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|   | For      the Year Ended September 30, 2007 |
|--------|--------------------------------------------|

|   |    Commission      File Number 1-6560 |
|--------|------------------------------------------------------|

|   | THE      FAIRCHILD CORPORATION |
|--------|--------------------------------|

|   | (Exact      name of Registrant as specified in itscharter) |
|--------|------------------------------------------------------------|

| Delaware                                                         | 34-0728587                                |
|------------------------------------------------------------------|-------------------------------------------|
| (State      or other jurisdiction of                             | (I.R.S.      Employer Identification No.) |
| Incorporation      or organization)                              |                                      |
|                                                             |                                      |
| 1750      Tysons Boulevard, Suite 1400, McLean, VA 22102         |
|  (Address      of principal executive offices)              |
| (703)      478-5800                                              |
| (Registrant’s      telephone number, including area code)  |
| 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 Stock Exchange              |

| Title of      Class                        |   |   |       |
|--------------------------------------------|--------|--------|------------|
| Class      A Common Stock, $0.10 Par Value |   |   | 22,604,835 |   |
| Class      B Common Stock, $0.10 Par Value |   |   | 2,621,338  |   |

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| PART      I                                 |                                                                                                | Page   |
|---------------------------------------------|-----------------------------------------------------------------------------------------------------|--------|
|                                        |                                                                                                |   |
|      Item      1.  | Business                                                                                            | 3      |
|      Item      1A. | Risk Factors                                                                                        | 7      |
|      Item      1B. | Unresolved Staff Comments                                                                           | 10     |
|      Item      2.  | Properties                                                                                          | 10     |
|      Item      3.  | Legal Proceedings                                                                                   | 11     |
|      Item      4.  | Submission of Matters to a Vote of      Stockholders                                                | 11     |
|                                        |                                                                                                |   |
| PART      II                                |                                                                                                |   |
|                                        |                                                                                                |   |
|      Item      5.  | Market for Common Equity, Related Stockholder Matters and      Issuer Purchases of Common Equity    | 12     |
|      Item      6.  | Selected Financial Data                                                                             | 14     |
|      Item      7.  | Management's Discussion and Analysis of Financial Condition      and Results of Operations          | 15     |
|      Item      7A. | Quantitative and Qualitative Disclosures about Market      Risk                                     | 30     |
|      Item      8.  | Financial Statements and Supplementary    Data                                                      | 31     |
|      Item      9.  | Changes in and Disagreements with Accountants on Accounting      and Financial Disclosure           | 76     |
|      Item      9A. | Controls and Procedures                                                                             | 76     |
|                                        |                                                                                                |   |
| PART      III                               |                                                                                                |   |
|                                        |                                                                                                |   |
|      Item      10. | Directors, Executive Officers, and Corporate      Governance                                        | 78     |
|      Item      11. | Executive Compensation                                                                              | 83     |
|      Item      12. | Security Ownership of Certain Beneficial Owners and      Management and Related Stockholder Matters | 96     |
|      Item      13. | Certain Relationships, Related Transactions, and Director      Independence                         | 99     |
|      Item      14. | Principal Accountant Fees and Services                                                              | 101    |
|                                        |                                                                                                |   |
| PART      IV                                |                                                                                                |   |
|                                        |                                                                                                |   |
|      Item      15. | Exhibits and Financial Statement    Schedules                                                       | 103    |

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|   |   |
|--------|--------|

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ITEM 1A

| ·   | Our operations are primarily      dependent upon the retail and aerospace industries.  Our      operations may be affected adversely by general economic conditions and      events which result in reduced customer spending in the markets served by      our products in the retail and aerospace industries. Any downturn in      either or both industries could materially and adversely affect the      overall financial condition of ourcompany. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·   | Our company is highly      leveraged. Our ability to access additional capital or liquidate      non-core assets may be limited and require significant lead time. If we      are unable to raise additional capital, or if interest rates or other      terms are unfavorable, our financial condition or results of operations      may be adversely affected. As such, our cash requirements are dependent      upon our ability to achieve and execute internal business plans,      including: |
|--|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | Our      ability to accurately predict demand for our  products; |
|---------------|------------------------------------------------------------------|

| o   | Our      ability to negotiate favorable pricing and other terms from our      suppliers; |
|---------------|------------------------------------------------------------------------------------------|

| o   | Our      ability to receive timely deliveries from  suppliers; |
|---------------|----------------------------------------------------------------|

| o   | Our      ability to raise cash to meet seasonal and other  demands; |
|---------------|---------------------------------------------------------------------|

| o   | Our      ability to maintain customer satisfaction, attract customers to our      stores, and deliver products ofquality; |
|---------------|---------------------------------------------------------------------------------------------------------------------------|

| o   | Our      ability to properly assess our competition;and |
|---------------|---------------------------------------------------------|

| o   | Our      ability to improve our operations to profitability  status. |
|---------------|----------------------------------------------------------------------|

|  | ·   | Foreign exchange rate      risks.  We purchase and sell a significant amount of our      products internationally. In most markets sales are made in the foreign      country’s local currency.  Additionally, a significant amount of      purchases are made in currencies other than the foreign country’s local      currency.  We do not place significant reliance on the use of      derivative financial instruments to attempt to manage risks associated      with foreign currency exchange rates.  Accordingly, there can be no      assurance that in the future we will not have a material adverse effect on      our business and results of operations from exposure to changes in foreign      exchange rates. |
|--|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | ·   | Interest rate risk. We      are subject to market risk from exposure to changes in interest rates      based on our variable rate financing. Increases in interest rates could      have a negative impact on our available cash and our results of operations      and adversely affect the overall financial condition of our      company. |
|--|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·   | Government regulation.      We must comply with governmental laws and regulations that are subject to      change and may involve significant costs. Our sales and      operations in areas outside the United States may be subject to foreign      laws, regulations and the legal systems of foreign courts or      tribunals.  These laws and policies governing operations of      foreign-based companies could result in increased costs or restrictions on      the ability of the Company to sell its products in certain      countries.  Our international sales operations may also be adversely      affected by United States laws affecting foreign trade and      taxation. |
|--|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·   | Economic, political, and other      risks associated with business activities in foreign countries.      Because we plan to continue using foreign manufacturers, our      operating results could be harmed by economic, political, regulatory and      other factors in foreign countries. We currently use      suppliers in Asia to manufacture a significant amount of the products we      sell, and we plan to continue using foreign suppliers to manufacture these      products. These international operations are subject to inherent risks,      which may adversely affect us,including: |
|--|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | political      and economic instability; |
|---------------|------------------------------------------|

| o   | high      levels of inflation, historically the case in a number of countries in      Asia; |
|---------------|---------------------------------------------------------------------------------------------|

| o   | burdens      and costs of compliance with a variety of foreign  laws; |
|---------------|-----------------------------------------------------------------------|

| o   | foreign      taxes; and |
|---------------|-------------------------|

| o   | changes      in tariff rates or other trade and monetary  policies. |
|---------------|---------------------------------------------------------------------|

|  | ·   | Our operations are dependent      upon attracting and retaining skilled employees.  Our      future success depends on our continuing ability to identify, hire,      develop, motivate and retain skilled personnel in all areas of our      organization.   The current and future total compensation      arrangements, which include benefits and cash bonuses, may not be      successful in attracting new employees and retaining and motivating our      existing employees. If we do not succeed in attracting personnel or      retaining and motivating existing personnel, we may be unable to develop      and distribute products and services or grow effectively. The success of      one or more of our operations is dependent on our ability to satisfy top      managers and core employees, who may negotiate as a  group. |
|--|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·   | We have a number of worldwide      competitors of varying sizes some of which have greater financial      resources than we do. Several of our competitors are more      diversified than we are, and/or they may have greater financial resources      than we do.  Also, if price becomes a more important competitive      factor for our customers, we may face a competitive disadvantage due to      our marketing strategies and cost of capital.  Failure to adequately      address and quickly respond to these competitive pressures could have a      material adverse effect on our business and results of      operations. |
|--|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | ·   | Our marketing strategy of      associating our retail products with a motorcycling lifestyle may not be      successful with future customers.  We have had success in      marketing our products to motorcyclists.  The lifestyle of      motorcyclists is now more typically associated with a customer base      comprised of individuals who are, on average, in their mid-forties.       To sustain long-term growth, the motorcycle industry must continue to be      successful in promoting motorcycling to customers new to the sport of      motorcycling including women and younger riders.  Accordingly,      we must be successful providing products that satisfy the latest fashion      desires and protection requirements of our customers. Failure to      adequately address and quickly respond to our customers’ needs could have      a material adverse effect on our business and results of      operations. |
|--|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·   | Our success in our retail      operations depends upon the continued strength of the Hein Gericke and      Polo brands. We believe that our Hein Gericke and Polo brands are      essential to the success of our business and that maintaining and      enhancing the brands is critical to maintaining and expanding our customer      base.  Failure to protect the brands from infringers or to grow the      value of our Hein Gericke and Polo brands could have a material adverse      effect on our business and results of  operations. |
|--|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·   | Our future growth will suffer      if we do not achieve sufficient market acceptance of our products to      compete effectively.  Our success depends, in part, on      our ability to gain acceptance of our current and future products by a      large number of customers. Achieving market-based acceptance for our      products will require marketing efforts and the expenditure of financial      and other resources to create product awareness and demand by potential      customers. We may be unable to offer products consistently, or at all,      that compete effectively with products of others on the basis of price or      performance. Failure to achieve broad acceptance of our products by      potential customers and to compete effectively could have a material      adverse effect on our business and results of  operations. |
|--|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·   | Quarterly fluctuations.      Quarterly results of our PoloExpress and Hein Gericke segments’      operations have historically fluctuated as a result of retail customers      purchasing patterns, with the highest quarters in terms of sales and      profitability being our third and fourth quarters. Any economic downturn      occurring in our third and fourth quarters could have a material adverse      effect on our business and results of  operations. |
|--|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·   | We incur substantial costs and      cash funding requirements with respect to pension benefits and providing      healthcare to our former employees. Our estimates of liabilities      and expenses for pensions and other post-retirement healthcare benefits      require the use of assumptions. These assumptions include the rate used to      discount the future estimated liability, the rate of return on plan      assets, and several assumptions relating to the retirees’ medical costs      and mortality. Actual results may differ, which may have a material      adverse effect on future results of operations, liquidity or shareholders’      equity. Our largest pension plan is in an underfunded situation, and our      future funding requirements were projected based upon legislation that      changed in fiscal 2006. Any additional changes in the pension laws or      estimates used could have a material adverse effect on our future funding      requirements, business and results of operations. In addition, rising      healthcare and retirement benefit costs in the United States may put us at      a competitive disadvantage. |
|--|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·   | If our goodwill or amortizable      intangible assets become impaired, we may be required to record a      significant charge to earnings.    Under      generally accepted accounting principles, we review our amortizable      intangible assets for impairment when events or changes in circumstances      indicate the carrying value may not be recoverable. Goodwill and      intangible assets deemed to have an indefinite life are required to be      tested for impairment at least annually. Factors that may be considered a      change in circumstances indicating that the carrying value of our goodwill      or intangible assets may not be recoverable include a decline in stock      price and market capitalization, reduced future cash flow estimates, and      slower growth rates in the industries we serve. We may be required to      record a significant charge to earnings in our financial statements during      the period in which any impairment of our goodwill or intangible assets is      determined, negatively impacting our results of  operations. |
|--|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·   | Expense of being a public      company. The costs of being a small to mid-sized public company      have increased substantially with the introduction and implementation of      controls and procedures mandated by the Sarbanes-Oxley Act of 2002. We      have seen audit fees and audit related fees significantly increase in past      years. These increases, and any additional burden placed by future      legislation, could have a material adverse effect on our financial      condition, future results of operations, or net cash flows.  For      fiscal 2007, we were not required to have an external audit of our      internal controls over financial reporting under Section 404. We will      continue to assess our future requirements to report on our assessment of      controls or have an external audit of our internal controls on an annual      basis. |
|--|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | ·   | Concentrated ownership of      voting shares. As of September 30, 2007, the Steiner family      beneficially owns approximately 60.3% of the aggregate vote of shares of      the Company.  Therefore, the ability for individual shareholders      to influence the direction of the Company may be  limited. |
|--|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·   | Potential limitation on use of      net operating tax losses on change in share      ownership.  Under Section 382 of the Internal Revenue      Code, the Company’s ability to use it’s existing accumulated net operating      losses in the United States may be reduced if there has occurred      significant changes in ownership of shares of the      company.  Similar rules exist in certain foreign jurisdictions      where the Company has tax losses. |
|--|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·   | Environmental matters.      As an owner and former owner and operator of property, including those at      which we performed manufacturing operations, we are subject to extensive      federal, state and local environmental laws and regulations. Inherent in      such ownership and operation is also the risk that there may be potential      environmental liabilities and costs in connection with any required      remediation of such properties. We routinely assess our environmental      accruals for identified concerns at locations of our former operations. We      cannot provide assurance that unexpected environmental liabilities will      not arise. |
|--|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·   | Legal matters. We are      involved in various other claims and lawsuits incidental to our business      or predecessor businesses.  We, either on our own or through our      insurance carriers, are contesting these matters.  For certain      instances, our insurers are defending us under “reservations of (their)      rights” and may later deny coverage, in whole or part.  We have      had and are currently involved in litigations with our carriers over their      denials of coverage or failure to defend our interests.  In the      opinion of management, the ultimate resolution of litigation against us      will not have a material adverse effect on our financial condition, future      results of operations or net cash flows.  However, litigation      and other claims are subject to inherent uncertainties and management’s      view of these matters may change in the future.  There exists a      possibility that a material adverse impact on our financial position and      results of operations could occur in the period for which the effect of an      unfavorable final outcome becomes probable and reasonably      estimable. |
|--|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |     |
|--------|--------------------|

ITEM 1B

ITEM 2

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|                              |  Owned      or |   | Square  |    |             |              |
|-----------------------------------|---------------------|--------|---------|---------|------------------|-------------------|
|  Location                    | Leased              |   | Footage |    | Business Segment | Primary Use       |
| Fullerton,      California        | Owned               |   |    | 208,000 |             | Corporate         | Rental |
| Düsseldorf,      Germany     | Leased              |   |    | 145,000 |             | PoloExpress       | Office      & Warehousing |
| Düsseldorf,      Germany     | Leased              |   |    | 117,000 |             | Hein      Gericke | Office      & Warehousing |
| Huntington      Beach, California | Owned               |   |    | 58,000  |             | Corporate         | Rental |
| Titusville,      Florida          | Leased              |   |    | 37,000  |             | Aerospace         | Distribution |
| Atlanta,      Georgia             | Leased              |   |    | 29,000  |             | Aerospace         | Distribution |
| McLean,      Virginia             | Leased              |   |    | 17,000  |             | Corporate         | Office |
| Tustin,      California           | Leased              |   |    | 15,000  |             | Hein      Gericke | Office      & Warehousing |
| Wichita,      Kansas              | Owned               |   |    | 11,000  |             | Aerospace         | Distribution |
| Harrogate,      United Kingdom    | Leased              |   |    | 5,000   |             | Hein      Gericke | Office |

ITEM 3

ITEM4.

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ITEM 5

|                |   | Stock      Price |   |
|---------------------|--------|------------------|--------|
|                |   | High             |   |   | Low |   |
| Fiscal      2007    |   |             |   |   |   |   |
| First      Quarter  |   | $                | 2.69   |   |   | $ | 2.00 |   |
| Second      Quarter |   |             | 2.47   |   |   |   | 1.75 |   |
| Third      Quarter  |   |             | 2.30   |   |   |   | 1.60 |   |
| Fourth      Quarter |   |             | 2.40   |   |   |   | 1.72 |   |
|                |   |             |   |   |   |   |   |   |
| Fiscal      2006    |   |             |   |   |   |   |   |   |
| First      Quarter  |   | $                | 2.85   |   |   | $ | 2.11 |   |
| Second      Quarter |   |             | 2.79   |   |   |   | 2.26 |   |
| Third      Quarter  |   |             | 2.61   |   |   |   | 2.00 |   |
| Fourth      Quarter |   |             | 2.80   |   |   |   | 2.08 |   |

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|                                                                             | Total      equity compensation plans approved by shareholders |
|----------------------------------------------------------------------------------|---------------------------------------------------------------|
| Number      of securities to be issued upon exercise of outstanding      options | 126,000                                                       |
| Weighted      average exercise price of outstanding options                      | $2.28                                                         |
| Number      of securities remaining available for future issuance                | None                                                          |

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ITEM 6.

|                                                            |   |               |    |   |               |   |    |            |   |   |    |   |   | 3      Month |    |   |   |   |
|-----------------------------------------------------------------|--------|--------------------|---------|--------|--------------------|--------|---------|-----------------|--------|--------|---------|--------|--------|--------------|---------|--------|--------|--------|
|                                                            |   |               |    |   |               |   |    |            |   |   |    |   |   | Transition   |    |   |   |   |
|                                                            |   | Years      Ended   |    |   | Period      Ended  |   |    | Year      Ended |   |
|                                                            |   | September      30, |    |   | September      30, |   |    | June      30,   |   |
|                                                            |   | 2007               |    |   | 2006               |   |    | 2005            |   |   | 2004    |   |   | 2003         |    |   | 2003   |   |
| Summary      of Operations:                                     |   |               |    |   |               |   |    |            |   |   |    |   |   |         |    |   |   |   |
|  Net      sales                                            |   | $                  | 355,008 |   |               | $      | 308,641 |            |   | $      | 341,587 |   |   | $            | 318,132 |   |   | $      | 14,857 |   |   | $ | 59,633 |   |
|  Rental      revenue                                       |   |               | 950     |   |               |   | 950     |            |   |   | 656     |   |   |         | 930     |   |   |   | 260 |   |   |   | 808 |   |
|  Gross      margin                                         |   |               | 142,487 |   |               |   | 123,641 |            |   |   | 130,492 |   |   |         | 122,490 |   |   |   | 3,924 |   |   |   | 20,699 |   |
|  Operating      loss                                       |   |               | (40,546 | )      |               |   | (26,929 | )               |   |   | (28,305 | )      |   |         | (14,099 | )      |   |   | (5,955 | ) |   |   | (51,348 | ) |
|  Net      interest expense                                 |   |               | 11,448  |   |               |   | 8,501   |            |   |   | 11,427  |   |   |         | 10,599  |   |   |   | 662 |   |   |   | 22,328 |   |
|  Income      tax benefit (provision)                       |   |               | 6,768   |   |               |   | (2,176  | )               |   |   | 1,048   |   |   |         | 8,953   |   |   |   | 415 |   |   |   | (408 | ) |
|  Loss      from continuing operations                      |   |               | (39,118 | )      |               |   | (33,890 | )               |   |   | (27,309 | )      |   |         | (7,388  | )      |   |   | (2,486 | ) |   |   | (83,837 | ) |
|  Loss      per share from continuing operations:           |   |               |    |   |               |   |    |            |   |   |    |   |   |         |    |   |   |   |   |   |   |   |   |   |
|       Basic      and diluted      |   | $                  | (1.55   | )      |               | $      | (1.34   | )               |   | $      | (1.08   | )      |   | $            | (0.29   | )      |   | $      | (0.10 | ) |   | $ | (3.33 | ) |
|  Other      Data:                                          |   |               |    |   |               |   |    |            |   |   |    |   |   |         |    |   |   |   |   |   |   |   |   |   |
|  Capital      expenditures                                 |   |               | 11,729  |   |               |   | 7,777   |            |   |   | 11,668  |   |   |         | 12,260  |   |   |   | 312 |   |   |   | 7,888 |   |
|  Cash      provided by (used for) operating activities     |   |               | 10,373  |   |               |   | (71,773 | )               |   |   | (13,060 | )      |   |         | (13,101 | )      |   |   | (6,971 | ) |   |   | (122,521 | ) |
|  Cash      provided by (used for) investing activities     |   |               | 9,441   |   |               |   | 54,987  |            |   |   | 26,802  |   |   |         | (97,284 | )      |   |   | 29 |   |   |   | 605,516 |   |
|  Cash      provided by (used for) financing activities     |   |               | (19,463 | )      |               |   | 12,328  |            |   |   | (13,807 | )      |   |         | 116,622 |   |   |   | 1,523 |   |   |   | (485,842 | ) |
|  Balance      Sheet Data:                                  |   |               |    |   |               |   |    |            |   |   |    |   |   |         |    |   |   |   |   |   |   |   |   |   |
|  Total      assets                                         |   |               | 357,354 |   |               |   | 415,129 |            |   |   | 448,639 |   |   |         | 499,165 |   |   |   | 377,208 |   |   |   | 390,549 |   |
|  Long-term      debt, less current maturities              |   |               | 25,767  |   |               |   | 65,450  |            |   |   | 47,990  |   |   |         | 61,382  |   |   |   | 4,277 |   |   |   | 2,815 |   |
|  Stockholders'      equity                                 |   |               | 92,885  |   |               |   | 89,018  |            |   |   | 111,346 |   |   |         | 138,896 |   |   |   | 136,139 |   |   |   | 137,957 |   |
|      Per      outstanding common share |   | $                  | 3.68    |   |               | $      | 3.53    |            |   | $      | 4.41    |   |   | $            | 5.52    |   |   | $      | 5.41 |   |   | $ | 5.48 |   |

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ITEM7.

|  | ·   | At      our Aerospace segment, we have enhanced our efforts to develop new      products. This includes a concentration on expansion opportunities for the      products and services we offer to extend across a larger group of aircraft      fleet and customer base. In 2007, our Aerospace segment generated revenue      growth of 8.1% and operating income growth of 9.2% over the prior year.      While the impact of our work has yet to be fully realized, we are      optimistic that our expectations to achieve substantial additional growth      within our Aerospace segment can occur in the near  future. |
|--|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·   | At      our PoloExpress segment, in an effort to further strengthen the range of      our products, we introduced several third party brands, offered more      casual wear offerings, added two new stores in Switzerland, and relocated      5 store locations within Germany, optimizing store location and store      size. Excluding foreign currency factors, our PoloExpress segment      experienced revenue growth of 15.6% over the prior year. We have also      decided, that in the fall of 2008, we will move PoloExpress into a much      larger warehouse to optimize efficiency and provide sufficient space      needed to capitalize on future expansion  opportunities. |
|--|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | At      our Hein Gericke segment, we have consolidated and centralized our      warehouse facilities to one location to service all of Europe, improved      the timeliness of product deliveries from suppliers to our warehouse and      delivery to the stores, reintroduced our Hein Gericke product catalog to      expand brand awareness and attract customer traffic, and increased efforts      to optimize store location and appearance. Midway through our seasonal      period, we opened new stores in Paris and Amsterdam and relocated our      store in Vienna. Additionally, we closed 2 underperforming stores.      Recently, we have restructured our management team providing them with      clear goals to: maximize gross margins without reducing sales; optimize      inventory management by purchasing more fast moving products; reduce the      number of upscale third party brands offered; minimize the number of slow      moving or low margin products offered; and strictly maintain cash flow      within budgeted guidelines. Although margins improved slightly in fiscal      2007, an effort to reduce the level of “discontinued products” during the      last three months of the fiscal year partially offset our margin      gains. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·   | At      Corporate, we intensified efforts to reduce corporate expenses and      maximize returns generated by the sale of non-core      assets.  Accordingly, we successfully negotiated reductions in      our corporate insurance contracts. In 2007, we reduced expenses by in      excess of $2.8 million for salaries, travel expenses, and our director and      officer insurance expenses, over the costs incurred in    2006. |
|--|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | ·   | In      August 2007, we purchased annuities to settle the liabilities of an      overfunded pension plan, which resulted in net remaining assets of      approximately $8.7 million. This action triggered settlement accounting,      which required us to expense approximately $26.2 million relating to the      previous unrecognized actuarial losses and the costs associated with      purchasing annuity contracts.  In September 2007, we would have      been required to recognize approximately $17.0 million as a reduction to      stockholders' equity upon the adoption of SFAS No. 158, Employers’ Accounting for      Defined Benefit Pension and Other Postretirement Pension Plans, to      recognized actuarial losses which were previously amortizable under the      prior accounting rules. In September 2007, the settled pension plan,      including its $8.7 million net remaining assets, was merged with one of      our underfunded pension plans.  In accordance with the Pension      Protection Act of 2006, this action reduces the amount we will be required      to contribute to our underfunded pensionplan. |
|--|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·   | In      September 2007, we decided to amend certain retiree medical plans to      eliminate subsidized supplemental Medicare insurance coverage for the      current and future retirees of our non-class action retiree medical plans      effective January 1, 2008. This action provided income recognition of      approximately $11.8 million in fiscal 2007, as a result of the reduction      in our postretirement benefitsliabilities. |
|--|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·   | On      October 31, 2007, we resolved all disputes with Alcoa related to the 2002      sale of the fastener business to Alcoa.  Accordingly, $25.3      million of the escrow account was released to us and Alcoa made an      additional payment to us of $0.6 million and assumed specified liabilities      for foreign taxes, environmental matters, and worker compensation      claims.  We used $20.9 million of these proceeds to fully repay      the GoldenTree loan, which carried a variable interest rate of 12.8% at      September 30, 2007.  We expect the repayment of this loan will      eliminate in excess of $2.5 million in annual interest    costs. |
|--|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·   | On      October 31, 2007, we sold our property in Fullerton, California to Alcoa      for $19.0 million.  We used $13.0 million of these proceeds to      fully repay the Beal Bank loan, which carried a variable interest rate of      11.2% at September 30, 2007.  We expect the repayment of this      loan will eliminate in excess of $1.0 million in annual interest      costs. |
|--|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·   | In      December 2007, we decided to change the investment allocation of our      pension plan assets to a more traditional allocation of 60% in equity      securities and 40% in fixed-income securities, from the previous very      conservative allocation of 80% invested fixed income securities and 20% in      equity. Our goal is to maximize returns by taking on an additional nominal      risk. We expect this investment reallocation will significantly reduce the      actual amounts of our annual long-term future cash contribution      requirements. |
|--|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·   | During      the three months ended December 31, 2007, actions were taken to      consolidate and restructure back office functions at Hein      Gericke. |
|--|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | At      our Aerospace segment, we expect to continue our growth by offering      additional products, obtaining required certifications and delivering new      products recently developed, pursuing refinancing opportunities of our      existing debt, and maximizing cash flow  opportunities. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | At      our PoloExpress segment, we expect to continue our growth through opening      new store locations and optimizing current store locations, transitioning      to our new warehouse location, maximizing inventory management      opportunities, continuing to add to our product offerings, pursuing      refinancing opportunities, and maximizing cash flow      opportunities. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | ·   | At      our Hein Gericke segment, we expect to continue cost structure      improvements by taking aggressive actions to reduce additional expenses,      including: closing stores which do not provide a positive contribution;      reducing advertising expense; and considering opportunities to further      reduce warehousing expenses. Additionally, we expect to achieve a      significant improvement in gross margin contribution, conclude the      refinancing of the GMAC loan, pursue additional refinancing opportunities,      and produce positive cash flow for theyear. |
|--|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | At      our Corporate segment, we expect to continue efforts to generate cash from      the liquidation of non-core assets, including the pending sale for $7.3      million of our Huntington Beach, California property and disposing of      additional non-core property andinvestments. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | At      our Corporate segment, we expect to continue efforts to further reduce      expenses. |
|--------------------|-----------------------------------------------------------------------------------------------|

| ·   | We      may consider opportunities to dispose of one or more of our core      businesses in an effort to receive optimal values or eliminate future cash      needs. We expect to use the proceeds received from a disposal at optimal      value to pursue new acquisition opportunities or reinvest in our remaining      businesses. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We      may also consider raising cash to meet the subsequent needs of our      operations by issuing additional stock or debt, entering into partnership      arrangements, liquidating assets, or other  means. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

| (In      thousands)          |   | Years      Ended September 30, |    |
|------------------------------|--------|--------------------------------|---------|
|                         |   | 2007                           |    |   | 2006 |   |   | 2005 |   |
| Revenues                     |   |                           |    |   |   |   |   |   |   |
| PoloExpress                  |   | $                              | 140,611 |   |   | $ | 112,786 |   |   | $ | 111,161 |   |
| Hein      Gericke            |   |                           | 128,335 |   |   |   | 116,255 |   |   |   | 145,933 |   |
| Aerospace                    |   |                           | 86,062  |   |   |   | 79,600 |   |   |   | 84,493 |   |
| Corporate      and Other     |   |                           | 950     |   |   |   | 950 |   |   |   | 656 |   |
| Total                        |   | $                              | 355,958 |   |   | $ | 309,591 |   |   | $ | 342,243 |   |
|                         |   |                           |    |   |   |   |   |   |   |   |   |   |
| Operating      Income (Loss) |   |                           |    |   |   |   |   |   |   |   |   |   |
| PoloExpress                  |   | $                              | 12,131  |   |   | $ | 11,796 |   |   | $ | 9,895 |   |
| Hein      Gericke            |   |                           | (25,926 | ) |   |   | (22,084 | ) |   |   | (15,295 | ) |
| Aerospace                    |   |                           | 6,519   |   |   |   | 5,968 |   |   |   | 6,093 |   |
| Corporate      and Other     |   |                           | (33,270 | ) |   |   | (22,609 | ) |   |   | (28,998 | ) |
| Total                        |   | $                              | (40,546 | ) |   | $ | (26,929 | ) |   | $ | (28,305 | ) |

----

----

----

----

----

----

----

| ·   | Liquidating      investments and other non-coreassets. |
|--------------------|--------------------------------------------------------|

| ·   | Refinancing      existing debt and borrowing additional funds which may be available to us      from improved performance at our Aerospace and PoloExpress operations or      increased values of certain real estate weown. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Eliminating,      reducing, or delaying all non-essential services provided by outside      parties, including consultants. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------|

| ·   | Significantly      reducing our corporate overheadexpenses. |
|--------------------|-------------------------------------------------------------|

| ·   | Delaying      inventory purchases. |
|--------------------|------------------------------------|

----

| (In      thousands)                            |   | 2008   |    |   | 2009   |   |   | 2010   |   |   | 2011   |   |   | 2012   |   |   | Thereafter |   |   | Total  |   |
|------------------------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|------------|--------|--------|--------|--------|
| Debt                                           |   | $      | 48,511  |   |   | $      | 3,864  |   |   | $      | 21,903 |   |   | $      | -      |   |       | $      | -      |   |   | $ | - |   |   | $ | 74,278 |   |
| Estimated      interest costs                  |   |   | 4,797   |   |   |   | 2,900  |   |   |   | 1,608  |   |   |   | -      |   |       |   | -      |   |   |   | - |   |   |   | 9,305 |   |
| Capital      lease obligations                 |   |   | 724     |   |   |   | -      |   |   |   | -      |   |   |   | -      |   |       |   | -      |   |   |   | - |   |   |   | 724 |   |
| Operating      lease commitments               |   |   | 27,833  |   |   |   | 22,977 |   |   |   | 17,126 |   |   |   | 13,717 |   |       |   | 11,099 |   |   |   | 54,143 |   |   |   | 146,895 |   |
| Pension      contributions                     |   |   | 4,700   |   |   |   | 6,500  |   |   |   | 6,500  |   |   |   | 6,300  |   |       |   | 6,100  |   |   |   | 15,300 |   |   |   | 45,400 |   |
| Postretirement      benefits                   |   |   | 2,553   |   |   |   | 2,346  |   |   |   | 2,276  |   |   |   | 2,190  |   |       |   | 2,097  |   |   |   | 8,715 |   |   |   | 20,177 |   |
| Acquire      remaining interest in PoloExpress |   |   | 15,369  |   |   |   | -      |   |   |   | -      |   |   |   | -      |   |       |   | -      |   |   |   | - |   |   |   | 15,369 |   |
| Total      contractual cash obligations        |   | $      | 104,487 |   |   | $      | 38,587 |   |   | $      | 49,413 |   |   | $      | 22,207 |   |       | $      | 19,296 |   |   | $ | 78,158 |   |   | $ | 312,148 |   |

----

----

ITEM 7A

|                    |       |                     |                   |   |  Total    |
|-------------------------|------------|--------------------------|------------------------|--------|----------------|
|                    |  Euro |  British      Pound |  Swiss      Franc | Other  |  Exposure |
| Revenues                | 78%        | 18%                      | 4%                     | 0%     | 100%           |
| Operating      Expenses | 80%        | 17%                      | 3%                     | 0%     | 100%           |
| Working      Capital    | 82%        | 14%                      | 2%                     | 2%     | 100%           |

----

ITEM 8

|                                                                                                              | Page   |
|-------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                              |   |
| Report of BDO Seidman, LLP, Independent Registered      Public Accounting Firm                                    | 32     |
|                                                                                                              |   |
| Report of KPMG LLP, Independent Registered Public      Accounting Firm                                            | 33     |
|                                                                                                              |   |
| Consolidated Balance Sheets as of September 30, 2007 and      2006                                                | 34     |
|                                                                                                              |   |
| Consolidated Statements of Operations for the years ended      September 30, 2007, 2006, and 2005                 | 36     |
|                                                                                                              |   |
| Consolidated Statements of Stockholders’ Equity for the      years ended September 30, 2007, 2006, and 2005 | 37     |
|                                                                                                              |   |
| Consolidated Statements of Cash Flows for the years ended      September 30, 2007, 2006, and 2005                 | 38     |
|                                                                                                              |   |
| Notes to Consolidated Financial Statements                                                                        | 39     |

----

Report ofIndependent Registered Public Accounting Firm

----

Report ofIndependent Registered Public Accounting Firm

----

CONSOLIDATED BALANCE SHEETS

| ASSETS                                                                                        |               |
|-----------------------------------------------------------------------------------------------|--------------------|
|                                                                                          | September      30, |   |
|                                                                                          | 2007               |   |   | 2006 |   |
| CURRENT      ASSETS:                                                                          |               |   |   |   |   |   |
| Cash      and cash equivalents - unrestricted                                                 |               | $ | 9,527 |   |   | $ | 8,541 |   |
| Cash      and cash equivalents - restricted                                                   |               |   | 3,243 |   |   |   | .- |   |
| Short-term      investments - unrestricted                                                    |               |   | 2,192 |   |   |   | 50,510 |   |
| Short-term      investments - restricted                                                      |               |   | 47,411 |   |   |   | 6,002 |   |
| Accounts      receivable-trade, net                                                           |               |   | 16,566 |   |   |   | 16,927 |   |
| Inventories,      net                                                                         |               |   | 118,205 |   |   |   | 106,718 |   |
| Prepaid      expenses and other current assets                                                |               |   | 10,085 |   |   |   | 10,795 |   |
| Total      Current Assets                                                                     |               |   | 207,229 |   |   |   | 199,493 |   |
|                                                                                          |               |   |   |   |   |   |   |   |
| Property,      plant and equipment, net                                                       |               |   | 64,390 |   |   |   | 58,698 |   |
| Goodwill                                                                                      |               |   | 13,721 |   |   |   | 14,128 |   |
| Amortizable      intangible assets, net of accumulated amortization of $2,322 and      $1,673 |               |   | 892 |   |   |   | 1,279 |   |
| Non-amortizable      intangible assets                                                        |               |   | 33,509 |   |   |   | 30,969 |   |
| Prepaid      pension assets                                                                   |               |   | .- |   |   |   | 33,373 |   |
| Deferred      loan fees                                                                       |               |   | 1,537 |   |   |   | 3,170 |   |
| Long-term      investments - unrestricted                                                     |               |   | 3,499 |   |   |   | 4,370 |   |
| Long-term      investments - restricted                                                       |               |   | 21,190 |   |   |   | 60,949 |   |
| Notes      receivable                                                                         |               |   | 3,459 |   |   |   | 5,396 |   |
| Other      assets                                                                             |               |   | 7,928 |   |   |   | 3,304 |   |
| TOTAL      ASSETS                                                                             |               | $ | 357,354 |   |   | $ | 415,129 |   |
|                                                                                          |               |   |   |   |   |   |   |   |

----

| LIABILITIES      AND STOCKHOLDERS’ EQUITY                                                          |               |
|----------------------------------------------------------------------------------------------------------|--------------------|
|                                                                                                     | September      30, |   |
|                                                                                                     | 2007               |   |   | 2006 |   |
| CURRENT      LIABILITIES:                                                                                |               |   |   |   |   |   |
| Bank      notes payable and current maturities of long-term debt                                         |               | $ | 49,235 |   |   | $ | 25,492 |   |
| Accounts      payable                                                                                    |               |   | 32,128 |   |   |   | 26,325 |   |
| Accrued      liabilities:                                                                                |               |   |   |   |   |   |   |   |
|     Salaries,      wages and commissions                                             |               |   | 10,521 |   |   |   | 10,044 |   |
|     Insurance                                                                        |               |   | 6,224 |   |   |   | 7,357 |   |
|     Interest                                                                         |               |   | 697 |   |   |   | 1,810 |   |
|     Other      accrued liabilities                                                   |               |   | 41,468 |   |   |   | 28,304 |   |
|     Income      taxes                                                                |               |   | 186 |   |   |   | 2,314 |   |
| Current      liabilities of discontinued operations                                                      |               |   | - |   |   |   | 62 |   |
| Total      Current Liabilities                                                                           |               |   | 140,459 |   |   |   | 101,708 |   |
|                                                                                                     |               |   |   |   |   |   |   |   |
| Long-term      debt, less current maturities                                                             |               |   | 25,767 |   |   |   | 65,450 |   |
| Other      long-term liabilities                                                                         |               |   | 15,247 |   |   |   | 31,750 |   |
| Pension      liabilities                                                                                 |               |   | 34,825 |   |   |   | 40,622 |   |
| Retiree      health care liabilities                                                                     |               |   | 16,231 |   |   |   | 26,008 |   |
| Deferred      tax liability                                                                              |               |   | 4,884 |   |   |   | 4,530 |   |
| Noncurrent      income taxes                                                                             |               |   | 10,936 |   |   |   | 39,923 |   |
| Noncurrent      liabilities of discontinued operations                                                   |               |   | 16,120 |   |   |   | 16,120 |   |
| TOTAL      LIABILITIES                                                                                   |               |   | 264,469 |   |   |   | 326,111 |   |
| Commitments      and contingencies                                                                       |               |   |   |   |   |   |   |   |
| STOCKHOLDERS'      EQUITY:                                                                               |               |   |   |   |   |   |   |   |
| Class      A common stock, $0.10 par value; 40,000 shares authorized,                                    |               |   |   |   |   |   |   |   |
|   30,480      shares issued and 22,605 shares outstanding; entitled to one vote per      share |               |   | 3,047 |   |   |   | 3,047 |   |
| Class      B common stock, $0.10 par value; 20,000 shares authorized,                                    |               |   |   |   |   |   |   |   |
|   2,621      shares issued and outstanding; entitled to ten votes per    share                 |               |   | 262 |   |   |   | 262 |   |
| Paid-in      capital                                                                                     |               |   | 232,639 |   |   |   | 232,612 |   |
| Treasury      stock, at cost, 7,875 shares of Class A common stock                                       |               |   | (76,352 | ) |   |   | (76,352 | ) |
| Accumulated      deficit                                                                                 |               |   | (16,021 | ) |   |   | (15,680 | ) |
| Note      due from stockholder                                                                           |               |   | (43 | ) |   |   | (43 | ) |
| Accumulated      other comprehensive loss                                                                |               |   | (50,647 | ) |   |   | (54,828 | ) |
| TOTAL      STOCKHOLDERS' EQUITY                                                                          |               |   | 92,885 |   |   |   | 89,018 |   |
| TOTAL      LIABILITIES AND STOCKHOLDERS' EQUITY                                                          |               | $ | 357,354 |   |   | $ | 415,129 |   |
|                                                                                                     |               |   |   |   |   |   |   |   |

----

CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                            |   | Years      Ended September 30, |    |
|-----------------------------------------------------------------|--------|--------------------------------|---------|
|                                                            |   | 2007                           |    |   | 2006 |   |   | 2005 |   |
| REVENUE:                                                        |   |                           |    |   |   |   |   |   |   |
|    Net      sales                                |   | $                              | 355,008 |   |   | $ | 308,641 |   |   | $ | 341,587 |   |
|    Rental      revenue                           |   |                           | 950     |   |   |   | 950 |   |   |   | 656 |   |
|                                                            |   |                           | 355,958 |   |   |   | 309,591 |   |   |   | 342,243 |   |
|  COSTS      AND EXPENSES:                                  |   |                           |    |   |   |   |   |   |   |   |   |   |
|    Cost      of goods sold                       |   |                           | 213,241 |   |   |   | 185,712 |   |   |   | 211,582 |   |
|    Cost      of rental revenue                   |   |                           | 230     |   |   |   | 238 |   |   |   | 169 |   |
|    Selling,      general & administrative    |   |                           | 186,860 |   |   |   | 155,364 |   |   |   | 163,734 |   |
|    Other      income, net                        |   |                           | (4,476  | ) |   |   | (5,336 | ) |   |   | (5,497 | ) |
|    Amortization      of intangibles              |   |                           | 649     |   |   |   | 542 |   |   |   | 560 |   |
|                                                            |   |                           | 396,504 |   |   |   | 336,520 |   |   |   | 370,548 |   |
|                                                            |   |                           |    |   |   |   |   |   |   |   |   |   |
|  OPERATING      LOSS                                       |   |                           | (40,546 | ) |   |   | (26,929 | ) |   |   | (28,305 | ) |
|                                                            |   |                           |    |   |   |   |   |   |   |   |   |   |
|  Interest      expense                                     |   |                           | (14,278 | ) |   |   | (11,498 | ) |   |   | (13,143 | ) |
|  Interest      income                                      |   |                           | 2,830   |   |   |   | 2,997 |   |   |   | 1,716 |   |
|  Net      interest expense                                 |   |                           | (11,448 | ) |   |   | (8,501 | ) |   |   | (11,427 | ) |
|  Investment      income                                    |   |                           | 6,019   |   |   |   | 2,923 |   |   |   | 5,920 |   |
|  Fair      market value increase in interest rate contract |   |                           | -       |   |   |   | 836 |   |   |   | 5,942 |   |
|  Loss      from continuing operations before income taxes  |   |                           | (45,975 | ) |   |   | (31,671 | ) |   |   | (27,870 | ) |
|  Income      tax (provision) benefit                       |   |                           | 6,768   |   |   |   | (2,176 | ) |   |   | 1,048 |   |
|  Equity      in income (loss) of affiliates, net           |   |                           | 89      |   |   |   | (43 | ) |   |   | (487 | ) |
|  Loss      from continuing operations                      |   |                           | (39,118 | ) |   |   | (33,890 | ) |   |   | (27,309 | ) |
|  Net      loss from discontinued operations                |   |                           | (6,469  | ) |   |   | (14,405 | ) |   |   | (4,806 | ) |
|  Net      gain on disposal of discontinued operations      |   |                           | 45,315  |   |   |   | 13,600 |   |   |   | 13,575 |   |
|  Income      tax provision from discontinued operations    |   |                           | (69     | ) |   |   | (2,604 | ) |   |   | (825 | ) |
|  NET      LOSS                                             |   | $                              | (341    | ) |   | $ | (37,299 | ) |   | $ | (19,365 | ) |
|                                                            |   |                           |    |   |   |   |   |   |   |   |   |   |
| BASIC AND DILUTED      EARNINGS (LOSS) PER SHARE:               |   |                           |    |   |   |   |   |   |   |   |   |   |
|  Loss      from continuing operations                      |   | $                              | (1.55   | ) |   | $ | (1.34 | ) |   | $ | (1.08 | ) |
|  Net      loss from discontinued operations                |   |                           | (0.26   | ) |   |   | (0.58 | ) |   |   | (0.19 | ) |
|  Net      gain on disposal of discontinued operations      |   |                           | 1.80    |   |   |   | 0.54 |   |   |   | 0.54 |   |
|  Income      tax provision from discontinued operations    |   |                           | -       |   |   |   | (0.10 | ) |   |   | (0.03 | ) |
| NET      LOSS                                                   |   | $                              | (0.01   | ) |   | $ | (1.48 | ) |   | $ | (0.76 | ) |
|                                                            |   |                           |    |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding:                       |   |                           |    |   |   |   |   |   |   |   |   |   |
|   Basic      and Diluted                              |   |                           | 25,226  |   |   |   | 25,226 |   |   |   | 25,224 |   |

----

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

|                                                  |   |         |   |   |         |   |   |    |   |   |     |   |   | Retained     |    |   |          |   |    | Accumulated   |   |   |   |   |
|-------------------------------------------------------|--------|--------------|--------|--------|--------------|--------|--------|---------|--------|--------|----------|--------|--------|--------------|---------|--------|---------------|--------|---------|---------------|--------|--------|--------|--------|
|                                                  |   | Class      A |   |   | Class      B |   |   |    |   |   |     |   |   | Earnings     |    |   | Notes         |   |    | Other         |   |   |   |   |
|                                                  |   | Common       |   |   | Common       |   |   | Paid-in |   |   | Treasury |   |   | (Accumulated |    |   | Due      From |   |    | Comprehensive |   |   |   |   |
|                                                  |   | Stock        |   |   | Stock        |   |   | Capital |   |   | Stock    |   |   | Deficit)     |    |   | Stockholders  |   |    | Loss          |   |   | Total  |   |
| Balance,      October 1, 2004                         |   | $            | 3,038  |   |         | $      | 262    |    |   | $      | 232,766  |   |   | $            | (76,459 | )      |          | $      | 40,984  |          |   | $      | (1,061 | )      |   | $ | (60,634 | ) |   | $ | 138,896 |   |
| Comprehensive      income (loss):                     |   |         |   |   |         |   |   |    |   |   |     |   |   |         |    |   |          |   |    |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss                                         |   |         | -      |   |         |   | -      |    |   |   | -        |   |   |         | -       |   |          |   | (19,365 | )             |   |   | -      |   |   |   | - |   |   |   | (19,365 | ) |
| Cumulative      translation adjustment                |   |         | -      |   |         |   | -      |    |   |   | -        |   |   |         | -       |   |          |   | -       |          |   |   | -      |   |   |   | (1,366 | ) |   |   | (1,366 | ) |
| Change      in fair market value of cash flow hedges  |   |         | -      |   |         |   | -      |    |   |   | -        |   |   |         | -       |   |          |   | -       |          |   |   | -      |   |   |   | 114 |   |   |   | 114 |   |
| Excess      of additional pension liability over      |   |         |   |   |         |   |   |    |   |   |     |   |   |         |    |   |          |   |    |          |   |   |   |   |   |   |   |   |   |   |   |   |
|   unrecognized      prior service cost      |   |         | -      |   |         |   | -      |    |   |   | -        |   |   |         | -       |   |          |   | -       |          |   |   | -      |   |   |   | (7,457 | ) |   |   | (7,457 | ) |
| Net      unrealized holding changes on                |   |         |   |   |         |   |   |    |   |   |     |   |   |         |    |   |          |   |    |          |   |   |   |   |   |   |   |   |   |   |   |   |
|  available-for-sale      securities              |   |         | -      |   |         |   | -      |    |   |   | -        |   |   |         | -       |   |          |   | -       |          |   |   | -      |   |   |   | (235 | ) |   |   | (235 | ) |
| Total      comprehensive loss                         |   |         |   |   |         |   |   |    |   |   |     |   |   |         |    |   |          |   |    |          |   |   |   |   |   |   |   |   |   |   | (28,309 | ) |
| Proceeds      received from deferred compensation     |   |         |   |   |         |   |   |    |   |   |     |   |   |         |    |   |          |   |    |          |   |   |   |   |   |   |   |   |   |   |   |   |
|   units      exercised                      |   |         | 9      |   |         |   | -      |    |   |   | (309     | )      |   |         | 300     |   |          |   | -       |          |   |   | -      |   |   |   | - |   |   |   | - |   |
| Purchase      of treasury shares                      |   |         | -      |   |         |   | -      |    |   |   | -        |   |   |         | (193    | )      |          |   | -       |          |   |   | -      |   |   |   | - |   |   |   | (193 | ) |
| Proceeds      from stockholders loan repayments       |   |         | -      |   |         |   | -      |    |   |   | -        |   |   |         | -       |   |          |   | -       |          |   |   | 952    |   |   |   | - |   |   |   | 952 |   |
| Balance,      September 30, 2005                      |   |         | 3,047  |   |         |   | 262    |    |   |   | 232,457  |   |   |         | (76,352 | )      |          |   | 21,619  |          |   |   | (109   | )      |   |   | (69,578 | ) |   |   | 111,346 |   |
| Comprehensive      income (loss):                     |   |         |   |   |         |   |   |    |   |   |     |   |   |         |    |   |          |   |    |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss                                         |   |         | -      |   |         |   | -      |    |   |   | -        |   |   |         | -       |   |          |   | (37,299 | )             |   |   | -      |   |   |   | - |   |   |   | (37,299 | ) |
| Cumulative      translation adjustment                |   |         | -      |   |         |   | -      |    |   |   | -        |   |   |         | -       |   |          |   | -       |          |   |   | -      |   |   |   | 2,591 |   |   |   | 2,591 |   |
| Change      in fair market value of cash flow hedges  |   |         | -      |   |         |   | -      |    |   |   | -        |   |   |         | -       |   |          |   | -       |          |   |   | -      |   |   |   | 298 |   |   |   | 298 |   |
| Excess      of unrecognized prior service cost        |   |         |   |   |         |   |   |    |   |   |     |   |   |         |    |   |          |   |    |          |   |   |   |   |   |   |   |   |   |   |   |   |
|   over      additional pension liability    |   |         | -      |   |         |   | -      |    |   |   | -        |   |   |         | -       |   |          |   | -       |          |   |   | -      |   |   |   | 8,051 |   |   |   | 8,051 |   |
| Net      unrealized holding changes      on           |   |         |   |   |         |   |   |    |   |   |     |   |   |         |    |   |          |   |    |          |   |   |   |   |   |   |   |   |   |   |   |   |
|        available-for-sale securities             |   |         | -      |   |         |   | -      |    |   |   | -        |   |   |         | -       |   |          |   | -       |          |   |   | -      |   |   |   | 3,810 |   |   |   | 3,810 |   |
| Total      comprehensive      loss                    |   |         | -      |   |         |   |   |    |   |   |     |   |   |         |    |   |          |   |    |          |   |   |   |   |   |   |   |   |   |   | (22,549 | ) |
| Compensation      expense      from stock options     |   |         | -      |   |         |   | -      |    |   |   | 155      |   |   |         | -       |   |          |   | -       |          |   |   | -      |   |   |   | - |   |   |   | 155 |   |
| Proceeds      from stockholders      loan repayments  |   |         | -      |   |         |   | -      |    |   |   | -        |   |   |         | -       |   |          |   | -       |          |   |   | 66     |   |   |   | - |   |   |   | 66 |   |
| Balance,      September 30, 2006                      |   |         | 3,047  |   |         |   | 262    |    |   |   | 232,612  |   |   |         | (76,352 | )      |          |   | (15,680 | )             |   |   | (43    | )      |   |   | (54,828 | ) |   |   | 89,018 |   |
| Comprehensive      income (loss):                     |   |         |   |   |         |   |   |    |   |   |     |   |   |         |    |   |          |   |    |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss                                         |   |         | -      |   |         |   | -      |    |   |   | -        |   |   |         | -       |   |          |   | (341    | )             |   |   | -      |   |   |   | - |   |   |   | (341 | ) |
| Cumulative      translation      adjustment           |   |         | -      |   |         |   | -      |    |   |   | -        |   |   |         | -       |   |          |   | -       |          |   |   | -      |   |   |   | 9,998 |   |   |   | 9,998 |   |
| Excess      of additional pension      liability over |   |         |   |   |         |   |   |    |   |   |     |   |   |         |    |   |          |   |    |          |   |   |   |   |   |   |   |   |   |   |   |   |
|   unrecognized      prior service cost      |   |         | -      |   |         |   | -      |    |   |   | -        |   |   |         | -       |   |          |   | -       |          |   |   | -      |   |   |   | (864 | ) |   |   | (864 | ) |
| Net      unrealized holding changes      on           |   |         |   |   |         |   |   |    |   |   |     |   |   |         |    |   |          |   |    |          |   |   |   |   |   |   |   |   |   |   |   |   |
|        available-for-sale      securities        |   |         | -      |   |         |   | -      |    |   |   | -        |   |   |         | -       |   |          |   | -       |          |   |   | -      |   |   |   | 86 |   |   |   | 86 |   |
| Total      comprehensive income                       |   |         |   |   |         |   |   |    |   |   |     |   |   |         |    |   |          |   |    |          |   |   |   |   |   |   |   |   |   |   | 8,879 |   |
| Compensation      expense from stock options          |   |         | -      |   |         |   | -      |    |   |   | 27       |   |   |         | -       |   |          |   | -       |          |   |   | -      |   |   |   | - |   |   |   | 27 |   |
| Adjustment      to initially apply SFAS No.      158  |   |         | -      |   |         |   | -      |    |   |   | -        |   |   |         | -       |   |          |   | -       |          |   |   | -      |   |   |   | (5,039 | ) |   |   | (5,039 | ) |
| Balance,      September 30,      2007                 |   | $            | 3,047  |   |         | $      | 262    |    |   | $      | 232,639  |   |   | $            | (76,352 | )      |          | $      | (16,021 | )             |   | $      | (43    | )      |   | $ | (50,647 | ) |   | $ | 92,885 |   |

----

CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                        |   | Years      Ended September 30, |    |
|---------------------------------------------------------------------------------------------|--------|--------------------------------|---------|
|                                                                                        |   | 2007                           |    |   | 2006 |   |   | 2005 |   |
| Cash flows from      operating activities:                                                  |   |                           |    |   |   |   |   |   |   |
|   Net      loss                                                                   |   | $                              | (341    | ) |   | $ | (37,299 | ) |   | $ | (19,365 | ) |
|   Depreciation      and amortization                                              |   |                           | 9,006   |   |   |   | 7,523 |   |   |   | 7,873 |   |
|   Deferred      loan fees amortization                                            |   |                           | 1,770   |   |   |   | 1,138 |   |   |   | 1,329 |   |
|   Provision      for doubtful accounts                                            |   |                           | 624     |   |   |   | 1,002 |   |   |   | 629 |   |
|   Reserve      for inventory obsolescence                                         |   |                           | 1,412   |   |   |   | 768 |   |   |   | 3,378 |   |
|   Deferred      income taxes                                                      |   |                           | (6,669  | ) |   |   | 1,834 |   |   |   | (2,225 | ) |
|   Gain      on collection of note receivable                                      |   |                           | (2,110  | ) |   |   | - |   |   |   | - |   |
|   (Gain)      loss on sale of property, plant, and equipment, net                 |   |                           | 271     |   |   |   | (8 | ) |   |   | (645 | ) |
|   Compensation      expense from stock options                                    |   |                           | 27      |   |   |   | 155 |   |   |   | - |   |
|   Loss      on sale of affiliates and equity in (income) loss of      affiliates  |   |                           | (89     | ) |   |   | 43 |   |   |   | 487 |   |
|   Unrealized      holding gain on interest rate contract                          |   |                           | -       |   |   |   | (836 | ) |   |   | (5,942 | ) |
|   Loss      from impairments                                                      |   |                           | -       |   |   |   | - |   |   |   | 2,894 |   |
|   Realized      gain from sale and impairment of investments                      |   |                           | (5,557  | ) |   |   | (1,812 | ) |   |   | (7,022 | ) |
|   Net      pension and postretirement settlement charge                           |   |                           | 14,540  |   |   |   | - |   |   |   | - |   |
|   Net      sales (purchases) of trading securities                                |   |                           | 47,215  |   |   |   | (33,025 | ) |   |   | 8,102 |   |
|   Change      in cash and cash equivalents - restricted                           |   |                           | (3,243  | ) |   |   | - |   |   |   | - |   |
|   Change      in accounts receivable                                              |   |                           | 55      |   |   |   | 950 |   |   |   | 9,288 |   |
|   Change      in inventories                                                      |   |                           | (3,166  | ) |   |   | (12,709 | ) |   |   | (332 | ) |
|   Change      in prepaid expenses and other current assets                        |   |                           | 3,092   |   |   |   | (3,054 | ) |   |   | 417 |   |
|   Change      in other non-current assets and liabilities                         |   |                           | (13,668 | ) |   |   | 12,994 |   |   |   | (4,076 | ) |
|   Change      in accounts payable and accrued liabilities                         |   |                           | 9,880   |   |   |   | 14,405 |   |   |   | (7,548 | ) |
|   Change      in pension and health care liabilities                              |   |                           | (30,114 | ) |   |   | (11,927 | ) |   |   | 8,160 |   |
|   Non-cash      charges and working capital changes of discontinued    operations |   |                           | (12,562 | ) |   |   | (11,915 | ) |   |   | (8,462 | ) |
|   Net      cash provided by (used for) operating activities                       |   |                           | 10,373  |   |   |   | (71,773 | ) |   |   | (13,060 | ) |
| Cash flows from      investing activities:                                                  |   |                           |    |   |   |   |   |   |   |   |   |   |
|   Purchase      of property, plant and equipment                                  |   |                           | (11,729 | ) |   |   | (7,777 | ) |   |   | (11,668 | ) |
|   Proceeds      from sale of property, plant, and equipment                       |   |                           | 29      |   |   |   | 61 |   |   |   | 10,502 |   |
|   Purchases      of available-for-sale investment securities                      |   |                           | (29,199 | ) |   |   | (39,716 | ) |   |   | (14,527 | ) |
|   Proceeds      from the sale of available-for-sale investment securities         |   |                           | 35,345  |   |   |   | 43,955 |   |   |   | 24,059 |   |
|   Equity      (divestiture) investment in affiliates                              |   |                           | -       |   |   |   | - |   |   |   | (400 | ) |
|   Acquisitions,      net of cash acquired                                         |   |                           | (350    | ) |   |   | - |   |   |   | - |   |
|   Net      proceeds received from the sale of discontinued operations             |   |                           | 12,500  |   |   |   | 54,561 |   |   |   | 18,500 |   |
|   Changes      in notes receivable                                                |   |                           | 2,845   |   |   |   | 4,001 |   |   |   | 963 |   |
|   Investing      activities of discontinued operations                            |   |                           | -       |   |   |   | (98 | ) |   |   | (627 | ) |
|   Net      cash provided by investing activities                                  |   |                           | 9,441   |   |   |   | 54,987 |   |   |   | 26,802 |   |
| Cash flows from      financing activities:                                                  |   |                           |    |   |   |   |   |   |   |   |   |   |
|   Proceeds      from issuance of debt                                             |   |                           | 17,830  |   |   |   | 50,068 |   |   |   | 29,894 |   |
|   Debt      repayments                                                            |   |                           | (37,260 | ) |   |   | (30,589 | ) |   |   | (43,395 | ) |
|   Purchase      of treasury stock                                                 |   |                           | -       |   |   |   | - |   |   |   | (193 | ) |
|   Payment      of financing fees                                                  |   |                           | (33     | ) |   |   | (2,403 | ) |   |   | (377 | ) |
|   Proceeds      from stockholder loan repayments                                  |   |                           | -       |   |   |   | 66 |   |   |   | 952 |   |
|   Payment      of interest rate contract                                          |   |                           | -       |   |   |   | (4,310 | ) |   |   | - |   |
|   Financing      activities of discontinued operations                            |   |                           | -       |   |   |   | (504 | ) |   |   | (688 | ) |
|   Net      cash provided by (used for) financing activities                       |   |                           | (19,463 | ) |   |   | 12,328 |   |   |   | (13,807 | ) |
| Net      change in cash and cash equivalents                                                |   |                           | (351    | ) |   |   | (4,458 | ) |   |   | (65 | ) |
| Effect      of exchange rate changes on cash                                                |   |                           | 635     |   |   |   | 417 |   |   |   | (202 | ) |
| Cash      and cash equivalents, beginning of the year                                       |   |                           | 8,541   |   |   |   | 12,582 |   |   |   | 12,849 |   |
| Cash      and cash equivalents, end of the year                                             |   | $                              | 9,527   |   |   | $ | 8,541 |   |   | $ | 12,582 |   |

----

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

----

| (In      thousands)     |   | 2007   |   |   | 2006   |   |   | 2005   |   |
|-------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|  Interest          |   | $      | 15,391 |   |   | $      | 10,131 |   |   | $ | 13,488 |   |
|  Income      taxes |   |   | 2,287  |   |   |   | 260    |   |   |   | 520 |   |

----

| (In      thousands)                          |   | 2007   |   |   | 2006   |   |   | 2005   |   |
|----------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Beginning      Balance                       |   | $      | 1,083  |   |   | $      | 2,679  |   |   | $ | 2,775 |   |
| Charges      to cost and expenses            |   |   | 624    |   |   |   | 1,002  |   |   |   | 629 |   |
| Charges      (credits) to other accounts (a) |   |   | 83     |   |   |   | 41     |   |   |   | (183 | ) |
| Amounts      written off                     |   |   | (588   | )      |   |   | (2,639 | )      |   |   | (542 | ) |
| Ending      Balance                          |   | $      | 1,202  |   |   | $      | 1,083  |   |   | $ | 2,679 |   |

| (a) | Represent  recoveries      of amounts written off in prior periods and foreign currency translation      adjustments. |
|-----|---------------------------------------------------------------------------------------------------------------------------------|

|                                   |   | September      30, |    |
|----------------------------------------|--------|--------------------|---------|
| (In      thousands)                    | 2007   |               | 2006    |   |
| Finished      goods                    |   | $                  | 117,704 |   |   | $ | 106,718 |   |
| Raw      materials and work-in-process |   |               | 501     |   |   |   | - |   |
| Total      inventories                 |   | $                  | 118,205 |   |   | $ | 106,718 |   |

| (In      thousands)                          |   | 2007   |   |   | 2006   |   |   | 2005   |   |
|----------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Beginning      Balance                       |   | $      | 15,223 |   |   | $      | 15,118 |   |   | $ | 13,681 |   |
| Charges      to cost and expenses            |   |   | 1,412  |   |   |   | 768    |   |   |   | 3,378 |   |
| Charges      (credits) to other accounts (a) |   |   | 672    |   |   |   | 196    |   |   |   | (616 | ) |
| Amounts      written off                     |   |   | (389   | )      |   |   | (859   | )      |   |   | (1,325 | ) |
| Ending      Balance                          |   | $      | 16,918 |   |   | $      | 15,223 |   |   | $ | 15,118 |   |

| (a) | Represent  recoveries      of amounts written off in prior periods and foreign currency translation      adjustments. |
|-----|---------------------------------------------------------------------------------------------------------------------------------|

----

|                                        |   | September      30, |   |
|---------------------------------------------|--------|--------------------|--------|
| (In      thousands)                         |   | 2007               |   |   | 2006 |   |
| Land                                        |   | $                  | 21,607 |   |   | $ | 21,606 |   |
| Building      and improvements              |   |               | 18,724 |   |   |   | 11,482 |   |
| Machinery      and equipment                |   |               | 17,948 |   |   |   | 14,866 |   |
| Transportation      vehicles                |   |               | 7,150  |   |   |   | 7,134 |   |
| Furniture      and fixtures                 |   |               | 29,536 |   |   |   | 24,838 |   |
| Construction      in progress               |   |               | 3,434  |   |   |   | 3,761 |   |
| Property,      plant and equipment, at cost |   |               | 98,399 |   |   |   | 83,687 |   |
| Less:      Accumulated depreciation         |   |               | 34,009 |   |   |   | 24,989 |   |
| Net      property, plant and equipment      |   | $                  | 64,390 |   |   | $ | 58,698 |   |

----

----

| (In      thousands, except per share data)                                                                                        |   | 2005   |    |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|
| Net      loss, as reported                                                                                                        |   | $      | (19,365 | ) |
| Total      stock-based employee compensation expense determined under the fair value      based method for all awards, net of tax |   |   | (150    | ) |
| Pro      Forma                                                                                                                    |   | $      | (19,515 | ) |
| Basic      and diluted loss per share:                                                                                            |   |   |    |   |
| As      reported                                                                                                                  |   | $      | (0.76   | ) |
| Pro      forma                                                                                                                    |   |   | (0.77   | ) |

|                         | 2007 | 2006      | 2005      |
|------------------------------|------|-----------|-----------|
| Risk-free      interest rate | N/A  | 4.6%-5.0% | 3.6%-4.2% |
| Expected      life in years  | N/A  | 4.94      | 4.94      |
| Expected      volatility     | N/A  | 60%-61%   | 61%-63%   |
| Expected      dividends      | N/A  | None      | None      |

----

----

|                | September      30, |   | Translation |   | September      30, |   | Error      |   | Translation |   | September      30, |   |
|---------------------|--------------------|--------|-------------|--------|--------------------|--------|------------|--------|-------------|--------|--------------------|--------|
| (In      thousands) | 2005               |   | Adjustment  |   | 2006               |   | Correction |   | Adjustment  |   | 2007               |   |
|  PoloExpress   |               | $      | 3,140       |   |               | $      | 167        |   |        | $      | 3,307              |   |   | $ | (728 | ) |   | $ | 321 |   |   | $ | 2,900 |   |
|  Aerospace     |               |   | 10,821      |   |               |   | -          |   |        |   | 10,821             |   |   |   | - |   |   |   | - |   |   |   | 10,821 |   |
|  Total         |               | $      | 13,961      |   |               | $      | 167        |   |        | $      | 14,128             |   |   | $ | (728 | ) |   | $ | 321 |   |   | $ | 13,721 |   |

|   |      The      components of intangible assets, all of which pertain to our PoloExpress      and Hein Gericke segments, were asfollows: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                              | September      30, |   |         |   | Translation |   | September      30, |   |        |   | Error      |   |         |   | Translation |   | September      30, |
|-----------------------------------|--------------------|--------|--------------|--------|-------------|--------|--------------------|--------|-------------|--------|------------|--------|--------------|--------|-------------|--------|--------------------|
| (In      thousands)               | 2005               |   | Amortization |   | Adjustment  |   | 2006               |   | Acquisition |   | Correction |   | Amortization |   | Adjustment  |   | 2007               |
|  Trademarks                  | $                  | 29,424 |         | $      | -           |   | $                  | 1,545  |        | $      | 30,969     |   | $            | -      |        | $      | (1,467             | ) | $ | - |   | $ | 4,007 |   | $ | 33,509 |
|  Customer      relationships |               | 1,721  |         |   | (533        | )      |               | 91     |        |   | 1,279      |   |         | 323    |        |   | (131               | ) |   | (649 | ) |   | 70 |   |   | 892 |
|  Other                       |               | 8      |         |   | (8          | )      |               | -      |        |   | -          |   |         | -      |        |   | -                  |   |   | - |   |   | - |   |   | - |
|  Total                       | $                  | 31,153 |         | $      | (541        | )      | $                  | 1,636  |        | $      | 32,248     |   | $            | 323    |        | $      | (1,598             | ) | $ | (649 | ) | $ | 4,077 |   | $ | 34,401 |

----

|                                                                                                                   |   | September      30, 2007 |   |   | September      30, 2006 |   |
|------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|--------|--------|-------------------------|--------|
|                                                                                                                   |   | Aggregate               |   |   | Aggregate               |   |
|                                                                                                                   |   | Fair                    |   |   | Cost                    |   |   | Fair |   |   | Cost |   |
| (In      thousands)                                                                                                    |   | Value                   |   |   | Basis                   |   |   | Value |   |   | Basis |   |
|  Cash      and cash equivalents:                                                                                  |   |                    |   |   |                    |   |   |   |   |   |   |   |
|       Money      market and other cash funds                                             |   | $                       | 9,527  |   |                    | $      | 9,527 |   |   | $ | 8,541 |   |   | $ | 8,541 |   |
|       Money      market and other cash funds - restricted                                |   |                    | 3,243  |   |                    |   | 3,243 |   |   |   | - |   |   |   | - |   |
|  Total      cash and cash equivalents                                                                             |   |                    | 12,770 |   |                    |   | 12,770 |   |   |   | 8,541 |   |   |   | 8,541 |   |
|                                                                                                                   |   |                    |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |
|  Short-term      investments:                                                                                     |   |                    |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |
|       Money      market funds – available-for-sale – restricted              |   |                    | 33,767 |   |                    |   | 33,767 |   |   |   | 6,002 |   |   |   | 6,002 |   |
|       Corporate      bonds – trading securities                                    |   |                    | -      |   |                    |   | - |   |   |   | 42,919 |   |   |   | 42,919 |   |
|       Equity      securities – trading securities                                  |   |                    | -      |   |                    |   | - |   |   |   | 2,459 |   |   |   | 2,459 |   |
|       Equity      and equivalent securities – available-for-sale                   |   |                    | 2,192  |   |                    |   | 932 |   |   |   | 5,132 |   |   |   | 825 |   |
|       Equity      and equivalent securities – available-for-sale -restricted       |   |                    | 13,644 |   |                    |   | 11,565 |   |   |   | - |   |   |   | - |   |
|  Total      short-term investments                                                                                |   |                    | 49,603 |   |                    |   | 46,264 |   |   |   | 56,512 |   |   |   | 52,205 |   |
|                                                                                                                   |   |                    |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |
|  Long-term      investments:                                                                                      |   |                    |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |
|       U.S.      government securities – available-for-sale – restricted      |   |                    | -      |   |                    |   | - |   |   |   | 512 |   |   |   | 512 |   |
|       Money      market funds – available-for-sale – restricted              |   |                    | 6,643  |   |                    |   | 6,643 |   |   |   | 10,313 |   |   |   | 10,313 |   |
|       Corporate      bonds – available-for-sale – restricted                 |   |                    | 6,300  |   |                    |   | 6,300 |   |   |   | 28,934 |   |   |   | 29,326 |   |
|       Equity      and equivalent securities – available-for-sale –restricted |   |                    | 8,247  |   |                    |   | 5,941 |   |   |   | 9,275 |   |   |   | 7,984 |   |
|       Other      securities – available-for-sale - restricted                      |   |                    | -      |   |                    |   | - |   |   |   | 11,915 |   |   |   | 11,565 |   |
|       Other      investments, at cost                                                    |   |                    | 3,499  |   |                    |   | 3,499 |   |   |   | 4,370 |   |   |   | 4,370 |   |
|  Total      long-term investments                                                                                 |   |                    | 24,689 |   |                    |   | 22,383 |   |   |   | 65,319 |   |   |   | 64,070 |   |
| Total      cash equivalents and investments                                                                            |   | $                       | 87,062 |   |                    | $      | 81,417 |   |   | $ | 130,372 |   |   | $ | 124,816 |   |

----

| (In      thousands)                                                        |   | 2007   |   |   | 2006   |   |   | 2005   |   |
|----------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|  Gross      realized gain from sales of available-for-sale securities |   | $      | 3,861  |   |   | $      | 873    |   |   | $ | 262 |   |
|  Gross      realized loss from sales of available-for-sale securities |   |   | -      |   |   |   | -      |   |   |   | (191 | ) |
|  Gross      realized gain from sales of trading securities            |   |   | 1,696  |   |   |   | 667    |   |   |   | 183 |   |
|  Gross      realized loss from sales of trading securities            |   |   | -      |   |   |   | (200   | )      |   |   | (6 | ) |
|  Change      in unrealized holding gain from trading securities       |   |   | -      |   |   |   | 475    |   |   |   | 746 |   |
|  Gross      realized loss from impairments                            |   |   | -      |   |   |   | -      |   |   |   | (825 | ) |
|  Dividend      income                                                 |   |   | 462    |   |   |   | 1,108  |   |   |   | 5,751 |   |
|                                                                       |   | $      | 6,019  |   |   | $      | 2,923  |   |   | $ | 5,920 |   |

|                               | September      30, |   |
|------------------------------------|--------------------|--------|
|                               | 2007               |   | 2006 |   |
| (In      thousands)                | Fair      Value    |   | Cost      Basis |   | Fair      Value |   | Cost      Basis |   |
|  Due      in one year or less |               | $      | - |   |   | $ | - |   |   | $ | 29,065 |   |   | $ | 29,457 |   |
|  Due      after ten years     |               |   | 6,300 |   |   |   | 6,300 |   |   |   | 43,300 |   |   |   | 43,300 |   |
|                               |               | $      | 6,300 |   |   | $ | 6,300 |   |   | $ | 72,365 |   |   | $ | 72,757 |   |

----

| 4.  NOTES      PAYABLE AND LONG-TERM DEBT |
|-----------------------------------------------------|

|                                                                    |   | September      30, |    |
|-------------------------------------------------------------------------|--------|--------------------|---------|
|                                                                    |   | 2007               |    |   | 2006 |   |
| (In      thousands)                                                     |   | Amount             |    |   | Average      Rate |   |   | Amount |   |   | Average      Rate |   |
|  Revolving      credit facilities – Hein Gericke             |   | $                  | 11,410  |   |   |   | 7.7 | % |   | $ | 11,425 |   |   |   | 6.9 | % |
|  Current      maturities of long-term debt                         |   |               | 37,825  |   |   |   |   |   |   |   | 14,067 |   |   |   |   |   |
|  Total      notes payable and current maturities of long-term debt |   |               | 49,235  |   |   |   |   |   |   |   | 25,492 |   |   |   |   |   |
|  GoldenTree      term loan – Corporate                       |   |               | 20,938  |   |   |   | 12.8 | % |   |   | 30,000 |   |   |   | 12.8 | % |
|  Term      loan agreement – Hein Gericke                     |   |               | 3,711   |   |   |   | 5.2 | % |   |   | 6,090 |   |   |   | 4.4 | % |
|  Term      loan agreement – PoloExpress                      |   |               | 6,992   |   |   |   | 5.3 | % |   |   | 11,292 |   |   |   | 4.7 | % |
|  Promissory      note – Corporate                            |   |               | 13,000  |   |   |   | 11.2 | % |   |   | 13,000 |   |   |   | 11.5 | % |
|  CIT      revolving credit facility – Aerospace              |   |               | 12,042  |   |   |   | 8.8 | % |   |   | 9,603 |   |   |   | 9.3 | % |
|  GMAC      credit facility – Hein Gericke                    |   |               | 3,511   |   |   |   | 8.0 | % |   |   | 3,118 |   |   |   | 7.0 | % |
|  Other      notes payable, collateralized by assets                |   |               | 2,674   |   |   |   | 6.8 | % |   |   | 3,837 |   |   |   | 6.7 | % |
|  Capital      lease obligations                                    |   |               | 724     |   |   |   | 7.8 | % |   |   | 2,577 |   |   |   | 8.9 | % |
|  Less:      current maturities of long-term debt                   |   |               | (37,825 | ) |   |   |   |   |   |   | (14,067 | ) |   |   |   |   |
|  Net      long-term debt                                           |   |               | 25,767  |   |   |   |   |   |   |   | 65,450 |   |   |   |   |   |
|  Total      debt                                                   |   | $                  | 75,002  |   |   |   |   |   |   | $ | 90,942 |   |   |   |   |   |

| ·   | We      must maintain cash, cash equivalents, or public securities that meet or      exceed a minimum liquidity threshold of between $10.0 million and $20.0      million. At September 30, 2007, our minimum liquidity requirement was      $12.4 million, and accordingly we have classified $12.4 million of cash      and qualified investments as restricted  investments. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A      change of control whereby Jeffrey Steiner, Eric Steiner, or Natalia Hercot      cease to own a controlling interest in The Fairchild Corporation would be      an event of default under the loan. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

|                                                      |   | Pension      Benefits |    |   | Postretirement      Benefits (a) |   |
|-----------------------------------------------------------|--------|-----------------------|---------|--------|----------------------------------|--------|
|                                                      |   | September      30,    |    |   | September      30,               |   |
| (In      thousands)                                       |   | 2007                  |    |   | 2006                             |   |   | 2007 |   |   | 2006 |   |
|  Change      in benefit obligation:                  |   |                  |    |   |                             |   |   |   |   |   |   |   |
|  Benefit      obligation at beginning of year        |   | $                     | 178,339 |   |                             | $      | 198,441 |   |   | $ | 26,185 |   |   | $ | 34,859 |   |
|  Service      cost                                   |   |                  | 322     |   |                             |   | 391 |   |   |   | 11 |   |   |   | 26 |   |
|  Interest      cost                                  |   |                  | 9,749   |   |                             |   | 10,589 |   |   |   | 1,521 |   |   |   | 1,920 |   |
|  Plan      participants’ contributions         |   |                  | -       |   |                             |   | - |   |   |   | 1,052 |   |   |   | 791 |   |
|  Amendments                                          |   |                  | (108    | )      |                             |   | (3 | ) |   |   | - |   |   |   | (2,569 | ) |
|  Actuarial      (gain) loss                          |   |                  | 6,145   |   |                             |   | (9,530 | ) |   |   | 5,784 |   |   |   | (3,989 | ) |
|  Settlements                                         |   |                  | -       |   |                             |   | - |   |   |   | (11,797 | ) |   |   | - |   |
|  Benefits      paid                                  |   |                  | (19,307 | )      |                             |   | (21,549 | ) |   |   | (4,370 | ) |   |   | (4,853 | ) |
|  Medicare      subsidy received                      |   |                  | -       |   |                             |   | - |   |   |   | 320 |   |   |   | - |   |
|  Benefit      obligation at end of year              |   |                  | 175,140 |   |                             |   | 178,339 |   |   |   | 18,706 |   |   |   | 26,185 |   |
|                                                      |   |                  |    |   |                             |   |   |   |   |   |   |   |   |   |   |   |
|  Change      in plan assets:                         |   |                  |    |   |                             |   |   |   |   |   |   |   |   |   |   |   |
|  Fair      value of plan assets at beginning of year |   |                  | 150,612 |   |                             |   | 163,282 |   |   |   | - |   |   |   | - |   |
|  Actual      return on plan assets                   |   |                  | 5,866   |   |                             |   | 4,630 |   |   |   | - |   |   |   | - |   |
|  Employer      contribution                          |   |                  | 2,745   |   |                             |   | 4,251 |   |   |   | 3,318 |   |   |   | 4,062 |   |
|  Plan      participants’ contributions         |   |                  | -       |   |                             |   | - |   |   |   | 1,052 |   |   |   | 791 |   |
|  Expenses                                            |   |                  | -       |   |                             |   | (2 | ) |   |   | - |   |   |   | - |   |
|  Benefits      paid                                  |   |                  | (19,307 | )      |                             |   | (21,549 | ) |   |   | (4,370 | ) |   |   | (4,853 | ) |
|  Fair      value of plan assets at end of year       |   |                  | 139,916 |   |                             |   | 150,612 |   |   |   | - |   |   |   | - |   |
|                                                      |   |                  |    |   |                             |   |   |   |   |   |   |   |   |   |   |   |
|  Funded      status                                  |   |                  | (35,224 | )      |                             |   | (27,727 | ) |   |   | (18,706 | ) |   |   | (26,185 | ) |
|  Unrecognized      net actuarial loss                |   |                  | -       |   |                             |   | 80,691 |   |   |   | - |   |   |   | 16,414 |   |
|  Unrecognized      prior service cost                |   |                  | -       |   |                             |   | 1,513 |   |   |   | - |   |   |   | (19,588 | ) |
|  Net      amount recognized                          |   | $                     | (35,224 | )      |                             | $      | 54,477 |   |   | $ | (18,706 | ) |   | $ | (29,359 | ) |

| (a) | Exclusive      of death benefit obligation discussedbelow. |
|-----|------------------------------------------------------------|

----

|                                                                                                  |   | Pension      Benefits |    |   | Postretirement      Benefits |   |
|-------------------------------------------------------------------------------------------------------|--------|-----------------------|---------|--------|------------------------------|--------|
|                                                                                                  |   | September      30,    |    |   | September      30,           |   |
| (In      thousands)                                                                                   |   | 2007                  |    |   | 2006                         |   |   | 2007 |   |   | 2006 |   |
| Amounts      recognized in our consolidated balance sheets:                                           |   |                  |    |   |                         |   |   |   |   |   |   |   |
|           Prepaid      benefit cost                 |   | $                     | -       |   |                         | $      | 33,373 |   |   | $ | - |   |   | $ | - |   |
|           Accrued      liabilities                  |   |                  | (399    | )      |                         |   | - |   |   |   | (2,475 | ) |   |   | (3,351 | ) |
|           Accrued      benefit cost                 |   |                  | (34,825 | )      |                         |   | (42,432 | ) |   |   | (16,231 | ) |   |   | (26,008 | ) |
|           Intangible      assets                    |   |                  | -       |   |                         |   | 1,513 |   |   |   | - |   |   |   | - |   |
|           Accumulated      other comprehensive loss |   |                  | -       |   |                         |   | 62,023 |   |   |   | - |   |   |   | - |   |
|           Net      amount recognized                |   | $                     | (35,224 | )      |                         | $      | 54,477 |   |   | $ | (18,706 | ) |   | $ | (29,359 | ) |
|                                                                                                  |   |                  |    |   |                         |   |   |   |   |   |   |   |   |   |   |   |
| Amounts      recognized in accumulated other comprehensive income    (loss):                          |   |                  |    |   |                         |   |   |   |   |   |   |   |   |   |   |   |
|           Unamortized      prior service costs      |   | $                     | 1,253   |   |                         |   |   |   |   | $ | - |   |   |   |   |   |
|           Unamortized      net gains and other      |   |                  | 63,228  |   |                         |   |   |   |   |   | 3,445 |   |   |   |   |   |
|           Total      amount recognized              |   | $                     | 64,481  |   |                         |   |   |   |   | $ | 3,445 |   |   |   |   |   |
|                                                                                                  |   |                  |    |   |                         |   |   |   |   |   |   |   |   |   |   |   |
| Pension      plans with an accumulated benefit obligation                                             |   |                  |    |   |                         |   |   |   |   |   |   |   |   |   |   |   |
| in      excess of plan assets:                                                                        |   |                  |    |   |                         |   |   |   |   |   |   |   |   |   |   |   |
|           Projected      benefit obligation         |   | $                     | 127,249 |   |                         | $      | 134,184 |   |   |   |   |   |   |   |   |   |
|           Accumulated      benefit obligation       |   |                  | 126,259 |   |                         |   | 133,623 |   |   |   |   |   |   |   |   |   |
|           Fair      value of plan assets            |   |                  | 92,025  |   |                         |   | 91,191 |   |   |   |   |   |   |   |   |   |

|                               |   | Pension      Benefits |   |   | Postretirement      Benefits |   |
|------------------------------------|--------|-----------------------|--------|--------|------------------------------|--------|
|                               |   | September      30,    |   |   | September      30,           |   |
|                               |   | 2007                  |   |   | 2006                         |   |   | 2007 |   |   | 2006 |   |
| Discount      rate                 |   |                  | 6.375  | %      |                         |   | 6.000 | % |   |   | 6.375 | % |   |   | 6.000 | % |
| Rate      of compensation increase |   |                  | 3.750  | %      |                         |   | 3.750 | % |   |   | N/A |   |   |   | N/A |   |

----

|                                          | Pension      Benefits |   | Postretirement      Benefits |
|-----------------------------------------------|-----------------------|--------|------------------------------|
|                                          | September      30,    |   | September      30,           |
|                                          | 2007                  | 2006   |                         | 2007 | 2006 |
| Discount      rate                            | 6.000%                | 5.625% |                         | 6.000% | 5.625% |
| Expected      long-term return on plan assets | 8.000%                | 8.500% |                         | N/A | N/A |
| Rate      of compensation increase            | 3.750%                | 3.750% |                         | N/A | N/A |

|                                       |   | Pension      Benefits |    |   | Postretirement      Benefits |   |
|--------------------------------------------|--------|-----------------------|---------|--------|------------------------------|--------|
| (In      thousands)                        |   | 2007                  |    |   | 2006                         |   |   | 2005 |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |
| Service      cost                          |   | $                     | 322     |   |                         | $      | 391 |   |   | $ | 534 |   |   | $ | 11 |   |   | $ | 26 |   |   | $ | 42 |   |
| Interest      cost                         |   |                  | 9,749   |   |                         |   | 10,589 |   |   |   | 11,529 |   |   |   | 1,521 |   |   |   | 1,920 |   |   |   | 2,901 |   |
| Expected      return on assets             |   |                  | (11,693 | )      |                         |   | (13,675 | ) |   |   | (14,443 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
| Amortization      of prior service cost    |   |                  | 260     |   |                         |   | 260 |   |   |   | 314 |   |   |   | (1,566 | ) |   |   | (1,111 | ) |   |   | (217 | ) |
| Amortization      of actuarial (gain)/loss |   |                  | 3,109   |   |                         |   | 3,675 |   |   |   | 3,509 |   |   |   | 1,055 |   |   |   | 1,301 |   |   |   | 1,306 |   |
| Net      periodic pension cost             |   |                  | 1,747   |   |                         |   | 1,240 |   |   |   | 1,443 |   |   |   | 1,021 |   |   |   | 2,136 |   |   |   | 4,032 |   |
|  Curtailment      charge (a)          |   |                  | -       |   |                         |   | - |   |   |   | 970 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|  Settlement      (income)/charge (b)  |   |                  | 26,337  |   |                         |   | 524 |   |   |   | 750 |   |   |   | (11,797 | ) |   |   | - |   |   |   | - |   |
| Total      net pension cost                |   | $                     | 28,084  |   |                         | $      | 1,764 |   |   | $ | 3,163 |   |   | $ | (10,776 | ) |   | $ | 2,136 |   |   | $ | 4,032 |   |

| (a) | The      curtailment charge reflects the freezing of our SERP plan for the      remaining active employee participants who were executive officers as of      December 31, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | The      pension settlement charge in 2007 reflects primarily recognition of      accumulated actuarial losses resulting from the closure of an overfunded      pension plan and merger with an underfunded pension plan.  The      $11.8 million postretirement income recognition in 2007 resulted from a      decision to eliminate health care assistance to retirees for whom we are      not contractually obligated to provide benefits.  These 2007      amounts were recorded in selling, general, and administrative      expense.  As a result of the sale of Fairchild Aerostructures on      June 24, 2005, we have settled the pension benefits for the Fairchild      Aerostructures employees. This amount was recorded in discontinued      operations. The 2006 settlement resulted from lump distributions from our      SERP plan. |

----

|                   |   | September      30, |   |
|------------------------|--------|--------------------|--------|
|                   |   | 2007               |   |   | 2006 |   |
| Asset      Category:   |   |               |   |   |   |   |
| Equity      securities |   |               | 18.2   | % |   |   | 13.1 | % |
| Debt      securities   |   |               | 72.5   | % |   |   | 81.8 | % |
| Other                  |   |               | 9.3    | % |   |   | 5.1 | % |
| Total                  |   |               | 100.0  | % |   |   | 100.0 | % |

| Asset      Category:   |   |   |        |
|------------------------|--------|--------|-------------|
| Equity      securities |   |   | 10–30 | % |
| Debt      securities   |   |   | 65–85 | % |
| Real      estate       |   |   | 0–20  | % |
| Other                  |   |   | 0–20  | % |

----

|                   |   | Pension  |   |   | Postretirement |   |
|------------------------|--------|----------|--------|--------|----------------|--------|
| (In      thousands)    |   | Benefits |   |   | Benefits       |   |
| 2008                   |   | $        | 10,990 |   |           | $      | 2,553 |   |
| 2009                   |   |     | 10,567 |   |           |   | 2,346 |   |
| 2010                   |   |     | 10,330 |   |           |   | 2,276 |   |
| 2011                   |   |     | 10,191 |   |           |   | 2,190 |   |
| 2012                   |   |     | 10,151 |   |           |   | 2,097 |   |
| 2013      – 2015 |   |     | 47,534 |   |           |   | 8,715 |   |

| (In      thousands)                                 |   | Prior      to SFAS 158 Adjustment |    |   | SFAS      158 Adjustment |   |   | Post      SFAS 158 Adjustment |   |
|-----------------------------------------------------|--------|-----------------------------------|---------|--------|--------------------------|--------|--------|-------------------------------|--------|
| Accrued      liabilities                            |   | $                                 | (61,297 | )      |                     | $      | 7,367  |                          |   | $ | (53,930 | ) |
| Intangible      assets                              |   |                              | 1,253   |   |                     |   | (1,253 | )                             |   |   | - |   |
| Accumulated      other comprehensive loss (pre tax) |   |                              | 62,887  |   |                     |   | 5,039  |                          |   |   | 67,926 |   |

----

|                             |                  |   |     | Postretirement |   |   |   |   |
|----------------------------------|-----------------------|--------|----------|----------------|--------|--------|--------|--------|
| (In      thousands)              | Pension      Benefits |   | Benefits |           | Total  |   |
| Prior      service cost/(credit) |                  | $      | 260      |           |   | $      | -      |   |   | $ | 260 |   |
| (Gains)/losses      and other    |                  |   | 2,968    |           |   |   | 174    |   |   |   | 3,142 |   |

| (In      thousands)                                    |   | 2007   |    |   | 2006   |   |   | 2005   |   |
|--------------------------------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|
| (Earnings)      loss from continuing operations        |   | $      | (6,768  | )      |   | $      | 2,176  |   |   | $ | (1,048 | ) |
| Net      (gain) on disposal of discontinued operations |   |   | (32,815 | )      |   |   | -      |   |   |   | - |   |
| (Earnings)      loss from discontinued operations      |   |   | 69      |   |   |   | 2,604  |   |   |   | 825 |   |
|                                                   |   | $      | (39,514 | )      |   | $      | 4,780  |   |   | $ | (223 | ) |

----

| (In      thousands)                          |   | 2007   |   |   | 2006   |   |   | 2005   |   |
|----------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|  Current:                               |   |   |   |   |   |   |   |   |   |
|           Federal        |   | $      | 474    |   |   | $      | 94     |   |   | $ | - |   |
|           State          |   |   | (655   | )      |   |   | 160    |   |   |   | 241 |   |
|           Foreign        |   |   | 82     |   |   |   | 88     |   |   |   | 936 |   |
|           Total current  |   |   | (99    | )      |   |   | 342    |   |   |   | 1,177 |   |
|  Deferred:                              |   |   |   |   |   |   |   |   |   |   |   |   |
|           Federal        |   |   | -      |   |   |   | -      |   |   |   | (3,167 | ) |
|           State          |   |   | -      |   |   |   | -      |   |   |   | - |   |
|           Foreign        |   |   | (6,669 | )      |   |   | 1,834  |   |   |   | 942 |   |
|           Total deferred |   |   | (6,669 | )      |   |   | 1,834  |   |   |   | (2,225 | ) |
| Total      tax provision (benefit)           |   | $      | (6,768 | )      |   | $      | 2,176  |   |   | $ | (1,048 | ) |

| (In      thousands)                                       |   | 2007   |    |   | 2006   |   |    | 2005   |   |
|-----------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
|  Tax      at United States statutory rates           |   | $      | (16,091 | )      |   | $      | (11,085 | )      |   | $ | (9,755 | ) |
|  State      income taxes, net of federal tax benefit |   |   | (1,893  | )      |   |   | 104     |   |   |   | 157 |   |
|  Effect      of foreign operations                   |   |   | (48     | )      |   |   | 129     |   |   |   | 32 |   |
|  NOLs      untilized by discontinued operations      |   |   | 2,358   |   |   |   | -       |   |   |   | - |   |
|  Change      in valuation allowance                  |   |   | 13,054  |   |   |   | 10,846  |   |   |   | 7,996 |   |
|  Extraterritorial      income exclusion              |   |   | (272    | )      |   |   | (307    | )      |   |   | (281 | ) |
|  Rate      change                                    |   |   | (4,131  | )      |   |   | -       |   |   |   | - |   |
|  Effect      of change in tax status                 |   |   | -       |   |   |   | 1,970   |   |   |   | - |   |
|  Other,      net                                     |   |   | 255     |   |   |   | 519     |   |   |   | 803 |   |
|  Net      tax provision (benefit)                    |   | $      | (6,768  | )      |   | $      | 2,176   |   |   | $ | (1,048 | ) |

----

|                                                    |   | September      30, |     |
|---------------------------------------------------------|--------|--------------------|----------|
| (In      thousands)                                     |   | 2007               |     |   | 2006 |   |
| Deferred      tax assets:                               |   |               |     |   |   |   |
|        Accrued expenses                            |   | $                  | 4,018    |   |   | $ | 3,786 |   |
|        Asset basis differences                     |   |               | 1,650    |   |   |   | 5,629 |   |
|        Inventory                                   |   |               | 4,969    |   |   |   | 4,371 |   |
|        Employee compensation and benefits          |   |               | 3,332    |   |   |   | 2,962 |   |
|        Environmental reserves                      |   |               | 5,529    |   |   |   | 4,895 |   |
|        Postretirement health benefits              |   |               | 7,917    |   |   |   | 11,182 |   |
|        Net operating loss and credit carryforwards |   |               | 100,898  |   |   |   | 82,511 |   |
|        Other                                       |   |               | 3,806    |   |   |   | 1,904 |   |
|        Pensions                                    |   |               | 40,720   |   |   |   | 39,355 |   |
|        Total deferred tax assets                   |   |               | 172,839  |   |   |   | 156,595 |   |
|        Less:  Valuation allowance (a)         |   |               | (150,828 | ) |   |   | (128,155 | ) |
|        Net deferred tax assets                     |   |               | 22,011   |   |   |   | 28,440 |   |
| Deferred      tax liabilities:                          |   |               |     |   |   |   |   |   |
|        Asset basis differences                     |   |               | (9,129   | ) |   |   | (19,325 | ) |
|        Pensions                                    |   |               | (11,283  | ) |   |   | (13,645 | ) |
| Total      deferred tax liabilities                     |   |               | (20,412  | ) |   |   | (32,970 | ) |
| Net      deferred tax assets (liabilities)              |   | $                  | 1,599    |   |   | $ | (4,530 | ) |

| (a) | Includes      $12.5 million correction to the amount of state NOLs and $2.9 million      true-up of prior years' balances. |
|-----|----------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                              |   | September      30, |   |
|---------------------------------------------------------------------------------------------------|--------|--------------------|--------|
| (In      thousands)                                                                               |   | 2007               |   |   | 2006 |   |
|  Current      deferred tax assets included in Prepaid expenses and other current      assets |   | $                  | 1,445  |   |   | $ | - |   |
|                                                                                              |   |               |   |   |   |   |   |   |
|  Noncurrent      deferred tax assets included in Other assets                                |   | $                  | 5,038  |   |   | $ | - |   |
|  Current      liabilities:                                                                   |   |               |   |   |   |   |   |   |
|          Other current                                                             |   | $                  | 186    |   |   | $ | 2,314 |   |
|                                                                                    |   | $                  | 186    |   |   | $ | 2,314 |   |
|  Noncurrent      income tax liabilities:                                                     |   |               |   |   |   |   |   |   |
|         Deferred income taxes                                                           |   | $                  | 4,884  |   |   | $ | 4,530 |   |
|         Other noncurrent                                                                |   |               | 10,936 |   |   |   | 39,923 |   |
|                                                                                              |   | $                  | 15,820 |   |   | $ | 44,453 |   |

----

| 7.  EQUITY      SECURITIES |
|--------------------------------------|

| 8.  STOCK      OPTIONS |
|----------------------------------|

----

|                                   |   |   |      |   | Weighted      Average |   |
|----------------------------------------|--------|--------|-----------|--------|-----------------------|--------|
|                                   |   | Shares |      |   | Exercise      Price   |   |
| Outstanding      at October 1, 2004    |   |   | 1,053,043 |   |                  | $      | 5.37 |   |
|     Granted        |   |   | 77,000    |   |                  |   | 2.54 |   |
|     Expired        |   |   | (309,727  | )      |                  |   | 9.12 |   |
|     Forfeited      |   |   | (5,229    | )      |                  |   | 2.49 |   |
| Outstanding      at September 30, 2005 |   |   | 815,087   |   |                  |   | 3.70 |   |
|     Granted        |   |   | 93,000    |   |                  |   | 2.18 |   |
|     Expired        |   |   | (485,478  | )      |                  |   | 3.41 |   |
|     Forfeited      |   |   | (86,250   | )      |                  |   | 2.92 |   |
| Outstanding      at September 30, 2006 |   |   | 336,359   |   |                  |   | 3.90 |   |
|     Expired        |   |   | (210,359  | )      |                  |   | 4.86 |   |
| Outstanding      at September 30, 2007 |   |   | 126,000   |   |                  | $      | 2.28 |   |
| Exercisable      at September 30, 2005 |   |   | 664,497   |   |                  | $      | 3.71 |   |
| Exercisable      at September 30, 2006 |   |   | 246,359   |   |                  | $      | 4.53 |   |
| Exercisable      at September 30, 2007 |   |   | 58,500    |   |                  | $      | 2.42 |   |

|                 |   |   | Options      Outstanding |    | Options      Exercisable |
|----------------------|--------|--------|--------------------------|---------|--------------------------|
|                 |   |   |                     |    |                     |   |   | Weighted |   |   |   |   |   |   | Weighted |
|                 |   |   |                     |    |                     | Weighted |   | Average |   |   |   |   | Weighted |   | Average |
|                 |   |   |                     |    |                     | Average |   | Remaining |   |   |   |   | Average |   | Remaining |
| Range      of        |   |   | Number                   |    |                     | Exercise |   | Contractual |   | Number |   |   | Exercise |   | Contractual |
| Exercise      Prices |   |   | Outstanding              |    |                     | Price |   | Term |   | Exercisable |   |   | Price |   | Term |
| $      2.17 - $ 2.99 |   |   |                     | 122,000 |                     |   | $ | 2.22 |   | 3.9      years |   |   | 54,500 |   |   | $ | 2.28 |   | 1.8      years |
| $      3.00 - $ 3.99 |   |   |                     | 2,000   |                     |   |   | 3.49 |   | 2.4      years |   |   | 2,000 |   |   |   | 3.49 |   | 2.4      years |
| $      4.00 - $ 4.99 |   |   |                     | 1,000   |                     |   |   | 4.99 |   | 0.1      years |   |   | 1,000 |   |   |   | 4.99 |   | 0.1      years |
| $      5.00 - $ 5.11 |   |   |                     | 1,000   |                     |   |   | 5.11 |   | 1.1      years |   |   | 1,000 |   |   |   | 5.11 |   | 1.1      years |
| $      2.17 - $ 5.11 |   |   |                     | 126,000 |                     |   | $ | 2.28 |   | 3.8      years |   |   | 58,500 |   |   | $ | 2.42 |   | 1.8      years |

----

|                                         |   | 1996      |   |   | 2001      |   |   | Stock    |   |   |    |   |
|----------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|----------|--------|--------|---------|--------|
|                                         |   | Directors |   |   | Directors |   |   | Deferral |   |   |    |   |
| Securities to be      issued upon:           |   | Plan      |   |   | Plan      |   |   | Plan     |   |   | Total   |   |
| Exercise      of outstanding options         |   |      | 96,000 |   |      |   | 30,000 |     |   |   | -       |   |   |   | 126,000 |   |
| Weighted      average option exercise price  |   | $         | 2.26   |   |      | $      | 2.35   |     |   | $      | -       |   |   | $ | 2.28 |   |
| Issuance      of deferred compensation units |   |      | -      |   |      |   | -      |     |   |   | 177,657 |   |   |   | 177,657 |   |
| Shares      available for future issuance    |   |      | 96,000 |   |      |   | 30,000 |     |   |   | 177,657 |   |   |   | 303,657 |   |

| (In      thousands, except per share data)             |   | 2007         |    |   | 2006         |   |    | 2005         |   |
|--------------------------------------------------------|--------|--------------|---------|--------|--------------|--------|---------|--------------|--------|
| Basic      loss per share:                             |   |         |    |   |         |   |    |         |   |
| Loss      from continuing operations                   |   | $            | (39,118 | )      |         | $      | (33,890 | )            |   | $ | (27,309 | ) |
| Weighted      average common shares outstanding        |   |         | 25,226  |   |         |   | 25,226  |         |   |   | 25,224 |   |
| Basic      loss from continuing operations per share   |   | $            | (1.55   | )      |         | $      | (1.34   | )            |   | $ | (1.08 | ) |
|                                                   |   |         |    |   |         |   |    |         |   |   |   |   |
| Diluted      loss per share:                           |   |         |    |   |         |   |    |         |   |   |   |   |
| Loss      from continuing operations                   |   | $            | (39,118 | )      |         | $      | (33,890 | )            |   | $ | (27,309 | ) |
| Weighted      average common shares outstanding        |   |         | 25,226  |   |         |   | 25,226  |         |   |   | 25,224 |   |
| Diluted      effect of options                         |   | antidilutive |    |   | antidilutive |   |    | antidilutive |   |
| Total      shares outstanding                          |   |         | 25,226  |   |         |   | 25,226  |         |   |   | 25,224 |   |
| Diluted      loss from continuing operations per share |   | $            | (1.55   | )      |         | $      | (1.34   | )            |   | $ | (1.08 | ) |

----

|                                                                                   |   | September      30, |    |
|----------------------------------------------------------------------------------------|--------|--------------------|---------|
| (In      thousands)                                                                    |   | 2007               |    |   | 2006 |   |   | 2005 |   |
| Excess      of additional pension liability over unrecognized prior service      costs |   | $                  | (67,926 | ) |   | $ | (62,023 | ) |   | $ | (70,074 | ) |
| Net      unrealized holding gains on available-for-sale securities                     |   |               | 5,645   |   |   |   | 5,559 |   |   |   | 1,749 |   |
| Foreign      currency translation adjustments                                          |   |               | 11,634  |   |   |   | 1,636 |   |   |   | (955 | ) |
| Other                                                                                  |   |               | -       |   |   |   | - |   |   |   | (298 | ) |
| Accumulated      other comprehensive loss                                              |   | $                  | (50,647 | ) |   | $ | (54,828 | ) |   | $ | (69,578 | ) |

----

----

|                                |   | September      30, |   |
|-------------------------------------|--------|--------------------|--------|
| (In      thousands)                 |   | 2007               |   |   | 2006 |   |
| Machinery      and equipment        |   | $                  | 6,556  |   |   | $ | 5,177 |   |
| Other                               |   |               | -      |   |   |   | 330 |   |
| Less:      Accumulated depreciation |   |               | (3,848 | ) |   |   | (2,910 | ) |
|                                |   | $                  | 2,708  |   |   | $ | 2,597 |   |

|                                |   | September      30, |   |
|-------------------------------------|--------|--------------------|--------|
| (In      thousands)                 |   | 2007               |   |   | 2006 |   |
| Land      and improvements          |   | $                  | 5,168  |   |   | $ | 5,168 |   |
| Buildings      and improvements     |   |               | 3,423  |   |   |   | 3,423 |   |
| Less:      Accumulated depreciation |   |               | (725   | ) |   |   | (608 | ) |
|                                |   | $                  | 7,866  |   |   | $ | 7,983 |   |

----

----

----

----

|                                       |   |        |    |   |              |   |    |      |   |   | Corporate      |   |   |   |    |
|--------------------------------------------|--------|-------------|---------|--------|-------------------|--------|---------|-----------|--------|--------|----------------|--------|--------|--------|---------|
| (In      thousands)                        |   | PoloExpress |    |   | Hein      Gericke |   |    | Aerospace |   |   | and      Other |   |   | Total  |    |
|  2007                                 |   |        |    |   |              |   |    |      |   |   |           |   |   |   |    |
|  Revenues                             |   | $           | 140,611 |   |              | $      | 128,335 |      |   | $      | 86,062         |   |   | $      | 950     |   |   | $ | 355,958 |   |
|  Operating      income (loss)         |   |        | 12,131  |   |              |   | (25,926 | )         |   |   | 6,519          |   |   |   | (33,270 | ) |   |   | (40,546 | ) |
|  Interest      income                 |   |        | 520     |   |              |   | 87      |      |   |   | -              |   |   |   | 2,223   |   |   |   | 2,830 |   |
|  Interest      expense                |   |        | (1,431  | )      |              |   | (4,379  | )         |   |   | (1,394         | )      |   |   | (7,074  | ) |   |   | (14,278 | ) |
|  Income      tax (provision) benefit  |   |        | 6,702   |   |              |   | (33     | )         |   |   | (5             | )      |   |   | 104     |   |   |   | 6,768 |   |
|  Capital      expenditures            |   |        | 7,967   |   |              |   | 3,067   |      |   |   | 588            |   |   |   | 107     |   |   |   | 11,729 |   |
|  Depreciation      and amortization   |   |        | 2,303   |   |              |   | 5,042   |      |   |   | 472            |   |   |   | 1,189   |   |   |   | 9,006 |   |
|  Identifiable      assets at Sept. 30 |   |        | 96,208  |   |              |   | 95,897  |      |   |   | 49,093         |   |   |   | 116,156 |   |   |   | 357,354 |   |
|                                       |   |        |    |   |              |   |    |      |   |   |           |   |   |   |    |   |   |   |   |   |
|  2006                                 |   |        |    |   |              |   |    |      |   |   |           |   |   |   |    |   |   |   |   |   |
|  Revenues                             |   | $           | 112,786 |   |              | $      | 116,255 |      |   | $      | 79,600         |   |   | $      | 950     |   |   | $ | 309,591 |   |
|  Operating      income (loss)         |   |        | 11,796  |   |              |   | (22,084 | )         |   |   | 5,968          |   |   |   | (22,609 | ) |   |   | (26,929 | ) |
|  Interest      income                 |   |        | 927     |   |              |   | 95      |      |   |   | 2              |   |   |   | 1,973   |   |   |   | 2,997 |   |
|  Interest      expense                |   |        | (2,161  | )      |              |   | (2,586  | )         |   |   | (1,444         | )      |   |   | (5,307  | ) |   |   | (11,498 | ) |
|  Income      tax (provision) benefit  |   |        | 1,845   |   |              |   | (3,685  | )         |   |   | (11            | )      |   |   | (325    | ) |   |   | (2,176 | ) |
|  Capital      expenditures            |   |        | 1,417   |   |              |   | 5,233   |      |   |   | 332            |   |   |   | 795     |   |   |   | 7,777 |   |
|  Depreciation      and amortization   |   |        | 1,478   |   |              |   | 4,399   |      |   |   | 403            |   |   |   | 1,243   |   |   |   | 7,523 |   |
|  Identifiable      assets at Sept. 30 |   |        | 75,657  |   |              |   | 89,421  |      |   |   | 47,331         |   |   |   | 202,720 |   |   |   | 415,129 |   |
|                                       |   |        |    |   |              |   |    |      |   |   |           |   |   |   |    |   |   |   |   |   |
|  2005                                 |   |        |    |   |              |   |    |      |   |   |           |   |   |   |    |   |   |   |   |   |
|  Revenues                             |   | $           | 111,161 |   |              | $      | 145,933 |      |   | $      | 84,493         |   |   | $      | 656     |   |   | $ | 342,243 |   |
|  Operating      income (loss)         |   |        | 9,895   |   |              |   | (15,295 | )         |   |   | 6,093          |   |   |   | (28,998 | ) |   |   | (28,305 | ) |
|  Interest      income                 |   |        | -       |   |              |   | 98      |      |   |   | -              |   |   |   | 1,618   |   |   |   | 1,716 |   |
|  Interest      expense                |   |        | (1,758  | )      |              |   | (3,632  | )         |   |   | (1,329         | )      |   |   | (6,424  | ) |   |   | (13,143 | ) |
|  Income      tax (provision) benefit  |   |        | (1,733  | )      |              |   | (49     | )         |   |   | (26            | )      |   |   | 2,856   |   |   |   | 1,048 |   |
|  Capital      expenditures            |   |        | 985     |   |              |   | 8,434   |      |   |   | 550            |   |   |   | 1,699   |   |   |   | 11,668 |   |
|  Depreciation      and amortization   |   |        | 1,395   |   |              |   | 5,006   |      |   |   | 375            |   |   |   | 1,097   |   |   |   | 7,873 |   |
|  Identifiable      assets at Sept. 30 |   |        | 65,405  |   |              |   | 91,624  |      |   |   | 42,848         |   |   |   | 248,762 |   |   |   | 448,639 |   |

----

|                                                            |   | United |    |   |   |   |    |   |   |   |   |   |
|-----------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|--------|--------|
| (In      thousands)                                             |   | States |    |   | Europe |   |    | Other  |   |   | Total  |   |
| 2007                                                            |   |   |    |   |   |   |    |   |   |   |   |   |
| Revenues      by geographic area                                |   | $      | 91,753  |   |   | $      | 264,205 |   |   | $      | -      |   |   | $ | 355,958 |   |
| Operating      loss by geographic area                          |   |   | (24,913 | )      |   |   | (15,469 | )      |   |   | (164   | )      |   |   | (40,546 | ) |
| Loss      from continuing operations before taxes               |   |   | (34,417 | )      |   |   | (11,670 | )      |   |   | (164   | )      |   |   | (45,935 | ) |
| Identifiable      assets by geographic area at September 30     |   |   | 47,946  |   |   |   | 306,163 |   |   |   | 3,245  |   |   |   | 357,354 |   |
| Long-lived      assets by geographic area at September 30       |   |   | 50,876  |   |   |   | 47,882  |   |   |   | 3,245  |   |   |   | 102,003 |   |
|                                                            |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| 2006                                                            |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Revenues      by geographic area                                |   | $      | 91,341  |   |   | $      | 218,250 |   |   | $      | -      |   |   | $ | 309,591 |   |
| Operating      loss by geographic area                          |   |   | (17,920 | )      |   |   | (8,996  | )      |   |   | (13    | )      |   |   | (26,929 | ) |
| Loss      from continuing operations before taxes               |   |   | (18,497 | )      |   |   | (13,161 | )      |   |   | (13    | )      |   |   | (31,671 | ) |
| Identifiable      assets by geographic area at September 30     |   |   | 159,910 |   |   |   | 251,974 |   |   |   | 3,245  |   |   |   | 415,129 |   |
| Long-lived      assets by geographic area at September 30       |   |   | 115,956 |   |   |   | 50,059  |   |   |   | 3,245  |   |   |   | 169,260 |   |
|                                                            |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| 2005                                                            |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Revenues      by geographic area                                |   | $      | 114,516 |   |   | $      | 227,727 |   |   | $      | -      |   |   | $ | 342,243 |   |
| Operating      loss by geographic area                          |   |   | (20,680 | )      |   |   | (7,615  | )      |   |   | (10    | )      |   |   | (28,305 | ) |
| Loss      from continuing operations before taxes               |   |   | (13,578 | )      |   |   | (14,092 | )      |   |   | (200   | )      |   |   | (27,870 | ) |
| Identifiable      assets by geographic area at September 30 (a) |   |   | 214,683 |   |   |   | 230,711 |   |   |   | 3,245  |   |   |   | 448,639 |   |
| Long-lived      assets by geographic area at September 30 (b)   |   |   | 203,264 |   |   |   | 49,775  |   |   |   | 3,245  |   |   |   | 256,284 |   |

| (a) | Identifiable      assets related to discontinued operations in the United States were      $80,882 at September 30, 2005. |
|-----|---------------------------------------------------------------------------------------------------------------------------|
| (b) | Long-lived      assets related to discontinued operations in the United States were      $79,373 at September 30, 2005.   |

|                |   |   |   |   |   |   |                 |   |    | Asia-Pacific |   | South  |   |   |   |   |   |   |   |
|---------------------|--------|--------|--------|--------|--------|--------|----------------------|--------|---------|--------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| (In      thousands) | Europe |   | Canada |   | Japan  |   | (without      Japan) |   | America |         | Other  |   | Total  |   |
| 2007                |   | $      | 11,855 |   |   | $      | 4,690                |   |    | $            | 12,413 |   |   | $      | 4,782  |   |   | $      | 4,306  |   |   | $ | 5,667 |   |   | $ | 43,713 |   |
| 2006                |   |   | 10,431 |   |   |   | 4,052                |   |    |         | 12,600 |   |   |   | 4,496  |   |   |   | 3,394  |   |   |   | 5,234 |   |   |   | 40,207 |   |
| 2005                |   |   | 10,304 |   |   |   | 4,594                |   |    |         | 8,426  |   |   |   | 4,902  |   |   |   | 3,127  |   |   |   | 4,950 |   |   |   | 36,303 |   |

----

|                                                                  | December      31, |   | March      31, |   | June      30, |   | September      30, |   |
|-----------------------------------------------------------------------|-------------------|--------|----------------|--------|---------------|--------|--------------------|--------|
| (In      thousands, except per share data)                       | 2006              |   | 2007           |   | 2007          |   | 2007               |   |
| Net      revenues                                                     |              | $      | 60,623         |   |          | $      | 81,012             |   |   | $ | 118,165 |   |   | $ | 96,158 |   |
| Gross      margin                                                     |              |   | 22,553         |   |          |   | 31,685             |   |   |   | 52,216 |   |   |   | 36,033 |   |
| Operating      income (loss) (a)                                      |              |   | (10,776        | )      |          |   | (8,156             | )      |   |   | 3,037 |   |   |   | (24,651 | ) |
| Income      tax (provision) benefit                                   |              |   | (607           | )      |          |   | (49                | )      |   |   | (110 | ) |   |   | 7,534 |   |
| Earnings      (loss) from continuing operations (b)                   |              |   | (14,029        | )      |          |   | (10,935            | )      |   |   | 4,412 |   |   |   | (18,566 | ) |
|    Per      basic and diluted share                    |              |   | (0.56          | )      |          |   | (0.43              | )      |   |   | 0.18 |   |   |   | (0.74 | ) |
| Loss      from discontinued operations, net of tax                    |              |   | (1,966         | )      |          |   | (778               | )      |   |   | (1,934 | ) |   |   | (1,860 | ) |
|    Per      basic and diluted share                    |              |   | (0.08          | )      |          |   | (0.03              | )      |   |   | (0.08 | ) |   |   | (0.07 | ) |
| Net      gain on disposal of discontinued operations (c)              |              |   | 12,500         |   |          |   | 32,815             |   |   |   | - |   |   |   | - |   |
|    Per      basic and diluted share                    |              |   | 0.50           |   |          |   | 1.30               |   |   |   | - |   |   |   | - |   |
| Net      earnings (loss)                                              |              |   | (3,495         | )      |          |   | 21,102             |   |   |   | 2,478 |   |   |   | (20,426 | ) |
| Per      basic and diluted share                                      |              |   | (0.14          | )      |          |   | 0.84               |   |   |   | 0.10 |   |   |   | (0.81 | ) |
|                                                                  |              |   |           |   |          |   |               |   |   |   |   |   |   |   |   |   |
|                                                                  |              |   |           |   |          |   |               |   |   |   |   |   |   |   |   |   |
|                                                                  |              |   |           |   |          |   |               |   |   |   |   |   |   |   |   |   |
|                                                                  | December      31, |   | March      31, |   | June      30, |   | September      30, |   |
| (In      thousands, except per share data)                       | 2005              |   | 2006           |   | 2006          |   | 2006               |   |
| Net      revenues                                                     |              | $      | 51,547         |   |          | $      | 62,964             |   |   | $ | 105,815 |   |   | $ | 89,265 |   |
| Gross      margin                                                     |              |   | 19,403         |   |          |   | 23,937             |   |   |   | 44,379 |   |   |   | 35,922 |   |
| Operating      income (loss)                                          |              |   | (9,193         | )      |          |   | (10,918            | )      |   |   | 2,405 |   |   |   | (9,223 | ) |
| Income      tax (provision) benefit (d)                               |              |   | 13             |   |          |   | 5                  |   |   |   | (1,580 | ) |   |   | (614 | ) |
| Loss      from continuing operations (d) (e)                          |              |   | (10,095        | )      |          |   | (11,687            | )      |   |   | (951 | ) |   |   | (11,157 | ) |
|    Per      basic and diluted share                    |              |   | (0.40          | )      |          |   | (0.46              | )      |   |   | (0.04 | ) |   |   | (0.45 | ) |
| Earnings      (loss) from discontinued operations, net of tax (f) (g) |              |   | (411           | )      |          |   | 622                |   |   |   | (1,192 | ) |   |   | (16,028 | ) |
|    Per      basic and diluted share                    |              |   | (0.02          | )      |          |   | 0.02               |   |   |   | (0.04 | ) |   |   | (0.64 | ) |
| Net      gain on disposal of discontinued operations                  |              |   | 12,500         |   |          |   | -                  |   |   |   | 1,000 |   |   |   | 100 |   |
|    Per      basic and diluted share                    |              |   | 0.50           |   |          |   | -                  |   |   |   | 0.04 |   |   |   | - |   |
| Net      earnings (loss)                                              |              |   | 1,993          |   |          |   | (11,066            | )      |   |   | (1,144 | ) |   |   | (27,082 | ) |
|    Per      basic and diluted share                    |              |   | 0.08           |   |          |   | (0.44              | )      |   |   | (0.05 | ) |   |   | (1.07 | ) |

| (a) | The      $15.4 million increase in operating loss for the quarter ended September      30, 2007 compared to the quarter ended September 30, 2006 resulted from a      $26.2 million pension settlement charge in 2007 from the liquidation of an      overfunded pension plan, offset partially by income recognition of $11.8      million in 2007 from a decision to eliminate health care assistance to      retirees for whom we are not contractually obligated to provide      benefits.                                                                                                                                                                                                                                 |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | The      items discussed in (a) above were also the principal reason for the $7.4      million increase in loss from continuing operations for the quarter ended      September 30, 2007 compared to the year-ago period. In addition, we      recorded an adjustment in the first quarter of fiscal 2007 to correct the      carrying value of the liability associated with our obligation to acquire      the remaining 7.5% of PoloExpress to reflect the liability at its      estimated present value.  As a result of this correction, we      recognized $1.3 million of interest expense.  The related tax      benefit of $0.3 million was recognized in the fourth quarter of fiscal      2007. |
| (c) | The      $32.8 million net gain on disposal of discontinued operations in the      quarter ended March 31, 2007 resulted from reduction of tax liabilities      due to expiration of the related      statutes of limitation and closure of the related tax periods related to      previously disposed of operations.                                                                                                                                                                                                                                                                                                                                                                                                              |
| (d) | $1.4      million of the increase in the tax provision for quarter ended June 30,      2006 resulted from the restatement of deferred tax liabilities associated      with the acquisition of indefinite      lived intangibles in foreign taxing jurisdictions.  This      restatement adjustment was also the principal reason for the $1.2 million      shift to loss from continuing operations for the quarter ended June 30,      2006.                                                                                                                                                                                                                                                                             |
| (e) | $1.0      million of the improvement in loss from continuing operations for the      quarter ended March 31, 2006 compared to the year-ago period resulted from      the recharacterization      of our interest in Voyager Kibris, including elimination of the related      loss during the quarter ended March 31, 2006.                                                                                                                                                                                                                                                                                                                                                                                                         |
| (f) | The      $1.4 million decrease in      loss from discontinued operations, net of tax for the quarter ended June      30, 2006 resulted from the decrease in the accrual for the claim made by      the Ohio Bureau of Workers Compensation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| (g) | The      $16.0 million loss from discontinued operations, net of tax for the      quarter ended September 30, 2006 was primarily comprised of $4.1 million      of additional environmental accruals, $4.0      million accrued for the arbitration award of health and safety      claims to Alcoa, and a $1.4 million additional accrual for the claim      made by the Ohio Bureau of WorkersCompensation.                                                                                                                                                                                                                                                                                                                  |

----

----

| (In      thousands)                                                  |   | 2007   |   |   | 2006   |   |    | 2005   |   |
|----------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|---------|--------|--------|
|    Net      sales                                     |   | $      | -      |   |   | $      | 7,450   |   |   | $ | 17,745 |   |
|    Cost      of goods sold                            |   |   | -      |   |   |   | (3,524  | )      |   |   | (14,510 | ) |
|    Gross      margin                                  |   |   | -      |   |   |   | 3,926   |   |   |   | 3,235 |   |
|                                                                 |   |   |   |   |   |   |    |   |   |   |   |   |
|    Selling,      general & administrative expense |   |   | (6,633 | )      |   |   | (16,638 | )      |   |   | (5,062 | ) |
|    Other      income, net                             |   |   | 164    |   |   |   | 1,008   |   |   |   | 402 |   |
|  Operating      loss                                            |   |   | (6,469 | )      |   |   | (11,704 | )      |   |   | (1,425 | ) |
|  Net      interest expense                                      |   |   | -      |   |   |   | (2,701  | )      |   |   | (3,381 | ) |
|  Loss      from discontinued operations before income taxes     |   |   | (6,469 | )      |   |   | (14,405 | )      |   |   | (4,806 | ) |
|  Income      tax provision                                      |   |   | (69    | )      |   |   | (2,604  | )      |   |   | (825 | ) |
|  Net      loss from discontinued operations                     |   | $      | (6,538 | )      |   | $      | (17,009 | )      |   | $ | (5,631 | ) |

|                                                               |          | September      30, |          |
|--------------------------------------------------------------------|---------------|--------------------|---------------|
| (In      thousands)                                                | 2007      (a) |               | 2006      (a) |   |
|   Current      liabilities of discontinued operations    |          | $                  | -             |   |   | $ | 62 |   |
|   Noncurrent      liabilities of discontinued operations |          |               | 16,120        |   |   |   | 16,120 |   |
|  Total      net liabilities of discontinued operations        |          | $                  | 16,120        |   |   | $ | 16,182 |   |

| (a) | Represents      a $15.1 million deferred gain on the sale of the shopping center and $1.0      million for the estimated minimum cost to remediate environmental      matters. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (In      thousands)                 |   | 2007   |   |   | 2006   |   |   | 2005   |   |
|-------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Earnout      on sale of fasteners   |   | $      | 12,500 |   |   | $      | 12,500 |   |   | $ | 12,500 |   |
| Release      of income tax reserves |   |   | 32,815 |   |   |   | -      |   |   |   | - |   |
| Gain      on sale of landfill       |   |   | -      |   |   |   | 1,100  |   |   |   | - |   |
| Gain      on sale of Aerostructures |   |   | -      |   |   |   | -      |   |   |   | 1,825 |   |
| Other                               |   |   | -      |   |   |   | -      |   |   |   | (750 | ) |
|                                |   | $      | 45,315 |   |   | $      | 13,600 |   |   | $ | 13,575 |   |

----

ITEM 9

ITEM 9A

----

----

ITEM 10

| Name                     |   | Age |   | Position                                                                             |
|--------------------------|--------|-----|--------|--------------------------------------------------------------------------------------|
| Didier      Choix        |   | 50  |   |      Director                                               |
| Robert      E. Edwards   |   | 59  |   |      Director                                               |
| Andrea      Goren        |   | 40  |   |      Director                                               |
| Daniel      Lebard       |   | 68  |   |      Director                                               |
| Glenn      Myles         |   | 52  |   |      Director                                               |
| Philip      S. Sassower  |   | 68  |   |      Director                                               |
| Eric      I. Steiner     |   | 45  |   |      President,      Chief Operating Officer and Director   |
| Jeffrey      J. Steiner  |   | 70  |   |      Chairman      of the Board and Chief Executive Officer |
| Michael      J. Vantusko |   | 50  |   |      Director                                               |

----

----

|     |                                                                                                                                                                                                 |    |                                                                                                                                                                                                                                                |
|----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Function |                                                                                                                                                                                                 | Members |
|     |                                                                                                                                                                                                 |    |                                                                                                                                                                                                                                                |
|  | Responsible      for the appointment, compensation and oversight of the Company’s outside      auditors and resolution of disagreements, if any, between outside auditors      and management. |    | Michael      J. Vantusko (Chairman) (appointed 7/19/2006)Didier      Choix (appointed 7/19/2006)Robert      E. Edwards (appointed 3/8/2006)Daniel      Lebard (appointed 3/8/2006) Steven      L. Gerard resigned from the Board on 7/13/2006. |
|  | Receives      and responds to complaints (which may be submitted confidentially or      anonymously) regarding accounting, internal account control or auditing      matters.                        |
|  | Examines      and considers (and, where appropriate, pre-approves) matters relating to      the internal and external audits of the Company’s accounts and its      financial affairs.         |
|  | Selects      the Company’s independent auditors.                                                                                                                                               |
|  | Reviews      the Company’s auditing, financial reporting and internal control      functions.                                                                                                  |

|   |  | He      has served since February 2000 as President of Grantwood Consulting, LLC,      a financial advisory and consulting firm, and of Grantwood Capital, LLC, a      private equity investing firm. |
|--------|----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |  | He      served from 1996 to 2000 as Chief Financial Officer & Senior Vice      President of Waterlink, Inc. (NYSE: WLK), an international equipment      consolidator, and from 1995 to 1996 as Chief Financial Officer of Waxman      Industries, Inc. (NYSE: WAX), a products  distributor. |
|--------|----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |  | He      also served The Fairchild Corporation in a variety of roles, including      Vice President and Chief Financial Officer of a former $300 million      division of the Company, between 1979 and1994. |
|--------|----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |  | He      is a Certified Public Accountant. |
|--------|----------|-------------------------------------------|

----

----

----

ITEM11

| Fiscal      2007         |
|--------------------------|
| Name                     | Fees      Earned or Paid in Cash      ($) | Option      Awards ($)(1) | All Other ($) | Total ($) |
|                     |   |   |   |   |
| Didier      Choix        |  55,230 |  - |  - |  55,230 |
| Robert      E. Edwards   |  59,000 |  - |  - |  59,000 |
| Daniel      Lebard       |  46,000 |  - |  - |  46,000 |
| Glenn      Myles         |  31,730 |  - |  - |  31,730 |
| Michael      J. Vantusko |  75,230 |  - |  - |  75,230 |

----

| Annual      Retainer:               |   | $20,000                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|-------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Attendance      Fees:               |   | $2,500      for each Board meeting.$2,500      for each Audit Committee meeting.$1,000      per meeting for all other Board Committee meetings.Reimbursed      travel expenses related to attendance at meetings.                                                                                                                                                                                                                                                                                                                                                                            |
|                                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Stock      Options:                 |   | Under      the 1996 Non-Employee Directors Stock Option Plan (the “1996 NED Plan”)      each non-employee director was issued stock options for 30,000 shares at      the time he or she was first elected as a director. Thereafter, each      director was issued stock options for 1,000 shares on an annual basis      (immediately after each Annual Meeting). The 1996 NED Plan expired in      September 2006 and there is no current proposal to adopt a new stock      option plan in its place.  Outstanding options continue in full      force and effect. |
|                                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Special  Committee:       |   | $25,000      to each member, one time retainer.$30,000      to the Chairman, one time retainer.$1,000      attendance fee for each meeting (member).$1,250      attendance fee for each meeting (Chairman).                                                                                                                                                                                                                                                                                                                                                                                  |
|                                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| ChChairman      of Audit Committee: |   | $10,000      a year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

----

| ·   | Provide      compensation competitive with other companies facing similar      challenges. |
|--------------------|--------------------------------------------------------------------------------------------|

| ·   | Encourage      executives to increase profitability and shareholder  value. |
|--------------------|-----------------------------------------------------------------------------|

| ·   | Promote      the success of business units of theCompany. |
|--------------------|-----------------------------------------------------------|

| ·   | Directly      relate compensation to Company performance and/or the objective value of      individual service. |
|--------------------|-----------------------------------------------------------------------------------------------------------------|

----

----

----

| Name & Principal    Position                                                              | Fiscal Year |   | Salary ($) |      |   | Bonus ($) (5) |   |    | Non-Equity      Incentive Plan Compensation ($)      (1) |   |   | Change      in Pension Value & Nonqualified Deferred Compensation Earnings ($) |   |   | All      Other Compensation ($)      (2) |     |   | Total ($) |   |
|-----------------------------------------------------------------------------------------------|-------------|--------|-----------------|-----------|--------|-------------------------|--------|---------|---------------------------------------------------------------|--------|--------|------------------------------------------------------------------------------------|--------|--------|-----------------------------------------------|----------|--------|----------------|--------|
|                                                                                          |        |   |            |      |   |                    |   |    |                                                          |   |   |                                                                               |   |   |                                          |     |   |           |   |
| Jeffrey      Steiner, Chairman & CEO (3) (4)                                              | 2007        |   |            | 1,325,000 |   |                    |   | 52,394  |                                                          |   |   | -                                                                                  |   |   |                                          | (241,172 | )      |           |   | 23,389 |   |   |   | 1,159,611 |   |
|                                                                                          | 2006        |   |            | 1,542,596 |   |                    |   | 52,394  |                                                          |   |   | -                                                                                  |   |   |                                          | 79,833   |   |           |   | 26,899 |   |   |   | 1,701,722 |   |
|                                                                                          | 2005        |   |            | 2,500,005 |   |                    |   | -       |                                                          |   |   | -                                                                                  |   |   |                                          | 100,125  |   |           |   | 27,787 |   |   |   | 2,627,917 |   |
|                                                                                          |        |   |            |      |   |                    |   |    |                                                          |   |   |                                                                               |   |   |                                          |     |   |           |   |   |   |   |   |   |   |
| Klaus      Esser, Managing Director of Polo Express, GmbH (6)                                 | 2007        |   |            | 399,185   |   |                    |   | -       |                                                          |   |   | 675,292                                                                            |   |   | NA                                            |     |   |           | 18,100 |   |   |   | 1,092,577 |   |
|                                                                                          | 2006        |   |            | 283,086   |   |                    |   | -       |                                                          |   |   | 529,248                                                                            |   |   | NA                                            |     |   |           | 16,837 |   |   |   | 829,171 |   |
|                                                                                          | 2005        |   |            | 254,516   |   |                    |   | -       |                                                          |   |   | 585,386                                                                            |   |   | NA                                            |     |   |           | 17,409 |   |   |   | 857,311 |   |
|                                                                                          |        |   |            |      |   |                    |   |    |                                                          |   |   |                                                                               |   |   |                                          |     |   |           |   |   |   |   |   |   |   |
| Michael      McDonald, Sr. Vice President & CFO                                           | 2007        |   |            | 239,101   |   |                    |   | -       |                                                          |   |   | -                                                                                  |   |   |                                          | 7,598    |   |           |   | 22,277 |   |   |   | 268,976 |   |
|                                                                                          | 2006        |   |            | 159,723   |   |                    |   | -       |                                                          |   |   | -                                                                                  |   |   |                                          | 2,720    |   |           |   | 14,710 |   |   |   | 177,153 |   |
|                                                                                          | 2005        |   |            | 143,580   |   |                    |   | 13,500  |                                                          |   |   | -                                                                                  |   |   |                                          | 15,286   |   |           |   | 14,674 |   |   |   | 187,040 |   |
|                                                                                          |        |   |            |      |   |                    |   |    |                                                          |   |   |                                                                               |   |   |                                          |     |   |           |   |   |   |   |   |   |   |
| Donald      Miller, Exec.  Vice President & General      Counsel  (3) | 2007        |   |            | 355,003   |   |                    |   | -       |                                                          |   |   | -                                                                                  |   |   |                                          | 87,684   |   |           |   | 24,206 |   |   |   | 466,893 |   |
|                                                                                          | 2006        |   |            | 375,003   |   |                    |   | 200,000 |                                                          |   |   | -                                                                                  |   |   |                                          | 74,700   |   |           |   | 20,176 |   |   |   | 669,879 |   |
|                                                                                          | 2005        |   |            | 375,250   |   |                    |   | -       |                                                          |   |   | -                                                                                  |   |   |                                          | 147,206  |   |           |   | 21,877 |   |   |   | 544,333 |   |
|                                                                                          |        |   |            |      |   |                    |   |    |                                                          |   |   |                                                                               |   |   |                                          |     |   |           |   |   |   |   |   |   |   |
| Warren      Persavich, President, Aerospace Division                                          | 2007        |   |            | 226,289   |   |                    |   | -       |                                                          |   |   | 177,600                                                                            |   |   |                                          | 28,881   |   |           |   | 20,459 |   |   |   | 453,229 |   |
|                                                                                          | 2006        |   |            | 226,289   |   |                    |   | -       |                                                          |   |   | 155,400                                                                            |   |   |                                          | 24,868   |   |           |   | 24,137 |   |   |   | 430,694 |   |
|                                                                                          | 2005        |   |            | 226,289   |   |                    |   | -       |                                                          |   |   | 43,290                                                                             |   |   |                                          | 92,042   |   |           |   | 19,351 |   |   |   | 380,972 |   |
|                                                                                          |        |   |            |      |   |                    |   |    |                                                          |   |   |                                                                               |   |   |                                          |     |   |           |   |   |   |   |   |   |   |
| Eric      Steiner, President & COO                                                        | 2007        |   |            | 535,500   |   |                    |   | -       |                                                          |   |   | -                                                                                  |   |   |                                          | 12,324   |   |           |   | 40,500 |   |   |   | 588,324 |   |
|                                                                                          | 2006        |   |            | 588,707   |   |                    |   | -       |                                                          |   |   | -                                                                                  |   |   |                                          | 9,769    |   |           |   | 32,142 |   |   |   | 630,618 |   |
|                                                                                          | 2005        |   |            | 714,802   |   |                    |   | -       |                                                          |   |   | -                                                                                  |   |   |                                          | 53,412   |   |           |   | 34,651 |   |   |   | 802,865 |   |

|   | FY      2007 = Fiscal Year from October 1, 2006 to September 30,    2007. |
|--------|---------------------------------------------------------------------------|

|   | FY      2006 = Fiscal Year from October 1, 2005 to September 30,    2006. |
|--------|---------------------------------------------------------------------------|

|   | FY      2005 = Fiscal Year from October 1, 2004 to September 30,      2005. |
|--------|---------------------------------------------------------------------------------------|

|   |    |
|--------|--------------|

| (1) | Mr. Esser and Mr.      Persavich receive non-equity incentive-based compensation pursuant to      contracts with the Company, which are described in the tables of contract      terms following the Grants of Plan Based Awards Table    below. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Includes      for Mr. E. Steiner $11,154 which was earned in fiscal 2005, but payment of      which has been deferred.  The aggregate amounts of perquisites      included in the Summary Compensation Table under the heading “All Other      Compensation” for fiscal 2007 consist of:  401(k) match;      financial services; personal W-2 auto; and life and disability      insurance.  Personal W-2 auto for Mr. E. Steiner was $27,966 in      fiscal 2007, based on one vehicle in Germany for part of fiscal 2007 and      one in the United States for part of fiscal 2007. The Euro amount for the      German auto was converted to US Dollars based on the monthly average      interbank rates posted on the OANDA.com website.  The      incremental cost to the Company for all vehicles was calculated based on      the miles driven for personal and for company  use. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (3) | Does      not include advances before retirement of earned benefits under the      Company’s Unfunded SERP (Supplemental Executive Retirement Plan). See      disclosure under Certain Transactions. Advances under the Unfunded SERP      for Mr. J. Steiner are as follows: |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Fiscal      2007 |   | $ | 1,400,000 |   |
|------------------|--------|---|-----------|--------|
| Fiscal      2006 |   | $ | 3,459,283 |   |
| Fiscal      2005 |   | $ | 477,222   |   |

| (4) | Table      does not include a remaining $3,140,000 change in control payment due to      Mr. J. Steiner upon termination of  employment. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

| (5) | For      Mr. J. Steiner, represents payment under a release of claims required by      the Derivative Settlement in connection with a former split-dollar life      insurance premium.  These payments were $52,394 in each of      fiscal 2007 and 2006. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | Mr.      Esser is paid in Euros.  The US Dollar values given are based on      monthly average interbank rates posted on the OANDA.com      website. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Name                  |   | Grant      Date      |   | Threshold  ($) |   | Estimated      Future Payouts Under Non-Equity Incentive Plan Awards      Target  ($) |   | Maximum      ($) |
|-----------------------|--------|----------------------|--------|--------------------------|--------|-------------------------------------------------------------------------------------------------|--------|------------------|
|                  |   |                 |   |                     |   |                                                                                            |   |             |
| Klaus      Esser      |   | January      1, 2006 |   |  See      agreement |   |  700,000                                                                                   |   |  none       |
| Warren      Persavich |   | October      1, 2006 |   |  *                  |   |  177,600                                                                                   |   |  177,600    |

----

| ·   | Employment      Agreement between the Company and Jeffrey  Steiner: |
|--------------------|---------------------------------------------------------------------|

| Term      of the Agreement:                                   | Pursuant      to the Derivative Settlement, the term under this employment agreement is      thirty (30) months, extended annually by an additional 12 months unless      either party gives timely notice not to extend the    agreement.                                                                                                                                                                                                                                                                                                                                        |
|---------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Minimum      Base Salary Under the      Agreement:            | As      determined by the Board of Directors. However, see description immediately      below regarding current base salary.                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Current      Base Salary:                                     | Pursuant      to the terms of the Derivative Settlement, effective as of January 12,      2006, Jeffrey Steiner’s aggregate base-pay compensation under all his      employment agreements was reduced to $1,325,000 per year. Such reduction      shall remain in place until such time as the Compensation Committee and      Jeffrey Steiner agree on the terms of a new or amended employment      agreement. Prior to January 12, 2006, Jeffrey Steiner’s aggregate base      salary under all his employment agreements was $2,500,000 per      annum.          |
|                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Payments      in Event of Death:                              | Estate      to receive an amount equal to one year’s base salary, plus bonuses for the      fiscal year in which death occurred.                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Payments      in Event of Termination      Due to Disability: | Base      salary until the date of termination, and fifty percent of base salary for      two years thereafter, plus bonuses for the fiscal year in which disability      occurred.                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Change      in Control Payments:                              | In      connection with the December 3, 2002, sale of Fairchild Fasteners to Alcoa      Inc., our Board of Directors determined that Jeffrey Steiner was entitled      to a change of control payment in the amount of $6,280,000. Fifty percent      (50%) of such payment was made to Jeffrey Steiner during January to June      2003. The remaining 50% ($3,140,000) will be paid upon Jeffrey Steiner’s      termination of employment with Fairchild. No other change of control      payments are provided for in Jeffrey Steiner’s employment      agreement. |
|                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Split-Dollar      Life Insurance:                             | Pursuant      to the Derivative Settlement, the Company and Jeffrey Steiner executed an      agreement confirming that the Company’s obligations under Jeffrey      Steiner’s split-dollar life insurance policy are irrevocably terminated      and released.                                                                                                                                                                                                                                                                                                        |
|                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Confidentiality      andNon-competition:                      | The      employment agreement is subject to a three year confidentiality obligation      and a two year non-competition obligation.  No special waiver      provisions apply to these duties.                                                                                                                                                                                                                                                                                                                                                                           |

| ·   | Employment      Agreement between Banner Aerospace (a Company Subsidiary) and Jeffrey      Steiner: |
|--------------------|-----------------------------------------------------------------------------------------------------|

| Term      of the Agreement: | Pursuant      to the Derivative Settlement, the term under this employment agreement is      thirty (30) months, extended annually by an additional 12 months unless      either party gives timely notice not to extend the    agreement. |
|-----------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Minimum      Base Salary Under the      Agreement:            | Not      less than $250,000 per year. However, see description immediately below      regarding current base salary.                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|---------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| Current      BaseSalary:                                      | Pursuant      to the terms of the Derivative Settlement, effective as of      January 12, 2006, Jeffrey Steiner’s aggregate base-pay compensation      under all his employment agreements was reduced to $1,325,000 per year.      Such reduction shall remain in place until such time as the Compensation      Committee and Jeffrey Steiner agree on the terms of a new or amended      employment agreement. Prior to January 12, 2006, Jeffrey Steiner’s      aggregate base salary under all his employment agreements was $2,500,000      per annum. |
|                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| Payments      in Event of Death:                              | Estate      to receive an amount equal to one year’s base salary, plus bonuses for the      fiscal year in which death occurred.                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| Payments      in Event of Termination      Due to Disability: | Base      salary until the date of termination, and fifty percent of base salary for      two years thereafter, plus bonuses for the fiscal year in which disability      occurred.                                                                                                                                                                                                                                                                                                                                                                                                |

----

| ·   | Service      Agreement between Fairchild Switzerland, Inc. (Company Subsidiary) and      Jeffrey Steiner: |
|--------------------|-----------------------------------------------------------------------------------------------------------|

| Term      of the Agreement:                        | Year      to year, terminated in 2006 due to the planned closure of the Swiss branch      of Fairchild Switzerland, Inc., the termination of which branch was      registered on December 5, 2007.                                                                                                                                                                                                                                                                                                                                                                       |
|----------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| Minimum      Base Salary Under the      Agreement: | Greater      of $400,000 or 680,000 Swiss Francs per year, but not more than $400,000.      However, see description immediately below regarding current base      salary.                                                                                                                                                                                                                                                                                                                                                                                               |
|                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| Current      Base Salary:                          | Pursuant      to the terms of the Derivative Settlement, effective as of January 12,      2006, Jeffrey Steiner’s aggregate base-pay compensation under all his      employment agreements was reduced to $1,325,000 per year. Such reduction      shall remain in place until such time as the Compensation Committee and      Jeffrey Steiner agree on the terms of a new or amended employment      agreement. Prior to January 12, 2006, Jeffrey Steiner’s aggregate base      salary under all his employment agreements was $2,500,000 per      annum. |

| ·   | Employment      Agreement between the Company and Eric  Steiner: |
|--------------------|------------------------------------------------------------------|

| Term      of the Agreement:                        | Pursuant      to the Derivative Settlement, the term under this employment agreement is      two years, expiring January 12, 2008.  The Derivative Settlement      did not affect his prior employment contract’s provision that his      employment will extend by one year terms as long as neither party has      given 90 days notice of termination.  This provision runs from      August 1 to August 1, rather than from January 12 to January      12. |
|----------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| Minimum      Base Salary Under the      Agreement: | $540,000.      However, see description immediately below regarding current base      salary.                                                                                                                                                                                                                                                                                                                                                                                            |

| Current      Base Salary:                                                        | Pursuant      to the terms of the Derivative Settlement, effective as of January 12,      2006, Eric Steiner’s base-pay was reduced to $535,500 per year. Such      reduction shall remain in place until such time as the Compensation      Committee and Eric Steiner agree on the terms of a new or amended      employment agreement. Prior to January 12, 2006, Eric Steiner’s base      salary was $725,000 per annum.                                                                                                                                                                                                                                                                                                                     |
|----------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Payments      in Event of Death:                                                 | Same      as the Company’s CEO.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Payments      in Event of Termination      Due to Disability:                    | Same      as the Company’s CEO.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Payments      in the  event of a      “change in control”: | In      connection with the sale of Fairchild Fasteners to Alcoa Inc., our Board      of Directors determined that Eric Steiner was entitled to a change of      control payment in the amount of $5,434,000.  Fifty percent      (50%) of such payment was made to Eric Steiner in January      2003.  The remaining 50% was paid in four equal and consecutive      quarterly installments, with the first installment made on March 3, 2003,      and the last installment made in January 2004. In      connection with such change of control award, Eric Steiner’s employment      agreement was amended, pursuant to which he relinquished any future change      of control payments under such employment agreement. |
|                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Confidentiality      and non-competition:                                        | The      contract is subject to a permanent confidentiality obligation and a one      year non-competition obligation.  No special waiver provisions      apply to these duties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

| ·   | Letter      Agreement between the Company and Donald  Miller: |
|--------------------|---------------------------------------------------------------|

| Payments      in the event of Termination      Without Cause:         | Two      (2) times then current annual base salary, plus 1 times current      annual base salary in lieu of bonus.                                                                                                                                                                                                                                                                                                                                                                              |
|-----------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| Payments      in the event of a      “change in control”: | In      connection with the sale of Fairchild Fasteners to Alcoa Inc., our Board      of Directors determined that Mr. Miller was entitled to a change of      control payment in the amount of $1,125,000. Fifty percent (50%) of such      payment was made to Mr. Miller in December 2002. The remaining 50% was      paid in four equal and consecutive quarterly installments, with the first      installment made on March 3, 2003, and the last installment made in      January, 2004. |
|                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                  | In      connection with such change of control award, the letter agreement between      the Company and Mr. Miller was amended, pursuant to which      Mr. Miller relinquished any future change of control payments under      such letter agreement.                                                                                                                                                                                                                                |

----

| ·   | Employment      Agreement between PoloExpress and Klaus  Esser: |
|--------------------|-----------------------------------------------------------------|

|                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|-------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Term      of the Agreement:   | The      initial agreement provided for a term of three years ending on December      31, 2008. Either party could elect to terminate the contract as of      December 31, 2008 by giving nine (9) months prior written notice. If the      contract was not terminated as of December 31, 2008, it continued in place      until either party gave twelve (12) months prior written notice of      termination.  The initial term of the amended and restated      agreement is 7 years, beginning on January 1, 2006, and ending on December      31, 2012, subject to certain provisions for automaticrenewal.  |
| Base      Salary and Bonuses: | Base      pay compensation to Mr. Esser during fiscal 2006 initially was 240,000      Euros per year. In addition, if PoloExpress had an annual EBITDA of more      than 6 million Euros, Mr. Esser was entitled to a      bonus for such year equal to 5% of the total EBITDA of      PoloExpress.  The amended and restated agreement provides for an      increase in base salary of 60,000 Euros, to 300,000 Euros per year, and      bonus amounts payable as follows:                                                                                                                                        |

|   |  FiscalYears Ending      until September 30,      2008September      30, 2009After      September 30, 2009 |  EBITDA      threshold5 Million      Euros or more6 Million      Euros or more7 Million      Euros or more |  PercentageBonus 5%      of EBITDA       6%      of EBITDA 6%      of EBITDA                                                                                                      |
|--------|----------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |  The      bonus for each year is payable in monthly installments. The actual bonus      amount is determined at the end of each year, after EBITDA is confirmed.      If the aggregate monthly installments paid are less than or more than the      amounts due, the Company or Mr. Esser, respectively, shall repay the other      party for the difference. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Non-Compete      Payments: | Following      termination of employment, Mr. Esser shall not compete for a period of 24      months, provided that PoloExpress continues to compensate Mr. Esser during      such period at the rate of fifty percent (50%) of his average      compensation. Average compensation is based on the last three years of      employment, and includes base pay and bonuses. Within twenty-eight (28)      days of the termination of employment, PoloExpress may elect not to      enforce the two-year non-compete covenant, in which case Mr. Esser shall      not compete for a period of one year (as specified in Paragraph 75a of the      German Commercial Code) and PoloExpress will compensate Mr. Esser at the      rate of 30,000 Euros per month during such one year      period.  Under the amended and restated agreement, starting      January 1, 2009, following termination of employment, the PoloExpress      option to elect not to enforce the two-year non-compete provision is      terminated. |
|----------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Employment Agreement between      Banner Aerospace, Inc. and Warren D.Persavich: |
|--------------------|----------------------------------------------------------------------------------|

| Term      of the Agreement:                                   | Currently      under an extended “rolling term” of at least 730 days, with one day added      to the term for each day there is no notice by either party to terminate      the agreement.                                                                                                                           |
|---------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                          |                                                                                                                                                                                                                                                                                                                             |
| Base      Salary and Bonuses:                                 | Not      less than $155,000 per year, with a 50% bonus upon achievement of goals      designated from time to time by the Compensation Committee, plus any other      bonuses, such as transaction related bonuses.                                                                                                              |
|                                                          |                                                                                                                                                                                                                                                                                                                             |
| Current      BaseSalary:                                      | As      determined by the Board of Directors.  See the Summary      Compensation Chart.                                                                                                                                                                                                                                |
|                                                          |                                                                                                                                                                                                                                                                                                                             |
| Payments      in Event of Death:                              | Estate      to receive an amount equal to six month’s base salary, plus bonuses for      the fiscal year in which death occurred.                                                                                                                                                                                          |
|                                                          |                                                                                                                                                                                                                                                                                                                             |
| Payments      in Event of Termination      Due to Disability: | Base      salary until the date of termination, and bonuses for the fiscal year in      which termination occurred, provided that the foregoing payments shall be      made only to the extent that such payments, plus disability insurance      proceeds, would not exceed 100% of base salary for the applicable      period. |
|                                                          |                                                                                                                                                                                                                                                                                                                             |
| Confidentiality      and non-competition:                     | The      contract is subject to a permanent confidentiality obligation and a six      month non-competition obligation.  No special waiver provisions      apply to these duties.                                                                                                                                      |

----

| Name                          | Plan    Name                     | Number of      Years of Credited      Service | September 30,      2007 Present Value of Accumulated      Benefit | Payments During Last      FY   |
|-------------------------------|----------------------------------|-----------------------------------------------|-------------------------------------------------------------------|--------------------------------|
|                          |                             |                                          |                                                              |                           |
| Jeffrey      Steiner          | Retirement      Plan For         |  17                                      |  $      174,550                                              | 04/18/2007  $150,000 |
| Chairman      & CEO       | Employees      of The            |                                          |                                                              | 05/29/2007  $225,000 |
|                          | Fairchild      Corporation       |                                          |                                                              |                           |
|                          |                             |                                          |                                                              |                           |
| Klaus      Esser              | Does      not participate in the |                                          |                                                              |
|                          | U.S.      Pension Plan.          |                                          |                                                              |                           |
|                          |                             |                                          |                                                              |                           |
| Michael      McDonald, Sr.    | Retirement      Plan For         |  17                                      |  $      71,270                                               |  $      -                 |
| Vice      President & CFO | Employees      of The            |                                          |                                                              |                           |
|                          | Fairchild      Corporation       |                                          |                                                              |                           |
|                          |                             |                                          |                                                              |                           |
| Donald      Miller, Exec.     | Retirement      Plan For         |  16                                      |  $      983,093                                              |  $      -                 |
| Vice      President and       | Employees      of The            |                                          |                                                              |                           |
| General      Counsel          | Fairchild      Corporation       |                                          |                                                              |                           |
|                          |                             |                                          |                                                              |                           |
| Warren      Persavich,        | Retirement      Plan For         |  30                                      |  $      565,341                                              |  $      -                 |
| President,      Aerospace     | Employees      of The            |                                          |                                                              |                           |
| Division                      | Fairchild      Corporation       |                                          |                                                              |                           |
|                          |                             |                                          |                                                              |                           |
| Eric      Steiner, President  | Retirement      Plan For         |  16                                      |  $      258,303                                              |  $      -                 |
| &      COO                | Employees      of The            |                                          |                                                              |                           |
|                          | Fairchild      Corporation       |                                          |                                                              |                           |

|                                                           |   | September      30, |   |
|----------------------------------------------------------------|--------|--------------------|--------|
| Name                                                           |   | 2007               |   |   | 2006 |   |   | 2005 |   |
| Jeffrey Steiner, Chairman      & CEO                       |   | $                  | 1,679  |   |   | $ | 3,787 |   |   | $ | 2,895 |   |
| Michael McDonald, Sr. Vice      President & CFO            |   | $                  | 2,306  |   |   | $ | 1,964 |   |   | $ | 1,779 |   |
| Donald Miller, Exec. Vice      President & General Counsel |   | $                  | 10,786 |   |   | $ | 9,965 |   |   | $ | 9,193 |   |
| Warren Persavich, President,      Aerospace Division           |   | $                  | 8,849  |   |   | $ | 8,346 |   |   | $ | 7,850 |   |
| Eric Steiner, President &      COO                         |   | $                  | 6,979  |   |   | $ | 6,403 |   |   | $ | 5,877 |   |

|   | (1)      Footnote 5 of the Financial Statements included in the 2007 Annual      Report which accompanies this Proxy Statement sets forth the valuation      method and assumptions used to calculate accrued  benefits. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                                                                                                                         |
|--------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                             | Unfunded      SERP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | Funded      SERP                                                                                                                                                                                                                             |
|                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                                                                                                                         |
| Retirement      Benefits                         | Provides      a maximum retirement benefit (in the aggregate for both Supplemental      Executive Retirement Plans) equal to the difference between (i) sixty      percent (60%) of the participant’s highest base salary for five      consecutive years of the last ten years of employment, and (ii) the      aggregate of other pension benefits (including the Funded SERP), profit      sharing benefits, and primary Social Security payments to which the      participant is entitled. |   | An      annual retirement benefit determined by multiplying the participant’s      years of credited service times a fixed amount. The amount varies by      participant.                                                              |
|                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                                                                                                                         |
| Funding                                          | This      is an unfunded obligation of the Company, not subject to ERISA      regulations. The Company makes discretionary contributions to a “Rabbi      Trust” to help meet its obligations under this plan, but the assets under      such trust are subject to the claims of the Company’s      creditors.                                                                                                                                                                      |   | This      benefit is a part of the Retirement Plan for Employees of the Fairchild      Corporation. It is a funded obligation of the Company. Such funding      contributions are not assets available to the creditors of the      Company. |
|                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                                                                                                                         |
| Pre-Retirement      Distributions                | Subject      to the approval of the Compensation Committee, the plan permits      participants to elect to receive retirement advances.                                                                                                                                                                                                                                                                                                                                                               |   | At      the participant’s request upon attainment of Normal Retirement Age as      defined in the Plan.                                                                                                                                |
|                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                                                                                                                         |
| Participants                                     | Executive      Officers. All persons named in the Summary Compensation Table are eligible      for participation in this plan except Mr. Klaus Esser.                                                                                                                                                                                                                                                                                                                                                 |   | Same      as the unfunded plan.                                                                                                                                                                                                              |
|                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                                                                                                                         |
| Special      Years of Service Accreditation | Pursuant      to a letter agreement with Mr. Miller, for purposes of determining years      of service with the Company under the Supplemental Executive Retirement      Plans, Mr. Miller will be credited with two years of service for each of      the first ten years he is employed by the Company.                                                                                                                                                                                             |   | None.                                                                                                                                                                                                                                        |

----

----

ITEM 12

| ·   | each      director; |
|--------------------|---------------------|

| ·   | each      executive officer named in the Summary Compensation  Table; |
|--------------------|-----------------------------------------------------------------------|

| ·   | the      directors and executive officers as a group;and |
|--------------------|----------------------------------------------------------|

| ·   | each      person who we know beneficially owns more than 5% of the common      stock. |
|--------------------|---------------------------------------------------------------------------------------|

| Name                                                  |   | Number      of Shares of Class A Stock (1) |   | Percentage      of Class |   | Number      of Shares of Class B Stock (1) |   | Percentage      of Class |
|-------------------------------------------------------|--------|--------------------------------------------|--------|--------------------------|--------|--------------------------------------------|--------|--------------------------|
| Directors:                                            |   |                                       |   |                     |   |                                       |   |                     |
| Didier      Choix (2)                                 |   |   7,500                          |   | *                        |   |   -                              |   | 0.00%                    |
| Robert      E. Edwards (2)                            |   |   999,695                        |   | 4.42%                    |   |   -                              |   | 0.00%                    |
| Andrea      Goren (3)                                 |   |   6,902,588                      |   | 30.54%                   |   |   -                              |   | 0.00%                    |
| Daniel      Lebard (2)                                |   |   48,356                         |   | *                        |   |   -                              |   | 0.00%                    |
| Glenn      Myles (2)                                  |   |   7,500                          |   | *                        |   |   -                              |   | 0.00%                    |
| Philip      S. Sassower (3)                           |   |   6,902,588                      |   | 30.54%                   |   |   -                              |   | 0.00%                    |
| Eric      Steiner (3)(6)                              |   |   5,957,120                      |   | 23.68%                   |   |   2,548,996                      |   | 97.24%                   |
| Jeffrey      J. Steiner (3)(4)                        |   |   73,544                         |   | *                        |   |   30,000                         |   | 1.14%                    |
| Michael      J. Vantusko (2)                          |   |   7,500                          |   | *                        |   |   -                              |   | 0.00%                    |
|                                                  |   |                                       |   |                     |   |                                       |   |                     |
| Other      Named Executive Officers:                  |
| Klaus      Esser                                      |   |   -                              |   | 0.00%                    |   |   -                              |   | 0.00%                    |
| Donald      E. Miller (3)                             |   |   90,076                         |   | *                        |   |   -                              |   | 0.00%                    |
| Warren      D. Persavich                              |   |   -                              |   | 0.00%                    |   |   -                              |   | 0.00%                    |
| Michael      L. McDonald                              |   |   5,258                          |   | *                        |   |   -                              |   | 0.00%                    |
|                                                  |   |                                       |   |                     |   |                                       |
| All      Directors and Executive Officers as a Group: |
| (13      persons including the foregoing) (2)         |   |   14,099,137                     |   | 55.86%                   |   |   2,578,996                      |   | 98.38%                   |
|                                                  |   |                                       |   |                     |   |                                       |   |                     |
| Other      5% Beneficial Owners: (5)                  |
| Dimensional      Fund Advisors, Inc.                  |   |   1,954,931                      |   | 8.65%                    |   |   -                              |   | 0.00%                    |
| GAMCO      Investors, Inc.                            |   |   4,236,092                      |   | 18.74%                   |   |   -                              |   | 0.00%                    |
| Natalia      Hercot (3)(6)                            |   |   5,794,521                      |   | 23.04%                   |   |   2,548,996                      |   | 97.24%                   |
| Phoenix      FA Holdings, LLC (7)                     |   |   6,902,588                      |   | 30.54%                   |   |   -                              |   | 0.00%                    |
| The      Steiner Group LLC (6)                        |   |   5,727,684                      |   | 22.78%                   |   |   2,533,996                      |   | 96.67%                   |

| (1) | The      Class A Stock Column includes shares of Class B Stock, which are      immediately convertible into Class A Stock on a share-for-share      basis.  Options that are exercisable immediately or within sixty      days after January 16, 2008, appear in the Class A Stock column.      Excludes Deferred Compensation Units (“DCUs”) to be paid out on      February 28, 2010 in the form of one share of Class A Common      Stock for each DCU as follows: E. Steiner, 42,826 shares; J. Steiner,      134,831 shares. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (2) | Includes      exercisable stock options to purchase Class A Stock as      follows:  D. Choix, 7,500 shares; R. Edwards, 2,000 shares; D.      Lebard, 33,000 shares; G. Myles, 7,500 shares; M. Vantusko, 7,500      shares;  Directors and Executive Officers as a group, 57,500      shares. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Includes      shares beneficially owned, asfollows: |
|-----|-----------------------------------------------------|

|   | A.      Goren and P. Sassower—6,902,588 Class A shares held by Phoenix FA      Holdings, LLC.  In Form 3’s filed on January 16 2008, Mr. Goren      and Mr. Sassower each reported indirect beneficial ownership of these      shares but disclaimed any beneficial ownership of these securities except      to the extent of their respective pecuniary interest      therein.  (See Footnote7.) |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Mr. Jeffrey      Steiner, c/o The Fairchild Corporation, 1750 Tysons Boulevard, Suite 1400,      McLean, VA 22102. |
|-----|-------------------------------------------------------------------------------------------------------------------------|

| (5) | Based      on the following information: |
|-----|------------------------------------------|

| (6) | Controlling Interest held by      LLC:  The Steiner Group LLC (a Delaware limited liability      company) (the “LLC”) holds 3,193,688 shares of Class A Stock and      2,533,996 shares of Class B Stock. It holds a controlling interest in the      Company. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (7) | On      November 21, 2007, Phoenix FA Holdings, LLC, a Delaware limited      liability company,  (“Phoenix”),  filed a 13D stating      that SG Phoenix Ventures IV LLC, the Managing Member of Phoenix, reported      beneficial ownership of the Fairchild shares held by Phoenix (the      “Shares”).  The Form 13D stated that Mr. Andrea Goren and Mr.      Philip S. Sassower, as co-managers of SG Phoenix Ventures IV LLC, may be      deemed to be the beneficial owners of the Shares.  On December      21, 2007, Phoenix filed a Form 3 reporting direct beneficial ownership of      6,902,588 shares of Fairchild Class A Common Stock (the “Fairchild      Shares”).   In Form 3’s filed on January 16, 2008, Messrs.      Goren and Sassower each reported indirect beneficial ownership of the      Fairchild Shares, but disclaimed beneficial ownership of the Fairchild      Shares except to the extent of their pecuniary interest      therein. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

ITEM 13

| ·   | The      Company provided a surety for Mr. Steiner and paid his expenses in      connection with legal proceedings in France, totaling approximately $5.645      million, and Mr. Steiner undertook to repay such amounts to the      Company if it were ultimately determined that he was not entitled to      indemnification under Delaware law (the “Undertaking”). Pursuant      to the Derivative Settlement, the Company and Mr. Steiner agreed to      mutually resolve Mr. Steiner’s claims for indemnity and his      obligations to the Company under the Undertaking, by paying the Company      $3,763,333, of which $833,333 was withdrawn from Mr. Steiner’s      Company SERP account, and $2,930,000 was paid by him via the Company’s      D&O liability insurance carrier, in satisfaction of its obligations to      indemnify and insureMr. Steiner.  |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Previously,      we have extended loans to purchase our Class A common stock to certain      members of our senior management and Board of Directors, for the purpose      of encouraging ownership of our stock, and to provide additional incentive      to promote our success. The loans are non-interest bearing, and have all      been fully repaid except for one. The remaining outstanding loan is      non-interest bearing, and matures in approximately one year, or becomes      due and payable immediately upon the termination of employment if prior to      such maturity date. On September 30, 2006, the borrower, who is a      non-executive officer of the Company, owed us approximately $50,000. In      fiscal 2006, Mr. Steven Gerard, a former director, repaid, when due, his      outstanding loan. All other loans to directors and executive officers were      repaid in full prior to September 30, 2005. During 2006, the largest      aggregate balance of indebtedness outstanding under the officer and      director stock purchase program was approximately $66,000 from Mr. Gerard,      and $50,000 from the officer. During 2007, the balance of indebtedness      outstanding under the officer and director stock purchase program was      approximately $50,000 due from a single, non-executive officer. In fiscal      2003, the Board of Directors extended, by five years, the expiration date      of the loan to that officer, after confirming he was not deemed an      executive officer. In accordance with the Sarbanes-Oxley Act of 2002, no      new loans will be made to executive officers or      directors. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | As      of September 30, 2007, the Steiner family beneficially owns approximately      60.3% of the aggregate vote of shares of the      Company.  Therefore, the ability for individual shareholders to      influence the direction of the Company may be  limited. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On      September 30, 2007 and 2006, we owed a remaining amount for change of      control payments of $3.1 million to Mr. J. Steiner. The amount owed to Mr.      J. Steiner is payable to him upon his termination of employment with us.      On September 30, 2007, deferred compensation of $11,000 was due from us to      Mr. E. Steiner. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In      December 2007, Mr. J. Steiner reimbursed us $704,000 for personal expenses      that we paid on his behalf, which were outstanding as of September 30,      2007.  In December 2006, Mr. J. Steiner reimbursed us $40,000 for      personal expenses that we paid on his behalf, which were outstanding as of      September 30, 2006.  At no time during 2007 and 2006 did amounts due      to us from Mr. J. Steiner or Mr. E. Steiner exceed the amount of the      after-tax salary on deferrals we owed to either Mr. J. Steiner or Mr. E.      Steiner. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Subject      to the approval of the Compensation and Stock Option Committee, our      Unfunded Supplemental Executive Retirement Plan (SERP) permits      participants to elect to receive retirement advances on an actuarially      reduced basis. Mr. J. Steiner received pre-retirement distributions from      the Unfunded SERP (representing a partial distribution of his vested      benefits) in the amount of $1,400,000 in fiscal 2007 and $3,500,000 in      fiscal 2006.  As of September 30, 2007, Mr. J. Steiner’s      remaining balance in the Unfunded SERP plan was $704,300.  Mr.      D. Miller also took an advance from the Unfunded SERP plan in fiscal 2007      in the amount of $919,131, representing his full balance in the Unfunded      SERP.  Mr. E. Steiner’s unfunded SERP account has      $861,763. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Mr.      E. Steiner, son of J. Steiner, is an executive officer of the      Company.  His compensation is set forth in the compensation      table of our proxy statement. Natalia Hercot, daughter of J. Steiner, is a      Vice President of the Company, for which she received compensation of      approximately $13,500 in fiscal 2007 and $20,000 in fiscal      2006.  Mrs. Hercot’s annual salary was adjusted to $10,000 per      year on December 23, 2005.  Her income exceeded $10,000 per year      in fiscal 2007 due to being reimbursed for previously untaken vacation      time.  Her monthly salary has been reduced to an amount of Euros      that will keep her compensation at approximately $10,000 per      year. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | During      2005, Phillipe Hercot, son-in-law of Mr. J. Steiner, subleased a room in      our Paris office and paid arm's length rent to the  Company. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We      paid $36,000 in 2006 and $36,000 in 2005 for security protection at the      Steiner Family residence in France. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------|

| ·   | We      provide to Mr. J. Steiner automobiles for business use. We charged Mr. J.      Steiner $15,000 in 2007 and $15,000 in 2006 to cover personal use and the      cost of these vehicles that exceeded our reimbursement    policy. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | During      2007 and 2006, we reimbursed $0.5 million and $0.4 million, respectively,      to Mr. J. Steiner, representing a portion of out-of-pocket costs he      incurred personally in connection with the entertainment of third parties,      which may benefit the Company. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Mr.      Klaus Esser’s brother is an employee of PoloExpress. His compensation      (currently €72,000) was approximately $94,000 in fiscal 2007 and $94,000      in fiscal 2006. Petra Esser is a relative of Mr. K. Esser and has current      annual compensation of approximately€16,000. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

ITEM 14

----

----

ITEM 15.

|  Schedule      Number |  Description                                            |  Page |   |
|----------------------------|--------------------------------------------------------------|------------|--------|
|                       |                                                         |       |   |
|  I                    |  Condensed Financial Information of Parent      Company |  104  |   |

----

BALANCE SHEETS (NOT CONSOLIDATED

|                                                   |   | September      30, |    |
|--------------------------------------------------------|--------|--------------------|---------|
|                                                   |   | 2007               |    |   | 2006 |   |
|                                                   |   |               |    |   |   |   |
|  ASSETS                                           |   |               |    |   |   |   |
|  Current      assets:                             |   |               |    |   |   |   |
|  Cash      and cash equivalents                   |   | $                  | 805     |   |   | $ | 4,308 |   |
| Short-term      investments                            |   |               | 25,814  |   |   |   | 45,378 |   |
|  Accounts      receivable                         |   |               | 805     |   |   |   | 447 |   |
|  Prepaid      expenses and other current assets   |   |               | 64      |   |   |   | 58 |   |
|  Total      current assets                        |   |               | 27,488  |   |   |   | 50,191 |   |
|                                                   |   |               |    |   |   |   |   |   |
|  Property,      plant and equipment, net          |   |               | 1,451   |   |   |   | 1,809 |   |
|  Investments      in subsidiaries                 |   |               | 141,895 |   |   |   | 136,125 |   |
|  Deferred      loan fees                          |   |               | 1,027   |   |   |   | 2,044 |   |
|  Marketable      securities - long term           |   |               | 7,978   |   |   |   | 34,173 |   |
|  Other      assets                                |   |               | 33      |   |   |   | 39 |   |
|  Total      assets                                |   | $                  | 179,872 |   |   | $ | 224,381 |   |
|                                                   |   |               |    |   |   |   |   |   |
|  LIABILITIES      AND STOCKHOLDERS' EQUITY        |   |               |    |   |   |   |   |   |
|  Current      liabilities:                        |   |               |    |   |   |   |   |   |
|  Current      maturities of long term liabilities |   | $                  | 64      |   |   | $ | 69 |   |
|  Accounts      payable                            |   |               | -       |   |   |   | 19 |   |
|  Other      accrued expenses                      |   |               | 4,009   |   |   |   | 6,897 |   |
|  Total      current liabilities                   |   |               | 4,073   |   |   |   | 6,985 |   |
|                                                   |   |               |    |   |   |   |   |   |
|  Long-term      liabilities                       |   |               | 21,641  |   |   |   | 30,781 |   |
|  Noncurrent      income taxes                     |   |               | 7,582   |   |   |   | 39,923 |   |
|  Other      long-term liabilities                 |   |               | 2,033   |   |   |   | 2,045 |   |
|  Total      liabilities                           |   |               | 35,329  |   |   |   | 79,734 |   |
|                                                   |   |               |    |   |   |   |   |   |
|  Stockholders'      equity:                       |   |               |    |   |   |   |   |   |
|  Class      A common stock                        |   |               | 3,047   |   |   |   | 3,047 |   |
|  Class      B common stock                        |   |               | 262     |   |   |   | 262 |   |
|  Paid-in      capital                             |   |               | 232,639 |   |   |   | 232,612 |   |
|  Treasury      stock                              |   |               | (76,352 | ) |   |   | (76,352 | ) |
|  Accumulated      deficit                         |   |               | (16,021 | ) |   |   | (15,680 | ) |
|  Accumulated      other comprehensive income      |   |               | 968     |   |   |   | 758 |   |
|  Total      stockholders' equity                  |   |               | 144,543 |   |   |   | 144,647 |   |
|  Total      liabilities and stockholders' equity  |   | $                  | 179,872 |   |   | $ | 224,381 |   |

----

|                                                                   |   | Years      Ended September 30, |   |
|------------------------------------------------------------------------|--------|--------------------------------|--------|
|                                                                   |   | 2007                           |   |   | 2006 |   |   | 2005 |   |
|  Costs      and Expenses:                                         |   |                           |   |   |   |   |   |   |   |
|  Selling,      general & administrative                       |   | $                              | 7,359  |   |   | $ | 12,192 |   |   | $ | 11,648 |   |
|                                                                   |   |                           | 7,359  |   |   |   | 12,192 |   |   |   | 11,648 |   |
|                                                                   |   |                           |   |   |   |   |   |   |   |   |   |   |
|  Operating      loss                                              |   |                           | (7,359 | ) |   |   | (12,192 | ) |   |   | (11,648 | ) |
|                                                                   |   |                           |   |   |   |   |   |   |   |   |   |   |
|  Net      interest expense                                        |   |                           | (2,761 | ) |   |   | (2,548 | ) |   |   | (2,980 | ) |
|  Investment      income                                           |   |                           | 5,146  |   |   |   | 851 |   |   |   | 112 |   |
|  Fair      market value adjustment – interest rate contract |   |                           | -      |   |   |   | 836 |   |   |   | 5,942 |   |
|  Loss      from continuing operations before income taxes         |   |                           | (4,974 | ) |   |   | (13,053 | ) |   |   | (8,574 | ) |
|                                                                   |   |                           |   |   |   |   |   |   |   |   |   |   |
|  Income      tax (benefit) provision                              |   |                           | 208    |   |   |   | (244 | ) |   |   | 2,953 |   |
|  Loss      from discontinued operations, net of tax               |   |                           | (71    | ) |   |   | (8,594 | ) |   |   | (735 | ) |
|  Equity      in income (loss) of affiliates                       |   |                           | 89     |   |   |   | - |   |   |   | (87 | ) |
|  Loss      before equity in loss of subsidiaries                  |   |                           | (4,748 | ) |   |   | (21,891 | ) |   |   | (6,443 | ) |
|                                                                   |   |                           |   |   |   |   |   |   |   |   |   |   |
|  Equity      in earnings (loss) of subsidiaries                   |   |                           | 4,407  |   |   |   | (15,408 | ) |   |   | (12,922 | ) |
|  Net      loss                                                    |   | $                              | (341   | ) |   | $ | (37,299 | ) |   | $ | (19,365 | ) |

----

|                                                            |   | Years      Ended September 30, |   |
|-----------------------------------------------------------------|--------|--------------------------------|--------|
|                                                            |   | 2007                           |   |   | 2006 |   |   | 2005 |   |
|                                                            |   |                           |   |   |   |   |   |   |   |
|  Cash      provided by (used for) operations               |   | $                              | 7,082  |   |   | $ | (62,790 | ) |   | $ | (13,841 | ) |
|  Cash      flows from investing activities:                |   |                           |   |   |   |   |   |   |   |   |   |   |
|  Purchase      of fixed assets                             |   |                           | (44    | ) |   |   | (724 | ) |   |   | (1,146 | ) |
|  Net amounts      advanced to subsidiaries            |   |                           | (1,363 | ) |   |   | 41,572 |   |   |   | 13,498 |   |
|  Net      cash provided by (used for) investing activities |   |                           | (1,407 | ) |   |   | 40,848 |   |   |   | 12,352 |   |
|                                                            |   |                           |   |   |   |   |   |   |   |   |   |   |
|  Cash      flows from financing activities:                |   |                           |   |   |   |   |   |   |   |   |   |   |
|  Proceeds      from issuance of debt                       |   |                           | -      |   |   |   | 31,552 |   |   |   | 961 |   |
|  Debt      repayments                                      |   |                           | (9,145 | ) |   |   | (1,649 | ) |   |   | (70 | ) |
|  Payment      of interest rate contract                    |   |                           | -      |   |   |   | (4,310 | ) |   |   | - |   |
|  Payment      of financing fees                            |   |                           | (33    | ) |   |   | (2,217 | ) |   |   | - |   |
|  Purchase      of treasury stock                           |   |                           | -      |   |   |   | - |   |   |   | (193 | ) |
|  Net      cash provided by (used for) financing activities |   |                           | (9,178 | ) |   |   | 23,376 |   |   |   | 698 |   |
|  Net      change in cash and cash equivalents              |   |                           | (3,503 | ) |   |   | 1,434 |   |   |   | (791 | ) |
|  Cash      and cash equivalents, beginning of the year     |   |                           | 4,308  |   |   |   | 2,874 |   |   |   | 3,665 |   |
|  Cash      and cash equivalents, end of the year           |   | $                              | 805    |   |   | $ | 4,308 |   |   | $ | 2,874 |   |

----

|                                                                    |   | September      30, |   |
|-------------------------------------------------------------------------|--------|--------------------|--------|
|                                                                    |   | 2007               |   |   | 2006 |   |
|  GoldenTree      term loan                                         |   | $                  | 20,938 |   |   | $ | 30,000 |   |
|  Other      term debt                                              |   |               | 767    |   |   |   | 845 |   |
|  Capital      lease obligations                                    |   |               | -      |   |   |   | 5 |   |
|     Total      debt                                 |   |               | 21,705 |   |   |   | 30,850 |   |
|     Less:      Current maturities of long-term debt |   |               | (64    | ) |   |   | (69 | ) |
|     Total      long-term debt                       |   | $                  | 21,641 |   |   | $ | 30,781 |   |

| (In      thousands)     |   | 2007   |   |   | 2006   |   |   | 2005   |   |
|-------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|  Interest          |   | $      | 5,709  |   |   | $      | 1,676  |   |   | $ | 4,441 |   |
|  Income      taxes |   |   | 1,144  |   |   |   | 150    |   |   |   | 102 |   |

----

| 2.1 | Acquisition      Agreement dated as of July 16, 2002 among Alcoa Inc., The Fairchild      Corporation, Fairchild Holding Corp. and Sheepdog, Inc., with Exhibit A      (Conveyance, Assignment, Transfer and Bill of Sale), Exhibit B      (Undertaking and Indemnity Agreement) and Exhibit C (Escrow Agreement)      attached thereto (incorporated by reference to Exhibit 2.1 to the Current      Report on Form 8-K dated July 16, 2002) (incorporated by reference to the      Registrant's Report on Form 8-K dated December 3,  2002). |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.2 | Amendment      No. 1 to the Acquisition Agreement, dated as of December 3, 2002, to the      Acquisition Agreement, dated as of July 16, 2002, among Alcoa Inc., The      Fairchild Corporation, Fairchild Holding Corp. and Sheepdog, Inc.      (incorporated by reference to the Registrant's Report on Form 8-K dated      December 3, 2002) (incorporated by reference to the Registrant's Report on      Form 8-K dated December 3, 2002). |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.3 | Purchase      Contract, relating to the assets of Hein Gericke (the “Hein Gericke      Purchase Contract”) executed October 11, 2003, among Fairchild Textile      GmbH (as Purchaser), Eurobike Vermögensverwaltungs GmbH (as a Seller) and      (as additional Sellers) the insolvency administrator Dr. Biner Bähr,      acting in his capacity as insolvency administrator over the assets of (i)      Hein Gericke-Holding GmbH, (ii) Hein Gericke Vertriebs GmbH, (iii) Paul A      Boy GmbH and (iv) Eurobike AG (incorporated by reference to the      Registrant's Report on Form 8-K dated November 14,  2003). |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.4 | Amendment      to Purchase Contract, dated November 1, 2003, amending the Hein Gericke      Purchase Contract referred to immediately above (incorporated by reference      to the Registrant's Report on Form 8-K dated November 14,      2003). |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.5 | Purchase      Contract, relating to the Sellers ownership interest in PoloExpress (the      “PoloExpress Purchase Contract”), executed October 11, 2003, among      Fairchild Textile GmbH (as Purchaser) and the following Sellers, Helmet      House GmbH , BMJ Motorsport Vertriebs GmbH, and Eurobike AG (incorporated      by reference to the Registrant's Report on Form 8-K dated November 14,      2003). |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.6 | Amendment      to Purchase Contract, dated November 1, 2003, amending the PoloExpress      Purchase Contract referred to immediately above (incorporated by reference      to the Registrant's Report on Form 8-K dated November 14,      2003). |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.7 | Guaranties      by The Fairchild Corporation, each dated November 1, 2003, to the Sellers      of the Polo Express business, guaranteeing the deferred purchase price      under the PoloExpress Purchase Contract (aggregate of EUR 20,000 Million)      due no later than April 30, 2004 (incorporated by reference to the      Registrant's Report on Form 8-K dated November 14,  2003). |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.8 | Contract,      relating to Mr. Klaus Esser’s Ownership interest in PoloExpress ,executed      October 11, 2003, between Fairchild Textile GmbH (as Purchaser) and Mr.      Klaus Esser (as Seller) (incorporated by reference to the Registrant's      Report on Form 8-K dated November 14,2003). |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.1   | Registrant's      Restated Certificate of Incorporation (incorporated by reference to      Exhibit "C" of Registrant's Proxy |
|-----------------|------------------------------------------------------------------------------------------------------------------------------|

| 3.2 | Certificate      of Amendment to Registrant’s Certificate of Incorporation, dated November      16, 1990, changing name from Banner Industries, Inc. to The Fairchild      Corporation. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.3 | Registrant's      Amended and Restated By-Laws, as amended as of November 21, 1996      (incorporated by reference to the Registrant's Quarterly Report on Form      10-Q for the quarter ended December 29,1996). |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.4 | Amendment      to the Company's By-Laws, dated as of February 12, 1999 (incorporated by      reference to Registrant's Annual Report on Form 10-K for the fiscal year      ended June 30, 1999). |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 3.5 | Amendment      to the Company's By-Laws, dated December 23, 2005 (incorporated by      reference to Registrant's Annual Report on Form 10-K for the fiscal year      ended September 30, 2005). |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.6 | Amended      and Restated Charter of the Audit Committee dated January 31, 2005      (incorporated by reference to Registrant's Annual Report on Form 10-K for      the fiscal year ended September 30,2005). |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | Instruments      Defining the Rights of Security Holders, Including    Indentures |
|---|-----------------------------------------------------------------------------------|

| 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 to      Registrant's Annual Report on Form 10-K for the fiscal year ended June 30,      1989). |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.3   | Savings      Plan for Employees of The Fairchild Corporation, amended and restated as      of February 28, 2002 (incorporated by reference to the Registrant’s Report      on Form S-8 dated August 6, 2002). |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.4   | Savings      Plan for Employees of The Fairchild Corporation Trust Agreement, dated      February 1, 2002, between The Fairchild Corporation and Putnam Fiduciary      Trust Company (incorporated by reference to the Registrant’s Report on      Form S-8 dated August 6, 2002). |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.5   | Notice      of Hearing and Proposed Settlement of The Fairchild Corporation      Stockholder Derivative Litigation, dated April 1, 2005 (incorporated by      reference to the Registrant's Report on Form 8-K dated April 1,      2005). |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.6   | Notice      of Hearing and Proposed Supplemental Settlement of The Fairchild      Corporation Stockholder Derivative Litigation, dated October 24, 2005      (incorporated by reference to the Registrant's Report on Form 8-K dated      October 24, 2005). |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10 | Material      Contracts |
|----|-------------------------|

| 10(a) | (Stock      Option Plans) |
|-------|---------------------------|

| 10.1 | Amended      and Restated 1986 Non-Qualified and Incentive Stock Option Plan, dated as      of February 9, 1998 (incorporated by reference to Exhibit B of      Registrant's Proxy Statement dated October 9,  1998). |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.2 | Amendment      Dated May 7, 1998 to the 1986 Non-Qualified and Incentive Stock Option      Plan (incorporated by reference to Exhibit A of Registrant's Proxy      Statement dated October 9, 1998). |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.3 | 1996      Non-Employee Directors Stock Option Plan (incorporated by reference to      Exhibit B of Registrant's Proxy Statement dated October 7,      1996). |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.4 | Stock      Option Deferral Plan dated February 9, 1998 (for the purpose of allowing      deferral of gain upon exercise of stock options) (incorporated by      reference to Registrant's Quarterly Report on Form 10-Q for the quarter      ended March 29, 1998). |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.5 | Amendment      to the Stock Option Deferral Plan, dated June 28, 2000 (for the purpose of      making an equitable adjustment in connection with the spin off of      Fairchild Bermuda and the receipt of Global Sources shares) (incorporated      by reference to Registrant's Annual Report on Form 10-K for the fiscal      year ended June 30, 2000). |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.6 | Amendment      dated May 21, 1999, amending the 1996 Non-Employee Directors Stock Option      Plan (for the purpose of allowing deferral of gain upon exercise of stock      options) (incorporated by reference to Registrant's Annual Report on Form      10-K for the fiscal year ended June 30,1999). |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 10.7 | 2000      Non-Employee Directors Stock Option Plan (incorporated by reference to      Appendix 2 of Registrant's Proxy Statement dated October 10,      2000). |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.8 | 2001      Non-Employee Directors Stock Option Plan (incorporated by reference to      Appendix 1 of Registrant's Proxy Statement dated October 10,      2000). |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10(b) | (Employee      Agreements) |
|-------|----------------------------|

| 10.9 | Amended      and Restated Employment Agreement between Registrant and Jeffrey J.      Steiner dated September 10, 1992 (incorporated by reference to      Registrant's Annual Report on Form 10-K for the fiscal year ended June 30,      1993). |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.10 | Employment      Agreement between Banner Aerospace, Inc. and Jeffrey J. Steiner, dated      September 9, 1992. |
|-------|----------------------------------------------------------------------------------------------------------------|

| 10.11 | Restated      and Amended Service Agreement between Fairchild Switzerland, Inc. and      Jeffrey J. Steiner, dated April 1,2001. |
|-------|----------------------------------------------------------------------------------------------------------------------------------|

| 10.12 | Letter      Agreement dated February 27, 1998, between Registrant and Donald E. Miller      (incorporated by reference to Registrant's Quarterly Report on Form 10-Q      for the quarter ended March 29,1998). |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.13 | Officer      Loan Program, dated as of February 5, 1999, lending up to $750,000 to      officers for the purchase of Company Stock (incorporated by reference to      Registrant's Annual Report on Form 10-K for the fiscal year ended June 30,      1999). |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.14 | Director      and Officer Loan Program, dated as of August 12, 1999, lending up to      $2,000,000 to officers and directors for the purchase of Company Stock      (incorporated by reference to Registrant's Annual Report on Form 10-K for      the fiscal year ended June 30,1999). |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.15 | Employment      Agreement between Eric Steiner and The Fairchild Corporation, dated as of      August 1, 2000 (incorporated by reference to Registrant's Annual Report on      Form 10-K for the fiscal year ended June 30,  2000). |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.16 | Employment      Agreement between Banner Aerospace, Inc. and Warren D. Persavich (together      with Amendment No. 1 to such Agreement) (incorporated by reference to      Registrant's Annual Report on Form 10-K for the fiscal year ended June 30,      2000). |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.17 | Amendment      to Employment Agreements between the Company and Jeffrey Steiner, dated      January 22, 2003 (for the purpose of amending change of control payments)      (incorporated by reference to Registrant's Quarterly Report on Form 10-Q      for the quarter ended December 29,2002). |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.18 | Amendment      to Employment Agreement between the Company and Eric Steiner, dated      January 22, 2003 (for the purpose of amending change of control payments)      (incorporated by reference to Registrant's Quarterly Report on Form 10-Q      for the quarter ended December 29,2002). |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.19 | Amendment      to Incentive Contract between the Company and Donald Miller, dated January      22, 2003 (for the purpose of amending change of control payments)      (incorporated by reference to Registrant's Quarterly Report on Form 10-Q      for the quarter ended December 29,2002). |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.20 | Employment      Agreement dated October 18, 2005, between PoloExpress and Klaus Esser      (incorporated by reference to the Registrant's Report on Form 8-K dated      October 18, 2005). |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.21 | Amendment      to Employment Agreement between PoloExpress and Klauss Esser, dated May      30, 2007 (incorporated by reference to the Registrant’s Report on Form 8-K      dated May 30, 2007). |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 10(c) | (Credit      Agreements) |
|-------|--------------------------|

| 10.22 | Promissory      Note dated as of August 26, 2004 issued by The Fairchild Corporation to      Beal Bank, SSB in connection with $13,000,000 loan secured by the      Company’s real estate in Huntington Beach CA, Fullerton CA, and Wichita KS      (incorporated by reference to the Registrant's Annual Report on Form 10-K      dated September 30, 2004). |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.23 | Loan      Agreement (English Translation) dated April 21, 2004, between Hein Gericke      and Polo Express (as Borrower) and Stadtsparkasse Düsseldorf and HSBC      Trinkaus & Burkhardt AG (as Lenders) relating to €31,000,000 loan, as      reported by the Company in the Registrant’s Report on Form 8-K dated May      6, 2004 (incorporated by reference to the Registrant's Report on Form 10-Q      dated August 4, 2004). |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.24 | Working      Capital Loans (English Translation) dated April 21, 2004, between Hein      Gericke (as Borrower) and Stadtsparkasse Düsseldorf relating to €5,000,000      loan, as reported by the Company in the Registrant’s Report on Form 8-K      dated May 6, 2004 (incorporated by reference to the Registrant's Report on      Form 10-Q dated August 4, 2004). |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.25 | Working      Capital Loans (English Translation) dated April 21, 2004, between Hein      Gericke (as Borrower) and HSBC Trinkaus & Burkhardt AG relating to      €5,000,000 loan, as reported by the Company in the Registrant’s Report on      Form 8-K dated May 6, 2004 (incorporated by reference to the Registrant's      Report on Form 10-Q dated August 4,2004). |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.26  | Loan      Agreement dated December 26, 2003, between Republic Thunderbolt LLC, as      borrower and Column Financial, Inc. as lender, relating to $55,000,000      loan secured by Airport Plaza Shopping Center, Farmingdale      NY  (incorporated by reference to the Registrant's Report on      Form 10-Q dated February 12, 2004). |
|-------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.27 | Loan      Agreement dated April 30, 2004, between Hein Gericke UK, as borrower, and      GMAC Commercial Finance PLC, as lender, relating to inventory loan to Hein      Gericke UK (incorporated by reference to the Registrant's Report on Form      10-Q dated August 4, 2004). |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.28 | Loan      Agreement dated January 12, 2004, between Banner Aerospace Holding Corp.      I, as borrower, and CIT Group/Business Credit, Inc., as lender, relating      to inventory loan to Banner (incorporated by reference to the Registrant's      Report on Form 10-Q dated May 13,2004). |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.29 | Credit      Agreement dated May 3, 2006, between The Fairchild Corporation, as      borrower, The Bank of New York, as Administrative Agent, and GoldenTree      Asset management L.P., as Collateral Agent, for a four-year term loan in      the original principal amount of $30,000,000 (incorporated by reference to      the Registrant’s Report on Form 8-K dated May 3,  2006). |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.30 | Settlement      and Mutual Release dated October 31, 2007 between The Fairchild      Corporation, Fairchild Holding Corp. and Sheepdog, Inc. (the “Fairchild      Parties”) and Alcoa Inc. to settle all claims between them and to sell to      Alcoa a building previously rented by Alcoa Inc. from one of the Fairchild      Parties (incorporated by reference from our Form 8-K dated as of November      5, 2007). |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 11 | Other      Exhibits |
|----|---------------------|

| 11. | Computation      of net loss per share (found at Note 9 in Item 8 to Registrant's      Consolidated Financial Statements for the fiscal years ended September 30,      2007, September 30, 2006, and September 30,  2005). |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14 | Corporate      Governance Matters |
|----|-----------------------------------|

| 14.1 | Corporate      Governance and Committee Charter:  The Company’s Board of      Directors has adopted a written charter for the Corporate Governance and      Nominating Committee.  The charter is posted on the Company’s      website (www.fairchild.com).  A      copy may also be obtained upon request from the Company’s Corporate      Secretary. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 14.2 | Compensation      Committee Charter:  The Company’s Board of Directors has adopted      a written charter for the Compensation Committee.  The charter      is posted on the Company’s website (www.fairchild.com).  A      copy may also be obtained upon request from the Company’s Corporate      Secretary. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14.3 | Audit      Committee Charter:  The Company’s Board of Directors has adopted      a written charter for the Audit Committee.  The charter is      posted on the Company’s website (www.fairchild.com).  A      copy may also be obtained upon request from the Company’s Corporate      Secretary. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14.4 | On      January 31, 2005, the Company’s Board of Directors adopted an Amended and      Restated Corporate Governance Guidelines.  The full text of the      Corporate Governance Guidelines can be found on the Company’s website      www.fairchild.com).  A      copy may also be obtained upon request from the Company’s Corporate      Secretary. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14.5 | On      August 2, 2004, the Company’s Board of Directors adopted an Amended and      Restated Code of Business Conduct and Ethics, applicable to all employees,      officers and directors of the corporation.  The code is posted      on the Company’s website (www.fairchild.com).  A      copy may also be obtained upon request from the Company’s Corporate      Secretary. |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14.6 | In      November 2003, the Company’s Board of Directors adopted the Code of Ethics      for Senior Financial Officers (including the Chief Executive Officer, the      Chief Finical Officer, the Principal Accounting Officer or Controller, and      all persons performing similar functions on behalf of the Company). The      code is posted on the Company’s website (www.fairchild.com).      A copy may also be obtained upon request from the Company’s Corporate      Secretary. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *14.7 | Annual Certification by CEO as filed with the      NYSE, dated March 29, 2007, regarding Compliance with NYSE Corporate      Governance Listing Standards. |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14.9 | Pre-Approval      Policy by the Audit Committee Re Audit and Non-Audit Services,      incorporated by reference to the Fiscal 2005 Proxy    Statement. |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| *21 | List of subsidiaries of    Registrant. |
|-----|----------------------------------------|

| *23.1 | Consent of BDO Seidman, LLP, Independent      Registered Public AccountingFirm. |
|-------|---------------------------------------------------------------------------------|

| *23.2 | Consent of KPMG LLP, Independent Registered Public      Accounting Firm. |
|-------|--------------------------------------------------------------------------|

| *31.1 | Certifications required by Section 302 of the      Sarbanes-Oxley Act, signed by Jeffrey J.  Steiner. |
|-------|-------------------------------------------------------------------------------------------------------|

| *31.2 | Certifications required by Section 302 of the      Sarbanes-Oxley Act, signed by Michael  McDonald. |
|-------|-----------------------------------------------------------------------------------------------------|

| *32.1 | Certifications required by Section 906 of the      Sarbanes-Oxley Act, signed by Jeffrey J.  Steiner. |
|-------|-------------------------------------------------------------------------------------------------------|

| *32.2 | Certifications required by Section 906 of the      Sarbanes-Oxley Act, signed by Michael  McDonald. |
|-------|-----------------------------------------------------------------------------------------------------|

|   | ------------------------- |
|--------|---------------------------|

|   | *Filed      herewith. |
|--------|-----------------------|

----

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| By:       |  /s/ |  JEFFREY      J. STEINER  |  Chairman,      Chief Executive             |  March      4, 2008 |
|-----------|-----------|--------------------------------|--------------------------------------------------|--------------------------|
|      |      |  Jeffrey      J. Steiner  |  Officer      and Director                  |                     |
|      |      |                           |                                             |                     |
|  By: |  /s/ |  DIDIER      CHOIX        |  Director                                   | March      4, 2008       |
|      |      |  Didier      Choix        |                                             |                     |
|      |      |                           |                                             |                     |
|  By: |  /s/ |  ROBERT      E. EDWARDS   |  Director                                   | March      4, 2008       |
|      |      |  Robert      E. Edwards   |                                             |                     |
|      |      |                           |                                             |                     |
| By:       |  /s/ |  ANDREA      GOREN        | Director                                         | March      4, 2008       |
|      |      |  Andrea      Goren        |                                             |                     |
|      |      |                           |                                             |                     |
|  By: |  /s/ |  DANIEL      LEBARD       |  Director                                   |  March      4, 2008 |
|      |      |  Daniel      Lebard       |                                             |                     |
|      |      |                           |                                             |                     |
|  By: |  /s/ |  GLENN      MYLES         |  Director                                   | March      4, 2008       |
|      |      |  Glenn      Myles         |                                             |                     |
|      |      |                           |                                             |                     |
| By:       |  /s/ |  PHILIP      S. SASSOWER  | Director                                         |  March      4, 2008 |
|      |      |  Philip      S. Sassower  |                                             |                     |
|      |      |                           |                                             |                     |
|  By: |  /s/ |  MICHAEL      J. VANTUSKO |  Director                                   | March      4, 2008       |
|      |      |  Michael      J. Vantusko |                                             |                     |
|      |      |                           |                                             |                     |
|  By: |  /s/ |  ERIC      I. STEINER     |  President,      Chief  Operating |  March      4, 2008 |
|      |      |  Eric      I. Steiner     |  Officer      and Director                  |                     |