The Fairchild Corporation Reports Growth in Second Quarter Operating Performance Driven By Fairchild Fasteners

Business Wire, Feb 4, 1999

DULLES, Va.--(BUSINESS WIRE)--Feb. 4, 1999--

One-Time Charge from Sale of Solair Unit Creates $.40 Per Share

Loss in Continuing Operations

The Fairchild Corporation (NYSE: FA) today announced pro forma earnings from continuing operations of $0.16 per share, or $3.4 million, for its second fiscal quarter ending December 27, 1998. The sale of Solair Inc. by the Company's Banner Aerospace, Inc. subsidiary resulted in a non-recurring $19.3 million charge, and caused Fairchild to report a loss of $8.8 million or $0.40 per share from continuing operations. This compares with a loss of $0.27 per share in the same period last year.

Strong gains were reported by the Company's Fairchild Fasteners unit, a leading manufacturer of aerospace and industrial fastening devices. Fairchild Fasteners sales in the quarter increased 12.9 percent to $102.8 million, compared with $91.0 million a year ago. Operating margins in the period also improved substantially over the previous year, increasing from 7.0 percent to 10.4 percent. Operating income of Fairchild Fasteners rose by 66.8 percent to $10.6 million compared with $6.4 million for the second quarter of 1998.

Eric Steiner, President and Chief Operating Officer of The Fairchild Corporation said: "Our results mark the first time that Fairchild Fasteners has had double digit increases in both revenue and earnings in our second fiscal quarter. This has been achieved despite overall weakening in the aerospace market. We are reaping the benefits of our efforts over the past two years to cut costs aggressively, increase our market presence, grow our European operations, and, above all, to set the highest quality production and service standards in the industry. I am confident that our continuing efforts in these areas will provide an effective counter-balance to any further market weakness."

The Fairchild Corporation reported a net loss of $0.82 per share or $18.0 million for the quarter due to the sale of Solair, which had not been a contributor to the Company's earnings in the recent past, and an additional contribution to reserves for anticipated losses on the discontinued Technologies unit, which has been adversely affected by the economic recession in Asia. Currency translation adjustments and unrealized gains on securities totaling $30 million resulted in a reported comprehensive income of $0.55 per share or $11.9 million for the quarter.

Earnings from the Aerospace Distribution unit, comprised chiefly of Banner Aerospace, Inc. (NYSE: BAR), increased from first quarter results due to margin improvement. The Aerospace Distribution segment reported operating profit of $2.0 million on sales of $46.8 million for the quarter ended December 27, 1998. Results are not comparable with the previous year because of the sale of the Banner Hardware Division to AlliedSignal in January 1998.

Jeffrey J. Steiner, Chairman and Chief Executive Officer of The Fairchild Corporation, said: "The Company continues to show its strength in a challenging market, and our operations will be further enhanced by the completion of our acquisition of Kaynar Technologies, Inc. (Nasdaq: KTIC) later this year and the efficiencies we will realize when the merger of Banner Aerospace with Fairchild is concluded." The Company's acquisition of Kaynar and the merger of Banner Aerospace are subject to regulatory approval, among other things.

Fairchild's net interest expense declined substantially to $7.3 million from $15.2 million for the second quarter in the previous year, reflecting a reduction in bank debt and the retirement of the Company's high-yield public debt in 1998.

The Fairchild Corporation is a leading manufacturer and distributor of aerospace components, with additional holdings in semiconductor and optical disc manufacturing equipment and real estate. The Company had a weighted average number of basic and diluted shares outstanding during the second quarter, of 21,872,000, compared with 17,088,000 in the previous year.

This news release contains forward-looking statements within the meaning of Section 27-A of the Securities Act of 1933, as amended and Section 21-E of the Securities Exchange Act of 1934, as amended. The Company's actual results could differ materially from those set forth in the forward-looking statements as a result of the risks associated with the Company's business, changes in general economic conditions, and changes in the assumptions used in making such forward-looking statements. -0-