FAIRCHILD INDUSTRIES, INC.
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.
FAIRCHILD INDUSTRIES, INC.
PRO FORMA CONDENSED SEPARATED BALANCE SHEET
December 31, 1995
(in thousands)
Historical Pro Forma
--------------------- -----------------------
ASSETS FII DME Adjustments FII
------ ---------- ---------- ------------ ---------
Cash $ 6,329 $ $ 74,000 (1)
(74,000)(2) $ 6,329
Accounts receivable 60,425 60,425
Notes receivable-current 171,377 (1) 171,377
Inventories 67,967 67,967
Prepaid expenses and other
current assets 8,136 8,136
Net current assets of
discontinued operations 34,609 (34,166) 443
---------- ---------- --------- ---------
Total Current Assets 177,466 (34,166) 171,377 314,677
Property, plant and equipment 209,799 209,799
Accumulated depreciation (93,372) (93,372)
Net noncurrent assets of
discontinued operations 85,577 (85,528) 49
Goodwill 138,456 138,456
Other assets 64,836 64,836
---------- ---------- --------- ---------
Total Assets $ 582,762 $(119,694) $171,377 $634,445
========== ========== ========= =========
LIABILITIES
- -----------
Bank notes payable and current
maturities of long term debt $ 74,598 $ $(67,303)(2) $ 7,295
Accounts payable 26,444 26,444
Intercompany notes payable 23,405 23,405
Other accrued liabilities 50,962 7,341 (1) 58,303
Accrued income tax 41,420 (1) 41,420
---------- ---------- --------- ---------
Total Current Liabilities 175,409 -- (18,542) 156,867
Long-term debt, less current
maturities 188,427 (6,697)(2) 181,730
Other long-term liabilities 54,551 54,551
Noncurrent income taxes 17,884 17,884
Redeemable preferred stock 16,691 16,691
---------- ---------- --------- ---------
Total Liabilities 452,962 -- (25,239) 427,723
Stockholders' equity:
Series B preferred stock 230,200 230,200
Series C preferred stock 24,015 24,015
Common stock 140 (3,826) 3,826 (1) 140
Paid-in capital 2,925 (100,084) 100,084 (1) 2,925
Retained earnings (130,124) (15,784) 15,784 (1)
76,922 (1) (53,202)
Cumulative translation
adjustment 2,644 2,644
---------- ---------- --------- ---------
Total Stockholders' Equity 129,800 (119,694) 196,616 206,722
Total Liabilities and
Stockholders' Equity $ 582,762 $(119,694) $171,377 $634,445
========== ========== ========= =========
See Notes to Pro Forma Condensed Separated Financial Statements.
FAIRCHILD INDUSTRIES, INC.
PRO FORMA CONDENSED SEPARATED STATEMENT OF EARNINGS
For the year ended June 30, 1995
(in thousands)
Historical Pro Forma
--------------------- -----------------------
FII DME Adjustments FII
Revenue: ---------- ---------- ----------- ---------
Sales $ 508,612 $(167,769) $340,843
Other income, net 2,908 396 3,304
---------- ---------- --------- ---------
511,520 (167,373) -- 344,147
Cost and expenses:
Cost of sales 392,802 (110,152) 282,650
Selling, general and
administrative 85,383 (30,208) 55,175
Research and development 4,100 (1,114) 2,986
Amortization of goodwill 5,842 (1,637) 4,205
---------- ---------- --------- ---------
488,127 (143,111) -- 345,016
Operating income (loss) 23,393 (24,262) -- (869)
Interest expense 35,284 (60) (6,463)(3) 28,761
Interest income (184) 18 (13,710)(3) (13,876)
---------- ---------- --------- ---------
Net interest expense 35,100 (42) (20,173) 14,885
Investment income, net 924 924
Equity in earnings of
affiliates 762 (762) --
Minority interest (121) 156 35
---------- ---------- --------- ---------
Earnings (loss) from continuing
operations before taxes (10,142) (24,826) 20,173 (14,795)
Income tax provision (benefit) 2,017 (10,410) 7,061 (1,332)
---------- ---------- --------- ---------
Earnings (loss) from continuing
operations $ (12,159) $ (14,416) $ 13,113 $(13,462)
========== ========== ========= =========
See Notes to Pro Forma Condensed Separated Financial Statements.
FAIRCHILD INDUSTRIES, INC.
PRO FORMA CONDENSED SEPARATED STATEMENT OF EARNINGS
For the six months ended December 31, 1995
(in thousands)
Historical Pro Forma
--------------------- -----------------------
FII DME Adjustments FII
Revenue: ---------- ---------- ----------- ---------
Sales $ 175,197 $ (*) $175,197
Other income, net 350 350
---------- ---------- --------- ---------
175,547 -- -- 175,547
Cost and expenses:
Cost of sales 138,048 138,048
Selling, general and
administrative 26,364 26,364
Research and development 44 44
Amortization of goodwill 2,132 2,132
Restructuring 285 285
---------- ---------- --------- ---------
166,873 -- -- 166,873
Operating income (loss) 8,674 -- -- 8,674
Interest expense 17,889 (3,232)(3) 14,657
Interest income (172) (6,855)(3) (7,027)
---------- ---------- --------- ---------
Net interest expense 17,717 -- (10,087) 7,630
Minority interest 20 20
---------- ---------- --------- ---------
Earnings (loss) from continuing
operations before taxes (9,023) -- 10,087 1,064
Income tax provision (benefit) (1,626) 3,530 1,904
---------- ---------- --------- ---------
Earnings (loss) from continuing
operations $ (7,397) $ -- $ 6,556 $ (841)
========== ========== ========= =========
* - 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.
FAIRCHILD INDUSTRIES, INC.
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.