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: March 31, 1998
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 March 31, 1998 is as follows:
8,263,000 shares of Common Stock
<PAGE>
FAIRFIELD MANUFACTURING COMPANY, INC.
Form 10-Q
March 31, 1998
PART I - FINANCIAL INFORMATION
Page
Number
Item 1 - Financial Statements:
Consolidated Balance Sheets, March 31, 1998 (Unaudited) and 3
December 31, 1997
Consolidated Statements of Operations for the three months 4
ended March 31, 1998 and 1997 (Unaudited)
Consolidated Statements of Cash Flows for the three months 5
ended March 31, 1998 and 1997 (Unaudited)
Consolidated Statement of Stockholder's Equity (Deficit) 6
for the three months ended March 31, 1998 (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 10-11
Item 6 - Exhibits and Reports on Form 8-K 11
SIGNATURE 12
EXHIBIT INDEX 13-16
<PAGE>
FAIRFIELD MANUFACTURING COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except share data)
March 31, 1998 December 31,
1997
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 378 $ 3,059
Trade receivables, less allowance of $600 28,759 22,733
in 1998 and 1997
Inventory 27,085 23,875
Prepaid expenses 1,143 1,048
Total current assets 57,365 50,715
PROPERTY, PLANT AND EQUIPMENT, NET 69,362 69,227
OTHER ASSETS:
Excess of investment over net assets 50,483 50,884
acquired, less accumulated
amortization of $13,876 in 1998 and
13,475 in 1997
Deferred financing costs, less 2,215 2,386
accumulated amortization of $3,198
in 1998 and $3,026 in 1997
Total other assets 52,698 53,270
Total assets $179,425 $173,212
LIABILITIES AND STOCKHOLDER'S EQUITY
(DEFICIT)
CURRENT LIABILITIES:
Current maturities of long-term debt $ 4,750 $ 4,000
Accounts payable 12,895 10,896
Due to parent 2,808 2,208
Accrued liabilities 20,320 22,987
Deferred income taxes 2,800 2,800
Total current liabilities 43,573 42,891
ACCRUED RETIREMENT COSTS 14,752 15,778
DEFERRED INCOME TAXES 8,721 8,881
LONG-TERM DEBT, NET OF CURRENT 116,250 110,000
MATURITIES
11-1/4% CUMULATIVE EXCHANGEABLE 47,898 47,850
PREFERRED STOCK
STOCKHOLDER'S EQUITY (DEFICIT):
Common stock: par value $.01 per share, 83 82
10,000,000 shares authorized,
8,263,000 and 8,190,000 issued and
outstanding in 1998 and 1997,
respectively
Additional paid-in capital 39,913 39,414
Accumulated deficit (91,765) (91,684)
Total stockholder's equity (51,769) (52,188)
(deficit)
Total liabilities and stockholder's $179,425 $173,212
equity (deficit)
The accompanying notes to consolidated financial statements
are an integral part of these statements.
<PAGE>
FAIRFIELD MANUFACTURING COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share data)
(Unaudited)
For the For the
three three
months months
ended March ended March
31, 1998 31, 1997
Net sales $ 55,388 $ 49,235
Cost of sales 45,368 39,852
Selling, general and administrative
expenses 4,201 4,218
OPERATING INCOME 5,819 5,165
Interest expense, net 3,303 3,231
Other expense, net 14 20
INCOME BEFORE INCOME TAXES, PREFERRED 2,502 1,914
STOCK DIVIDENDS AND DISCOUNT
ACCRETION
Provision for income taxes 1,130 940
INCOME BEFORE PREFERRED STOCK DIVIDENDS 1,372 974
AND DISCOUNT ACCRETION
Preferred stock dividends and discount
accretion 1,453 300
NET INCOME/(LOSS) $(81) $674
INCOME/(LOSS) PER SHARE DATA:
Net income/(loss) per common share $(0.01) $0.09
Weighted average common shares 8,190,811 7,805,604
outstanding
The accompanying notes to consolidated financial statements
are an integral part of these statements.
<PAGE>
FAIRFIELD MANUFACTURING COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
For the For the
three three
months months
ended ended
March 31, March 31,
1998 1997
OPERATING ACTIVITIES:
Net income (loss) $(81) $674
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Depreciation, accretion and amortization 3,423 3,381
Increase (decrease) in deferred income (160) 58
taxes
Increase (decrease) in accrued retirement (1,026) (981)
costs
(Increase) decrease in current assets:
Trade receivables (6,026) (971)
Inventory (3,210) (2,319)
Prepaids (95) 98
Increase (decrease) in current
liabilities:
Accounts payable 3,122 2,288
Due to parent 600 158
Accrued liabilities (2,667) (711)
Net cash (used in) provided by operating
activities (6,120) 1,675
INVESTING ACTIVITIES:
Additions to plant and equipment, net (4,061) (2,752)
Net cash used in investing activities (4,061) (2,752)
FINANCING ACTIVITIES:
Proceeds from additional capital contribution 500 399
Payment of dividends -- (50,770)
Advance to parent -- 3,027
Proceeds of long-term debt 9,000 4,000
Payment of long-term debt (2,000) (7,750)
Proceeds of preferred stock offering -- 50,000
Payment of preferred stock issuance costs -- (2,300)
Net cash (used in) provided by financing
activities 7,500 (3,394)
INCREASE (DECREASE) IN CASH AND CASH (2,681) (4,471)
EQUIVALENTS
CASH AND CASH EQUIVALENTS:
Beginning of period 3,059 6,185
End of period $378 $1,714
Supplemental Disclosures:
Cash paid for:
Interest $5,549 $5,581
Taxes to parent $-- $300
Non-cash activities:
Additions to property and equipment excluded amounts due and unpaid at
March 31, 1998 and 1997 of $1,123 and $671, respectively.
The accompanying notes to consolidated financial statements
are an integral part of these statements.
<PAGE>
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, $ 82 $39,414 $(91,684) $(52,188)
1998
Capital contribution 1 499 -- 500
Net loss -- -- (81) (81)
Balance, March 31, 1998 $ 83 $39,913 $(91,765) $(51,769)
The accompanying notes to consolidated financial statements
are an integral part of these statements.
<PAGE>
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 three months ended March 31, 1998 and 1997
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 ("Old Preferred
Stock"). In July 1997, the Company completed an exchange offer pursuant to
which each share of the Old Preferred Stock was exchanged for a new share of 11-
1/4% Series A Cumulative Exchangeable Preferred Stock (the "New Preferred
Stock"). The terms of the New Preferred Stock are substantially identical to
the terms of the Old Preferred Stock, except that the New Preferred Stock is
registered under the Securities Act of 1933, as amended. 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.
<PAGE>
4. Inventory:
Inventory consists of the following:
(In thousands) March 31, 1998 December 31,
1997
Raw materials $ 4,508 $ 3,495
Work in process 12,467 11,892
Finished goods 10,110 8,488
27,085 23,875
Less: excess of FIFO cost over LIFO cost -- --
$ 27,085 $ 23,875
5. Income (Loss) per Common Share:
Net income (loss) per common share is computed by dividing net income
(loss) available to common stockholder by the weighted average number of common
shares outstanding during the period, which, for the three months ended March
31, 1998 was 8,190,811 and for March 31, 1997 was 7,805,604. 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.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Net sales for the three months ended March 31, 1998 increased by $6.2
million, or 12.5%, to $55.4 million compared to $49.2 million for the three
months ended March 31, 1997. The sales increase for the three months ended
March 31, 1998 resulted from increased market demand and new programs won during
1997.
Cost of sales for the three months ended March 31, 1998 increased by $5.5
million, or 13.8%, to $45.4 million, or 81.9% of net sales, compared to $39.9
million, or 80.9% of net sales, for the three months ended March 31, 1997. The
increase resulted primarily from the increase in sales volume.
Selling, general and administrative expense ("SG&A") was $4.2 million, or
7.6% of net sales, for the three months ended March 31, 1998, compared to $4.2
million, or 8.6% of net sales, for the three months ended March 31, 1997.
Earnings from operations for the three months ended March 31, 1998 were
$5.8 million, or 10.5% of net sales compared to $5.2 million, or 10.5% of net
sales compared to the first three months of 1997.
Interest expense for the first quarter of 1998 and 1997 was $3.3 million
and $3.2 million, respectively. Interest expense increased due to a higher
average debt balance during the quarter ended March 31, 1998, compared to the
first three months of 1997.
The Company's income before income taxes, preferred stock dividends and
discount accretion was $2.5 million for the first quarter of 1998, compared to
$1.9 million for the first three months of 1997.
The Company's net income (loss) was ($0.1) million for the first three
months of 1998, as compared to $0.7 million for the first three months of 1997.
This reduction resulted from improved results from operations in 1998 offset by
$1.2 million more of preferred stock dividends and discount accretion. The
preferred stock was outstanding for only 19 days during the same period in the
first three months of 1997.
<PAGE>
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 used by operating activities for the three months ended March 31,
1998 was $6.1 million, a decrease of $7.8 million compared with net cash
provided by operations of $1.7 million in the comparable 1997 period. The
decrease in cash from operations in comparison to the prior year period relates
principally to increases in accounts receivable and inventory at March 31, 1998
due to sales volume growth and increased demand, respectively.
Capital expenditures for various machine tools, equipment and building
improvement items totaled $4.1 million and $2.8 million during the first three
months of 1998 and 1997, respectively. The capital expenditures for both 1998
and 1997 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
On March 12, 1997, the Company completed a private offering of 50,000
shares of 11-1/4% Cumulative Exchangeable Preferred Stock ("Old Preferred
Stock"). In July 1997, the Company completed an exchange offer pursuant to
which each share of the Old Preferred Stock was exchanged for a new share of 11-
1/4% Series A Cumulative Exchangeable Preferred Stock (the "New Preferred
Stock"). The terms of the New Preferred Stock are substantially identical to
the terms of the Old Preferred Stock, except that the New Preferred Stock is
registered under the Securities Act of 1933, as amended. The net proceeds from
this offering ($47.7 million) were used to fund a dividend to Lancer, and used
by Lancer to redeem $47.7 million of its Series C Preferred Stock.
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
<PAGE>
liabilities) and (ii) assets consisting of approximately
$10,000 in cash and certain net operating loss carry forwards.
Item 6. Exhibits and Reports on Form 8K
(a) Exhibits
See Exhibit Index
(b) Reports on Form 8-K
None
<PAGE>
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: May 15, 1998 By /s/RICHARD A. BUSH
Richard A. Bush
Vice President Finance
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
(2) (a) Merger Agreement under the State of Delaware between
First Colony Farms, Inc. ("First Colony") and
Fairfield Manufacturing Company, Inc. ("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) (b) 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 Fairfield's Form 10-K as filed with
the Securities and Exchange Commission on March 22,
1995 (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) 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) (c) 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) (d) 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.
<PAGE>
(10) (e) 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) (f) 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) (g) 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) (h) 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) (i) 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) (j) 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) (k) 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) (l) 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) (m) 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) (n) 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) (o) 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) (p) 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) (q) 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) (r) 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.
<PAGE>
(10) (s) 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) (t) The Fairfield Manufacturing Company, Inc. Equity
Participation Plan, dated August 21, 1989
incorporated by reference from Exhibit 10(x) to
Fairfield's Form 10-K as filed with the Securities
and Exchange Commission on March 15, 1996 (to the
"1995 Form 10-K").
(10) (u) 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) (v) 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) (w) The Fairfield Manufacturing Company, Inc. (1992)
Supplemental Executive Retirement Plan incorporated
by reference from Exhibit 10(aa) to the 1995 Form 10-
K.
(10) (x) 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) (y) 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) (z) 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) (aa) 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) (bb) 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) (cc) 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) (dd) 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) (ee) 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.
(10) (ff) Consulting Agreement, dated August 1, 1997, between
Fairfield and Wolodymyr B. Lechman, incorporated by
reference from Exhibit 10(hh) to Fairfield's Form 10-
Q as filed with the Securities and Exchange
Commission on November 12, 1997.
<PAGE>
(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.
(b) No reports on Form 8-K have been filed during the last quarter of
the period covered by this report.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SUMMARY CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FAIRFIELD
1998 FIRST QUARTER 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FROM 10-Q FILING AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 378
<SECURITIES> 0
<RECEIVABLES> 29,359
<ALLOWANCES> (600)
<INVENTORY> 27,085
<CURRENT-ASSETS> 1,143
<PP&E> 156,467
<DEPRECIATION> 87,105
<TOTAL-ASSETS> 179,425
<CURRENT-LIABILITIES> 43,573
<BONDS> 0
47,898
0
<COMMON> 83
<OTHER-SE> (51,852)
<TOTAL-LIABILITY-AND-EQUITY> 179,425
<SALES> 55,388
<TOTAL-REVENUES> 55,388
<CGS> 45,368
<TOTAL-COSTS> 49,569
<OTHER-EXPENSES> 14
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,303
<INCOME-PRETAX> 2,502
<INCOME-TAX> 1,130
<INCOME-CONTINUING> 1,372
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (81)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
