SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported)February 22, 1996
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THE FAIRCHILD CORPORATION
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(Exact name of Registrant as specified in its charter)
Delaware 1-6560 34-0728587
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(State or other (Commission File (I.R.S. Employer
jurisdiction Number) Identification No.)
of incorporation)
Washington Dulles International Airport
300 West Service Road, P.O. Box 10803
Chantilly, Virginia 22021-9998
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (703) 478-5800
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NONE
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(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition of Disposition of Assets
On February 22, 1996, pursuant to the Asset Purchase
Agreement dated as of January 23, 1996 (the "Purchase
Agreement"), The Fairchild Corporation (the
"Registrant") through its subsidiaries VSI
Corporation, D-M-E Europe (U.K.) Limited and D-M-E
Normalien GmbH (collectively, the "Sellers")
completed its sale to Cincinnati Milacron Inc.
("CMI") and its subsidiaries of all of the assets,
properties and other rights owned, used or held for
use by the Sellers in connection with the Sellers'
business of developing, producing, manufacturing,
marketing, selling and distributing mold bases, mold
components, moldmaking tools and supplies, polishing
equipment, electronic temperature and pressure
control equipment, runnerless molding systems and
process controls and Computer Aided Design and
Computer Aided Manufacturing hardware and software
for the plastics industry (the "Business"). The sale
included the Sellers' voting stock or other interests
in each of VSI International N.V., D-M-E France
S.A.R.L., D-M-E of Canada Ltd. and several joint
ventures. A copy of the Purchase Agreement has been
previously filed and reference is made thereto for
the complete terms and conditions thereof.
The sale price (which is subject to adjustment
following an audit of the closing date balance sheet
of the Business) is $245,376,555. The sale price is
based on a target net tangible asset value,
representing the book value of all assets reflected
on the closing date balance sheet of the Business
(excluding goodwill and net of any applicable contra-
asset accounts) acquired by CMI and its subsidiaries
less the amount of all liabilities reflected on the
closing date balance sheet and assumed by CMI and its
subsidiaries. The sale price consists of $74,000,000
in cash, $62,300,000 of which was received on
January 26, 1996 and $11,700,000 of which was
received on February 22, 1996, and two 8% promissory
notes in the aggregate principal amount of
$171,376,555. The promissory notes mature one year
following the closing date; provided that the
Registrant may require prepayment of, and CMI may at
its option prepay, such notes after the six month
anniversary of the closing date.
<PAGE>
Item 7. Financial Statements and Exhibits.
Pro Forma Financial Information
Attached hereto are unaudited proforma condensed
separated balance sheets as of December 31, 1995 and
pro forma condensed separated consolidated statements
of earnings for the year ended June 30, 1995 and the
six months ended December 31, 1995. This pro forma
financial data give effect to the Company's
disposition of the Business.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
THE FAIRCHILD CORPORATION
Date: March , 1996 By: /s/ Michael T. Alcox
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Michael T. Alcox
Senior Vice President
THE FAIRCHILD CORPORATION
PRO FORMA CONDENSED SEPARATED FINANCIAL STATEMENTS (UNAUDITED)
The Following unaudited pro forma condensed separated
balance sheet as of December 31, 1995, and the pro forma
condensed separated consolidated statements of earnings for the
year ended June 30, 1995 and the six months ended December 31,
1995, give effect to the Company's disposition of the D-M-E
Company ("DME"). The pro forma information is based on the
historical financial statements of the Company and DME giving
effect to the transaction and assumptions and adjustments
specified in the accompanying notes to the pro forma financial
statements.
The unaudited pro forma statements of the Company are not
necessarily indicative of the results or financial position that
actually would have occurred if the disposition of DME had been
in effect since July 1, 1994 and July 1, 1995, nor are they
necessarily indicative of future results or financial position of
the Company. The pro forma financial statements should be read
in conjunction with the audited financial statements and notes
thereto included in the Company's June 30, 1995 Form 10-K.
<PAGE>
THE FAIRCHILD CORPORATION
PRO FORMA CONDENSED SEPARATED BALANCE SHEET
December 31, 1995
(in thousands)
Historical Pro Forma
--------------------- -----------------------
ASSETS TFC DME Adjustments TFC
- ------ ---------- ---------- ------------ ---------
Cash $ 42,967 $ $ 74,000 (1)
(74,000)(2) $ 42,967
Accounts receivable 70,241 70,241
Notes receivable-current 171,377 (1) 171,377
Inventories 78,449 78,449
Prepaid expenses and other
current assets 27,092 27,092
Net current assets of
discontinued operations 34,609 (34,166) 443
---------- ---------- --------- ---------
Total Current Assets 253,358 (34,166) 171,377 390,569
Property, plant and equipment 228,239 228,239
Accumulated depreciation (98,970) (98,970)
Net noncurrent assets of
discontinued operations 85,577 (85,528) 49
Investment in affiliates 70,904 70,904
Goodwill 152,184 152,184
Other assets 137,405 137,405
---------- ---------- --------- ---------
Total Assets $ 828,697 $(119,694) $171,377 $880,380
========== ========== ========= =========
LIABILITIES
- -----------
Bank notes payable and current
maturities of long term debt $ 100,288 $ $(67,303)(2) $ 32,985
Accounts payable 32,323 32,323
Other accrued liabilities 75,816 7,341 (1) 83,157
Accrued income tax 41,420 (1) 41,420
---------- ---------- --------- ---------
Total Current Liabilities 208,427 -- (18,542) 189,885
Long-term debt, less current
maturities 448,642 (6,697)(2) 441,945
Other long-term liabilities 86,873 86,873
Noncurrent income taxes 38,981 38,981
Redeemable preferred stock 15,311 15,311
---------- ---------- --------- ---------
Total Liabilities 798,234 -- (25,239) 772,995
Stockholders' equity:
Common stock 2,242 (3,826) 3,826 (1) 2,242
Treasury stock (51,719) (51,719)
Paid-in capital 67,445 (100,084) 100,084 (1) 67,445
Retained earnings 9,344 (15,784) 15,784 (1)
76,922 (1) 86,386
Cumulative translation
adjustment 3,151 3,151
---------- ---------- --------- ---------
Total Stockholders' Equity 30,463 (119,694) 196,616 107,385
Total Liabilities and
Stockholders' Equity $ 828,697 $(119,694) $171,377 $880,380
========== ========== ========= =========
See Notes to Pro Forma Condensed Separated Financial Statements.
<PAGE>
THE FAIRCHILD CORPORATION
PRO FORMA CONDENSED SEPARATED STATEMENT OF EARNINGS
For the year ended June 30, 1995
(in thousands, except per share data)
Historical Pro Forma
--------------------- -----------------------
TFC DME Adjustments TFC
Revenue: ---------- ---------- ----------- ---------
Sales $ 546,323 $(167,769) $378,554
Other income, net 656 396 1,052
---------- ---------- --------- ---------
546,979 (167,373) -- 379,606
Cost and expenses:
Cost of sales 419,290 (110,152) 309,138
Selling, general and
administrative 107,226 (30,208) 77,018
Research and development 4,100 (1,114) 2,986
Amortization of goodwill 6,157 (1,637) 4,520
---------- ---------- --------- ---------
536,773 (143,111) -- 393,662
Operating income (loss) 10,206 (24,262) -- (14,056)
Interest expense 71,159 (60) (6,463)(3) 64,636
Interest income (3,389) 18 (13,710)(3) (17,081)
---------- ---------- --------- ---------
Net interest expense 67,770 (42) (20,173) 47,555
Investment income, net 5,705 5,705
Equity in earnings of
affiliates 2,369 (762) 1,607
Minority interest (2,449) 156 (2,293)
---------- ---------- --------- ---------
Earnings (loss) from continuing
operations before taxes (51,939) (24,826) 20,173 (56,592)
Income tax provision (benefit) (18,019) (10,410) 7,061 (21,368)
---------- ---------- --------- ---------
Earnings (loss) from continuing
operations $ (33,920) $ (14,416) $ 13,113 $(35,223)
========== ========== ========= =========
Earnings (loss) per share:
Loss from continuing operations $ (2.11) $ (2.19)
========== =========
Weighted average number of
shares outstanding 16,103 16,103
========== =========
See Notes to Pro Forma Condensed Separated Financial Statements.
<PAGE>
THE FAIRCHILD CORPORATION
PRO FORMA CONDENSED SEPARATED STATEMENT OF EARNINGS
For the six months ended December 31, 1995
(in thousands, except per share data)
Historical Pro Forma
--------------------- -----------------------
TFC DME Adjustments TFC
Revenue: ---------- ---------- ----------- ---------
Sales $ 211,376 $ (*) $211,376
Other income, net 136 136
---------- ---------- --------- ---------
211,512 -- -- 211,512
Cost and expenses:
Cost of sales 162,141 162,141
Selling, general and
administrative 41,274 41,274
Research and development 44 44
Amortization of goodwill 2,378 2,378
Restructuring 285 285
---------- ---------- --------- ---------
206,122 -- -- 206,122
Operating income (loss) 5,390 -- -- 5,390
Interest expense 36,047 (3,232)(3) 32,815
Interest income (1,279) (6,855)(3) (8,134)
---------- ---------- --------- ---------
Net interest expense 34,768 -- (10,087) 24,681
Investment income, net 1,912 1,912
Equity in earnings of
affiliates 1,889 1,889
Minority interest (1,085) (1,085)
---------- ---------- --------- ---------
Earnings (loss) from continuing
operations before taxes (26,662) -- 10,087 (16,575)
Income tax provision (benefit) (9,951) 3,530 (6,421)
---------- ---------- --------- ---------
Earnings (loss) from continuing
operations $ (16,711) $ -- $ 6,556 $(10,155)
========== ========== ========= =========
Earnings (loss) per share:
Loss from continuing operations $ (1.04) $ (0.64)
========== =========
Weighted average number of
shares outstanding 16,122 16,122
========== =========
* - Results of DME were included as part of earnings from discontinued
operations for the six months ended December 31, 1995.
See Notes to Pro Forma Condensed Separated Financial Statements.
<PAGE>
THE FAIRCHILD CORPORATION
NOTES TO PRO FORMA CONDENSED SEPARATED FINANCIAL STATEMENTS
On February 22, 1996, the Company completed the sale of DME to
Cincinnati Milacron for $74,000,000 in cash and $171,377,000 in 8% promissory
notes which mature one year following the closing of the sale. The pro forma
financial statements separate (i) the assets and liabilities of DME from the
Company's consolidated balance sheets at December 31, 1995, and (ii) the
results of operations of DME from the Company's consolidated statement of
earnings for the year ended June 30, 1995 and six months ended December 31,
1995. In separating the entities, the following pro forma adjustments have
been made.
(1) Reflects the sale of certain assets and liabilities of DME in
exchange for cash and notes receivable, reduced by accrued expenses
(incentive compensation, legal, audit and other associated fees) incurred for
the disposition as follows:
December 31,
1995
------------
Cash $ 74,000,000
Notes receivable 171,377,000
Other accrued expenses (7,341,000)
------------
Net proceeds received 238,036,000
Carrying value of net assets sold 119,694,000
------------
Nonrecurring gain before taxes 118,342,000
Taxes payable (35% statutory tax rate) 41,420,000
------------
Net gain on sale $ 76,922,000
============
(2) Cash received was immediately used to reduce bank loans(with
interest rates of approximately 8.73% in fiscal 1995) as follows:
December 31,
1995
Bank notes payable and current maturities ------------
of debt $ 67,303,000
Long-term debt, less current maturities 6,697,000
------------
Total $ 74,000,000
============
(3) For purposes of presenting the pro forma condensed separated
statement of earnings, the following adjustments (which are expected to be
recurring) have been made:
Six Months
Ended Year Ended
December 31, June 30,
1995 1995
Increase (decrease) in earnings: ----------- -----------
Interest expense from revised debt
structures (see Note 2) $ 3,232,000 $ 6,463,000
Interest income from notes receivable 6,855,000 13,710,000
Tax effects of the above adjustments (3,530,000) (7,061,000)
----------- -----------
Net adjustments $ 6,556,000 $13,113,000
=========== ===========
(4) The pro forma statement of earnings has not been adjusted for
non-recurring credits or charges that are expected to be incurred within the
ensuing year. Such non-recurring items omitted from the pro forma statement
of earnings represents the gain, net of tax, on the sale of DME of
$76,922,000. See Note 1.
