UNITED STATES
                    SECURITIES AND EXCHANGE COMMISSION
                          WASHINGTON, D.C. 20549
                                     
                                 FORM 10-K

 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                ACT OF 1934

 For the Year Ended June 30, 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)

  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
                                     
          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
          
  Title of each class                    Name of exchange on which registered
  Class  A Common Stock, par value
    $.10 per share                        New  York and Pacific Stock Exchange
          
          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:  None
          
      Indicate  by  check mark whether the Registrant  (1)  has  filed  all
reports  required  to  be filed by Section 13 or 15(d)  of  the  Securities
Exchange  Act  of 1934 during the preceding 12 months (or for such  shorter
period that the Registrant was required to file such reports), and (2)  has
been subject to such filing requirements for the past ninety (90) days [X].

      Indicate by check mark if disclosure of delinquent filers pursuant to
Item  405  of  Regulation  S-K is not contained herein,  and  will  not  be
contained,  to the best of registrant's knowledge, in definitive  proxy  or
information statements incorporated by reference in Part III of  this  Form
10-K or any amendment to this Form 10-K [  ].

     On September 17, 1998, the aggregate market value of the common shares
held  by  nonaffiliates of the Registrant (based upon the closing price  of
these shares on the New York Stock exchange) was approximately $197 million
(excluding shares deemed beneficially owned by affiliates of the Registrant
under Commission Rules).

      As of September 17, 1998, the number of shares outstanding of each of
the Registrant's classes of common stock were as follows:

    Class A common stock, $.10 par value               19,494,291

    Class B common stock, $.10 par value                 2,624,662


DOCUMENTS INCORPORATED BY REFERENCE:

      Portions of the registrant's definitive proxy statement for the  1998
Annual Meeting of Stockholders' to be held on November 19, 1998 (the  "1998
Proxy  Statement"), which the Registrant intends to file  within  120  days
after June 30, 1998, are incorporated by reference into Parts III and IV.

                         THE FAIRCHILD CORPORATION
                                 INDEX TO
                        ANNUAL REPORT ON FORM 10-K
                    FOR FISCAL YEAR ENDED JUNE 30, 1998



PART I                                                              Page

Item 1.  Business                                                   4
Item 2.  Properties                                                 10
Item 3.  Legal Proceedings                                          10
Item 4.  Submission of Matters to a Vote of Stockholders            11


PART II

Item  5.  Market for the Company's Common Equity and Related
          Stockholder Matters                                       12
Item  6.  Selected Financial Data                                   14
Item  7.  Management's Discussion and Analysis of Results of
          Operations and Financial Condition                        15
Item  8.  Financial Statements and Supplementary Data               27
Item  9.  Disagreements on Accounting and Financial Disclosure      66

PART III

Item 10.  Directors and Executive Officers of the  Company          67
Item 11.  Executive Compensation                                    67
Item 12.  Security Ownership of Certain Beneficial Owners and
          Management                                                67
Item 13.  Certain Relationships and Related Transactions            67

PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports
          on Form 8-K                                               68


                                  PART I

ITEM 1.  BUSINESS

General
      The Fairchild Corporation (the "Company") was incorporated in October
1969,  under the laws of the State of Delaware.  The Company is the largest
aerospace fastener manufacturer in the world and an international  supplier
to  the aerospace industry, distributing a wide range of aircraft parts and
related   support   services.  Through  internal   growth   and   strategic
acquisitions, the Company is one of the leading aircraft parts suppliers to
aircraft  manufacturers  such as Boeing, Airbus, Lockheed  Martin,  British
Aerospace  and Bombardier and to airlines such as Delta Air  Lines  and  US
Airways.

      The Company's primary business focus is on the aerospace industry and
its  aerospace  business  consists primarily  of  two  segments:  aerospace
fasteners and aerospace parts distribution. The aerospace fasteners segment
manufactures  and markets high performance fastening systems  used  in  the
manufacturing  and  maintenance  of commercial  and  military  aircraft  by
original  equipment  manufacturers  ("OEMs").  The  aerospace  distribution
segment  stocks  and  distributes  a wide  variety  of  aircraft  parts  to
commercial  airlines and air cargo carriers, other distributors, fixed-base
operators, corporate aircraft operators and other aerospace companies.  The
Company's  aerospace  distribution business is conducted  through  its  83%
owned  subsidiary, Banner Aerospace, Inc. ("Banner").  For a comparison  of
the  sales  of the Company's business segments for each of the  last  three
fiscal  years, see Item 7, "Management's Discussion and Analysis of Results
of  Operations  and Financial Condition", which is herein  incorporated  by
reference.
      The  Company  also  owns a technology products unit,  which  designs,
manufactures, and markets high performance production equipment and systems
required for the manufacture of semiconductor chips and recordable  compact
discs,  and a significant equity interest in Nacanco Paketleme ("Nacanco"),
which manufactures customized cans for the beverage industry in Turkey.

Recent Developments

      Recent  developments  of  the  Company  are  incorporated  herein  by
reference  from "Recent Developments and Significant Business Combinations"
included  in  Item 7 "Management's Discussion and Analysis  of  Results  of
Operations and Financial Condition".

Financial Information about Business Segments

      The Company's business segment information is incorporated herein  by
reference  from Note 20 of the Company's consolidated financial  statements
included in Item 8, "Financial Statements and Supplementary Data".

Narrative Description of Business Segments

Aerospace Fasteners

      The  Company, through its Aerospace Fasteners segment, is  a  leading
worldwide  manufacturer  and  supplier of fastening  systems  used  in  the
construction  and  maintenance of commercial and  military  aircraft.   The
Aerospace Fasteners segment accounted for 50.9% of total sales for the year
ended June 30, 1998.

  Products

      In  general, aerospace fasteners produced by the Company are used  to
join  materials  in  applications that are not of  themselves  critical  to
flight.  Products  range from standard aerospace screws,  to  more  complex
systems  that  fasten  airframe structures, and sophisticated  latching  or
quick  disconnect mechanisms that allow efficient access to internal  parts
which  require  regular servicing or monitoring.  The  Aerospace  Fasteners
segment  also  manufactures and supplies fastening  systems  used  in  non-
aerospace  industrial  and  electronic niche applications.   The  Aerospace
Fasteners segment produces and sells products under various trade names and
trademarks   including  Voi-Shan  (fasteners  for  aerospace   structures),
Screwcorp    (standard   externally   threaded   products   for   aerospace
applications), RAM (custom designed mechanisms for aerospace applications),
Camloc (components for the industrial, electronic, automotive and aerospace
markets),  and  Tridair and Rosan (fastening systems for  highly-engineered
aerospace, military and industrial applications).

     Principal product lines of the Aerospace Fasteners segment include:

      Standard  Aerospace Airframe Fasteners - These fasteners  consist  of
standard  externally  threaded  fasteners  used  in  non-critical  airframe
applications  on a wide variety of aircraft.  These fasteners  include  Hi-
Torque Speed Drive, Tri-Wing, Torq-Set, Phillips and Hex Heads.

     Commercial Aerospace Structural and Engine Fasteners - These fasteners
consist  of  more highly engineered, permanent or semi-permanent  fasteners
used   in   non-critical  but  more  sophisticated  airframe   and   engine
applications,  which could involve joining more than two materials.   These
fasteners  are  generally engineered to specific customer  requirements  or
manufactured  to specific customer specifications for special applications,
often  involving exacting standards.  These fasteners include Hi-Lok, Veri-
Lite, Eddie-Bolt2 and customer proprietary engine nuts.

      Proprietary  Products  and  Fastening Systems  -  These  very  highly
engineered, proprietary fasteners are designed by the Company for  specific
customer  applications and include high performance structural latches  and
hold  down  mechanisms.  These fasteners are usually proprietary in  nature
and   are  used  primarily  in  either  commercial  aerospace  or  military
applications.  These  fasteners include Visu-Lok, Composi-Lok,  Keen-serts,
Mark IV, Flatbeam and Ringlock.

      Highly  Engineered  Fastening Systems for Industrial  Applications  -
These  highly engineered fasteners are designed by the Company for specific
niche  applications in the electronic, automotive and durable goods markets
and are sold under the Camloc trade name.

  Sales and Markets

      The products of the Aerospace Fasteners segment are sold primarily to
domestic  and  foreign  OEMs of airframes, subcontracors  to  OEMs,  engine
assemblies,  and to the maintenance and repair market through distributors.
Sixty-six percent of its sales are domestic.  Major customers include  OEMs
such  as Boeing, Airbus, and Aerospatiale and their subcontractors, as well
as  major  distributors such as AlliedSignal, Tri-Star Aerospace and  Wesco
Aircraft  Hardware.   Recently,  OEMs have  significantly  increased  their
production levels.  In addition, OEMs have implemented programs  to  reduce
inventories  and pursue just-in-time relationships. This has allowed  parts
distributors to significantly expand their business due to their ability to
better  meet  OEM  objectives.  In response, the  Company,  which  formerly
supplied  the OEMs directly, is expanding efforts to provide parts  through
its  subsidiaries, which are distributors, such as Special-T  Fasteners  in
the Unites States and AS+C GmbH in Europe.  No single customer accounts for
more than 10% of the Company's consolidated sales.

      Products  are marketed by a direct sales force team and  distribution
companies in the United States and Europe.  The direct sales force team  is
organized by customer and region. The internal sales force is organized  by
facility  and  product range and is focused on servicing  customers  needs,
identifying  new  product applications, and obtaining the approval  of  new
products.   All  the  Company's products are marketed  through  centralized
advertising and promotional activities.

     Revenues in the Aerospace Fasteners segment bear a strong relationship
to  aircraft  production.  As OEMs searched for cost cutting  opportunities
during the aerospace industry recession, parts manufacturers, including the
Company,  accepted  lower-priced orders and/or smaller quantity  orders  to
maintain  market  share, at lower profit margins.  However,  during  recent
years, this situation has improved as build rates in the aerospace industry
have increased and resulted in capacity constraints.  All though lead times
have  increased,  the Company has been able to provide its major  customers
with  favorable  pricing,  while  maintaining  or  increasing  margins   by
negotiating  for  larger  minimum  lot sizes  that  are  more  economic  to
manufacture.   In  addition,  the Company has eliminated  "make  and  hold"
contracts  under which large volume buyers would require current production
of  parts  for  long-term unspecified dates of delivery. Overall,  existing
backlog  is anticipated to result in higher margins due to larger and  more
efficient  lot  sizes, combined with the utilization of  recently  acquired
customized production capacity and training programs for all employees.

     Fasteners also have applications in the automotive/industrial markets,
where  numerous special fasteners are required (such as engine bolts, wheel
bolts  and turbo charger tension bolts).  The Company is actively targeting
the  automotive  market as a hedge against any potential  downturn  in  the
aerospace industry.

  Manufacturing and Production

     The  Aerospace  Fasteners  segment  has  eight  primary  manufacturing
facilities,  of which three are located in the United States and  five  are
located  in  Europe.   Each  facility  has  virtually  complete  production
capability,  and  subcontracts  only those production  steps  which  exceed
capacity.  Each plant is designed to produce a specified product  or  group
of   products,   determined  by  the  production   process   involved   and
certification requirements. The Company's largest customers have recognized
its  quality and operational controls by conferring ISO D1-9000A status  at
all  of  its U.S. facilities, and ISO D1-9000 status at all of its European
facilities.  All  of  its  facilities are "preferred  suppliers"  and  have
received all SPC and NADCAP approvals from OEMs.  The Company is the  first
and   only  aerospace  fastener  manufacturing  company  with  all  of  its
facilities holding ISO-9000 approval.

      The Company has a fully operational modern information system at  all
of  its  U.S.  facilities,  which was expanded  to  most  of  its  European
operations in Fiscal 1998.  The Company will expand this information system
to  the  remaining  European operations in Fiscal  1999.   The  new  system
performs  detailed and timely cost analysis of production  by  product  and
facility.  Updated MIS systems also help the Company to better service  its
customers. OEMs require each product to be produced in an OEM-qualified/OEM-
approved facility.

  Competition

      Despite intense competition in the industry, the Company remains  the
dominant  manufacturer  of aerospace fasteners.   The  worldwide  aerospace
fastener  market  is  estimated  to  be $1.7  billion  (before  distributor
resales).   The Company holds approximately 23% of the market and  competes
with  SPS Technologies, Hi-Shear, and Huck, which the Company believes hold
approximately 13%, 11% and 10% of the market, respectively.  In Europe, its
largest competitors are Blanc Aero and Southco Fasteners.

      The  Company  competes  primarily in the highly-engineered  "systems"
segment where its broad product range allow it to more fully serve each OEM
and  distributor.   The  Company's product  array  is  diverse  and  offers
customers  a  large  selection  to address  various  production  needs.  In
addition, roughly 45% of the Company's output is unique or is in  a  market
where the Company has a small number of competitors.  The Company seeks  to
maintain  its  technological  edge  and  competitive  advantage  over   its
competitors,  and  has  historically  demonstrated  innovative   production
methods and new products to meet customer demands at fair price levels.

Aerospace Distribution

      The  Company,  through  Banner (its Aerospace Distribution  segment),
distributes a wide variety of aircraft parts, which it has purchased on the
open  market or acquired from OEMs as an authorized distributor.  No single
distributor  arrangement is material to the Company's financial  condition.
The  Aerospace Distribution segment accounted for 48.3% of total  sales  in
Fiscal 1998.

  Products

      An  extensive  inventory of products and a quick  response  time  are
essential  in  providing service to its customers.  Another key  factor  in
selling  to  its customers is Banner's ability to maintain  a  system  that
traces a part back to the manufacturer.

      Products of the Aerospace Distribution segment are divided  into  two
groups:  rotables  and  engines.  Rotables include flight  data  recorders,
radar  and navigation systems, instruments, landing gear and hydraulic  and
electrical  components.  Engines include jet engines and engine  parts  for
use on both narrow and wide body aircraft and smaller engines for corporate
and  commuter  aircraft.  Banner provides a  number  of  services  such  as
immediate  shipment of parts in aircraft-on-ground situations. Banner  also
buys and sells commercial aircraft from time to time.

      Rotable parts are sometimes purchased as new parts, but are generally
purchased  in the aftermarket which are then overhauled for the Company  by
outside  contractors, including OEMs and FAA-licensed facilities.  Rotables
are  sold  in  a variety of conditions such as new, overhauled, serviceable
and  "as is".  Rotables may also be exchanged instead of sold.  An exchange
occurs when an aircraft part in inventory is exchanged for a part from  the
customer  and the customer is charged an exchange fee plus the actual  cost
to  overhaul  the part.  Engines and engine components are  sold  "as  is",
overhauled or disassembled for resale as parts.

  Sales and Markets

     Subsidiaries of the Aerospace Distribution segment sell their products
in  the United States and abroad to most of the world's commercial airlines
and  to  air  cargo  carriers,  as well as other  distributors,  fixed-base
operators,  corporate  aircraft operators and  other  aerospace  companies.
Approximately 70.7% of its sales are to domestic purchasers, some  of  whom
may represent offshore users.

      The Aerospace Distribution segment conducts marketing efforts through
its  direct  sales  force, outside representatives and,  for  some  product
lines, overseas sales offices.  Sales in the aviation aftermarket depend on
price,   service,  quality  and  reputation.   The  Aerospace  Distribution
segment's  business  does not experience significant seasonal  fluctuations
nor depend on a single customer.  No single customer accounts for more than
10% of the Company's consolidated revenue.

  Competition

      The  rotables  group  competes with AAR Corp., Air  Ground  Equipment
Services  ("AGES"),  Aviation Sales Company, The Memphis  Group  and  other
large  and  small  companies  in  a very fragmented  industry.   The  major
competitors  for  Banner's engine group are OEMs such as  General  Electric
Company and Pratt and Whitney, as well as the engine parts division of  AAR
Corp., AGES, and many smaller companies.

Other Operations

     Other operations include: Nacanco, real estate holdings, and a company
operating  under  the  trade name of Fairchild Gas Springs  Division  ("Gas
Springs").

  Nacanco Paketleme

      Established in 1987, Nacanco is the largest manufacturer of  aluminum
cans for soft drinks and beer in Turkey with an estimated 80% market share.
Nacanco  generated EBITDA of approximately $38 million on annual  sales  of
$101 million for its fiscal year ended December 31, 1997.  The Company owns
31.9%  of  Nacanco's common stock with Pechiney International  SA  and  its
subsidiaries  holding  substantially all of the balance.  The  Company  has
received cash dividends of $5.7 million and $4.8 million in the years ended
June 30, 1998 and 1997, respectively.

  Real Estate

      The  Company has significant real estate holdings having a book value
of  approximately  $67  million as of June 30, 1998.   The  Company's  real
estate  holdings consist of (i) approximately 80 acres on Long Island,  New
York  which are currently being developed into retail centers; (ii) various
industrial  buildings from which the Company receives  rental  income;  and
(iii)  property to be used as landfills upon receipt of necessary  licenses
and government approvals.

  Gas Springs Division

      A  Fiscal 1995 start-up operation, Gas Springs manufactures gas  load
springs  and  other devices used in raising, lowering or  moving  of  heavy
loads.  Its  products  have numerous consumer and industrial  applications,
including  in  fitness  equipment,  sunbeds,  furniture,  automotive,   and
agricultural  and  construction equipment. Annual sales were  $5.8  million
from Gas Springs in Fiscal 1998.

  Technology Products

      Acquired  by the Company in June 1994, Fairchild Technologies  ("FT")
manufactures, markets and services capital equipment for recordable compact
disc  ("CD-R") and advanced semiconductor manufacturing. FT's products  are
used  worldwide  to produce CD-Rs, CDs and CD-ROMs, as well  as  integrated
circuits   for   the   data  processing,  communications,   transportation,
automotive and consumer electronic industries, as well as for the military.

       FT   is   a   leader  in  microlithography  semiconductor  machinery
manufacturing  in  Europe  and  has four product  lines,  the  first  being
equipment  for  wafer  microlithography  processing.   This  includes   the
mainstay   Series   6000  Flexible  Wafer  Process  Line,   consisting   of
lithographic processing systems with flexible material flow, modular design
and   high   throughput,  and  the  recently  introduced   Falcon   Modular
Microlithography  System  for  0.25  micron  (65/256  Mbit   DRAM)   device
manufacturing.   The  Falcon  system has a  fully  modular  design  and  is
expandable to accommodate expected technological advancements and  specific
customer configurations.

      FT  has  recently combined new and proven technology and a number  of
leading  edge components and systems in compact disc processing to  develop
its  Compact Disc Recordable ("CD-R10X") manufacturing system. The  CD-R10X
system is a state of the art design for producing cost effective recordable
CDs  by  combining a high quality injection molding machine with  scanning,
inspection, and pneumatic handling systems.

      With  an  established  base  of controls/clean  room  technology  and
software/configuration  engineering, FT is able  to  provide  systems  with
multiple modular designs for a variety of customer applications. More  than
1,000  FT  wafer  production  systems are in  operation  worldwide.   Major
customers in the wafer product line include Motorola, Samsung, Siemens, GEC
Plessey,  Texas  Instruments, National Semiconductor, Macronix,  and  Erso.
Other  major  customers include Sonopress (Bertelsmann), and Krauss  Maffei
for  the  CD  product  line.  The wafer product line  competes  with  Tokyo
Electron,  Dai Nippon Screen and the Silicon Valley Group.  Competitors  in
the  CD  product  line consist of Robi Systems, Leybold and Marubeni.  (See
Note  4  to  the Company's Consolidated Financial Statements,  included  in
"Item 8 Financial Statements and Supplementary Data").

Foreign Operations

    The Company's operations are located primarily in the United States and
Europe.  Inter-area sales are not significant to the total revenue  of  any
geographic area.  Export sales are made by U.S. businesses to customers  in
non-U.S.  countries, whereas foreign sales are made by the  Company's  non-
U.S. subsidiaries.  For the Company's sales results by geographic area  and
export   sales,  see  Note  21  of  the  Company's  Consolidated  Financial
Statements included in Item 8, Financial Statements and Supplementary Data.

Backlog of Orders

    Backlog is important for all the Company's operations, due to the long-
term  production requirements of its customers.  The Company's  backlog  of
orders as of June 30, 1998 in the Aerospace Fasteners segment and Aerospace
Distribution  segment  amounted  to  $208.8  million,  and  $15.6  million,
respectively.  The  Company  anticipates that  in  excess  of  91%  of  the
aggregate backlog at June 30, 1998 will be delivered by June 30, 1999.

Suppliers

      The  Company does not consider itself to be materially dependent upon
any  one  supplier,  but is dependent upon a wide range of  subcontractors,
vendors  and  suppliers  of  materials  to  meet  its  commitments  to  its
customers.  From  time  to time the Company enters  into  exclusive  supply
contracts  in return for logistics and price advantages.  The Company  does
not believe that any one of these contracts would impair its operations  if
a supplier were unable to perform.

Personnel

     As  of  June 30, 1998, the Company had approximately 3,900  employees.
Approximately  5% of these employees were covered by collective  bargaining
agreements.  The Company believes that its relations with its employees are
good.

Environmental Matters

      A  discussion of Environmental Matters is included in Note 19 to  the
Company's Consolidated Financial Statements, included in Item 8, "Financial
Statements and Supplementary Data" and is herein incorporated by reference.

ITEM 2.   PROPERTIES

      As  of  June 30, 1998, the Company owned or leased buildings totaling
approximately 1,708,000 square feet, approximately 1,022,000 square feet of
which  was  owned  and  686,000  square feet  was  leased.   The  Aerospace
Fasteners segment's properties consisted of approximately 1,084,000  square
feet,  with principal operating facilities of approximately 922,000  square
feet  concentrated  in  Southern  California,  France  and  Germany.    The
Aerospace  Distribution  segment's properties  consisted  of  approximately
370,000  square feet, with principal operating facilities of  approximately
252,000  square  feet  located in Florida and Texas.  Corporate  and  Other
operating  properties consisted of approximately 129,000 square feet,  with
principal operating facilities of approximately 104,000 square feet located
in  California  and  Germany. The Company owns its  corporate  headquarters
building at Washington-Dulles International Airport.

      The Company has several parcels of property which it is attempting to
market, lease and/or develop, including:  (i) an eighty acre parcel located
in  Farmingdale,  New  York,  (ii)  a  six  acre  parcel  in  Temple  City,
California, (iii) an eight acre parcel in Chatsworth, California, and  (iv)
several  other  parcels  of real estate, primarily located  throughout  the
continental United States.

      The  following table sets forth the location of the larger properties
used  in  the  continuing operations of the Company, their building  square
footage,  the business segment or groups they serve and their primary  use.
Each  of  the properties owned or leased by the Company is, in management's
opinion,  generally well maintained, is suitable to support  the  Company's
business  and  is  adequate for the Company's present needs.   All  of  the
Company's  occupied  properties are maintained and  updated  on  a  regular
basis.
<TABLE>
<CAPTION>

                     Owned                         
                      or    Square     Business       Primary
     Location       Leased Footage   Segment/Group      Use
<S>                <C>      <C>     <C>               <C>
Saint Cosme,       Owned             Aerospace         
France                     304,000   Fasteners    Manufacturing
Torrance,           Owned            Aerospace         
California                 284,000   Fasteners    Manufacturing
City of Industry,   Owned            Aerospace         
California                 140,000   Fasteners    Manufacturing
Carrollton, Texas  Leased            Aerospace         
                           126,000   Distribution   Distribution
Dulles, Virginia    Owned            Corporate       Office
                           125,000
Lakeland, Florida  Leased             Aerospace         
                            70,000   Distribution   Distribution
Ft. Lauderdale,    Leased             Aerospace         
Florida                     57,000   Distribution   Distribution
Toulouse, France    Owned             Aerospace         
                            56,000     Fasteners    Manufacturing
Fremont,           Leased             Technology        
California                  55,000     Products     Manufacturing
Kelkheim, Germany   Owned             Aerospace         
                            52,000     Fasteners    Manufacturing
Santa Anna,         Owned             Aerospace         
California                  50,000     Fasteners    Manufacturing
Vaihingen,         Leased             Technology        
Germany                     49,000     Products     Manufacturing
Chatsworth,        Leased             Aerospace         
California                  36,000     Fasteners    Distribution
</TABLE>

      Information concerning long-term rental obligations of the Company at
June  30,  1998,  is  set  forth in Note 18 to the  Company's  consolidated
financial  statements,  included  in  Item  8,  "Financial  Statements  and
Supplementary Data", and is incorporated herein by reference.

ITEM 3.   LEGAL PROCEEDINGS

      A  discussion  of legal proceedings is included in  Note  19  to  the
Company's Consolidated Financial Statements, included in Item 8, "Financial
Statements and Supplementary Data" and is incorporated herein by reference.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS

      There  were no matters submitted to a vote of security holders during
the fourth quarter of the fiscal year covered by this report.

                                     
                                  PART II


ITEM  5.   MARKET  FOR  THE COMPANY'S COMMON STOCK AND RELATED  STOCKHOLDER
MATTERS

Market Information

      The  Company's Class A Common Stock is traded on the New  York  Stock
Exchange  and  Pacific Stock Exchange under the symbol FA.   The  Company's
Class  B  Common  Stock is not listed on any exchange and is  not  publicly
traded.  Class B Common Stock can be converted to Class A Common  Stock  at
any time.

     Information regarding the quarterly price range of the Company's Class
A  Common  Stock is incorporated herein by reference from Note  22  of  the
Company's  Consolidated Financial Statements included in Item  8  Financial
Statements and Supplementary Data.

Holders of Record

     The Company had approximately 1,321 and 51 record holders of its Class
A and Class B Common Stock, respectively, at September 15, 1998.

Dividends

      The  Company's  current policy is to retain earnings to  support  the
growth  of  its present operations and to reduce its outstanding debt.  Any
future  payment  of dividends will be determined at the discretion  of  the
Company's  Board  of  Directors and will depend on the Company's  financial
condition, results of operations and restrictive covenants in the Company's
credit  agreement that limit the payment of dividends over the term of  the
agreement  (See  Note 8 of the Company's Consolidated Financial  Statements
included in Item 8 Financial Statements and Supplementary Data).

Sale of Unregistered Securities

Fourth Quarter, Fiscal Year 1998

     On May 14, 1998, pursuant to the Company's stock option deferral plan,
the  Company issued an aggregate of 12,081 deferred compensation  units  to
certain  officers  of  the Company as a result of  the  exercise  of  stock
options  by such individuals. Each deferred compensation unit entitles  the
recipient  to receive one share of the Company's Class A Common Stock  upon
expiration of the "deferral period" for the stock options exercised.

     On May 4, 1998, in accordance with the terms of Special-T Acquisition,
the Company issued 15,090 restricted shares of the Company's Class A Common
Stock.

Third Quarter, Fiscal Year 1998

      On February 12, 1998, pursuant to the Company's stock option deferral
plan,  the Company issued 24,545 deferred compensation units to an  officer
of  the  Company,  as  a result of the exercise of stock  options  by  such
individual.   Each  deferred compensation unit entitles  the  recipient  to
receive  one share of Class A Common Stock upon expiration of the "deferral
period" for the stock options exercised.

      On  March  2,  1998,  in  accordance  with  the  terms  of  Special-T
Acquisition,  the  Company  issued  1,057,515  restricted  shares  of   the
Company's Class A Common Stock.

      On March 13, 1998, the Company issued 47,283 restricted shares of the
Company's  Class  A  Common Stock resulting from  a  cashless  exercise  of
100,000 warrants by Dunstan Ltd.

ITEM 6.  SELECTED FINANCIAL DATA
<TABLE>

                        Five-Year Financial Summary
                   (In thousands, except per share data)
<CAPTION>
                                     
                                  For the years ended June 30,
Summary of Operations:         1994     1995    1996      1997     1998
<S>                          <C>     <C>      <C>      <C>      <C>
 Net sales                   $203,456 $220,351 $349,236 $680,763 $741,176
 Gross profit                  28,415   26,491   74,101  181,344  186,506
 Operating income (loss)      (46,845) (30,333) (11,286)  33,499   45,443
 Net interest expense          66,670   64,113   56,459   47,681   42,715
 Earnings (loss) from
   continuing operations        4,834  (56,280) (32,186)   1,816   52,399
 Earnings (loss) per share from                                 
continuing
operations:
      Basic                   $  0.30  $(3.49)  $ (1.98) $  0.11  $  2.78
      Diluted                    0.30   (3.49)    (1.98)    0.11     2.66
 Other Data:                                                    
 EBITDA                        (7,471) (9,830)   12,078   57,806   66,045
 EBITDA Margin                   N.M.   N.M.       3.5%     8.5%     8.9%
 Cash used for operating                            (100,0 (102,3
activities                    (33,271) (25,040)  (48,951) (100,058) (102,300)
 Cash provided by (used for)                                  
investing activities          166,068  (19,156)   57,540    79,975    60,876
 Cash provided by (used for) (101,390)  12,345   (39,637)   (1,455)   73,895                        
financing activities     
 Balance Sheet Data:                                            
 Total assets                 860,943  828,680   993,398  1,052,666 1,157,259
 Long-term debt, less current                              
maturities                    518,718  508,225   368,589    416,922  295,402
 Redeemable preferred stock of 17,552   16,342     --         --        --
subsidiary
 Stockholders' equity          69,494   39,378   230,861    232,424  473,559
     per outstanding common 
     share                    $  4.32  $  2.50   $ 14.10  $   13.98 $  20.54
</TABLE>

      The  results  of Banner Aerospace, Inc. are included in  the  periods
since  February  25, 1996, when Banner became a majority-owned  subsidiary.
Prior  to  February  25,  1996,  the Company's  investment  in  Banner  was
accounted for using the equity method. Fiscal 1994 includes the gain on the
sale  of Rexnord Corporation stock. Fiscal 1998 includes the gain from  the
Banner  Hardware Group Disposition. The results of the hardware  group  are
included  in  the  periods  from March 1996 through  December  1997,  until
disposition   (see   Note  22  of  the  Company's  Consolidated   Financial
Statements). These transactions materially affect the comparability of  the
information reflected in the selected financial data.

      EBITDA represents the sum of operating income before depreciation and
amortization. Included in EBITDA are restructuring and unusual  charges  of
$25,553  and  $2,319  in  Fiscal 1994 and 1996, respectively.  The  Company
considers  EBITDA  to  be an indicative measure of the Company's  operating
performance due to the significance of the Company's long-lived  asset  and
because  such  data  is  considered useful by the investment  community  to
better  understand the Company's results, and can be used  to  measure  the
Company's ability to service debt, fund capital expenditures and expand its
business. EBITDA is not a measure of financial performance under GAAP,  may
not be comparable to other similarly titled measures of other companies and
should  not  be  considered as an alternative either to net  income  as  an
indicator  of the Company's operating performance, or to cash  flows  as  a
measure of the Company's liquidity. Cash expenditures for various long-term
assets,  interest expense, and income taxes have been, and will be incurred
which are not reflected in the EBITDA presentation. Furthermore, EBITDA  is
not  available for the discretionary use of management and,  prior  to  the
payment  of  dividends,  the  Company  uses  EBITDA  to  meet  its  capital
expenditures and debt service requirements. EBITDA Margin represents EBITDA
as a percentage of net sales.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
                 FINANCIAL CONDITION

      The Fairchild Corporation (the "Company") was incorporated in October
1969,  under the laws of the State of Delaware.  On November 15, 1990,  the
Company  changed  its name from Banner Industries, Inc.  to  The  Fairchild
Corporation.   The  Company  is the owner of 100%  of  RHI  Holdings,  Inc.
("RHI") and the majority owner of Banner Aerospace, Inc. ("Banner"). RHI is
the  owner  of  100%  of  Fairchild Holding Corp. ("FHC").   The  Company's
principal  operations  are conducted through Banner and  FHC.  The  Company
holds a significant equity interest in Nacanco Paketleme ("Nacanco"),  and,
during  the  period  covered  by this report,  held  a  significant  equity
interest in Shared Technologies Fairchild Inc. ("STFI").  (See Item 8, Note
4  to Financial Statements, as to the disposition of the Company's interest
in STFI.)

GENERAL

      The  Company  is the largest aerospace fastener manufacturer  in  the
world and an international supplier to the aerospace industry, distributing
a  wide  range  of  aircraft  parts and related support  services.  Through
internal  growth  and strategic acquisitions, the Company  is  one  of  the
leading  aircraft parts suppliers to aircraft manufacturers such as Boeing,
Airbus,  Lockheed Martin, British Aerospace and Bombardier and to  airlines
such as Delta Air Lines and US Airways.

      The Company's primary business focus is on the aerospace industry and
its  business  consists primarily of two segments: aerospace fasteners  and
aerospace  parts distribution. The aerospace fasteners segment manufactures
and  markets  high performance fastening systems used in the  manufacturing
and   maintenance  of  commercial  and  military  aircraft.  The  aerospace
distribution  segment  stocks and distributes a wide  variety  of  aircraft
parts  to  commercial airlines and air cargo carriers,  original  equipment
manufacturers ("OEMs"), other distributors, fixed-base operators, corporate
aircraft  operators and other aerospace companies. The Company's  aerospace
distribution  business  is  conducted through  its  83%  owned  subsidiary,
Banner.

CAUTIONARY STATEMENT

      Certain  statements  in  the  financial discussion  and  analysis  by
management  contain  forward-looking  information  that  involve  risk  and
uncertainty,   including   current  trend  information,   projections   for
deliveries,  backlog, and other trend projections.  Actual  future  results
may  differ materially depending on a variety of factors, including product
demand;  performance issues with key suppliers; customer  satisfaction  and
qualification  issues;  labor  disputes;  governmental  export  and  import
policies;  worldwide  political stability and economic  growth;  and  legal
proceedings.

RECENT DEVELOPMENTS AND SIGNIFICANT BUSINESS COMBINATIONS

      The  Company has effected a series of transactions designed  to:  (i)
reduce  its total indebtedness and annual interest expense; (ii) focus  its
operations  in  aerospace  manufacturing;  (iii)  increase  the  number  of
publicly  held  shares  of  Class A Common Stock;  and  (iv)  increase  the
Company's operating and financial flexibility.

      On  November  20,  1997, STFI entered into a  merger  agreement  with
Intermedia Communications Inc. ("Intermedia") pursuant to which holders  of
STFI  common  stock received $15.00 per share in cash (the "STFI  Merger").
The  Company was paid approximately $178.0 million in cash (before tax  and
selling  expenses) in exchange for the common and preferred stock  of  STFI
owned by the Company.  In the nine months ended March 29, 1998, the Company
recorded  a  $96.0  million gain, net of tax, on disposal  of  discontinued
operations,  from  the proceeds received from the STFI  Merger,  which  was
completed on March 11, 1998. The results of STFI have been accounted for as
discontinued operations.

      On November 28, 1997, the Company acquired AS+C GmbH, Aviation Supply
+  Consulting  ("AS&C")  in  a  business combination  accounted  for  as  a
purchase.  The  total  cost  of the acquisition was  $13.2  million,  which
exceeded  the  fair  value of the net assets of AS&C by approximately  $7.4
million,  which is preliminarily being allocated as goodwill and  amortized
using  the  straight-line method over 40 years. The Company purchased  AS&C
with cash borrowed. AS&C is an aerospace parts, logistics, and distribution
company primarily servicing the European OEM market.

      On  December 19, 1997, the Company completed a secondary offering  of
public  securities.   The offering consisted of an  issuance  of  3,000,000
shares  of  the  Company's Class A Common Stock at $20.00  per  share  (the
"Offering").

      On December 19, 1997, immediately following the Offering, the Company
restructured its FHC and RHI Credit Agreements by entering into a new  six-
and-a-half-year credit facility to provide the Company with a $300  million
senior  secured credit facility (the "Facility") consisting of  (i)  a  $75
million  revolving loan with a letter of credit sub-facility of $30 million
and  a  $10  million swing loan sub-facility, and (ii) a $225 million  term
loan.

      On  January  13, 1998, certain subsidiaries of Banner  (the  "Selling
Subsidiaries") completed the disposition of substantially all of the assets
and  certain liabilities of its hardware business and PacAero unit  to  two
wholly-owned subsidiaries of AlliedSignal Inc. (the "Buyers"), in  exchange
for  shares of AlliedSignal Inc. common stock with an aggregate value equal
to  $369  million (the "Banner Hardware Group Disposition").  The  purchase
price  received  by the Selling Subsidiaries was based on the  consolidated
net  worth as reflected on an adjusted closing date balance sheet  for  the
assets  (and  liabilities)  conveyed by the  Selling  Subsidiaries  to  the
Buyers.  The assets transferred to the Buyers consist primarily of Banner's
hardware  group, which includes the distribution of bearings, nuts,  bolts,
screws,  rivets  and  other  type  of  fasteners,  and  its  PacAero  Unit.
Approximately $196 million of the common stock received from the Buyers was
used  to repay outstanding loans of Banner's subsidiaries and related fees.
Banner  effected  the Banner Hardware Group Disposition to concentrate  its
efforts  on  the rotables and jet engine businesses and because the  Banner
Hardware  Group  Disposition presented a unique opportunity  to  realize  a
significant return on the disposition of the hardware group.

      On  February  3, 1998, with the proceeds of the Offering,  term  loan
borrowings under the Facility, and a portion of the after tax proceeds  the
Company  received  from the STFI Merger (collectively, the  "Refinancing"),
the  Company  refinanced  substantially all of  its  existing  indebtedness
(other  than  indebtedness of Banner), consisting of (i) $63.0  million  to
redeem  the  11  7/8% Senior Debentures due 1999; (ii)  $117.6  million  to
redeem  the  12% Intermediate Debentures due 2001; (iii) $35.9  million  to
redeem the 13 1/8% Subordinated Debentures due 2006; (iv) $25.1 million  to
redeem  the  13% Junior Subordinated Debentures due 2007; and (vi)  accrued
interest of $10.6 million.

      On  March 2, 1998, the Company consummated the acquisition of Edwards
and  Lock  Management  Corporation, doing business as  Special-T  Fasteners
("Special-T"), in a business combination to be accounted for as a  purchase
(the  "Special-T  Acquisition"). The contractual  purchase  price  for  the
acquisition was valued at approximately $47.3 million, of which  50.1%  was
paid in shares of Class A Common Stock of the Company and 49.9% was paid in
cash  according to terms specified in the acquisition agreement. The  total
cost  of  the  acquisition exceeded the fair value of  the  net  assets  of
Special-T  by approximately $21.6 million, which amount is being  allocated
as  goodwill, and amortized using the straight-line method over  40  years.
Special-T  manages  the  logistics  of worldwide  distribution  of  Company
manufactured  precision fasteners to customers in the  aerospace  industry,
for  government  agencies,  original  equipment  manufacturers,  and  other
distributors.

  On  May  11,  1998,  the  Company commenced an  offer  to  exchange  (the
"Exchange  Offer"),  for each properly tendered share of  Common  Stock  of
Banner, a number of shares of the Company's Class A Common Stock, par value
$0.10 per share, equal to the quotient of $12.50 divided by $20.675 up to a
maximum  of  4,000,000 shares of Banner's Common Stock. The Exchange  Offer
expired on June 9, 1998 and 3,659,364 shares of Banner's Common Stock  were
validly  tendered for exchange, and the Company issued 2,212,361 shares  of
Class  A  Common Stock to the tendering shareholders. As a  result  of  the
Exchange Offer, the Company's ownership of Banner Common Stock increased to
83.3%. The Company effected the Exchange Offer to increase its ownership of
Banner to over 80% in order for the Company to include Banner in its United
States consolidated corporate income tax return.

     Fiscal 1997 Transactions

      In  February 1997, the Company completed a transaction (the "Simmonds
Acquisition")  pursuant  to which the Company acquired  common  shares  and
convertible debt representing an 84.2% interest, on a fully diluted  basis,
of  Simmonds S.A. ("Simmonds").  The Company then initiated a tender  offer
to  purchase the remaining shares and convertible debt held by the  public.
By Fiscal year-end, the Company had purchased, or placed sufficient cash in
escrow  to  purchase,  all  the remaining shares and  convertible  debt  of
Simmonds.   The total purchase price of Simmonds, including the  assumption
of  debt,  was approximately $62.0 million, which the Company  funded  with
available  cash.   The  Company  recorded approximately  $20.5  million  in
goodwill  as  a  result of this acquisition.  Simmonds is one  of  Europe's
leading   manufacturers  and  distributors  of  aerospace  and   automotive
fasteners.

      On  June  30,  1997,  the Company sold all the patents  of  Fairchild
Scandinavian   Bellyloading  Company  ("SBC")  to   Teleflex   Incorporated
("Teleflex")  for  $5.0 million, and immediately thereafter  sold  all  the
stock of SBC to a wholly-owned subsidiary of Teleflex for $2.0 million. The
Company  may also receive an additional amount of up to $7.0 million  based
on  future net sales of the patented products and services. In Fiscal 1997,
the  Company recorded a $2.5 million nonrecurring gain as a result of these
transactions.

     Fiscal 1996 Transactions

     The Company, RHI and Fairchild Industries, Inc. ("FII"), the Company's
former subsidiary, entered into an Agreement and Plan of Merger dated as of
November  9,  1995  (as  amended,  the  "Merger  Agreement")  with   Shared
Technologies  Inc.  ("STI").  On March 13, 1996,  in  accordance  with  the
Merger  Agreement,  STI  succeeded to the  telecommunications  systems  and
services  business  operated  by  the  Company's  Fairchild  Communications
Services Company ("FCSC"). The transaction was effected by a Merger of  FII
with  and into STI (the "Merger"), with the surviving company renamed STFI.
Prior  to the Merger, FII transferred all of its assets to, and all of  its
liabilities  were assumed by FHC, except for the assets and liabilities  of
FCSC, and $223.5 million of FII's existing debt and preferred stock.  As  a
result  of  the  Merger, the Company received shares of  Common  Stock  and
Preferred  Stock  of  STFI,  representing  approximately  a  41%  ownership
interest in STFI.

      On  February 22, 1996, pursuant to the Asset Purchase Agreement dated
January 26, 1996, the Company, through its subsidiaries, completed the sale
of  certain  assets,  liabilities and the business  of  the  D-M-E  Company
("DME")  to  Cincinnati  Milacron  Inc.  ("CMI"),  for  a  sales  price  of
approximately  $244.3 million, as adjusted.  The sales price  consisted  of
$74.0  million  in  cash,  and two 8% promissory  notes  in  the  aggregate
principal amount of $170.3 million (together, the "8% CMI Notes").  On July
29, 1996, CMI paid in full the 8% CMI Notes.

      On  January  27,  1996,  FII completed the  sale  of  Fairchild  Data
Corporation  ("Data")  to  SSE Telecom, Inc.  ("SSE")  for  book  value  of
approximately $4.4 million and 100,000 shares of SSE's common stock  valued
at  $9.06 per share, or $0.9 million, at January 26, 1996, and warrants  to
purchase  an additional 50,000 shares of SSE's common stock at  $11.09  per
share.

       Accordingly,  DME  and  Data  were  accounted  for  as  discontinued
operations.  The combined net sales of DME and Data totaled $108.1  million
(through January 26, 1996) and $180.8 million for Fiscal 1995. Net earnings
from  discontinued operations were $9.2 million (through January 26,  1996)
and $14.0 million for Fiscal 1995.

      Effective  February 25, 1996, the Company completed the  transfer  of
Harco,  Inc.  to Banner in exchange for 5,386,477 shares of  Banner  common
stock.  The  exchange increased the Company's ownership  of  Banner  common
stock  from approximately 47.2% to 59.3%, resulting in the Company becoming
the   majority  shareholder  of  Banner.  Accordingly,  the   Company   has
consolidated the results of Banner since February 25, 1996.  In June  1997,
the  Company  purchased $28.0 million of newly issued Series A  Convertible
Paid-in-Kind Preferred Stock of Banner.

RESULTS OF OPERATIONS

      The  Company  currently reports in two principal  business  segments:
Aerospace Fasteners and Aerospace Distribution.  The results of Gas Springs
and   SBC  are  included  in  Corporate  and  Other.  The  following  table
illustrates  the  historical sales and operating income  of  the  Company's
operations for the past three years.
<TABLE>
<CAPTION>

(In thousands)                 For the years ended June 30,
                                1996     1997       1998
<S>                           <C>       <C>       <C>
 Sales by Segment:                                    
   Aerospace Fasteners        $218,059  $269,026  $387,236
   Aerospace Distribution (a)  129,973   411,765   358,431
   Corporate and Other           7,046    15,185     5,760
   Eliminations (b)             (5,842)  (15,213)  (10,251)
 Total Sales                  $349,236  $680,763  $741,176
                                                          
 Operating Income (Loss) by Segment:
   Aerospace Fasteners (c)    $    135  $ 17,390  $ 32,722
   Aerospace Distribution (a)    5,625    30,891    20,330
   Corporate and Other         (17,046)  (14,782)   (7,609)
 Total Operating Income (Loss)$(11,286) $ 33,499  $ 45,443

(a)    Effective  February  25,  1996,  the  Company  became  the  majority
  shareholder of Banner Aerospace, Inc. and, accordingly, began consolidating
  their results as of that date.
(b)   Represents intersegment sales from the Aerospace Fasteners segment to
  the Aerospace Distribution segment.
(c)  Includes restructuring charges of $2.3 million in Fiscal 1996.
</TABLE>

      The  following  unaudited  pro  forma  table  illustrates  sales  and
operating  income of the Company's operations by segment, on  a  pro  forma
basis,  as if the Company had operated in a consistent manner for the  past
three  years ended June 30, 1996, 1997 and 1998. The pro forma results  are
based  on the historical financial statements of the Company and Banner  as
though  the Banner Hardware Group Disposition and consolidation  of  Banner
had  been  in  effect  since the beginning of each period.  The  pro  forma
information is not necessarily indicative of the results of operations that
would  actually have occurred if the transactions had been in effect  since
the  beginning of each period, nor is it necessarily indicative  of  future
results of the Company.
<TABLE>
<CAPTION>

                               For the years ended June 30,
                                1996     1997       1998
<S>                           <C>       <C>       <C>
 Sales by Segment:                                    
   Aerospace Fasteners (a)    $197,099  $269,026  $387,236
   Aerospace Distribution      144,996   178,412   227,279
   Corporate and Other           4,799     5,118     5,760
   Eliminations                       -      (29)         -
 Total Sales                  $346,894  $452,527  $620,275
                                                          
 Operating Income (Loss) by                               
Segment:
   Aerospace Fasteners        $ (2,639) $ 17,390  $ 32,722
   Aerospace Distribution        4,881     9,739     9,740
   Corporate and Other         (15,731)  (15,950)   (7,609)
 Total Operating Income      
(Loss)                        $(13,489) $ 11,179  $ 34,853

(a)   Fiscal  1998 results include comparable sales of approximately  $59.2
  million and operating income of approximately $10.0 million provided from
  companies acquired in Fiscal 1997 and 1998.
</TABLE>

Consolidated Results

      Net  sales  of $741.2 million in 1998 increased by $60.4 million,  or
8.9%,  compared  to  sales  of $680.8 million in  1997.  Sales  growth  was
stimulated  by  the  resurgent commercial aerospace industry  and  business
acquisitions  over  the past 18 months, partially offset  by  the  loss  of
revenues   as   a   result  of  the  Banner  Hardware  Group   Disposition.
Approximately  15.8%  of  the  1998 sales  growth  was  stimulated  by  the
resurgent  commercial  aerospace industry. Recent acquisitions  contributed
approximately 8.7% to the sales growth, while dispositions decreased growth
by  approximately 15.0%. Net sales of $680.8 million in 1997  significantly
improved  by  $331.5  million, or 94.9%, compared to net  sales  of  $349.2
million  in  1996.  Sales growth was stimulated by the improved  commercial
aerospace industry, together with the effects of several strategic business
acquisitions. On a pro forma basis, net sales increased 30.5% and 37.1%  in
1997 and 1998, respectively, as compared to the previous Fiscal periods.

      Gross  Margin as a percentage of sales was 21.2%, 26.6% and 25.2%  in
1996,  1997,  and 1998, respectively. Decreased margins in the Fiscal  1998
period  was  attributable  to  a change in product  mix  in  the  Aerospace
Distribution  segment as a result of the Banner Hardware Group Disposition.
Partially offsetting overall lower margins were improved margins within the
Aerospace  Fasteners segment, resulting from efficiencies  associated  with
increased  production, improved skills of the work force, and reduction  in
the  payment of overtime. The increase in 1997 was attributable  to  higher
revenues combined with continued productivity improvements achieved  during
Fiscal 1997.

     Selling, General & Administrative expense as a percentage of sales was
22.7%,  21.0%, and 19.1% in Fiscal 1996, 1997, and 1998, respectively.  The
improvement  in  Fiscal 1998 was attributable primarily  to  administrative
efficiencies allowed by increased sales. The improvement in Fiscal 1997 was
also   positively  affected  by  administrative  efficiencies  allowed   by
increased sales and also benefited from the positive results obtained  from
restructuring and downsizing programs put in place prior periods.

      Other income increased $6.5 million in 1998 as compared to 1997,  due
primarily  to  the  sale of air rights over a portion of the  property  the
Company owns and is developing in Farmingdale, New York.

       Operating  income  of $45.4 million in Fiscal 1998  increased  $11.9
million, or 35.7%, compared to operating income of $33.5 million in  Fiscal
1997.  The  increase in operating income was due primarily to the  improved
results  in the Company's Aerospace Fasteners segment. Operating income  of
$33.5  million in Fiscal 1997 increased $44.8 million compared to operating
loss  of  $11.3  million  in  Fiscal 1996.  The  Fiscal  1997  increase  in
operating  income  was  due  primarily to growth  in  sales  and  increased
operational efficiencies. On a pro forma basis, operating income  increased
$23.7 million in Fiscal 1998, compared to Fiscal 1997, and $24.7 million in
Fiscal 1997, compared to Fiscal 1996.

     Net interest expense decreased 10.4% in Fiscal 1998 compared to Fiscal
1997,  and  decreased  15.5% in Fiscal 1997 compared to  Fiscal  1996.  The
decreases  were due to a series of transactions that significantly  reduced
the Company's total debt. (See Recent Developments and Significant Business
Combinations in this section).

      Investment  income (loss), net, was $4.6 million, $6.7  million,  and
$(3.4)  million in 1996, 1997, and 1998, respectively.  The $10.1  decrease
in  1998  was  due to recognition of unrealized losses on the  fair  market
adjustments  of investments previously classified as trading securities  in
the  Fiscal  1998  periods while recording unrealized  gains  from  trading
securities in the Fiscal 1997 periods. Unrealized holding gains (losses) on
available-for-sale   investments  are  marked  to  market   value   through
stockholders'  equity  and  reported separately as  part  of  comprehensive
income  (see discussion below). The 45.4% increase in Fiscal 1997  was  due
primarily to gains realized from the sale of investments in Fiscal 1997.

     Nonrecurring income of $124.0 million in 1998 resulted from the Banner
Hardware  Group Disposition. Nonrecurring income in 1997 includes the  $2.5
million gain from the sale of SBC.

      An income tax provision of $48.7 million in the first nine months  of
Fiscal 1998 represented a 39.4% effective tax rate on pre-tax earnings from
continuing  operations  (excluding equity in  earnings  of  affiliates  and
minority interest) of $123.4 million. The tax provision was slightly higher
than  the  statutory rate because of goodwill associated  with  the  Banner
Hardware  Group  Disposition,  which is not deductible  for  tax  purposes.
Income  taxes included a $5.7 million tax benefit in Fiscal 1997 on a  pre-
tax  loss  of $7.1 million from continuing operations. The tax benefit  was
due primarily to reversing Federal income taxes previously provided due  to
a change in the estimate of the required tax accruals.  In Fiscal 1996, the
tax benefit from the loss from continuing operations was $29.8 million.

      Equity  in  earnings of affiliates decreased $0.6  million  in  1998,
compared  to 1997, and $0.2 million in 1997, compared to 1996. The  current
year's  decrease  is  attributable to losses  recorded  by  small  start-up
ventures. The prior year's decrease was attributable to the lower  earnings
of Nacanco.

      Minority  interest increased by $22.8 million in  Fiscal  1998  as  a
result of the $124.0 million nonrecurring pre-tax gain recognized from  the
Banner Hardware Group Disposition.

      Included  in  earnings (loss) from discontinued  operations  are  the
results  of  Fairchild Technologies ("Technologies") through January  1998,
the  Company's equity in earnings of STFI prior to the STFI Merger, and the
results  of  FCS, DME and Data in Fiscal 1996. Losses increased  in  Fiscal
1998  as  a  result of increased losses recorded at Technologies and  lower
equity   earnings  contributed  by  STFI  (See  Note  4  to  the  Company's
Consolidated Financial Statements).

      In  1998, the Company recorded a $96.0 million gain, net of  tax,  on
disposal  of discontinued operations, from the proceeds received  from  the
STFI  Merger. Offsetting this gain was an after-tax charge of $36.2 million
the  Company recorded in connection with the adoption of a formal  plan  to
enhance the opportunities for disposition of Technologies. Included in this
charge  was  (i)  $28.2  million (net of an income  tax  benefit  of  $11.8
million)  relating to the net losses of Technologies since the  measurement
date,  including  the  write  down of assets for  impairment  to  estimated
realizable  value; and (ii) $8.0 million (net of an income tax  benefit  of
$4.8  million) relating to a provision for operating losses over  the  next
seven  months  at Technologies. The Company's results are affected  by  the
operations  of  Technologies,  which  may  fluctuate  because  of  industry
cyclicality,  the volume and timing of orders, the timing  of  new  product
shipments, customers' capital spending, and pricing changes by Technologies
and  its  competition.  Technologies has experienced  a  reduction  of  its
backlog,  and margin compression during the past year, which combined  with
the   existing  cost  base,  is  likely  to  impact  future  earnings  from
Technologies. While the Company believes that $36.1 million is a reasonable
charge  for  the  expected  losses in connection with  the  disposition  of
Technologies, there can be no assurance that this estimate is adequate.  In
Fiscal  1996,  the  Company recorded a $54.0 million gain  on  disposal  of
discontinued operations resulting from the sale of DME to CMI and a  $163.1
million nontaxable gain resulting from the Merger.

     In 1998, the Company recognized an extraordinary loss of $6.7 million,
net  of  tax,  to write-off the remaining deferred loan fees  and  original
issue  discounts  associated  with early extinguishment  of  the  Company's
indebtedness pursuant to the Public Debt Repayment and refinancing  of  the
FHC and RHI Credit Agreement facilities. In 1996, the Company recognized an
extraordinary  loss of $10.4 million, net of tax, as a result  of  premiums
paid,  redemption costs, consent fees, and the write off of  deferred  loan
fees  associated with the Senior Notes and bank debt extinguished prior  to
maturity.

      Net  earnings  of $101.1 million in 1998, improved by $99.8  million,
compared  to  the  $1.3  million  net  earnings  recorded  in  1997.   This
improvement  is  attributable  to a $11.9  million  increase  in  operating
income, a $124.0 million non-recurring gain from the Banner Hardware  Group
Disposition, and the $59.7 million net gain on the disposal of discontinued
operations. Partially offsetting this increase was a $54.4 million increase
in the income tax provision, a $22.8 million change in minority interest, a
$10.0  decrease  in  investment income, and the $6.7 million  extraordinary
loss.  Net earnings in 1997 improved $28.3 million, compared to 1996, after
excluding   the  $216.7  million  net  gain  on  disposal  of  discontinued
operations in 1996. The 1997 increase reflected a $44.8 million improvement
in operating profit.

     Comprehensive income includes foreign currency translation adjustments
and  unrealized  holding changes in the fair market value of available-for-
sale  investment  securities. The fair market value of  unrealized  holding
securities  increased $20.6 million in 1998, primarily as a  result  of  an
increase in the value of AlliedSignal common stock which was received  from
the Banner Hardware Group Disposition.

Segment Results

Aerospace Fasteners Segment

      Sales  in the Aerospace Fasteners segment increased by $118.2 million
to  $387.2  million,  up  43.9% in Fiscal 1998, compared  to  Fiscal  1997,
reflecting significant growth in the commercial aerospace industry combined
with  the  effect of acquisitions. New orders have continued to  be  strong
resulting  in  a  backlog of $209 million at June 30, 1998,  up  from  $196
million  at  June  30, 1997. Excluding sales contributed  by  acquisitions,
sales  increased approximately 21.9% in Fiscal 1998 compared to  the  prior
year.  Sales in the Aerospace Fasteners segment increased by $51.0  million
to  $269.0  million, up 23.4% in Fiscal 1997, compared to the  Fiscal  1996
period, reflecting significant growth in the commercial aerospace industry,
combined  with  the  Simmonds acquisition. On  a  pro  forma  basis,  sales
increased 43.9% in Fiscal 1998, compared to Fiscal 1997 and 36.5% in Fiscal
1997, compared to Fiscal 1996.

      Operating income improved by $15.3 million, or 88.2%, in Fiscal 1998,
compared   to   Fiscal  1997.  Acquisitions  and  marketing  changes   were
contributors  to  this  improvement.  Excluding  the  results  provided  by
acquisitions, operating income increased by approximately 30.8%  in  Fiscal
1998,  compared  to  the  same  period  in  the  prior  year.  The  Company
anticipates  that manufacturing and productivity efficiencies will  further
improve  operating income in the coming months. Operating  income  improved
from  breakeven  to  $17.4 million during Fiscal 1997, compared  to  Fiscal
1996.  This improvement was achieved as a result of accelerated  growth  in
the  commercial aerospace industry, particularly in the second half of  the
year.  Certain efficiencies achieved during Fiscal 1997 continued  to  have
positive  effects  on  operating income. On a pro  forma  basis,  operating
income increased $15.3 million in Fiscal 1998, as compared to Fiscal  1997,
and $20.0 million in Fiscal 1997, as compared to Fiscal 1996.

     The Company believes that the demand for aerospace fasteners in Fiscal
1999 will remain relatively high, given the forecasted build rates for  new
aircraft.  The Company anticipates that order rates may level off  in  late
calendar  1998. However, production volume should remain at  a  respectable
level  and  production efficiency improvements should allow the Company  to
generate an increase in profits.

Aerospace Distribution Segment

      Sales  in  the  Aerospace  Distribution segment  decreased  by  $53.3
million, or 13.0% in Fiscal 1998, compared to Fiscal 1997. The exclusion of
six  months'  revenues as a result of the Banner Hardware Group Disposition
was  primarily responsible for the decrease in the current year,  in  which
sales  otherwise  reflected  a robust aerospace industry.  Sales  increased
$281.8  million  from reporting twelve months of activity  in  Fiscal  1997
versus four months of activity in Fiscal 1996, when the Company became  the
majority shareholder of Banner and, accordingly, began consolidating  their
results.  On a twelve-month pro forma basis, sales increased $48.9 million,
or  27.4%,  in Fiscal 1998 compared to Fiscal 1997, and $33.4  million,  or
23.0%, in Fiscal 1997 compared to Fiscal 1996.

      Operating income decreased $10.6 million in Fiscal 1998, compared  to
Fiscal 1997, due to the Banner Hardware Group Disposition. Operating income
increased $25.3 million in 1997, compared to 1996, as a result of including
only  four months of activity after consolidation of Banner in 1996.  On  a
twelve-month  pro forma basis, operating income was stable in  Fiscal  1998
compared  to Fiscal 1997, and increased $4.9 million, or 99.5%,  in  Fiscal
1997 compared to Fiscal 1996.

      In  Fiscal  1996,  as a result of the transfer  of  Harco  to  Banner
effective February 25, 1996, the Company recorded four months of sales  and
operating  income  of  Banner, including Harco as  part  of  the  Aerospace
Distribution  segment.  This segment reported $130.0 million in  sales  and
$5.6 million in operating income for this four-month period ended June  30,
1996. In Fiscal 1996, the first eight months of Harco's sales and operating
income were included in the Aerospace Fasteners segment.

Corporate and Other

      The  Corporate  and  Other classification includes  the  Gas  Springs
Division  and corporate activities. The results of SBC, which was  sold  at
Fiscal 1997 year-end, are included in the prior period results.  The  group
reported a decrease in sales of $9.4 million, in 1998, as compared to 1997,
due  to the exclusion of SBC's results in the current year. Sales increased
in  1997  as a result of improved results contributed by SBC. The operating
loss  decreased  by  $7.2 million in 1998, compared to Fiscal  1997,  as  a
result  of  an  increase in other income and a decrease in legal  expenses.
Over the past three years, corporate administrative expense as a percentage
of sales has decreased from 4.5% in 1996 to 2.8% in 1997 to 2.2% in 1998.


FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

      Total  capitalization as of June 30, 1998 and 1997 amounted to $789.6
million  and  $696.7 million, respectively. The changes  in  capitalization
included a decrease in debt of $148.2 million and an increase in equity  of
$241.1  million.  The  decrease in debt was primarily  the  result  of  the
Refinancing and repayment of outstanding term loans with approximately $194
million of AlliedSignal Inc. common stock received from the Banner Hardware
Group  Disposition, partially offset by additional borrowings. The increase
in  equity  was  due to (i) Fiscal 1998 net income of $101.1 million,  (ii)
$53.3  million  in  net  proceeds received from the Offering,  (iii)  $64.5
million  of  Class  A Common Stock issued in connection with  the  Exchange
Offering  and  the  Special-T acquisition, and (iv) the $20.6  million  net
unrealized   gain   recorded  on  the  appreciation  of  available-for-sale
securities.

      The  Company  maintains  a  portfolio of  investments  classified  as
available-for-sale  securities, which had a fair  market  value  of  $238.2
million  at  June 30, 1998. Although the market value of these  investments
appreciated  $20.6  million in Fiscal 1998, there is risk  associated  with
market  fluctuations  inherent to stock investments. Additionally,  because
the  Company's  portfolio is small and predominately consists  of  a  large
position  in  AlliedSignal common stock, large swings in the value  of  the
portfolio should be expected.

      Net  cash used by operating activities for the Fiscal 1998  and  1997
amounted  to  $102.5 million and $100.1 million, respectively. The  primary
use  of  cash  for operating activities in Fiscal 1998 was an  increase  in
inventories from continuing operations of $54.9 million. The primary use of
cash  for  operating activities in fiscal 1997 was an increase in  accounts
receivable  of  $48.7 million and inventories of $36.9  million  which  was
mainly to support the Company's sales growth.

      Net  cash provided from investing activities for Fiscal 1998 and 1997
amounted to $60.9 million and $80.0 million, respectively. In Fiscal  1998,
the  sale  of  discontinued  operations,  including  the  STFI  Disposition
provided the primary source of cash from investing activities amounting  to
$168.0   million,  which  was  slightly  offset  by  the   acquisition   of
subsidiaries  in the amount of $32.8 million. In Fiscal 1997,  the  primary
source  of  cash  from  investing activities was the sale  of  discontinued
operations, including DME, of $173.7 million, which was slightly offset  by
the acquisition of subsidiaries in the amount of $55.9 million.

      Net  cash provided by (used for) financing activities for the  Fiscal
1998  and  1997 amounted to $74.1 million and $(1.5) million, respectively.
Cash  provided by financing activities in fiscal 1998 included the issuance
$53.8  million  of  stock  from the Offering and $275.5  million  from  the
issuance  of additional debt partially offset by the repayment of debt  and
the repurchase of debentures of $258.0 million. The primary use of cash for
financing activities in Fiscal 1997 was cash used for the repayment of debt
and  the repurchase of debentures of $155.6 million offset by proceeds from
the issuance of additional debt of $154.3 million.

      The  Company's  principal  cash requirements  include  debt  service,
capital expenditures, acquisitions, and payment of other liabilities. Other
liabilities  that require the use of cash include post-employment  benefits
for  retirees, environmental investigation and remediation obligations, and
litigation settlements and related costs.  The Company expects that cash on
hand,  cash generated from operations, and cash from borrowings  and  asset
sales will be adequate to satisfy cash requirements.

     With the proceeds of the Offering, borrowings under the Facility and a
portion  of  the  after  tax proceeds the Company received  from  the  STFI
Merger,   the   Company  refinanced  substantially  all  of  its   existing
indebtedness (other than indebtedness at Banner), consisting of the 11 7/8%
Senior  Debentures due 1999, the 12% Intermediate Debentures due 2001,  the
13  1/8%  Subordinated  Debentures due 2006, the  13%  Junior  Subordinated
debentures  due  2007 and its existing bank indebtedness.  The  Refinancing
reduced  the Company's total net indebtedness by approximately $132 million
and reduced the Company's annual interest expense, on a pro forma basis, by
approximately  $21 million. The completion of the STFI Merger  reduced  the
Company's annual interest expense by approximately $3 million. In addition,
a  portion of the proceeds from the Banner Hardware Group Disposition  were
used  to repay all of Banner's outstanding bank indebtedness, which further
reduced the Company's annual interest expense.

      For the Company's fiscal years 1996, 1997, and 1998, Technologies had
pre-tax  operating losses of approximately $1.5 million, $3.6 million,  and
$48.7  million, respectively. In addition, as a result of the  downturn  in
the   Asian  markets,  Technologies  has  experienced  delivery  deferrals,
reduction in new orders, lower margins and increased price competition.  In
response,  in February 1998, the Company adopted a formal plan  to  enhance
the  opportunities for the disposition of Technologies, while improving the
ability  of  Technologies to operate more efficiently. The plan includes  a
reduction  in production capacity, work force, and the pursuit of potential
vertical and horizontal integration with peers and competitors of  the  two
divisions that constitute Technologies, or the inclusion of those divisions
in  a  spin-off.  If the Company elects to include Technologies in a  spin-
off,  the  Company  believes  that  it  would  be  required  to  contribute
substantial  additional  resources  to  allow  Technologies  the  liquidity
necessary  to  sustain and grow both the Fairchild Technologies'  operating
divisions.

      The  Company  is considering a transaction designed to  separate  the
aerospace fasteners business of the Company from the aerospace distribution
and  other  businesses  of the Company. The transaction  would  consist  of
distributing  (the "Spin-Off") to its shareholders all of the  stock  of  a
subsidiary to be formed ("Spin-Co"), consisting of the Company's  aerospace
fasteners  segment.  The  Spin-Off would result in  the  formation  of  two
publicly  traded  companies,  each of which would  be  able  to  pursue  an
independent  strategic  path. The Company believes  this  separation  would
offer  both  companies  the  opportunity  to  pursue  strategic  objectives
appropriate  to different businesses and to create targeted incentives  for
their  management  and key employees. In addition, the  Spin-Off  would  be
expected  to  offer  each  entity greater financial  flexibility  in  their
respective capital raising strategies.

      The  Company  has conditioned the Spin-Off distribution  upon,  among
other  things,  (i) approval of the Spin-Off by the Company's shareholders;
(ii)  receiving confirmation that the distribution will qualify as  a  tax-
free transaction under Section 355 of the Internal Revenue Code of 1986, as
amended;  (iii) the transfer of assets and liabilities contemplated  by  an
agreement  to be entered into between the Company and Spin-Co  having  been
consummated in all material respects; (iv) the Spin-Co Class A Common Stock
having been approved for listing on the New York Stock Exchange; (v) a Form
10  registration  statement with respect to Spin-Co Class  A  Common  Stock
becoming  effective under the Securities Exchange Act of 1934, as  amended;
and  (vi)  receipt  of  a satisfactory solvency opinion  for  each  entity.
Although  the  Company's ability to effect the Spin-Off is  uncertain,  the
Company  may  effect  the Spin-Off as soon as it is reasonably  practicable
following receipt of the aforementioned items relating to Spin-Co  and  all
necessary  governmental and third party approvals.  In order to effect  the
Spin-Off, approval is required from the board of directors of the  Company.
The  composition of the assets and liabilities to be included  in  Spin-Co,
and  accordingly the ability of the Company to consummate the Spin-Off,  is
contingent, among other things, on obtaining consents and waivers under the
Company's  New  Credit  Facility.  In addition, the Company  may  encounter
unexpected  delays in effecting the Spin-Off, and the Company can  make  no
assurance  as to the timing thereof. In addition, prior to the consummation
of  the Spin-Off, the Company may sell, restructure or otherwise change the
assets and liabilities that will be in Spin-Co, or for other reasons  elect
not  to  consummate  the  Spin-Off. Because circumstances  may  change  and
because provisions of the Internal Revenue Code of 1986, as amended, may be
further  amended from time to time, the Company may, depending  on  various
factors,  restructure or delay the timing of the Spin-Off to  minimize  the
tax consequences thereof to the Company and its shareholders. Consequently,
there can be no assurance that the Spin-Off will ever occur.

Year 2000

      As  the end of the century nears, there is a widespread concern  that
many  existing computer programs that use only the last two digits to refer
to  a  year will not properly recognize a year that begins with the  digits
"20"  instead of "19."  If not corrected, many computer applications  could
fail,  create  erroneous results, or cause unanticipated systems  failures,
among  other problems.  The Company has begun to take appropriate  measures
to  ensure that its information processing systems, embedded technology and
other infrastructure will be ready for the Year 2000.

      The  Company  has  retained both technical  review  and  modification
consultants to help it assess its Year 2000 readiness.  Working with  these
consultants  and  other  advisors, the Company has  formulated  a  plan  to
address Year 2000 issues.  Under this plan, the Company's systems are being
modified  or  replaced, or will be modified or replaced, as  necessary,  to
render them, as far as possible, Year 2000 ready.  Substantially all of the
material systems within the Aerospace Fasteners segment are currently  Year
2000  ready.   Within the Aerospace Distribution segment and  at  Fairchild
Technologies,  the  Company intends to replace  and  upgrade  a  number  of
important  systems that are not Year 2000 compliant, and is  assessing  the
extent to which current product inventories may include embedded technology
that  is  not  Year  2000 ready.  The Company expects to  complete  initial
testing of its most critical information technology and related systems  by
June  30,  1999,  and  anticipates that it  will  complete  its  Year  2000
preparations  by  October  31,  1999.  The  Company  could  be  subject  to
liability to customers and other third parties if its systems are not  Year
2000 compliant, resulting in possible legal actions for breach of contract,
breach  or warranty, misrepresentation, unlawful trade practices and  other
harm.

     In addition, the Company is continually attempting to assess the level
of Year 2000 preparedness of its key suppliers, distributors, customers and
service providers.  To this end, the Company has sent, and will continue to
send,  letters,  questionnaires and surveys  to  its  significant  business
partners  inquiring  about  their  Year 2000  efforts.   If  a  significant
business  partner  of  the  Company fails to be Year  2000  compliant,  the
Company  could  suffer  a  material loss  of  business  or  incur  material
expenses.

      The  Company is also developing and evaluating contingency  plans  to
deal  with  events  affecting the Company or one of its  business  partners
arising  from  significant  Year 2000 problems.   These  contingency  plans
include  identifying  alternative  suppliers,  distribution  networks   and
service providers.

      Although  the  Company's  Year  2000 assessment,  implementation  and
contingency planning is not yet complete, the Company does not now  believe
that  Year  2000  issues will materially affect its  business,  results  of
operations  or  financial  condition.  However,  the  Company's  Year  2000
efforts  may not be successful in every respect.  To date, the Company  has
incurred approximately $0.3 million in costs that are directly attributable
to  addressing Year 2000 issues.  Management currently estimates  that  the
Company  will  incur  between $2.0 million and $3.0 million  in  additional
costs during the next 18 months relating to the Year 2000 problem.


RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

     In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement   of   Financial  Accounting  Standards  No.  131  ("SFAS   131")
"Disclosures about Segments of an Enterprise and Related Information." SFAS
131   supersedes  Statement  of  Financial  Accounting  Standards  No.   14
"Financial  Reporting for Segments of a Business Enterprise"  and  requires
that  a  public  company report certain information  about  its  reportable
operating  segments  in annual and interim financial  reports.   Generally,
financial information is required to be reported on the basis that is  used
internally for evaluating segment performance and deciding how to  allocate
resources to segments.  The Company will adopt SFAS 131 in Fiscal 1999.

      In  February 1998, the FASB issued Statement of Financial  Accounting
Standards  No. 132 ("SFAS 132") "Employers' Disclosures about Pensions  and
Other  Postretirement  Benefits."   SFAS  132  revises  and  improves   the
effectiveness  of  current  note  disclosure  requirements  for  employers'
pensions and other retiree benefits by requiring additional information  to
facilitate financial analysis and eliminating certain disclosures which are
no  longer  useful.  SFAS 132 does not address recognition  or  measurement
issues. The Company will adopt SFAS 132 in Fiscal 1999.

      In  June  1998,  the  FASB issued Statement of  Financial  Accounting
Standards  No. 133 ("SFAS 133") "Accounting for Derivative Instruments  and
Hedging  Activities." SFAS 133 establishes a new model for  accounting  for
derivatives  and hedging activities and supersedes and amends a  number  of
existing  accounting  standards.   It  requires  that  all  derivatives  be
recognized  as assets and liabilities on the balance sheet and measured  at
fair  value.   The  corresponding derivative gains or losses  are  reported
based  on the hedge relationship that exists, if any.  Changes in the  fair
value  of hedges that are not designated as hedges or that do not meet  the
hedge  accounting  criteria  in SFAS 133 are required  to  be  reported  in
earnings.   Most  of the general qualifying criteria for  hedge  accounting
under  SFAS  133  were  derived  from, and are  similar  to,  the  existing
qualifying  criteria in SFAS 80 "Accounting for Futures  Contracts."   SFAS
133 describes three primary types of hedge relationships: fair value hedge,
cash  flow  hedge, and foreign currency hedge. The Company will adopt  SFAS
133  in  Fiscal  1999  and is currently evaluating the financial  statement
impact.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The following consolidated financial statements of the Company and the
report  of  the  Company's  independent  public  accountants  with  respect
thereto, are set forth below.



                                                                        Page

Report of Independent Public Accountants                                28

Consolidated Balance Sheets as of June 30, 1997 and 1998                29

Consolidated Statements of Earnings For Each of The Three Years Ended
June 30, 1996, 1997, and 1998                                           31

Consolidated Statements of Stockholders' Equity For Each of The Three
Years Ended June 30, 1996, 1997, and 1998                               33

Consolidated  Statements of Cash Flows For Each of  The  Three  Years
Ended June 30, 1996, 1997, and 1998                                     34

Notes to Consolidated Financial Statements                              35

Supplementary information regarding "Quarterly Financial Data  (Unaudited)"
is set forth under Item 8 in Note 22 to Consolidated Financial Statements.


                 Report of Independent Public Accountants



To The Fairchild Corporation:

      We  have audited the accompanying consolidated balance sheets of  The
Fairchild   Corporation   (a   Delaware   corporation)   and   consolidated
subsidiaries  as  of  June 30, 1997 and 1998, and the related  consolidated
statements of earnings, stockholders' equity and cash flows for each of the
three  years  in  the  period ended June 30, 1996, 1997  and  1998.   These
financial  statements  are the responsibility of the Company's  management.
Our  responsibility is to express an opinion on these financial  statements
based  on our audits. We did not audit the financial statements of  Nacanco
Paketleme  (see  Note  7),  the investment in which  is  reflected  in  the
accompanying  financial statements using the equity method  of  accounting.
The investment in Nacanco Paketleme represents 2 percent of total assets as
of  June 30, 1998 and 1997, and the equity in its net income represents  17
percent, 257 percent, and 9 percent of earnings from continuing operations.
The  statements  of Nacanco Paketleme were audited by other auditors  whose
report  has been furnished to us and our opinion, insofar as it relates  to
the amounts included for Nacanco Paketleme, is based on the report of other
auditors.

     We conducted our audits in accordance with generally accepted auditing
standards.   Those standards require that we plan and perform an  audit  to
obtain reasonable assurance about whether the financial statements are free
of  material  misstatement.  An audit includes examining, on a test  basis,
evidence   supporting  the  amounts  and  disclosures  in   the   financial
statements. An audit also includes assessing the accounting principles used
and  significant  estimates made by management, as well as  evaluating  the
overall  financial  statement presentation.  We  believe  that  our  audits
provide a reasonable basis for our opinion.

      In our opinion, based on our audits and the report of other auditors,
the  financial statements referred to above present fairly, in all material
respects,   the  financial  position  of  The  Fairchild  Corporation   and
consolidated subsidiaries as of June 30, 1997 and 1998, and the results  of
their  operations and their cash flows for each of the three years  in  the
period  ended  June 30, 1996, 1997 and 1998, in conformity  with  generally
accepted accounting principles.


                                              Arthur Andersen LLP

Washington, D.C.
September 22, 1998
<TABLE>
          THE FAIRCHILD CORPORATION AND CONSOLIDATED SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
                              (In thousands)

<CAPTION>


                   ASSETS                     June 30, June 30,
                                                1997     1998
CURRENT ASSETS:                                                
<S>                                           <C>       <C>
Cash and cash equivalents, $4,839 and $746
restricted                                    $ 19,420 $ 49,601
Short-term investments                          25,647    3,962
Accounts receivable-trade, less allowances of  151,361  120,284
$6,905 and $5,655
Inventories:                                                   
   Finished goods                              292,441  187,205
   Work-in-process                              20,357   20,642
   Raw materials                                10,567    9,635
                                               323,365  217,482
Net current assets of discontinued operations   17,884   11,613
Prepaid expenses and other current assets       34,490   53,081
Total Current Assets                           572,167  456,023
                                                               
Property, plant and equipment, net of                          
accumulated
  depreciation of $131,646 and $82,968         121,918  118,963
Net assets held for sale                        26,147   23,789
Net noncurrent assets of discontinued           14,495    8,541
operations
Cost in excess of net assets acquired                          
(Goodwill), less
  accumulated amortization of $36,672 and      154,129  168,307
$42,079
Investments and advances, affiliated            55,678   27,568
companies
Prepaid pension assets                          59,742   61,643
Deferred loan costs                              9,252    6,362
Long-term investments                            4,120  235,435
Other assets                                    35,018   50,628
TOTAL ASSETS                                $1,052,666 $1,157,259










The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
</TABLE>

<TABLE>
          THE FAIRCHILD CORPORATION AND CONSOLIDATED SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
                              (In thousands)
<CAPTION>


    LIABILITIES AND STOCKHOLDERS' EQUITY      June 30, June 30,
                                                1997     1998
CURRENT LIABILITIES:                                           
<S>                                           <C>       <C>
Bank notes payable and current maturities of  
long-term debt                                $ 47,322 $ 20,665
Accounts payable                                75,522   53,859
Accrued liabilities:                                           
    Salaries, wages and commissions             17,138   23,613
    Employee benefit plan costs                  1,764    1,463
    Insurance                                   15,021   12,575
    Interest                                    11,213    2,303
    Other accrued liabilities                   52,182   52,789
                                                97,318   92,743
Income taxes                                     5,863   28,311
Total Current Liabilities                      226,025  195,578
                                                               
LONG-TERM LIABILITES:                                          
Long-term debt, less current maturities        416,922  295,402
Other long-term liabilities                     23,622   23,767
Retiree health care liabilities                 43,351   42,103
Noncurrent income taxes                         42,013   95,176
Minority interest in subsidiaries               68,309   31,674
TOTAL LIABILITIES                              820,242  683,700
                                                               
STOCKHOLDERS' EQUITY:                                          
Class A common stock, 10 cents par value;                      
authorized 40,000,000
  shares, 26,678,561 (20,233,879 in 1997)                      
shares issued and
  20,428,591 (13,992,283 in 1997) shares         2,023    2,667
outstanding
Class B common stock, 10 cents par value;                      
authorized 20,000,000
  shares, 2,624,716 (2,632,516 in 1997)            263      263
shares issued and outstanding
Paid-in capital                                 71,015  195,112
Retained earnings                              209,949  311,039
Cumulative other comprehensive income              893   16,386
Treasury Stock, at cost, 6,249,970 (6,241,596                  
in 1997) shares
  of Class A common stock                     (51,719) (51,908)
TOTAL STOCKHOLDERS' EQUITY                     232,424  473,559
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY              
                                            $1,052,666 $1,157,259


The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
</TABLE>

<TABLE>
          THE FAIRCHILD CORPORATION AND CONSOLIDATED SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF EARNINGS
                   (In thousands, except per share data)
<CAPTION>

                                   For the Years Ended June 30,
                                     1996     1997     1998
<S>                                <C>      <C>      <C>
REVENUE:                                                 
   Net sales                      $349,236  $680,763  $741,176
   Other income, net                   300        28     6,508
                                   349,536   680,791   747,684
 COSTS AND EXPENSES:                                     
     Cost of goods sold            275,135   499,419   554,670
     Selling, general &                                  
administrative                      79,295   142,959   141,930
     Research and development           94       100       172
     Amortization of goodwill        3,979     4,814     5,469
     Restructuring                   2,319      -         -
                                   360,822   647,292   702,241
 OPERATING INCOME (LOSS)           (11,286)   33,499    45,443
 Interest expense                   64,521    52,376    46,007
 Interest income                    (8,062)   (4,695)   (3,292)
 Net interest expense               56,459    47,681    42,715
 Investment income (loss), net       4,575     6,651    (3,362)
 Non-recurring income (loss)        (1,724)    2,528   124,028
 Earnings (loss) from continuing                         
operations before taxes            (64,894)   (5,003)  123,394
 Income tax (provision) benefit     29,839     5,735   (48,659)
 Equity in earnings of affiliates,                       
net                                  4,821     4,598     3,956
 Minority interest, net             (1,952)   (3,514)  (26,292)
 Earnings (loss) from continuing                         
operations                         (32,186)    1,816    52,399
 Earnings (loss) from discontinued                       
operations, net                     15,612      (485)   (4,296)
 Gain on disposal of discontinued                        
operations, net                    216,716       -      59,717
 Earnings (loss) before            200,142     1,331   107,820
extraordinary items
 Extraordinary items, net                                
                                   (10,436)       -     (6,730)
NET EARNINGS (LOSS)               $189,706   $ 1,331  $101,090
 Other comprehensive income, net                         
of tax:
 Foreign currency translation                            
adjustments                          (606)   (1,514)   (5,140)
 Unrealized holding gains (losses)                       
on securities arising                   -        74    20,633
    During the period
 Other comprehensive income (loss)    (606)  (1,440)   15,493
 COMPREHENSIVE INCOME (LOSS)      $189,100  $  (109) $116,583




The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
</TABLE>

<TABLE>
          THE FAIRCHILD CORPORATION AND CONSOLIDATED SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF EARNINGS
                   (In thousands, except per share data)
<CAPTION>


                                   For the Years Ended June 30,
                                     1996   1997   1998
<S>                                <C>      <C>     <C>
BASIC EARNINGS PER SHARE:                                
Earnings (loss) from continuing          
operations                         $(1.98)  $0.11   $2.78
Earnings (loss) from discontinued                        
operations, net                       0.96  (0.03)  (0.23)
Gain on disposal of discontinued                         
operations, net                      13.37      -    3.17
Extraordinary items, net                                 
                                    (0.64)      -  (0.36)
NET EARNINGS (LOSS)                $(0.64)  $0.08  $5.36
 Other comprehensive income, net                         
of tax:
 Foreign currency translation            
adjustments                        $(0.04) $(0.09) $(0.27)
 Unrealized holding gains (losses)                       
on securities arising during the         -      -    1.10
period
 Other comprehensive income                              
                                    (0.04) (0.09)    0.83
 COMPREHENSIVE INCOME (LOSS)       $11.67 $(0.01)   $6.19
                                                         
DILUTED EARNINGS PER SHARE:                              
Earnings (loss) from continuing         
operations                         $(1.98)  $0.11   $2.66
Earnings (loss) from discontinued                        
operations, net                       0.96 (0.03)  (0.22)
Gain on disposal of discontinued                         
operations, net                      13.37      -    3.04
Extraordinary items, net                                 
                                    (0.64)      -  (0.34)
NET EARNINGS (LOSS)           
                                    $11.71  $0.08   $5.14
 Other comprehensive income, net                         
of tax:
 Foreign currency translation       
adjustments                        $(0.04) $(0.09)  $(0.26)
 Unrealized holding gains (losses)                       
on securities arising during the         -      -    1.05
period
 Other comprehensive income                              
                                    (0.04) (0.09)    0.79
 COMPREHENSIVE INCOME (LOSS)       $11.67 $(0.01)   $5.93
Weighted average shares                                  
outstanding:
  Basic                             16,206 16,539  18,834
  Diluted                           16,206 17,321  19,669









The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
</TABLE>

<TABLE>
          THE FAIRCHILD CORPORATION AND CONSOLIDATED SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                              (In thousands)
<CAPTION>

                                                            Cumulativ      
                                                                e
                           Class Class                         Other        
                             A     B
                           CommonCommon Paid-  Retain Treas Comprehen      
                                          in     ed    ury    sive
                           Stock Stock Capital Earnings Stock  Income   Total
<S>                        <C>    <C>    <C>    <C>    <C>    <C>       <C>
 Balance, July 1, 1995  $1,965  $ 270 $67,011 $18,912 $(51,719) $2,939 39,378      
 Net earnings               -     -      -    189,706   -       -     189,706                                  06
 Foreign currency                                                          
translation adjustments      -     -      -      -      -         (606) (606)
 Fair market value of                                                      
stock warrants issued        -     -     1,148   -      -       -      1,148
 Proceeds received from                                                    
options exercised            28    -     1,481   -      -       -      1,509
 Exchange of Class B for                                                   
Class A
    common stock                                                           
                               7    (7)   -      -      -       -         -
 Retirement of preferred                                                   
stock of subsidiary          -     -     (274)   -      -       -     (274)
 Balance, June 30, 1996                                                    
                           2,000    263 69,366 208,618 (51,719)  2,333 230,861
 Net earnings                                                              
                             -     -      -     1,331   -       -     1,331
 Foreign currency                                                          
translation adjustments      -     -      -      -      -     (1,514) (1,514)
 Fair market value of                                                      
stock warrants issued        -     -       546   -      -       -       546
 Proceeds received from                                                    
options
   exercised (234,935                                                      
shares)                       23   -     1,103   -      -       -     1,126
 Exchange of Class B for                                                   
Class A
 Common stock (1,188                                                       
shares)                      -     -      -      -      -       -         -
 Net unrealized holding                                                    
gain on
 Available-for-sale                                                        
securities                   -     -      -      -      -      74        74
 Balance, June 30, 1997                                      
                           2,023   263 71,015 209,949 (51,719) 893    232,424
 Net earnings                                                              
                             -     -      -    101,09   -       -     101,0
                                                    0                    90
 Foreign currency                                                          
translation adjustments      -     -      -      -      -     (5,140) (5,14
                                                                         0)
 Compensation expense from                                                 
         adjusted
    terms to warrants and                                                  
options                      -     -     5,655   -      -       -     5,655
 Stock issued for Special-                                                 
T Fasteners                  108   -    21,939   -      -       -     22,04
acquisition                                                               7
 Stock issued for Exchange                                                 
Offer                        221   -    42,588   -      -       -     42,80
                                                                          9
 Equity Offering                                                           
                             300   -    53,268   -      -       -     53,56
                                                                          8
 Proceeds received from                                                    
stock options
    exercised (141,259                                                     
shares)                       10   -       652   -    (189)     -       473
 Cashless exercise of                                                      
warrants (47,283 shares)       5   -       (5)   -      -       -         -
 Exchange of Class B for                                                   
Class A
    common stock (7,800                                                    
shares)                      -     -      -      -      -       -         -
 Net unrealized holding                                                    
gain on
    available-for-sale                                                     
securities                   -     -      -      -      -      20,633 20,63
                                                                          3
Balance, June 30, 1998  $ 2,667  $263 $195,112 $311,039 $(51,908)$16,386$473,559

The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
</TABLE>

<TABLE>
          THE FAIRCHILD CORPORATION AND CONSOLIDATED SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (In thousands)
<CAPTION>
                                     
                                                For the Twelve Months Ended
                                                   1996    1997    1998
<S>                                              <C>      <C>      <C>
Cash flows from operating activities:         
        Net earnings                            $189,706 $ 1,331 $101,090
        Depreciation and amortization             21,045  24,307  20,036
        Accretion of discount on long-term                              
liabilities                                        4,686   4,963   3,766
        Net gain on the disposition of                                  
subsidiaries                                           -       - (124,041)
        Net gain on the sale of discontinued                            
operations                                      (216,645)      - (132,787)
        Extraordinary items, net of cash                                
payments                                           4,501       -  10,347
        Provision for restructuring (excluding                          
cash payments of $777 in 1996)                     1,542       -       -
        (Gain) loss on sale of property, plant,                         
and equipment                                        (9)    (72)     246
        (Undistributed) distributed earnings of                         
affiliates, net                                  (3,857) (1,055)   1,725
        Minority interest                         1,952   3,514  26,292
        Change in trading securities             (5,346) (5,733)   9,275
        Change in receivables                    (5,566) (48,693)(12,846)
        Change in inventories                   (16,088) (36,868)(54,857)
        Change in other current assets           (2,989) (14,088)(26,643)
        Change in other non-current assets        3,609  (16,565)(16,562)
        Change in accounts payable, accrued                             
liabilities and other long-term liabilities      (37,477)  6,102  80,677
        Non-cash charges and working capital                            
changes of discontinued operations                11,985 (17,201) 11,789
        Net cash used for operating activities   (48,951)(100,058)(102,493)
 Cash flows from investing activities:                                  
        Proceeds received from (used for)                               
investment securities, net                           265 (12,951) (7,287)
        Purchase of property, plant and                                 
equipment                                        (5,680) (15,014) (36,029)
        Proceeds from sale of plant, property                           
and equipment                                         98     213     336
        Equity investment in affiliates                                 
                                                 (2,361) (1,749) (4,343)
        Minority interest in subsidiaries                               
                                                 (2,817) (1,610) (26,383)
        Acquisition of subsidiaries, net of cash                        
acquired                                               - (55,916) (32,795)
        Net proceeds received from the sale of                          
discontinued operations                           71,559 173,719 167,987
        Changes in net assets held for sale                             
                                                   5,894     385   2,140
        Investing activities of discontinued                            
operations                                       (9,418) (7,102) (2,750)
        Net cash provided by investing                                  
activities                                        57,540  79,975  60,876
 Cash flows from financing activities:                                  
        Proceeds from issuance of debt                                  
                                                 156,501 154,294 275,523
        Debt repayments and repurchase of                               
debentures, net                                 (195,420)(155,600)(258,014)
        Issuance of Class A common stock                                
                                                   1,509   1,126  54,041
        Financing activities of discontinued                            
operations                                       (2,227) (1,275)   2,538
        Net cash provided by (used for)                                 
financing activities                             (39,637) (1,455)  74,088
    Effect of exchange rate changes on cash                             
                                                   (485)   1,309 (2,290)
    Net change in cash and cash equivalents                             
                                                 (31,533) (20,229) 30,181
    Cash and cash equivalents, beginning of the                         
year                                              71,182  39,649  19,420
    Cash and cash equivalents, end of the year        
                                                 $39,649 $19,420 $49,601

The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
</TABLE>

          THE FAIRCHILD CORPORATION AND CONSOLIDATED SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (In thousands, except per share data)


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

      Corporate  Structure:  The Fairchild Corporation (the "Company")  was
incorporated in October 1969, under the laws of the State of Delaware.  The
Company  is  the majority owner of Banner Aerospace, Inc., ("Banner").  RHI
Holdings, Inc. ("RHI") is a direct subsidiary of the Company.  RHI  is  the
owner  of  100% of Fairchild Holding Corp. ("FHC"). The Company's principal
operations are conducted through FHC and Banner.  The Company also holds  a
significant  equity  interest in Nacanco Paketleme  ("Nacanco").  Prior  to
March  10, 1998, the Company held an equity interest in Shared Technologies
Fairchild Inc. ("STFI"). The Company's investment in STFI resulted  from  a
March 13, 1996 Merger of the Communications Services Segment of the Company
with   Shared  Technologies,  Inc.  The  merger  of  STFI  into  Intermedia
Communications  Inc., as discussed in Note 4, completes the disposition  of
the  Communications Services Segment. In February 1998, the Company adopted
a  formal  plan  to  dispose of its interest in the Fairchild  Technologies
segment.   Accordingly,  the  Company's financial  statements  present  the
results   of  the  Communications  Services  Segment,  STFI  and  Fairchild
Technologies as discontinued operations.

      Fiscal Year:  The fiscal year ("Fiscal") of the Company ends June 30.
All  references herein to "1996", "1997", and "1998" mean the fiscal  years
ended June 30, 1996, 1997 and 1998, respectively.

       Consolidation   Policy:  The  accompanying  consolidated   financial
statements  are  prepared in accordance with generally accepted  accounting
principles  and include the accounts of the Company and all of its  wholly-
owned   and  majority-owned  subsidiaries.   All  significant  intercompany
accounts   and   transactions  have  been  eliminated   in   consolidation.
Investments in companies in which ownership interest range from  20  to  50
percent are accounted for using the equity method (see Note 7).

      Cash  Equivalents/Statements of Cash  Flows:   For  purposes  of  the
Statements  of  Cash  Flows,  the  Company  considers  all  highly   liquid
investments  with original maturity dates of three months or less  as  cash
equivalents.  Total net cash disbursements (receipts) made by  the  Company
for income taxes and interest were as follows:
<TABLE>
<CAPTION>

                              1996     1997     1998
<S>                         <C>      <C>      <C>
 Interest                    $66,716 $48,567  $52,737
 Income Taxes                  9,279  (1,926)   (987)
</TABLE>

     Restricted Cash: On June 30, 1997 and 1998, the Company had restricted
cash  of  $4,839  and  $746, respectively, all of which  is  maintained  as
collateral for certain debt facilities.  Cash investments are in short-term
certificates of deposit.

      Investments: Management determines the appropriate classification  of
its   investments   at  the  time  of  acquisition  and  reevaluates   such
determination at each balance sheet date.  Trading securities  are  carried
at  fair  value,  with  unrealized holding gains  and  losses  included  in
earnings.   Available-for-sale securities are carried at fair  value,  with
unrealized  holding gains and losses, net of tax, reported  as  a  separate
component  of  stockholders' equity.  Investments in equity securities  and
limited partnerships that do not have readily determinable fair values  are
stated at cost and are categorized as other investments. Realized gains and
losses are determined using the specific identification method based on the
trade date of a transaction.  Interest on corporate obligations, as well as
dividends on preferred stock, are accrued at the balance sheet date.

      Inventories: Inventories are stated at the lower of cost  or  market.
Cost  is  determined  using  the  last-in,  first-out  ("LIFO")  method  at
principal  domestic aerospace fastener manufacturing operations  and  using
the  first-in, first-out ("FIFO") method elsewhere.  If the FIFO  inventory
valuation  method had been used exclusively, inventories  would  have  been
approximately  $4,868  and  $8,706  higher  at  June  30,  1997  and  1998,
respectively.   Inventories  from  continuing  operations  are  valued   as
follows:
<TABLE>
<CAPTION>

                                    June 30,   June 30,
                                      1997     1998
<S>                                <C>        <C>
 First-in, first-out (FIFO)                       
                                    $293,469 $177,426
 Last-in, First-out (LIFO)                          
                                      29,896  40,056
 Total inventories                         
                                    $323,365 $217,482
</TABLE>

     Properties and Depreciation: The cost of property, plant and equipment
is  depreciated over estimated useful lives of the related assets. The cost
of  leasehold improvements is depreciated over the lesser of the length  of
the   related  leases  or  the  estimated  useful  lives  of  the   assets.
Depreciation  is  computed  using the straight-line  method  for  financial
reporting  purposes and using accelerated depreciation methods for  Federal
income  tax  purposes.  No interest costs were capitalized in  any  of  the
years presented.  Property, plant and equipment consisted of the following:
<TABLE>
<CAPTION>

                                    June 30, June 30,
                                      1997     1998
<S>                                 <C>       <C>
Land                               $  13,438 $ 11,694
Building and improvements             54,907   47,579
Machinery and equipment              152,430  113,669
Transportation vehicles                  864      676
Furniture and fixtures                25,401   16,362
Construction in progress               6,524   11,951
Property, plant and equipment at     253,564  201,931
cost
Less: Accumulated depreciation       131,646   82,968
Net property, plant and equipment   $121,918 $118,963
</TABLE>

     Amortization of Goodwill: Goodwill, which represents the excess of the
cost  of  purchased businesses over the fair value of their net  assets  at
dates  of acquisition, is being amortized on a straight-line basis over  40
years.

      Deferred Loan Costs: Deferred loan costs associated with various debt
issues are being amortized over the terms of the related debt, based on the
amount   of   outstanding  debt,  using  the  effective  interest   method.
Amortization  expense  for these loan costs for 1996,  1997  and  1998  was
$3,827, $2,847 and $2,406, respectively.

      Impairment of Long-Lived Assets: In Fiscal 1997, the Company  adopted
Statement   of  Financial  Accounting  Standards  No.  121  ("SFAS   121"),
"Accounting  for  the Impairment of Long-Lived Assets  and  for  Long-Lived
Assets  to Be Disposed Of".  SFAS 121 establishes accounting standards  for
the  impairment of long-lived assets, certain identifiable intangibles, and
goodwill  related to those assets to be held and used, and  for  long-lived
assets and certain identifiable intangibles to be disposed of.  The Company
reviews  its  long-lived assets, including property, plant  and  equipment,
identifiable  intangibles and goodwill, for impairment whenever  events  or
changes  in  circumstances indicate that the carrying amount of the  assets
may  not  be fully recoverable.  To determine recoverability of  its  long-
lived assets the Company evaluates the probability that future undiscounted
net  cash  flows  will  be less than the carrying  amount  of  the  assets.
Impairment is measured based on the difference between the carrying  amount
of  the assets and fair value.  The implementation of SFAS 121 did not have
a material effect on the Company's consolidated results of operations.

       Foreign   Currency  Translation:  For  foreign  subsidiaries   whose
functional  currency is the local foreign currency, balance sheet  accounts
are  translated  at exchange rates in effect at the end of the  period  and
income statement accounts are translated at average exchange rates for  the
period.   The  resulting translation gains and losses  are  included  as  a
separate  component of stockholders' equity.  Foreign currency  transaction
gains  and  losses  are included in other income and were insignificant  in
Fiscal 1996, 1997 and 1998.

      Research  and Development: Company-sponsored research and development
expenditures are expensed as incurred.

     Capitalization of interest and taxes: The Company capitalizes interest
expense and property taxes relating to property being developed.

      Nonrecurring Income: Nonrecurring income of $124,028 in 1998 resulted
from disposition of Banner hardware group (See Note 2). Nonrecurring income
of  $2,528  in  1997  resulted from the gain  recorded  from  the  sale  of
Fairchild  Scandinavian  Bellyloading  Company  ("SBC"),  (See   Note   2).
Nonrecurring  expense in 1996 resulted from expenses incurred  in  1996  in
connection  with  other,  alternative  transactions  considered   but   not
consummated.

      Stock-Based  Compensation: In Fiscal 1997,  the  Company  implemented
Statement   of  Financial  Accounting  Standards  No.  123  ("SFAS   123"),
"Accounting for Stock-Based Compensation".  SFAS 123 establishes  financial
accounting  standards for stock-based employee compensation plans  and  for
transactions in which an entity issues equity instruments to acquire  goods
or services from non-employees.  As permitted by SFAS 123, the Company will
continue  to use the intrinsic value based method of accounting  prescribed
by  APB  Opinion  No. 25, for its stock-based employee compensation  plans.
Fair market disclosures required by SFAS 123 are included in Note 12.

      Use  of  Estimates:   The  preparation  of  financial  statements  in
conformity   with   generally  accepted  accounting   principles   requires
management  to  make  estimates and assumptions that  affect  the  reported
amounts  of assets and liabilities and disclosure of contingent assets  and
liabilities  at  the  date  of the financial statements  and  the  reported
amounts  of  revenues  and  expenses during the reporting  period.   Actual
results could differ from those estimates.

       Reclassifications:  Certain  amounts  in  prior   years'   financial
statements have been reclassified to conform to the 1998 presentation.

     Recently Issued Accounting Pronouncements: In June 1997, the Financial
Accounting   Standards  Board  ("FASB")  issued  Statement   of   Financial
Accounting Standards No. 131 ("SFAS 131") "Disclosures about Segments of an
Enterprise  and  Related  Information." SFAS 131  supersedes  Statement  of
Financial Accounting Standards No. 14 "Financial Reporting for Segments  of
a  Business  Enterprise" and requires that a public company report  certain
information  about its reportable operating segments in annual and  interim
financial  reports.  Generally, financial information  is  required  to  be
reported  on  the  basis  that is used internally  for  evaluating  segment
performance  and  deciding  how to allocate  resources  to  segments.   The
Company will adopt SFAS 131 in Fiscal 1999.

      In  February 1998, the FASB issued Statement of Financial  Accounting
Standards  No. 132 ("SFAS 132") "Employers' Disclosures about Pensions  and
Other  Postretirement  Benefits."   SFAS  132  revises  and  improves   the
effectiveness  of  current  note  disclosure  requirements  for  employers'
pensions and other retiree benefits by requiring additional information  to
facilitate financial analysis and eliminating certain disclosures which are
no  longer  useful.  SFAS 132 does not address recognition  or  measurement
issues. The Company will adopt SFAS 132 in Fiscal 1999.

      In  June  1998,  the  FASB issued Statement of  Financial  Accounting
Standards  No. 133 ("SFAS 133") "Accounting for Derivative Instruments  and
Hedging  Activities." SFAS 133 establishes a new model for  accounting  for
derivatives  and hedging activities and supersedes and amends a  number  of
existing  accounting  standards.   It  requires  that  all  derivatives  be
recognized  as assets and liabilities on the balance sheet and measured  at
fair  value.   The  corresponding derivative gains or losses  are  reported
based  on the hedge relationship that exists, if any.  Changes in the  fair
value  of derivative that are not designated as hedges or that do not  meet
the  hedge  accounting criteria in SFAS 133 are required to be reported  in
earnings.   Most  of the general qualifying criteria for  hedge  accounting
under  SFAS  133  were  derived  from, and are  similar  to,  the  existing
qualifying  criteria in SFAS 80 "Accounting for Futures  Contracts."   SFAS
133 describes three primary types of hedge relationships: fair value hedge,
cash  flow  hedge, and foreign currency hedge. The Company will adopt  SFAS
133  in  Fiscal  1999  and is currently evaluating the financial  statement
impact.

2.  BUSINESS COMBINATIONS

      The Company has accounted for the following acquisitions by using the
purchase  method.   The respective purchase price is assigned  to  the  net
assets  acquired based on the fair value of such assets and liabilities  at
the respective acquisition dates.

      In  December 1997, the Company acquired AS+C GmbH, Aviation Supply  +
Consulting ("AS&C") in a business combination accounted for as a  purchase.
The  total  cost  of the acquisition was $13,245, which exceeded  the  fair
value  of  the  net  assets  of  AS&C by  approximately  $7,350,  which  is
preliminarily being allocated as goodwill and amortized using the straight-
line method over 40 years. The Company purchased AS&C with cash borrowings.
AS&C  is  an aerospace parts, logistics, and distribution company primarily
servicing the European OEM market.

      On  March 2, 1998, the Company consummated the acquisition of Edwards
and  Lock  Management  Corporation, doing business as  Special-T  Fasteners
("Special-T"), in a business combination to be accounted for as a  purchase
(the  "Special-T  Acquisition"). The contractual  purchase  price  for  the
acquisition was valued at approximately $47,300, of which 50.1% was paid in
shares  of Class A Common Stock of the Company and 49.9% was paid in  cash.
The total cost of the acquisition exceeded the fair value of the net assets
of  Special-T by approximately $21,605, which amount is preliminarily being
allocated as goodwill, and amortized using the straight-line method over 40
years.   Special-T  manages  the  logistics of  worldwide  distribution  of
Company  manufactured  precision fasteners to customers  in  the  aerospace
industry,  government agencies, original equipment manufacturers ("OEM's"),
and other distributors.

      In  February 1997, the Company completed a transaction (the "Simmonds
Acquisition")  pursuant  to which the Company acquired  common  shares  and
convertible debt representing an 84.2% interest, on a fully diluted  basis,
of Simmonds S.A. ("Simmonds"). The Company then initiated a tender offer to
purchase the remaining shares and convertible debt held by the public.   By
June  30,  1997,  the Company had purchased, or placed sufficient  cash  in
escrow  to  purchase,  all  the remaining shares and  convertible  debt  of
Simmonds. The total purchase price of Simmonds, including the assumption of
debt,  was  approximately $62,000, which the Company funded with  available
cash and borrowings. The Company recorded approximately $20,453 in goodwill
as a result of this acquisition, which will be amortized using the straight-
line   method   over  40  years.  Simmonds  is  one  of  Europe's   leading
manufacturers and distributors of aerospace and automotive fasteners.

       On   January   13,   1998,   certain  subsidiaries   (the   "Selling
Subsidiaries"),  of Banner, completed the disposition of substantially  all
of  the  assets and certain liabilities of the Selling Subsidiaries to  two
wholly-owned subsidiaries of AlliedSignal Inc. (the "Buyers"), in  exchange
for  shares of AlliedSignal Inc. common stock with an aggregate value equal
to  $369,000 (the "Banner Hardware Group Disposition"). The purchase  price
received  by  the  Selling Subsidiaries was based on the  consolidated  net
worth as reflected on an adjusted closing date balance sheet for the assets
(and  liabilities) conveyed by the Selling Subsidiaries to the Buyers.  The
assets  transferred  to the Buyers consist primarily of  Banner's  hardware
group,  which  includes the distribution of bearings, nuts, bolts,  screws,
rivets  and  other  type of fasteners, and its PacAero unit.  Approximately
$196,000  of  the common stock received from the Buyers was used  to  repay
outstanding  term  loans of Banner's subsidiaries  and  related  fees.  The
Company  will  account  for its remaining investment in  AlliedSignal  Inc.
common  stock as an available-for-sale security. Banner effected the Banner
Hardware  Group Disposition to concentrate its efforts on the rotables  and
jet  engine  businesses and because the Banner Hardware  Group  Disposition
presented  a  unique  opportunity to realize a significant  return  on  the
disposition of the hardware group. As a result of the Banner Hardware Group
Disposition  and  the  repayment of outstanding  term  loans,  the  Company
recorded non-recurring income of $124,028 for the year ended June 30, 1998.

      On  June  30,  1997,  the Company sold all the patents  of  Fairchild
Scandinavian   Bellyloading  Company  ("SBC")  to   Teleflex   Incorporated
("Teleflex") for $5,000, and immediately thereafter sold all the  stock  of
SBC  to a wholly owned subsidiary of Teleflex for $2,000.  The Company  may
also  receive additional proceeds of up to $7,000 based on future net sales
of SBC's patented products and services.

3.  MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES

      Effective February 25, 1996, the Company completed a transfer of  the
Company's  Harco  Division ("Harco") to Banner in  exchange  for  5,386,477
shares  of  Banner  common  stock.  The exchange  increased  the  Company's
ownership  of  Banner  common  stock from  approximately  47.2%  to  59.3%,
resulting  in  the  Company becoming the majority  shareholder  of  Banner.
Accordingly,  the  Company has consolidated the  results  of  Banner  since
February  25,  1996.   The Company recorded a $427 nonrecurring  loss  from
outside expenses incurred for this transaction in 1996.

      In May 1997, Banner granted all of its stockholders certain rights to
purchase Series A Convertible Paid-in-Kind Preferred Stock.  In June  1997,
Banner  received  net  proceeds of $33,876 and issued 3,710,955  shares  of
preferred  stock.   The Company purchased $28,390 of  the  preferred  stock
issued by Banner, increasing its voting percentage to 64.0%.

  On  May  11,  1998,  the  Company commenced an  offer  to  exchange  (the
"Exchange  Offer"),  for each properly tendered share of  Common  Stock  of
Banner, a number of shares of the Company's Class A Common Stock, par value
$0.10 per share, equal to the quotient of $12.50 divided by $20.675 up to a
maximum  of  4,000,000 shares of Banner's Common Stock. The Exchange  Offer
expired on June 9, 1998 and 3,659,364 shares of Banner's Common Stock  were
validly tendered for exchange and the Company issued 2,212,361 shares Class
A  Common  Stock to the tendering shareholders. As a result of the Exchange
Offer,  the Company's ownership of Banner Common Stock increased to  83.3%.
The Company effected the Exchange Offer to increase its ownership of Banner
to  more than 80% in order for the Company to include Banner in its  United
States consolidated corporate income tax return.

      On  June  30, 1998, the Company had $31,674 of minority interest,  of
which  $31,665 represents Banner.  Minority shareholders hold approximately
16.7% of Banner's outstanding common stock.

      In  connection  with  the Company's December 23,  1993  sale  of  its
interest  in Rexnord Corporation to BTR Dunlop Holdings, Inc. ("BTR"),  the
Company  placed shares of Banner, with a fair market value  of  $5,000,  in
escrow  to secure the Company's remaining indemnification of BTR against  a
contingent  liability.   Once  the contingent liability  is  resolved,  the
escrow will be released.

4.   DISCONTINUED OPERATIONS AND NET ASSETS HELD FOR SALE

      The  Company,  RHI  and  Fairchild Industries,  Inc.  ("FII"),  RHI's
subsidiary,  entered  into an Agreement and Plan  of  Merger  dated  as  of
November  9,  1995  (as  amended,  the  "Merger  Agreement")  with   Shared
Technologies  Inc.  ("STI").  On March 13, 1996,  in  accordance  with  the
Merger  Agreement,  STI  succeeded to the  telecommunications  systems  and
services   business   segment   operated   by   the   Company's   Fairchild
Communications Services Company ("FCSC").

     The transaction was effected by a Merger of FII with and into STI (the
"Merger") with the surviving company renamed Shared Technologies Fairchild,
Inc  ("STFI").  Prior to the Merger, FII transferred all of its assets  to,
and  all of its liabilities were assumed by FHC, except for the assets  and
liabilities  of FCSC, and $223,500 of FII debt and preferred stock.   As  a
result  of  the  Merger, the Company received shares of  Common  Stock  and
Preferred Stock of STFI representing approximately a 41% ownership interest
in  STFI.  The  Merger  was  structured as a reorganization  under  section
386(a)(1)(A) of the Internal Revenue Code of 1986, as amended. In 1996, the
Company recorded a $163,130 gain from this transaction.

      On  November  20,  1997, STFI entered into a  merger  agreement  with
Intermedia Communications Inc. ("Intermedia") pursuant to which holders  of
STFI  common  stock received $15.00 per share in cash (the "STFI  Merger").
The Company was paid approximately $178,000 in cash (before tax and selling
expenses) in exchange for the common and preferred stock of STFI  owned  by
the Company.  In the nine months ended March 29, 1998, the Company recorded
a  $95,960  gain, net of tax, on disposal of discontinued operations,  from
the  proceeds received from the STFI Merger, which was completed  on  March
11,  1998.  The  results of STFI have been accounted  for  as  discontinued
operations.

      The  results of FCSC and STFI have been accounted for as discontinued
operations.  The net sales of FCSC totaled, $91,290 in 1996.  Net  earnings
from discontinued operations from FCSC and STFI was $7,901 $3,149, and $648
in 1996, 1997, and 1998, respectively.

      For  the  Company's  fiscal  years 1996, 1997,  and  1998,  Fairchild
Technologies ("Technologies") had pre-tax operating losses of approximately
$1.5  million, $3.6 million, and $48.7 million, respectively. In  addition,
as  a  result  of  the  downturn  in the Asian  markets,  Technologies  has
experienced delivery deferrals, reduction in new orders, lower margins  and
increased   price  competition.  In  response,  in  February,   1998   (the
"measurement  date"),  the Company adopted a formal  plan  to  enhance  the
opportunities for disposition of Technologies, while improving the  ability
of  Technologies to operate more efficiently. The plan includes a reduction
in  production capacity and headcount at Technologies, and the  pursuit  of
potential vertical and horizontal integration with peers and competitors of
the  two divisions that constitute Technologies, or the inclusion of  those
divisions in a spin-off. If the Company elects to include Technologies in a
spin-off,  the  Company  believes that it would be required  to  contribute
substantial  additional  resources  to  allow  Technologies  the  liquidity
necessary  to  sustain and grow both the Fairchild Technologies'  operating
divisions.

      In connection with the adoption of such plan, the Company recorded an
after-tax charge of $36,243 in discontinued operations in Fiscal  1998,  of
which,  $28,243 (net of an income tax benefit of $11,772) relating  to  the
net  losses of Technologies since the measurement date, including the write
down  of  assets  for impairment to estimated realizable  value;  and  (ii)
$8,000 (net of an income tax benefit of $4,806) relating to a provision for
operating  losses  over  the next seven months at Technologies.  While  the
Company  believes  that  $36,243 is a reasonable charge  for  the  expected
losses in connection with the disposition of Technologies, there can be  no
assurance that this estimate is adequate.

     Earnings from discontinued operations for the twelve months ended June
30,  1996, 1997, and 1998 includes net losses of $1,475, $3,634 and $4,944,
respectively, from Technologies until the adoption date of a formal plan on
the measurement date.

      On  February 22, 1996, pursuant to an Asset Purchase Agreement  dated
January  26, 1996, the Company, through one of its subsidiaries,  completed
the  sale  of  certain assets, liabilities and the business  of  the  D-M-E
Company  ("DME") to Cincinnati Milacron Inc. ("CMI"), for a sales price  of
approximately $244,331, as adjusted.  The sales price consisted of  $74,000
in  cash, and two 8% promissory notes in the aggregate principal amount  of
$170,331  (together, the "8% CMI Notes").  On July 29, 1996,  CMI  paid  in
full  the 8% CMI Notes. As a result of the sale of DME in 1996, the Company
recorded  a  gain  on disposal of discontinued operations of  approximately
$54,012, net of a $61,929 tax provision.

      On  January  27,  1996,  FII completed the  sale  of  Fairchild  Data
Corporation  ("Data")  to  SSE Telecom, Inc.  ("SSE")  for  book  value  of
approximately  $4,400 and 100,000 shares of SSE's common  stock  valued  at
$9.06 per share, or $906, at January 26, 1996, and warrants to purchase  an
additional 50,000 shares of SSE's common stock at $11.09 per share.

      Accordingly, the results of DME and Data have been accounted  for  as
discontinued  operations.  The combined net sales of DME and  Data  totaled
$108,131  for 1996. Net earnings from discontinued operations  was  $9,186,
net of $5,695 for taxes in 1996.

      Net  assets held for sale at June 30, 1998, includes two  parcels  of
real estate in California, and several other parcels of real estate located
primarily throughout the continental United States, which the Company plans
to   sell,  lease  or  develop,  subject  to  the  resolution  of   certain
environmental matters and market conditions.  Also included in  net  assets
held  for  sale  are  limited partnership interests in (i)  a  real  estate
development joint venture, and (ii) a landfill development partnership.

      Net  assets  held  for sale are stated at the lower  of  cost  or  at
estimated  net realizable value, which consider anticipated sales proceeds,
and  other  carrying  costs  to  be incurred  during  the  holding  period.
Interest is not allocated to net assets held for sale.

5.   PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)

      The following unaudited pro forma information for 1996, 1997 and 1998
provides  the  results  of  the  Company's operations  as  though  (i)  the
disposition  of  the Banner Hardware Group, DME, Data,  and  SBC  (ii)  the
Merger  of  FCSC and subsequent disposition of STFI, (iii) the transfer  of
Harco  to  Banner,  resulting  in the consolidation  of  Banner,  and  (iv)
Exchange  Offer had been in effect since the beginning of each period.  The
pro  forma  information is based on the historical financial statements  of
the Company, Banner, DME, FCSC and SBC, giving effect to the aforementioned
transactions.   In  preparing the pro forma data, certain  assumptions  and
adjustments  have been made which (i) reduce interest expense  for  revised
debt  structures, (ii) increase interest income for notes  receivable,  and
(iii)  reduce minority interest from increased ownership in Banner and  the
preferred stock of a former subsidiary being redeemed.

      The  following  unaudited  pro  forma financial  information  is  not
necessarily  indicative of the results of operations  that  actually  would
have occurred if the transactions had been in effect since the beginning of
each  period,  nor is it necessarily indicative of future  results  of  the
Company.
<TABLE>
<CAPTION>

                                             1996     1997     1998
<S>                                        <C>      <C>      <C>
Sales                                     $346,893 $ 452,527  $620,275
Operating income                           (13,489)   11,179    34,853
Earnings (loss) from continuing operations  (1,880)    3,616     4,628
Basic and diluted earnings (loss) from                                
continuing operations per share              (0.10)     0.19      0.21
Net loss                                                              
                                            (3,355)     (18)  (28,438)
Basic and diluted net loss per share                                  
                                             (0.18)   (0.00)    (1.35)
</TABLE>

      The  pro  forma  financial information does not reflect  nonrecurring
income  and  gains  from  disposal  of discontinued  operations  that  have
occurred from these transactions.

6.   INVESTMENTS

      Investments  at  June  30,  1998 consist primarily  of  common  stock
investments  in public corporations, which are classified as available-for-
sale securities.  Other short-term investments and long-term investments do
not  have  readily  determinable  fair  values  and  primarily  consist  of
investments in preferred and common stocks of private companies and limited
partnerships.  A summary of investments held by the Company consists of the
following:
<TABLE>
<CAPTION>

                                        June 30, 1997        June 30, 1998
                                       Aggregate          Aggregate      
                                          Fair     Cost    Fair      Cost
                                          Value   Basis   Value      Basis
<S>                                      <C>     <C>      <C>       <C>
Short-term investments:                                                    
     Trading securities - equity         $16,094  $7,398  $     -   $     -
     Available-for-sale equity                                             
securities                                     -       -    3,907     5,410
     Other investments                     9,553   9,553       55        55
                                         $25,647 $16,951   $3,962   $ 5,465
Long-term investments:                                                     
     Available-for-sale equity           $     - $     - $234,307  $195,993
     Other investments                     4,120   4,120    1,128     1,128
                                         $ 4,120 $ 4,120 $235,435  $197,121
</TABLE>

      On June 30, 1998, the Company had gross unrealized holding gains from
available-for-sale  securities  of $38,314  and  gross  unrealized  holding
losses from available-for-sale securities of $1,503.

     Investment income is summarized as follows:
<TABLE>
<CAPTION>

                                          1996     1997   1998
<S>                                      <C>     <C>      <C>
Gross realized gain (loss) from sales    $(1,744)$ 1,673 $  364
 Change in unrealized holding gain                             
(loss) from trading securities             5,527   4,289 (5,791)
 Gross realized loss from impairments          -       -   (182)
 Dividend income                             792     689  2,247
                                          $4,575  $6,651 $(3,362)
</TABLE>

      Subsequent  to  year-end,  the Company's investment  in  AlliedSignal
common  stock (included in long-term available-for-sale equity  securities)
declined  in  value from $218 million at June 30, 1998 to $177  million  at
September 17, 1998. Also subsequent to year-end the Company sold  calls  on
800,000 shares of AlliedSignal common stock for approximately $1.8 million.
These  calls will be marked to market through current income on  a  monthly
basis until the calls mature.

7.   INVESTMENTS AND ADVANCES, AFFILIATED COMPANIES

       The   following  table  presents  summarized  historical   financial
information   on   a  combined  100%  basis  of  the  Company's   principal
investments, which are accounted for using the equity method.
<TABLE>
<CAPTION>

                                      1996     1997     1998
<S>                                 <C>       <C>       <C>
 Statement of Earnings:                                       
     Net sales                      $295,805 $102,962 $ 90,235
     Gross profit                     89,229   39,041   32,449
     Earnings from continuing                                 
operations                            18,289   14,812   14,780
     Net earnings                     18,289   14,812   14,780
 Balance Sheet at June 30:                                    
     Current assets                          $ 47,546 $ 33,867
     Non-current assets                        40,878   39,898
     Total assets                              88,424   73,765
     Current liabilities                       26,218   14,558
     Non-current liabilities                      740    1,471
</TABLE>

      The  Company owns approximately 31.9% of Nacanco common  stock.   The
Company  recorded equity earnings of $5,487, $4,673, and $4,683  from  this
investment for 1996, 1997 and 1998, respectively.

      Effective February 25, 1996, the Company increased its percentage  of
ownership of Banner common stock from 47.2% to approximately 59.3%.   Since
February 25, 1996, the Company has consolidated Banner's results.  Prior to
February 25, 1996, the Company accounted for its investment in Banner using
the  equity method and held its investment in Banner as part of investments
and  advances,  affiliated  companies.   The  Company  recorded  equity  in
earnings of $363 from this investment in 1996.

      The  Company's  share  of equity in earnings  of  all  unconsolidated
affiliates  for  1996,  1997  and  1998 was  $4,821,  $4,598,  and  $3,956,
respectively.   The carrying value of investments and advances,  affiliated
companies consists of the following:
<TABLE>
<CAPTION>

                                      June     June
                                       30,      30,
                                      1997     1998
<S>                                 <C>       <C>
 Nacanco                            $ 20,504  $19,329
 STFI                                 31,978        -
 Others                                3,196    8,239
                                    $ 55,678  $27,568
</TABLE>

      On  June  30,  1998,  approximately $6,103 of the Company's  $473,559
consolidated  retained  earnings  are from  undistributed  earnings  of  50
percent  or less currently owned affiliates accounted for using the  equity
method.

8.  NOTES PAYABLE AND LONG-TERM DEBT

      At June 30, 1997 and 1998, notes payable and long-term debt consisted
of the following:
<TABLE>
<CAPTION>

                                            June 30,  June 30,
                                              1997      1998
<S>                                        <C>        <C>
 Bank credit agreements                    $     100  $      -
 Other short-term notes payable               15,429    17,811
 Short-term notes payable (weighted                
average interest rates of 7.8%             $  15,529  $ 17,811
   and 5.2% in 1997 and 1998,
respectively)
 Bank credit agreements                    $ 177,250  $290,800
 11 7/8% RHI Senior debentures due 1999       85,852         -
 12% Intermediate debentures due 2001        115,359         -
 13 1/8% Subordinated debentures due 2006     35,188         -
 13% Junior Subordinated debentures due                       
2007                                          24,834         -
 10.65% Industrial revenue bonds               1,500     1,500
 Capital lease obligations, interest from                     
4.4% to 10.1%                                  1,897       923
 Other notes payable, collateralized by                       
property, plant and
   equipment, interest from 3.0% to 10.0%      6,835     5,033
                                                              
                                             448,715   298,256
 Less: Current maturities                    (31,793)   (2,854)
 Net long-term debt                         $416,922  $295,402
</TABLE>

     The Company maintains credit agreements (the "Credit Agreements") with
a  consortium  of banks, which provide revolving credit facilities  to  the
Company  and  Banner,  and  a  term loan to the Company  (collectively  the
"Credit Facilities").

      On December 19, 1997, immediately following the Offering, the Company
restructured  its  FHC and RHI Credit Agreements by  entering  into  a  new
credit agreement (the "New Credit Agreement") to provide the Company with a
$300,000 senior secured credit facility (the "Facility") consisting of  (i)
a  $75,000  revolving loan with a letter of credit sub-facility of  $30,000
and  a  $10,000  swing  loan sub-facility, and (ii) a $225,000  term  loan.
Advances made under the Facility will generally bear interest at a rate of,
at the Company's option, either (i) 2% over the Citibank N.A. base rate, or
(ii)  3%  over  the  Eurodollar Rate ("LIBOR") for the  first  nine  months
following  closing,  which is subject to change based  upon  the  Company's
financial performance thereafter. The New Credit Agreement is subject to  a
non-use commitment fee of ??% of the aggregate unused availability for  the
first  nine  months post-closing and is subject to change  based  upon  the
Company's financial performance thereafter.  Outstanding letters of  credit
are  subject to fees equivalent to the LIBOR margin rate. A borrowing  base
is  calculated  monthly to determine the amounts available  under  the  New
Credit Agreement.  The borrowing base is determined monthly based upon  (i)
the  EBITDA of the Company's Aerospace Fastener business, as adjusted,  and
(ii)  specified  percentages  of  various marketable  securities  and  cash
equivalents.  The New Credit Agreement will mature on June  18,  2004.  The
term  loan  is  subject to mandatory prepayment requirements  and  optional
prepayments.  The  revolving  loan  is  subject  to  mandatory   prepayment
requirements and optional commitment reductions.

      The  New Credit Agreement requires the Company to comply with certain
financial and non-financial loan covenants, including maintaining a minimum
net worth and maintaining certain interest and fixed charge coverage ratios
at  the end of each Fiscal Quarter.  Additionally, the New Credit Agreement
restricts  annual capital expenditures to $35,000 in 1999  and  $25,000  in
each year thereafter. Substantially all of the Company's assets are pledged
as  collateral  under  the New Credit agreement. The New  Credit  Agreement
restricts  the  payment of dividends to the Company's  shareholders  to  an
aggregate  of  $200 over the life of the agreement. At June 30,  1998,  the
Company  was  in  compliance with all the covenants under  the  New  Credit
Agreement.

      Banner  maintains a credit agreement (the "Banner Credit  Agreement")
which  provides Banner and its subsidiaries with funds for working  capital
and potential acquisitions. On November 25, 1997, Banner amended its credit
agreement to increase its revolving credit facility by $50,000. Immediately
following  this  amendment, the facility under the Banner Credit  Agreement
consisted of (i) a $55,000 six-year term loan ("Banner Term Loan"); (ii)  a
$30,000  seven-year term loan ("Tranche B Loan"); (iii) a $40,000  six-year
term loan ("Tranche C Loan"); and (iv) a $121,500 six-year revolving credit
facility ("Banner Revolver"). On January 13, 1998, in conjunction with  the
Banner  Hardware Group Disposition, the outstanding balances of the  Banner
Term  Loan, Tranche B Loan and Tranche C Loan were fully repaid  (See  Note
2).

      Based  on  the  Company's financial performance, the Banner  Revolver
bears interest at prime plus 1/4% to 1 1/2% or LIBOR plus 1 1/2% to 2  3/4%
and  is  subject  to a nonuse fee of 30 to 50 basis points  of  the  unused
availability.  On  June 30, 1998, Banner's performance  level  resulted  in
borrowings under the Revolver bearing interest at prime plus 1/4% and LIBOR
plus  1  1/2%  and a nonuse fee of 30 basis points for the  quarter  ending
September  30, 1998. The Banner Credit Agreement contains certain financial
and  nonfinancial covenants which Banner is required to meet on a quarterly
basis.  The  financial  covenants include minimum  net  worth  and  minimum
earnings levels, and minimum ratios of interest coverage, fixed charges and
debt  to  earnings  before interest, taxes, depreciation and  amortization.
Banner  also  has certain limitations on the incurring of additional  debt,
and has restrictions which limit dividends and distributions on the capital
stock  of the Company to an aggregate of $150 in any fiscal year.  At  June
30,  1998,  Banner  was in compliance with all covenants under  the  Banner
Credit Agreement. Substantially all of the Company's assets are pledged  as
collateral under the Banner Credit Agreement.

      On  February  3, 1998, with the proceeds of the Offering,  term  loan
borrowings  under  the  Facility, and the after tax  proceeds  the  Company
received  from  the  STFI Merger, the Company redeemed  (collectively,  the
"Public  Debt  Repayment") all of its existing publicly  held  indebtedness
(other  than indebtedness of Banner), consisting of (i) $63,000  to  redeem
the  11  7/8% Senior Debentures due 1999; (ii) $117,600 to redeem  the  12%
Intermediate  Debentures due 2001; (iii) $35,856  to  redeem  the  13  1/8%
Subordinated  Debentures due 2006; (iv) $25,063 to redeem  the  13%  Junior
Subordinated Debentures due 2007; and (v) accrued interest of $10,562.

      The Company recognized an extraordinary loss of $6,730, net of $3,624
tax  benefit,  to write-off the remaining deferred loan fees  and  original
issue  discounts associated with the early extinguishment of the  Company's
indebtedness pursuant to the Public Debt Repayment and refinancing  of  the
FHC and RHI Credit Agreement facilities.


The following table summarizes the Credit Facilities at June 30, 1998:
<TABLE>
<CAPTION>

                                     Outstanding Outstanding      
                                      Revolving   Term
                                        Credit    Loan     Available
                                     Facilities Facilities Facilities
<S>                                     <C>        <C>        <C>
 The Company:                                                        
     Term Loan                          $    -    $225,000  $225,000
     Revolving credit facility               -           -    75,000
 Banner Aerospace, Inc.:                                             
     Revolving credit facility             65,800        -    121,500
 Total                                  $  65,800  $225,000  $421,500
</TABLE>

      At  June  30, 1998, the Company had letters of credit outstanding  of
$18,658,   which  were  supported  by  a  sub-facility  under  the   Credit
Facilities.  At June 30, 1998, the Company had unused bank lines of  credit
aggregating  $112,042,  at interest rates slightly higher  than  the  prime
rate.   The Company also has short-term lines of credit relating to foreign
operations, aggregating $21,205, against which the Company owed $10,088  at
June 30, 1998.

      The  annual  maturity  of  long-term debt obligations  (exclusive  of
capital  lease  obligations) and bank notes payable for each  of  the  five
years  following June 30, 1998, are as follows:  $20,398 for  1999,  $3,210
for 2000, $3,382 for 2001, $70,972 for 2002 and $107,594 for 2003.

      In  September 1995, Banner entered into several interest  rate  hedge
agreements  ("Hedge  Agreements") to manage its exposure  to  increases  in
interest  rates  on  its variable rate debt.  The Hedge Agreements  provide
interest  rate  protection on $60,000 of debt through  September  2000,  by
providing  an interest rate cap of 7% if the 90-day LIBOR rate exceeds  7%.
If  the  90-day LIBOR rate drops below 5%, Banner will be required  to  pay
interest at a floor rate of approximately 6%.

      In  November 1996, Banner entered into an additional hedge  agreement
("Additional  Hedge  Agreement") with one of its major lenders  to  provide
interest  rate protection on $20,000 of debt for a period of  three  years.
Effectively, the Additional Hedge Agreement provides for a cap of 7 1/4% if
the  90-day  LIBOR  exceeds 7 1/4%.  If the 90-day LIBOR  drops  below  5%,
Banner  will  be required to pay interest at a floor rate of  approximately
6%.   No  cash outlay was required to obtain the Additional Hedge Agreement
as the cost of the cap was offset by the sale of the floor.

     In August 1997, the Company entered into a delayed-start swap interest
rate  lock  hedge  agreement  (the "FHC Hedge  Agreement")  to  reduce  its
exposure  to increases in interest rates on variable rate debt. In December
1997,  the  Company amended the FHC Hedge Agreement. On February 17,  1998,
the  FHC  Hedge  Agreement  began to provide interest  rate  protection  on
$100,000  of  variable  rate  debt  for  ten  years,  with  interest  being
calculated based on a fixed LIBOR rate of 6.715%. On January 14, 1998,  the
FHC Hedge Agreement was further amended to provide interest rate protection
with  interest being calculated based on a fixed LIBOR rate of  6.24%  from
February 17, 1998 to February 17, 2003. On February 17, 2003, the bank will
have  a  one-time  option  to  either (i)  elect  to  cancel  the  ten-year
agreement;  or  (ii) do nothing and proceed with the transaction,  using  a
fixed LIBOR rate of 6.715% for the period February 17, 2003 to February 19,
2008. No costs were incurred as a result of these transactions.

      The  Company recognizes interest expense under the provisions of  the
Hedge  Agreements  and the Additional Hedge Agreement based  on  the  fixed
rate. The Company is exposed to credit loss in the event of non-performance
by the lenders; however, such non-performance is not anticipated.

      The  table  below provides information about the Company's derivative
financial instruments and other financial instruments that are sensitive to
changes  in interest rates, which include interest rate swaps. For interest
rate  swaps,  the  table  presents notional amounts  and  weighted  average
interest  rates by expected (contractual) maturity dates. Notional  amounts
are  used  to calculate the contractual payments to be exchanged under  the
contract.  Weighted  average variable rates are based  on  implied  forward
rates in the yield curve at the reporting date.
<TABLE>
<CAPTION>

                           
                                    Expected Maturity Date
                         1999   2000    2001   2002     2003  Thereafter
<S>                     <C>     <C>     <C>     <C>     <C>      <C>
Interest Rate Swaps:                                             
   Variable to Fixed       -   20,000  60,000    -       -    100,000
      Average cap rate     -    7.25%   6.81%    -       -     6.49%
      Average floor        -    5.84%   5.99%    -       -     6.24%
rate
      Weighted average     -    5.71%   5.74%    -       -     5.95%
rate
      Fair Market Value    -    (19)    (204)    -       -    (6,295)
</TABLE>

 9.  PENSIONS AND POSTRETIREMENT BENEFITS

     Pensions

      The  Company and its subsidiaries have defined benefit pension  plans
covering  most  of  its employees.  Employees in foreign  subsidiaries  may
participate   in   local  pension  plans,  which  are  in   the   aggregate
insignificant.  The Company's funding policy is to make the minimum  annual
contribution  required  by  applicable regulations.   The  following  table
provides  a  summary  of  the components of net  periodic  pension  expense
(income) for the plans:
<TABLE>
<CAPTION>

                                     1996   1997    1998
<S>                                 <C>     <C>     <C>
 Service cost (current period       
attribution)                        $3,513  $2,521  $2,685
 Interest cost of projected benefit                       
obligation                          14,499  15,791  14,476
 Actual return on plan assets                             
                                  (39,430) (31,400) (40,049)
 Amortization of prior service cost                       
                                        81   (180)   (184)
 Net amortization and deferral                            
                                    21,495  11,157  21,228
                                                          
                                       158 (2,111) (1,844)
 Net periodic pension expense                             
(income) for other plans             (118)     142   (108)
including foreign plans
 Net periodic pension expense
  (income)                         $   40 $(1,969) $(1,952)
</TABLE>


     Assumptions used in accounting for the plans were:
<TABLE>
<CAPTION>

                                     1996   1997    1998
<S>                                 <C>     <C>     <C>
Discount rate                        8.5%   7.75%   7.0%
Expected rate of increase in         4.5%   4.5%    4.5%
salaries
Expected long-term rate of return    9.0%   9.0%    9.0%
on plan assets
</TABLE>

      In  Fiscal 1996, the Company recognized one-time charges of $857 from
the  divestiture of subsidiaries, which resulted in a recognition of  prior
service  costs,  and $84 from the early retirement window  program  at  the
Company's  corporate  office.  The reduction in liabilities  due  from  the
cessation  of  future salary increases is not immediately  recognizable  in
income, but will be used as an offset against existing unrecognized losses.
The  Company  will have a future savings benefit from a lower net  periodic
pension cost due to the amortization of a smaller unrecognized loss.

      The  following  table  sets  forth  the  funded  status  and  amounts
recognized  in the Company's consolidated balance sheets at June  30,  1997
and 1998, for the plans:
<TABLE>
<CAPTION>

                                           June 30,June 30,
                                             1997    1998
<S>                                        <C>      <C>
Actuarial present value of benefit                         
obligations:
 Vested                                   $198,300 $212,837
 Nonvested                                   7,461    8,120
 Accumulated benefit obligation            205,761  220,957
 Effect of projected future compensation                   
increases                                      683    1,650
 Projected benefit obligation              206,444  222,607
 Plan assets at fair value                 237,480  261,097
 Plan assets in excess of projected                        
benefit obligations                         31,036   38,490
 Unrecognized net loss                      29,592   23,798
 Unrecognized prior service cost              (571)    (387)
 Unrecognized net transition assets           (315)    (258)
 Prepaid pension cost                      $59,742  $61,643
</TABLE>

      Plan assets include Class A Common Stock of the Company valued  at  a
fair  market  value  of  $26,287 and $16,167 at June  30,  1997  and  1998,
respectively. Substantially all of the plan assets are invested  in  listed
stocks and bonds.

     Postretirement Health Care Benefits

      The Company provides health care benefits for most retired employees.
Postretirement health care expense from continuing operations totaled $779,
$642,  and $804 for 1996, 1997 and 1998, respectively.  The Company accrual
was  approximately  $34,965  and $33,062 as of  June  30,  1997  and  1998,
respectively,   for   postretirement  health  care  benefits   related   to
discontinued  operations.  This represents the cumulative discounted  value
of  the  long-term  obligation  and includes interest  expense  of  $3,877,
$3,349,  and  $3,714  for the years ended June 30,  1996,  1997  and  1998,
respectively.  The components of expense in Fiscal 1996, 1997 and 1998  are
as follows:
<TABLE>
<CAPTION>

                                       1996     1997    1998
<S>                                  <C>       <C>      <C>
 Service cost of benefits earned      $   281  $  140  $  166
 Interest cost on liabilities           4,377   3,940   3,979
 Net amortization and deferral             (2)    (89)    373
 Net periodic postretirement benefit  $  4,656 $ 3,991 $ 4,518
</TABLE>

      A  one-time  credit  of $3,938, resulting from  the  divestitures  of
subsidiaries,  was  offset by $4,361 from DME's accumulated  postretirement
benefit  obligation for active employees, which was transferred to  CMI  as
part  of  the sale.  The Company recognized the net effect of  $423  as  an
expense in 1996.

      The  following table sets forth the funded status for  the  Company's
postretirement health care benefit plans at June 30:
<TABLE>
<CAPTION>

                                             1997    1998
<S>                                        <C>      <C>
Accumulated postretirement benefit                         
obligations:
 Retirees                                 $ 48,145  $54,654
 Fully eligible active participants            390      632
 Other active participants                   2,335    2,911
 Accumulated postretirement benefit                        
obligation                                  50,870   58,197
 Unrecognized prior service cost               ---    (935)
 Unrecognized net loss                       6,173   16,387
 Accrued postretirement benefit liability $ 44,697  $42,745
</TABLE>

     In Fiscal 1998, the Company amended a former subsidiary's medical plan
to  increase the retiree's contribution rate to approximately  20%  of  the
negotiated  premium, resulting in a $1,003 decrease to  unrecognized  prior
service costs.

     The accumulated postretirement benefit obligation was determined using
a discount rate of 7.0%, and a health care cost trend rate of 6.7% for pre-
age-65  and  post-age-65 employees, respectively, gradually  decreasing  to
5.5% in the year 2003 and thereafter.

      Increasing  the  assumed health care cost trend  rates  by  1%  would
increase  the accumulated postretirement benefit obligation as of June  30,
1998, by approximately $1,666, and increase the net periodic postretirement
benefit cost by approximately $129 for Fiscal 1998.

10.  INCOME TAXES

     The provision (benefit) for income taxes from continuing operations is
summarized as follows:
<TABLE>
<CAPTION>

                               1996    1997     1998
<S>                          <C>      <C>      <C>
 Current:                                             
     Federal                $(40,640)   5,612  (4,860)
     State                     1,203    1,197      500
     Foreign                  (3,805)     (49)   3,893
                                                      
                            (43,242)    6,760    (467)
 Deferred:                                           
     Federal                  17,060  (15,939)  46,092
     State                    (3,657)    3,444    3,034
                              13,403   (12,495)   49,126
 Net tax provision (benefit) $(29,839) $(5,735) $ 48,659
</TABLE>

      The  income tax provision (benefit) for continuing operations differs
from  that computed using the statutory Federal income tax rate of 35%,  in
Fiscal 1996, 1997 and 1998, for the following reasons:
<TABLE>
<CAPTION>

                                          1996     1997    1998
<S>                                     <C>       <C>      <C>
 Computed statutory amount             $(22,713) $(1,751)  43,188
 State income taxes, net of applicable                           
federal tax benefit                          782     778    4,362
 Nondeductible acquisition valuation                             
items                                      1,329   1,064    1,204
 Tax on foreign earnings, net of tax                             
credits                                    1,711 (1,938)  (1,143)
 Difference between book and tax basis                           
of assets acquired and                     1,040 (1,102)    4,932
    liabilities assumed
 Revision of estimate for tax accruals                           
                                         (3,500) (5,335)  (3,905)
 Other                                                           
                                         (8,488)   2,549       21
 Net tax provision (benefit)           $(29,839)  (5,735)   48,659
</TABLE>


      The following table is a summary of the significant components of the
Company's  deferred tax assets and liabilities, and deferred  provision  or
benefit for the following periods:
<TABLE>
<CAPTION>

                           1996     1997             1998       
                        Deferred Deferred         Deferred      
                      (Provision)(Provision)June 30,(Provision)June 30,
                         Benefit   Benefit   1997  Benefit    1998
<S>                      <C>      <C>       <C>      <C>      <C>
 Deferred tax assets:                                              
 Accrued expenses          (1,643)     504    6,440  (3,853)   2,587
 Asset basis differences    1,787   (1,492)     572   7,540    8,112
 Inventory                      -    2,198    2,198  (2,198)       -
 Employee compensation                                             
and benefits                 (26)    (267)   5,141     (55)   5,086
 Environmental reserves     (737)  (1,253)   3,259      207   3,466
 Loss and credit
 carryforward            (23,229)  (8,796)       -        -       -
 Postretirement benefits  (1,273)      138  19,472  (1,338)  18,134
 Other                     2,186    2,079   7,598    4,506  12,104
                                                                   
                         (22,935)  (6,889)  44,680    4,809  49,489
 Deferred tax liabilities:
 Asset basis differences  16,602  (3,855) (26,420)  (54,012)(80,432)
 Inventory                 4,684    2,010       -    (1,546) (1,546)
 Pensions                  1,516  (1,038) (19,281)       95 (19,186)
 Other                   (13,270)   22,267 (7,240)    1,528 (5,712)
                           9,532   19,384 (52,941)  (53,935)(106,876)
 Net deferred tax
liability               $(13,403) $12,495 $(8,261) $(49,126)$(57,387)
</TABLE>


The amounts included in the balance sheet are as follows:
<TABLE>
<CAPTION>

                                      June    June
                                      30,     30,
                                      1997    1998
<S>                                 <C>      <C>
 Prepaid expenses and other current                 
assets:
 Current deferred                  $ 11,307   $    -
 Income taxes payable:                              
 Current deferred                  $ (2,735)  $34,553
 Other current                        8,598  (6,242)
                                   $  5,863   $28,311
 Noncurrent income tax liabilities:                 
 Noncurrent deferred               $ 22,303   $22,834
 Other noncurrent                    19,710    72,342
                                   $ 42,013   $95,176
</TABLE>

      The  1996,  1997  and 1998 net tax benefits include  the  results  of
reversing $3,500, $5,335, and $3,905 respectively, of federal income  taxes
previously  provided for due to a change in the estimate  of  required  tax
accruals.

      Domestic  income taxes, less available credits, are provided  on  the
unremitted income of foreign subsidiaries and affiliated companies, to  the
extent the Company intends to repatriate such earnings.  No domestic income
taxes  or  foreign  withholding  taxes are provided  on  the  undistributed
earnings  of  foreign  subsidiaries and affiliates,  which  are  considered
permanently  invested,  or which would be offset by allowable  foreign  tax
credits.   At  June  30, 1998, the amount of domestic  taxes  payable  upon
distribution of such earnings was not significant.

     In the opinion of management, adequate provision has been made for all
income  taxes  and  interest, and any liability that may  arise  for  prior
periods  will  not  have  a material effect on the financial  condition  or
results of operations of the Company.

11.  EQUITY SECURITIES

      On  December 19, 1997, the Company completed a secondary offering  of
public  securities.   The offering consisted of the issuance  of  3,000,000
shares  of  the  Company's Class A Common Stock at $20.00  per  share  (the
"Offering").

     In accordance with the terms of the Special-T Acquisition, the Company
issued 1,072,605 restricted shares of the Company's Class A Common Stock in
Fiscal  1998. Additionally, the Company established an employee stock  plan
to issue up to 44,900 additional shares of Class A Common Stock to Special-
T employees.

      On March 13, 1998, the Company issued 47,283 restricted shares of the
Company's  Class  A  Common Stock resulting from  a  cashless  exercise  of
100,000 warrants by Dunstan Ltd.

      On  May  11,  1998, the Company commenced an offer to  exchange  (the
"Exchange  Offer"),  for each properly tendered share of  Common  Stock  of
Banner, a number of shares of the Company's Class A Common Stock, par value
$0.10 per share, equal to the quotient of $12.50 divided by $20.675 up to a
maximum  of  4,000,000 shares of Banner's Common Stock. The Exchange  Offer
expired  on  June  9, 1998 and approximately 3,659,364 shares  of  Banner's
Common  Stock  were  validly tendered for exchange and the  Company  issued
approximately  2,212,361  shares Class A  Common  Stock  to  the  tendering
shareholders. As a result of the Exchange Offer, the Company's ownership of
Banner  Common Stock increased to 83.3%. The Company effected the  Exchange
Offer to increase its ownership of Banner to more than 80% in order for the
Company  to  include  Banner  in its United States  consolidated  corporate
income tax return.

      The  Company  had  20,428,591 shares of  Class  A  common  stock  and
2,624,716  shares  of Class B common stock outstanding at  June  30,  1998.
Class  A  common  stock is traded on both the New York  and  Pacific  Stock
Exchanges.  There is no public market for the Class B common stock.  Shares
of  Class  A common stock are entitled to one vote per share and cannot  be
exchanged  for  shares of Class B common stock.  Shares of Class  B  common
stock  are  entitled to ten votes per share and can be  exchanged,  at  any
time,  for  shares of Class A common stock on a share-for-share basis.   In
Fiscal 1998, 141,259 shares of Class A Common Stock were issued as a result
of the exercise of stock options and shareholders converted 7,800 shares of
Class B common stock into Class A common stock.

      During  Fiscal 1998, the Company issued 36,626 deferred  compensation
units  ("DCU's) pursuant to the Company's stock option deferral plan  as  a
result  of  a  cashless  exercise of 45,000 stock  options.   Each  DCU  is
represented by one share of the Company's Treasury Stock and is convertible
into a share of the Company's Class A Common Stock after a specified period
of time.

12.  STOCK OPTIONS AND WARRANTS

     Stock Options

      The Company's 1986 Non-Qualified and Incentive Stock Option Plan (the
"1986 Plan"), authorizes the issuance of 4,541,000 shares of Class A Common
Stock upon the exercise of stock options issued under the 1986 Plan. At the
1998 Annual Meeting, stockholders will be asked to approve an amendment  to
increase  the number of shares authorized under the 1986 Plan to  5,141,000
shares  of  Class  A  Common Stock.  The purpose of the  1986  Plan  is  to
encourage  continued employment and ownership of Class A  Common  Stock  by
officers and key employees of the Company and its subsidiaries, and provide
additional incentive to promote the success of the Company.  The 1986  Plan
authorizes the granting of options at not less than the market value of the
common stock at the time of the grant. The option price is payable in  cash
or,  with  the  approval  of the Company's Compensation  and  Stock  Option
Committee  of the Board of Directors, in shares of common stock, valued  at
fair  market value at the time of exercise.  The options normally terminate
five  years from the date of grant, subject to extension of up to 10  years
or for a stipulated period of time after an employee's death or termination
of  employment.  The 1986 plan expires on April 9, 2006; however, all stock
options  outstanding as of April 9, 2006 shall continue to  be  exercisable
pursuant to their terms.

      The  Company's ten year 1996 Non-Employee Directors Stock Option Plan
(the "1996 NED Plan") authorizes the issuance of 250,000 shares of Class  A
Common  Stock upon the exercise of stock options issued under the 1996  NED
Plan.   The 1996 NED Plan authorizes the granting of options at the  market
value  of  the common stock on the date of grant.  An initial stock  option
grant for 30,000 shares of Class A Common Stock will be made to each person
who becomes a new non-employee Director, on such date, with the options  to
vest  25%  each  year from the date of grant.  On the date of  each  annual
meeting,  each  person elected as a non-employee Director at  such  meeting
will  be granted an option for 1,000 shares of Class A Common Stock,  which
will vest immediately.  The exercise price is payable in cash or, with  the
approval  of the Stock Option Committee, in shares of Class A  or  Class  B
Common  Stock,  valued at fair market value at the date of  exercise.   All
options  issued under the 1996 NED Plan will terminate five years from  the
date  of grant or a stipulated period of time after a Non-Employee Director
ceases  to  be  a  member of the Board.  The 1996 NED Plan is  designed  to
maintain  the Company's ability to attract and retain highly qualified  and
competent persons to serve as outside directors of the Company.

     On November 17, 1994, the Company's stockholders approved the grant of
stock  options  of 190,000 shares to outside Directors of  the  Company  to
replace expired stock options.  These stock options expire five years  from
the date of the grant.

      A  summary of stock option transactions under the 1986 Plan, the 1996
NED Plan, and prior plans are presented in the following tables:
<TABLE>
<CAPTION>

                                           Weighted
                                           Average
                                           Exercise
                                Shares      Price
<S>                           <C>        <C>
Outstanding at July 1, 1995   1,699,781         5.14
    Granted                     540,078         4.33
    Exercised                  (286,869)        5.26
    Expired                    (659,850)        6.06
    Forfeited                   (19,653)        4.30
Outstanding at June 30, 1996  1,273,487         4.27
    Granted                     457,350        14.88
    Exercised                  (234,935)        4.79
    Expired                      (1,050)        4.59
    Forfeited                    (9,412)        3.59
Outstanding at June 30, 1997  1,485,440         7.46
    Granted                     357,250        24.25
    Exercised                  (141,259)        4.70
    Forfeited                   (46,650)        7.56
Outstanding at June 30, 1998  1,654,781       $ 7.46
Exercisable at June 30, 1996    399,022         4.59
Exercisable at June 30, 1997    486,855         4.95
Exercisable at June 30, 1998    667,291       $ 6.58
</TABLE>


      A  summary  of options outstanding at June 30, 1998 is  presented  as
follows:
<TABLE>
<CAPTION>

                    Options Outstanding          Options Exercisable
                              Weighted Average             Weighted
                              Average  Remaining           Average
     Range of         Number  Exercise  Contract  Number   Exercise
  Exercise Prices  Outstanding  Price     Life  Exercisable Price
<S>                 <C>        <C>      <C>       <C>       <C>
  $3.50 - $8.625     848,791   $ 4.07   1.8 years   516,010 $  4.05
 $13.625 - $16.25    472,240   $14.98   3.4 years   151,281 $ 15.22
$18.5625 - $25.0625  333,750   $24.02   4.1 years         -       -
 $3.50 - $25.0625  1,654,781   $ 7.46   3.2 years   667,291  $ 6.58
</TABLE>


      The  weighted average grant date fair value of options granted during
1996, 1997, and 1998 was $1.95, $6.90, and $11.18, respectively.  The  fair
value of each option granted is estimated on the grant date using the Black-
Scholes  option pricing model.  The following significant assumptions  were
made in estimating fair value:
<TABLE>
<CAPTION>

                                 1996       1997        1998
<S>                           <C>        <C>         <C>
Risk-free interest rate     5.5% - 6.6%  6.0% - 6.7% 5.4% -6.3%
Expected life in years             4.27      4.65        4.66
Expected volatility            46% - 47%  43% - 45%     44% - 45%
Expected dividends               none        none       none
</TABLE>

      The  Company recognized compensation expense of $104 as a  result  of
stock  options  that  were modified in 1998. The Company  is  applying  APB
Opinion  No. 25 in accounting for its stock option plans.  Accordingly,  no
compensation cost has been recognized for the granting of stock options  in
1996,  1997 or 1998. If stock options granted in 1996, 1997 and  1998  were
accounted for based on their fair value as determined under SFAS  123,  pro
forma earnings would be as follows:
<TABLE>
<CAPTION>

                                  1996     1997     1998
<S>                             <C>      <C>       <C>
Net earnings:                                            
    As reported                 $189,706 $  1,331 $101,090
    Pro forma                    189,460      283   99,817
Basic earnings per share:                                
    As reported                 $  11.71 $   0.08 $   5.36
    Pro forma                      11.69     0.02     5.30
Diluted earnings per share:                              
    As reported                 $  11.71 $   0.08 $   5.14
    Pro forma                      11.69     0.02     5.07
</TABLE>

      The pro forma effects of applying SFAS 123 are not representative  of
the  effects on reported net earnings for future years.  The effect of SFAS
123 is not applicable to awards made prior to 1996 and additional awards in
future years are expected.

     Stock Option Deferral Plan

On  February  9,  1998,  the Board adopted a Stock  Option  Deferral  Plan,
subject  to  approval  by  the shareholders at  the  1998  Annual  Meeting.
Pursuant  to  the  Stock Option Deferral Plan, certain officers  (at  their
election)  may  defer  payment  of the "Compensation"  they  receive  in  a
particular  year  or  years  from the exercise of  Company  stock  options.
"Compensation" means the excess value of a stock option, determined by  the
difference between the fair market value of shares issueable upon  exercise
of  a stock option, and the option price payable upon exercise of the stock
option.   An  officer's  deferred Compensation shall  be  in  the  form  of
"Deferred Compensation Units," representing the number of shares of  Common
Stock that the officer shall be entitled to receive upon expiration of  the
deferral period. (The number of Deferred Compensation Units issueable to an
officer  is  determined by dividing the amount of the deferred Compensation
by  the  fair  market  value of the Company's  stock  as  of  the  date  of
deferral.)

     Stock Warrants

      On  April  25, 1997, the Company issued warrants to purchase  100,000
shares  of  Class A Common Stock, at $12.25 per share, to Dunstan  Ltd.  as
incentive  remuneration for the performance of certain  investment  banking
services.   The warrants were earned on a pro-rata basis over  a  six-month
period  ending  October  31,  1997.  The  warrants  became  exercisable  on
November  1,  1997,  and  on  March 13, 1998,  the  Company  issued  47,283
restricted shares of the Company's Class A Common Stock resulting from  the
cashless exercise of these warrants.  The Company recorded expenses of $191
and $300 in 1997 and 1998, respectively, for stock warrants earned based on
a grant date fair value of $5.46.

       Effective  as  of  February  21,  1997,  the  Company  approved  the
continuation  of  an existing warrant to Stinbes Limited (an  affiliate  of
Jeffrey  Steiner) to purchase 375,000 shares of the Company's  Class  A  or
Class B Common Stock at $7.67 per share. The warrant was modified to extend
the exercise period from March 13, 1997, to March 13, 2002, and to increase
the  exercise price per share by $.002 for each day subsequent to March 13,
1997,  but fixed at $7.80 per share after June 30, 1997.  In addition,  the
warrant  was  modified  to provide that the warrant may  not  be  exercised
except within the following window periods:  (i) within 365 days after  the
merger  of  STFI with AT&T Corporation, MCI Communications, Worldcom  Inc.,
Teleport  Communications  Group, Inc., or Intermedia  Communications  Inc.;
(ii)  within 365 days after a change of control of the Company, as  defined
in  the Company's Credit Agreement; or (iii) within 365 days after a change
of  control  of  Banner,  as defined in the Banner Credit  Agreement.   The
payment  of  the  warrant price may be made in cash or  in  shares  of  the
Company's Class A or Class B Common Stock, valued at fair market  value  at
the  time of exercise, or combination thereof.  In no event may the warrant
be  exercised  after March 13, 2002. As a result of the  STFI  Disposition,
these  warrants became exercisable through March 9, 1999. Accordingly,  the
Company recognized a charge of $5,606 in 1998.

      On  November 9, 1995, the Company issued warrants to purchase 500,000
shares  of  Class  A Common Stock, at $9.00 per share, to Peregrine  Direct
Investments Limited ("Peregrine"), in exchange for a standby commitment  it
received on November 8, 1995, from Peregrine.  The Company elected  not  to
exercise  its  rights  under the Peregrine commitment.   The  warrants  are
immediately exercisable and will expire on November 8, 2000.

      On  February 21, 1996, the Company issued warrants to purchase 25,000
shares  of Class A Common Stock, at $9.00 per share, to a non-employee  for
services  provided in connection with the Company's various  dealings  with
Peregrine.  The warrants issued are immediately exercisable and will expire
on November 8, 2000.

      The  Company recorded nonrecurring expenses of $1,148 for  the  grant
date  fair value of the stock warrants issued in 1996.  The warrants issued
in 1996 were outstanding at June 30, 1998.

13.  EARNINGS PER SHARE

      Effective  December  28,  1997,  the  Company  adopted  Statement  of
Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS  128").
This  statement replaces the previously reported primary and fully  diluted
earnings (loss) per share with basic and diluted earnings (loss) per share.
Unlike  primary earnings (loss) per share, basic earnings (loss) per  share
excludes any diluted effects of options. Diluted earnings (loss) per  share
is  very  similar to the previously reported fully diluted earnings  (loss)
per  share. All earnings (loss) per share have been restated to conform  to
the requirements of SFAS 128.

      The  following table illustrates the computation of basic and diluted
earnings (loss) per share:
<TABLE>
<CAPTION>

                                         1996    1997     1998
<S>                                    <C>      <C>      <C>
Basic earnings per share:                                   
Earnings (loss) from continuing              
operations                            $(32,186) $ 1,816 $ 52,399
Weighted average common shares                                  
outstanding                             16,206   16,539   18,834
Basic earnings per share:                                       
Basic earnings (loss) from continuing
operations per share                  $ (1.98)  $  0.11 $   2.78
                                                                
Diluted earnings per share:                                 
Earnings (loss) from continuing           
operations                            $(32,186) $  1,816 $ 52,399
Weighted average common shares                                  
outstanding                             16,206   16,539   18,834
Diluted effect of options         Antidilutive      449      546
Diluted effect of warrants        Antidilutive      333      289
Total shares outstanding                16,206   17,321   19,669
Diluted earnings (loss) from             
continuing operations per share       $ (1.98)  $  0.11  $  2.66
</TABLE>

      The computation of diluted earnings (loss) from continuing operations
per  share  for  1996  excluded  the effect of  incremental  common  shares
attributable to the potential exercise of common stock options  outstanding
and  warrants  outstanding,  because  their  effect  was  antidilutive.  No
adjustments  were made to earnings per share calculations for  discontinued
operations and extraordinary items.

14.  FAIR VALUE OF FINANCIAL INSTRUMENTS

      Statement  of  Financial Accounting Standards No. 107  ("SFAS  107"),
"Disclosures   about   Fair  Value  of  Financial  Instruments",   requires
disclosures of fair value information about financial instruments,  whether
or  not  recognized  in the balance sheet, for which it is  practicable  to
estimate  that  value.   In  cases  where  quoted  market  prices  are  not
available, fair values are based on estimates using present value or  other
valuation techniques.  Those techniques are significantly affected  by  the
assumptions  used,  including discount rate and estimates  of  future  cash
flows.   In  that  regard,  the  derived fair  value  estimates  cannot  be
substantiated  by  comparison to independent markets and,  in  many  cases,
could not be realized in immediate settlement of the instrument.  SFAS  107
excludes  certain  financial instruments and all non-financial  instruments
from  its  disclosure requirements.  Accordingly, the aggregate fair  value
amounts presented do not represent the underlying value of the Company.

      The  following  methods and assumptions were used by the  Company  in
estimating its fair value disclosures for financial instruments:

      The  carrying  amount reported in the balance sheet approximates  the
fair  value  for cash and cash equivalents, short-term borrowings,  current
maturities  of long-term debt, and all other variable rate debt  (including
borrowings under the Credit Agreements).

     Fair values for equity securities, and long-term public debt issued by
the Company are based on quoted market prices, where available.  For equity
securities  not actively traded, fair values are estimated by using  quoted
market  prices  of  comparable instruments or, if  there  are  no  relevant
comparable  instruments,  on  pricing  models  or  formulas  using  current
assumptions.   The  fair value of limited partnerships, other  investments,
and  notes  receivable  are estimated by discounting expected  future  cash
flows using a current market rate applicable to the yield, considering  the
credit quality and maturity of the investment.

      The  fair value for the Company's other fixed rate long-term debt  is
estimated  using  discounted cash flow analyses,  based  on  the  Company's
current   incremental  borrowing  rates  for  similar  types  of  borrowing
arrangements.

      Fair  values  for  the Company's other off-balance-sheet  instruments
(letters of credit, commitments to extend credit, and lease guarantees) are
based  on  fees currently charged to enter into similar agreements,  taking
into account the remaining terms of the agreements and the counter parties'
credit  standing.   The fair value of the Company's other off-balance-sheet
instruments at June 30, 1998 was not material.

      The  carrying  amounts  and fair values of  the  Company's  financial
instruments at June 30, 1997 and 1998 are as follows:
<TABLE>
<CAPTION>

                               June 30, 1997    June 30, 1998
                               Carrying Fair    Carrying Fair
                               Amount  Value    Amount   Value
<S>                             <C>      <C>      <C>      <C>
 Cash and cash equivalents     $ 19,420 $19,420 $49,601 $49,601
 Investment securities:                                        
 Short-term equity securities                                  
                                 16,094  16,122   3,907   3,907
 Short-term other investments                                  
                                  9,553   9,592      55     193
 Long-term equity securities                                   
                                      -       - 234,307 234,307
 Long-term other investments                                   
                                  4,120   4,617   1,128   1,128
 Notes receivable:                                             
 Long-term                                                     
                                  1,300   1,300     850     850
 Short-term debt                                               
                                 15,529  15,529  17,811  17,811
 Long-term debt:                                               
 Bank credit agreement                                         
                                177,250 177,250 290,800 290,800
 Senior notes and subordinated                                 
debentures                      261,233 270,995       -       -
 Industrial revenue bonds                                      
                                  1,500   1,500   1,500   1,500
 Capitalized leases                                            
                                  1,897   1,897     923     923
 Other                                                         
                                  6,835   6,835   5,033   5,033
</TABLE>

15.  RESTRUCTURING CHARGES

      In  Fiscal  1996, the Company recorded restructuring charges  in  the
Aerospace  Fasteners  segment in the categories  shown  below.   All  costs
classified as restructuring were the direct result of formal plans to close
plants, to terminate employees, or to exit product lines. Substantially all
of these plans have been executed.  Other than a reduction in the Company's
existing   cost  structure  and  manufacturing  capacity,   none   of   the
restructuring  charges  resulted  in  future  increases  in   earnings   or
represented   an   accrual  of  future  costs.   The  costs   included   in
restructuring  were predominately nonrecurring in nature and  consisted  of
the following significant components:
<TABLE>
<CAPTION>

<S>                                                           <C>
Write down of inventory to net realizable value related to     
discontinued product lines (a)                                $   156
Write down of fixed assets related to discontinued product           
lines                                                             270
Severance benefits for terminated employees (substantially           
all paid within twelve months)                                  1,368
Plant closings facility costs (b)                                    
                                                                  389
Contract termination claims                                          
                                                                  136
                                                                
                                                               $2,319

(a)  Write down was required because product line was discontinued.
(b)  Includes  lease  settlements,  write-off  of  leasehold  improvements,
     maintenance, restoration and clean up costs.
</TABLE>

16.   EXTRAORDINARY ITEMS

     In Fiscal 1998 the Company recognized an extraordinary loss of $6,730,
net  of  tax,  to write-off the remaining deferred loan fees  and  original
issue  discounts  associated  with early extinguishment  of  the  Company's
indebtedness pursuant to the Public Debt Repayment and refinancing  of  the
FHC and RHI Credit Agreement facilities (See Note 8).

      During Fiscal 1996, the Company used the Merger transaction and  cash
available  to  retire fully all of the FII's 12 1/4% senior notes  ("Senior
Notes"),  FII's  9 3/4% subordinated debentures due 1998,  and  bank  loans
under  a  credit  agreement  of a former subsidiary  of  the  Company,  VSI
Corporation. The redemption of the Senior Notes at a premium, consent  fees
paid  to  holders of the Senior Notes, the write off of the original  issue
discount  on FII 9 3/4% subordinated debentures and the write  off  of  the
remaining  deferred  loan fees associated with the  issuance  of  the  debt
retired,  resulted  in  an extraordinary loss of  $10,436,  net  of  a  tax
benefit, in 1996.

17.  RELATED PARTY TRANSACTIONS

      The  Company  and its subsidiaries are all parties to a  tax  sharing
agreement  whereby  the  Company files a consolidated  federal  income  tax
return.  Each subsidiary makes payments to the Company based on the  amount
of  federal income taxes, if any, the subsidiary would have paid if it  had
filed a separate tax return.

     The Company and Banner paid for a chartered aircraft used from time to
time for business related travel.  The owner of the chartered aircraft is a
company  51%  owned by an immediate family member of Mr.  Jeffrey  Steiner.
Cost  for such flights charged to the Company and Banner are comparable  to
those  charged  in  arm's  length transactions between  unaffiliated  third
parties.

      The  Company and Banner prepaid hours for a chartered helicopter used
from  time to time for business related travel.  The owner of the chartered
helicopter  is a company controlled by Mr. Jeffrey Steiner. Cost  for  such
flights  charged to the Company and Banner are comparable to those  charged
in arm's length transactions between unaffiliated third parties.

      Prior  to  the  consolidation of Banner on  February  25,  1996,  the
Aerospace Fasteners segment had sales to Banner of $3,663 in 1996.

18. LEASES

      The Company holds certain of its facilities and equipment under long-
term leases.  The minimum rental commitments under non-cancelable operating
leases  with lease-terms in excess of one year, for each of the five  years
following June 30, 1998, are as follows: $3,174 for 1999, $4,145 for  2000,
$3,400  for  2001, $2,217 for 2002 and $1,526 for 2003.  Rental expense  on
operating leases from continuing operations for Fiscal 1996, 1997 and  1998
was  $6,197,  $4,928, and $8,610, respectively.  Minimum commitments  under
capital leases for each of the five years following June 30, 1998, are $322
for  1999, $275 for 2000, $238 for 2001, $164 for 2002, and $143 for  2003,
respectively.  At  June  30,  1998, the  present  value  of  capital  lease
obligations was $923. At June 30, 1998, capital assets leased, included  in
property, plant, and equipment consisted of:
<TABLE>
<CAPTION>

<S>                                 <C>
Buildings and improvements         $   70
Machinery and equipment             5,272
Furniture and fixtures                197
Less: Accumulated depreciation     (2,898)
                                  $ 2,641
</TABLE>


19.  CONTINGENCIES

     Government Claims

      The  Corporate Administrative Contracting Officer (the "ACO"),  based
upon  the  advice of the United States Defense Contract Audit  Agency,  has
made  a  determination that Fairchild Industries, Inc.  ("FII"),  a  former
subsidiary  of  the  Company,  did  not  comply  with  Federal  Acquisition
Regulations  and Cost Accounting Standards in accounting for (i)  the  1985
reversion  to  FII of certain assets of terminated defined benefit  pension
plans,  and  (ii)  pension  costs upon the closing  of  segments  of  FII's
business.   The  ACO  has  directed FII to prepare  cost  impact  proposals
relating  to  such  plan terminations and segment closings  and,  following
receipt  of  such cost impact proposals, may seek adjustments  to  contract
prices.   The  ACO alleges that substantial amounts will  be  due  if  such
adjustments are made, however, an estimate of the possible loss or range of
loss from the ACO's assertion cannot be made.  The Company believes it  has
properly  accounted for the asset reversions in accordance with  applicable
accounting standards.  The Company has held discussions with the government
to attempt to resolve these pension accounting issues.

     Environmental Matters

      The  Company's operations are subject to stringent Government imposed
environmental  laws  and regulations concerning, among  other  things,  the
discharge  of materials into the environment and the generation,  handling,
storage, transportation and disposal of waste and hazardous materials.   To
date,  such  laws  and regulations have not had a material  effect  on  the
financial  condition,  results of operations, or  net  cash  flows  of  the
Company,  although the Company has expended, and can be expected to  expend
in  the  future,  significant  amounts for investigation  of  environmental
conditions   and   installation   of  environmental   control   facilities,
remediation   of  environmental  conditions  and  other  similar   matters,
particularly in the Aerospace Fasteners segment.

      In  connection with its plans to dispose of certain real estate,  the
Company  must investigate environmental conditions and may be  required  to
take  certain  corrective action prior or pursuant to any such disposition.
In   addition,  management  has  identified  several  areas  of   potential
contamination  at or from other facilities owned, or previously  owned,  by
the  Company, that may require the Company either to take corrective action
or to contribute to a clean-up.  The Company is also a defendant in certain
lawsuits  and  proceedings  seeking to  require  the  Company  to  pay  for
investigation or remediation of environmental matters and has been  alleged
to  be  a  potentially  responsible party  at  various  "Superfund"  sites.
Management  of the Company believes that it has recorded adequate  reserves
in  its  financial statements to complete such investigation and  take  any
necessary  corrective  actions  or  make any  necessary  contributions.  No
amounts  have been recorded as due from third parties, including  insurers,
or  set off against, any liability of the Company, unless such parties  are
contractually obligated to contribute and are not disputing such liability.

      As  of June 30, 1998, the consolidated total recorded liabilities  of
the   Company   for  environmental  matters  approximated   $8,659,   which
represented  the  estimated probable exposures for these  matters.   It  is
reasonably  possible that the Company's total exposure  for  these  matters
could be approximately $14,995.

     Other Matters

      The  Company  is  involved  in  various  other  claims  and  lawsuits
incidental to its business, some of which involve substantial amounts.  The
Company, either on its own or through its insurance carriers, is contesting
these  matters.  In the opinion of management, the ultimate  resolution  of
the  legal  proceedings, including those aforementioned, will  not  have  a
material  adverse effect on the financial condition, or future  results  of
operations or net cash flows of the Company.

20.  BUSINESS SEGMENT INFORMATION

      The Company reports in two principal business segments. The Aerospace
Fasteners  segment  includes the manufacture of high performance  specialty
fasteners  and  fastening  systems.   The  Aerospace  Distribution  segment
distributes a wide range of aircraft parts and related support services  to
the  aerospace  industry. The results of Fairchild Technologies,  which  is
primarily  engaged in the designing and manufacturing of capital  equipment
and   systems   for  recordable  compact  disc  and  advance  semiconductor
manufacturing,  were previously reported under Corporate and  Other,  along
with the results of two smaller operations.  Fairchild Technologies is  now
recorded in discontinued operations.

     The Company's financial data by business segment is as follows:
<TABLE>
<CAPTION>

                                      1996     1997     1998
<S>                                 <C>       <C>       <C>
 Sales:                                                       
     Aerospace Fasteners                   $        $        $
                                     218,059  269,026  387,236
     Aerospace Distribution (a)                               
                                     129,973  411,765  358,431
     Corporate and Other                                      
                                       7,046   15,185    5,760
     Eliminations (b)                                         
                                     (5,842) (15,213) (10,251)
 Total Sales                               $        $        $
                                     349,236  680,763  741,176
 Operating Income (Loss):                                     
     Aerospace Fasteners (c)               $        $        $
                                         135   17,390   32,722
     Aerospace Distribution (a)                               
                                       5,625   30,891   20,330
     Corporate and Other                                      
                                    (17,046) (14,782)  (7,609)
 Operating Income (Loss)                   $        $        $
                                    (11,286)   33,499   45,443
 Capital Expenditures:                                        
     Aerospace Fasteners                   $        $        $
                                       3,841    8,964   31,221
     Aerospace Distribution                              3,812
                                       1,556    4,787
     Corporate and Other                                   996
                                         283    1,263
 Total Capital Expenditures                $        $        $
                                       5,680   15,014   36,029
 Depreciation and Amortization:                               
     Aerospace Fasteners                   $        $        $
                                      14,916   16,112   16,260
     Aerospace Distribution                                   
                                       1,341    5,138    3,412
     Corporate and Other                                   364
                                       4,788    3,057
 Total Depreciation and                    $        $        $
Amortization                          21,045   24,307   20,036
 Identifiable Assets at June 30:                              
     Aerospace Fasteners                   $        $        $
                                     252,200  346,533  427,927
     Aerospace Distribution                                   
                                     329,477  428,436  452,397
     Corporate and Other                                      
                                     411,721  277,697  276,935
 Total Identifiable Assets                 $        $        $
                                     993,398 1,052,66 1,157,25
                                                    6        9

(a)    Effective  February  25,  1996,  the  Company  became  the  majority
  shareholder of Banner Aerospace, Inc. and, accordingly, began consolidating
  their results.
(b)   Represents intersegment sales from the Aerospace Fasteners segment to
  the Aerospace Distribution segment.
(c)  Includes restructuring charges of $2.3 million in Fiscal 1996.
</TABLE>

21.  FOREIGN OPERATIONS AND EXPORT SALES

      The  Company's operations are located primarily in the United  States
and Europe.  Inter-area sales are not significant to the total sales of any
geographic  area.  The Company's financial data by geographic  area  is  as
follows:
<TABLE>
<CAPTION>

                                       1996     1997     1998
<S>                                  <C>      <C>      <C>
Sales by Geographic Area:                                      
    United States                           $        $        $
                                      292,136  580,453  613,325
    Europe                                                     
                                       56,723  100,310  127,851
    Other                                                      
                                          377        -        -
Total Sales                                 $        $        $
                                      349,236  680,763  741,176
Operating Income (Loss) by                                     
Geographic Area:
    United States                           $        $        $
                                     (12,175)   27,489   28,575
    Europe                                                     
                                        1,037    6,010   16,868
    Other                                                      
                                        (148)        -        -
Total Operating Income (Loss)               $        $        $
                                     (11,286)   33,499   45,443
Identifiable Assets by Geographic                              
Area at June 30:
    United States                           $        $        $
                                      929,649  855,233  903,054
    Europe                                                     
                                       63,749  197,433  254,205
Total Identifiable Assets                   $                  
                                      993,398 $1,052,6 $1,157,2
                                                    66       59
</TABLE>

     Export sales are defined as sales to customers in foreign countries by
the Company's domestic operations.  Export sales amounted to the following:
<TABLE>
<CAPTION>

                                       1996     1997     1998
<S>                                  <C>      <C>      <C>
Export Sales                                                   
     Europe                                 $        $        $
                                       27,330   48,187   68,515
     Asia (excluding Japan)                                    
                                        6,766   21,221   19,744
     Canada                                                    
                                        8,878   17,797   16,426
     Japan                                                     
                                       11,958   19,819   12,056
     South America                                             
                                        2,118    4,414   11,038
     Other                                                     
                                        6,447   11,493   10,340
Total Export Sales                          $        $        $
                                       63,497  122,931  138,119
</TABLE>


22.  QUARTERLY FINANCIAL DATA (UNAUDITED)

     The following table of quarterly financial data has been prepared from
the  financial  records  of the Company without  audit,  and  reflects  all
adjustments which are, in the opinion of management, necessary for  a  fair
presentation  of  the  results  of  operations  for  the  interim   periods
presented:
<TABLE>
<CAPTION>


Fiscal 1997 quarters ended              Sept. 29  Dec. 29 March 30June 30
<S>                                     <C>      <C>       <C>      <C>
Net sales                                      $        $       $        $
                                         138,244  152,461 179,436  210,622
Gross profit                                                              
                                          37,092   36,785  47,552   59,915
Earnings (loss) from continuing                                           
operations                               (3,797)  (1,960)   (117)    7,690
    per basic share                                                       
                                          (0.22)   (0.12)  (0.01)     0.47
    per diluted share                                                     
                                          (0.22)   (0.15)  (0.01)     0.44
Earnings (loss) from discontinued                                         
operations, net                            (821)  (1,017)     157    1,196
    per basic share                                                       
                                          (0.05)   (0.06)    0.01     0.07
    per diluted share                                                     
                                          (0.05)   (0.06)    0.01     0.07
Net earnings (loss)                                                       
                                         (4,618)  (2,977)      40    8,886
    per basic share                                                       
                                          (0.27)   (0.18)       -     0.54
    per diluted share                                                     
                                          (0.27)   (0.18)       -     0.51
Market price range of Class A Stock:                                      
High                                          17   17 3/8  15 3/8       18
Low                                       12 1/4   14 3/8  12 7/8   11 5/8
Close                                         16   14 5/8  13 3/8       18
                                                                          
Fiscal 1998 quarters ended              Sept. 28  Dec. 28 March 29June 30
<S>                                     <C>      <C>       <C>      <C>
 Net sales                                     $        $       $        $
                                         194,362  208,616 164,164  174,034
 Gross profit                                                             
                                          46,329   56,822  37,790   45,565
 Earnings (loss) from continuing                                          
operations                                 1,229  (4,605)  50,418    5,357
    per basic share                                                       
                                            0.07   (0.27)    2.52     0.25
    per diluted share                                                     
                                            0.07   (0.27)    2.41     0.24
Loss from discontinued operations, net                                    
                                           (737)  (1,945) (1,578)     (36)
    Per basic share                                                       
                                          (0.04)   (0.11)  (0.08)     0.24
    Per diluted share                                                     
                                          (0.04)   (0.11)  (0.08)     0.44
Gain (loss) from disposal of                                      (16,805)
discontinued operations, net                   -   29,974  46,548
    Per basic share                                                 (0.78)
                                               -     1.75    2.32
    Per diluted share                                               (0.76)
                                               -     1.75    2.23
Extraordinary items, net                                                  
                                               -  (3,024) (3,701)      (5)
    Per basic share                                                       
                                               -   (0.18)  (0.18)        -
    Per diluted share                                                     
                                               -   (0.18)  (0.18)        -
Net earnings (loss)                                               (11,489)
                                             492   20,400  91,687
    Per basic share                                                 (0.53)
                                            0.03     1.19    4.58
    per diluted share                                               (0.52)
                                            0.03     1.19    4.38
Market price range of Class A Stock:                                      
High                                     28  3/8 28 11/16      25       23
Low                                           17 19  5/16 19  7/16 18  3/16
Close                                    26  7/8  21  1/2 21  1/4 20  3/16
</TABLE>

      Included  in  earnings (loss) from continuing operations  are  (i)  a
$2,528  nonrecurring  gain from the sale of SBC in the  fourth  quarter  of
Fiscal 1997, and (ii) a $123,991 nonrecurring gain from the Banner Hardware
Group  Disposition.  Gain  (loss) on disposal  of  discontinued  operations
includes  (i)  gains  (losses) of $29,974, $68,900,  and  $(2,914)  in  the
second,  third  and fourth quarter of Fiscal 1998, respectively,  resulting
from  the  gain  on the STFI disposition, and (ii) losses  of  $22,352  and
$13,891  in  the  third  and fourth quarter of Fiscal  1998,  respectively,
resulting  from  the  estimated  loss  on  dispoal  of  certain  assets  of
Technologies.   Earnings from discontinued operations,  net,  includes  the
results  of  Technologies  and STFI (until disposition)  in  each  quarter.
Extraordinary  items  relate to the early extinguishment  of  debt  by  the
Company.
ITEM 9.  DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

     None.

                                 PART III

ITEM 5.  OTHER INFORMATION

      Articles have appeared in the French press reporting an inquiry by  a
French  magistrate  into certain allegedly improper  business  transactions
involving  Elf Acquitaine, a French petroleum company, its former  chairman
and various third parties, including Maurice Bidermann.  In connection with
this  inquiry,  the  magistrate has made inquiry  into  allegedly  improper
transactions between Mr. Steiner and that petroleum company.   In  response
to the magistrate's request that Mr. Steiner appear in France as a witness,
Mr.  Steiner  submitted written statements concerning the transactions  and
appeared in person before the magistrate and others.  Mr. Steiner, who  has
been put under examination (mis en examen), by the magistrate, with respect
to this matter, has not been charged.

      Mr.  Steiner  has  been  cited by a French prosecutor  to  appear  on
November  7,  1998,  before the Tribunal de Grande Instance  de  Paris,  to
answer  a  charge  of knowingly benefiting in 1990, from a  misuse  by  Mr.
Bidermann of corporate assets of Societe Generale Mobiliere et Immobiliere,
a  French  corporation in which Mr. Bidermann is believed to have been  the
sole shareholder.

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

      The  information  required  by this Item is  incorporated  herein  by
reference from the 1998 Proxy Statement.

ITEM 11.  EXECUTIVE COMPENSATION

      The  information  required  by this Item is  incorporated  herein  by
reference from the 1998 Proxy Statement.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The  information  required  by this Item is  incorporated  herein  by
reference from the 1998 Proxy Statement.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      The  information  required  by this Item is  incorporated  herein  by
reference from the 1998 Proxy Statement.


                                  PART IV


ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

     The following documents are filed as part of this Report:

(a)(1)  Financial Statements.

      All financial statements of the registrant as set forth under Item  8
of this report on Form 10-K (see index on Page 15).

(a)(2)   Financial  Statement Schedules and Report  of  Independent  Public
Accountants.


Schedule Number               Description                             Page

     I     Condensed  Financial Information  of  Parent  Company       70

    II     Valuation and Qualifying Accounts                           74


     All other schedules are omitted because they are not required.



                 Report of Independent Public Accountants



To The Fairchild Corporation:

We  have  audited in accordance with generally accepted auditing standards,
the  consolidated  financial statements of The  Fairchild  Corporation  and
subsidiaries included in this Form 10-K and have issued our report  thereon
dated  September 22, 1998.  Our audits were made for the purpose of forming
an  opinion  on  the  basic financial statements taken  as  a  whole.   The
schedules  listed in the index on the preceding page are the responsibility
of  the Company's management and are presented for the purpose of complying
with the Securities and Exchange Commission's rules and are not part of the
basic  financial  statements.  These schedules have been subjected  to  the
auditing procedures applied in the audits of the basic financial statements
and,  in  our opinion, fairly state in all material respects the  financial
data  required  to be set forth therein in relation to the basic  financial
statements taken as a whole.




                                                 Arthur Andersen LLP

Washington, D.C.
September 22, 1998

SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
<TABLE>
                                     
                         THE FAIRCHILD CORPORATION
           CONDENSED FINANCIAL STATEMENTS OF THE PARENT COMPANY
                     BALANCE SHEETS (NOT CONSOLIDATED)
                              (In thousands)
<CAPTION>

                                                  June 30,   June 30,
                    ASSETS                          1997       1998
<S>                                             <C>          <C>
Current assets:                                                      
  Cash and cash equivalents                     $       234  $      -
  Accounts receivable                                   384       400
  Prepaid expenses and other current assets             250   (1,230)
Total current assets                                    868     (830)
                                                                     
Property, plant and equipment, less accumulated         486       677
depreciation
Investments in subsidiaries                         390,355   627,634
Investments and advances, affiliated companies        1,435       963
Goodwill                                              4,133    14,333
Noncurrent tax assets                                29,624    45,439
Other assets                                          2,403    21,031
Total assets                                      $ 429,304 $ 709,247
                                                                     
     LIABILITIES AND STOCKHOLDERS' EQUITY                            
Current liabilities:                                                 
  Current maturities of long-term debt            $       - $   2,250
  Accounts payable and accrued expenses               8,315    10,218
Total current liabilities                             8,315    12,468
                                                                     
Long-term debt                                      190,567   222,750
Other long-term liabilities                             797       470
Total liabilities                                   199,679   235,688
Stockholders' equity:                                                
Class A common stock                                  2,023     2,467
Class B common stock                                    263       263
Retained earnings and other equity                  227,339   470,829
Total stockholders' equity                          229,625   473,559
Total liabilities and stockholders' equity        $ 429,304  $ 709,247

The accompanying notes are an integral part of these condensed financial
statements.
</TABLE>


                                                                 Schedule I
<TABLE>

                                 
    THE FAIRCHILD CORPORATION AND
      CONSOLIDATED SUBSIDIARIES
CONDENSED FINANCIAL STATEMENTS OF THE                    
               COMPANY
      STATEMENT OF EARNINGS (NOT CONSOLIDATED)
            (In thousands)                               
<CAPTION>                                                
                   
                                         For the Years Ended June 30,
                                          1996         1997        1998    
<S>                                    <C>          <C>          <C> 
Costs and Expenses:                                                         
  Selling, general & administrative          5,148       3,925       3,516  
  Amortization of goodwill                     130         130         147  
                                             5,278       4,055       3,663  
                                                                            
Operating loss                              (5,278 )     (4,055 )     (3,663 )
                                                                            
Net interest expense                        28,387      25,252      24,048  
                                                                            
Investment income, net                           1          16         208 
Equity in earnings of affiliates               269         480        (613 )
Nonrecurring expense                        (1,064 )         --           --  
Loss from continuing operations before     (34,459 )    (28,811 )    (28,116 )
taxes
Income tax provision (benefit)             (12,509 )    (15,076 )    (10,580 )
Loss before equity in earnings of          (21,950 )    (13,735 )    (17,536 )
subsidiaries
Equity in earnings of subsidiaries         211,656      15,066     118,626 
Net earnings (loss)                        189,706       1,331     101,090 

The accompanying notes are an integral part of these condensed financial
statements.
</TABLE>

<TABLE>
                                                                 Schedule I
                         THE FAIRCHILD CORPORATION
           CONDENSED FINANCIAL STATEMENTS OF THE PARENT COMPANY
                STATEMENT OF CASH FLOWS (NOT CONSOLIDATED)
                              (IN THOUSANDS)
<CAPTION>

                                        For the Years Ended June 30,
                                          1996        1997       1995
<S>                                    <C>          <C>         <C>
Cash provided by (used for) operations $  36,916   $ (14,271 )   $(80,099)
                                                                        
 Investing activities:                                                  
   Equity investments in affiliates          (21 )      2,092        (141)
                                             (21 )      2,092        (141)
 Financing activities:                                                  
   Proceeds from issuance of debt                      9,400     225,000
                                               -
   Debt repayments                       (42,265 )                        
                                                           -   (198,867)
   Issuance of common stock                1,509       1,126            
                                                                  53,848
                                         (40,756 )     10,526       79,981
 Net decrease in cash                    $(3,861 )    $(1,653 )   $  (259)

The accompanying notes are an integral part of these condensed financial
statements.
</TABLE>

                                                                 Schedule I
                                     
          THE FAIRCHILD CORPORATION AND CONSOLIDATED SUBSIDIARIES
               CONDENSED FINANCIAL STATEMENTS OF THE COMPANY
             NOTES TO FINANCIAL STATEMENTS (NOT CONSOLIDATED)
                              (In thousands)


1.   BASIS OF PRESENTATION

  In  accordance with the requirements of Regulation S-X of the  Securities
  and  Exchange  Commission, the financial statements of  the  Company  are
  condensed  and  omit  many  disclosures  presented  in  the  consolidated
  financial statements and the notes thereto.

2.   LONG-TERM DEBT
<TABLE>
<CAPTION>

                                        June 30,  June 30,
                                          1997      1998
<S>                                    <C>        <C>
    Bank Credit Agreement            $     --     $225,000
    12% Inter. Debentures Due 2001        128,000      --
    13 1/8% Sub. Debentures Due 2006       35,856       --
    13% Jr. Sub. Debenture Due 2007        30,063       --
    Less: Original issue discounts        (3,352)       --
                                     $    190,567 $ 225,000
  </TABLE>
  
  Maturities  of  long-term debt for the next five years  are  as  follows:
  $2,250  in  1999, $2,250 in 2000, $2,250 in 2001,  $3,375  in  2002,  and
  $107,438 in 2003.
  
3.   DIVIDENDS FROM SUBSIDIARIES

  Cash  dividends  paid  to The Fairchild Corporation by  its  consolidated
  subsidiaries were $5,000, $10,000, and $42,100 in 1998, 1997,  and  1996,
  respectively.   The  Fairchild Corporation  also  received  dividends  of
  Banner  stock  with a fair market value of $187,424 from its subsidiaries
  in 1998.
  
4.   CONTINGENCIES
  
  The  Company is involved in various other claims and lawsuits  incidental
  to  its  business,  some  of  which  involve  substantial  amounts.   The
  Company,  either  on  its  own  or through  its  insurance  carriers,  is
  contesting  these  matters.  In the opinion of management,  the  ultimate
  resolution  of  the  legal proceedings will not have a  material  adverse
  effect  on  the  financial condition, or future results of operations  or
  net cash flows of the Company.
  

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

     Changes in the allowance for doubtful accounts are as follows:
<TABLE>
<CAPTION>

                                For the Years Ended June 30,
                                  1996     1997    1998
<S>                             <C>      <C>      <C>
 Beginning balance              $  2,738 $ 5,449 $ 6,905
 Charges to cost and expenses      1,766   1,978   2,240
 Charges to other accounts (a)     2,405     445 (2,642)
 Amounts written off              (1,460)   (967)   (848)
 Ending Balance                $   5,449 $  6,905 $ 5,655


(a)   Recoveries of amounts written off in prior periods, foreign  currency
  translation  and  the  change in related noncurrent  taxes.  Fiscal  1998
  includes a reduction of $2,801 relating to the assets disposed as a result
  of the Banner Hardware Group Disposition.
</TABLE>



(a)(3)  Exhibits.

3.1   Registrant's  Restated Certificate of Incorporation (incorporated  by
   reference to Exhibit "C" of Registrant's Proxy Statement dated October 27,
   1989).

3.2   Registrant's Amended and Restated By-Laws, as amended as of  November
   21, 1996 (incorporated by reference to the Registrant's Quarterly Report on
   From 10-Q for the quarter ended December 29, 1996) (the "December 1996 10-
   Q").

4.1   Specimen  of  Class  A  Common  Stock  certificate  (incorporated  by
   reference to Registration Statement No. 33-15359 on Form S-2).

4.2   Specimen  of  Class  B  Common  Stock  certificate  (incorporated  by
   reference from Registrant's Annual Report on Form  10-K for the fiscal year
   ended June 30, 1989) (the "1989 10-K").

10.  Material Contracts

(Stock Option Plans)

10.1  1988  U.K. Stock Option Plan of Banner Industries, Inc. (incorporated
   by reference from Registrant's Annual Report on Form  10-K for the fiscal
   year ended June 30, 1988) (the "1988 10-K").

10.2  Description of grants of stock options to non-employee  directors  of
   Registrant (incorporated by reference to the 1988 10-K).

10.3  1986  Non-Qualified and Incentive Stock Option Plan (incorporated  by
   reference to Registrant's Proxy Statement dated November 15, 1990).

10.4  1986  Non-Qualified and Incentive Stock Option Plan (incorporated  by
   reference to Registrant's Proxy Statement dated November 21, 1997).

10.5  1996  Non-Employee  Directors  Stock  Option  Plan  (incorporated  by
   reference to Registrant's Proxy Statement dated November 21, 1997).

10.6  Stock  Option  Deferral Plan dated February 9,  1998(incorporated  by
   reference to Registrant's Quarterly Report on From 10-Q for the  quarter
   ended March 29, 1998) (the "March 1998 10-Q").

(Employee Agreements)

10.7  Amended  and  Restated  Employment Agreement between  Registrant  and
   Jeffrey J. Steiner dated September 10, 1992 (incorporated by reference from
   Registrant's Annual Report on Form  10-K for the fiscal year ended June 30,
   1993) (the "1993 10-K").

10.8 Letter Agreement dated September 9, 1996, between Registrant and Colin
   M. Cohen (incorporated by reference from Registrant's Annual Report on Form
   10-K for the fiscal year ended June 30, 1997) (the "1997 10-K")

10.9 Employment Agreement between RHI Holdings, Inc., and Jacques Moskovic,
   dated  as  of  December  29, 1994. (incorporated  by  reference  to  the
   Registrant's Annual Report on Form 10-K/A for the fiscal year ended June
   30, 1996) (the "1996 10-K/A").

10.10        Employment  Agreement  between  Fairchild  France,  Inc.,  and
   Jacques Moskovic, dated as of December 29, 1994. (incorporated by reference
   to the 1996 10-K/A).

10.11           Employment   Agreement  between  Fairchild  France,   Inc.,
   Fairchild  CDI, S.A., and Jacques Moskovic, dated as of April  18,  1997
   (incorporated by reference to the Registrant's Annual Report on From 10-K
   for the fiscal year ended June 30, 1995) (the "1995 10-K").

10.12     Employment Agreement between Robert Edwards and Fairchild Holding
   Corp., dated March 2, 1998 (incorporated by reference to the March 1998 10-
   Q).

10.13      Letter Agreement dated February 27, 1998, between Registrant and
   John L. Flynn (incorporated by reference to the March 1998 10-Q).

10.14      Letter Agreement dated February 27, 1998, between Registrant and
   Donald E. Miller (incorporated by reference to the March 1998 10-Q).

*10.15   Promissory Note in the amount of $100,000, issued by Robert Sharpe
to the Registrant, dated July 1, 1998 (filed herewith).

*10.16   Promissory Note in the amount of $200,000 issued by Robert  Sharpe
to the Registrant, dated July 1, 1998 (filed herewith).

(Credit Agreements)

10.15          Credit Agreement dated as of March 13, 1996, among Fairchild
   Holding  Corporation ("FHC"), Citicorp USA, Inc. and  certain  financial
   institutions (incorporated by reference from Registrant's Annual Report on
   Form  10-K for the fiscal year ended June 30, 1996) (the "1996 10-K").

10.16           Restated and Amended Credit Agreement dated as of July  26,
   1996,  (the "FHC Credit Agreement"), among FHC, Citicorp USA,  Inc.  and
   certain financial institutions (incorporated by reference to the 1996 10-
   K).

10.17           Amendment No. 1, dated as of January 21, 1997, to  the  FHC
   Credit Agreement dated as of March 13, 1996 (incorporated by reference to
   the Registrant's Quarterly Report on From 10-Q for the quarter ended March
   30, 1997) (the "March 1997 10-Q").

10.18           Amendment No. 2 and Consent, dated as of February 21, 1997,
   to  the FHC Credit Agreement dated as of March 13, 1996 (incorporated by
   reference to the March 30,1997 10-Q).

10.19           Amendment  No.  3, dated as of June 30, 1997,  to  the  FHC
   Credit Agreement dated as of March 13, 1996 (incorporated by reference to
   the 1997 10-K).

10.20           Second  Amended And Restated Credit Agreement dated  as  of
   July  18,  1997, to the FHC Credit Agreement dated as of March 13,  1996
   (incorporated by reference to the 1997 10-K).

10.21           Restated and Amended Credit Agreement dated as of  May  27,
   1996,  (the "RHI Credit Agreement"), among RHI, Citicorp USA,  Inc.  and
   certain financial institutions. (incorporated by reference to the 1996 10-
   K).

10.22          Amendment No. 1 dated as of July 29, 1996, to the RHI Credit
   Agreement (incorporated by reference to the 1996 10-K).

10.23          Amendment No. 2 dated as of April 7, 1997, to the RHI Credit
   Agreement (incorporated by reference to the 1997 10-K).

10.24     Amendment No. 3 dated as of September 26, 1997, to the RHI Credit
   Agreement (incorporated by reference to the Registrant's Quarterly Report
   on Form 10-Q for the quarter ended September 28, 1997) (the "September 1997
   10-Q").

10.25     Third Amended and Restated Credit Agreement, dated as of December
   19, 1997, among RHI, FHC, the Registrant, Citicorp USA, Inc. and certain
   financial  institutions (incorporated by reference to  the  Registrant's
   Quarterly Report on Form 10-Q for the quarter ended December 28, 1997) (the
   "December 1997 10-Q").

10.26      Interest  Rate Hedge Agreement between Registrant and  Citibank,
   N.A.  dated  as  of  August 19, 1997 (incorporated by reference  to  the
   September 1997 10-Q).

10.27      Amendment  dated as of December  23, 1997, to the Interest  Rate
   Hedge Agreement between Registrant and Registrant and Citibank, N.A.  dated
   as of August 19, 1997(incorporated by reference to the December 1997 10-Q).

10.28     Amendment  dated as of January  14,  1997,  to  the Interest Rate
   Hedge Agreement between Registrant  and Citibank, N.A. dated as of  August
   19, 1997 (incorporated by reference to the March 1998 10-Q).

(Stinbes Warrants)

10.29          Form Warrant Agreement (including form of Warrant) issued by
   the  Company  to Drexel Burnham Lambert on March 13, 1986,  subsequently
   purchased by Jeffrey Steiner and subsequently assigned to Stinbes Limited
   (an affiliate of Jeffrey Steiner), for the purchase of Class A or Class B
   Common  Stock (incorporated herein by reference to Exhibit 4(c)  of  the
   Company's Registration Statement No. 33-3521 on Form S-2).

10.30      Form  Warrant Agreement issued to Stinbes Limited  dated  as  of
   September  26,  1997, effective retroactively as of  February  21,  1997
   (incorporated by reference to the September 1997 10-Q).

10.31      Extension of Warrant Agreement  between  Registrant  and Stinbes
   Limited for 375,000 shares of Class A or Class B Common  Stock  dated  as
   of  September  26,  1997, effective retroactively as of February 21, 1997
   (incorporated by reference to the September 1997 10-Q).

10.32      Amendment  of Warrant Agreement dated February 9, 1998,  between
   the Registrant and Stinbes Limited (incorporated by reference to the March
   1998 10-Q).

(Other Material Contracts)

10.33     Voting Agreement dated as of July 16, 1997, between RHI Holdings,
   Inc.,  and  Tel-Save Holdings, Inc., (incorporated by reference  to  the
   Registrant's  Schedule  13D/A, Amendment No. 3,  filed  July  22,  1997,
   regarding  Registrant's stock ownership in Shared Technologies Fairchild
   Inc.).

10.34      Stock  Option  Agreement dated November  20,  1997  between  RHI
   Holdings,   Inc.  and  Intermedia Communications Inc.  (Incorporated  by
   reference to Scheduled  13D/A (Amendment No. 4) dated as of November 25,
   1997 filed by the Company on  December 1, 1997).

10.35      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).

10.36      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).

10.37      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).

10.38      Agreement and plan of Merger dated January 28, 1998, as  amended
   on  February  20, 1998, and March 2, 1998, between the Company  and  the
   shareholders' of Special-T Fasteners (Incorporated by reference to Form 8-K
   dated as of March 2, 1998 filed by the Company on March 12, 1998).

*10.41    Registration  Rights  Agreement  between  Registrant  and  Banner
Aerospace, Inc., dated as of July 7, 1998 (filed herewith).

10.39         Purchase Agreement by and between BTR Dunlop Holdings,  Inc.,
   RHI  Holdings,  Inc.,  and Registrant, dated  as  of  December  2,  1993
   (incorporated by reference to Registrant's current report on Form 8-K dated
   December 23, 1993).

10.40         Agreement and Plan of Merger dated as of November 9, 1995  by
   and among The Fairchild Corporation, RHI, FII and Shared Technologies, Inc.
   ("STI Merger Agreement") (incorporated by reference from the Registrant's
   Form 8-K dated as of November 9, 1995).

10.41          Amendment No. 1 to STI Merger Agreement dated as of February
   2, 1996 (incorporated by reference from the Registrant's Form 8-K dated as
   of March 13, 1996).

10.42          Amendment No. 2 to STI Merger Agreement dated as of February
   23, 1996 (incorporated by reference from the Registrant's Form 8-K dated as
   of March 13, 1996).

10.43          Amendment No. 3 to STI Merger Agreement dated as of March 1,
   1996 (incorporated by reference from the Registrant's Form 8-K dated as of
   March 13, 1996).

10.44           Asset  Purchase  Agreement dated as of  January  23,  1996,
   between  The  Fairchild Corporation, RHI and Cincinnati  Milacron,  Inc.
   (incorporated by reference from the Registrant's Form 8-K  dated  as  of
   January 26, 1996).

10.45           Stock  Exchange Agreement between The Fairchild Corporation
   and  Banner  Aerospace, Inc. pursuant to which the Registrant  exchanged
   Harco, Inc. for shares of Banner Aerospace,Inc. (incorporated by reference
   to the Banner Aerospace, Inc. Definitive Proxy Statement dated and filed
   with the SEC on February 23, 1996 with respect to the Special Meeting of
   Shareholders of Banner Aerospace, Inc. held on March 12, 1996).

10.46      Allocation  Agreement dated April 13,  1992  by  and  among  The
   Fairchild Corporation, RHI, Rex-PT Holdings, Rexnord Corporation, Rexnord
   Puerto Rico, Inc. and Rexnord Canada Limited (incorporate by reference to
   1992 10-K).

11    Computation  of earnings per share (found at Note  1  in  Item  8  to
   Registrant's Consolidated Financial Statements for the fiscal year ended
   June 30, 1997).

*22      List  of subsidiaries of Registrant (incorporated by reference  to
the 1997 10-K).

*23.1  Consent of Arthur Andersen LLP, independent public accountants.

*23.2  Consent of Price Waterhouse Coopers, independent public accountants.

*27     Financial Data Schedules.

99.1  Financial statements, related notes thereto and Auditors'  Report  of
   Banner  Aerospace,  Inc.  for  the fiscal  year  ended  March  31,  1998
   (incorporated by reference to the Banner Aerospace, Inc. Form  10-K  for
   fiscal year ended March 31, 1998).

99.2  Financial statements, related notes thereto and Auditors'  Report  of
   Nacanco Paketleme for the fiscal year ended December 31, 1997 (incorporated
   by reference to the Registrant's Form 8-K filed on June 26, 1998).

*Filed herewith.

(b)  Reports on Form 8-K

      On  March  12,  1998,  the Company filed a From  8-K  to  report  the
acquisition of Special-T Fasteners.   On April 23, 1998, May 5,  1998,  and
May 7, 1998, the Company filed amendments to said Form 8-K, to report (Item
7)  audited financial statements of Special-T Fasteners, and unaudited  pro
forma consolidate financial statements giving effect to the acquisition  of
Special-T Fasteners.

      On  June  26, 1998, the Company filed a Form 8-K to report  (Item  5)
audited  financial statements for the years ended December 31,  1997,  1996
and 1995 for Nacanco Paketleme, a 32% owned equity affiliate.

                                SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange  Act  of 1934, the Registrant has duly caused this  report  to  be
signed on its behalf by the undersigned, thereunto duly authorized.

                         THE FAIRCHILD CORPORATION



                               By:       /s/
                                 Colin M. Cohen
                                 Senior Vice President and
                                 Chief Financial Officer



Date:  September 23, 1998

Pursuant  to the requirements of the Securities Exchange Act of 1934,  this
report  has  been signed below by the following persons on  behalf  of  the
Registrant, in their capacities and on the dates indicated.

By:       JEFFREY J. STEINER   Chairman, Chief Executive    September 23,
    /s                                                          1998
    /
          Jeffrey J. Steiner     Officer and Director             
                                                                  
           MICHAEL T. ALCOX   Vice President and Director   September 23,
By: /s                                                          1998
    /
           Michael T. Alcox                                       
                                                                  
          MELVILLE R. BARLOW           Director             September 23,
By: /s                                                          1998
    /
          Melville R. Barlow                                      
                                                                  
          MORTIMER M. CAPLIN           Director             September 23,
By: /s                                                          1998
    /
          Mortimer M. Caplin                                      
                                                                  
            COLIN M. COHEN      Senior Vice President,      September 23,
By: /s                                  Chief                   1998
    /
            Colin M. Cohen       Financial Officer and            
                                       Director
                                                                  
             PHILIP DAVID              Director             September 23,
By: /s                                                          1998
    /
             Philip David                                         
                                                                  
            ROBERT EDWARDS             Director             September 23,
By: /s                                                          1998
    /
            Robert Edwards                                        
                                                                  
           HAROLD J. HARRIS            Director             September 23,
By: /s                                                          1998
    /
           Harold J. Harris                                       
                                                                  
            DANIEL LEBARD              Director             September 23,
By: /s                                                          1998
    /
            Daniel Lebard                                         
                                                                  
         JACQUES S. MOSKOVIC     Senior Vice President      September 23,
By: /s                                                          1998
    /
         Jacques S. Moskovic         And Director                 
                                                                  
          HERBERT S. RICHEY            Director             September 23,
By: /s                                                          1998
    /
          Herbert S. Richey                                       
                                                                  
             MOSHE SANBAR              Director             September 23,
By: /s                                                          1998
    /
             Moshe Sanbar                                         
                                                                  
         ROBERT A. SHARPE II    Senior Vice President,      September 23,
By: /s                                                          1998
    /
         Robert A. Sharpe II    Operations and Director           
                                                                  
           ERIC I. STEINER    President, Chief  Operating   September 23,
By: /s                                                          1998
    /
           Eric I. Steiner       Officer and Director