SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: September 8, 1998
WATKINS-JOHNSON COMPANY
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(Exact name of registrant as specified in its charter)
CALIFORNIA 1-5631 94-1402710
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(State of Organization) (Commission Number) (IRS Employer I.D. Number)
3333 Hillview Avenue, Palo Alto, California 94304-1223
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (650) 493-4141
NOT APPLICABLE
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On September 8, 1998, Watkins-Johnson Company (the "company") issued a press
release announcing it will restructure its operations including a write down of
assets and an approximately 20 percent reduction of its global work force. The
company expects results of third quarter of 1998, ending September 25, to have a
net-of-tax loss of approximately $50 million to $55 million. This estimated loss
includes charges for restructuring, down-sizing and other operating charges.
Attached hereto as Exhibit 99.1 is the company's press release dated September
8, 1998.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(C) Exhibits
Exhibit Number Exhibit
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99.1 Watkins-Johnson Company Press Release Dated
September 8, 1998
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
WATKINS-JOHNSON COMPANY
By /s/ W. Keith Kennedy, Jr.
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W. Keith Kennedy, Jr.
President
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EXHIBIT 99.1
Tuesday September 8, 4:16 p.m. Eastern Time
Company Press Release
Watkins-Johnson Announces Restructuring and Cost
Reduction Plan, Expects Lower Third-Quarter 1998
Operating Results
PALO ALTO, Calif.--(BUSINESS WIRE)--Sept. 8, 1998-- Watkins-Johnson Company
(NYSE:WJ) today announced it will restructure its operations including a write
down of assets and an approximately 20 percent reduction of its global work
force. Except for severance costs, most of the charges associated with this
action do not affect the company's cash position.
The company expects results of third quarter of 1998, ending Sept. 25, to have a
net-of-tax loss of approximately $50 million to $55 million. This estimated loss
includes charges for restructuring, down-sizing and other operating charges.
Weakening Semiconductor Equipment Outlook
Continued weak orders for semiconductor capital equipment is the primary reason
for this action. The company is sizing its Semiconductor Equipment Group to
match a reduced level of forecasted revenue. As part of this resizing, further
efforts on the high-density plasma chemical-vapor-deposition (HDPCVD) systems
have been discontinued. The intellectual property generated by the plasma
development effort is being offered to potential buyers. The company will
continue to offer its core atmospheric pressure chemical-vapor-deposition
(APCVD) product line to semiconductor manufacturers.
Its future development activities will be focused on two recently announced
systems, the WJ-1500 and the WJ-3200A. The WJ-1500 extends the continuous
processing APCVD to 0.15 micron design rule fabrication plants. The WJ-3200A
system extends WJ's linear injector capability to next generation single wafer
processing (APNext).
"Semiconductor investment has declined and the company believes decisive actions
are required to bring its cost structure into alignment with the extremely low
conditions of this cyclical market," stated Dr. W. Keith Kennedy,
Watkins-Johnson's CEO. "We intend to preserve key research and development
activities to provide new equipment for the market applications in premetal
dielectric, shallow trench isolation and very-low dielectric constant (VLK)
films. New business processes are being implemented and our global support
strategy is being refined to effectively support our customers. The
Semiconductor Equipment Group will be appropriately positioned as the
semiconductor industry recovers."
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Wireless Communications Actions
The company continued to evaluate its Base2(tm) base-station product,
reassessing key customer needs and market conditions. Assets associated with
this product are included in the write down.
"The telecommunications industry is performing well," said Dr. Kennedy. "Our
wireless OEM subassembly product shipments continue to perform to our
expectations. We are optimistic for the future of the refocused Wireless
Communications business segment."
Share Repurchase Authorization Increased
Watkins-Johnson's Board of Directors has increased the share repurchase
authorization by 1,000,000 shares to a maximum of 3,500,000 shares. Through June
26, 1998 approximately 1,757,000 shares had been repurchased of which 52,600
were repurchased during the first half of 1998. Since then, the company has
repurchased nearly 640,000 additional shares, bringing the cumulative repurchase
to approximately 2,397,000 shares.
Forward-looking Statements
This news release, other than the historical financial information, consists of
forward-looking statements that involve risks and uncertainties, including
quarterly fluctuations in results, the timely availability of new products, the
impact of competitive products and pricing, and the other risks detailed from
time to time in the company's SEC reports, including the reports on Form 10-K
for the year ended December 31, 1997 and on Form 10-Q for the quarter ended June
26, 1998. Actual results may vary materially.
Background Information
Watkins-Johnson Company, headquartered in Palo Alto, specializes in two
high-technology business areas. WJ's wireless-communications units produce
radio-frequency components, subassemblies and equipment for fixed and mobile
networks worldwide. The company's Semiconductor Equipment Group produces
atmospheric-pressure dielectric chemical-vapor-deposition systems for
high-volume integrated-circuit manufacturing. Sales in 1997 exceeded $291
million.
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Contact:
Watkins-Johnson Company, Palo Alto
Frank E. Emery, 650/813-2752
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