The Fairchild Corporation Reports $0.32 Earnings per Share From Continuing Operations in its Fourth Quarter
20 September 2000
The Fairchild Corporation Reports $0.32 Earnings per Share From Continuing Operations in its Fourth Quarter
DULLES, Va.--Sept. 20, 2000--The Fairchild Corporation reported today that Net Earnings From Continuing Operations amounted to $8.1 million, or $0.32 per share, for its fourth quarter ended June 30, 2000, an improvement of $44.4 million compared with the prior year's fourth quarter.Net Earnings From Continuing Operations for the year ended June 30, 2000 was $21.8 million, or $0.87 per share, compared to a loss of $23.5 million a year ago.
The current year's Net Earnings From Continuing Operations included one-time pre-tax gains of $28.6 million arising from the disposal of the Company's interest in Nacanco Paketleme, and its Camloc Gas Springs business, partially offset by $8.6 million of restructuring charges at Fairchild Fasteners.
Additionally, fiscal 2000 pre-tax operating results were adversely affected by approximately $2.9 million due to the impact of foreign currencies on our European operations, and approximately $3.4 million related to the integration of the Kaynar Technologies and Fairchild manufacturing facilities.
Finally, the Company's net tax benefit in fiscal 2000 includes the results of reversing $7.8 million of federal income taxes previously provided for due to a revision in estimated tax accruals.
The fiscal 1999 results included non-recurring pre-tax charge of $65.1 million, relating to the dispositions of Solair and Dallas Aerospace, and the acquisition of Kaynar Technologies, and a pre-tax restructuring charge of $6.4 million.
Net Earnings for the current year was $9.8 million, or $0.39 per share, and included a $12.0 million after-tax loss on the disposal of the remaining operations of Fairchild Technologies.
Sales for the year improved by 2.9% to $635.4 million, resulting primarily from the 20.5% increase in fastener sales from $442.7 million to $533.6 million as a result of the Kaynar acquisition, offset somewhat by the partial year impact of the disposition of Dallas Aerospace and the impact on revenues of foreign currency fluctuations of approximately $7 million.
For the three-month period, reported sales of $160.6 million amounted to a decrease of 6.2%, as compared to the prior year period, reflecting the disposition of Dallas Aerospace and the recent decrease in the value of European currencies.
Operating Income for the quarter amounted to $7.3 million, after a restructuring charge of $1.1 million, an increase of $56.8 million as compared to the prior-year's fourth quarter, which was adversely affected by $52.2 million of restructuring and non-recurring charges.
For the current fiscal year, Operating Income, after a restructuring charge of $8.6 million, amounted to $23.2 million, as compared to the prior year's loss of $45.9 million, after restructuring and non-recurring charges of $71.5 million.
The current year's Operating Income was also impacted by $3.4 million caused by the disruption of production due to integration of facilities, and foreign currency declines. After adjusting for the previously mentioned items, the current year EBITDA in our Fasteners business would have been approximately $87 million.
The Company has seen encouraging trends indicating that an improvement in the Aerospace Fastener market could be imminent. Orders have picked up in recent months and the Company's book-to-bill ratio has improved in excess of 10% over the past eight months.
Additionally, some analysts have recently forecasted that aircraft deliveries in calendar 2001 - 2002 will be significantly higher than they had originally projected.
The Company believes that the negative impact of OEM inventory reduction programs will diminish in the latter part of calendar 2000 and that the demand for our products should increase if this increase in projected aircraft build rates materializes.
The Company has recently placed additional emphasis on debt reduction. Debt was reduced by $41.8 million in fiscal 2000, with $36.5 million occurring in the fourth quarter.
After several consecutive years of extraordinary investment in both information systems and state-of-the-art equipment, fiscal 2001 capital expenditures are expected to decrease, increasing available cash flow.
Inventory decreased by $10.4 million in fiscal 2000, due entirely to a $33.6 million decrease from the disposition of Dallas Aerospace, offset partially by increases at core operations.
The Company believes that the higher level of sales anticipated for fiscal 2001 can be serviced without significant increases in inventory in fiscal 2001, adding further to improved cash flow available for future debt reductions. The effects on debt are expected to be more apparent in the second half of fiscal 2001.
The Fairchild Corporation is a leading worldwide manufacturer and supplier of precision fastening systems used in the construction and maintenance of commercial and military aircraft, and a distributor of aerospace parts. Fairchild Fasteners has manufacturing facilities as well as sales/design customer teams in the United States, Germany, France, Portugal, Hungary, Australia and the United Kingdom.
The Company offers the market innovative solutions to the inventory delivery, stocking, and dispensing of fasteners, because of its unique position to serve customers worldwide from its manufacturing and logistics businesses.
Banner Aerospace, the Company's aerospace distribution segment, provides aircraft parts and services. Additional information is available on The Fairchild Corporation Web site (www. Fairchildcorp.com).
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.
THE FAIRCHILD CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
Three Months Ended Twelve Months Ended
--------------------- ----------------------
06/30/00 06/30/99 06/30/00 06/30/99
--------- --------- --------- ---------
REVENUE:
Net sales $ 160,579 $ 171,250 $ 635,361 $ 617,322
Other income,
net 4,769 2,426 14,410 3,899
--------- --------- --------- ---------
165,348 173,676 649,771 621,221
COSTS AND
EXPENSES:
Cost of goods
sold 118,762 148,445 472,023 504,893
Selling, general
& administrative 34,823 65,853 133,353 149,348
Amortization of
goodwill 3,384 2,515 12,574 6,517
Restructuring 1,122 6,374 8,578 6,374
--------- --------- --------- ---------
158,091 223,187 626,528 667,132
OPERATING INCOME
(LOSS) 7,257 (49,511) 23,243 (45,911)
Net interest
expense (9,645) (9,391) (44,092) (30,346)
Investment
income 785 2,090 9,935 39,800
Nonrecurring
gain (230) -- 28,625 --
--------- --------- --------- ---------
Earnings (loss)
from continuing
operations
before taxes (1,833) (56,812) 17,711 (36,457)
Income tax
benefit 9,821 20,561 4,399 13,245
Equity in earnings
(loss) of
affiliates, net 124 (26) (346) 1,795
Minority interest,
net -- 24 -- (2,090)
--------- --------- --------- ---------
Earnings (loss)
from continuing
operations 8,112 (36,253) 21,764 (23,507)
Loss on disposal
of discontinued
operations, net (12,006) (2,475) (12,006) (31,349)
Extraordinary
items, net -- (4,153) -- (4,153)
--------- --------- --------- ---------
NET EARNINGS (LOSS) $ (3,894) $ (42,881) $ 9,758 $ (59,009)
========= ========= ========= =========
BASIC AND DILUTED
EARNINGS PER SHARE:
Earnings (loss)
from continuing
operations $ 0.32 $ (1.46) $ 0.87 $ (1.03)
Loss on disposal
of discontinued
operations, net
(0.48) (0.10) (0.48) (1.38)
Extraordinary
items, net
-- (0.17) -- (0.18)
--------- --------- --------- ---------
NET EARNINGS (LOSS) $ (0.16) $ (1.73) $ 0.39 $ (2.59)
========= ========= ========= =========
Weighted average
shares outstanding:
Basic 25,051 24,748 24,954 22,766
========= ========= ========= =========
Diluted 25,051 24,748 25,137 22,766
========= ========= ========= =========
SEGMENT RESULTS
Three Months Ended Twelve Months Ended
--------------------- -----------------------
06/30/00 06/30/99 06/30/00 06/30/99
--------- --------- --------- ---------
Sales by Segment:
Aerospace
Fasteners $ 136,923 $ 139,651 $ 533,620 $ 442,722
Aerospace
Distribution
23,656 29,888 101,002 168,336
Corporate and
Other -- 1,711 739 6,264
--------- --------- --------- ---------
TOTAL SALES $ 160,579 $ 171,250 $ 635,361 $ 617,322
========= ========= ========= =========
Operating Results
by Segment:
Aerospace
Fasteners $ 11,653 $ 9,566 $ 33,909 $ 38,956
Aerospace
Distribution (26,725) 1,767 7,758 (40,003)
Corporate and
Other (6,163) (32,352) (18,424) (44,864)
--------- --------- --------- ---------
TOTAL OPERATING
INCOME (a) $ 7,257 $ (49,511) $ 23,243 $ (45,911)
========= ========= ========= =========
EBITDA by
Segment:
Aerospace
Fasteners $ 21,635 $ 17,120 $ 71,935 $ 61,415
Aerospace
Distribution
1,988 (26,324) 8,734 (38,132)
Corporate and
Other
(4,857) (32,021) (15,604) (43,537)
--------- --------- --------- ---------
TOTAL EBITDA (a) $ 18,766 $ (41,225) $ 65,065 $ (20,254)
========= ========= ========= =========
(a) Fiscal 2000 results include restructuring charges of $8.6 million
in the aerospace fasteners segment. Fiscal 1999 results include
inventory impairment charges of $41.5 million ($22.2 million in
the fourth quarter) in the aerospace distribution segment due to
the dispositions of Solair and Dallas Aerospace, costs relating to
acquisitions of $23.6 million ($23.6 million in the fourth
quarter) and restructuring charges of $6.4 million ($6.4 million
in the fourth quarter).