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Eaton sells AIL subsidiary to employee stock ownership plan
CLEVELAND, OH.... Eaton Corporation today said it has sold a majority of the stock of its AIL Systems Inc. subsidiary to AIL management and an AIL employee stock ownership plan (ESOP) for an undisclosed amount. Eaton will retain a minority interest in the new company. The transaction is effective today.
AIL, which develops and produces high technology electronics for the U.S. military, had 1996 sales of $112 million.
Stephen R. Hardis, Eaton Chairman and Chief Executive Officer, said: "Today's action permits AIL to more directly determine its own future. AIL's management under Jim Smith has done an extraordinary job of coping with the effects of the prolonged reduction in defense procurement and the restructuring of the defense supplier industry. This team will now have a chance to pursue their strategic objectives as an independent, motivated group. We have every confidence in the future of AIL as it returns to its original form of a technically superior organization owned and controlled by its employees."
Neil A. Armstrong will continue in his role as chairman of the AIL board of directors. Other board members are James M. Smith, AIL President and Chief Executive Officer; Darrell L. Reed, Chief Financial and Administrative Officer; and Eaton's retired Vice President Accounting, Ronald L. Leach. Other outside directors will be added to the board in the future.
Founded immediately following World War II as Airborne Instruments Laboratory, the Long Island-based company became a leader in the development of radar technologies for such applications as air and vessel traffic control systems and the automatic landing system for the Space Shuttle. Its most significant military contracts were to provide the defensive countermeasures system for the U. S. Air Force's B-1B bomber and EF-111 aircraft, as well as the U. S. Navy's EA-6B aircraft.
More recently, AIL has developed major initiatives in the areas of space-based communications, environmental monitoring instruments and lightweight surveillance radars. AIL was acquired by Cutler-Hammer, Inc. in 1958, and became a part of Eaton Corporation when Eaton acquired Cutler-Hammer in 1979.
Also included in today's announcement are AIL's two California business units, American Nucleonics Corporation of Westlake Village and Technical Services Operations of Lancaster. Total AIL employment is approximately 900.
Today's announcement does not affect Eaton's Aerospace Controls or Navy Controls businesses, which are leaders in the development and manufacture of electrical systems and controls for aviation and shipboard commercial and military applications.
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 55,000 employees and 155 manufacturing sites in 26 countries around the world. Sales for 1996 were $7 billion.