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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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


 For the Quarterly Period Ended September 30, 2001 Commission File Number 1-6560


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

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

                45025 Aviation Drive, Suite 400, Dulles, VA 20166
                    (Address of principal executive offices)

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


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past ninety (90) days.

                                    YES X NO

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

                                                        Outstanding at
  Title of Class                                      September 30, 2001
  Class A Common Stock, $0.10 Par Value                   22,527,801
  Class B Common Stock, $0.10 Par Value                    2,621,502


--------------------------------------------------------------------------------







        THE FAIRCHILD CORPORATION INDEX TO QUARTERLY REPORT ON FORM 10-Q
                    FOR THE QUARTER ENDED SEPTEMBER 30, 2001






                                                                            Page
PART I.FINANCIAL INFORMATION

  Item 1.  Condensed Consolidated Balance Sheets as of September 30, 2001
            (Unaudited)and June 30, 2001 ..................................    3

           Consolidated Statements of Earnings (Unaudited) for the Three
           Months ended September 30, 2001 and October 1, 2000 ............    5

           Condensed Consolidated Statements of Cash Flows (Unaudited)
           for the Three Months ended September 30, 2001 and October 1,
           2000 ...........................................................    6

           Notes to Condensed Consolidated Financial Statements (Unaudited)    7

  Item 2.  Management's Discussion and Analysis of Results of Operations
           and Financial Condition ........................................   18

  Item 3.  Quantitative and Qualitative Disclosure About Market Risk ......   23


PART II. OTHER INFORMATION

  Item 1.  Legal Proceedings ..............................................   25

  Item 5.  Other Information ..............................................   25

  Item 6.  Exhibits and Reports on Form 8-K ...............................   25


     All references in this Quarterly Report on Form 10-Q to the terms "we,"
"our," "us," the "Company" and "Fairchild" refer to The Fairchild Corporation
and its subsidiaries. All references to "fiscal" in connection with a year shall
mean the 12 months ended June 30.








                          PART I. FINANCIAL INFORMATION

                          ITEM 1. FINANCIAL STATEMENTS



             THE FAIRCHILD CORPORATION AND CONSOLIDATED SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                September 30, 2001 (Unaudited) and June 30, 2001
                                 (In thousands)


                                     ASSETS
                                                                                                       
                                                                                              9/30/01             6/30/01
                                                                                         ------------------   -----------------
CURRENT ASSETS:                                                                                                     (*)
---------------
Cash and cash equivalents, $1,146 and $1,184 restricted                                          $  14,335           $  14,951
Short-term investments                                                                               2,633               3,105
Accounts receivable-trade, less allowances of $7,453 and $6,951                                    129,496             121,703
Inventories:
   Finished goods                                                                                  144,010             146,416
   Work-in-process                                                                                  35,175              30,813
   Raw materials                                                                                    12,246              11,758
                                                                                         ------------------   -----------------
                                                                                                   191,431             188,987
Prepaid expenses and other current assets                                                           65,114              62,163
                                                                                         ------------------   -----------------
Total Current Assets                                                                               403,009             390,909

Property, plant and equipment, net of accumulated
  depreciation of $166,035 and $156,914                                                            146,861             149,108
Net assets held for sale                                                                            13,618              17,999
Goodwill                                                                                           418,455             419,149
Investments and advances, affiliated companies                                                       3,747               2,813
Prepaid pension assets                                                                              65,156              65,249
Deferred loan costs                                                                                 12,431              12,916
Real estate investment                                                                             110,030             110,505
Long-term investments                                                                                7,684               7,779
Other assets                                                                                        20,438              33,438
                                                                                         ------------------   -----------------
TOTAL ASSETS                                                                                   $ 1,201,429         $ 1,209,865
                                                                                         ------------------   -----------------






*Condensed from audited financial statements.


The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.








             THE FAIRCHILD CORPORATION AND CONSOLIDATED SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                September 30, 2001 (Unaudited) and June 30, 2001
                                 (In thousands)


                      LIABILITIES AND STOCKHOLDERS' EQUITY


                                                                                                       
                                                                                              9/30/01             6/30/01
                                                                                         ------------------   -----------------
CURRENT LIABILITIES:                                                                                                (*)
--------------------
Bank notes payable and current maturities of long-term debt                                      $  25,031           $  26,528
Accounts payable                                                                                    53,081              57,625
Accrued liabilities:
    Salaries, wages and commissions                                                                 33,045              29,894
    Employee benefit plan costs                                                                      5,470               6,421
    Insurance                                                                                       13,177              13,923
    Interest                                                                                        12,641               7,016
    Other accrued liabilities                                                                       37,169              38,031
                                                                                         ------------------   -----------------
Total Current Liabilities                                                                          179,614             179,438

LONG-TERM LIABILITES:
Long-term debt, less current maturities                                                            460,529             470,530
Fair value of interest rate contract                                                                11,671               6,422
Other long-term liabilities                                                                         25,465              25,729
Retiree health care liabilities                                                                     42,605              41,886
Noncurrent income taxes                                                                            110,748             124,007
                                                                                         ------------------   -----------------
TOTAL LIABILITIES                                                                                  830,632             848,012

STOCKHOLDERS' EQUITY:
Class A common stock, $0.10 par value; authorized 40,000 shares, 30,335 shares
  issued and
  22,528 shares outstanding                                                                          3,034               3,034
Class B common stock, $0.10 par value; authorized 20,000
   shares, 2,622 shares issued and outstanding                                                         262                 262
Paid-in capital                                                                                    232,820             232,820
Treasury stock, at cost, 7,807 shares of Class A common stock                                     (76,563)            (76,563)
Retained earnings                                                                                  243,188             246,788
Notes due from stockholders                                                                        (1,768)             (1,768)
Cumulative other comprehensive income                                                             (30,176)            (42,720)
                                                                                         ------------------   -----------------
TOTAL STOCKHOLDERS' EQUITY                                                                         370,797             361,853
                                                                                         ------------------   -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                     $ 1,201,429         $ 1,209,865
                                                                                         ------------------   -----------------



*Condensed from audited financial statements


The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.








             THE FAIRCHILD CORPORATION AND CONSOLIDATED SUBSIDIARIES
                                       CONDENSED CONSOLIDATED STATEMENTS OF
                                 EARNINGS (Unaudited) For The Three (3) Months
                                 Ended September 30, 2001 and October 1, 2000
                                                 (In thousands, except per share data)

                                                                                                     
REVENUE:                                                                                     09/30/01           10/01/00
                                                                                         ------------------ ------------------
   Net sales                                                                                   $   165,073        $   148,367
   Rental revenue                                                                                    1,733              1,668
   Other income, net                                                                                 1,337                879
                                                                                         ------------------ ------------------
                                                                                                   168,143            150,914
 COSTS AND EXPENSES:
   Cost of goods sold                                                                              124,403            113,591
   Cost of rental revenue                                                                            1,234              1,103
   Selling, general & administrative                                                                31,756             28,790
   Amortization of intangibles                                                                           -              3,134
                                                                                         ------------------ ------------------
                                                                                                   157,393            146,618

 OPERATING INCOME                                                                                   10,750              4,296
 Interest expense                                                                                   12,909             12,983
 Interest income                                                                                     (482)              (524)
                                                                                         ------------------ ------------------
 Net interest expense                                                                               12,427             12,459

 Investment loss                                                                                     (386)              (380)
 Change in fair market value of interest rate contract                                             (5,249)              (470)
                                                                                         ------------------ ------------------
 Loss from continuing operations before taxes                                                      (7,312)            (9,013)
 Income tax benefit                                                                                  3,680              3,574
 Equity in earnings (loss) of affiliates, net                                                           33                (6)
                                                                                         ------------------ ------------------
 NET LOSS                                                                                      $   (3,599)        $   (5,445)
                                                                                         ------------------ ------------------
 Other comprehensive income (loss), net of tax:
 Foreign currency translation adjustments                                                           12,677            (4,080)
 Derivative adjustments                                                                                 19              (528)
 Unrealized periodic holding changes on securities                                                   (152)              (761)
                                                                                         ------------------ ------------------
 Other comprehensive loss                                                                           12,544            (5,369)
                                                                                         ------------------ ------------------
 COMPREHENSIVE INCOME (LOSS)                                                                    $    8,945        $  (10,814)
                                                                                         ------------------ ------------------
BASIC AND DILUTED EARNINGS PER SHARE:
NET LOSS                                                                                       $    (0.14)        $    (0.22)
 Other comprehensive income (loss), net of tax:
 Foreign currency translation adjustments                                                             0.50             (0.16)
 Derivative adjustments                                                                                  -             (0.02)
 Unrealized periodic holding changes on securities                                                  (0.01)             (0.03)
                                                                                         ------------------ ------------------
 Other comprehensive loss                                                                             0.49             (0.21)
                                                                                         ------------------ ------------------
 COMPREHENSIVE INCOME (LOSS)                                                                    $     0.35        $    (0.43)
                                                                                         ------------------ ------------------
Weighted average shares outstanding:
  Basic                                                                                             25,149             25,068
                                                                                         ------------------ ------------------
  Diluted                                                                                           25,149             25,068
                                                                                         ------------------ ------------------

The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.








             THE FAIRCHILD CORPORATION AND CONSOLIDATED SUBSIDIARIES
                                      CONDENSED CONSOLIDATED STATEMENTS OF CASH
                                 FLOWS (Unaudited) For The Three (3) Months
                                 Ended September 30, 2001 and October 1, 2000
                                 (In thousands)


                                                                                                      
                                                                                              9/30/01            10/1/00
                                                                                         ------------------  -----------------
Cash flows from operating activities:
        Net earnings                                                                             $ (3,599)          $ (5,445)
        Depreciation and amortization                                                                7,511             10,950
        Amortization of deferred loan fees                                                             503                456
        Unrealized holding loss on derivatives                                                       5,249                470
        Undistributed (earnings) loss of affiliates, net                                              (33)                  9
        Change in assets and liabilities                                                           (2,368)           (31,545)
                                                                                         ------------------  -----------------
        Net cash provided by (used for) operating activities                                         7,263           (25,105)
 Cash flows from investing activities:
        Purchase of property, plant and equipment                                                  (4,235)            (3,861)
        Net proceeds received from the sale of property, plant, and equipment                        3,710                  -
        Net proceeds received from (used for) investment securities                                   (53)              4,759
        Real estate investment                                                                       (211)            (1,601)
        Equity investment in affiliates                                                              (394)                  -
        Proceeds received from net assets held for sale                                              4,358              2,211
                                                                                         ------------------  -----------------
        Net cash provided by investing activities                                                    3,175              1,508
 Cash flows from financing activities:
        Proceeds from issuance of debt                                                              35,896             23,453
        Debt repayments                                                                           (47,394)            (2,608)
        Issuance of Class A common stock                                                                 -                194
                                                                                         ------------------  -----------------
        Net cash provided by (used for) financing activities                                      (11,498)             21,039
       Effect of exchange rate changes on cash                                                         444              (416)
                                                                                         ------------------  -----------------
       Net change in cash and cash equivalents                                                       (616)            (2,974)
       Cash and cash equivalents, beginning of the year                                             14,951             35,790
                                                                                         ------------------  -----------------
       Cash and cash equivalents, end of the period                                               $ 14,335           $ 32,816
                                                                                         ------------------  -----------------














The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.






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

1.       FINANCIAL STATEMENTS

     The consolidated balance sheet as of September 30, 2001, and the
consolidated statements of earnings and cash flows for the three months ended
September 30, 2001 and October 1, 2000 have been prepared by us, without audit.
In the opinion of management, all adjustments (consisting of normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and cash flows at September 30, 2001, and for all periods presented,
have been made. The balance sheet at June 30, 2001 was condensed from the
audited financial statements as of that date.

     Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These consolidated financial statements should
be read in conjunction with the financial statements and notes thereto included
in our June 30, 2001 Annual Report on Form 10-K. The results of operations for
the period ended September 30, 2001 are not necessarily indicative of the
operating results for the full year. Certain amounts in the prior year's
quarterly financial statements have been reclassified to conform to the current
presentation.

2.       EQUITY SECURITIES

     We had 22,527,801 shares of Class A common stock and 2,621,502 shares of
Class B common stock outstanding at September 30, 2001. 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. The shares of Class A common stock are
entitled to one vote per share and cannot be exchanged for shares of Class B
common stock. The 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.

3.       RESTRICTED CASH

     On September 30, 2001 and June 30, 2001, we had restricted cash of $1,146
and $1,184, respectively, all of which is maintained as collateral for certain
debt facilities and escrow arrangements.

4.





EARNINGS PER SHARE

     The following table illustrates the computation of basic and diluted
earnings per share:


                                                                                                    
                                                                                              Three Months Ended
                                                                                         ---------------------------------
                                                                                             9/30/01          10/1/00
                                                                                         ----------------  ---------------
Basic earnings per share:
 Loss from continuing operations                                                               $ (3,599)        $ (5,445)
                                                                                         ================  ===============
 Common shares outstanding                                                                        25,149           25,068
                                                                                         ================  ===============
 Basic earnings from continuing operations per share                                            $ (0.14)         $ (0.22)
                                                                                         ================  ===============

Diluted earnings per share:
 Earnings from continuing operations                                                           $ (3,599)        $ (5,445)
                                                                                         ================  ===============
 Common shares outstanding                                                                        25,149           25,068
 Options                                                                                   antidilutive     antidilutive
 Warrants                                                                                  antidilutive     antidilutive
                                                                                         ----------------  ---------------
 Total shares outstanding                                                                         25,149           25,068
                                                                                         ================  ===============
 Diluted earnings from continuing operations per share                                          $ (0.14)         $ (0.22)
                                                                                         ================  ===============


     Stock options entitled to purchase 1,976,226 and 2,283,011 shares of Class
A common stock were antidilutive and not included in the earnings per share
calculation for the three months ended September 30, 2001 and October 1, 2000,
respectively. Stock warrants entitled to purchase 400,000 and 650,000 shares of
Class A common stock were antidilutive and not included in the earnings per
share calculation for the three months ended September 30, 2001 and October 1,
2000, respectively. These shares could be dilutive in subsequent periods.

5.       CONTINGENCIES

     Environmental Matters

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

     In connection with our plans to dispose of certain real estate, we must
investigate environmental conditions and we may be required to take certain
corrective action prior or pursuant to any such disposition. In addition, we
have identified several areas of potential contamination related to other
facilities owned, or previously owned, by us, that may require us either to take
corrective action or to contribute to a clean-up. We are also a defendant in
certain lawsuits and proceedings seeking to require us to pay for investigation
or remediation of environmental matters and we have been alleged to be a
potentially responsible party at various "superfund" sites. We believe that we
have recorded adequate reserves in our 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 environmental liability, unless such
parties are contractually obligated to contribute and are not disputing such
liability.

     As of September 30, 2001, the consolidated total of our recorded
liabilities for environmental matters was approximately $13.9 million, which
represented the estimated probable exposure for these matters. It is reasonably
possible that our total exposure for these matters could be approximately $18.1
million.

     Other Matters

     We are involved in various other claims and lawsuits incidental to our
business. We, either on our own or through our insurance carriers, are
contesting these matters. In the opinion of management, the ultimate resolution
of the legal proceedings, including those mentioned above, will not have a
material adverse effect on our financial condition, future results of operations
or net cash flows.

6.





BUSINESS SEGMENT INFORMATION

     We currently report in three principal business segments: aerospace
fasteners, aerospace distribution and real estate operations. The following
table provides the historical results of our operations for the three months
ended September 30, 2001 and October 1, 2000, respectively.


                                                                                                      
                                                                                              9/30/01          10/1/00
                                                                                         -----------------------------------
 SALES BY SEGMENT:
   Aerospace Fasteners Segment                                                                   $ 147,090        $ 125,446
   Aerospace Distribution Segment                                                                   17,983           22,921
                                                                                         -----------------------------------
 TOTAL SALES                                                                                     $ 165,073        $ 148,367
                                                                                         -----------------------------------
OPERATING RESULTS BY SEGMENT:
   Aerospace Fasteners Segment                                                                   $  14,866         $  6,999
   Aerospace Distribution Segment                                                                      454            1,287
   Real Estate Operations Segment (a)                                                                  438              564
   Corporate                                                                                       (5,008)          (4,554)
                                                                                         -----------------------------------
 TOTAL OPERATING INCOME (b)                                                                      $  10,750         $  4,296
                                                                                         -----------------------------------

EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES:
   Aerospace Fasteners Segment                                                                   $  14,392         $  6,439
   Aerospace Distribution Segment                                                                      431            1,728
   Real Estate Operations Segment (a)                                                                (229)            (265)
   Corporate                                                                                      (21,907)         (16,915)
                                                                                         -----------------------------------
Total loss from continuing operations before taxes (b)                                           $ (7,313)        $ (9,013)
                                                                                         -----------------------------------

TOTAL ASSETS:                                                                                 9/30/01           6/30/01
                                                                                         -----------------------------------
   Aerospace Fasteners Segment                                                                   $ 849,349        $ 844,693
   Aerospace Distribution Segment                                                                   58,234           58,643
   Real Estate Operations Segment                                                                  116,068          116,250
   Corporate                                                                                       177,778          190,279
                                                                                         -----------------------------------
 TOTAL ASSETS                                                                                  $ 1,201,429      $ 1,209,865
                                                                                         -----------------------------------


(a) - Includes rental revenue of $1.7 million for both of the three months ended
September 30, 2001 and October 1, 2000. (b) - Includes goodwill amortization of
$3.1 million in the three months ended October 1, 2000.







7.  RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

     In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141, "Accounting for Business Combinations."
This statement requires that the purchase method of accounting be used for all
business combinations initiated after June 30, 2001, and establishes specific
criteria for the recognition of intangible assets separately from goodwill. We
will follow the requirements of this statement for business acquisitions made
after June 30, 2001. There were no acquisitions for the quarter ended September
30, 2001.

     In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 142, "Accounting for Goodwill and Other
Intangible Assets." This statement requires that goodwill and intangible assets
deemed to have an indefinite life not be amortized. Instead of amortizing
goodwill and intangible assets deemed to have an indefinite life, the statement
requires a test for impairment to be performed annually, or immediately if
conditions indicate that such an impairment could exist. The amortization period
of intangible assets with finite lives will no longer be limited to forty years.
This statement is effective for fiscal years beginning after December 15, 2001,
and permits early adoption for fiscal years beginning after March 15, 2001. We
have adopted SFAS No. 142 on July 1, 2001. As a result of adopting SFAS No. 142,
we will no longer amortize goodwill of approximately $12.5 million per year.
Using the fair value measurement requirement, rather than the undiscounted cash
flows approach, we expect to record an impairment from the implementation of
SFAS No. 142. The initial evaluation of reporting units on a fair value basis,
as required from the implementation of SFAS No. 142, indicates that an
impairment exists at reporting units within our aerospace fasteners segment.
Based upon the initial evaluation, the estimated range of impairment is between
approximately $60 million to $65 million. However, once impairment is determined
at a reporting unit, SFAS No. 142 requires that the amount of goodwill
impairment be determined based on what the balance of goodwill would have been
if purchase accounting were applied at the date of impairment. We have not
completed that analysis, but we expect to complete this analysis prior to June
30, 2002. If the carrying amount of goodwill exceeds its fair value, an
impairment loss must be recognized in an amount equal to that excess. Once an
impairment loss is recognized, the adjusted carrying amount of goodwill will be
its new accounting basis. The actual amount of impairment could be significantly
different than the range provided above. We are currently measuring the amount
of impairment of goodwill to be recorded from adopting this standard.

     The following table provides the comparable effects of adoption of SFAS No.
142 for the three months ended September 30, 2001 and October 1, 2000,
respectively:


                                                                               
                                                                        9/30/01           10/01/00
                                                                   ------------------ ------------------
Reported net loss                                                         $  (3,599)         $  (5,445)
Add back: Goodwill amortization                                                    -              3,134
                                                                   ------------------ ------------------
Adjusted net loss                                                         $  (3,599)         $  (2,311)
                                                                   ------------------ ------------------

Basic and Diluted loss per share:
Reported net loss                                                         $   (0.14)         $   (0.22)
Add back: Goodwill amortization                                                    -               0.13
                                                                   ------------------ ------------------
Adjusted net loss                                                         $   (0.14)         $   (0.09)
                                                                   ------------------ ------------------



     In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 143, "Accounting for Asset Retirement
Obligations". This statement addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and
associated asset retirement costs. It applies to legal obligations associated
with the retirement of long-lived assets that result from the acquisition,
construction, development, and normal operation of a long-lived asset, except
for certain lease obligations. This statement is effective for fiscal years
beginning after June 15, 2002. We are currently evaluating the impact of
adopting this standard.

     In October 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 144, "Accounting for the Impairment or
Disposal of Long-lived Assets," which supersedes SFAS No. 121. Though it retains
the basic requirements of SFAS 121 regarding when and how to measure an
impairment loss, SFAS 144 provides additional implementation guidance. SFAS 144
applies to long-lived assets to be held and used or to be disposed of, including
assets under capital leases of lessees; assets subject to operating leases of
lessors; and prepaid assets. SFAS 144 also expands the scope of a discontinued
operation to include a component of an entity, and eliminates the current
exemption to consolidation when control over a subsidiary is likely to be
temporary. This statement is effective for fiscal years beginning after December
15, 2001. We are currently evaluating the impact of adopting this standard.

8.       CONSOLIDATING FINANCIAL STATEMENTS

     The following unaudited consolidating financial statements show separately
The Fairchild Corporation and the subsidiaries of The Fairchild Corporation.
These financial statements are provided to fulfill public reporting
requirements, and present separately the guarantors of the 10 3/4% senior
subordinated notes due 2009 issued by The Fairchild Corporation. The "parent
company" provides the results of The Fairchild Corporation on an unconsolidated
basis. The guarantors are composed primarily of our domestic subsidiaries,
excluding our shopping center in Farmingdale New York, and certain other
subsidiaries.









                           CONSOLIDATING BALANCE SHEET
                 FOR THE THREE MONTHS ENDING SEPTEMBER 30, 2001

                                                               Parent                         Non                         Fairchild
                                                              Company      Guarantors     Guarantors     Eliminations     Historical
                                                                                                         
                                                            -------------  ------------  -------------- ---------------  -----------
Cash                                                        $        520   $     6,490   $       7,325  $            -   $    14,335
Marketable securities                                                 71         2,562               -               -         2,633
Accounts Receivable (including intercompany), less
allowances                                                         3,229       731,847          90,336       (695,916)       129,496
Inventory, net                                                         -       142,920          48,511               -       191,431
Prepaid and other current assets                                     288        22,295           6,176          36,355        65,114
                                                            -------------  ------------  -------------- ---------------  -----------
Total current assets                                               4,108       906,114         152,348       (659,561)       403,009

Investment in Subsidiaries                                       891,958             -               -       (891,958)             -
Net fixed assets                                                     502       108,445          37,914               -       146,861
Net assets held for sale                                               -        13,618               -               -        13,618
Investments in affiliates                                             93         3,654               -               -         3,747
Goodwill                                                               -       386,037          32,418               -       418,455
Deferred loan costs                                               11,585            19             827               -        12,431
Prepaid pension assets                                                 -        65,156               -               -        65,156
Real estate investment                                                 -             -         110,030               -       110,030
Long-term investments                                                969         3,767           3,436           (488)         7,684
Other assets                                                      18,008         1,537             893               -        20,438
                                                            -------------  ------------  -------------- ---------------  -----------
Total assets                                                $    927,223   $ 1,488,347   $     337,866  $  (1,552,007)   $ 1,201,429
                                                            =============  ============  ============== ===============  ===========

Bank notes payable & current maturities of debt             $      2,250   $     1,651   $      21,130  $            -   $    25,031
Accounts payable (including intercompany)                             20       893,293         229,870     (1,070,102)        53,081
Other accrued expenses                                          (23,531)        57,476          31,202          36,355       101,502
                                                            -------------  ------------  -------------- ---------------  -----------
Total current liabilities                                       (21,261)       952,420         282,202     (1,033,747)       179,614

Long-term debt, less current maturities                          422,741         4,027          33,761               -       460,529
FMV of Interest Rate Contract                                     11,671             -               -               -        11,671
Other long-term liabilities                                          407        20,995           4,063               -        25,465
Noncurrent income taxes                                          111,335         (587)               -               -       110,748
Retiree health care liabilities                                        -        38,135           4,470               -        42,605
                                                            -------------  ------------  -------------- ---------------  -----------
Total liabilities                                                524,893     1,014,990         324,496     (1,033,747)       830,632

Class A common stock                                               3,034             -               -               -         3,034
Class B common stock                                                 262             -               -               -           262
Notes due from stockholders                                        (430)       (1,338)               -               -       (1,768)
Paid-in-capital                                                  232,820       478,206          83,966       (562,172)       232,820
Retained earnings                                                243,187        17,448        (61,847)          44,400       243,188
Cumulative other comprehensive income                              (468)      (20,959)         (8,749)               -      (30,176)
Treasury stock, at cost                                         (76,075)             -               -           (488)      (76,563)
                                                             ------------  ------------  -------------- --------------- ------------
Total stockholders' equity                                       402,330       473,357          13,370       (518,260)       370,797
                                                            -------------  ------------  -------------- --------------- ------------
Total liabilities & stockholders' equity                    $    927,223   $ 1,488,347   $     337,866  $  (1,552,007)   $ 1,201,429
                                                            =============  ============  ============== ===============  ===========










                      CONSOLIDATING STATEMENTS OF EARNINGS
                 FOR THE THREE MONTHS ENDING SEPTEMBER 30, 2001

                                                             Parent                      Non                             Fairchild
                                                            Company        Guarantors    Guarantors     Eliminations     Historical
                                                                                                         
                                                            -------------  ------------  -------------- ---------------  -----------
Net Sales                                                   $          -       128,954          42,367         (4,515)       166,806

Costs and expenses
Cost of sales                                                          -        99,620          30,533         (4,515)       125,638
Selling, general & administrative                                  1,996        22,761           5,661               -        30,418
Amortization of intangibles                                            -             -               1               -             1
                                                            -------------  ------------  -------------- ---------------  -----------
                                                                   1,996       122,381          36,195         (4,515)       156,057
                                                            -------------  ------------  -------------- ---------------  -----------
Operating income (loss)                                          (1,996)         6,573           6,172               -        10,749

Net interest expense (including intercompany)                    (4,390)        15,441           1,376               -        12,427
Investment (income) loss, net                                          -           386               -               -           386
Intercompany dividends                                                 -            27               -            (27)             -
FMV Adj of Interest Rate Contract                                  5,249             -               -               -         5,249
                                                            -------------  ------------  -------------- ---------------  -----------
Earnings (loss) before taxes                                     (2,855)       (9,281)           4,796              27       (7,313)
Income tax (provision) benefit                                     1,432         4,653         (2,405)                         3,680
Equity in earnings of affiliates and subsidiaries                (2,177)            51               -           2,159            33
                                                            -------------  ------------  -------------- ---------------  -----------
Net earnings (loss)                                         $    (3,600)       (4,577)           2,391           2,186       (3,600)
                                                            =============  ============  ============== ===============  ===========









                            CONSOLIDATING CASH FLOWS
                 FOR THE THREE MONTHS ENDING SEPTEMBER 30, 2001

                                                               Parent                         Non                         Fairchild
                                                              Company      Guarantors     Guarantors     Eliminations     Historical
                                                                                                         
                                                            -------------  ------------  -------------- ---------------  -----------
 Cash Flows from Operating Activities:
 Net earnings (loss)                                        $    (3,600)       (4,577)           2,391           2,186       (3,600)
 Depreciation & amortization                                          12         4,955           2,544               -         7,511
 Amortization of deferred loan fees                                  377             1             125               -           503
 Unrealized holding (gain) loss on derivatives                     5,249             -               -               -         5,249
 Undistributed (distributed) earnings of affiliates                   18          (51)               -               -          (33)
 Change in assets and liabilities                                  6,610       (4,456)         (2,335)         (2,186)       (2,367)
                                                            -------------  ------------  -------------- ---------------  -----------
 Net cash (used for) provided by operating activities              8,666       (4,128)           2,725               -         7,263

 Cash Flows from Investing Activities:
 Proceeds received from (used for):
    Purchase of PP&E                                                (14)       (3,029)         (1,192)               -       (4,235)
    Investment securities, net                                         -          (53)               -               -          (53)
    Sale of PP&E                                                       -         3,693              17               -         3,710
    Equity investment in affiliates                                (394)                                                       (394)
 Change in real estate investment                                      -             -           (211)               -         (211)
 Change in net assets held for sale                                    -         4,358               -               -         4,358
                                                            -------------  ------------  -------------- ---------------  -----------
 Net cash (used for) provided by investing activities              (408)         4,969         (1,386)               -         3,175

 Cash Flows from Financing Activities:
 Proceeds from issuance of debt                                   22,700        12,299             897               -        35,896
 Debt repayments, net                                           (31,000)      (13,196)         (3,198)               -      (47,394)
                                                            -------------  ------------  -------------- ---------------  -----------
 Net cash (used for) provided by financing activities            (8,300)         (897)         (2,301)               -      (11,498)
 Effect of exchange rate changes on cash                               -             -             444               -           444
                                                            -------------  ------------  -------------- ---------------  -----------
 Net change in cash                                                 (42)          (56)           (518)               -         (616)
 Cash, beginning of the year                                         562         6,546           7,843               -        14,951
                                                            -------------  ------------  -------------- ---------------  -----------
 Cash, end of the year                                      $        520   $     6,490   $       7,325  $            -   $    14,335
                                                            =============  ============  ============== ===============  ===========











                           CONSOLIDATING BALANCE SHEET
                                  JUNE 30, 2001

                                                               Parent                         Non                         Fairchild
                                                              Company      Guarantors     Guarantors     Eliminations     Historical
                                                                                                         
                                                            -------------  ------------  -------------- ---------------  -----------
Cash                                                        $        562   $     6,546   $       7,843  $            -   $    14,951
Marketable securities                                                 71         3,034               -               -         3,105
Accounts Receivable (including intercompany), less
allowances                                                         2,336       628,104          84,599       (593,336)       121,703
Inventory, net                                                         -       144,157          44,830               -       188,987
Prepaid and other current assets                                     287        22,134           7,198          32,544        62,163
                                                            -------------  ------------  -------------- ---------------  -----------
Total current assets                                               3,256       803,975         144,470       (560,792)       390,909

Investment in Subsidiaries                                       880,945             -               -       (880,945)             -
Net fixed assets                                                     501       112,969          35,638               -       149,108
Net assets held for sale                                               -        17,999               -               -        17,999
Net noncurrent assets of discontinued operations                       -             -               -               -             -
Investments in affiliates                                             93         2,720               -               -         2,813
Goodwill                                                          15,720       370,440          32,989               -       419,149
Deferred loan costs                                               11,944            20             952               -        12,916
Prepaid pension assets                                                 -        65,249               -               -        65,249
Real estate investment                                                 -             -         110,505               -       110,505
Long-term investments                                              1,205         3,626           3,436           (488)         7,779
Other assets                                                       2,607         1,335             786          28,710        33,438
                                                            -------------  ------------  -------------- ---------------  -----------
Total assets                                                $    916,271   $ 1,378,333   $     328,776  $  (1,413,515)   $ 1,209,865
                                                            =============  ============  ============== ===============  ===========

Bank notes payable & current maturities of debt             $      2,250   $     1,632   $      22,646  $            -   $    26,528
Accounts payable (including intercompany)                             20       778,541         230,934       (951,870)        57,625
Other accrued expenses                                          (54,398)        57,839          30,590          61,254        95,285
Net current liabilities of discontinued operations                     -             -               -               -             -
                                                            -------------  ------------  -------------- ---------------  -----------
Total current liabilities                                       (52,128)       838,012         284,170       (890,616)       179,438

Long-term debt, less current maturities                          431,041         5,918          33,571               -       470,530
Fair market value of interest rate contract                        6,422             -               -               -         6,422
Other long-term liabilities                                          405        21,672           3,652               -        25,729
Noncurrent income taxes                                          124,466         (587)             128               -       124,007
Retiree health care liabilities                                        -        37,335           4,551               -        41,886
                                                            -------------  ------------  -------------- ---------------  -----------
Total liabilities                                                510,206       902,350         326,072       (890,616)       848,012

Class A common stock                                               3,034             -               -               -         3,034
Class B common stock                                                 262             -               -               -           262
Notes due from stockholders                                        (430)       (1,338)               -               -       (1,768)
Paid-in-capital                                                  232,820       478,207          83,513       (561,720)       232,820
Retained earnings                                                246,788        25,623        (64,932)          39,309       246,788
Cumulative other comprehensive income                              (334)      (26,509)        (15,877)               -      (42,720)
Treasury stock, at cost                                         (76,075)             -               -           (488)      (76,563)
                                                            -------------  ------------  -------------- ---------------  -----------
Total stockholders' equity                                       406,065       475,983           2,704       (522,899)       361,853
                                                            -------------  ------------  -------------- ---------------  -----------
Total liabilities & stockholders' equity                    $    916,271   $ 1,378,333   $     328,776  $  (1,413,515)   $ 1,209,865
                                                            ============= =============  ============== ===============  ===========











                      CONSOLIDATING STATEMENTS OF EARNINGS

                   FOR THE THREE MONTHS ENDED OCTOBER 1, 2000

                                                               Parent                         Non                         Fairchild
                                                              Company      Guarantors     Guarantors     Eliminations     Historical
                                                                                                         
                                                            -------------  ------------  -------------- ---------------  -----------
Net Sales                                                   $          -   $   116,058   $      34,146  $      (1,837)   $   148,367

Cost of sales                                                          -        90,824          24,604         (1,837)       113,591
Selling, general & administrative                                  1,363        22,250           3,733               -        27,346
Amortization of goodwill                                             202         2,683             249               -         3,134
                                                            -------------  ------------  -------------- ---------------  -----------
                                                                   1,565       115,757          28,586         (1,837)       144,071
                                                            -------------  ------------  -------------- ---------------  -----------
Operating income (loss)                                          (1,565)           301           5,560               -         4,296

Net interest expense (including intercompany)                    (2,460)        12,388           2,531               -        12,459
Investment (income) loss, net                                          -           380               -               -           380
Fair market value adjustment of Interest Rate Contract               470             -               -               -           470
                                                            -------------  ------------  -------------- ---------------  -----------
Earnings (loss) before taxes                                         425      (12,467)           3,029               -       (9,013)
Income tax (provision) benefit                                     (169)         4,944         (1,201)               -         3,574
Equity in earnings of affiliates and subsidiaries                (5,701)           (6)               -           5,701           (6)
                                                            -------------  ------------  -------------- ---------------  -----------
Net earnings (loss)                                         $    (5,445)   $   (7,529)   $       1,828  $        5,701   $   (5,445)
                                                            =============  ============  ============== ===============  ===========





                     CONSOLIDATING STATEMENTS OF CASH FLOWS
                   FOR THE THREE MONTHS ENDED OCTOBER 1, 2000

                                                               Parent                         Non                         Fairchild
                                                                Company     Guarantors     Guarantors    Eliminations     Historical
                                                                                                        
                                                            ------------- -------------  -------------- --------------- ------------
 Cash Flows from Operating Activities:
 Net earnings (loss)                                        $    (5,445)  $    (7,529)   $       1,828  $        5,701  $    (5,445)
 Depreciation & amortization                                         232         8,124           2,594               -        10,950
 Amortization of deferred loan fees                                  343             2             111               -           456
 Undistributed (distributed) earnings of affiliates                    -             9               -               -             9
 Change in assets and liabilities                               (16,244)         (714)         (8,416)         (5,701)      (31,075)
                                                            ------------- -------------  -------------- --------------- ------------
 Net cash (used for) provided by operating activities           (21,114)         (108)         (3,883)               -      (25,105)

 Cash Flows from Investing Activities:
 Proceeds received from (used for):
    Purchase of PP&E                                                (30)       (3,034)           (797)               -       (3,861)
    Investment securities, net                                         -         4,759               -               -         4,759
 Change in real estate investment                                      -             -         (1,601)               -       (1,601)
 Change in net assets held for sale                                    -         2,211               -               -         2,211
                                                            ------------- -------------  -------------- --------------- ------------
 Net cash (used for) provided by investing activities               (30)         3,936         (2,398)               -         1,508

 Cash Flows from Financing Activities:
 Proceeds from issuance of debt                                   21,082            14           2,357               -        23,453
 Debt repayments, net                                                  -         (594)         (2,014)               -       (2,608)
 Issuance of Class A common stock                                    194             -               -               -           194
                                                            ------------- -------------  -------------- --------------- ------------
 Net cash (used for) provided by financing activities             21,276         (580)             343               -        21,039
 Effect of exchange rate changes on cash                               -             -           (416)               -         (416)
                                                            ------------- -------------  -------------- --------------- ------------
 Net change in cash                                                  132         3,248         (6,354)               -       (2,974)
 Cash, beginning of the year                                          35        23,06 3         12,692               -        35,790
                                                            ------------- -------------  -------------- --------------- ------------
 Cash, end of the year                                      $        167  $     26,311   $       6,338  $            -  $     32,816
                                                            ============= =============  ============== =============== ============








                 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

     The Fairchild  Corporation  was  incorporated in October 1969,  under the
laws of the State of Delaware,  under the name of Banner Industries,  Inc. On
November 15, 1990,  we changed our name from Banner  Industries,  Inc. to The
Fairchild  Corporation.  We own 100% of RHI Holdings,  Inc. and Banner
Aerospace,  Inc. RHI is the owner of 100% of Fairchild  Holding Corp.  Our
principal  operations are conducted through Fairchild Holding Corp. and Banner
Aerospace.

     The following discussion and analysis provide information which management
believes is relevant to the assessment and understanding of our consolidated
results of operations and financial condition. The discussion should be read in
conjunction with the consolidated financial statements and notes thereto.

GENERAL

     We are a leading worldwide aerospace and industrial fastener manufacturer
and distribution supply chain services provider and, through Banner Aerospace,
an international supplier to airlines and general aviation businesses,
distributing a wide range of aircraft parts and related support services.
Through internal growth and strategic acquisitions, we have become one of the
leading suppliers of fasteners to aircraft OEMs, such as Boeing, European
Aeronautic Defense and Space Company, General Electric, Lockheed Martin, and
Northrop Grumman.

     Our business consists of three segments: aerospace fasteners, aerospace
distribution and real estate operations. The aerospace fasteners segment
manufactures and markets high performance fastening systems used in the
manufacture and maintenance of commercial and military aircraft. Our aerospace
distribution segment stocks and distributes a wide variety of aircraft parts to
commercial airlines and air cargo carriers, fixed-base operators, corporate
aircraft operators and other aerospace companies. Our real estate operations
segment owns and operates a shopping center located in Farmingdale, New York.

CAUTIONARY STATEMENT

     Certain statements in this financial discussion and analysis by management
contain certain "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 with respect to our financial
condition, results of operation and business. These statements relate to
analyses and other information, which are based on forecasts of future results
and estimates of amounts not yet determinable. These statements also relate to
our future prospects, developments and business strategies. These
forward-looking statements are identified by their use of terms and phrases such
as "anticipate," "believe," "could," "estimate," "expect," "intend," "may,"
"plan," "predict," "project," "will" and similar terms and phrases, including
references to assumptions. These forward-looking statements involve risks and
uncertainties, including current trend information, projections for deliveries,
backlog and other trend estimates, that may cause our actual future activities
and results of operations to be materially different from those suggested or
described in this financial discussion and analysis by management. These risks
include: product demand; our dependence on the aerospace industry; reliance on
Boeing and European Aeronautic Defense and Space Company; customer satisfaction
and quality issues; labor disputes; competition, including recent intense price
competition; our ability to achieve and execute internal business plans;
worldwide political instability and economic growth; reduced airline revenues as
a result of the September 11, 2001 terrorist attacks on the United States, and
their aftermath; military actions in Afghanistan; the cost and availability of
electric power to operate our plants; and the impact of any economic downturns
and inflation.

     If one or more of these risks or uncertainties materializes, or if
underlying assumptions prove incorrect, our actual results may vary materially
from those expected, estimated or projected. Given these uncertainties, users of
the information included in this financial discussion and analysis by
management, including investors and prospective investors are cautioned not to
place undue reliance on such forward-looking statements. We do not intend to
update the forward-looking statements included in this Annual Report, even if
new information, future events or other circumstances have made them incorrect
or misleading.

RESULTS OF OPERATIONS

Consolidated Results

     We currently report in three principal business segments: aerospace
fasteners, aerospace distribution and real estate operations. The following
table provides the historical sales and operating income of our segments for the
three months ended September 30, 2001 and October 1, 2000, respectively.


                                                                                                  
                                                                                            9/30/01       10/1/00
                                                                                         ----------------------------
 SALES BY SEGMENT:
   Aerospace Fasteners Segment                                                               $ 147,090     $ 125,446

   Aerospace Distribution Segment                                                               17,983        22,921
                                                                                         ----------------------------
 TOTAL SALES                                                                                 $ 165,073     $ 148,367
                                                                                         ----------------------------
OPERATING RESULTS BY SEGMENT:
   Aerospace Fasteners Segment                                                               $  14,866      $  6,999

   Aerospace Distribution Segment                                                                  454         1,287

   Real Estate Operations Segment (a)                                                              438           564

   Corporate                                                                                   (5,008)       (4,554)
                                                                                         ----------------------------
 TOTAL OPERATING INCOME (b)                                                                  $  10,750      $  4,296
                                                                                         ----------------------------


(a) - Includes rental revenue of $1.7 million for both of the three months ended
September 30, 2001 and October 1, 2000. (b) - The three months ended October 1,
2000 includes goodwill amortization of $2.8 million in the aerospace fastener
segment, $0.1 million in the aerospace distribution segment and $0.2 million at
corporate.



     Net sales of $165.1 million in the first quarter of fiscal 2002 increased
by $16.7 million, or 11.3%, compared to sales of $148.4 million in the first
quarter of fiscal 2001. Sales in the first quarter of fiscal 2002 reflected
strong growth at our aerospace fasteners segment and were offset partially by
approximately $1.3 million due to the negative foreign currency impact on our
European operations from the U.S. dollar strengthening against the Euro on a
period-to-period basis. Results for the three months ended October 1, 2000,
included revenue of $3.2 million from an aerospace distribution segment
operation which was shut down in June 2001.

     Gross margin as a percentage of sales was 24.6% and 23.4% in the first
quarter of fiscal 2002 and fiscal 2001, respectively. The gross margin
improvement in the fiscal 2002 three-month period was attributable primarily to
the increase in sales and the related economies of scale.

     Selling, general & administrative expense as a percentage of sales was
19.2% and 19.4% in the first quarter of fiscal 2002 and 2001, respectively. The
improvement in the fiscal 2002 three-month period was attributable primarily to
the increase in sales and the related economies of scale.

     Rental revenue remained stable in the first three months of fiscal 2002,
compared to the first three months of fiscal 2001.

    Other income increased $0.5 million in the first three months of fiscal
2002, compared to the first three months of fiscal 2001. The increase was due
primarily to $0.7 million of income recognized from the disposition of non-core
property during the three months ended September 30, 2001.

     Operating income for the three months ended September 30, 2001, increased
by $6.5 million, or 150.2%, as compared to the same period of the prior year.
The results for the three months ended October 1, 2000, included $3.1 million of
goodwill amortization, prior to the implementation of a new accounting
pronouncement that eliminates goodwill amortization in the current quarter.
Changes in foreign currency resulted in a unfavorable effect of approximately
$0.2 million on operating income at our European operations in the first quarter
of fiscal 2002, as compared to the first quarter of fiscal 2001.

     Net interest expense was $12.4 million in the first quarter of fiscal 2002
and first quarter of fiscal 2001. However, cash interest expense decreased by
$1.1 million in the first quarter of fiscal 2002, as compared to the first
quarter of fiscal 2001, due primarily to lower interest rates.

     We recognized an investment loss of $0.4 million in the first three months
of fiscal 2002, due primarily to the fair market value change of trading
securities, and $0.4 million in the first three months of fiscal 2001, due
primarily to recognizing realized losses from investments we liquidated.

     The fair market value of a ten-year $100 million interest rate contract
decreased by $5.2 million in the first quarter of fiscal 2002 and $0.5 million
in the first quarter of 2001.

     An income tax benefit of $3.7 million in the first three months of fiscal
2002 represented a 50.3% effective tax rate on pre-tax losses from operations.
The tax benefit was higher than the statutory rate due primarily to lower tax
rates on $4.4 million of earnings generated by our foreign operations that
utilize net operating loss carry forwards. An income tax benefit of $3.6 million
in the first three months of fiscal 2001 represented a 39.7% effective tax rate
on pre-tax losses from continuing operations. The tax benefit approximated the
statutory rate.

     Comprehensive income includes foreign currency translation adjustments,
unrealized holding changes in the fair market value of available-for-sale
investment securities, and the cumulative effect of adoption of SFAS 133,
Accounting for Derivatives. For the three months ended September 30, 2001, the
foreign currency translation adjustment resulted in a $12.7 million increase,
and was offset partially by a $0.2 million decrease in the fair market value of
unrealized holding gains on investment securities.


Segment Results

Aerospace Fasteners Segment

     Sales in our Aerospace Fasteners segment increased by $21.6 million, or
17.3%, in the first quarter of fiscal 2002, as compared to the first quarter of
fiscal 2001. The improvement in the current quarter reflected approximately
$22.9 million from strong internal growth. Current quarter sales at our European
operations were negatively affected by approximately $1.3 million due to the
strengthening of the U.S. Dollar against the Euro. Backlog increased by $3.9
million in the first quarter to $222.3 million at September 30, 2001, and
included approximately $3.9 from the strengthening of the Euro against the U.S.
dollar during the three-month period ended September 30, 2001. Our book-to-bill
ratio for the first quarter was 98.7%, reflecting the stronger level of sales.

     Operating income was $14.9 million in the first quarter of fiscal 2002, an
increase of $7.9 million as compared to the first quarter of fiscal 2001. The
improvement in the first three months of fiscal 2002 was due primarily to the
increase in sales and higher gross margins, and $0.7 million from the gain
recognized on the sale of non-core property. On July 1, 2001, we adopted a new
accounting pronouncement that does not require us to amortize goodwill. Goodwill
amortization of $2.8 million was recorded in the first three months of fiscal
2001. Operating expenses continue to be monitored as management attempts to
efficiently reduce operating costs.

     We are cautiously optimistic that the overall demand for aerospace
fasteners in fiscal 2002 will not decrease significantly despite the recently
announced reductions in commercial aircraft build rates. Projected aircraft
build rates have been adversely affected by decreased worldwide demand for
travel following the September 11, 2001, terrorist attacks that temporarily
halted domestic travel and hampered worldwide travel. The tragic terrorists'
attacks may continue to have a significant impact on the commercial aviation
industry, raising concerns about our ability to maintain a strong order backlog
and level of new orders. A significant amount of cancellations of orders for
aircraft from original equipment manufacturers or reductions in future orders
could adversely impact our results. We continue to monitor events closely and
any significant decline in future bookings will require us to pursue additional
cost reduction initiatives to protect our businesses.

Aerospace Distribution Segment

     Sales in our aerospace distribution segment decreased by $4.9 million, in
the first quarter of fiscal 2002, compared to the first quarter of fiscal 2001.
Results from the prior three months ended October 1, 2000, included revenue of
$3.2 million from an operation which was shut down in June 2001. Sales in the
three months ended September 30, 2001, were adversely affected due to the
terrorist attacks on September 11, 2001 and have been sluggish since then.

     Operating income decreased by $0.8 million in the first quarter of fiscal
2002, compared to the first quarter in fiscal 2001. The results for the three
months ended September 30, 2001, were hampered by the reduction in revenue and
the related economies of scale.

Real Estate Operations Segment

     Our real estate operations segment owns and operates a shopping center
located in Farmingdale, New York. Included in operating income was rental
revenue of $1.7 million for both the three months ended September 30, 2001 and
October 1, 2000. Operating income decreased slightly in the three months ended
September 30, 2001, as compared to the three months ended October 1, 2000. As of
September 30, 2001, we have leased approximately 74% of the developed shopping
center.

Corporate

The operating loss increased by $0.5 million in the first three months of fiscal
2002, compared to the first three months of fiscal 2001 due primarily to an
increase in legal expenses in the first three months of fiscal 2002.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

     Total capitalization as of September 30, 2001 and June 30, 2001 amounted to
$856.4 million and $858.9 million, respectively. The three-month changes in
capitalization included a $11.5 million reduction in debt reflecting cash
provided by our operations and the sale of non-core assets, offset by an
increase in equity of $8.9 million which was due primarily to a $12.5 million
favorable increase in foreign currency translation adjustments and our reported
net loss.

     We maintain a portfolio of investments classified primarily as
available-for-sale securities, which had a fair market value of $10.3 million at
September 30, 2001. The market value of these investments decreased by $0.3
million in the three months ended September 30, 2001. There is risk associated
with market fluctuations inherent in stock investments, and because our
portfolio is not diversified, large swings in its value may occur.

     Net cash provided by operating activities for the three months ended
September 30, 2001 was $7.3 million and net cash used for operating activities
for the three months ended October 1, 2000 was $25.1 million. The primary source
of cash from operating activities in the first three months of fiscal 2002
included $9.7 million of earnings after deducting non-cash expenses of $7.5
million for depreciation, $5.2 million from the reduction in the fair market
value of an interest rate contract, and $0.5 million from the amortization of
deferred loan fees. The primary use of cash for operating activities in the
first three months of fiscal 2001 was a $22.9 million decrease in accounts
payable and other accrued liabilities, offset partially by a $14.3 million
decrease in accounts receivable.

     Net cash provided by investing activities was $3.1 million and $1.5 for the
three months ended September 30, 2001 and October 1, 2000, respectively. In the
first three months of fiscal 2002, the primary source of cash was $8.1 million
provided from the dispositions of non-core real estate and net assets held for
sale, partially offset by $4.2 million of capital expenditures. The primary
source of cash from investing activities in the first three months of fiscal
2001 was $7.0 million of net proceeds received from the sale of investments and
dispositions of non-core real estate, offset partially by capital expenditures
of $4.2 million and investments of $1.0 million in our shopping center.

     Net cash used for financing activities for the three months ended September
30, 2001, was $11.5 million. Net cash provided by financing activities for the
three months ended October 1, 2000, was $21.0 million. Cash used for financing
activities in the first three months of fiscal 2002 included a net debt
reduction of $11.5 million. Cash provided by financing activities in the first
quarter of fiscal 2001, included $20.8 million of net proceeds from the issuance
of additional debt.

     Our principal cash requirements include debt service, capital expenditures,
and payment of other liabilities including postretirement benefits,
environmental investigation and remediation obligations, and litigation
settlements and related costs. We expect that cash on hand, cash generated from
operations, cash available from borrowings and additional financing and asset
sales will be adequate to satisfy our cash requirements during the next twelve
months.

     We are required under the credit agreement to comply with certain financial
and non-financial loan covenants, including maintaining certain interest and
fixed charge coverage ratios and maintaining certain indebtedness to EBITDA
ratios at the end of each fiscal quarter. Our most restrictive covenant is the
interest coverage ratio, which represents the ratio of EBITDA to interest
expense, as defined in the credit agreement. At September 30, 2001, the interest
coverage ratio was 2.11, which exceeded the minimum requirement of 2.0.
Additionally, the credit agreement restricts annual capital expenditures to $40
million during the life of the facility. For the three months ended September
30, 2001, capital expenditures were $4.2 million. Except for non-guarantor
assets, substantially all of our assets are pledged as collateral under the
credit agreement. The credit agreement restricts the payment of dividends to our
shareholders to an aggregate of the lesser of $0.01 per share or $0.4 million
over the life of the agreement. Noncompliance with any of the financial
covenants without cure or waiver would constitute an event of default under the
credit agreement. An event of default resulting from a breach of a financial
covenant may result, at the option of lenders holding a majority of the loans,
in an acceleration of the principal and interest outstanding, and a termination
of the revolving credit line. At September 30, 2001, we were in compliance with
the covenants under the credit agreement.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

     In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141, "Accounting for Business Combinations."
This statement requires that the purchase method of accounting be used for all
business combinations initiated after June 30, 2001, and establishes specific
criteria for the recognition of intangible assets separately from goodwill. We
will follow the requirements of this statement for business acquisitions made
after June 30, 2001. There were no acquisitions for the quarter ended September
30, 2001.

     In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 142, "Accounting for Goodwill and Other
Intangible Assets." This statement requires that goodwill and intangible assets
deemed to have an indefinite life not be amortized. Instead of amortizing
goodwill and intangible assets deemed to have an indefinite life, the statement
requires a test for impairment to be performed annually, or immediately if
conditions indicate that such an impairment could exist. The amortization period
of intangible assets with finite lives will no longer be limited to forty years.
This statement is effective for fiscal years beginning after December 15, 2001,
and permits early adoption for fiscal years beginning after March 15, 2001. We
have adopted SFAS No. 142 on July 1, 2001. As a result of adopting SFAS No. 142,
we will no longer amortize goodwill of approximately $12.5 million per year.
Using the fair value measurement requirement, rather than the undiscounted cash
flows approach, we expect to record an impairment from the implementation of
SFAS No. 142. The initial evaluation of reporting units on a fair value basis,
as required from the implementation of SFAS No. 142, indicates that an
impairment exists at reporting units within our aerospace fasteners segment.
Based upon the initial evaluation, the estimated range of impairment is between
approximately $60 million to $65 million. However, once impairment is determined
at a reporting unit, SFAS No. 142 requires that the amount of goodwill
impairment be determined based on what the balance of goodwill would have been
if purchase accounting were applied at the date of impairment. We have not
completed that analysis, but we expect to complete this analysis prior to June
30, 2002. If the carrying amount of goodwill exceeds its fair value, an
impairment loss must be recognized in an amount equal to that excess. Once an
impairment loss is recognized, the adjusted carrying amount of goodwill will be
its new accounting basis. The actual amount of impairment could be significantly
different than the range provided above. We are currently measuring the amount
of impairment of goodwill to be recorded from adopting this standard.

     In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 143, "Accounting for Asset Retirement
Obligations". This statement addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and
associated asset retirement costs. It applies to legal obligations associated
with the retirement of long-lived assets that result from the acquisition,
construction, development, and normal operation of a long-lived asset, except
for certain lease obligations. This statement is effective for fiscal years
beginning after June 15, 2002. We are currently evaluating the impact of
adopting this standard.

     In October 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 144, "Accounting for the Impairment or
Disposal of Long-lived Assets," which supersedes SFAS No. 121. Though it retains
the basic requirements of SFAS 121 regarding when and how to measure an
impairment loss, SFAS 144 provides additional implementation guidance. SFAS 144
applies to long-lived assets to be held and used or to be disposed of, including
assets under capital leases of lessees; assets subject to operating leases of
lessors; and prepaid assets. SFAS 144 also expands the scope of a discontinued
operation to include a component of an entity, and eliminates the current
exemption to consolidation when control over a subsidiary is likely to be
temporary. This statement is effective for fiscal years beginning after December
15, 2001. We are currently evaluating the impact of adopting this standard.


        ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

      In fiscal 1998, we entered into a ten-year interest rate swap agreement to
reduce our cash flow exposure to increases in interest rates on variable rate
debt. The ten-year interest rate swap agreement provides us with interest rate
protection on $100 million of variable rate debt, with interest being calculated
based on a fixed LIBOR rate of 6.24% to February 17, 2003. On February 17, 2003,
the bank with which we entered into the interest rate swap agreement, will have
a one-time option to elect to cancel the agreement or to do nothing and proceed
with the transaction, using a fixed LIBOR rate of 6.715% for the period February
17, 2003 to February 19, 2008.

     We did not elect to pursue hedge accounting for the interest rate swap
agreement, which was executed to provide an economic hedge against cash flow
variability on the floating rate note. When evaluating the impact of SFAS No.
133 on this hedge relationship, we assessed the key characteristics of the
interest rate swap agreement and the note. Based on this assessment, we
determined that the hedging relationship would not be highly effective. The
ineffectiveness is caused by the existence of the embedded written call option
in the interest rate swap agreement, and the absence of a mirror option in the
hedged item. As such, pursuant to SFAS No. 133, we designated the interest rate
swap agreement in the no hedging designation category. Accordingly, we have
recognized a non-cash decrease in fair market value of interest rate derivatives
of $5.2 million and $0.5 million, in the three months ended September 30, 2001
and October 1, 2000, respectively, as a result of the fair market value
adjustment for our interest rate swap agreement.

     The fair market value adjustment of these agreements will generally
fluctuate based on the implied forward interest rate curve for 3-month LIBOR. If
the implied forward interest rate curve decreases, the fair market value of the
interest hedge contract will increase and we will record an additional charge.
If the implied forward interest rate curve increases, the fair market value of
the interest hedge contract will decrease, and we will record income.

     In March 2000, the Company issued a floating rate note with a principal
amount of $30,750,000. Embedded within the promissory note agreement is an
interest rate cap. The embedded interest rate cap limits the 1-month LIBOR
interest rate that we must pay on the note to 8.125%. At execution of the
promissory note, the strike rate of the embedded interest rate cap of 8.125% was
above the 1-month LIBOR rate of 6.61%. Under SFAS 133, the embedded interest
rate cap is considered to be clearly and closely related to the debt of the host
contract and is not required to be separated and accounted for separately from
the host contract. In fiscal 2001, we accounted for the hybrid contract,
comprised of the variable rate note and the embedded interest rate cap, as a
single debt instrument.

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



(In thousands)
Expected Fiscal Year Maturity Date                               2003                               2008
                                                                              
                                                  ----------------------------------------------------------------------
   Type of Interest Rate Contracts                        Interest Rate Cap                  Variable to Fixed
   Variable to Fixed                                           $30,750                            $100,000
   Fixed LIBOR rate                                              N/A                                6.24% (a)
   LIBOR cap rate                                               8.125%                              N/A
   Average floor rate                                            N/A                                N/A
   Weighted average forward LIBOR rate                          2.64%                              4.74%
   Fair Market Value at September 30, 2001                        $4                             $(11,671)


(a)  - On February 17, 2003, the bank will have a one-time option to elect to
     cancel the agreement or to do nothing and proceed with the transaction,
     using a fixed LIBOR rate of 6.715% for the period February 17, 2003 to
     February 19, 2008.








PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

     The information required to be disclosed under this Item is set forth in
Footnote 6 (Contingencies) of the Consolidated Financial Statements (Unaudited)
included in this Report.

Item 5.  Other Information

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

Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits:

        None

(b)      Reports on Form 8-K:

         There were no reports filed on Form 8-K during the quarter ended
September 30, 2001 for which this report is filed.






                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to the signed on its behalf by the undersigned
hereunto duly authorized.



                          For THE FAIRCHILD CORPORATION
                          (Registrant) and as its Chief
                               Financial Officer:



                            By: /s/ MICHAEL T. ALCOX
                                --------------------
                                Michael T. Alcox
                            Senior Vice President and
                             Chief Financial Officer




Date:    November 14, 2001