211
OTHER ASSETS:
Excess of investment over net assets 51,689 52,491
acquired, less accumulated
amortization of $12,670 in 1997 and
11,868 in 1996
Deferred financing costs, less 2,674 3,016
accumulated amortization of $2,698
in 1997 and $2,355 in 1996
Total other assets 54,363 55,507
Total assets $172,807 $176,370
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 3,500 $ 3,000
Accounts payable 11,056 13,260
Due to parent 325 287
Accrued liabilities 20,554 18,182
Deferred income taxes 3,800 3,800
Total current liabilities 39,235 38,529
ACCRUED RETIREMENT COSTS 14,857 15,423
DEFERRED INCOME TAXES 11,996 11,988
LONG-TERM DEBT, NET OF CURRENT 110,000 115,000
MATURITIES
11 1/4% CUMULATIVE EXCHANGEABLE 47,756 --
PREFERRED STOCK
STOCKHOLDER'S EQUITY (DEFICIT):
Common stock: par value $.01 per share, 79 78
10,000,000 shares authorized,
7,910,000 and 7,805,000 issued and
outstanding in 1997 and 1996,
respectively
Additional paid-in capital 37,676 36,788
Accumulated deficit (88,792) (41,436)
Total stockholder's equity (51,037) (4,570)
(deficit)
Total liabilities and stockholder's $172,807 $176,370
equity (deficit)
The accompanying notes to consolidated financial statements
are an integral part of these statements.
FAIRFIELD MANUFACTURING COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three months ended Six months ended June
June 30, 30,
1997 1996 1997 1996
Net sales $ 50,754 $ 49,585 $ 99,989 $100,925
Cost of sales 40,874 40,838 80,726 82,513
Selling, general and 4,437 4,561 8,655 8,599
administrative
expenses
OPERATING INCOME 5,443 4,186 10,608 9,813
Interest expense, net 3,111 2,990 6,342 6,060
Other expense, net 26 12 46 33
INCOME BEFORE INCOME TAXES 2,306 1,184 4,220 3,720
Provision for income taxes 1,130 772 2,070 1,755
NET INCOME $1,176 $412 $2,150 $1,965
Preferred stock dividends (1,463) -- (1,763) --
and discount accretion
NET (LOSS)/INCOME AVAILABLE
TO COMMON STOCKHOLDER $(287) $412 $387 $1,965
(LOSS)/INCOME PER SHARE
DATA:
Net (loss)/income per
common share $(0.04) $0.05 $0.05 $0.26
Weighted average 7,857,582 7,701,560 7,831,593 7,688,918
common shares
outstanding
The accompanying notes to consolidated financial statements
are an integral part of these statements.
FAIRFIELD MANUFACTURING COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
For the For the
six six
months months
ended ended
June 30, June 30,
1997 1996
OPERATING ACTIVITIES:
Net income $ 2,150 $ 1,965
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 6,749 6,662
Deferred income tax benefit 8 (1,033)
(Decrease) increase in accrued retirement (566) --
costs
(Increase) decrease in current assets:
Trade receivables 790 598
Inventory (2,155) 5,183
Prepaids 362 257
Increase (decrease) in current
liabilities:
Accounts payable (2,632) 2,183
Due to parent 38 (413)
Accrued liabilities 665 (1,413)
Net cash (used in) provided by operating 5,409 13,989
activities
INVESTING ACTIVITIES:
Additions to plant and equipment, net
(3,394) (6,024)
Net cash used in investing activities
(3,394) (6,024)
FINANCING ACTIVITIES:
Proceeds from additional capital contribution 879 1,053
Payment of dividends (50,770) --
Advance to parent 3,027 --
Proceeds of long-term debt 4,000 5,000
Payment of long-term debt (8,500) (15,000)
Proceeds of preferred stock offering 50,000 --
Payment of preferred stock issuance costs (2,300) --
Net cash used in financing activities (3,664) (8,947)
DECREASE IN CASH AND CASH EQUIVALENTS (1,649) (982)
CASH AND CASH EQUIVALENTS:
Beginning of period 6,185 4,324
End of period $ 4,536 $3,342
Supplemental Disclosures:
Cash paid for:
Interest $ 6,171 $ 5,921
Taxes to parent $ 1,000 $1,700
Non-cash activities:
Additions to plant and equipment included in accounts payable at June
30, 1997 and 1996 of $428 and $114, respectively, are excluded from
operating activities above.
Preferred stock dividends included in accrued liabilities at June 30,
1997 of $1,707 are excluded from operating activities above.
The accompanying notes to consolidated financial statements
are an integral part of these statements.
FAIRFIELD MANUFACTURING COMPANY, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY (DEFICIT)
(In thousands)
(Unaudited)
Additional Stock-
Common Paid-in Accumulat holder's
Stock Capital ed Equity
Deficit (Deficit)
Balance, January 1, 1997 $ 78 $36,788 $(41,436) $ (4,570)
Issuance of common 1 (1) -- --
stock
Capital contribution -- 879 -- 879
Common stock dividends -- -- (50,770) (50,770)
Preferred stock -- -- (56) (56)
discount accretion
Preferred stock -- -- (1,707) (1,707)
dividends accrued
Advance to parent -- -- 3,027 3,027
Merger with First -- 10 -- 10
Colony Farms, Inc.
Net income -- -- 2,150 2,150
Balance, June 30, 1997 $ 79 $37,676 $(88,792) $(51,037)
The accompanying notes to consolidated financial statements
are an integral part of this statement.
FAIRFIELD MANUFACTURING COMPANY, INC.
NOTES to CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Interim Financial Information:
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
reporting and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-
X. Accordingly, certain information and footnote disclosures normally included
in financial statements prepared under generally accepted accounting principles
have been condensed or omitted pursuant to such regulations. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation of the Fairfield Manufacturing Company, Inc.'s
("the Company") financial position, results of operations and cash flows have
been included. The results for the six months ended June 30, 1997 and 1996 are
not necessarily indicative of the results to be expected for the full year or
for any interim period.
2. Parent Company of Registrant:
The Company is wholly-owned by Lancer Industries Inc. ("Lancer").
On March 27, 1997, First Colony Farms, Inc., a Delaware corporation and
wholly-owned subsidiary of Lancer ("First Colony"), merged with and into the
Company, with the Company being the surviving corporation of the merger.
Immediately prior to the merger, First Colony had (i) no known liabilities
(including contingent liabilities) and (ii) assets consisting of approximately
$10 thousand in cash and certain net operating loss carry forwards.
3. Sale of Preferred Stock:
On March 12, 1997, the Company completed a private offering of 50,000
shares of 11 1/4% Cumulative Exchangeable Preferred Stock ("Preferred Stock").
Each share has a liquidation preference of $1,000, plus accumulated and unpaid
dividends. The Company is required, subject to certain conditions, to redeem
all of the Preferred Stock outstanding on March 15, 2009 at a redemption price
equal to 100% of the liquidation preference. Dividends are payable semi-
annually at an annual rate of 11 1/4%, and may (prior to March 15, 2002) be
paid, at the Company's option, either in cash or in additional shares of
Preferred Stock.
The net proceeds from this offering ($47.7 million) were used to fund a
dividend to Lancer, and used by Lancer to redeem approximately $47.7 million of
its Series C Preferred Stock.
4. Inventory:
Inventory consists of the following:
(In thousands) June 30, 1997 December 31,
1996
Raw materials $ 5,001 $ 4,178
Work in process 7,754 8,070
Finished goods 8,720 7,490
21,475 19,738
Less: excess of FIFO cost over (402) (820)
LIFO cost
$ 21,073 $ 18,918
5. Income per Common Share:
Net income per common share is computed by dividing net income less the
preferred stock dividend requirement by the weighted average number of common
shares outstanding during the period, which, for the three and six months ended
June 30, 1997 was 7,857,582 and 7,831,593, respectively, and for the three and
six months ended June 30, 1996 was 7,701,560 and 7,688,918, respectively. The
increase in the weighted average common shares outstanding is due to the Company
issuing additional shares of its common stock to Lancer in consideration of
certain capital contributions made by Lancer to the Company primarily pursuant
to the Tax Sharing Agreement.
6. Debt:
In connection with the sale of Preferred Stock, the Company amended its
loan agreement (which provides for a Revolving Credit Facility and a Term Loan)
with a senior lending institution. The amendment allowed for the sale of the
Preferred Stock (see note 3) and the approximately $47.7 million dividend to
Lancer.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Net sales for the three months ended June 30, 1997 increased by $1.2
million, or 2.4%, to $50.8 million compared to $49.6 million for the three
months ended June 30, 1996. For the six months ended June 30, 1997, the
Company's net sales decreased by $0.9 million, or 0.9%, to $100.0 million
compared to $100.9 million for the six months ended June 30, 1996.
Cost of sales for the three months ended June 30, 1997 were $40.9 million,
or 80.5% of net sales, compared to $40.8 million, or 82.4% of net sales, for the
three months ended June 30, 1996. For the first half of 1997, cost of sales
were $80.7 million, or 80.7% of net sales, compared to $82.5 million, or 81.8%
of net sales, for the first half of 1996. Cost of sales for 1996 included costs
associated with the Company's investment in new processes that reduced
manufacturing cycle times and resulted in a reduction of inventory.
Manufacturing cycle times have remained consistent throughout 1997.
Selling, general and administrative expense ("SG&A") was $4.4 million, or
8.7% of net sales, for the three months ended June 30, 1997, compared to $4.6
million, or 9.2% of net sales, for the three months ended June 30, 1996. The
decrease in SG&A expense is due to a 1996 write-off of $0.5 million resulting
from a customer filing Ch. 11 partially offset by 1997 investments in marketing
and sales and design engineering. For the six months ended June 30, 1997, SG&A
increased by $0.1 million, or 0.7%, to $8.7 million, compared to $8.6 million,
or 8.5% of net sales, for the six months ended June 30, 1996.
Earnings from operations for the three months ended June 30, 1997 were $5.4
million, or 10.7% of net sales compared to $4.2 million, or 8.5% of net sales
compared to the three months ended June 30, 1996. For the six months ended June
30, 1997 the Company's earnings from operations were $10.6 million, or 10.6% of
net sales, compared to $9.8 million, or 9.7% of net sales for the first six
months of 1996.
Interest expense for the second quarter of 1997 and 1996 was $3.1 million
and $3.0 million, respectively. For the first half of 1997 and 1996, interest
expense was $6.3 million and $6.1 million, respectively. Interest expense
increased due to a higher average debt balance during both the three and six
months ended June 30, 1997, compared to the same periods in 1996.
The Company's income before income taxes was $2.3 million for the second
quarter of 1997, compared to $1.2 million for the second quarter of 1996. For
the six months ended June 30, 1997, the Company's income before income taxes was
$4.2 million compared to $3.7 million for the comparable 1996 period.
The Company's net income was $1.2 million for the second quarter of 1997,
as compared to $0.4 million for the second quarter of 1996. For six months
ended June 30, 1997, the Company's net income was $2.2 million compared to $2.0
million for the comparable 1996 period.
Liquidity and Capital Resources
The Company's liquidity requirements have been met by funds provided by
operations and short-term borrowings under its Credit Facilities.
Net cash provided by operations for the six months ended June 30, 1997 was
$5.4 million, a decrease of $8.6 million compared with net cash provided by
operations of $14.0 million in the comparable 1996 period. The decrease in cash
from operations in comparison to the prior year period was due primarily to the
Company significantly reducing inventory in 1996.
Capital expenditures for various machine tools, equipment and building
improvement items totaled $3.8 million and $6.1 million during the first six
months of 1997 and 1996, respectively. Of the $3.8 million in 1997, $0.4
million has been funded by an increase in accounts payable in the balance sheet
versus $0.1 million of the $6.1 million of capital expenditures in 1996. The
capital expenditures for both 1997 and 1996 were principally targeted at
increasing capacity and productivity to meet heightened customer demand.
The Company believes that the amounts available under the existing credit
facilities and cash flow from operations will provide adequate liquidity for the
foreseeable future.
PART II - OTHER INFORMATION
Item 5. Other Information
Effective April 11, 1997, Kenneth A. Burns was appointed President and
Chief Executive Officer. Prior to his appointment, Mr. Burns served as
President and Chief Operating Officer.
Item 6. Exhibits and Reports on Form 8K
(a) Exhibits
See Exhibit Index
(b) Reports on Form 8-K
None.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused the report to be signed on its behalf by the
undersigned thereunto duly authorized.
FAIRFIELD MANUFACTURING COMPANY, INC.
Dated: July 11, 1997 By /s/RICHARD A. BUSH
Richard A. Bush
Vice President Finance
EXHIBIT INDEX
Exhibit No. Description
(2) (a) Articles of Merger and related Plan of Merger under
the state of Indiana of Fairfield Manufacturing
Company, Inc. ("Fairfield") with and into Central
Alabama Grain Company, Inc. ("CAG") dated March 31,
1995, incorporated by reference from Exhibit 2(a) to
Fairfield's Form 10-K as filed with the Securities
and Exchange Commission on March 22, 1995 (the "1994
Form 10-K").
(2) (b) Certificate of Ownership and Merger, merging
Fairfield into CAG, incorporated by reference from
Exhibit 2(b) to the 1994 Form 10-K.
(2) (c) Merger Agreement under the State of Delaware between
First Colony Farms, Inc. ("First Colony") and
Fairfield dated as of March 24, 1997, incorporated by
reference from Exhibit 2(c) to Fairfield's Form S-4
as filed with the Securities and Exchange Commission
on April 9, 1997 (the "1997 Form S-4").
(2) (d) Certificate of Merger, merging First Colony with and
into Fairfield, incorporated by reference from
exhibit 2(d) to the 1997 Form S-4.
(3) (a) Restated Certificate of Incorporation of Fairfield,
together with the Certificate of Amendment, dated
March 7, 1997, and filed on March 11, 1997,
incorporated by reference from Exhibit 3(a) to the
1997 Form S-4.
(3) (b) By-Laws of Fairfield, incorporated by reference from
Exhibit 3(c) to the 1994 Form 10-K.
(4) (a) Indenture, dated as of July 7, 1993, between
Fairfield and First Fidelity Bank, National
Association, New York, as trustee, incorporated by
reference from Exhibit 4(a) to Fairfield's Form 10-Q
as filed with the Securities and Exchange Commission
on August 16, 1993 (the "Second Quarter 1993 Form 10-
Q").
(4) (b) Supplemental Indenture No. 1, dated as of March 31,
1995, between CAG as successor-in-interest to
Fairfield and First Fidelity Bank, National
Association, as trustee, incorporated by reference
from Exhibit 4(b) to the 1994 Form 10-K.
(4) (c) Indenture, dated as of March 12, 1997, between
Fairfield and United States Trust Company of New York
as Trustee, incorporated by reference from Exhibit
4(c) to the 1997 Form S-4.
(4) (d) Certificate of Designation, dated March 12, 1997, for
the Existing Preferred Stock, incorporated by
reference from Exhibit 4(d) to the 1997 Form S-4.
(9) Voting Trust Agreement
Not Applicable.
(10) (a) Loan Agreement, dated as of July 7, 1993, among
Fairfield, the lenders named therein and General
Electric Capital Corporation ("GECC"), as agent,
incorporated by reference from Exhibit 10(a) to the
Second Quarter 1993 Form 10-Q.
(10) (b) Amended and Restated Warrant Agreement, dated as of
July 7, 1993, among Fairfield, Mitsui Nevitt Capital
Corporation and Principal Mutual Life Insurance
Company, incorporated by reference from Exhibit 10(b)
to the Second Quarter 1993 Form 10-Q.
(10) (c) Security Agreement, dated as of July 7, 1993, between
Fairfield and GECC, as agent, incorporated by
reference from Exhibit 10(c) to the Second Quarter
1993 Form 10-Q.
(10) (d) Security Agreement, dated as of July 7, 1993, between
T-H Licensing, Inc. ("T-H Licensing") and GECC, as
agent, incorporated by reference from Exhibit 10(d)
to the Second Quarter 1993 Form 10-Q.
(10) (e) Stock Pledge Agreement, dated as of July 7, 1993,
between Fairfield and GECC, as agent, incorporated by
reference from Exhibit 10(e) to the Second Quarter
1993 Form 10-Q.
(10) (f) Stock Pledge Agreement, dated as of July 7, 1993,
between Fairfield Holdings, Inc. and GECC, as agent,
incorporated by reference from Exhibit 10(f) to the
Second Quarter 1993 Form 10-Q.
(10) (g) Trademark Security Agreement, dated as of July 7,
1993, between Fairfield and GECC, as agent,
incorporated by reference from Exhibit 10(g) to the
Second Quarter 1993 Form 10-Q.
(10) (h) Trademark Security Agreement, dated as of July 7,
1993, between T-H Licensing and GECC, as agent,
incorporated by reference from Exhibit 10(h) to the
Second Quarter 1993 Form 10-Q.
(10) (i) Patent Security Agreement, dated as of July 7, 1993,
between Fairfield and GECC, as agent, incorporated
by reference from Exhibit 10(i) to the Second Quarter
1993 Form 10-Q.
(10) (j) Patent Security Agreement, dated as of July 7, 1993,
between T-H Licensing and GECC, as agent,
incorporated by reference from Exhibit 10(j) to the
Second Quarter 1993 Form 10-Q.
(10) (k) Subsidiary Guaranty, dated as of July 7, 1993,
between T-H Licensing and GECC, as agent,
incorporated by reference from Exhibit 10(k) to the
Second Quarter 1993 Form 10-Q.
(10) (l) Mortgage, Assignment of Leases, Rents and Profits,
Security Agreement and Fixture Filing, dated as of
July 7, 1993, between Fairfield and GECC, as agent,
incorporated by reference from Exhibit 10(l) to the
Second Quarter 1993 Form 10-Q.
(10) (m) Collection Account Agreement, dated as of July 7,
1993, among Fairfield and GECC, and acknowledged by
Bank One, Lafayette, N.A., incorporated by reference
from Exhibit 10(m) to the Second Quarter 1993 Form 10-
Q.
(10) (n) Used Machinery Account Agreement, dated as of July 7,
1993, among Fairfield and GECC, and acknowledged by
Bank One, Lafayette, N.A., incorporated by reference
from Exhibit 10(n) to the Second Quarter 1993 Form 10-
Q.
(10) (o) Quitclaim Grant of Security Interest, dated as of
July 7, 1993, between Fairfield and GECC, as agent,
incorporated by reference from Exhibit 10(o) to the
Second Quarter 1993 Form 10-Q.
(10) (p) Supplemental Quitclaim Grant of Security Interest
(Patents only), dated as of July 7, 1993, between
Fairfield and GECC, as agent, incorporated by
reference from Exhibit 10(p) to the Second Quarter
1993 Form 10-Q.
(10) (q) First Amendment to Loan Agreement, dated as of
September 30, 1994, among Fairfield, the lenders
named therein and GECC, as agent, incorporated by
reference from Exhibit 10(q) as filed with the
Securities and Exchange Commission on November 14,
1994.
(10) (r) Second Amendment to Loan Agreement, dated as of March
30, 1995, among Fairfield, the lenders named therein
and GECC, as agent, incorporated by reference from
Exhibit 10(r) to the 1994 Form 10-K.
(10) (s) Third Amendment to Loan Agreement, dated as of March
31, 1995, among Fairfield, the lenders named therein
and GECC, as agent, incorporated by reference from
Exhibit 10(s) to the 1994 Form 10-K.
(10) (t) First Amendment to Mortgage Assignment of Leases,
Rents and Profits, Security Agreement and Fixture
Filing, dated as of March 31, 1995, between Fairfield
and GECC, as agent, incorporated by reference from
Exhibit 10(t) to the 1994 Form 10-K.
(10) (u) Stock Pledge Agreement, dated as of March 31, 1995,
between Lancer Industries Inc. ("Lancer") and GECC,
as agent, incorporated by reference from Exhibit
10(u) to the 1994 Form 10-K.
(10) (v) Amended and Restated Security Agreement, dated as of
March 31, 1995, between Fairfield and GECC, as agent,
incorporated by reference from Exhibit 10(v) to the
1994 Form 10-K.
(10) (w) The Fairfield Manufacturing Company, Inc. Equity
Participation Plan, dated August 21, 1989
incorporated by reference from Exhibit 10(x) to the
1995 Form 10-K.
(10) (x) The Collective Bargaining Agreement, ratified October
28, 1995, between Fairfield and United Auto Workers'
Local 2317 incorporated by reference from Exhibit
10(y) to the 1995 Form 10-K.
(10) (y) The Tax Sharing Agreement, dated as of July 18, 1990,
between Fairfield and Lancer, incorporated by
reference from Exhibit 10(z) to the 1995 Form 10-K.
(10) (z) The Fairfield Manufacturing Company, Inc. (1992)
Supplemental Executive Retirement Plan incorporated
by reference from Exhibit 10(aa) to the 1995 Form 10-
K.
(10) (aa) Letter Agreement, dated December 29, 1989, granting
exclusive license from T-H Licensing to Fairfield
incorporated by reference from Exhibit 10(bb) to the
1995 Form 10-K.
(10) (bb) Fourth Amendment to Loan Agreement, dated as of
December 5, 1996, among Fairfield, the lenders named
therein and GECC, as agent, incorporated by reference
from Exhibit 10(cc) to Fairfield's Form 10-K as filed
with the Securities and Exchange Commission on
February 25, 1997 (the "1996 Form 10-K").
(10) (cc) Second Amendment to Mortgage Assignment of Leases,
Rents and Profits, Security Agreement and Fixture
Filing, dated as of December 5, 1996, between
Fairfield and GECC, as agent, incorporated by
reference from Exhibit 10(dd) to the 1996 Form 10-K.
(10) (dd) Fifth Amendment to the Loan Agreement, dated as of
February 26, 1997, among Fairfield, the lenders named
therein and GECC, as agent, incorporated by reference
from Exhibit 10(ee) to the 1997 Form S-4.
(10) (ee) The Employment Agreement, dated as of June 1, 1996,
between Fairfield and K. A. Burns, incorporated by
reference from Exhibit 10(ee) to the 1996 Form 10-K.
(10) (ff) Consent and Amendment, dated as of March 27, 1997,
among Fairfield and GECC, as sole lender and agent,
incorporated by reference from Exhibit 10(gg) to the
1997 Form S-4.
(10) (gg) Securities Purchase Agreement, dated March 7, 1997,
between Fairfield and the Initial Purchaser,
incorporated by reference from Exhibit 10(hh) to the
1997 Form S-4.
(10) (hh) Share Registration Rights Agreement, dated March 12,
1997, between Fairfield and the Initial Purchaser,
incorporated by reference from Exhibit 10(ii) to the
1997 Form S-4.
(11) Statement re computation of per share earnings.
Not Applicable.
(12) Statement re Computation of ratios.
Not Applicable.
(13) Annual Report to Security Holders, Form 10-Q or
Quarterly Report to Security Holders.
Not Applicable.
(16) Letter re Change in Certifying Accountant.
Not Applicable.
(18) Letter re change in accounting principles.
Not Applicable.
(21) Subsidiaries of Fairfield Manufacturing Company, Inc.
T-H Licensing, Inc.
(22) Published report regarding matters submitted to vote
of security holders.
Not Applicable.
(23) Consents of experts and counsel.
Not Applicable.
(24) Power of attorney.
Not Applicable.
(28) Information from Reports Furnished to State Insurance
Regulatory Authorities.
Not Applicable.
(99) Additional exhibits.
Not Applicable.
<TABLE> <S> <C>
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<LEGEND>
This schedule contains summary financial information extracted from SEC Form
10-Q and is qualified in its entirety by reference to such financial statements.
</LEGEND>
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<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-START> APR-1-1997 JAN-1-1997
<PERIOD-END> JUN-30-1997 JUN-30-1997
<CASH> 4536 4536
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<RECEIVABLES> 24506 24506
<ALLOWANCES> (600) (600)
<INVENTORY> 21073 21073
<CURRENT-ASSETS> 50006 50006
<PP&E> 68438 68438
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 172807 172807
<CURRENT-LIABILITIES> 39235 39235
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47756 47756
0 0
<COMMON> 79 79
<OTHER-SE> (51116) (51116)
<TOTAL-LIABILITY-AND-EQUITY> 172807 172807
<SALES> 50754 99989
<TOTAL-REVENUES> 50754 99989
<CGS> 40874 80726
<TOTAL-COSTS> 45311 89381
<OTHER-EXPENSES> 26 46
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 3111 6342
<INCOME-PRETAX> 2306 4220
<INCOME-TAX> 1130 2075
<INCOME-CONTINUING> 1176 2150
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1176 2150
<EPS-PRIMARY> (.04) .05
<EPS-DILUTED> (.04) .05
</TABLE>
