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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 8, 1998
EATON CORPORATION
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(Exact name of registrant as specified in its charter)
Ohio 1-1396 34-0196300
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
Eaton Center
Cleveland, Ohio 44114
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(Address of principal executive offices) Zip Code
(216) 523-5000
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Registrant's telephone number,
including area code
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Item 5. Other Events.
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Press Releases
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The following press releases are attached as exhibits and incorporated herein
by reference:
99.1 Press release dated September 29, 1998 concerning charge of $50 million
to restructure Semiconductor Equipment Operations.
99.2 Press release dated September 1, 1998 concerning lowering 1998
expectations for sales and earnings of Semiconductor Equipment
Operations.
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SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EATON CORPORATION
/s/ A. T. Dillon
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A. T. Dillon
Executive Vice President
Chief Financial and Planning Officer
DATE: October 8, 1998
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Exhibit 99.1
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September 29, 1998
EATON TO TAKE CHARGE OF $50 MILLION TO RESTRUCTURE
SEMICONDUCTOR EQUIPMENT OPERATIONS
CLEVELAND, OHIO . . . Eaton Corporation (NYSE:ETN) today said it will take a
non-recurring, pre-tax charge against third quarter earnings of $42 million, or
38 cents a share, as it continues to restructure its Semiconductor Equipment
Operations (SEO).
The company also expects to have additional charges relating to the SEO
restructuring in the fourth quarter and in the first quarter of 1999 of
approximately $4 million in each quarter.
The restructuring will include the layoff of an additional 475 of the SEO
worldwide workforce, bringing to 1,050, or 42%, the number of employees laid off
as a result of declining global markets for the equipment that manufactures
semiconductor chips.
Stephen R. Hardis, Chairman and Chief Executive Officer said, "On September 1 we
said that we were studying additional actions required to stem the losses in our
semiconductor equipment business, while maintaining support for critical new
product programs. Today's actions are intended to do that.
"These decisions are painful and it is small consolation that such restructuring
actions are being implemented throughout the industry," he said. "However, until
we are confident that we have reestablished profitability, and an upturn has
begun, we must remain focused on our objective of achieving a breakeven at
current volumes. We have been forced to make some very difficult choices. It is
our intent, however, to continue our technical leadership, and by doing so bring
the very dynamic and demanding semiconductor industry the best possible
solutions to their need for continuing design, quality and productivity
improvements."
The company said it will close its ion implant equipment manufacturing facility
in Austin, Texas and transfer production to Beverly, Massachusetts.
Approximately 200 of the 239 people currently employed in Austin will be
permanently laid off. The remaining employees will be offered positions in
Beverly, where SEO will continue to develop and manufacture state of the art ion
implant equipment for the semiconductor industry. Phase-out of the Austin plant
will begin immediately and be concluded by March 1, 1999. The balance of the
workforce reductions will occur at SEO operations around the world.
The company said that management of SEO's Thermal Processing Systems business,
located in Peabody, Massachusetts, will be merged into the Fusion Systems
Division, located in Rockville, Maryland, and its Flat Panel Equipment business
will be merged into SEO's Implant Systems Division. The latter two are located
in Beverly.
In addition to the costs associated with the headcount reduction, the $50
million charge also includes asset write-downs and other restructuring charges.
The forward-looking statements in this news release should be used with caution.
They are subject to various risks and uncertainties, many of which are outside
the control of the Company. Important factors which could cause actual results
to differ materially from those in the forward-looking statements include
changes in global economic conditions and the market for semiconductor capital
equipment.
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SEO provides integrated process solutions for the semiconductor manufacturing
industry. Its equipment, which includes ion implanters, rapid thermal processors
and fast ramp vertical furnaces, photoresist strip and photostabilization
equipment, and flat panel display ion implanters, is used in state of the art
integrated circuit manufacturing worldwide. Since 1978, Eaton's Implant Systems
Division has been a market leader in the manufacture of high current, medium
current and high energy ion implantation equipment.
Eaton Corporation is a global manufacturer of highly engineered products which
serve industrial, vehicle, construction, commercial and semiconductor markets.
Principal products include electrical power distribution and control equipment,
truck transmissions and axles, engine components, hydraulic products, ion
implanters and a wide variety of controls. Headquartered in Cleveland, the
company has 49,000 employees and 150 manufacturing sites in 25 countries around
the world. Sales for 1997 were $7.6 billion.
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Exhibit 99.2
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September 1, 1998
EATON LOWERS 1998 EXPECTATIONS
FOR SEMICONDUCTOR EQUIPMENT
Eaton today announced that it was lowering 1998 expectations for sales and
earnings of its Semiconductor Equipment Segment. Chairman Stephen R. Hardis
said, "Like other industry participants, Eaton has been surprised by the
unprecedented severity of conditions in the semiconductor equipment industry.
Given current orders and backlog, we now expect that Eaton's Semiconductor
Equipment Segment sales will reach only $275 million in 1998, 40% below 1997,
and that the Segment will suffer about an $80 million operating loss."
Hardis emphasized that industry activity shows no sign of bottoming, and that no
one in the industry can say with confidence when conditions will begin to turn.
"We are currently addressing what additional actions are required to stem the
losses while supporting critical new product programs," said Hardis. "The goal
is to achieve an operational breakeven at current volumes. That study will be
complete in about a month. At that time, we will report back to our owners about
any additional charges that may be required to implement needed structural
adjustments."
The forward-looking statements in this bulletin should be used with caution.
They are subject to various risks and uncertainties, many of which are outside
the control of the Company. Important factors which could cause actual results
to differ materially from those in the forward-looking statements include
changes in global economic conditions and the market for semiconductor capital
equipment.
