UNITED STATES
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):March 25, 1998 (March 10, 1998)
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Commission File Number 1-6560
THE FAIRCHILD CORPORATION
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(Exact name of Registrant as specified in its charter)
Delaware 34-0728587
- ------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
45025 Aviation Drive, Suite 400
Dulles, VA 20166
- --------------------------------------- ------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (703) 478-5800
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Washington Dulles International Airport
300 West Service Road, PO Box 10803
Chantilly, VA
- -------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
ITEM 2. DISPOSITION OF ASSETS
On November 20, 1997, Shared Technologies Fairchild Inc. ("STFI"), a
corporation of which the Company owned approximately 42% of the outstanding
common stock, executed a Merger Agreement with Intermedia Communications Inc.
("Intermedia"), pursuant to which holders of STFI common stock would receive
$15.00 per share in cash (the "STFI Merger"). On March 10, 1998, the STFI Merger
was consummated. In the quarter ended December 28, 1997 the Company was paid
approximately $85,000 in cash (before tax and selling expenses) in exchange for
preferred stock of STFI owned by the Company. The Company received an
additional $93,000 in cash (before tax and selling expenses) in the third
quarter of Fiscal 1998, in exchange for the 6,225,000 shares of common stock of
STFI owned by the Company.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma consolidated statement of earnings for the year
ended June 30, 1997 and for the six months ended December 28, 1997 have been
prepared to give effect to the STFI Merger as if the STFI Merger occurred on
July 1, 1996 and July 1, 1997, respectively. The unaudited pro forma
consolidated balance sheet as of December 28, 1997 has been prepared to give
effect to the STFI Merger as if it had occurred on such date.
The unaudited pro forma consolidated financial statements are not
necessarily indicative of the results that would have been obtained had the STFI
Merger been completed as of the dates presented or for any future period. The
unaudited pro forma consolidated financial statements should be read in
conjunction with the Company's Consolidated Financial Statements and notes
thereto included in the Company's Form 10-K/A dated June 30, 1997 and Form 10-Q
dated December 28, 1997.<PAGE>
<TABLE>
THE FAIRCHILD CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED JUNE 30, 1997
(In thousands, except per share data)
<CAPTION>
Historical STFI Pro Forma
(as Restated) Merger (1) Company
------------- ---------- ----------
<S> <C> <C> <C>
Sales $ 680,763 $ - $ 680,763
Costs and expenses:
Cost of sales 499,419 - 499,419
Selling, general & administrative 142,931 - 142,931
Research and development 100 - 100
Amortization of goodwill 4,814 - 4,814
----------- ----------- ---------
647,264 - 647,264
Operating income 33,499 - 33,499
Net interest expense (47,681) 9,595 (38,086)
Investment income, net 6,651 - 6,651
Equity in earnings of affiliates 4,598 - 4,598
Minority interest (3,514) - (3,514)
Nonrecurring income 2,528 - 2,528
---------- ----------- ---------
Earnings before taxes (3,919) 9,595 5,676
Income tax provision (benefit) (5,735) 3,358 (2,377)
---------- ----------- ---------
Earnings from continuing
operations $ 1,816 $ 6,237 $ 8,053
========== ============ ========
Earnings per share from
continuing operations:
Basic $ 0.11 $ 0.49
Diluted 0.10 0.46
Weighted average shares outstanding:
Basic 16,539 16,539
Diluted 17,321 17,321
/TABLE
<PAGE>
<TABLE>
THE FAIRCHILD CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
FOR THE SIX MONTHS ENDED DECEMBER 28, 1997
(In thousands, except per share data)
<CAPTION>
Historical STFI Pro Forma
(as Restated) Merger (1) Company
------------- ---------- ----------
<S> <C> <C> <C>
Sales $ 402,978 $ - $ 402,978
Costs and expenses:
Cost of sales 299,827 - 299,827
Selling, general & administrative 74,267 - 74,267
Research and development 97 - 97
Amortization of goodwill 2,606 - 2,606
------------ ------------ ------------
376,797 - 376,797
Operating income 26,181 - 26,181
Net interest expense (27,744) 4,521 (23,223)
Investment income, net (5,180) - (5,180)
Equity in earnings of affiliates 2,121 - 2,121
Minority interest (1,875) - (1,875)
------------ ------------ ------------
Earnings before taxes (6,497) 4,521 (1,976)
Income tax provision (benefit) (3,121) 1,582 (1,539)
------------ ------------ -------------
Earnings (loss) from continuing
operations $ (3,376) $ 2,939 $ (437)
============ ============ =============
Earnings (loss) per share from
continuing operations:
Basic $ (0.20) $ (0.03)
Diluted (0.20) (0.03)
Weighted average shares outstanding:
Basic 16,864 16,864
Diluted 16,864 16,864
</TABLE>
<PAGE>
<TABLE>
THE FAIRCHILD CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 28, 1997
(In thousands)
<CAPTION>
Historical STFI Pro Forma
(as Restated) Merger Company
------------- ----------- ------------
<S> <C> <C> <C>
Cash (2) $ 38,907 $ 67,545 $ 106,452
Short-term investments 8,487 - 8,487
Accounts receivable, less allowance 160,995 - 160,995
Inventory 361,966 - 361,966
Prepaid and other current assets 81,037 - 81,037
------------- ------------- ---------
Total current assets 651,392 67,545 718,937
Net fixed assets 126,198 - 126,198
Net assets held for sale 26,447 - 26,447
Net assets of discontinued operations 12,069 - 12,069
Investment in affiliates 21,829 - 21,829
Goodwill 160,150 - 160,150
Deferred loan costs 11,742 - 11,742
Prepaid pension assets 59,282 - 59,282
Other assets 53,627 - 53,627
------------ ----------- ----------
Total assets $ 1,122,736 $ 67,545 $1,190,281
=========== =========== ==========
Bank notes payable & current
maturities of debt $ 92,348 $ - $ 92,348
Accounts payable 70,739 - 70,739
Other accrued expenses 92,979 - 92,979
----------- ----------- -----------
Total current liabilities 256,066 - 256,066
Long-term debt, less current maturities 371,610 - 371,610
Other long-term liabilities 29,050 - 29,050
Retiree health care liabilities 42,366 - 42,366
Noncurrent income taxes 47,388 - 47,388
Minority interest in subsidiaries 70,327 - 70,327
------------ ---------- ----------
Total liabilities 816,807 - 816,807
Total stockholders' equity (3) 305,929 67,545 373,474
------------ ----------- ----------
Total liabilities &
stockholders' equity $ 1,122,736 $ 67,545 $ 1,190,281
=========== =========== ===========
</TABLE>
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(In thousands)
(1) Represents the net decrease of interest expense by $9,595, and $4,521 for
the fiscal year ended June 30, 1997 and the six months ended December 28, 1997,
respectively, reflecting the proceeds received from the STFI Merger used to
reduce the Company's debt and additional interest income from invested proceeds.
(2) The increase in cash of $67,545 reflects the remaining net proceeds
received in the third quarter of Fiscal 1998, from the completion of the STFI
Merger.
(3) Represents the increase in stockholders' equity related to the remaining
gain from the STFI Merger as follows:
<TABLE>
<CAPTION>
<S> <C>
Gross Proceeds to be received from the STFI common stock $ 93,375
Less: Cash Expenses (5,334)
--------
Net proceeds 88,041
Book Basis of STFI investment --
--------
Gain from disposal before taxes 88,041
Income tax provision 20,496
--------
Net gain from disposal $ 67,545
========
</TABLE>
In the quarter ended December 28, 1997, the Company recorded a $29,974
gain, net of tax, on disposal of discontinued operations, from the proceeds
received for the preferred stock of STFI. The results of STFI have been
accounted for as discontinued operations. Earnings from discontinued operations
included the Company's equity in earnings of $3,149 and $622 from the STFI
investments during the year ended June 30, 1997 and the six months ended
December 28, 1997, respectively. These amounts have not been adjusted for in
the pro forma consolidated financial statements since "earnings from
discontinued operations" appear below "earnings from continuing operations".
EXHIBITS
2.1 Stock Option Agreement dated November 20, 1997 between RHI Holdings,
Inc. and Intermedia Communications Inc. (Incorporated by reference to Schedule
13D/A (Amendment No. 4) dated as of November 25, 1997 filed by the Company on
December 1, 1997).
2.2 Stock Purchase Agreement dated November 25, 1997 between RHI Holdings,
Inc. and Intermedia Communications Inc. (Incorporated by reference to Schedule
13D/A (Amendment No. 4) dated as of November 25, 1997 filed by the Company on
December 1, 1997).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to the signed on its behalf by the undersigned
hereunto duly authorized.
For THE FAIRCHILD CORPORATION
(Registrant) and as its Chief
Financial Officer:
By: Colin M. Cohen
Senior Vice President and
Chief Financial Officer
Date: March 25, 1998
