UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION??
                             Washington, DC 20549

                             --------------------
                                  FORM 10-K/A
                             --------------------

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

For the year ended June 30, 1997         Commission File Number:  1-6560
                   -------------                                  ------

                          THE FAIRCHILD CORPORATION
            ------------------------------------------------------
            (Exact name of registrant as specified in its charter)

          Delaware                                     34-0728587
-------------------------------                    -------------------
(State or other jurisdiction of                    (I.R.S. Employer
incorporation or organization)                     Identification No.)

Washington Dulles International Airport
 300 West Service Road, P.O. Box 10803
         Chantilly, Virginia                               20153
----------------------------------------                ----------
(Address of principal executive offices)                (Zip Code)

                             (703) 478-5800
            ----------------------------------------------------
            (Registrant's Telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

                                       Name of exchange on
Title of each class                    which registered
-------------------                    -------------------
Class A Common Stock, par value
$.10 per share                         New York and Pacific Stock Exchange
-------------------------------        -----------------------------------
13 1/8% Subordinated Debentures
due 2006                               New York Stock Exchange
-------------------------------        -----------------------------------
12% Intermediate Subordinated
Debentures due 2001                    New York Stock Exchange
-------------------------------        -----------------------------------
13% Junior Subordinated
Debentures due 2007                    New York Stock Exchange
-------------------------------        -----------------------------------


Securities registered pursuant to Section 12(g) of the Act:  None
                                                             ----
Indicate  by check mark whether the Registrant:  (1) has filed all  reports
required to be filed by Section 13 or 15(d) of the Securities Exchange  Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject  to
such filing requirements for the past 90 days.

                                                       Yes  X  No
                                                          ----   ----

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

      As  of  November 21, 1997, the aggregate market value of  the  common
shares (based upon the closing price of these shares on the New York  Stock
exchange) of the Registrant held by nonaffiliates was approximately  $190.7
million  (excluding shares deemed beneficially owned by affiliates  of  the
Registrant under Commission Rules).

      As of November 23, 1997, the number of shares outstanding of each  of
the Registrant's classes of common stock were as follows:

    Class A common stock, $.10 par value               14,035,767
                                                     ------------
    Class B common stock, $.10 par value                2,625,616
                                                     ------------


AMENDMENT:

      The  purpose  of  this amendment is to revise and provide  additional
disclosure  for  (i)  Item 1, "Business", (ii) Item 2, "Properties",  (iii)
Item  6,  "Selected Financial Data", (iv) Item 7, "Management's  Discussion
and Analysis of Results of Operations and Financial Condition", (v) Item 8,
"Financial  Statements and Supplementary Data" and (vi) Item 14, "Exhibits,
Financial Statement Schedules and Reports on Form 8-K", as suggested by the
SEC staff from their review of the Company's filing.

                          THE FAIRCHILD CORPORATION
                                   INDEX TO
                          ANNUAL REPORT ON FORM 10-K
                      FOR FISCAL YEAR ENDED JUNE 30, 1997


PART I

     Item 1.    Business . . . . . . . . . . . . . . . . . . . . . . .

     Item 2.    Properties . . . . . . . . . . . . . . . . . . . . . .


PART II

     Item 6.    Selected Financial Data. . . . . . . . . . . . . . . .

     Item 7.    Management's Discussion and Analysis
                of Results of Operations and
                Financial Condition  . . . . . . . . . . . . . . . . .    4

     Item 8.    Financial Statements and
                Supplementary Data . . . . . . . . . . . . . . . . . .   14

PART IV

     Item 14.   Exhibits, Financial Statement
                Schedules and Reports on Form 8-K  . . . . . . . . . .   70


                                  PART I
                                  ------

ITEM 1.  BUSINESS
-----------------

(a)  General Development of Business

      The Fairchild Corporation (the "Company") was incorporated in October
1969,  under  the laws of the State of Delaware.  The Company  changed  its
name  from Banner Industries, Inc. to The Fairchild Corporation on November
15,  1990.   The Company is a holding company which owns all of the  issued
and outstanding stock of RHI Holdings, Inc. ("RHI"), and through RHI all of
the issued and outstanding stock of Fairchild Holding Corporation  ("FHC").
Through  RHI, the Company is the majority stockholder of Banner  Aerospace,
Inc. ("Banner").
   The Company is the largest aerospace fastener manufacturer and is one of
the  largest independent aerospace parts distributors in the world. Through
internal growth and strategic acquisitions, the Company has become  one  of
the  leading  aircraft  parts suppliers to aircraft manufacturers  such  as
Boeing,  Airbus, Lockheed Martin, British Aerospace and Bombardier  and  to
airlines such as Delta Airlines and US Airways.
The  Company's primary business focus is on the aerospace industry and  its
business  consists  primarily  of  two  segments--fasteners  and  aerospace
partsdistribution.  The aerospace fasteners segment,  which  accounted  for
approximately  51.4% of the Company's net sales in Fiscal 1997,  pro  forma
for  the  Disposition, manufactures and markets fastening systems  used  in
themanufacturing and maintenance of commercial and military  aircraft.  The
aerospace distribution segment, which accounted for approximately 35.9%  of
the  Company's  net  sales in Fiscal 1997, pro forma for  the  Disposition,
stocks  and  distributes  a wide variety of aircraft  parts  to  commercial
airlines  and  air  cargo  carriers, OEMs, other  distributors,  fixed-base
operators,  corporate  aircraft operators  and  other  aerospace  and  non-
aerospace  companies.  The  Company's aerospace  distribution  business  is
conducted through its 64% owned subsidiary, Banner.
Recent Developments
-------------------

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

(b)  Financial Information about Business Segments

      The Company's business segment information is incorporated herein  by
reference  from Note 21 of the Company's consolidated financial  statements
included in Item 8, "Financial Statements and Supplementary Data".

(c)  Narrative Description of Business Segments

INDUSTRY OVERVIEW

      The  aerospace parts industry currently is enjoying favorable  trends
driven  by strong growth in new commercial aircraft orders, an increase  in
miles  flown  by  existing aircraft, the need to modify older  aircraft  to
comply  with  noise  regulations  and  increased  orders  for  wide  bodied
aircraft.
      Demand  for aerospace fasteners and other aerospace parts is  closely
related  to  delivery and use rates for commercial and  military  aircraft.
Delivery  and  use  rates are in turn directly related to  the  actual  and
projected  volume of passenger and freight traffic, average  aircraft  age,
global  fleet  size and government defense expenditures. According  to  the
Boeing 1997 Current Market Outlook (the "Boeing Market Outlook"),
world  air  traffic grew 6.7% from 1995 to 1996, following a 6.6%  increase
from  1994  to 1995. Industry sources forecast that world air traffic  will
grow  by more than 5% per year for the next ten years. Boeing also projects
that  during this period domestic and international airlines will lease  or
purchase   over  7,000  new  aircraft,  thereby  increasing  the  worldwide
commercial fleet from approximately 11,500 aircraft at the end of  1996  to
approximately 17,000 aircraft (net of retirements) at the end of 2006.

      Boeing,  Airbus and McDonnell Douglas delivered over 277 new aircraft
in the first six months of 1997 compared to 184 in the comparable period of
the  prior  year.  Orders for new aircraft at these manufacturers  remained
stable, with 313 orders in the first six months of 1997 compared to 291  in
the comparable period of 1996. Cancellations, however, were greatly reduced-
-Boeing experienced only five cancellations in the first six months of 1997
as  compared  to  77 in the first six months of 1996. The Company  believes
that  the  world's  airlines must continue to add capacity  and  order  new
airplanes to be able to meet the anticipated demand.
      The  Company believes that over the next five years airlines will  be
required to replace a significant portion of their existing fleets  as  the
large  number  of  airplanes  delivered in the  1960s  become  increasingly
uneconomical to operate and the deadlines for compliance with the stringent
noise regulations adopted in the United States and Europe approach.

       The  Company's  fastener  business  benefits  from  noise  reduction
modifications  because  modifying an airplane  to  comply  with  the  noise
regulations  and  remain  serviceable  requires  a  substantial  number  of
fasteners. The Boeing Market Outlook reports that 560 airplanes in the U.S.
fleet  had been modified to meet the new noise standards and projects  that
1,080 planes in the U.S. fleet will be noise modified.

      The  Boeing Market Outlook projects that average airplane size should
rise worldwide over the next ten years. As airlines seek to serve a growing
number of air travelers with existing restrictions on arrival and departure
slots,  airport  gates  and  ramp capacity, commercial  aircraft  OEMs  are
experiencing   increased  orders  for  heavier,  widebodied   aircraft   of
intermediate  size. Widebodied aircraft generally require a greater  number
of fasteners than smaller aircraft.
AEROSPACE FASTENERS

      The  Company, through its Aerospace Fasteners segment, is  a  leading
worldwide  manufacturer  and  supplier of fastening  systems  used  in  the
construction  and  maintenance of commercial  and  military  aircraft.  The
Aerospace Fasteners segment accounted for 36.4% and 35.2% of total  Company
sales  for  the  year  ended June 30, 1997 and for the three  months  ended
September 28, 1997, respectively.

 PRODUCTS

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

     Principal product lines of the Aerospace Fasteners segment include:

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

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

       Proprietary  Products  and  Fastening  Systems--These  very   highly
engineered  proprietary fasteners are designed by the Company for  specific
customer  applications and include high performance structural latches  and
hold down mechanisms. These fasteners are usually proprietary in nature and
are primarily used in either commercial aerospace or military applications.
These  fasteners  include Visu-Lok(R), Composi-Lok(R), Keen-serts(R),  Mark
IV(TM), Flatbeam(TM) and Ringlock(TM).
      Highly  Engineered  Fastening Systems for  Industrial  Applications--
Thesehighly  engineered fasteners are designed by the Company for  specific
niche  applications in the electronic, automotive and durable goods markets
and are sold under the Camloc(R) trade name.

 SALES AND MARKETS

      The products of the Aerospace Fasteners segment are sold primarily to
domestic  and  foreign  OEMs,  and to the  maintenance  and  repair  market
throughdistributors.  Sixty-six percent of its sales  are  domestic.  Major
customers  include OEMs such as Boeing, McDonnell Douglas  and  Airbus  and
their  subcontractors,  as  well  as major  distributors  such  as  Burbank
Aircraft  Supply,  Special-T and Wesco. In addition, OEMs have  implemented
programs to reduce inventories and pursue just-in-time relationships.  This
has  allowed parts distributors to significantly expand their business  due
to  their  ability to better meet OEM objectives. In response, the Company,
which  formerly supplied the OEMs directly, is expanding efforts to provide
parts   through   distributors,  by  establishing  master   distributorship
agreements,  with Special-T, Wesco and others. No single customer  accounts
for more than 10% of consolidated sales. The Company's backlog of orders in
the  Aerospace Fasteners segment as of September 28, 1997 was $201 million.
The  Company  anticipates that approximately 95% of such  backlog  will  be
delivered by September 28, 1998.
      Products  are marketed by a direct sales force team which coordinates
efforts with an internal technical sales force team. The direct sales force
team  is  organized  by customer and region. The internal  sales  force  is
organized  by  facility  and  product range and  is  focused  on  servicing
customers  needs, identifying new product applications, and  obtaining  the
approval of new products. All the Company's products are leveraged  through
centralized advertising and promotional activities.

     Revenues in the Aerospace Fasteners segment bear a strong relationship
to  aircraft  production. As OEMs searched for cost  cutting  opportunities
during the aerospace industry recession, parts manufacturers, including the
Company,  accepted  lower-priced and/or smaller orders to  maintain  market
share,  at  lower profit margins. However, during the last two years,  this
situation  has  improved  as  build rates in the  aerospace  industry  have
increased  and  resulted  in  capacity  constraints.  As  lead  times  have
increased, the Company has been able to negotiate contracts with its  major
customers  at  more favorable pricing as well as larger minimum  lot  sizes
that  are  more  economic  to  manufacture. In addition,  the  Company  has
eliminated  "make and hold" contracts under  which  large  volume
buyers require current production of parts for long-term unspecified  dates
of  delivery. Overall, the Company believes existing backlog will result in
higher margins due to larger and more efficient lot sizes.
     Fasteners also have applications in the automotive/industrial markets,
where  numerous special fasteners are required (such as engine bolts, wheel
bolts  and  turbocharger tension bolts). The Company is actively  targeting
the  automotive  market as a hedge against any potential  downturn  in  the
aerospace industry.
 MANUFACTURING AND PRODUCTION
      The  Aerospace  Fasteners  segment has  seven  primary  manufacturing
facilities,  of which three are located in the United States and  four  are
located   in  Europe.  Each  facility  has  virtually  complete  production
capability, and subcontracts only those orders which exceed capacity.  Each
plant  is  designed  to produce a specified product or group  of  products,
determined  by  production process involved and certification requirements.
The Company's largest customers have recognized its quality and operational
controls  by  conferring ISO D1-9000A status at all of its U.S. facilities,
and  ISO  D1-9000 status at all of its European facilities. The Company  is
the  first  and  only aerospace fasteners manufacturing  company  with  all
facilities holding ISO-9000 approval.

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

      Despite intense competition in the industry, the Company remains  the
dominant  manufacturer  of  aerospace fasteners.  The  worldwide  aerospace
fastener  market  is  estimated  to  be $1.3  billion  (before  distributor
resales).  The Company holds approximately 20% of the market  and  competes
with  SPS Technologies, Hi-Shear and Huck, which the Company believes  hold
approximately 13%, 11% and 10% of the market, respectively. In Europe,  its
largest competitors are Blanc Aero and Southco Fasteners.

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

AEROSPACE DISTRIBUTION

      The Company conducts its aerospace parts distribution through Banner.
In  February 1996, the Company increased its ownership of Banner from 47.2%
to  59.3%,  and further increased such ownership interest to  64%  in  June
1997.  The Company, through its Aerospace Distribution segment, distributes
a  wide  variety  of  aircraft parts, which it  carries  in  inventory.  In
addition to selling products that it has purchased on the open market,  the
Company  also  acts  as a non-exclusive authorized distributor  of  several
different   aerospace   related  product  lines.  No   single   distributor
arrangement is material to the Company's financial condition. The Aerospace
Distribution segment accounted for 35.9% of total Company sales  in  Fiscal
1997,  pro forma for the Disposition. On December 8, 1997, Banner and eight
of  its  subsidiaries entered into an Asset Purchase Agreement pursuant  to
which  such subsidiaries have agreed to transfer substantially all of their
assets  to Allied for approximately $345 million of common stock of Allied.
The  assets  transferred to Allied consists primarily of Banner's  hardware
group,  which  includes the distribution of bearings, nuts, bolts,  screws,
rivets and other types of fasteners.

 PRODUCTS

      Following  consummation  of  the Disposition,  the  products  of  the
Aerospace  Distribution segment will be divided into two  groups:  rotables
and  engines. Rotables include flight data recorders, radar and  navigation
systems, instruments, landing gear and hydraulic and electrical components.
Engines  include  jet engines and engine parts for use on both  narrow  and
wide body aircraft and smaller engines for corporate and commuter aircraft.
The  Aerospace Distribution segment provides a number of services  such  as
immediate shipment of parts in aircraft-on-ground situations. The Aerospace
Distribution  segment  also provides products to  OEMs  to  airlines  under
inventory management programs. The Aerospace Distribution segment also buys
and sells commercial aircraft from time to time.
      Rotable parts are sometimes purchased as new parts, but are generally
purchased  as  used  parts which are then overhauled  for  the  Company  by
outside  contractors, including the original manufacturers and FAA-licensed
facilities.  Rotables  are sold in a variety of  conditions  such  as  new,
overhauled, serviceable and "as is" Rotables may also be exchanged  instead
of  sold.  An exchange occurs when an overhauled aircraft part in inventory
is  exchanged for a used part from the customer and the customer is charged
an  exchange  fee  plus the actual cost to overhaul the part.  Engines  and
engine components are sold as is, overhauled or disassembled for resale  as
parts.

 SALES AND MARKETS

     Subsidiaries of the Aerospace Distribution segment sell their products
in  the United States and abroad to most of the world's commercial airlines
and  to air cargo carriers, as well as OEMs, other distributors, fixed base
operators,   corporate   aircraft  operators  and   other   aerospace   and
nonaerospace companies. Approximately 76% of its sales, pro forma  for  the
Disposition,  are  to  domestic purchasers,  some  of  whom  may  represent
offshore users.

      The  Aerospace Distribution segment markets its products and services
through  direct sales forces, outside representatives and, for some product
lines, overseas sales offices. Sales in the aviation aftermarket depend  on
price,   service,  quality  and  reputation.  The  Aerospace   Distribution
segment's business does not experience significant seasonal fluctuations or
depend on a single customer. No single customer accounts for more than  10%
of  the Company's consolidated revenue, pro forma for the Disposition.  The
Company's  backlog of orders in the Aerospace Distribution  segment  as  of
September  28,  1997  was $22 million, pro forma for the  Disposition.  The
Company  anticipates  that  approximately  90%  of  such  backlog  will  be
delivered by September 28, 1998.

 COMPETITION

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

TECHNOLOGIES

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

 PRODUCTS

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

      Technologies has combined new and proven technology and a  number  of
leading  edge components and systems in compact disc processing to recently
develop  its Compact Disc Recordable ("CD-R10X") manufacturing system.  The
CD-R10X  system  is a state of the art design for producing cost  effective
recordable  CDs by combining a high quality injection molding machine  with
scanning, inspection, and pneumatic handling systems.
      A  third line is modular process equipment for use by the fabricators
of   liquid  crystal  displays.  Technologies  supplies  advanced   modular
solutions  with  high  throughput, small  footprint  and  minimum  cost  of
ownership.  Technologies is also a leading manufacturer of photolithography
processing equipment for photomask and thinfilm products.

      Technologies  specializes  in  providing  system  solutions,  and  in
coating,  developing,  priming, etching, stripping,  cleaning  and  thermal
processing of wafers, substrates and related semiconductor products.

 SALES AND MARKETS

       With   a   strong   base  of  controls/clean  room  technology   and
software/services engineering, Technologies is able to provide systems with
multiple  modular  designs for a variety of customer  applications.  Today,
more  than  1,000  Technologies wafer production systems are  in  operation
worldwide.  Approximately  60% of the Company's Fiscal  1997  business  was
derived  from  wafer related products and services. The remaining  40%  was
divided  between LCD and CD related systems, products, and services.  Major
customers in the wafer product line include Motorola, Samsung, Siemens, GEC
Plessey,  Texas  Instruments, National Semiconductor, Macronix,  and  Erso.
Other  major customers include Philips and Litton for the LCD product line,
Sonopress  (Bertelsmann), and Krauss Maffei for the CD  product  line,  and
Hyundai, NEC and Canon for the photomask product line. Approximately  76.3%
of Technologies' sales were to foreign customers.

 MANUFACTURING AND PRODUCTION

      Technologies has two manufacturing facilities consisting of Fairchild
Technologies   GmbH,   located  in  Vaihingen,   Germany,   and   Fairchild
Technologies USA, Inc. located in Fremont, California.

 COMPETITION
     The wafer product line competes with Tokyo Electron, Dai Nippon Screen
and the Silicon Valley Group. Competitors in the CD product line consist of
Robi  Systems,  Leybold and Marubeni. Competition in the photomask  product
line is provided by Mitsubishi Toyo, Tasmo and Solid State Equipment.

NACANCO PAKETLEME

      Established in 1987, Nacanco is the largest manufacturer of  aluminum
cans for soft drinks and beer in Turkey with an estimated 80% market share.
Nacanco  generated EBITDA of approximately $39 million on annual  sales  of
$107  million for the fiscal year ended December 31, 1996. The Company owns
31.9%  of  the  common  stock,  with  Pechiney  International  SA  and  its
subsidiaries holding substantially all of the balance. The Company received
from Nacanco cash dividends in excess of $3 million in each of the past two
fiscal years.

REAL ESTATE

      The  Company has significant real estate holdings having a book value
of  approximately  $54.1 million as of June 30, 1997.  The  Company's  real
estate holdings consist of (i) 80 acres on Long Island, New York which  are
currently  being  developed into retail centers;  (ii)  various  industrial
buildings from which the Company receives rental income; and (iii) property
to  be  used  as  landfills  upon the receipt  of  necessary  licenses  and
government approvals.

RESEARCH AND PATENTS

      The  Company's  research  and development activities  have  included:
applied  research; development of new products; testing and evaluation  of,
and  improvements  to,  existing  products; improvements  in  manufacturing
techniques  and processes; development of product innovations  designed  to
meet  government safety and environmental requirements; and development  of
technical services for manufacturing and marketing. The Company's sponsored
research  and  development  expenditures amounted  to  $7.8  million,  $0.1
million and $1.0 million for the years ended June 30, 1997, 1996, and 1995,
and   $0.6  million  for  the  three  months  ended  September  28,   1997,
respectively, substantially all of such expenditures being attributable  to
Fairchild Technologies. The Company owns patents relating to the design and
manufacture  of  certain  of its products and is a licensee  of  technology
covered  by  the patents of other companies. The Company does  not  believe
that any of its business segments are dependent upon any single patent.

PERSONNEL

      As  of June 30, 1997, pro forma for the Disposition, the Company  had
approximately  3,400  employees. Approximately 5% of these  employees  were
covered by collective bargaining agreements. The Company believes that  its
relations with its employees are satisfactory.
ITEM 2. PROPERTIES
------------------

      As of June 30, 1997, pro forma for the Disposition, the Company owned
or   leased  properties  totaling  approximately  1,631,000  square   feet,
approximately  1,046,000 square feet of which was owned and 585,000  square
feet was leased. The Aerospace Fasteners segment's properties consisted  of
approximately  1,020,000 square feet, with principal  operating  facilities
concentrated  in  Southern California, France and  Germany.  The  Aerospace
Distribution segment's properties consisted of approximately 380,000 square
feet,  with principal operating facilities of approximately 295,000  square
feet   located  in  Florida,  and  Texas.  Corporate  and  other  operating
properties  consisted of approximately 117,000 square feet, with  principal
operating  facilities  of  approximately  82,000  square  feet  located  in
California  and  Germany.  The Company owns its corporate  headquarters  at
Washington-Dulles International Airport.
      The Company has several parcels of property which it is attempting to
market,  lease and/or develop, including: (i) an eighty acre parcel located
in  Farmingdale,  New  York;  (ii)  a  six  acre  parcel  in  Temple  City,
California; (iii) an eight acre parcel in Chatsworth, California; and  (iv)
several  other  parcels  of real estate, primarily located  throughout  the
continental United States.

      The  following table sets forth the location of the larger properties
used in the continuing operations of the Company, their square footage, the
business  segment or groups they serve and their primary use. Each  of  the
properties  owned  or  leased by the Company is, in  management's  opinion,
generally  well maintained, suitable to support the Company's business  and
adequate  for  the  Company's present needs. All of the Company's  occupied
properties are maintained and updated on a regular basis.
                            OWNED OR SQUARE
PRIMARY
      LOCATION              LEASED  FOOTAGE BUSINESS SEGMENT/GROUP      USE
      --------             -------- ------- ---------------------- --------
-----   Saint Cosme, France...   Owned   304,000 Aerospace Fasteners
Manufacturing   Torrance, California..   Owned   284,000 Aerospace
Fasteners    Manufacturing   Carrollton, Texas.....   Leased  173,000
Aerospace Distribution Distribution   City of Industry,
    California...........   Owned   140,000 Aerospace Fasteners
Manufacturing   Chantilly, Virginia...   Owned   125,000 Corporate
Office   Lakeland, Florida.....   Leased   65,000 Aerospace Distribution
Distribution   Ft. Lauderdale,    Florida..............   Leased   57,000
Aerospace Distribution Distribution   Toulouse, France......   Owned
56,000 Aerospace Fasteners    Manufacturing   Fremont, California...
Leased   54,000 Technology Products    Manufacturing   Santa Ana,
California...........   Owned    50,000 Aerospace Fasteners
Manufacturing   Vaihingen, Germany....   Leased   49,000 Technology
Products    Manufacturing   Kelkheim, Germany.....   Leased   42,000
Aerospace Fasteners    Manufacturing   Fremont, California...   Leased
31,000 Technology Products    Manufacturing

ITEM 6.  SELECTED FINANCIAL DATA
--------------------------------
<TABLE>

Five-Year Financial Summary
(In thousands, except per share data)
<CAPTION>

For the years ended June 30,            1997       1996        1995        1994
1993
---------------------------         ----------  ----------  ----------  -------
---  ----------
<S>                                 <C>         <C>          <C>        <C>
<C>
Summary of Operations:
   Net  sales........................ $  731,960  $  409,520  $   256,840   $
203,456  $  247,080
    Gross   profit.....................     205,123       94,911       37,614
28,415      42,609
   Operating  income  (loss)..........      30,517       (9,115)     (31,917)
(46,845)    (29,595)
    Net  interest  expense.............      47,798       56,586       64,371
66,670      67,162
  Earnings (loss) from continuing
      operations.....................      (1,818)     (33,661)      (57,763)
4,834     (62,413)
  Earnings (loss) per share from
    continuing operations:
        Primary......................        (.10)       (2.03)        (3.59)
 .30       (3.87)
        Fully  diluted................        (.10)       (1.97)       (3.59)
 .30       (3.87)
Balance Sheet Data:
   Total  assets..................... $1,067,333  $1,009,938  $   850,294   $
866,621  $  941,675
  Long-term debt, less current
      maturities.....................     416,922       368,589       509,715
522,406     566,491
  Redeemable preferred stock of
      subsidiary.....................        --            --          16,342
17,552      17,732
    Stockholders'  equity.............     229,625      231,168        40,180
69,494      53,754
     per  outstanding  common  share...       13.81        14.10         2.50
4.32        3.34
</TABLE>

      The  results  of Banner Aerospace, Inc. are included in  the  periods
since  February  25, 1996, when Banner became a majority-owned  subsidiary.
Prior  to  February  25,  1996,  the Company's  investment  in  Banner  was
accounted for using the equity method. Fiscal 1994 includes the gain on the
sale  of  Rexnord Corporation stock.  These transactions materially  affect
the  comparability  of the information reflected in the selected  financial
data.

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

      The Fairchild Corporation (the "Company") was incorporated in October
1969,  under the laws of the State of Delaware.  On November 15, 1990,  the
Company  changed  its name from Banner Industries, Inc.  to  The  Fairchild
Corporation.   RHI  Holdings, Inc. ("RHI") is a direct  subsidiary  of  the
Company.   RHI is the owner of 100% of Fairchild Holding Corp. ("FHC")  and
the  majority  owner of Banner Aerospace, Inc. ("Banner").   The  Company's
principal  operations are conducted through RHI and FHC.  The Company  also
holds  significant equity interests in Shared Technologies  Fairchild  Inc.
("STFI") and Nacanco Paketleme ("Nacanco").

GENERAL

      The Company is the largest aerospace fastener manufacturer and is one
of  the  largest  independent aerospace parts distributors  in  the  world.
Through internal growth and strategic acquisitions, the Company has  become
one  of the leading aircraft parts suppliers to aircraft manufacturers such
as Boeing, Airbus, Lockheed Martin, British Aerospace and Bombardier and to
airlines such as Delta Airlines and US Airways.

      The Company's primary business focus is on the aerospace industry and
its  business  consists  primarily  of  two  aerospace  segments--aerospace
fasteners   and  aerospace  parts  distribution.  The  aerospace  fasteners
segment, which accounted for approximately 51.4% of the Company's net sales
in  Fiscal  1997, pro forma for the Disposition, manufactures  and  markets
fastening  systems used in the manufacturing and maintenance of  commercial
and  military aircraft. The aerospace distribution segment, which accounted
for  approximately  35.9% of the Company's net sales in  Fiscal  1997,  pro
forma  for  the  Disposition,  stocks and distributes  a  wide  variety  of
aircraft  parts to commercial airlines and air cargo carriers, OEMs,  other
distributors, fixed-base operators, corporate aircraft operators and  other
aerospace and non-aerospace companies. The Company's aerospace distribution
business is conducted through its 64% owned subsidiary, Banner.

CAUTIONARY STATEMENT

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

RECENT DEVELOPMENTS AND SIGNIFICANT BUSINESS COMBINATIONS

      On  November 20, 1997, STFI, a corporation of which the Company  owns
approximately  42% of the outstanding common stock, entered into  a  merger
agreement  with Intermedia Communications, Inc. ("Intermedia") pursuant  to
which  holders of STFI common stock will receive $15.00 per share in  cash.
In  connection  with the STFI Sale, the Company has received  approximately
$85 million in cash (before tax) in Exchange for certain preferred stock of
STFI  and expects to receive an additional $93 million in cash (before tax)
in  the first three months of 1998 in exchange for the 6,225,000 shares  of
common  stock  of  STFI  owned by the Company. The  Intermedia  transaction
replaces an earlier merger agreement with the Tel-Save Holdings, Inc. under
which  the  Company would have received consideration primarily  in  common
stock  of Tel-Save Holdings, Inc. Consummation of the STFI Sale is  subject
to certain conditions.

     On December 8, 1997, Banner and eight of its subsidiaries entered into
an Asset Purchase Agreement pursuant to which such subsidiaries have agreed
to  transfer  substantially  all  of  their  assets  to  AlliedSignal  Inc.
("Allied")  for approximately $345 million of common stock of  Allied  (the
"Disposition").  The  assets sold to Allied consist primarily  of  Banner's
hardware  group, which includes the distribution of bearings, nuts,  bolts,
screws,  rivets and other type of fasteners. Approximately $170 million  of
the  common  stock  received from Allied will be used to repay  outstanding
term  loans of Banner's subsidiaries and related fees. Consummation of  the
Disposition is subject to certain conditions. The Company is effecting  the
Disposition  to  concentrate its efforts on the  rotables  and  jet  engine
businesses  and  because the Disposition presented a unique opportunity  to
realize a significant return on the sale of the hardware group.

      In  January  1997, Banner, through its subsidiary, Dallas  Aerospace,
Inc.,  acquired PB Herndon Company ("PB Herndon") in a business combination
accounted  for  as  a purchase.  PB Herndon is a distributor  of  specialty
fastener lines and similar aerospace related components.  The total cost of
the acquisition was $16.0 million, which exceeded the fair value of the net
assets  of PB Herndon by approximately $3.5 million.  The excess  is  being
amortized using the straight-line method over 40 years.

      In  February 1997, the Company completed a transaction (the "Simmonds
Acquisition")  pursuant  to which the Company acquired  common  shares  and
convertible debt representing an 84.2% interest, on a fully diluted  basis,
of  Simmonds  S.A. ("Simmonds").  The Company initiated a tender  offer  to
purchase the remaining shares and convertible debt held by the public.   By
Fiscal  year-end, the Company had purchased, or placed sufficient  cash  in
escrow  to  purchase,  all  the remaining shares and  convertible  debt  of
Simmonds.   The total purchase price of Simmonds, including the  assumption
of  debt,  was approximately $62.0 million, which the Company  funded  with
available  cash.   The  Company  recorded approximately  $13.0  million  in
goodwill  as  a  result of this acquisition.  Simmonds is one  of  Europe's
leading   manufacturers  and  distributors  of  aerospace  and   automotive
fasteners.

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

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

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

      On  January  27,  1996,  FII completed the  sale  of  Fairchild  Data
Corporation  ("Data")  to  SSE Telecom, Inc.  ("SSE")  for  book  value  of
approximately $4.4 million and 100,000 shares of SSE's common stock  valued
at  $9.06  per share, or $.9 million, at January 26, 1996, and warrants  to
purchase  an additional 50,000 shares of SSE's common stock at  $11.09  per
share.

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

      Effective  February 25, 1996, the Company completed the  transfer  of
Harco  to  Banner in exchange for 5,386,477 shares of Banner common  stock.
The  exchange has increased the Company's ownership of Banner common  stock
from  approximately 47.2% to 59.3%, resulting in the Company  becoming  the
majority  shareholder of Banner. Accordingly, the Company has  consolidated
the  results of Banner since February 25, 1996.  In June 1997, the  Company
purchased  $28.0 million of newly issued Series A Convertible  Paid-in-Kind
Preferred  Stock  of Banner.  The Company now controls  64.0%  of  Banner's
voting  stock. Banner is a leading international supplier to the  aerospace
industry  as  a distributor, providing a wide range of aircraft  parts  and
related support services.

RESULTS OF OPERATIONS

      The  Company  currently reports in two principal  business  segments:
Aerospace  Fasteners and Aerospace Distribution.  The Company  consolidated
pre  March  13,  1996  operating results from the  Communications  Services
segment  and,  effective  February  25,  1996,  began  to  consolidate  the
operating  results of the Aerospace Distribution segment.  The  results  of
FT,  together  with  the results of Gas Springs and  SBC  are  included  in
Corporate  and Other. The following table illustrates the historical  sales
and operating income of the Company's operations for the past three years.
<TABLE>
<CAPTION>

                                         For the years ended June 30,
(In thousands)                         --------------------------------
                                         1997        1996        1995
Sales by Segment:                      --------    --------    --------
<S>                                    <C>         <C>         <C>
  Aerospace Fasteners...............   $269,026    $218,059    $215,364
  Aerospace Distribution (a)........    411,765     129,973        --
  Corporate and Other(b)............     66,382      67,330      41,476
  Eliminations (c)..................    (15,213)     (5,842)       --
                                        -------     -------     -------
Sales...............................   $731,960    $409,520    $256,840
                                        =======     =======     =======
Operating Income (Loss) by Segment:
  Aerospace Fasteners (d)...........   $ 17,390    $    135    $(11,497)
  Aerospace Distribution (a)........     30,891       5,625        --
  Corporate and Other (b)...........    (17,764)    (14,877)    (20,420)
                                        -------     -------     -------
Operating income (loss).............   $ 30,517    $ (9,115)   $(31,917)
                                        =======     =======     =======

(a)   Effective  February  25,  1996,  the  Company  became  the   majority
shareholder of Banner Aerospace, Inc. and, accordingly, began consolidating
their results as of that date.

(b)  Includes  sales  from Fairchild Technologies of $57.7  million,  $60.3
million, and $38.0 million in 1997, 1996 and 1995, respectively, and  gross
margin  from  Fairchild Technologies of $23.8 million, $20.8  million,  and
$11.1 million, respectively.

(c)  Represents intersegment sales from the Aerospace Fasteners segment  to
the Aerospace Distribution segment.

(d) Includes restructuring charges of $2.3 million in Fiscal 1996.
</TABLE>

      The  following  unaudited  pro  forma  table  illustrates  sales  and
operating  income of the Company's operations by segment, on  a  pro  forma
basis,  as if the Company had operated in a consistent manner for the  past
three  years ended June 30, 1997, 1996 and 1995. The pro forma results  are
based  on the historical financial statements of the Company and Banner  as
though the Disposition and consolidation of Banner had been in effect since
the  beginning of each period. The pro forma information is not necessarily
indicative  of the results of operations that would actually have  occurred
if  the transactions had been in effect since the beginning of each period,
nor is it necessarily indicative of future results of the Company.
<TABLE>
<CAPTION>

                                         For the years ended June 30,
(In thousands)                         --------------------------------
                                         1997        1996        1995
Pro Forma Sales by Segment:            --------    --------    --------
<S>                                    <C>         <C>         <C>
  Aerospace Fasteners (a)...........   $269,026    $197,099    $190,287
  Aerospace Distribution............    187,768     153,830     108,359
  Corporate and Other...............     66,382      67,330      41,476
  Eliminations......................        (29)       --          --
                                        -------     -------     -------
                                       $523,147    $418,259    $340,122
                                        =======     =======     =======
Pro Forma Operating Income (Loss)
  by Segment:
  Aerospace Fasteners (a)...........   $ 17,390    $ (2,639)   $(15,736)
  Aerospace Distribution ...........      8,272       5,431      (9,995)
  Corporate and Other...............    (17,764)    (14,876)    (20,420)
                                        -------     -------     -------
Operating income (loss).............   $  7,898    $(12,084)   $(46,151)
                                        =======     =======     =======

(a)   Fiscal  1997  results include sales of $27.2  million  and  operating
income  of  $1.2  million  provided by Simmonds since  its  acquisition  in
February 1997.
</TABLE>

Consolidated Results
--------------------

      Net sales of $731.9 million in Fiscal 1997 improved significantly  by
$322.4  million,  or 78.7%, compared to sales of $409.5 million  in  Fiscal
1996.  Sales  growth  was stimulated by the resurgent commercial  aerospace
industry,   together  with  the  effects  of  several  strategic   business
combinations  over the past 18 months.  Net sales in Fiscal  1996  were  up
59.3%  from  Fiscal  1995  reflecting strong sales  performances  from  the
Aerospace Fasteners segment and Fairchild Technologies ("FT"), included  in
the  Corporate and Other business segment, and the inclusion of four months
of  sales  from the Aerospace Distribution segment.  On a pro forma  basis,
net  sales increased 25.1% and 23.0% in Fiscal 1997 and 1996, respectively,
as compared to the previous Fiscal periods.

      Gross Margin as a percentage of sales was 28.0%, 23.2%, and 14.6%  in
Fiscal  1997,  1996, and 1995, respectively.  The increase in  the  current
year   was   attributable  to  higher  revenues  combined  with   continued
productivity  improvements achieved during Fiscal 1997.   The  increase  in
Fiscal  1996  compared to Fiscal 1995 was due to consolidation  of  plants,
elimination  of product lines, substantial downsizing and new  productivity
programs put in place.

     Selling, General & Administrative expense as a percentage of sales was
21.8%, 23.9%, and 25.6% in Fiscal 1997, 1996, and 1995, respectively.   The
increase in the current year was attributable primarily to the increase  in
selling  and  marketing costs incurred to support the  increase  in  sales.
The  decrease  in Fiscal 1996 compared to Fiscal 1995 was due primarily  to
the  positive  results obtained from restructuring and downsizing  programs
put in place earlier.

      Operating  income  of  $30.5 million in Fiscal 1997  increased  $39.6
million  compared to operating income of $9.1 million in Fiscal 1996.   The
increase in operating income was due primarily to the current year's growth
in  sales  and  increased operational efficiencies.   Operating  income  in
Fiscal  1996  improved by $22.8 million over Fiscal 1995 due  primarily  to
improved  cost efficiencies applied in the Aerospace Fasteners segment  and
the sales increase from FT in the Corporate and Other business segment.  On
a pro forma basis, operating income increased $20.0 million in Fiscal 1997,
as  compared to Fiscal 1996, and $34.1 million in Fiscal 1996, as  compared
to Fiscal 1995.

     Net interest expense decreased 15.5% in Fiscal 1997 compared to Fiscal
1996,  and  decreased  12.1% in Fiscal 1996 compared to  Fiscal  1995.  The
decreases  are due to lower borrowings as a result of the sale of  DME  and
the Merger, both of which significantly reduced the Company's total debt.

      Investment  income,  net, was $6.7 million,  $4.6  million  and  $5.7
million in Fiscal 1997, 1996, and 1995, respectively. The 45.4% increase in
Fiscal 1997 is due primarily to realized gains from the sale of investments
in  Fiscal  1997.  The 19.8% decrease in Fiscal 1996 resulted  from  losses
realized on the write-off of two foreign investments.

      Equity  in  earnings of affiliates decreased $0.2 million  in  Fiscal
1997,  compared to Fiscal 1996, and increased $3.2 million in Fiscal  1996,
compared  to  Fiscal 1995.  The current year's decrease is attributable  to
the  lower earnings of Nacanco. The prior year's increase was due primarily
to  higher  earnings from Nacanco, which improved the Company's  equity  in
earnings by $2.6 million.

     Nonrecurring income in Fiscal 1997 includes the $2.5 million gain from
the sale of SBC.

      Income Taxes included a $5.2 million tax benefit in Fiscal 1997 on  a
pre-tax  loss of $7.0 million from continuing operations.  The tax  benefit
was due primarily to reversing Federal income taxes previously provided due
to  a change in the estimate of the required tax accruals.  In Fiscal 1996,
the tax benefit from the loss from continuing operations was $26.3 million.

      Earnings from discontinued operations, net, include the earnings, net
of  tax, from STFI in Fiscal 1997 and 1996, and FCS, DME and Data in Fiscal
1996 and 1995.

     The $53.6 million gain on disposal of discontinued operations resulted
primarily  from  the sale of DME to CMI in Fiscal 1996.  Fiscal  1996  also
includes a $163.1 million nontaxable gain resulting from the Merger.

      Extraordinary  items,  net,  resulted from  premiums  paid  for,  and
redemption  costs and consent fees associated with, the retirement  of  the
Senior Notes and the write off of deferred loan fees, related primarily  to
Senior  Notes  and bank debt extinguished prior to maturity.  This  totaled
$10.4 million, net of a tax benefit, in Fiscal 1996.

      Net earnings in Fiscal 1997, compared to Fiscal 1996, after excluding
the  gain  on  sale of discontinued operations of $163.1 million  from  the
Merger  and  the $53.6 million gain on sale of discontinued  operations  in
1996  from  the  sale  of DME, improved $28.3 million, reflecting  a  $39.6
million improvement in operating profit. The net earnings increased  $223.5
million in Fiscal 1996, compared to Fiscal 1995, due primarily to the gain,
net of tax, from the sale of discontinued operations.

Segment Results
---------------

Aerospace Fasteners Segment
---------------------------

     Sales in the Aerospace Fasteners segment increased by $51.0 million to
$269.0  million,  up  23.4% in Fiscal 1997, compared  to  the  Fiscal  1996
period,  reflecting significant growth in the commercial aerospace industry
combined  with  the Simmonds acquisition.  New orders have been  strong  in
recent months resulting in a backlog of $195.7 million at June 30, 1997, up
from  $109.9 million at June 30, 1996.  Sales increased slightly in  Fiscal
1996  compared  to Fiscal 1995. The Harco division was transferred  to  the
Aerospace Distribution segment on February 25, 1996.  On a pro forma basis,
sales  increased 36.5% in Fiscal 1997, compared to Fiscal 1996 and 3.6%  in
Fiscal 1996, compared to Fiscal 1995.

      Operating  income  improved from breakeven to  $17.4  million  during
Fiscal  1997, compared to Fiscal 1996. This improvement was achieved  as  a
result   of  accelerated  growth  in  the  commercial  aerospace  industry,
particularly in the second half of the year. Certain efficiencies  achieved
during  Fiscal 1997 continued to have positive effects on operating income.
Operating income was positive in the Aerospace Fasteners segment, which was
an   $11.6  million  improvement  in  the  Fiscal  1996  period  over   the
corresponding  Fiscal  1995 period. During Fiscal  1996,  operating  losses
decreased  significantly in the Aerospace Fasteners segment, due  primarily
to  the  cost  of management changes, consolidation of plants,  eliminating
unprofitable  product  lines, pricing adjustments, substantial  work  force
downsizing  and  new  productivity,  quality  and  marketing  programs.   A
restructuring charge of $2.3 million was recorded in Fiscal 1996, primarily
for   severance  pay  to  employees  terminated  as  a  result  of  further
downsizing. On a pro forma basis, operating income increased $20.0  million
in  Fiscal  1997, as compared to Fiscal 1996, and $13.1 million  in  Fiscal
1996, as compared to Fiscal 1995.

Aerospace Distribution Segment
------------------------------

      Aerospace  Distribution sales were up $281.8  million  and  operating
income  was  up  $25.3  million, primarily the result of  reporting  twelve
months  in Fiscal 1997 versus four months in Fiscal 1996. On a twelve-month
pro forma basis sales were up $33.9 million, or 22.1%, and operating income
was  up  $2.8  million,  or 52.3%. Sales increases  in  all  three  groups,
hardware,  rotables and engines contributed to these strong  results.  This
segment has benefited from the extended service lives of existing aircraft,
growth  from  acquisitions and internal growth, which has increased  market
share.

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

Corporate and Other
-------------------

      The  Corporate  and  Other segment includes  Fairchild  Technologies,
Camloc Gas Springs Division and Fairchild Scandinavian Bellyloading Co.  AB
(SBC)  (formerly  the Technology Products segment). Sales improved  at  SBC
which,  was sold effective as of Fiscal 1997 year-end. Over the past  three
years,  corporate  administrative expense as  a  percentage  of  sales  has
decreased from 5.1% in 1995 to 3.5% in 1996 to 2.2% in 1997.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

      Net cash used by operating activities for the fiscal years ended June
30,   1997   and  1996  amounted  to  $97.0  million  and  $48.7   million,
respectively.  The primary use of cash for operating activities  in  fiscal
1997  was  an  increase  in  accounts  receivable  of  $56.0  million   and
inventories  of  $46.4  million which was mainly to support  the  Company's
sales  growth. The primary use of cash for operating activities  in  fiscal
1996 was a decrease in accounts payable, accrued liabilities and other long-
term liabilities of $36.5 million.

     Net cash provided from investing activities for the fiscal years ended
June  30,  1997  and  1996  amounted to $80.0 million  and  $57.5  million,
respectively.   The  primary source of cash from  investing  activities  in
fiscal  1997  was  the sale of discontinued operations, including  DME,  of
$173.7   million,  which  was  slightly  offset  by  the   acquisition   of
subsidiaries  in the amount of $55.9 million. The primary  source  of  cash
from  investing  activities in fiscal 1996 was  the  sale  of  discontinued
operations of $71.6 million.

     Net cash used for financing activities for the fiscal years ended June
30, 1997 and 1996 amounted to $1.5 million and $39.4 million, respectively.
The  primary  use of cash for financing activities in fiscal 1997  was  the
repayment of debt and the repurchase of debentures of $157.0 million offset
by  proceeds  from the issuance of additional debt of $154.4 million.   The
primary  use  of  cash  for financing activities in  fiscal  1996  was  the
repayment of debt and the repurchase of debentures of $198.8 million  which
was  partially offset by proceeds from the issuance of additional  debt  of
$157.9 million.

     The Company intends to issue three million shares of common stock (the
"Offering")  and  enter into a New Credit Facility that  will  provide  for
total  lending  commitments of up to $300 million. The New Credit  Facility
will be comprised of a revolving credit facility and a term loan facility.

      With  the  proceeds of the Offering, borrowings under the New  Credit
Facility  and the after tax proceeds the Company has already received  from
the STFI Sale, the Company will refinance substantially all of its existing
indebtedness (other than indebtedness at Banner), consisting of the 11 7/8%
Senior  Debentures due 1999, the 12% Intermediate Debentures due 2001,  the
13  1/8%  Subordinated  Debentures due 2006, the  13%  Junior  Subordinated
debentures  due  2007 and its existing bank indebtedness.  The  Refinancing
will  reduce  the  Company's total net indebtedness by  approximately  $132
million  and will reduce the Company's annual interest expense,  on  a  pro
forma basis, by approximately $21 million. The completion of the STFI  Sale
will  reduce  the  Company's annual interest expense  by  approximately  $3
million.  In addition, a portion of the proceeds from the Disposition  will
be  used to repay all of Banner's outstanding bank indebtedness, which will
further  reduce the Company's annual interest expense by an additional  $14
million.

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

      On  November 20, 1997, STFI, a corporation of which the Company  owns
approximately  42% of the outstanding common stock, entered into  a  merger
agreement  with Intermedia pursuant to which holders of STFI  common  stock
will receive $15.00 per share in cash. In connection with the STFI Sale the
Company  has  received approximately $85 million in cash  (before  tax)  in
exchange  for  certain preferred stock of STFI and expects  to  receive  an
additional  $93 million in cash (before tax) during the first three  months
of  1998 in exchange for the 6,225,000 shares of common stock of STFI owned
by  the  Company.  The Intermedia transaction replaces  an  earlier  merger
agreement  with the Tel-Save Holdings, Inc. under which the  Company  would
have received consideration primarily in common stock of Tel-Save Holdings,
Inc.

     On December 8, 1997, Banner and eight of its subsidiaries entered into
an Asset Purchase Agreement pursuant to which such subsidiaries have agreed
to  transfer  substantially  all  of  their  assets  to  AlliedSignal  Inc.
("Allied")  for approximately $345 million of common stock of  Allied.  The
assets to be transferred to Allied pursuant to the Asset Purchase Agreement
consist   primarily  of  Banner's  hardware  group,  which   includes   the
distribution  of  bearings, nuts bolts, screws, rivets and  other  type  of
fasteners.  Approximately $170 million of the consideration  received  from
the  Disposition will be used to repay outstanding term loans  of  Banner's
subsidiaries and related fees. Consummation of the Disposition  is  subject
to  certain conditions.  The Company is effecting the Disposition  to
concentrate its efforts on the  rotables  and  jet  engine businesses
and  because the Disposition presented a unique opportunity  to realize a
significant return on the sale of the hardware group.

     The increase in the Company's shareholder's equity is expected to be
approximately $36,501 resulting from the gain on sale projected to be
recorded at the closing of the Disposition of $103,379 and an estimated
tax provision of $41,826 and a minority interest effect of $25,052.  The
operating income (loss) of the subsidiaries included in the Disposition
was $22,619 and $6,049 for fiscal year 1997 and the three months ended
September 28, 1997.  Whereas the Company will no longer benefit from the
operations of the disposed Banner subsidiaries it expects to benefit from
lower interest expense and dividends paid on the Allied stock.

The  Company may effect a spin-off of certain non-aerospace assets as  soon
as  is  reasonably  practicable following receipt  of  a  solvency  opinion
relating  to  these assets and all necessary governmental and  third  party
approvals (the "Spin-Off"). The solvency opinion with respect to the  Spin-
Off  is required by the Company's lenders and board of directors. In  order
to  effect a Spin-Off, approval is required from the board of directors  of
the Company, however, shareholder approval is not required. The ability  of
the Company to consummate a Spin-Off is contingent, among other things,  on
the  ability  of  the  Company to obtain consents  and  waivers  under  the
Company's existing indebtedness and the New Credit Facility. The Company is
presently  in  negotiations  with  its  lenders  regarding  obtaining  such
consents and waivers and at the present time the Company has not reached an
agreement with its lenders that will allow the Company to consummate a Spin-
Off.  There  is  no assurance that the Company will be able to  obtain  the
necessary consents and waivers from its lenders and consequently  there  is
no  assurance  that the Company will be able to consummate a  Spin-Off.  In
addition, the Company may encounter unexpected delays in effecting a  Spin-
Off,  and  the Company can make no assurance as to the timing  thereof.  In
addition,  prior to the consummation of a Spin-Off, the Company  may  sell,
restructure or otherwise change the assets and liabilities that will be  in
Spin-Off,  or  for  other  reasons elect  not  to  consummate  a  Spin-Off.
Consequently, there can be no assurance that a Spin-Off will occur.

      In  connection with the Spin-Off, it is anticipated that the  Company
will  enter  into  an  indemnification  agreement  pursuant  to  which  the
resulting  Spin-Off company will assume and be solely responsible  for  all
known  and unknown past, present and future claims and liabilities  of  any
nature relating to the Pension Reversion Case (as described under "Business-
-Legal  Proceedings"); certain environmental liabilities currently recorded
as  $8.3 million, but for which it is reasonably possible the total expense
could  be  $13.0  million;  certain retiree medical  cost  and  liabilities
related  to  discontinued  operations for which  the  Company  has  accrued
approximately $31.3 million as of September 28, 1997 (see Note  11  to  the
Company's  Consolidated Financial Statements); and certain tax liabilities.
In  addition,  the  Spin-Off  company would also  be  responsible  for  all
liabilities relating to the Technologies business. Responsibility for  such
liabilities would require significant commitments.

      Should a Spin-Off, as presently contemplated, occur prior to June  of
1999,  a  Spin-Off  will be a taxable transaction to  shareholders  of  the
Company and could result in a material tax liability to the Company and its
stockholders. The amount of the tax to the Company and the Shareholders  is
uncertain, and if the tax is material to the Company, the Company may elect
not  to consummate a Spin-Off. Because circumstances may change and because
provisions of the Internal Revenue Code of 1986, as amended, may be further
amended  from time to time, the Company may, depending on various  factors,
restructure  or  delay  the  timing of  a  Spin-Off  to  minimize  the  tax
consequences thereof to the Company and its stockholders.

      With  the year 2000 approaching, the Company is preparing all of  its
computer  systems  to  be  Year 2000 compliant. Substantially  all  of  the
systems  within  the  Aerospace Fasteners segment are currently  Year  2000
compliant.  The Company expects to replace and upgrade some systems,  which
are  not Year 2000 compliant, within the Aerospace Distribution segment and
at  Fairchild Technologies. The Company expects all of its systems will  be
Year  2000  compliant on a timely basis. However, there can be no assurance
that  the systems of other companies, on which the Company's systems  rely,
will  also be timely converted. Management is currently evaluating the cost
of ensuring that all systems are Year 2000 compliant.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
-----------------------------------------

       In   October  1996,  the  American  Institute  of  Certified  Public
Accountants  issued Statement of Position 96-1 ("SOP 96-1")  "Environmental
Remediation  Liabilities".  SOP  96-1 provides  authoritative  guidance  on
specific  accounting  issues related to the recognition,  measurement,  and
display  and  disclosure  of  environmental remediation  liabilities.   The
Company  is  required to implement SOP 96-1 in Fiscal 1998.  The  Company's
present  policy is similar to the policy prescribed by SOP 96-1, therefore,
there will be no effect from implementation.

      In  February 1997, the Financial Accounting Standards Board  ("FASB")
issued two pronouncements, Statement of Financial Accounting Standards  No.
128   ("SFAS  128")  "Earnings  Per  Share",  and  Statement  of  Financial
Accounting Standards No. 129 ("SFAS 129") "Disclosure of Information  about
Capital   Structure".   SFAS  128  establishes  accounting  standards   for
computing and presenting earnings per share ("EPS").  SFAS 128 is effective
for  periods ending after December 15, 1997, including interim periods, and
requires restatement of all prior period EPS data presented.  Results  from
the calculation of simple and diluted earnings per share, as prescribed  by
SFAS  128,  would  not  be materially different from the  calculations  for
primary and fully diluted earnings per share for years ending June 30, 1997
and  June  30,  1996.   SFAS 129 establishes standards  for  disclosure  of
information about the Company's capital structure and becomes effective for
periods ending after December 15, 1997.

      In  June 1997, FASB issued two pronouncements, Statement of Financial
Accounting Standards No. 130 ("SFAS 130") "Reporting Comprehensive Income",
and  Statement  of  Financial Accounting Standards  No.  131  ("SFAS  131")
"Disclosures  about  Segments of an Enterprise  and  Related  Information".
SFAS  130  establishes standards for reporting and display of comprehensive
income and its components in the financial statements.  SFAS 131 supersedes
Statement of Financial Accounting Standards No. 14 "Financial Reporting for
Segments  of  a  Business Enterprise" and requires that  a  public  company
report  certain  information about its operating  segments  in  annual  and
interim financial reports.  The Company will adopt SFAS 130 and SFAS 131 in
Fiscal                                                                1998.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
----------------------------------------------------

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


                                                                     Page
                                                                     ----

     Consolidated Balance Sheets as of June 30, 1997 and 1996......   28

     Consolidated Statements of Earnings For The Three Years Ended
     June 30, 1997, 1996, and 1995.................................   30

     Consolidated Statements of Stockholders' Equity For The Three
     Years Ended June 30, 1997, 1996, and 1995.....................   32

     Consolidated Statements of Cash Flows For The Three Years
     Ended June 30, 1997, 1996, and 1995...........................   33

     Notes to Consolidated Financial Statements....................   35

     Report of Independent Public Accountants......................   69

     Supplementary data regarding "Quarterly Financial Information (Unaudited)"
is set forth under Item 8 in Note 23 to Consolidated Financial Statements.
<TABLE>

            THE FAIRCHILD CORPORATION AND CONSOLIDATED SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                                 (In thousands)

<CAPTION>

                                                  June 30,        June 30,
ASSETS                                              1997            1996
------                                            --------        --------
<S>                                              <C>            <C>
Current Assets:
Cash and cash equivalents.....................   $  19,420      $   39,649
  (of which $4,839 and $8,224 is restricted)
Short-term investments........................      25,647          10,498
Accounts receivable-trade, less allowances
  of $8,103 and $6,327........................     168,163          98,694
Notes receivable..............................        --           170,384
Inventories:
   Finished goods.............................     297,223         236,263
   Work-in-process............................      26,887          16,294
   Raw materials..............................      18,626          18,586
                                                 ---------       ---------
                                                   342,736         271,143

Prepaid expenses and other current assets.....      33,631          19,275
                                                 ---------       ---------
Total Current Assets..........................     589,597         609,643

Property, plant and equipment, net............     128,712          87,956

Net assets held for sale......................      26,147          45,405
Cost in excess of net assets acquired,
 (Goodwill) less accumulated amortization of
 $36,672 and $31,912..........................     154,808         140,201
Investments and advances, affiliated companies      55,678          53,471
Deferred loan costs...........................       9,252           7,825
Prepaid pension assets........................      59,742          57,660
Long-term investments.........................       4,120             585
Notes receivable and other assets.............      39,277           7,192
                                                 ---------       ---------
Total Assets..................................  $1,067,333      $1,009,938
                                                 =========       =========





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

<TABLE>

            THE FAIRCHILD CORPORATION AND CONSOLIDATED SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                       (In thousands, except share data)
<CAPTION>

                                                  June 30,        June 30,
LIABILITIES AND STOCKHOLDERS' EQUITY                1997            1996
------------------------------------              --------        --------
<S>                                             <C>             <C>
Current Liabilities:
Bank notes payable and current maturities
 of long-term debt...........................   $   47,422      $   84,892
Accounts payable.............................       84,953          65,478
Accrued salaries, wages and commissions......       19,166          17,367
Accrued insurance............................       15,397          16,340
Accrued interest.............................       16,011          10,748
Other........................................       54,625          37,302
Income taxes.................................        5,881          24,635
                                                 ---------       ---------
Total Current Liabilities....................      243,455         256,762

Long-term debt...............................      416,922         368,589
Other long-term liabilities..................       23,622          18,605
Retiree health care liabilities..............       43,387          44,452
Noncurrent income taxes......................       42,013          31,737
Minority interest in subsidiaries............       68,309          58,625
                                                 ---------       ---------
Total Liabilities............................      837,708         778,770

Stockholders' Equity:
Class A common stock, 10 cents par value;
  authorized 40,000,000 shares, 20,233,879,
  (19,997,756 in 1996) shares issued, and
  13,992,283 (13,756,160 in 1996) shares
  outstanding................................        2,023           2,000
Class B common stock, 10 cents par value;
  authorized 20,000,000 shares, 2,632,516
  shares issued and outstanding (2,633,704 in
  1996)......................................          263             263
Paid-in capital..............................       71,015          69,366
Retained earnings............................      209,949         208,618
Cumulative translation adjustment............       (1,860)          2,760
Net unrealized holding loss on available-for-
  sale securities............................          (46)           (120)
Treasury stock, at cost, 6,241,596 shares of
  Class A common stock.......................      (51,719)        (51,719)
                                                 ---------       ---------
Total Stockholders' Equity...................      229,625         231,168
                                                 ---------       ---------
Total Liabilities and Stockholders' Equity...   $1,067,333      $1,009,938
                                                 =========       =========

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

<TABLE>

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

                                                   For the Years Ended June
30,
                                                 --------------------------
------
                                                       1997            1996
1995
                                                 --------    --------    --
------
<S>                                              <C>         <C>
<C>
Revenue:
   Net  sales  of  products......................     $731,960     $409,520
$256,840
    Other  income  (expense).....................         (658)         635
1,169
                                                  -------     -------     -
------
                                                     731,302        410,155
258,009
Costs and expenses:
   Cost  of  goods  sold.........................      526,837      314,609
219,226
   Selling,  general  &  administrative..........      161,309       98,075
65,830
    Research  and  development...................        7,807           94
974
    Amortization  of  goodwill...................        4,832        4,173
3,896
    Restructuring..............................          --           2,319
--
                                                  -------     -------     -
------
                                                     700,785        419,270
289,926

Operating  income  (loss)......................       30,517        (9,115)
(31,917)

Interest   expense.............................        52,493        64,658
67,742
Interest   income..............................       (4,695)       (8,072)
(3,371)
                                                  -------     -------     -
------
Net   interest  expense.........................       47,798        56,586
64,371

Investment   income,  net.......................        6,651         4,575
5,705
Equity  in  earnings  of  affiliates.............        4,598        4,821
1,607
Minority   interest............................       (3,514)       (1,952)
(2,293)
Nonrecurring   income..........................        2,528        (1,724)
--
                                                  -------     -------     -
------
Earnings (loss) from continuing
   operations  before  taxes....................       (7,018)     (59,981)
(91,269)
Income   tax  benefit...........................        5,200        26,320
33,506
                                                  -------     -------     -
------
Earnings  (loss)  from  continuing operations...       (1,818)     (33,661)
(57,763)
Earnings  from  discontinued  operations,  net...        3,149       17,087
23,843
Gain (loss) on disposal of discontinued
    operations,  net............................         --         216,716
(259)
                                                  -------     -------     -
------
Earnings  (loss)  before  extraordinary  items...        1,331      200,142
(34,179)
Extraordinary  items,  net.....................         --         (10,436)
355
                                                  -------     -------     -
------
Net   earnings  (loss)..........................     $   1,331     $189,706
$(33,824)
                                                     =======        =======
=======

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

<TABLE>

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

                                              For the Years Ended June 30,
                                            -------------------------------
-
                                              1997        1996        1995
                                            --------    --------    -------
-
<S>                                         <C>         <C>         <C>
Primary Earnings (Loss) Per Share:
  Earnings (loss) from continuing
     operations...........................    $   (.10)     $  (2.03)     $
(3.59)
  Earnings from discontinued operations,
    net..................................       .18        1.03        1.48
  Gain (loss) on disposal of discontinued
       operations,    net......................          --           13.06
(.01)
                                             -------     -------     ------
-
  Earnings (loss) before extraordinary
        items................................           .08           12.06
(2.12)
  Extraordinary items, net...............       --         (.63)        .02
                                             -------     -------     ------
-
   Net  earnings  (loss) per share..........   $    .08      $  11.43     $
(2.10)
                                                   =======          =======
=======

Fully Diluted Earnings (Loss) Per Share:
  Earnings (loss) from continuing
      operations...........................    $   (.10)     $  (1.97)    $
(3.59)
  Earnings from discontinued operations,
    net..................................       .18        1.00        1.48
  Gain (loss) on disposal of discontinued
       operations,    net......................          --           12.67
(.01)
                                             -------     -------     ------
-
  Earnings (loss) before extraordinary
        items................................           .08           11.70
(2.12)
  Extraordinary items, net...............       --         (.61)        .02
                                             -------     -------     ------
-
   Net  earnings  (loss) per share..........   $    .08      $  11.09     $
(2.10)
                                                   =======          =======
=======

Weighted Average Number of Shares used
  in Computing Earnings Per Share:
Primary..................................    17,230      16,600      16,103
Fully diluted............................    17,321      17,100      16,103




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


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

                      Class A  Class B                 Cumulative
                       Common  Common Paid-in Retained Translation Treasury
                         Stock   Stock   Capital Earnings  Adjustment   Stock
Other    Total
                        -----  -----  ------- -------- ----------- -------   --
----  -------
<S>                    <C>    <C>    <C>     <C>        <C>       <C>       <C>
<C>
Balance,  July 1, 1994  $1,965 $ 270  $66,775 $52,736    $  872     $(51,719)
$(1,405) $69,494
Net  loss..............   -       -        -     (33,824)      -            -
-     (33,824)
Cumulative translation
  adjustment,  net......   -      -        -        -         2,989         -
-       2,989
Gain on purchase of
 preferred stock of
  subsidiary...........   -       -         236     -          -            -
-         236
Reduction of minimum
  liability for pensions  -       -        -        -          -            -
1,405    1,405
Net unrealized holding
 loss on available-for-
  sale  securities......   -      -        -        -          -            -
(120)    (120)
                        -----  ----   ------  ------    ------     -------   --
----  -------
Balance,  June 30, 1995  1,965   270   67,011  18,912     3,861      (51,719)
(120)  40,180
Net  earnings..........   -       -        -     189,706       -            -
-     189,706
Cumulative translation
  adjustment,  net......   -      -        -        -        (1,101)        -
-      (1,101)
Fair market value of
  stock  warrants issued   -      -       1,148     -          -            -
-       1,148
Proceeds received from
  options  exercised....     28   -       1,481     -          -            -
-       1,509
Exchange of Class B
 for Class A common
  stock................      7     (7)     -        -          -            -
-        -
Gain realized on
 retirement of
 preferred stock of
  subsidiary...........   -       -        (274)    -          -            -
-         (274)
                        -----  ----   ------  -------   ------     -------   --
----   -------
Balance,  June 30, 1996  2,000   263   69,366  208,618    2,760      (51,719)
(120)  231,168
Net  earnings..........   -      -        -        1,331      -             -
-       1,331
Cumulative translation
  adjustment,  net......   -      -        -        -        (4,620)        -
-       (4,620)
Fair market value of
  stock  warrants issued   -      -         546     -          -            -
-          546
Proceeds received from
  options  exercised....     23   -       1,103     -          -            -
-        1,126
Net unrealized holding
 gain on available-for-
  sale  securities......   -      -        -        -          -            -
74        74
                        -----  ----   ------  -------   ------     -------   --
----   -------
Balance, June 30, 1997 $2,023 $ 263  $71,015 $209,949  $(1,860)   $(51,719) $
(46) $229,625
                         =====   ====   ======  =======   ======      =======
======   =======




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


<TABLE>
           THE FAIRCHILD CORPORATION AND CONSOLIDATED SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In thousands)
<CAPTION>

                                                            For  the  Years
Ended June 30,
                                                         ------------------
--------------
                                                           1997        1996
1995
Cash flows from operating activities:                    --------    ------
--    --------
<S>                                                     <C>         <C>
<C>
Net  earnings  (loss)...................................   $    1,331     $
189,706   $ (33,824)
Adjustments to reconcile net earnings (loss) to net
  cash used for operating activities:
       Depreciation   and   amortization.....................        25,935
21,653      20,879
      Accretion   of  discount  on  long-term  liabilities....        4,963
4,686       4,773
      Net   gain   on  the  merger  of  subsidiaries............         --
(162,703)       --
      Net   gain  on  the  sale  of  discontinued  operations...         --
(53,942)       --
      Extraordinary   items,   net  of  cash   payments.........         --
4,501        --
    Provision for restructuring (excluding cash
        payments   of   $777   in   1996).......................         --
1,542        --
    (Gain) loss on sale of property, plant and
           equipment.......................................            (72)
(9)        655
      Undistributed   earnings   of  affiliates..............       (2,329)
(3,829)       (500)
        Minority    interest.................................         3,514
1,952       2,293
      Change   in   trading  securities......................       (5,733)
(5,346)      1,879
       Change   in   receivables.............................      (55,965)
(7,677)     (3,623)
       Change   in   inventories.............................      (46,389)
(10,747)     (8,578)
      Change   in  other  current  assets....................      (14,237)
(1,468)     (3,039)
      Change   in  other  non-current  assets................      (17,859)
1,030       3,492
    Change in accounts payable, accrued liabilities,
        and   other   long-term   liabilities.................        8,610
(41,255)    (21,541)
    Non-cash charges and working capital changes of
          discontinued    operations.........................         1,274
13,169      11,609
                                                         --------    ------
--    --------
Net   cash   used  for  operating  activities................      (96,957)
(48,737)    (25,525)

Cash flows from investing activities:
Proceeds received from (used for) investment
     securities,    net.....................................       (12,951)
265      12,281
Purchase   of   property,  plant  and  equipment.............      (22,116)
(6,622)     (5,911)
Proceeds   from  sale  of  property,  plant  and  equipment...          213
122         151
Equity    investments    in    affiliates......................          --
(2,361)     (1,051)
Minority   interest   in   subsidiaries.....................        (1,610)
(2,817)       --
Acquisition of subsidiaries, net of cash acquired.....    (55,916)       --
(607)
Net   proceeds  from  the  sale  of  discontinued  operations.      173,719
71,559        --
Changes   in   net  assets  held  for  sale...................          385
5,894       1,441
Investing   activities   of   discontinued  operations.......       (1,749)
(8,500)    (25,460)
                                                         --------    ------
--    --------
Net   cash  (used  for)  provided  by  investing   activities.       79,975
57,540     (19,156)

Cash flows from financing activities:
Proceeds   from   issuance   of   debt........................      154,394
157,877      71,712
Debt   repayments   and  repurchase  of  debentures..........     (156,975)
(197,825)    (57,417)
Issuance   of   Class   A  common  stock......................        1,126
1,509        --
Financing    activities    of   discontinued   operations.......         --
(936)     (1,950)
                                                         --------    ------
--    --------
Net   cash  provided  by  (used  for)  financing  activities..      (1,455)
(39,375)     12,345
Effect   of  exchange  rate  changes  on  cash...............       (1,792)
(961)      1,150
Net   decrease  in  cash  and  cash  equivalents.............      (20,229)
(31,533)    (31,186)
Cash   and  cash  equivalents,  beginning  of  the  year......       39,649
71,182     102,368
                                                         --------    ------
--    --------
Cash  and  cash  equivalents, end of the year............   $   19,420    $
39,649   $  71,182
                                                                   ========
========    ========
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
</TABLE>

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


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
     ------------------------------------------

      Corporate  Structure:  The Fairchild Corporation (the "Company")  was
incorporated in October 1969, under the laws of the State of Delaware.  RHI
Holdings, Inc. ("RHI") is a direct subsidiary of the Company.  RHI  is  the
owner of 100% of Fairchild Holding Corp. ("FHC") and the majority owner  of
Banner Aerospace, Inc., ("Banner").  The Company's principal operations are
conducted  through  FHC  and Banner.  The Company also  holds   significant
equity interests in Shared Technologies Fairchild Inc. ("STFI") and Nacanco
Paketleme  ("Nacanco"). The Company's investment in STFI  resulted  from  a
March 13, 1996 Merger of the Communications Services Segment of the Company
with  Shared Technologies, Inc. (See Note 3). The proposed sale of STFI  to
Intermedia  Communications Inc., as discussed in  Note  24,  completes  the
disposition of the Communications Services Segment. The Company's financial
statements  have been restated to present the results of the Communications
Services Segment and STFI as discontinued operations.

      Fiscal Year:  The fiscal year ("Fiscal") of the Company ends June 30.
All  references herein to "1997", "1996", and "1995" mean the fiscal  years
ended June 30, 1997, 1996 and 1995, respectively.

       Consolidation   Policy:  The  accompanying  consolidated   financial
statements  are  prepared in accordance with generally accepted  accounting
principles  and include the accounts of the Company and all of its  wholly-
owned   and  majority-owned  subsidiaries.   All  significant  intercompany
accounts   and   transactions  have  been  eliminated   in   consolidation.
Investments in companies in which ownership interest range from  20  to  50
percent are accounted for using the equity method (see Note 9).

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

                                     1997       1996       1995
                                   --------   --------   --------
<S>                                <C>        <C>        <C>
Interest.......................    $ 48,684   $ 66,843   $ 66,262
Income Taxes...................      (1,926)     9,279     (3,056)
</TABLE>


      Restricted  Cash:   On  June  30, 1997  and  1996,  the  Company  had
restricted  cash  of  $4,839  and $8,224, respectively,  all  of  which  is
maintained as collateral for certain debt facilities.  Cash investments are
in short-term certificates of deposit.

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

      Inventories:  Inventories are stated at the lower of cost or  market.
Cost  is  determined  using  the  last-in,  first-out  ("LIFO")  method  at
principal domestic aerospace manufacturing operations and using the  first-
in,  first-out ("FIFO") method elsewhere.  If the FIFO inventory  valuation
method had been used exclusively, inventories would have been approximately
$4,868  and  $4,756  higher  at  June  30,  1997  and  1996,  respectively.
Inventories from continuing operations are valued as follows:
<TABLE>
<CAPTION>

                                                June 30,     June 30,
(In thousands)                                    1997         1996
                                                --------     --------
<S>                                            <C>          <C>
First-in, first-out (FIFO).................    $ 312,840    $ 239,800
Last-in, first-out (LIFO)..................       29,896       31,343
                                                --------     --------
Total inventories..........................    $ 342,736    $ 271,143
                                                ========     ========
</TABLE>

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


<TABLE>
<CAPTION>

                                               June 30,        June 30,
                                                  1997            1996
                                                --------        --------
<S>                                             <C>             <C>
Land.......................................     $ 13,438        $ 10,408
Buildings and improvements.................       56,124          40,853
Machinery and equipment....................      158,944          94,406
Transportation vehicles....................          899             767
Furniture and fixtures.....................       26,815          18,466
Construction in progress...................        6,524           2,329
                                                 -------         -------
                                                 262,744         167,229
Less:  Accumulated depreciation............     (134,032)        (79,273)
                                                 -------         -------
Net property, plant and equipment..........     $128,712        $ 87,956
                                                 =======         =======
</TABLE>

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

     Deferred Loan Costs:  Deferred loan costs associated with various debt
issues are being amortized over the terms of the related debt, based on the
amount   of   outstanding  debt,  using  the  effective  interest   method.
Amortization  expense  for these loan costs for 1997,  1996  and  1995  was
$2,847, $3,827, and $3,794, respectively.

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

       Foreign  Currency  Translation:   For  foreign  subsidiaries   whose
functional  currency is the local foreign currency, balance sheet  accounts
are  translated  at exchange rates in effect at the end of the  period  and
income statement accounts are translated at average exchange rates for  the
period.   The  resulting translation gains and losses  are  included  as  a
separate component of stockholders' equity.  Foreign transaction gains  and
losses are included in other income and were insignificant in Fiscal  1997,
1996 and 1995.

       Research   and   Development:   The  Company  capitalizes   software
development costs upon the establishment of technological feasibility.  The
establishment  of technological feasibility and the ongoing  assessment  of
recoverability require considerable judgment by management with respect  to
certain  external factors, including anticipated future revenues, estimated
economic  life and changes in software and hardware technologies.  Software
development costs are amortized on a straight-line basis over the lesser of
five  years  or  the  expected  life of the product.   All  other  Company-
sponsored  research and development expenditures are expensed as  incurred.
Capitalized software development costs were $3,651 at June 30, 1997.

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

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

      Earnings Per Share:  Primary and fully diluted earnings per share are
computed  by  dividing  net income available to holders  of  the  Company's
common  stock,  by  the  weighted  average  number  of  shares  and   share
equivalents  outstanding  during the period.  To  compute  the  incremental
shares  resulting from stock options and warrants for primary earnings  per
share, the average market price of the Company's stock during the period is
used.   To compute the incremental shares resulting from stock options  and
warrants  for fully diluted earnings per share, the greater of  the  ending
market  price or the average market price of the Company's stock  is  used.
In  computing primary and fully diluted earnings per share for 1997 and  in
computing  fully  diluted earnings per share for 1996,  the  conversion  of
options and warrants was assumed, as the effect was dilutive.  In computing
primary  earnings per share for Fiscal 1996, only the dilutive effect  from
the conversion of options was assumed, as the effect from the conversion of
warrants  alone was antidilutive.  In computing primary and  fully  diluted
earnings  per share for Fiscal 1995, the conversion of options and warrants
was not assumed, as the effect was antidilutive.

      Stock-Based  Compensation:  In Fiscal 1997, the  Company  implemented
Statement   of  Financial  Accounting  Standards  No.  123  ("SFAS   123"),
"Accounting for Stock-Based Compensation".  SFAS 123 establishes  financial
accounting  standards for stock-based employee compensation plans  and  for
transactions in which an entity issues equity instruments to acquire  goods
or services from non-employees.  As permitted by SFAS 123, the Company will
continue  to use the intrinsic value based method of accounting  prescribed
by  APB  Opinion  No. 25, for its stock-based employee compensation  plans.
Fair market disclosures required by SFAS 123 are included in Note 15.

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

       Reclassifications:   Certain  amounts  in  prior  years'   financial
statements have been reclassified to conform to the 1997 presentation.

      Recently  Issued  Accounting Pronouncements:  In  October  1996,  the
American  Institute  of Certified Public Accountants  issued  Statement  of
Position 96-1 ("SOP 96-1") "Environmental Remediation Liabilities".  SOP 96-
1  provides authoritative guidance on specific accounting issues related to
the   recognition,   measurement,  and  the  display  and   disclosure   of
environmental  remediation  liabilities.   The  Company  is   required   to
implement SOP 96-1 in Fiscal 1998.  The Company's present policy is similar
to  the  policy prescribed by SOP 96-1; therefore there will be  no  effect
from implementation.

      In  February 1997, the Financial Accounting Standards Board  ("FASB")
issued two pronouncements, Statement of Financial Accounting Standards  No.
128 ("SFAS 128") "Earnings Per Share", and Statement of Financial
Accounting Standards No. 129 ("SFAS 129") "Disclosure of Information  about
Capital   Structure".   SFAS  128  establishes  accounting  standards   for
computing and presenting earnings per share ("EPS").  SFAS 128 is effective
for  periods ending after December 15, 1997, including interim periods, and
requires restatement of all prior period EPS data presented.  Results  from
the calculation of simple and diluted earnings per share, as prescribed  by
SFAS 128, would not differ materially from the calculations for primary and
fully  diluted earnings per share for the years ending June 30, 1997,  1996
and  1995.   SFAS  129 establishes standards for disclosure of  information
about  the  Company's capital structure and becomes effective  for  periods
ending after December 15, 1997.

      In  June 1997, FASB issued two pronouncements, Statement of Financial
Accounting Standards No. 130 ("SFAS 130") "Reporting Comprehensive Income",
and  Statement  of  Financial Accounting Standards  No.  131  ("SFAS  131")
"Disclosures  about  Segments of an Enterprise  and  Related  Information".
SFAS  130  establishes standards for reporting and display of comprehensive
income and its components in the financial statements.  SFAS 131 supersedes
Statement of Financial Accounting Standards No. 14 "Financial Reporting for
Segments  of  a  Business Enterprise" and requires that  a  public  company
report  certain  information about its operating  segments  in  annual  and
interim financial reports.  The Company will adopt SFAS 130 and SFAS 131 in
Fiscal 1998.

2.   ACQUISITIONS
     ------------

      The  Company's  acquisitions described  in  this  section  have  been
accounted  for using the purchase method.  The purchase prices assigned  to
the  net  assets acquired were based on the fair value of such  assets  and
liabilities at the respective acquisition dates.

      In  January  1997, Banner, through its subsidiary, Dallas  Aerospace,
Inc.,  acquired PB Herndon Company ("PB Herndon") in a business combination
accounted  for  as  a  purchase. PB Herndon is a distributor  of  specialty
fastener lines and similar aerospace related components.  The total cost of
the  acquisition  was $16,000, which exceeded the fair  value  of  the  net
assets of PB Herndon by approximately $3,451. The excess is being amortized
using  the  straight-line method over 40 years. The  Company  purchased  PB
Herndon with available cash.

      In  February 1997, the Company completed a transaction (the "Simmonds
Acquisition")  pursuant  to which the Company acquired  common  shares  and
convertible debt representing an 84.2% interest, on a fully diluted  basis,
of  Simmonds  S.A. ("Simmonds").  The Company initiated a tender  offer  to
purchase the remaining shares and convertible debt held by the public.   By
Fiscal  year-end, the Company had purchased, or placed sufficient  cash  in
escrow  to  purchase,  all  the remaining shares and  convertible  debt  of
Simmonds.   The total purchase price of Simmonds, including the  assumption
of debt, was approximately $62,000, which the Company funded with available
cash.   The Company recorded approximately $13,000 in goodwill as a  result
of this acquisition.  Simmonds is one of Europe's leading manufacturers and
distributors of aerospace and automotive fasteners.

      In September 1994, the Company acquired all of the outstanding common
stock  of  Fairchild Scandinavian Bellyloading Company AB ("SBC")  for  the
assumption of a minimal amount of debt.  SBC is a designer and manufacturer
of a patented cargo loading system, which is installed in the cargo area of
commercial aircraft.  On June 30, 1997, the Company sold all the patents of
SBC  to  Teleflex  Incorporated ("Teleflex") for  $5,000,  and  immediately
thereafter  sold  all  the  stock of SBC to a wholly  owned  subsidiary  of
Teleflex for $2,000.  The Company may also receive an additional amount  of
up  to  $7,000  based  on future net sales of SBC's patented  products  and
services.  In Fiscal 1997, the Company recorded a $2,528 nonrecurring  gain
as a result of these transactions.

      On  November  28, 1994, the Company's former Communications  Services
segment   completed   the   acquisition  of  substantially   all   of   the
telecommunications  assets of JWP Telecom, Inc. ("JWP")  for  approximately
$11,000,  plus the assumption of approximately $3,000 of liabilities.   JWP
is   a   telecommunications   system  integrator,   specializing   in   the
distribution, installation and maintenance of voice and data communications
equipment.

     Pro forma information is not required for these acquisitions.

3.  MERGER AGREEMENT
    ----------------

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

      The  transaction was effected by a Merger of FII with and  into   STI
(the  "Merger")  with the surviving company renamed  STFI.   Prior  to  the
Merger,  FII  transferred all of its assets to, and all of its  liabilities
were  assumed  by FHC, except for the assets and liabilities of  FCSC,  and
$223,500  of the FII's existing debt and preferred stock.  As a  result  of
the Merger, the Company received shares of Common Stock and Preferred Stock
of STFI representing approximately a 41% ownership interest in STFI.

       The   Merger  was  structured  as  a  reorganization  under  section
386(a)(1)(A) of the Internal Revenue Code of 1986, as amended. In 1996, the
Company recorded a $163,130 gain from this transaction. Subsequent to year-
end  the Company entered into an agreement to sell its investment in  STFI.
See Note 24 for further discussion.

4.   MAJORITY INTEREST BUSINESS COMBINATION
     --------------------------------------

      Effective February 25, 1996, the Company completed a transfer of  the
Company's  Harco  Division ("Harco") to Banner in  exchange  for  5,386,477
shares  of  Banner  common  stock.  The exchange  increased  the  Company's
ownership  of  Banner  common  stock from  approximately  47.2%  to  59.3%,
resulting  in  the  Company becoming the majority  shareholder  of  Banner.
Accordingly,  the  Company has consolidated the  results  of  Banner  since
February  25,  1996.   The Company recorded a $427 nonrecurring  loss  from
outside  expenses  incurred for this transaction  in  1996.   Banner  is  a
leading  international supplier to the aerospace industry as a distributor,
providing  a  wide  range of aircraft parts and related  support  services.
Harco is a distributor of precision fasteners to the aerospace industry.

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

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

5.   DISCONTINUED OPERATIONS AND NET ASSETS HELD FOR SALE
     ----------------------------------------------------

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

     As a result of the sale of DME in 1996, the Company recorded a gain on
disposal  of  discontinued operations of approximately $54,012,  net  of  a
$61,929 tax provision.

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

      Accordingly, the results of DME and Data have been accounted  for  as
discontinued  operations.  The  combined net sales of DME and Data  totaled
$108,131  and $180,773 for 1996 and 1995, respectively.  Net earnings  from
discontinued  operations was $9,186, net of $5,695 for taxes in  1996,  and
$13,994, net of $10,183 for taxes in 1995.

      Net  assets held for sale at June 30, 1997, includes two  parcels  of
real estate in California, and several other parcels of real estate located
primarily throughout the continental United States, which the Company plans
to   sell,  lease  or  develop,  subject  to  the  resolution  of   certain
environmental matters and market conditions.  Also included in  net  assets
held  for  sale  are  limited partnership interests in (i)  a  real  estate
development joint venture, and (ii) a landfill development partnership.

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

     See Note 24 for discontinuance of STFI.

6.   PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
     -----------------------------------------

      The  following unaudited pro forma information for the twelve  months
ended  June  30,  1996  and  June 30, 1995, provides  the  results  of  the
Company's  operations as though (i) the disposition of DME and  Data,  (ii)
the Merger of FCSC, and (iii) the transfer of Harco to Banner, resulting in
the consolidation of Banner, had been in effect since the beginning of each
period.   The  pro  forma information is based on the historical  financial
statements  of  the  Company, DME, FCSC and Banner, giving  effect  to  the
aforementioned  transactions.  In preparing the  pro  forma  data,  certain
assumptions  and  adjustments  have been made  which  (i)  reduce  interest
expense  for  revised  debt structures, (ii) increase interest  income  for
notes  receivable, (iii) reduce minority interest from Series  C  Preferred
Stock  of  FII  being  redeemed,  and (iv) adjust  equity  in  earnings  of
affiliates to include the estimated results of STFI.

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

                                             1996        1995
                                          ----------  ----------
<S>                                       <C>         <C>
Sales...................................  $597,407    $481,991
Loss from continuing operations.........   (15,766)    (32,972)
Primary loss from continuing operations
  per share.............................      (.96)      (2.05)
Net loss................................   (15,766)    (32,876)
  Primary net loss per share............      (.96)      (2.04)
</TABLE>

      The  pro  forma  financial  information has  not  been  adjusted  for
nonrecurring income and gains from disposal of discontinued operations that
have occurred from these transactions.

7.   EXTRAORDINARY ITEMS
     -------------------

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

      During  Fiscal 1995, the Company recognized extraordinary  gains  and
losses from the early extinguishment of debt resulting from repurchases of
its  debentures on the open market or in negotiated transactions,  and  the
write-offs  of  certain  deferred costs associated  with  the  issuance  of
securities  repurchased.   Early  extinguishment  of  the  Company's   debt
resulted in an extraordinary gain of $355, net of a tax provision, in 1995.

8.   INVESTMENTS
     -----------

      Short-term investments at June 30, 1997, consist primarily of  common
stock  investments in public corporations which are classified  as  trading
securities.  All other short-term investments and all long-term investments
do  not  have  readily  determinable fair values and primarily  consist  of
investments in preferred and common stocks of private companies and limited
partnerships.  A summary of investments held by the Company consists of the
following:

<TABLE>

                                            1997                 1996
                                    -------------------  ------------------
                                     Aggregate            Aggregate
Name of Issuer or                    Fair        Cost     Fair        Cost
Type of Each Issue                   Value       Basis    Value       Basis
-------------------                 ---------  -------  ---------- --------
<S>                                  <C>       <C>        <C>      <C>
Short-term investments:
-----------------------
Trading securities:
  Common stock....................   $16,094   $ 7,398   $10,362   $ 5,954
Other investments.................     9,553     9,553       136       136
                                      ------    ------    ------     ------
                                     $25,647   $16,951   $10,498   $ 6,090
                                      ======    ======    ======     ======
Other long-term investments:
----------------------------
Other investments.................   $ 4,120   $ 4,120    $   585   $   585
                                          ======       ======        ======
======
</TABLE>

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

                                          1997         1996         1995
                                         -------      -------      -------
<S>                                     <C>          <C>          <C>
Gross realized gain (loss) from sales.. $  1,673     $ (1,744)    $  3,948
Change in unrealized holding gain
  (loss) from trading securities.......    4,289        5,527          (36)
Gross realized loss from impairments...     --           --           (652)
Dividend income........................      689          792        2,445
                                         -------      -------      -------
                                        $  6,651     $  4,575     $  5,705
                                         =======      =======      =======
</TABLE>

9.   INVESTMENTS AND ADVANCES, AFFILIATED COMPANIES
     -----------------------------------------------

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

                                           1997         1996         1995
Statement of Earnings:                   --------     --------     --------
<S>                                      <C>          <C>          <C>
   Net sales............................ $292,049     $351,695     $313,888
   Gross profit.........................  133,734      114,248      100,644
   Earnings from continuing operations..   10,216       15,183        9,623
   Discontinued operations, net.........       (1)        --           --
   Net earnings.........................   10,215       15,183        9,623

Balance Sheet at June 30,:
   Current assets....................... $ 89,408     $ 93,925
   Non-current assets...................  369,464      377,547
   Total assets.........................  458,872      471,472
   Current liabilities..................   75,090       87,858
   Non-current liabilities..............  281,301      275,025
</TABLE>

      The  Company owns approximately 31.9% of Nacanco common  stock.   The
Company  recorded equity earnings of $4,673, $5,487, and $2,859  from  this
investment for 1997, 1996 and 1995, respectively.

      Effective February 25, 1996, the Company increased its percentage  of
ownership of Banner common stock from 47.2% to approximately 59.3%.   Since
February 25, 1996, the Company has consolidated Banner's results.  Prior to
February 25, 1996, the Company accounted for its investment in Banner using
the  equity method and held its investment in Banner as part of investments
and  advances,  affiliated  companies.   The  Company  recorded  equity  in
earnings  of  $363  and  $138  from this  investment  for  1996  and  1995,
respectively.

     The Company is accounting for an investment in a public fund, which is
controlled  by  an  affiliated investment group of the Company,  at  market
value.  The  amortized cost basis of the investment was $923 and  had  been
written  down by $71, before tax, to market value.  The Company recorded  a
gross  unrealized  holding  gain  (loss)  of  $114  and  $(120)  from  this
investment in 1997 and 1995, respectively.

      The  Company's  share  of equity in earnings  of  all  unconsolidated
affiliates  for  1997,  1996  and  1995 was  $7,747,  $4,871,  and  $1,607,
respectively.  The carrying value of investments and advances, affiliated
companies consists of the following:
<TABLE>
<CAPTION>

                                       June 30,    June 30,
                                         1997        1996
                                       --------    --------
<S>                                    <C>         <C>
Nacanco............................    $ 20,504    $ 20,886
STFI...............................      31,978      30,559
Others.............................       3,196       2,026
                                        -------     -------
                                       $ 55,678    $ 53,471
                                        =======     =======
</TABLE>

      On  June  30,  1997,  approximately $9,056 of the Company's  $209,949
consolidated  retained  earnings  was from  undistributed  earnings  of  50
percent  or  less currently owned affiliates accounted for  by  the  equity
method.

10.  NOTES PAYABLE AND LONG-TERM DEBT
     --------------------------------

      At June 30, 1997 and 1996, notes payable and long-term debt consisted
of the following:
<TABLE>
<CAPTION>

                                                 June 30,    June 30,
                                                   1997        1996
                                                 --------    --------
<S>                                              <C>         <C>
Bank credit agreements.......................    $    100    $ 73,500
Other short-term notes payable...............      15,529       3,035
                                                  -------     -------
Short-term notes payable (weighted average
 interest rates of 7.8% and  8.6% in 1997
 and 1996, respectively).....................    $ 15,629    $ 76,535
                                                  =======     =======
Bank credit agreements.......................    $177,250    $112,500

11 7/8% RHI Senior debentures due 1999.......      85,852      85,769
12% Intermediate debentures due 2001.........     115,359     114,495
13 1/8% Subordinated debentures due 2006.....      35,188      35,061
13% Junior Subordinated debentures due 2007..      24,834      24,800
10.65% Industrial revenue bonds..............       1,500       1,500
Capital lease obligations, interest from
  4.4% to 10.5%..............................       1,897          65
Other notes payable, collateralized by
  property, plant and equipment, interest
  from 4.3% to 10.0%.........................       6,835       2,756
                                                  -------     -------
                                                  448,715     376,946
Less: Current maturities.....................     (31,793)     (8,357)
                                                  -------     -------
Net long-term debt...........................    $416,922    $368,589
                                                  =======     =======
</TABLE>

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

      On  July  26,  1996, the Company amended and restated the  terms  and
provisions  of FHC's credit agreement, in their entirety (the  "FHC  Credit
Agreement").   The  FHC  Credit Agreement extends to  July  28,  2000,  the
maturity of FHC's revolving credit facility (the "FHC Revolver").  The  FHC
Revolver  has  a  borrowing  limit  of $52,000,  however,  availability  is
determined  monthly  by  calculation  of  a  borrowing  base  comprised  of
specified  percentages of FHC's accounts receivable,  inventories  and  the
appraised value of equipment and real property.  The FHC Revolver generally
bears  interest at a base rate of 1 1/2% over the greater of  (i)  Citibank
New  York's  base  rate, or (ii) the Federal Funds Rate  plus  1  1/2%  for
domestic  borrowings  and at 2 1/2% over Citibank London's  base  rate  for
foreign  borrowings. FHC's Revolver is subject to a non-use commitment  fee
of  1/2%  on  the average unused availability; and outstanding  letters  of
credit  are subject to fees of 2 3/4% per annum.  The FHC Credit  Agreement
was   further  amended  on  February  21,  1997  to  permit  the   Simmonds
Acquisition.  Terms modified by the February 21, 1997 amendment included  a
provision in which the borrowing rate on the FHC Revolver will increase  by
1/4% on each of September 30, 1997 and December 31, 1997, in the event that
the FHC Credit Agreement is not restructured or refinanced by such date.

     The FHC Credit Agreement requires FHC to comply with certain financial
and non-financial loan covenants, including maintaining a minimum net worth
of  $150,000  and  maintaining certain interest and fixed  charge  coverage
ratios  at  the end of each Fiscal Quarter.  Additionally, the  FHC  Credit
Agreement  restricts  annual  capital  expenditures  of  FHC  to   $12,000.
Substantially all of FHC's assets are pledged as collateral under  the  FHC
Credit  Agreement.  At June 30, 1997, FHC was in compliance  with  all  the
covenants under the FHC Credit Agreement.  FHC may transfer available  cash
as  dividends to the Company.  However, the FHC Credit Agreement  restricts
the Company from paying any dividends to stockholders.

       On  July  18,  1997,  the FHC Credit Agreement was  restructured  to
provide  FHC  with  a  $150,000 senior secured credit  facility  (the  "FHC
Facility")  consisting  of (i) up to $75,000 in  revolving  loans,  with  a
letter  of  credit sub-facility of $12,000, and (ii) a $75,000  term  loan.
Advances  made  under the FHC Facility would generally bear interest  at  a
rate  of, at the Company's option, (i) 2% over the Citibank N.A. base rate,
or  (ii)  3  1/4% over the Eurodollar Rate ("LIBOR").  The FHC Facility  is
subject  to  a  non-use  commitment fee of 1/2%  of  the  aggregate  unused
availability; and outstanding letters of credit are subject to  fees  of  3
1/2%  per  annum.  A borrowing base is calculated monthly to determine  the
amounts available under the FHC Facility.  The borrowing base is determined
monthly  based upon specified percentages of (i) FHC's accounts receivable,
inventories,  and the appraised value of equipment and real  property,  and
(ii)  assets  pledged  by  RHI to secure the facility.   The  FHC  Facility
matures  on July 28, 2000.  The FHC Facility provides that on December  31,
1998,  the  Company  must repay the term loan, in full,  together  with  an
amount  necessary to reduce the outstanding revolving loans to $52,000,  if
the  Company  has not complied with certain financial covenant requirements
as of September 30, 1998.

      The  Credit  Agreements  provide RHI with a $4,250  revolving  credit
facility  (the  "RHI Credit Agreement") which (i) generally  bears  a  base
interest  rate of 1/2% over the prime rate, (ii) requires a commitment  fee
of  1/2%,  and  (iii) matures on August 12, 1998.  RHI's  Credit  Agreement
requires RHI to comply with specified covenants and maintain a consolidated
net  worth  of  $175,000.   Additionally, RHI's  capital  expenditures  are
restricted, except for certain leasehold improvements, to $2,000 per  annum
plus  the selling price of fixed assets for such Fiscal Year.  The  Company
was  in  compliance with all the covenants under RHI's Credit Agreement  at
June  30, 1997. RHI may pay dividends to the Company if the purpose of such
dividends is to provide the Company with funds necessary to meet  its  debt
service  requirements  under specified notes and debentures.  However,  all
other  dividends are subject to certain limitations, which was  $10,000  in
Fiscal 1997.

      Banner  has a credit agreement (the "Banner Credit Agreement")  which
provides  Banner  and its subsidiaries with funds for working  capital  and
potential  acquisitions. The facilities under the Banner  Credit  Agreement
consist of (i) a $55,000 six-year term loan (the "Banner Term Loan"),  (ii)
a $30,000 seven-year term loan (the "Tranche B Loan"), (iii) a $40,000 six-
year  term loan (the "Tranche C Loan"), and (iv) a $71,500 revolving credit
facility  (the  "Banner Revolver").  The Banner Credit  Agreement  requires
certain semiannual term loan payments.  The Banner Term Loan and the Banner
Revolver  bear interest at prime plus 1 1/4% or LIBOR plus 2 1/2%  and  may
increase  by  1/4%  or decrease by up to 1% based upon certain  performance
criteria. As a result of Banner's performance level through March 31, 1997,
borrowings  under  the  Banner Term Loan and the Banner  Revolver  bore  an
interest  rate of prime plus 3/4% and LIBOR plus 2% for the quarter  ending
June  30, 1997.  The Tranche B Loan bears interest at prime plus 1 3/4%  or
LIBOR plus 3%.  The Tranche C Loan initially bears interest at prime plus 1
1/2%  or  LIBOR  plus  2 3/4% and may decrease by 1/4% based  upon  certain
performance criteria.  The Banner Credit Agreement requires that loans made
to  Banner can not exceed a defined borrowing base, which is based  upon  a
percentage  of  eligible  inventories and  accounts  receivable.   Banner's
revolving credit facility is subject to a non-use fee of 55 basis points of
the unused availability.

     The Banner Credit Agreement requires quarterly compliance with various
financial  and  non-financial  loan  covenants,  including  maintenance  of
minimum  net  worth, and minimum ratios of interest coverage, fixed  charge
coverage,  and  debt to earnings before interest, taxes,  depreciation  and
amortization.   Banner also has certain limitations on  the  incurrence  of
additional  debt.  As of June 30, 1997, Banner was in compliance  with  all
covenants under the Banner Credit Agreement.  Substantially all of Banner's
assets  are  pledged as collateral under the Banner Credit  Agreement.  The
Banner  Credit Agreement substantially limits the amount of dividends  that
can  be  paid to its shareholders, including the Company. Banner's  current
policy  is  to  retain  earnings  to support  the  growth  of  its  present
operations and to reduce its outstanding debt.

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

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

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

      The following table summarizes the Credit Facilities under the Credit
Agreements at June 30, 1997:
[CAPTION]
<TABLE>

                                         Revolving       Term        Total
                                           Credit        Loan     Available
                                               Facilities        Facilities
Facilities
RHI Holdings, Inc.                       ----------   ----------  ---------
-
<S>                                      <C>          <C>         <C>
  Revolving credit facility...........   $    100     $   --      $  4,250
Fairchild Holding Corp.
  Revolving credit facility...........     30,900         --        52,000
Banner Aerospace, Inc.
  Revolving credit facility...........     32,000         --        71,500
  Term Loan...........................       --         44,500      44,500
  Tranche B Loan......................       --         29,850      29,850
  Tranche C Loan......................       --         40,000      40,000
                                          -------      -------     -------
Total                                    $ 63,000     $114,350    $242,100
                                          =======      =======     =======
</TABLE>

      At  June  30, 1997, the Company had outstanding letters of credit  of
$10,811,  which  were  supported by the Credit  Agreement  and  other  bank
facilities on an unsecured basis.  At June 30, 1997, the Company had unused
bank lines of credit aggregating $53,939, at interest rates slightly higher
than  the  prime  rate.  The Company also has short-term  lines  of  credit
relating  to  foreign  operations, aggregating $9,350,  against  which  the
Company owed $5,967 at June 30, 1997.

      Summarized below are certain items and other information relating  to
the debt outstanding at June 30, 1997:
<TABLE>
<CAPTION>

                                         12%           13%        11 7/8%
                            13 1/8%  Intermediate    Junior     RHI Senior
                        Subordinated Subordinated Subordinated Subordinated
                         Debentures   Debentures   Debentures   Debentures
                        ------------ ------------ ------------ ------------
<S>                      <C>          <C>          <C>          <C>
Date Issued              March 1986   Oct. 1986    March 1987   March 1987
Face Value                $ 75,000      $160,000    $102,000     $126,000
Balance June 30, 1997     $ 35,188      $115,359    $ 24,834     $ 85,852
Percent Issued at           95.769        93.470      98.230       99.214
Bond Discount             $  3,173      $ 10,448    $  1,805     $    990
Amortization 1997         $    127      $    864    $     34     $     82
             1996         $    118      $    761    $     30     $     82
             1995         $    103      $    687    $     27     $     94
Yield to Maturity           13.80%        13.06%      13.27%       12.01%
Interest Payments        Semi-Annual  Semi-Annual  Semi-Annual  Semi-Annual
Sinking Fund Start Date    3/15/97      10/15/97      3/1/98       3/1/97
Sinking Fund Installments $  7,500      $ 32,000    $ 10,200     $ 31,500
Fiscal Year Maturity         2006          2002        2007         1999
Callable Option on         3/15/89      10/15/89      3/1/92       3/1/92
</TABLE>

      Under  the  most  restrictive covenants of the above indentures,  the
Company's  consolidated  net  worth, as defined,  must  not  be  less  than
$35,000.  RHI's consolidated net worth must not be less than $125,000.   At
June  30,  1997,  consolidated net worth was $229,625 at  the  Company  and
$438,830  at  RHI. At the present time, none of the Company's  consolidated
retained  earnings  are  available  for  capital  distributions  due  to  a
cumulative  earnings restriction. The indentures also provide  restrictions
on the amount of additional borrowings by the Company.

      The  annual  maturity  of  long-term debt obligations  (exclusive  of
capital  lease obligations) for each of the five years following  June  30,
1997,  are  as  follows:  $31,207 for 1998, $93,544 for 1999,  $42,288  for
2000, $77,407 for 2001, and $77,772 for 2002.

11.  PENSIONS AND POSTRETIREMENT BENEFITS
     ------------------------------------

     Pensions
     --------

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

                                                 1997      1996      1995
                                               --------  --------  --------
<S>                                            <C>       <C>       <C>
Service cost (current period attribution)..    $  2,521  $  3,513  $  3,917
Interest cost of projected benefit
  obligation...............................      15,791    14,499    14,860
Actual   return   on  plan  assets...............      (31,400)    (39,430)
(14,526)
Amortization of prior service cost.........        (180)       81        81
Net   amortization   and   deferral..............        11,157      21,495
(4,341)
                                                -------   -------   -------
                                                      (2,111)           158
(9)
Net periodic pension expense (income) for
  other plans including foreign plans......         142      (118)       78
                                                -------   -------   -------
Net periodic pension expense (income)......    $ (1,969) $     40  $     69
                                                =======   =======   =======
</TABLE>

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

                                             1997       1996       1995
                                           --------   --------   --------
<S>                                        <C>         <C>        <C>
Discount rate............................    7.75%      8.5%       8.5%
Expected rate of increase in salaries....    4.5%       4.5%       4.5%
Expected long-term rate of return on
  plan assets............................    9.0%       9.0%       9.0%
</TABLE>

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

      The  following  table  sets  forth  the  funded  status  and  amounts
recognized in the Company's consolidated balance sheets at June  30,  1997,
and 1996, for the plans:
<TABLE>
<CAPTION>

                                                         June 30,  June 30,
                                                           1997      1996
Actuarial present value of benefit obligations:          --------  --------
<S>                                                      <C>       <C>
  Vested................................................ $183,646  $164,819
  Nonvested.............................................    7,461     6,169
                                                          -------   -------
  Accumulated benefit obligation........................  191,107   170,988
  Effect of projected future compensation increases.....      683       905
                                                          -------   -------
Projected benefit obligation............................  191,790   171,893

Plan assets at fair value...............................  237,480   224,692
                                                          -------   -------
Plan assets in excess of projected benefit obligations..   45,690    52,799
Unrecognized net loss...................................   29,592    20,471
Unrecognized   prior   service   cost.........................        (571)
(354)
Unrecognized   net   transition   assets......................        (315)
(608)
                                                          -------   -------
Prepaid pension cost prior to SFAS 109 implementation...   74,396    72,308
Effect   of   SFAS   109  implementation.......................    (14,654)
(14,648)
                                                          -------   -------
Prepaid pension cost.................................... $ 59,742  $ 57,660
                                                          =======   =======
</TABLE>

      Plan assets include Class A Common Stock of the Company valued  at  a
fair  market  value  of  $26,287 and $11,094 at June  30,  1997  and  1996,
respectively. Substantially all of the plan assets are invested  in  listed
stocks and bonds.

     Postretirement Health Care Benefits
     -----------------------------------

      The Company provides health care benefits for most retired employees.
Postretirement health care expense from continuing operations totaled $642,
$779,  and  $701  for 1997, 1996 and 1995, respectively.  The  Company  has
accrued  approximately $34,965 and $36,995 as of June 30,  1997  and  1996,
respectively,   for   postretirement  health  care  benefits   related   to
discontinued  operations.  This represents the cumulative discounted  value
of  the  long-term  obligation  and includes interest  expense  of  $3,349,
$3,877,  and  $3,872  for the years ended June 30,  1997,  1996  and  1995,
respectively.  The components of expense in Fiscal 1997, 1996 and 1995  are
as follows:
<TABLE>
<CAPTION>

                                                  1997     1996     1995
                                                 ------   ------   ------
<S>                                              <C>      <C>      <C>
     Service cost of benefits earned............ $  140   $  281   $  321
     Interest cost on liabilities...............  3,940    4,377    4,385
     Net amortization and deferral..............    (89)      (2)    (133)
                                                 ------   ------   ------
     Net periodic postretirement benefit cost... $3,991   $4,656   $4,573
                                                 ======   ======   ======
</TABLE>

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

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

                                                           1997       1996
                                                         -------    -------
<S>                                                     <C>        <C>
     Accumulated postretirement benefit obligations:
       Retirees........................................ $ 48,145   $ 46,846
       Fully eligible active participants..............      390        347
       Other active participants.......................    2,335      1,887
                                                         -------    -------
     Accumulated postretirement benefit obligation.....   50,870     49,080
     Unrecognized net loss.............................    6,173      2,086
                                                         -------    -------
     Accrued postretirement benefit liability.......... $ 44,697   $ 46,994
                                                         =======    =======
</TABLE>

     The accumulated postretirement benefit obligation was determined using
a discount rate of 7.75%, and a health care cost trend rate of 7.0% for pre-
age-65  and  post-age-65 employees, respectively, gradually  decreasing  to
5.5% in the year 2003 and thereafter.

      Increasing  the  assumed health care cost trend  rates  by  1%  would
increase  the accumulated postretirement benefit obligation as of June  30,
1997, by approximately $1,871, and increase the net periodic postretirement
benefit cost by approximately $132 for Fiscal 1997.

12   INCOME TAXES
     ------------

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

                                        1997         1996         1995
                                      --------     --------     --------
<S>                                  <C>          <C>          <C>
Current:
  Federal..........................  $   6,143    $ (41,595)   $  (8,315)
  State............................      1,197        1,203          424
  Foreign..........................        (45)         669        1,191
                                      --------     --------     --------
                                         7,295      (39,723)      (6,700)
Deferred:
   Federal.........................    (15,939)      17,060      (24,754)
   State...........................      3,444       (3,657)      (2,052)
                                      --------     --------     --------
                                       (12,495)      13,403      (26,806)
                                      --------     --------     --------
Net tax benefit....................  $  (5,200)   $ (26,320)   $ (33,506)
                                      ========     ========     ========
</TABLE>

      The  income tax provision (benefit) for continuing operations differs
from  that computed using the statutory Federal income tax rate of 35%,  in
Fiscal 1997, 1996 and 1995, for the following reasons:
<TABLE>
<CAPTION>

                                        1997         1996         1995
                                      --------     --------     --------
<S>                                  <C>          <C>          <C>
Computed statutory amount..........  $  (1,354)   $ (20,993)   $ (31,944)
State income taxes, net of
  applicable federal tax benefit...        778          782       (1,794)
Nondeductible acquisition
  valuation items..................      1,064        1,329        1,420
Tax on foreign earnings, net of
  tax credits......................     (1,938)       1,711        2,965
Difference between book and tax
  basis of assets acquired and
  liabilities assumed..............     (1,102)       1,040        1,366
Revision of estimate for tax
  accruals.........................     (5,335)      (3,500)      (5,000)
Other..............................      2,687       (6,689)        (519)
                                     ---------    ---------     --------
Net tax benefit.................... $   (5,200)  $  (26,320)   $ (33,506)
                                     =========    =========     ========
</TABLE>

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

                                                                       1997
1996       1995
                                                                     Deferred
Deferred    Deferred
                                         June   30,   (Provision)  June   30,
(Provision) (Provision)
                                             1997         Benefit        1996
Benefit     Benefit
                                       --------  ----------  --------  --------
--- -----------
<S>                                    <C>       <C>         <C>        <C>
<C>
Deferred tax assets:
   Accrued  expenses...................  $ 6,440   $    504    $  5,936     $
(1,643)   $ (2,218)
    Asset   basis  differences............       572      (1,492)       2,064
1,787      (7,292)
  Inventory..........................    2,198      2,198       --          --
--
    Employee  compensation  and  benefits.     5,141        (267)       5,408
(26)        106
    Environmental   reserves.............     3,259       (1,253)       4,512
(737)     (1,202)
    Loss   and  credit  carryforward.......      --        (8,796)      8,796
(23,229)     17,991
    Postretirement   benefits............    19,472          138       19,334
(1,273)        514
     Other..............................      7,598        2,079        5,519
2,186       1,530
                                       -------    -------    -------     ------
-     -------
                                           44,680        (6,889)       51,569
(22,935)      9,429
Deferred tax liabilities:
    Asset   basis  differences............   (26,420)     (3,855)    (22,565)
16,602       4,129
    Inventory..........................       --          2,010       (2,010)
4,684       3,176
    Pensions...........................    (19,281)      (1,038)     (18,243)
1,516       1,074
    Other..............................     (7,240)      22,267      (29,507)
(17,525)      3,694
                                       -------    -------    -------     ------
-     -------
                                          (52,941)      19,384       (72,325)
5,277      12,073
                                       -------    -------    -------     ------
-     -------
Net  deferred  tax  liability...........  $  (8,261)  $   12,495    $(20,756)
$(17,658)   $ 21,502
                                          =======       =======       =======
=======     =======
</TABLE>

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

                                            June 30,     June 30,
                                              1997         1996
                                            --------     --------
<S>                                         <C>          <C>
Prepaid expenses and other current assets:
  Current deferred.....................     $ 11,307     $  8,012
                                             =======      =======

Income taxes payable:
  Current deferred.....................     $ (2,735)    $ 20,797
  Other current........................        8,616        3,838
                                             -------      -------
                                            $  5,881     $ 24,635
                                             =======      =======
Noncurrent income tax liabilities:
  Noncurrent deferred..................     $ 22,303     $  7,971
  Other noncurrent.....................       19,710       23,766
                                             -------      -------
                                            $ 42,013     $ 31,737
                                             =======      =======
</TABLE>

      The  1997,  1996  and 1995 net tax benefits include  the  results  of
reversing $5,335, $3,500 and $5,000, respectively, of federal income  taxes
previously  provided for due to a change in the estimate  of  required  tax
accruals.

      Domestic  income taxes, less available credits, are provided  on  the
unremitted income of foreign subsidiaries and affiliated companies, to  the
extent  that  such  earnings are intended to be repatriated.   No  domestic
income taxes or foreign withholding taxes are provided on the undistributed
earnings  of  foreign  subsidiaries and affiliates,  which  are  considered
permanently  invested,  or which would be offset by allowable  foreign  tax
credits.   At  June  30, 1997, the amount of domestic  taxes  payable  upon
distribution of such earnings was not significant.

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

13.  MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES
     ----------------------------------------------

      Included  in the Company's $68,309 of minority interest at  June  30,
1997, is $67,649, representing approximately 40.7% of Banner's common stock
effectively outstanding on a consolidated basis.

14.  EQUITY SECURITIES
     -----------------

      The  Company  had  13,992,283 shares of  Class  A  common  stock  and
2,632,516  shares  of Class B common stock outstanding at  June  30,  1997.
Class  A  common  stock is traded on both the New York  and  Pacific  Stock
Exchanges.  There is no public market for the Class B common stock.  Shares
of  Class  A common stock are entitled to one vote per share and cannot  be
exchanged  for  shares of Class B common stock.  Shares of Class  B  common
stock  are  entitled to ten votes per share and can be  exchanged,  at  any
time,  for  shares of Class A common stock on a share-for-share basis.   In
Fiscal 1997, 234,935 shares of Class A Common Stock were issued as a result
of the exercise of stock options and shareholders converted 1,188 shares of
Class B common stock into Class A common stock.

      RHI holds an investment of 4,319,423 shares of the Company's Class  A
common  stock.   At  June  30, 1997, RHI's market value  was  approximately
$78,649.  The Company accounts for the Class A common stock held by RHI  as
Treasury Stock.

15.  STOCK OPTIONS AND WARRANTS
     --------------------------

     Stock Options
     -------------

      The Company's 1986 Non-Qualified and Incentive Stock Option Plan (the
"1986 Plan"), authorizes the issuance of 4,320,000 shares of Class A Common
Stock  upon the exercise of stock options issued under the 1986 Plan.   The
purpose of the 1986 Plan is to encourage continued employment and ownership
of  Class  A Common Stock by officers and key employees of the Company  and
its  subsidiaries, and provide additional incentive to promote the  success
of  the  Company.   At  the  Company's 1996 annual meeting,  the  Company's
stockholders approved an extension of the expiration date of the 1986  Plan
from April 9, 1996 to April 9, 2006.  The 1986 Plan authorizes the granting
of  options  at not less than the market value of the common stock  at  the
time  of  the  grant.  The option price is payable in  cash  or,  with  the
approval  of the Company's Compensation and Stock Option Committee  of  the
Board  of Directors, in shares of common stock, valued at fair market value
at  the  time of exercise.  The options normally terminate five years  from
the  date  of  grant,  subject to extension of up to  10  years  or  for  a
stipulated  period  of  time after an employee's death  or  termination  of
employment.

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

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

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

                                               Weighted
                                               Average
                                               Exercise
                                   Shares       Price
                                 -----------   --------
<S>                              <C>           <C>
Outstanding at July 1, 1994       1,520,706    $ 5.57
  Granted                           356,600      3.78
  Expired                          (116,875)     5.44
  Forfeited                         (60,650)     5.94
                                 -----------   --------
Outstanding at June 30, 1995      1,699,781      5.14
  Granted                           540,078      4.33
  Exercised                        (286,869)     5.26
  Expired                          (659,850)     6.06
  Forfeited                         (19,653)     4.30
                                 -----------   --------
Outstanding at June 30, 1996      1,273,487      4.27
  Granted                           457,350     14.88
  Exercised                        (234,935)     4.79
  Expired                            (1,050)     4.59
  Forfeited                          (9,412)     3.59
                                 -----------   --------
Outstanding at June 30, 1997      1,485,440    $ 7.46
                                 ===========   ========
Exercisable at June 30, 1995      1,159,306    $ 5.68
Exercisable at June 30, 1996        399,022    $ 4.59
Exercisable at June 30, 1997        486,855    $ 4.95
</TABLE>

     A  summary  of  options outstanding at June 30, 1997 is  presented  as
follows:
<TABLE>
<CAPTION>

                        Options Outstanding         Options Exercisable
                 --------------------------------  ---------------------
                              Weighted   Average                Weighted
                              Average   Remaining               Average
   Range of        Number     Exercise  Contract     Number     Exercise
Exercise Prices  Outstanding   Price      Life     Exercisable   Price
---------------  -----------  --------  ---------  -----------  --------
<S>                            <C>      <C>          <C>         <C>
$  3.50 - 8.625   1,022,700    $ 4.10   2.6 years    452,509     $ 4.10
$13.625 - 16.25     462,740    $14.89   4.4 years     34,346     $16.19
---------------  -----------  --------  ---------  -----------  --------
$  3.50 - 16.25   1,485,440    $ 7.46   3.2 years    486,855     $ 4.95
===============  ===========  ========  =========  ===========  ========
</TABLE>

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

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

      The Company applies APB Opinion 25 in accounting for its stock option
plans.  Accordingly, no compensation cost has been recognized for the stock
option  plans  in 1997 or 1996. If stock options granted in 1997  and  1996
were  accounted for based on their fair value as determined under SFAS 123,
pro forma earnings would be as follows:
<TABLE>
<CAPTION>

                                       1997          1996
                                     --------      --------
<S>                                  <C>           <C>
Net earnings:
  As reported                        $  1,331      $189,706
  Pro forma                               283       189,460
Primary earnings per share:
  As reported                        $    .08      $  11.43
  Pro forma                               .02         11.41
Fully diluted earnings per share:
  As reported                        $    .08      $  11.09
  Pro forma                               .02         11.08
</TABLE>

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

     Stock Warrants
     --------------

      On  April  25, 1997, the Company issued warrants to purchase  100,000
shares  of  Class A Common Stock, at $12.25 per share, to Dunstan  Ltd.  as
incentive  remuneration for the performance of certain  investment  banking
services.   The warrants may be earned on a pro-rata basis over a six-month
period  ending  October  31,  1997.  The  warrants  become  exercisable  on
November  1, 1997 and expire on November 8, 2000.  The Company  recorded  a
selling,  general  &  administrative expense of  $191  in  1997  for  stock
warrants earned in 1997 based on a grant-date fair value of $5.46.

       Effective  as  of  February  21,  1997,  the  Company  approved  the
continuation  of  an existing warrant to Stinbes Limited (an  affiliate  of
Jeffrey  Steiner) to purchase 375,000 shares of the Company's  Class  A  or
Class  B  Common  Stock at $7.67 per share.  The warrant  was  modified  to
extend  the exercise period from Mach 13, 1997, to March 13, 2002,  and  to
increase  the exercise price per share by $.002 for each day subsequent  to
March  13,  1997,  but fixed at $7.80 per share after June  30,  1997.   In
addition, the warrant was modified to provide that the warrant may  not  be
exercised except within the following window periods:  (i) within 365  days
after  the  merger  of  STFI  with  AT&T Corporation,  MCI  Communications,
Worldcom  Inc., Tel-Save Holdings, Inc., or Teleport Communications  Group,
Inc.;  (ii)  within 365 days after a change of control of the  Company,  as
defined  in  the  FHC Credit Agreement; or (iii) within 365  days  after  a
change of control of Banner, as defined in the Banner Credit Agreement.  In
no event may the warrant be exercised after March 13, 2002.

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

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

      The  Company recorded nonrecurring expenses of $1,148 for  the  grant
date  fair value of the stock warrants issued in 1996.  The warrants issued
in 1996 were outstanding at June 30, 1997.

16.  FAIR VALUE OF FINANCIAL INSTRUMENTS
     -----------------------------------

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

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

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

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

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

      Fair  values for the Company's off-balance-sheet instruments (letters
of credit, commitments to extend credit, and lease guarantees) are based on
fees  currently  charged  to  enter into similar  agreements,  taking  into
account  the  remaining terms of the agreements and  the  counter  parties'
credit  standing.   The  fair  value  of  the  Company's  off-balance-sheet
instruments at June 30, 1997, was not material.

      The  carrying  amounts  and fair values of  the  Company's  financial
instruments at June 30, 1997 and 1996, are as follows:
<TABLE>
<CAPTION>

                                        June 30, 1997                  June
30, 1996
                                    ---------------------          ------------
---------
                                     Carrying       Fair             Carrying
Fair
                                      Amount         Value             Amount
Value
                                     --------     --------           --------
--------
<S>                                 <C>          <C>               <C>
<C>
Cash  and cash equivalents.........  $ 19,420     $ 19,420          $  39,649
$ 39,649
Investment securities:
   Short-term equity securities....    16,094       16,122             10,362
10,362
   Short-term other investments....     9,553        9,592                136
167
   Long-term other investments.....     4,120        4,617                585
1,451
Notes receivable:
   Current.........................      --           --              170,384
170,384
   Long-term.......................     1,300        1,300              3,702
3,702
Short-term  debt...................    15,629       15,629             76,535
76,535
Long-term debt:
   Bank  credit agreement...........   177,250      177,250           112,500
112,500
  Senior notes and subordinated
     debentures....................   261,233      270,995            260,125
264,759
   Industrial revenue bonds........     1,500        1,500              1,500
1,500
   Capitalized leases..............     1,897        1,897                 65
65
   Other...........................     6,835        6,835              2,756
2,756
</TABLE>

17.  RESTRUCTURING CHARGES
     ---------------------

      In  Fiscal  1996, the Company recorded restructuring charges  in  the
Aerospace  Fasteners  segment in the categories  shown  below.   All  costs
classified as restructuring were the direct result of formal plans to close
plants,  to  terminate employees, or to exit product lines.   Substantially
all  of  these  plans have been executed.  Other than a  reduction  in  the
Company's existing cost structure and manufacturing capacity, none  of  the
restructuring  charges  resulted  in  future  increases  in   earnings   or
represented   an   accrual  of  future  costs.   The  costs   included   in
restructuring  were predominately nonrecurring in nature and  consisted  of
the following significant components:
<TABLE>
<CAPTION>
<S>                                                 <C>
Write down of inventory to net realizable value
 related to discontinued product lines (a)......    $   156
Write down of fixed assets related to
 discontinued product lines.....................        270
Severance benefits for terminated employees
 (substantially all paid within twelve months)..      1,368
Plant closings facility costs (b)...............        389
Contract termination claims.....................        136
                                                     ------
                                                    $ 2,319
                                                     ======
(a)  Write down was required because product line was discontinued.

(b)  Includes  lease  settlements,  write-off  of  leasehold  improvements,
     maintenance,
 restoration and clean up costs.
</TABLE>

18.  RELATED PARTY TRANSACTIONS
     --------------------------

      Corporate  office  administrative expense recorded  by  FHC  and  its
redecessors was billed to the Company on a monthly basis during 1997,  1996
and 1995.  These costs represent the cost of services incurred on behalf of
affiliated  companies.  Each of these affiliated companies  has  reimbursed
FHC for such services.

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

      Prior  to  the  consolidation of Banner on  February  25,  1996,  the
Aerospace  Fasteners segment had sales to Banner of $3,663  and  $5,494  in
Fiscal 1996, and 1995, respectively.

19. LEASES
    ------

      The Company holds certain of its facilities and equipment under long-
term leases.  The minimum rental commitments under non-cancelable operating
leases  with lease-terms in excess of one year, for each of the five  years
following June 30, 1997, are as follows: $5,182 for 1998, $4,127 for  1999,
$2,937  for 2000, $2,271 for 2001, and $1,732 for 2002.  Rental expense  on
operating leases from continuing operations for Fiscal 1997, 1996 and  1995
was  $4,928,  $6,197, and $6,695, respectively.  Minimum commitments  under
capital leases for each of the five years following June 30, 1997, was $651
for  1998, $693 for 1999, $262 for 2000, $210 for 2001, and $137 for  2002,
respectively.  At  June  30,  1997, the  present  value  of  capital  lease
obligations  was $1,897. At June 30, 1997, capital assets leased,  included
in property, plant, and equipment consisted of:
<TABLE>
<CAPTION>
<S>                                     <C>
     Buildings and improvements.......  $ 1,396
     Machinery and equipment..........    8,017
     Furniture and fixtures...........      114
     Less: Accumulated depreciation...   (7,700)
                                         ------
                                        $ 1,827
                                         ======
</TABLE>

20.  CONTINGENCIES
     -------------

     CL Motor Freight ("CL") Litigation
     ----------------------------------

      The  Workers  Compensation Bureau of the State  of  Ohio  is  seeking
reimbursement from the Company for up to $5,400 for CL workers compensation
claims  which were insured under a self-insured program of CL.  The Company
has  contested  a significant portion of this claim and believes  that  the
ultimate disposition of this claim will not be material.

     Government Claims
     -----------------

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

     Environmental Matters
     ---------------------

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

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

      As  of June 30, 1997, the consolidated total recorded liabilities  of
the   Company   for  environmental  matters  approximated   $8,420,   which
represented  the  estimated probable exposures for these  matters.   It  is
reasonably  possible that the Company's total exposure  for  these  matters
could be approximately 13,200 on an undiscounted basis.

     Other Matters
     -------------

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

21.  BUSINESS SEGMENT INFORMATION
     ----------------------------

      The Company reports in two principal business segments. The Aerospace
Fasteners  segment  includes the manufacture of high performance  specialty
fasteners  and  fastening  systems.   The  Aerospace  Distribution  segment
distributes a wide range of aircraft parts and related support services  to
the  aerospace  industry. The results of Fairchild Technologies,  which  is
primarily  engaged in the designing and manufacturing of capital  equipment
and   systems   for  recordable  compact  disc  and  advance  semiconductor
manufacturing, are reported under Corporate and Other, along  with  results
two smaller operations.  Prior to the Merger on March 13, 1996, the Company
operated in the Communications Services segment.

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

                                          1997         1996         1995
Sales:                                 ---------    ---------    ---------
<S>                                    <C>          <C>          <C>
  Aerospace Fasteners..............    $ 269,026    $ 218,059    $ 215,364
  Aerospace Distribution (a).......      411,765      129,973         --
  Corporate and Other..............       66,382       67,330       41,476
  Eliminations (b).................      (15,213)      (5,842)        --
                                       ---------    ---------    ---------
Total Sales........................    $ 731,960    $ 409,520    $ 256,840
                                       =========    =========    =========
Operating Income (Loss):
  Aerospace Fasteners (c)..........    $  17,390    $     135    $ (11,497)
  Aerospace Distribution (a).......       30,891        5,625         --
  Corporate and Other..............      (17,764)     (14,875)     (20,420)
                                       ---------    ---------    ---------
Operating Income (Loss)............    $  30,517    $  (9,115)   $ (31,917)
                                       =========    =========    =========
Capital Expenditures:
  Aerospace Fasteners..............    $   8,964    $   3,841    $   4,974
  Aerospace Distribution...........        4,787        1,556         --
  Corporate and Other..............        8,365        1,225          937
                                       ---------    ---------    ---------
Total Capital Expenditures.........    $  22,116    $   6,622    $   5,911
                                       =========    =========    =========
Depreciation and Amortization:
  Aerospace Fasteners..............    $  16,112    $  14,916    $  15,619
  Aerospace Distribution...........        5,138        1,341         --
  Corporate and Other..............        4,685        5,396        5,260
                                       ---------    ---------    ---------
Total Depreciation and Amortization    $  25,935    $  21,653    $  20,879
                                       =========    =========    =========
Identifiable Assets at June 30,:
  Aerospace Fasteners..............   $  346,533   $  252,200    $ 290,465
  Aerospace Distribution...........      428,436      329,477         --
  Corporate and Other..............      292,364      428,261      559,829
                                       ---------    ---------    ---------
Total Identifiable Assets..........   $1,067,333   $1,009,938    $ 850,294
                                       =========    =========    =========

(a)   Effective  February  25,  1996,  the  Company  became  the   majority
shareholder of Banner Aerospace, Inc. and, accordingly, began consolidating
their results.

(b)  Represents intersegment sales from the Aerospace Fasteners segment  to
the Aerospace Distribution segment.

(c) Includes restructuring charges of $2.3 million in Fiscal 1996.
</TABLE>

22.  FOREIGN OPERATIONS AND EXPORT SALES
     -----------------------------------

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

                                         1997         1996         1995
Sales by Geographic Area:              ---------    ---------    ---------
<S>                                   <C>          <C>          <C>
  United States....................   $  595,334   $  301,957   $  175,101
  Europe...........................      136,626      107,186       80,945
  Other............................         --            377          794
                                       ---------    ---------    ---------
Total Sales........................   $  731,960   $  409,520   $  256,840
                                       =========    =========    =========
Operating Income by Geographic Area:
  United States....................   $   24,299   $  (14,903)  $  (31,522)
  Europe...........................        6,218        5,936         (432)
  Other............................         --           (148)          37
                                       ---------    ---------    ---------
Total Operating Income.............   $   30,517   $   (9,115)   $ (31,917)
                                       =========    =========    =========
</TABLE>

Identifiable Assets by Geographic
<TABLE>
<CAPTION>
<S>                                   <C>          <C>          <C>
Area at June 30,:
  United States....................   $  857,943   $  932,311   $  763,734
  Europe...........................      209,390       77,627       85,668
  Other............................         --           --            892
                                       ---------    ---------    ---------
Total Identifiable Assets..........   $1,067,333   $1,009,938   $  850,294
                                       =========    =========    =========
</TABLE>

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

                                         1997         1996         1995
                                       ---------    ---------    ---------
<S>                                   <C>          <C>          <C>
Export Sales
  Europe...........................   $   48,490   $   27,330   $   13,329
  Asia (excluding Japan)...........       29,145        8,920        1,526
  Japan............................       19,819       11,958        4,140
  Canada...........................       17,955        8,878        2,810
  Other............................       15,907        8,565          911
                                       ---------    ---------    ---------
Total Export Sales.................   $  131,316   $   65,651   $   22,716
                                       =========    =========    =========
</TABLE>

23.  QUARTERLY FINANCIAL DATA (UNAUDITED)
     ------------------------------------

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

-------------------------------------------------------------------------------
---------------
Fiscal  1997 quarters ended           Sept. 29       Dec. 29         Mar.  30
June 30
-------------------------------------------------------------------------------
---------------
<S>                                  <C>          <C>             <C>
<C>
Net  sales..........................  $146,090       $159,912        $190,782
$241,676
Gross  profit.......................    39,810         38,775          52,788
73,750
Earnings (loss) from continuing
  operations........................    (5,052)        (3,638)            435
7,227
     per  share......................      (.31)         (.22)            .03
 .42
Earnings from discontinued
   operations, net..................       434            661             395
1,659
     per  share......................       .03           .04             .02
 .10
Net  earnings (loss)................    (4,618)        (2,977)             40
8,886
     per  share......................      (.28)          (.18)            --
 .51
Market price of Class A Stock:
   High.............................      17          17 3/4          15  3/8
18
   Low..............................    12 1/4        14 3/8          12  7/8
11 5/8
   Close............................      16          14 5/8          13  3/8
18
</TABLE>

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------
---------------
Fiscal  1996 quarters ended             Oct. 1       Dec. 31        March  31
June 30
-------------------------------------------------------------------------------
---------------
<S>                                  <C>           <C>            <C>
<C>
Net  sales..........................  $ 74,929      $  71,419        $109,189
$153,983
Gross  profit.......................    15,502         15,134          23,856
40,418
Earnings (loss) from continuing
   operations.......................   (13,219)      (12,818)         (8,151)
527
     per  share......................      (.82)         (.80)           9.04
 .03
Earnings from discontinued
   operations, net..................     7,803          7,222           1,885
177
     per  share......................       .24           .21             .11
 .01
Gain (loss) from disposal of
   discontinued operations, net.....       (20)            (7)        224,416
(7,673)
     per  share......................      --            --              3.66
(.45)
Extraordinary items, net...........      --             --           (10,436)
--
     per  share......................      --            --             (.62)
--
Net  earnings  (loss)................    (5,436)       (5,603)        207,714
(6,969)
     per  share......................      (.34)         (.35)          12.42
(.41)
Market price range of Class A Stock
   High.............................         6         8 3/4           9  7/8
15 7/8
   Low..............................     2 7/8         4  3/4               8
9 1/4
   Close............................     5 1/8         8 1/2           9  3/8
14 5/8
</TABLE>

      Included  in  earnings (loss) from continuing operations  are  (i)  a
$2,528  nonrecurring  gain from the sale of SBC in the  fourth  quarter  of
Fiscal  1997,  (ii)  charges  to  reflect the  cost  of  restructuring  the
Company's  Aerospace Fasteners segment, of $285, $959  and  $1,075  in  the
second,  third and fourth quarters of Fiscal 1996, respectively, and  (iii)
nonrecurring income of $161,406 resulting primarily from the  gain  on  the
merger of FCSC with STI in the third quarter of Fiscal 1996.  Earnings from
discontinued operations, net, includes the results of DME and Data in  each
Fiscal 1996 quarter. Extraordinary items relate to the early extinguishment
of debt by the Company.  (See Note 7).

24.  SUBSEQUENT EVENTS
     -----------------

      On November 20, 1997, Shared Technologies Fairchild Inc. ("STFI"),  a
corporation  of which the Company owns approximately 42% of the outstanding
common   stock,   entered   into  a  merger   agreement   with   Intermedia
Communications Inc. ("Intermedia") pursuant to which holders of STFI common
stock  will  receive  $15.00  per share in  cash,  (the  "STFI  Sale").  In
connection  with the STFI Sale, the Company has received approximately  $85
million  in  cash (before tax) in exchange for certain preferred  stock  of
STFI  and expects to receive an additional $93 million in cash (before tax)
in  the first three months of 1998 in exchange for the 6,225,000 shares  of
common  stock  of  STFI  owned by the Company. The  Intermedia  transaction
replaces an earlier merger agreement with the Tel-Save Holdings, Inc. under
which  the  Company would have received consideration primarily  in  common
stock of Tel-Save Holdings, Inc.

       The  results  of  STFI  have  been  accounted  for  as  discontinued
operations. The net sales of STFI totaled, $91,290 and $108,710 in 1996 and
1995,  respectively. Net earnings from discontinued operations was  $3,149,
$9,849  and $7,901, in 1997, 1996, and 1995, respectively. Gain on disposal
of  discontinued operations includes a $163,130 nontaxable  gain  resulting
from the Merger (See Note 3).

     On December 8, 1997, Banner and eight of its subsidiaries entered into
an Asset Purchase Agreement pursuant to which such subsidiaries have agreed
to  transfer  substantially  all  of  their  assets  to  AlliedSignal  Inc.
("Allied")  for approximately $345 million of common stock of  Allied  (the
"Disposition").  The  assets transferred to Allied  consists  primarily  of
Banner's hardware group, which includes the distribution of bearings, nuts,
bolts,  screws,  rivets  and  other type of fasteners.  Approximately  $170
million  of  the common stock received from Allied will be  used  to  repay
outstanding term loans of Banner's subsidiaries and related fees.
                   Report of Independent Public Accountants
                   ----------------------------------------



To The Fairchild Corporation:

We  have  audited  the  accompanying consolidated  balance  sheets  of  The
Fairchild Corporation (a Delaware corporation) and subsidiaries as of  June
30,  1997  and  1996, and the related consolidated statements of  earnings,
stockholders' equity and cash flows for the years ended June 30, 1997, 1996
and  1995.   These  financial  statements are  the  responsibility  of  the
Company's management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In  our opinion, the financial statements referred to above present fairly,
in   all  material  respects,  the  financial  position  of  The  Fairchild
Corporation and subsidiaries as of June 30, 1997 and 1996, and the  results
of their operations and their cash flows for the years ended June 30, 1997,
1996 and 1995, in conformity with generally accepted accounting principles.






                                              Arthur Andersen LLP

Washington, D.C.
September 5, 1997

(except with respect to the matter discussed in
 Note 24, as to which the date is December 8, 1997)
                                  PART IV

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

     The following documents are filed as part of this Report:

(a)(1)  Financial Statements.

      All financial statements of the registrant as set forth under Item  8
of this report on Form 10-K (see index on Page 14).

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

             Schedule             Number                        Description
Page
 ---------------             -----------                                ---
-

       I        Condensed Financial Information of Parent Company      80


     II         Valuation and Qualifying Accounts                      83



     All other schedules are omitted because they are not required.

                 Report of Independent Public Accountants
                 ----------------------------------------


To The Fairchild Corporation:

We  have  audited in accordance with generally accepted auditing standards,
the  consolidated  financial statements of The  Fairchild  Corporation  and
subsidiaries included in this Form 10-K and have issued our report  thereon
dated  September 5, 1997.  Our audits were made for the purpose of  forming
an  opinion  on  the  basic financial statements taken  as  a  whole.   The
schedules  listed in the index on the preceding page is the  responsibility
of  the  Company's management and is presented for the purpose of complying
with the Securities and Exchange Commission's rules and is not part of  the
basic  financial  statements.  This schedule  has  been  subjected  to  the
auditing procedures applied in the audits of the basic financial statements
and,  in  our opinion, fairly states in all material respects the financial
data  required  to be set forth therein in relation to the basic  financial
statements taken as a whole.




                                                 Arthur Andersen LLP

Washington, D.C.
September 5, 1997

(except with respect to the matter discussed in
 Note 24, as to which the date is December 8, 1997)
(a)(3)  Exhibits.

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

    (b)     Registrant's Amended and Restated By-Laws, as amended as of
             November  21, 1996 (incorporated by reference to the  December
29,             1996 10-Q).

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

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

    (c)     Form of Indenture between Registrant and J. Henry Schroder Bank
            & Trust Company, pursuant to which Registrant's 13-1/8%
            Subordinated Debentures due 2006 (the "Senior Debentures") were
            issued (the "Debenture Indenture"), and specimen of Senior
            Debenture (incorporated by reference to Registration Statement
            No. 33-3521 on Form S-2).

    (d)     First Supplemental Indenture dated as of November 26, 1986, to
            the Debenture Indenture (incorporated by reference to the
            Registrant's Quarterly Report on Form 10-Q for the quarter
            ended December 31, 1986 (the "December 1986 10-Q").

    (e)     Form of Indenture between Registrant and Manufacturers Hanover
            Trust Company pursuant to which Registrant's 12-1/4% Senior
            Subordinated Notes due 1996 (the "Senior Notes") were issued
            (the"Note Indenture"), and specimen of Senior Note
            (incorporated by reference to Registration Statement No.
            33-03521 on Form S-2).

    (f)     First Supplemental Indenture dated as of November 26, 1986, to
            the Note Indenture (incorporated by reference to the December
            1986 10-Q).

    (g)     Indenture between Registrant and Connecticut National Bank (as
            successor to National Westminster Bank) dated as of October 15,
            1986, pursuant to which Registrant's Intermediate Subordinated
            Debentures due 2001 (the "Intermediate Debentures") were
            issued, and specimen of Intermediate Debenture (incorporated by
            reference to Registrant's Quarterly Report on Form 10-Q for the
            quarter ended September 30, 1986 (the "September 1986 10-Q")).

    (h)     Indenture between Rexnord Acquisition Corp. ("RAC") and Bank of
            New York (as successor to Irving Trust Company) dated as of
            March 2, 1987, pursuant to which RAC's Senior Subordinated
            Debentures due 1999 (the "Rexnord Senior Debentures") were
            issued (the "Rexnord Senior Indenture"), and specimen of
            Rexnord Senior Debenture incorporated by reference from
            Registrants Annual Report on Form 10-K for fiscal year ended
            June 30, 1987 (the "1987 10-K").

    (i)     First Supplemental Indenture between Rexnord Inc. ("Rexnord")
            (as successor to RAC) and Irving Trust Company dated as of July
            1, 1987, to the Rexnord Senior Indenture (incorporated by
            reference to Registration Statement No. 33-15359 on Form S-2).

    (j)     Second Supplemental Indenture between Rexnord Holdings Inc.,
            now know as RHI Holdings, Inc. ("RHI") (as successor to
            Rexnord) and Irving Trust Company dated as of August 16, 1988,
            to the Rexnord Senior Indenture (incorporated by reference to
            Registrant's Annual Report on Form 10-K for the fiscal year
            ended June 30, 1988 (the "1988 10-K")).

    (k)     Indenture between Registrant and Norwest Bank Minneapolis, N.A.
            dated as of March 2, 1987, pursuant to which Registrant's
            Junior Subordinated Debentures due 2007 (the "Junior
            Debentures") were issued, and specimen of Junior Debenture
            (incorporated by reference to Final Amendment to Tender Offer
            Statement on Schedule 14D-1 of Banner Acquisition Corp. ("BAC")
            dated March 9, 1987).

    (l)     First Supplemental Indenture between Registrant and Norwest
            Bank, Minnesota Bank, N.A., dated as of February 28, 1991, to
            Indenture dated as of March 2, 1987, relating to the Junior
            Debentures (incorporated by reference to the 1991 10-K).

    (m)     Securities Purchase Agreement dated as of October 15, 1986, by
            and among Registrant and each of the Purchasers of the
            Intermediate Debentures (incorporated by reference to the
            September 1986 10-Q).

    (n)     Securities Purchase Agreement dated as of March 2, 1987, by and
            among Registrant, RAC and each of the Purchasers of the Junior
            Debentures, the Rexnord Senior Debentures and other securities
            (incorporated by reference to the 1987 10-K).

    (o)     Registration Rights Agreement dated as of October 15, 1986, by
            and among Registrant and each of the purchasers of the
            Intermediate Debentures (incorporated by reference to the
            September 1986 10-Q).

    (p)     Registration Rights Agreement dated as of March 2, 1987, by and
            among Registrant, RAC and each of the purchasers of the Junior
            Debentures, the Rexnord Senior Debentures and other securities
            (incorporated by reference to Registrant's Report on Form 8-K
            dated March 17, 1987).

  10  (a)     Deferred Compensation Agreement between Registrant and Samuel
J.
            Krasney dated July 14, 1972, as amended November 17, 1978,
            September 3, 1985 (the "Krasney Deferred Compensation
            Agreement") incorporated by reference to Registrant's
            Annual Report on Form 10-K for the fiscal year ended
            June 30, 1985).

    (b)     Amendment to the Krasney Deferred Compensation Agreement dated
            September 6, 1990 (incorporated by reference to 1991 10-K).

    (c)     Amended and Restated Employment Agreement between Registrant
            and Samuel J. Krasney dated April 24, 1990 (incorporated by
            reference to the 1990 10-K).

    (d)     Letter Agreements dated August 4, 1993 among Samuel J. Krasney,
            The Fairchild Corporation and Jeffrey J. Steiner (incorporated
            by reference to 1993 10-K).

    (e)     1988 U.K. Stock Option Plan of Banner Industries, Inc.
            (incorporated by reference to the 1988 10-K).

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

    (g)     Amended and Restated Employment Agreement between Registrant
            and Jeffrey J. Steiner dated September 10, 1992 (incorporated
            by reference to 1993 10-K).

    (h)     Letter Agreement dated October 23, 1991 between Registrant and
            Eric Steiner (incorporated by reference to 1992 10-K).

    (i)     Letter Agreement dated October 23, 1991 between Registrant and
            John D. Jackson (incorporated by reference to 1992 10-K).

    (j)     Letter Agreement dated October 23, 1991 between Registrant and
            Michael T. Alcox (incorporated by reference to 1992 10-K).

    (k)     Letter Agreement dated October 23, 1991 between Registrant and
            Donald E. Miller (incorporated by reference to 1992 10-K).

    (l)     Letter Agreement dated October 23, 1991 between Registrant and
            John L. Flynn (incorporated by reference to 1992 10-K).

    (m)     Letter Agreement dated April 8, 1993 between Registrant and
            Thomas Flaherty (incorporated by reference to 1993 10-K).

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

    (o)     Letter Agreement dated October 21, 1994, as amended December
            21, 1994, between Registrant and Eric Steiner
            (incorporated by reference to the 1995 10-K).

    (p)     Letter Agreement dated October 21, 1994, as amended December
            21, 1994, between Registrant and Michael T. Alcox
            (incorporated by reference to the 1995 10-K).

    (q)     Letter Agreement dated October 21, 1994, as amended December
            21, 1994, between Registrant and Donald E. Miller
            (incorporated by reference to the 1995 10-K).

    (r)     Letter Agreement dated October 21, 1994, as amended December
            21, 1994, between Registrant and John L Flynn
            (incorporated by reference to the 1995 10-K).

    (s)     Letter Agreement dated October 21, 1994, as amended December
            21, 1994, between Registrant and Thomas J. Flaherty
            (incorporated by reference to the 1995 10-K).

     (t)      Letter Agreement dated September 9, 1996, between  Registrant
and
            Colin M. Cohen (incorporated by reference to the 1997 10-K).

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

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

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

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

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

    (w)     Credit Agreement dated as of March 13, 1996, among Fairchild
            Holding Corporation ("FHC"), Citicorp USA, Inc. and certain
            financial institutions (incorporated by reference to the 1996
            10-K).

     (x)(i)   Restated and Amended Credit Agreement dated as  of  July  26,
1996,
            (the "FHC Credit Agreement"), among FHC, Citicorp USA, Inc. and
            certain financial institutions.

     (x)(ii)  Amendment No. 1, dated as of January 21,  1997,  to  the  FHC
Credit
            Agreement dated as of March 13, 1996 (incorporated by reference
            to the March 30, 1997 10-Q).

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

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

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

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

   (y)(ii)  Amendment No. 1 dated as of July 29, 1996, to the RHI Credit
             Agreement dated as of May 27, 1996 (incorporated by  reference
to
            the 1996 10-K).

   (y)(iii) Amendment No. 2 dated as of April 7, 1997, to the RHI Credit
             Agreement dated as of May 27, 1996 (incorporated by  reference
to
            the 1997 10-K).

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

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

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

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

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

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

  (ac)(iii) Employment Agreement between Fairchild France, Inc., Fairchild
            CDI, S.A., and Jacques Moskovic, dated as of April 18, 1997
            (incorporated by reference to the 1995 10-K).

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

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

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

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

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

 23         Consent of Arthur Andersen LLP, independent public
            accountants (incorporated by reference to the 1997 10-K).

 27   Financial Data Schedules (incorporated by reference to the
            1997 10-K).

 99(a)      Financial statements, related notes thereto and Auditors'
             Report  of  Banner Aerospace, Inc. for the fiscal  year  ended
March
            31, 1997 (incorporated by reference to the Banner Aerospace,
            Inc. Form 10-K for fiscal year ended March 31, 1997).

 99(b)      Financial statements, related notes thereto and Auditors'
            Report of Shared Technologies Fairchild, Inc. for the fiscal
            year ended December 31, 1996 (incorporated by reference to
            the Registrant's Form 8-K filed on December 8, 1997).

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

*Filed herewith.

(b)  Reports on Form 8-K

      Registrant  filed no reports on Form 8-K during the last  quarter  of
Fiscal 1997.
                                SIGNATURES
                                ----------

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

                    THE FAIRCHILD CORPORATION



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



Date:  December 15, 1997


SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
<TABLE>
<CAPTION>

                         THE FAIRCHILD CORPORATION
           CONDENSED FINANCIAL STATEMENTS OF THE PARENT COMPANY
                     BALANCE SHEETS (NOT CONSOLIDATED)
                              (In thousands)

                                                  June 30,     June 30,
                                                    1997         1996
<S>                                              <C>           <C>
                    ASSETS                                              
Current assets:                                                         
  Cash and cash equivalents                       $     234    $   1,887
  Accounts receivable                                   384          179
  Prepaid expenses and other current assets             250          192
Total current assets                                    868        2,258
                                                                        
Property, plant and equipment, less accumulated         486          628
depreciation
Investments in subsidiaries                         390,355      391,958
Investments and advances, affiliated companies        1,435        3,047
Goodwill                                              4,133        4,263
Noncurrent tax assets                                29,624       14,548
Other assets                                          2,403        3,510
Total assets                                      $ 429,304    $ 420,212
                                                                        
     LIABILITIES AND STOCKHOLDERS' EQUITY                               
Current liabilities:                                                    
  Accounts payable and accrued expenses           $   8,315    $   7,735
Total current liabilities                             8,315        7,735
                                                                        
Long-term debt                                      190,567      180,141
Other long-term liabilities                             797        1,168
Total liabilities                                   199,679      189,044
Stockholders' equity:                                                   
Class A common stock                                  2,023        2,000
Class B common stock                                    263          263
Retained earnings and other equity                  227,339      228,905
Total stockholders' equity                          229,625      231,168
Total liabilities and stockholders' equity        $  429,304    $ 420,212
</TABLE>

The accompanying notes are an integral part of these condensed financial
statements.

                                                                 Schedule I
<TABLE>
<CAPTION>

    THE FAIRCHILD CORPORATION AND                        
      CONSOLIDATED SUBSIDIARIES
CONDENSED FINANCIAL STATEMENTS OF THE                    
               COMPANY
      STATEMENT OF EARNINGS (NOT                         
            CONSOLIDATED)
            (In thousands)                               
                                                                            
                                         For the                
                                       Years Ended
                                        June 30,
                                          1997         1996        1995    
Costs and Expenses:                                                         
<S>                                    <C>           <C>         <C>        
  Selling, general & administrative          3,925       5,148       3,920  
  Amortization of goodwill                     130         130         130  
                                             4,055       5,278       4,050  
                                                                            
Operating income                            (4,055 )     (5,278 )     (4,050 )
                                                                            
Net interest expense                        25,252      28,387      29,027  
                                                                            
Investment income, net                          16           1        (434 )
Equity in earnings of affiliates               480         269        (409 )
Nonrecurring expense                            --      (1,064 )         --  
Loss from continuing operations before     (28,811 )    (34,459 )    (33,920 )
taxes
Income tax provision (benefit)             (15,076 )    (12,509 )    (18,838 )
Loss before equity in earnings of          (13,735 )    (21,950 )    (15,082 )
subsidiaries
Equity in earnings of subsidiaries          15,066     211,656     (18,742 )
Net earnings (loss)                          1,331     189,706     (33,824 )
                                                                            
</TABLE>

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

THE FAIRCHILD CORPORATION

              CONDENSED FINANCIAL STATEMENTS OF THE PARENT COMPANY
                   STATEMENT OF CASH FLOWS (NOT CONSOLIDATED)
                                 (IN THOUSANDS)
<CAPTION>

                                        For the
                                         Years
                                         Ended
                                        June 30,
                                          1997        1996       1995
<S>                                    <C>          <C>          <C>
Cash provided by (used for) operations  $(14,271 )   $ 36,916    $(9,607)
                                                                        
 Investing activities:                                                  
   Equity investments in affiliates        2,092         (21 )      1,356
                                           2,092         (21 )      1,356
 Financing activities:                                                  
   Proceeds from issuance of               9,400                   7,400
intercompany debt                                          -
   Debt repayments                                   (42,265 )           
                                               -                       -
   Issuance of common stock                1,126       1,509            
                                                                       -
                                          10,526     (40,756 )      7,400
 Net decrease in cash                    $(1,653 )    $(3,861 )   $  (851)
</TABLE>

The accompanying notes are an integral part of these condensed financial
statements.
                                                                 Schedule I
                                     
          THE FAIRCHILD CORPORATION AND CONSOLIDATED SUBSIDIARIES
               CONDENSED FINANCIAL STATEMENTS OF THE COMPANY
             NOTES TO FINANCIAL STATEMENTS (NOT CONSOLIDATED)
                              (In thousands)


1.   BASIS OF PRESENTATION

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

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

                                        June 30,    June 30,
                                          1997        1996
<S>                                    <C>         <C>
    12% Inter. Debentures Due 2001      $ 128,000   $ 123,600
    13 1/8% Sub. Debentures Due 2006       35,856      35,856
    13% Jr. Sub. Debenture Due 2007        30,063      25,063
                                        $ 193,919   $ 184,519
  </TABLE>
  
  Maturities of long-term debt for the next five years are as follows: no
  maturities in 1998, $30,335 in 1999, $31,520 in 2000, $31,713 in 2001,
  and $37,320 in 2002.
  
3.   DIVIDENDS FROM SUBSIDIARIES

  Cash dividends paid to The Fairchild Corporation by its consolidated
  subsidiaries were $10,000, $42,100, and $10,000 in Fiscal 1997, 1996,
  and 1995, respectively.
  
4.   CONTINGENCIES

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


SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
-----------------------------------------------

     Changes in the allowance for doubtful accounts are as follows:

<TABLE>
<CAPTION>
                                         For the Years Ended June 30,
(In thousands)                        ----------------------------------
                                        1997         1996         1995
                                      --------     --------     --------
<S>                                   <C>          <C>          <C>
Beginning balance.................    $  6,327     $  3,971     $  2,284
Charged to cost and expenses......       1,999        2,099        1,868
Charges to other accounts (a).....         491        1,970          (86)
Amounts written off...............        (714)      (1,713)         (95)
                                       -------      -------      -------
Ending balance....................    $  8,103     $  6,327     $  3,971
                                       =======      =======      =======

(a)   Recoveries of amounts written off in prior periods, foreign  currency
translation and the change in related noncurrent taxes.
</TABLE>

      Included  in  Fiscal 1996 is $2,348 relating to the consolidation  of
Banner Aerospace, Inc. and $(309) from the deconsolidation of the Fairchild
Communications Services Company as a result of the Merger.