The Securities and Exchange Commission has launched a formal investigation of Fairchild Industries Inc.'s record-keeping and disclosure practices, a spinoff of a now-closed federal investigation of the Montgomery County conglomerate, Fairchild officials said here today.
Disclosure of the investigation came in documents released here and discussion of the matter during the company's annual stockholders meeting.
The company said it learned of the new investigation on March 3, although it began last June 10. In February 1979, Fairchild was acquitted by a federal judge on tax charges filed by the U.S. Attorney's Office in Baltimore, following a three-month probe that studied allegations of questionable political donation practices.
Apparently, the SEC probe is a follow-up examination of issues raised in the Baltimore investigation.
John F. Dealy, Fairchild's president, said after the meeting that SEC officials are looking at the same tax activities that a grand jury examined. "They haven't given us any more specifics," he said. "As far as we can ascertain, they will take a look at the same records. We know of no additional events."
The Internal Revenue Service has said the company owes an additional tax of $24.58 million and civil fraud penalties of $14.43 million for income taxes during the period 1965 through 1972. The company has asked a tax court to eliminate the penalties, although it disclosed that the IRS has proposed further tax adjustments and civil penalties for tax returns during the period of 1973 through 1975. The SEC apparently will study the implications of those tax situations.
The company has said consistently -- and reiterated in its 1980 annual report -- that "no fraudulent tax returns have been filed."
Discussion of the SEC investigation was the only negative note at an otherwise upbeat annual meeting, held here because this Piedmont town is the headquarters of two major Fairchild subsidiaries.
Dealy predicted a "strong year" in 1981 for Fairchild. The administration budget, Dealy said, proposes the purchase of 46 of Fairchild's A10 aircraft in its 1982 budget, after the final Carter administration budget called for the purchase of none of the anti-tank planes.
Fairchild chairman Edward G. Uhl also said Fairchild still hopes to acquire Bunker Ramo Corp., the Illinois electrical equipment company. On two other occasions, Fairchild's bitterly contested efforts to acquire the company have failed.
Fairchild now owns about 20 percent of Bunker Ramo's stock, but has agreed not to make further stock purchase attempts until January 1982.
Although Bunker Ramo is actively looking for another buyer, Uhl said he "still intends to try to put the companies together."
Uhl said Fairchild would sell its 1.27 million shares of Bunker Ramo stock if a takeover by Fairchild cannot be completed. If a deal cannot be worked out by next year, "we intend to sell our interest for cash."
The company enjoyed record growth in 1980, largely the result of Fairchild's purchase of VSI Corp., a California aerospace equipment and plastics company. The company released first-quarter earnings, the first full quarter that included VSI results. Fairchild reported profits of $17.1 million (93 cents a share) compared to 1980 first-quarter profits of $11.2 million (89 cents).
Sales rose from $192.5 million in the 1980 quarter to $312.1 million for the same quarter this year, although the 1980 sales figures do not include $108 million in VSI first quarter revenues.