6
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): January 28, 1998
(January 13,1998)
Commission File Number 1-6560
THE FAIRCHILD CORPORATION
(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)
Washington Dulles International Airport
300 West Service Road, PO Box 10803
Chantilly, VA 20153
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (703) 478-5800
NONE
(Former name or former address, if changed since last report)
ITEM 2. DISPOSITION OF ASSETS
On January 13, 1998, certain subsidiaries (the "Selling Subsidiaries"), of
Banner Aerospace, Inc. ("Banner", a majority-owned subsidiary of the
Registrant), completed the disposition of substantially all of the assets and
certain liabilities of the Selling Subsidiaries to AS BAR LLC and AS BAR PBH
LLC, two wholly-owned subsidiaries of AlliedSignal Inc., in exchange for
unregistered shares of AlliedSignal Inc. common stock with an aggregate value
equal to $345 million (the "Disposition"). The value of the AlliedSignal Inc.
common stock received by the Selling Subsidiaries was determined by the average
closing price of such stock on the New York Stock Exchange for a period of
twenty days preceding the closing.
The Selling Subsidiaries were Adams Industries, Inc., Aerospace Bearing
Support, Inc., Aircraft Bearing Corporation, Banner Distribution, Inc., Burbank
Aircraft Supply, Inc., Harco, Inc., PB Herndon Aerospace, Inc. (which
collectively comprise Banner's Hardware Group), Banner Aerospace Services, Inc.
(which transferred only those assets related to the Hardware Group business) and
PacAero. The transaction was evidenced by: (i) an Asset Purchase Agreement
dated as of December 8, 1997, attached hereto as Exhibit 2.1, among Banner,
seven of the Selling Subsidiaries (Adams Industries, Inc., Aerospace Bearing
Support, Inc., Aircraft Bearing Corporation, Banner Distribution, Inc., Burbank
Aircraft Supply, Inc., Harco, Inc. and PacAero), AlliedSignal Inc. and AS BAR
LLC; and (ii) an Asset Purchase Agreement dated as of December 8, 1997, attached
hereto as Exhibit 2.2, among Banner, two of the Selling Subsidiaries (PB Herndon
Aerospace, Inc. and Banner Aerospace Services, Inc.), AlliedSignal Inc. and AS
BAR PBH LLC. (AS BAR LLC and AS BAR PBH LLC are collectively referred to as the
"Buyers"). Reference is made to Exhibits 2.1 and 2.2 hereto for the complete
terms and conditions of the two Asset Purchase Agreements.
The purchase price received by the Selling Subsidiaries ($345 million) was
based on the consolidated net worth as reflected on an Estimated Closing Date
Balance Sheet for the assets (and liabilities) conveyed by the Selling
Subsidiaries to the Buyers. Such Estimated Closing Date Balance Sheet is
subject to review by the parties, and the purchase price shall be adjusted (up
or down) based on the net worth as reflected on the final Closing Date Balance
Sheet. The purchase price was allocated among the Selling Subsidiaries in the
following proportions: Adams Industries, Inc., 4.4%; Aerospace Bearing Support,
Inc., 8.4%; Aircraft Bearing Corporation, 8.5%; Banner Distribution, Inc., 1.5%;
Burbank Aircraft Supply, Inc., 43.5%; Harco, Inc., 23.5%; PacAero, 3.6%; PB
Herndon Aerospace, Inc., 6.1%; Banner Aerospace Services, Inc., 0.5%.
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 three months ended September 28, 1997 have been
prepared to give effect to the Disposition as if the Disposition occurred on
July 1, 1996 and July 1, 1997, respectively. The unaudited pro forma
consolidated balance sheet as of September 28, 1997 has been prepared to give
effect to the Disposition as if it had occurred on such date.
The unaudited pro forma consolidated financial data are not necessarily
indicative of the results that would have been obtained had the Disposition been
completed as of the dates presented or for any future period. The unaudited pro
forma consolidated financial data should be read in conjunction with the
Company's Consolidated Financial Statements and notes thereto included in the
Company's June 30, 1997 Form 10-K/A.
<TABLE>
THE FAIRCHILD CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED JUNE 30, 1997
<CAPTION>
<S> <C> <C> <C>
Pro Forma
Historical Adjustments(1) Company
(In thousands, except per share data)
Sales $ 731,960 $ (208,813) (2) $ 523,147
Costs and expenses:
Cost of sales 526,837 (134,634) 392,203
Selling, general &
administrative 161,967 (51,271) 110,696
Research and
development 7,807 - 7,807
Amortization of
goodwill 4,832 (289) 4,543
707,943 (186,194) 515,249
Operating income 30,517 (22,619) 7,898
Net interest expense (47,798) 14,450 (33,348)
Investment income, net 6,651 - 6,651
Equity in earnings of
affiliates 4,598 - 4,598
Minority interest (3,514) 3,168 (346)
Non-recurring income 2,528 - 2,528
Earnings before taxes (7,018) (5,001) (12,019)
Income tax provision
(benefit) (5,200) (386) (5,586)
Earnings from continuing
operations $(1,818) $(4,615) $ (6,433)
Primary earnings per
share:
Continuing operations $ (0.11) $ (0.37)
Weighted average shares
outstanding
17,230 17,230
</TABLE>
<TABLE>
THE FAIRCHILD CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
FOR THE THREE MONTHS ENDED SEPTEMBER 28, 1997
<CAPTION>
<S> <C> <C> <C>
Pro Forma
Historical Adjustments(1) Company
(In thousands, except per share data)
Sales $ 213,761 $(54,665) (3) $159,096
Costs and expenses:
Cost of sales 161,699 (33,206) 128,493
Selling, general &
administrative 40,122 (15,342) 24,780
Research and
development 605 - 605
Amortization of
goodwill 1,223 (68) 1,155
203,649 (48,616) 155,033
Operating income 10,112 (6,049) 4,063
Net interest expense (12,590) 3,745 (8,845)
Investment income, net 1,897 - 1,897
Equity in earnings of
affiliates 1,692 - 1,692
Minority interest (788) 569 (219)
Earnings before taxes 323 (1,735) (1,412)
Income tax provision
(benefit) (110) (906) (1,016)
Earnings from continuing
operations $ 433 $ (829) $ (396)
Earnings per share:
Continuing operations $ 0.02 $ (0.02)
Weighted average shares
outstanding 17,457 17,457
</TABLE>
<TABLE>
THE FAIRCHILD CORPORATION
UNAUDITED PRO FORMA BALANCE SHEETAS OF SEPTEMBER 28, 1997
<CAPTION>
<S> <C> <C> <C>
Pro Forma
Historical Adjustments Company
(In thousands, except per share data)
Cash $ 9,049 $ - $ 9,049
Short-term investments 18,403 172,508 (4) 190,911
Accounts receivable,
less allowance 172,239 (48,184) 124,055
Inventory 359,667 (176,790) 182,877
Prepaid and other
current assets 39,595 (10,156) 29,439
Total current assets 598,953 (62,622) 536,331
Net fixed assets 132,195 (12,553) 119,642
Net assets held for sale 26,262 - 26,262
Investment in affiliates 55,337 - 55,337
Goodwill 154,233 (19,089) 135,144
Deferred loan costs 11,489 (2,000) (5) 9,489
Prepaid pension assets 59,512 - 59,512
Other assets 45,135 (646) 44,489
Total Assets $1,083,116 $(96,910) $986,206
Bank notes payable ¤t
maturities of debt $ 79,781 $ (299) $ 79,482
Accounts payable 84,797 (30,518) 54,279
Other accrued expenses 91,289 43,826 (6) 135,115
Total current 255,867 13,009 268,876
Long-term debt, less
current maturities 412,261 (164,746) (7) 247,515
Other long-term liabilities 22,381 (5,969) 16,412
Retiree health care
liabilities 43,284 - 43,284
Noncurrent income taxes 48,939 - 48,939
Minority interest in
subsidiaries 69,178 25,052 (8) 94,230
Total liabilities 851,910 (133,411) 718,499
Total stockholders'
equity 231,206 36,052 267,258
Total liabilities &
stockholders'
equity $ 1,083,116 $ (96,910) 986,206
</TABLE>
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL STATEMENTS
(1) Represents the elimination of the results of operations associated with the
Disposition of a portion of Banner's business (see note 2) and the associated
reduction in interest expense due to the repayment of bank debt of Banner's
subsidiaries. No investment income was recognized on the remaining holdings of
AlliedSignal Inc. common stock. The Company estimates a remaining ownership of
approximately 4.6 million shares of AlliedSignal Inc. common stock,
representing less than 1% of AlliedSignal Inc.'s outstanding common stock.
(2) Represents the reduction of Banner Hardware Group sales of $223,997 offset
by $15,184 of additional sales recorded by the Fairchild Fasteners Group,
which represented Fiscal 1997 intercompany sales to the Banner Hardware
Group. These sales no longer require elimination as the Banner Hardware
Group is now treated as a third party for pro forma purposes. The net result
is a decrease in sales of $208,813 in Fiscal 1997.
(3) Represents the reduction of Banner Hardware Group sales of $59,512 offset
by $4,847 of additional sales recorded by the Fairchild Fasteners Group, which
represented intercompany sales to the Banner Hardware Group in the first
quarter of Fiscal 1998. These sales no longer require elimination as the
Banner Hardware Group is now treated as a third party for pro forma
purposes. The net result is a decrease in sales of $54,665 in the quarter
ended September 28, 1997.
(4) Represents a net increase of $172,508 in short-term investments. Banner
will receive AlliedSignal Inc. stock of $345,000 in exchange for the
Disposition. The offsetting decrease of $172,492 results from the repayment
of Banner long-term debt, associated interest and transaction fees.
(5) Represents the write-off of existing deferred financing fees of $2,000
related to the repayment of the debt of Banner's subsidiaries.
(6) Represents (i) an increase of accrued expenses of $42,583 for deferred
taxes associated with the Disposition; (ii) an increase of $10,000 in
accruals for transaction fees, indemnifications and other costs associated
with the transaction; (iii) a decrease of accrued interest of $2,447
associated with the defeasance of the Banner bank debt; and (iv) a decrease
of $6,310 in accruals associated with the business being sold to
AlliedSignal Inc.
(7) Represents the redemption of $164,746 of long-term debt.
(8) Represents the increase in the minority interest liability associated with
Banner's increased net worth associated with the Disposition.
EXHIBITS
2 (a) Asset Purchase Agreement dated as of December 8, 1997, among Banner
Aerospace, Inc. and seven of its subsidiaries (Adams Industries, Inc.,
Aerospace Bearing Support, Inc., Aircraft Bearing Corporation, Banner
Distribution, Inc., Burbank Aircraft Supply, Inc., Harco, Inc. and
PacAero), AlliedSignal Inc. and AS BAR LLC (incorporated by reference to
Banner Aerospace, Inc.'s Report on Form 8-K dated January 28, 1998).
2 (b) Asset Purchase Agreement dated as of December 8, 1997, among Banner
Aerospace, Inc. and two of its subsidiaries (PB Herndon Aerospace, Inc.
and Banner Aerospace Services, Inc.), AlliedSignal Inc. and AS BAR PBH
LLC (incorporated by reference to Banner Aerospace, Inc.'s Report on
Form 8-K dated January 28, 1998).
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: January 28, 1998
