SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________
SCHEDULE 13D
Under the Securities Exchange Act of 1934
WATKINS-JOHNSON COMPANY
(Name of Issuer)
Common Stock
(Title of Class of Securities)
942486-10-1 (CUSIP Number)
Warren Persavich
Senior Vice President & COO
Banner Aerospace, Inc.
45025 Aviation Drive, Suite 300
Dulles, VA 20166-7556
Telephone: 703-478-5790
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
October 13, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this
Schedule 13D and is filing this schedule because of Rule 13d-
1(b)(3) or (4), check the following box [ ].
PAGE 1 OF 14
CUSIP No. 942486-10-1
1. NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
Banner Aerospace, Inc. -- IRS EIN 95-2039311
The Fairchild Corporation -- IRS EIN 34-0728587
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)[ ] b)[ ]
3. SEC USE ONLY
4. SOURCE OF FUNDS: WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Each of the Reporting Persons is a Delaware corporation.
NUMBER OF SHARES BENEFICIALLY
OWNED BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER:
512,000
8. SHARED VOTING POWER: 0
9. SOLE DISPOSITIVE POWER:
512,000
10. SHARED DISPOSITIVE POWER: 0
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON 512,000
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 7.06%
14. TYPE OF REPORTING PERSON: CO
PAGE 2 OF 14
Item 1. Security and Issuer.
This Schedule 13D is filed with respect to the Common Stock of
Watkins-Johnson Company, a California corporation ("Issuer").
The principal executive offices of Issuer are located at 3333
Hillview Avenue, Palo Alto, CA 94304-1223.
Item 2. Identity and Background.
This statement is filed by Banner Aerospace, Inc., a Delaware
corporation ("Banner Aerospace"), and it's parent company, The
Fairchild Corporation ("Fairchild"). Banner Aerospace and
Fairchild are collectively referred to as the "Reporting
Persons."
The principal executive offices of Banner Aerospace are located
at 45025 Aviation Drive, Suite 300, Dulles, VA 20166-7556. The
principal executive offices of Fairchild are located at 45025
Aviation Drive, Suite 400, Dulles, VA 20166-7516. Banner
Aerospace is a publicly held company, traded on the New York
Stock Exchange under the symbol BAR. Fairchild is a publicly
held company, traded on the New York and Pacific Stock Exchange,
under the symbol FA. Fairchild owns approximately 83% of Banner
Aerospace's shares.
Banner Aerospace is a distributor of aircraft rotables and
engines. Fairchild's principal activities include Fairchild
Fasteners, a worldwide manufacturer of advanced aerospace
fastening devices, an 83% holding interest in Banner Aerospace,
and Fairchild Technologies, a manufacturer of semiconductor
equipment and optical disc equipment.
Exhibit A hereto sets forth the name, present principal
occupation or employer, citizenship, and stock ownership of
Issuer's Common Stock for each executive officer and director of
Banner Aerospace and each executive officer and director of
Fairchild. The business address of each such person is c/o
Banner Aerospace, Inc., 45025 Aviation Drive, Suite 400, Dulles,
VA 20166-7516, Attention: General Counsel.
PAGE 3 OF 14
During the past five years prior to the date hereof, neither of
the Reporting Persons nor (to the knowledge of the Reporting
Persons) any executive officer or director of the Reporting
Persons has: (i) been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors), or (ii)
been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating
activities subject to, Federal or State securities laws or
finding any violations with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
Through open market purchases, for the period of June 1, 1998,
through October 14, 1998, Banner Aerospace purchased an aggregate
of 512,000 shares of Issuer's Common Stock, at an aggregate
purchase price of $12,257,391.25 (the "Shares"). The Shares were
purchased with working capital funds of Banner Aerospace.
Because of its ownership interest in Banner Aerospace, Fairchild
is also deemed the beneficial ownership of the Shares.
Jeffrey Steiner may be deemed the beneficial owner of 28.96% of
Fairchild's Class A Common Stock (including shares owned by his
affiliates), and 86.03% of Banner Aerospace's Common Stock
(including shares owned by Fairchild). He is also the Chairman
of the Board, CEO and President of Banner Aerospace and Chairman
of the Board and CEO of Fairchild. As a result of such stock
ownership and executive positions, Mr. Steiner may be deemed to
be the beneficial owner of the Shares beneficially owned by the
Reporting Persons. Mr. Steiner disclaims such beneficial
ownership, except to the extent of his pecuniary interest
therein.
PAGE 4 OF 14
Item 4. Purpose of Transaction.
The Reporting Persons have acquired the Shares of Common Stock
reported herein because they believe that trading prices of the
Common Stock do not adequately reflect the value of the
underlying business and assets of the Issuer. From time to time
leading up to and subsequent to the Reporting Persons' purchase
of Shares of Common Stock, the Reporting Persons have had
discussions with the management of the Issuer regarding ways in
which the value of the Common Stock might be enhanced, including
the sale of part or all of the Issuer's businesses to the
Reporting Persons. During discussions to date, the Issuer has
informed the Reporting Person that the Issuer is exploring
opportunities for the Issuer's Semiconductor Equipment Group,
including partnership transactions or a possible sale. The
Reporting Persons believe that the Issuer's Semiconductor
Equipment Group may offer margin improvement and other
synergistic opportunities to the Reporting Persons as well as
other manufacturers.
The Reporting Persons continue to monitor and evaluate their
involvement in the Issuer in light of pertinent business and
market factors. The Reporting Persons may acquire additional
shares of Issuer's Common Stock through market transactions or
otherwise, maintain their current investment in the Issuer or
dispose of some or all of their Shares of Common Stock. The
Reporting Persons expect to continue to explore ways to enhance
the value of the Common Stock, if possible in cooperation with
management of the Issuer.
Other than as set forth above, the Reporting Persons have no
present plans or proposals which relate to or would result in any
of the actions set forth in parts (b)though (j) if Item 4;
however, the Reporting Persons reserve the right, either
individually or together with one or more of the other
shareholders of the Issuer, to determine in the future to take or
cause to be taken one or more of such actions.
PAGE 5 OF 14
Item 5. Interest in Securities of the Issuer.
(a) This statement on Schedule 13D relates to 512,000 shares of
Issuer's Common Stock beneficially owned by the Reporting
Persons. Issuer's third quarter earnings report dated
October 13, 1998 states that there are 7,249,000 shares of
Issuer Common Stock outstanding. Based on such number, the
512,000 Shares owned by the Reporting Persons constitute
approximately 7.06% of the issued and outstanding shares of
Issuer's Common Stock. The Reporting Persons first owned in
excess of 5% of the issued and outstanding shares of
Issuer's Common Stock as of October 13, 1998.
(b) Banner Aerospace has sole voting and dispositive power with
respect to the Shares. Because of Fairchild's 83% ownership
interest in Banner Aerospace, it may also be deemed to have
voting and dispositive power with respect to the Shares.
(c) Within the past sixty days, Banner Aerospace purchased
shares of Issuer's Common Stock on the dates, in the amounts
and at the prices set forth on Exhibit B attached hereto.
All of such purchases were made on the open market.
(d) Not applicable.
(e) Not applicable.
Item 7. Material to be Filed as Exhibits.
Exhibit A: Officers and Directors of Banner Aerospace, Inc.
and The Fairchild Corporation.
Exhibit B: Purchases of Watkins-Johnson Common Stock
PAGE 6 OF 14
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this
statement is true, complete and correct.
October 23, 1998 BANNER AEROSPACE, INC.
By: Warren Persavich
Senior Vice President and COO
THE FAIRCHILD CORPORATION
By: Donald E. Miller
Executive
Vice President, General Counsel and
Secretary
PAGE 7 OF 14
EXHIBIT A
OFFICERS AND DIRECTORS OF BANNER AEROSPACE, INC.
MICHAEL T. ALCOX
Citizenship: USA.
Director of Banner Aerospace. Part-Time Vice President of The
Fairchild Corporation. Owner and operator of travel and real
estate businesses.
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
STEVEN L. GERARD
Citizenship: USA.
Director of Banner Aerospace.
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
CHARLES M. HAAR
Citizenship: USA.
Director of Banner Aerospace.
Professor of law at Harvard University.
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
PHILIPPE HERCOT
Citizenship: French.
Director of Banner Aerospace.
Managing partner for Capital Industrie & Associs (a Paris, France
based investment and consulting firm).
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
MICHAEL D. HERDMAN
Citizenship: USA.
Director of Banner Aerospace.
Senior Vice President of American National Can for Beverage Cans
Europe/Asia Pacific.
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
WARREN D. PERSAVICH
Citizenship: USA.
Director, Senior Vice President and Chief Operating Officer of
Banner Aerospace.
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
PAGE 8 OF 14
DR. ERIC I. STEINER
Citizenship: USA.
Director and Senior Vice President of Banner Aerospace.
Director, President and Chief Operating Officer of The Fairchild
Corporation.
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
JEFFREY J. STEINER
Citizenship: Austria.
Chairman of the Board, CEO and President of Banner Aerospace.
Chairman of the Board and CEO of The Fairchild Corporation.
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
As a result of his stock ownership in the Reporting Persons and
executive positions with the Reporting Persons, Mr. Steiner may
be deemed to be the beneficial owner of the Shares beneficially
owned by the Reporting Persons. Mr. Steiner disclaims such
beneficial ownership, except to the extent of his pecuniary
interest therein.
LEONARD TOBOROFF
Citizenship: USA.
Director of Banner Aerospace
Executive Vice President and Director of Riddell Sports, Inc., a
manufacturer and licenser of sports equipment. Vice President
and Vice Chairman of the Board of Allis-Chalmers Corporation, a
holding company.
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
Eugene W. Juris
Citizenship: USA.
Vice President and Chief Financial Officer of Banner Aerospace.
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
Bradley T. Lough
Citizenship: USA.
Treasurer and Secretary of Banner Aerospace.
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
PAGE 9 OF 14
OFFICERS AND DIRECTORS OF THE FAIRCHILD CORPORATION
MICHAEL T. ALCOX
Citizenship: USA.
Director and Vice President (part-time) of The Fairchild
Corporation. Owner and operator of travel and real estate
businesses.
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
MELVILLE R. BARLOW
Citizenship: USA.
Director of The Fairchild Corporation.
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
MORTIMER M. CAPLIN
Citizenship: USA.
Director of The Fairchild Corporation. Attorney, Caplin &
Drysdale.
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
COLIN M. COHEN
Citizenship: South African. Resident of the USA.
Director, Senior Vice President (Business Development and
Finance) and Chief Financial Officer of The Fairchild
Corporation.
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
PHILIP DAVID
Citizenship: USA. Resident of the UK.
Director of The Fairchild Corporation.
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
ROBERT E. EDWARDS
Citizenship: USA.
Director of The Fairchild Corporation. Executive Vice President
of Fairchild Fasteners and Chief Executive Officer of Special-T
Fasteners, Inc., a wholly-owned subsidiary of Fairchild.
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
PAGE 10 OF 14
HAROLD J. HARRIS
Citizenship: USA.
Director of The Fairchild Corporation. President of Wm. H.
Harris, Inc. (retailer).
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
DANIEL LEBARD
Citizenship: French.
Director of The Fairchild Corporation. Chairman of the Board of
Daniel Lebard Management Development SA, a consulting firm in
Paris, France, which performs management services. Chief
Executive Officer of Groupe Sofrecid SA and Kvaerner-Clecim SA,
engineering companies whose headquarters are in Paris.
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
JACQUES S. MOSKOVIC
Citizenship: French.
Director and Senior Vice President of The Fairchild Corporation.
President and Chief Executive Officer of Fairchild Technologies,
a Fairchild subsidiary (manufacturer of semiconductor equipment
and optical disc equipment).
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
HERBERT S. RICHEY
Citizenship: USA.
Director of The Fairchild Corporation.
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
MOSHE SANBAR
Citizenship: Israel.
Director of The Fairchild Corporation. President of the Israel
National Committee of the International Chamber of Commerce.
Member of the executive board of the International Chamber of
Commerce, at the Paris headquarters.
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
PAGE 11 OF 14
ROBERT A. SHARPE II
Citizenship: USA.
Director and Senior Vice President (Operations) of The Fairchild
Corporation. Executive Vice President and Chief Financial
Officer of Fairchild Fasteners.
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
DR. ERIC I. STEINER
Citizenship: USA.
Director and Senior Vice President of Banner Aerospace.
Director, President and Chief Operating Officer of The Fairchild
Corporation.
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
JEFFREY J. STEINER
Citizenship: Austria.
Chairman of the Board, CEO and President of Banner Aerospace.
Chairman of the Board and CEO of The Fairchild Corporation.
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
As a result of his stock ownership in the Reporting Persons and
executive positions with the Reporting Persons, Mr. Steiner may
be deemed to be the beneficial owner of the Shares beneficially
owned by the Reporting Persons. Mr. Steiner disclaims such
beneficial ownership, except to the extent of his pecuniary
interest therein.
ROBERT D. BUSEY
Citizenship: USA.
Vice President of The Fairchild Corporation.
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
JOHN L. FLYNN
Citizenship: USA.
Senior Vice President (Tax)of The Fairchild Corporation.
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
PAGE 12 OF 14
NATALIA HERCOT
Citizenship: USA. Resident of France.
Vice President (Business Development) of The Fairchild
Corporation.
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
HAROLD R. JOHNSON
Citizenship: USA.
Senior Vice President (Business Development) of The Fairchild
Corporation.
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
ROBERT H. KELLEY
Citizenship: USA.
Vice President (Employee Benefits) of The Fairchild Corporation.
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
JEFFREY P. KENYON
Citizenship: USA.
Vice President of The Fairchild Corporation.
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
DONALD E. MILLER
Citizenship: USA.
Executive Vice President, General Counsel and Corporate Secretary
of The Fairchild Corporation.
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
KAREN L. SCHNECKENBURGER
Citizenship: USA.
Vice President and Treasurer of The Fairchild Corporation.
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
DAVID WYNNE-MORGAN
Citizenship: USA.
Senior Vice President (Corporate Communications) of The Fairchild
Corporation. Chairman of WMC Communications, Ltd.
(communications consultants).
Beneficial Ownership of Watkins-Johnson Common Stock: 0.
PAGE 13 OF 14
EXHIBIT B
PURCHASES OF WATKINS-JOHNSON COMMON STOCK
Trade date No. of Shares Price Per Share Total Cost
6/1/98 10,600 25.7675 273,135.50
6/2/98 70,400 25.8266 1,818,194.50
6/3/98 69,000 25.8228 1,781,770.00
6/4/98 150,000 25.5850 3,837,750.00
6/5/98 4,800 25.2831 121,359.00
6/8/98 15,200 25.6894 390,478.50
6/9/98 12,500 25.8300 322,875.00
6/10/98 45,500 25.8293 1,175,234.00
6/11/98 22,000 25.8300 568,260.00
10/13/98 10,200 17.5187 178,691.00
10/14/98 101,800 17.5800 1,789,644.00
-------- ----------- -------------
TOTAL 512,000 23.9402 12,257,391.25
PAGE 14 OF 14
