Joint News Release
Contact: UNOVA - Dirk Koerber - (310) 888-2575
[8/21 thru 8/23: Pager - (888) 751-7570]
Milacron - Albert Beaupre - (513) 841-7241
UNOVA to Buy Cincinnati Milacron's Machine Tool Group
for $178 Million in Cash
Sale to Be Accretive to UNOVA, Adding Almost $500 Million in Revenues
-- Milacron to Change Name and Focus on Plastics and Consumables
BEVERLY HILLS, CA and CINCINNATI, OH - August 21, 1998 - UNOVA,
Inc. (NYSE:UNA) and Cincinnati Milacron Inc. (NYSE:CMZ) jointly
announced today that they have signed a definitive agreement under
which UNOVA will buy Milacron's machine tool business for $178
million in cash, subject to post-closing adjustments.
Cincinnati Milacron's machine tool group, with 2,400 employees
worldwide, will add approximately $500 million in revenues to UNOVA's
Industrial Automation Systems (IAS) segment, based in Warren,
Michigan. UNOVA had 1997 sales of $1.5 billion, of which $800
million came from the IAS segment, which designs and installs
manufacturing systems. Together, the operations will rank as one of
the largest manufacturing systems and machine tool companies in the
world.
All Assets and Facilities Included; Milacron to Change Name
Under the agreement, UNOVA will purchase all assets of
Milacron's machine tool operations, including plants and offices in
Cincinnati, Ohio, and Birmingham, England, as well as the corporate
headquarters building in Cincinnati. UNOVA said it plans to run the
operation as a separate division with the current management, under
the name "Cincinnati Machine - A UNOVA Company."
Milacron said it will concentrate on its two larger businesses:
plastics technologies and industrial products for metalworking. To
avoid confusion in the marketplace, the company will change its name
to "Milacron Inc." and plans to relocate its corporate headquarters,
staying within the greater Cincinnati area.
Acquisition to Broaden UNOVA's Business Base
"We're very excited about this transaction," said Alton J.
Brann, Chairman and CEO of UNOVA. "We are acquiring an operation
that is well along in its turnaround, and which allows us to expand
our manufacturing systems activities into the non-automotive sector.
Not only are we adding an excellent distribution network, but this
combination creates the critical mass and economies of scale that
enable us to compete even more successfully in today's global market.
Our combined work force and technological capabilities make UNOVA one
of the strongest competitors in the world."
`Good for All Concerned'
"This move is a good one for all concerned," said Daniel J.
Meyer, Milacron chairman, president and CEO. "Our machine tool
employees will be a part of a global market leader that is dedicated
to machine tools as a core business and has both the will and
resources to make it grow. Our customers and suppliers will continue
to deal with people whose tradition is quality and service.
"At the same time, Milacron shareholders win, because we can now
redeploy this capital and concentrate our energies on our two larger
businesses: plastics processing technologies and industrial
consumable products for metalworking," Meyer said. After the
divestiture and including the recently announced acquisition of
Uniloy, the leading U.S. maker of blow molding systems, "the new
Milacron should have revenues around $1.8 billion in 1999," he noted,
"and can be expected to register more consistent earnings."
Accretive for UNOVA; Milacron Will Have Book Loss
UNOVA said that the transaction will initially be financed with
cash on hand and existing lines of credit, and will be treated as a
purchase for accounting purposes. "We expect that the acquisition
will add up to $0.10 earnings-per-share to our 1999 results, and more
going forward," Brann said. The expected earnings accretion reflects
the possible impact of longer-term hybrid-equity financing solutions
UNOVA is currently examining.
Milacron said the transaction will result in an after-tax book
loss to be recorded in the third quarter of up to $32 million, or
$.80 per share, the majority of which stems from cumulative currency
translation adjustments related to overseas assets. "Although we're
taking a book loss on this, it should be remembered that we gained
$52 million, or $1.53 per share, when we sold the electronic controls
portion of our machine tool group at the end of 1995," Meyer noted.
The transaction is expected to be completed in early October
following necessary regulatory approvals, the companies said.
Shareholder approval is not required by either company.
UNOVA Has Long History in the Manufacturing Systems Market
Although formed in October of 1997 when its activities were spun
off from Western Atlas Inc., UNOVA has a long and successful
tradition in manufacturing systems and machine tools. Among its
divisions are such respected names as Lamb Technicon, Lamb Honsberg,
Landis Gardner, Landis Lund, Goldcrown and R&B Machine Tools.
"Equally important," Meyer said, "our corporate cultures and
traditions of quality and service are completely compatible. In
fact, I can't think of a better company to entrust with our machine
tool operations and the Cincinnati name."
Brann and Meyer noted that their respective machine tool lines
were complementary with very little overlap. Milacron's machine tool
products consist of aerospace systems and stand-alone machinery for
general metalworking, while UNOVA is a leading supplier of large
integrated systems primarily for the automotive industry.
_____________________
UNOVA, an industrial technologies company with headquarters in
Beverly Hills, California, is a global market leader in the design
and installation of sophisticated manufacturing systems for the
automotive, truck and diesel engine industries, and in automated data
collection, mobile computing and wireless networking products. UNOVA
was formed in October 1997 when its activities were spun off from
Western Atlas Inc. With the acquisition, UNOVA's revenues are
expected to approach $2.5 billion in 1999.
Milacron, after the machine tool divestiture, emerges as a world
leader in plastics processing technologies and industrial consumable
products for metalworking, with estimated 1998 sales from continuing
operations approaching $1.6 billion, major manufacturing facilities
in North America, Europe and Asia and 11,500 employees worldwide.
The company's plastics technologies include: injection molding
machines, blow-molding systems, extrusion systems and wear items,
mold bases, mold-making equipment and mold components and after-
market parts and services. The company's industrial products
include: carbide metalcutting inserts, insert holders, carbide and
high-speed steel round tools, metalworking fluids, chemical and tool
management services, precision grinding wheels, carbide wear parts
and industrial magnets.
Lazard Freres and Cravath, Swaine & Moore advised Milacron on
the transaction.
The above forward-looking statements by their nature involve
risks and uncertainties that could significantly impact operations,
markets, products and expected results. For further information,
please refer to the Cautionary Statements included in UNOVA's and
Cincinnati Milacron's most recent Forms 10-Q on file with the
Securities and Exchange Commission.
Supplemental releases and fact sheets are available from both
companies.
-end-
News Release
Contact: Albert Beaupre (513) 841-7241
NOTE: THIS IS A SUPPLEMENT TO A JOINT RELEASE ISSUED EARLIER TODAY
Milacron C.E.O. Meyer Details Expected Benefits
Of Sale of Machine Tool Operations to UNOVA
____________________________
"Considerable Advantages For All"
CINCINNATI, OH, August 21, 1998 - Cincinnati Milacron Inc. (NYSE:
CMZ) - Daniel J. Meyer, chairman, president and chief executive
officer of Cincinnati Milacron, Inc. (NYSE: CMZ) said that the sale
of the company's machine tool operations to UNOVA, Inc. has
"considerable advantage for all parties concerned."
"Combining our machine tool group with UNOVA's will create a very
powerful competitor - one of the largest machine tool companies in
the world - with the critical mass and economies of scale needed to
succeed in today's large global markets. At the same time, Milacron
will be able to focus exclusively on our two larger, higher-margin
businesses: plastics technologies and industrial products, achieving
stronger and more consistent cash flow and earnings. So it's a good
step for both companies' shareholders, employees, customers and
suppliers worldwide."
Under the definitive agreement announced in a separate joint release
this morning, UNOVA will pay $178 million in cash for Milacron's
machine tool business and assets. The unit had sales of $458 million
and had operating earnings of $14.5 million in 1997, and has shown
improving results in the first half of 1998. As a result of the
transaction, Milacron expects to record an after-tax book loss of as
much as $32 million, or $.80 per share, in the third quarter of 1998.
"A Bittersweet Move"
"Of course, this is a bittersweet move for us, because machine tools
have been at the heart of Milacron for more than a century," Meyer
said. "And even though the machine tool group will remain one of
Milacron's most important customers and suppliers, we will greatly
miss the day-to-day contact with many friends and colleagues.
"The advantages to our machine tool group - and its employees,
customers and suppliers - are considerable," Meyer pointed out,
"because the group will continue to be a vital part of a successful
global market leader known for advanced technology, high quality and
superior service. As a part of a world-class, large-scale enterprise
focused on machine tools as a core business, the future for the
Cincinnati machine tool group is brighter than ever.
"We are convinced that we couldn't find a better company to entrust
with our machine tool business," he said. "At the same time, UNOVA
is getting a top-quality operation, with an excellent reputation, and
some of the best and brightest people in the business."
Milacron Becomes a Stronger, Less Cyclical Company
"The benefits for Milacron are also compelling," Meyer added. "We
become a stronger, less cyclical company, driven more by industrial
production and the consumer economies worldwide and less dependent on
domestic capital spending cycles. Further, we free up capital and
resources to concentrate on our plastics technologies and industrial
products operations. Essentially, we will have the benefit of more
than $178 million in cash, giving us greater flexibility to invest in
those businesses and supplement them with strategic acquisitions -
all without the need for new equity."
Milacron has made eleven acquisitions since 1993, as well as several
smaller divestitures going back to 1989, Meyer noted. "The
divestitures have aligned various operations, which were no longer
core for Milacron, with other companies' core businesses. And the
acquisitions have been excellent additions to our two larger
segments: plastics processing technologies and industrial consumable
products for metalworking, which, in recent years have accounted for
three-fourths of our sales and 90% of our earnings." he said. The
majority of the book loss on the sale results from cumulative
currency translation effects related to overseas assets. "While we're
taking a book loss on the sale, it should be remembered that we had a
$52 million gain - $1.53 per share - when we sold the electronic
controls portion of our machine tool group at the end of 1995," said
Meyer.
The New Milacron Inc.
Effective with the closing of the transaction, Cincinnati Milacron
will officially change its corporate name to Milacron, Inc. "The
rights to the long and widely respected name Cincinnati when used on
machine tools and metalworking equipment will become the property of
UNOVA," Meyer said. "We'll go forward as Milacron, which retains the
recognition and reputation we've established in plastics and
industrial products. The new Milacron will be an exciting, fast-
paced, global technology leader, with expected 1999 sales in excess
of $1.8 billion," he added.
The above forward-looking statements by their nature involve risks
and uncertainties that could significantly impact operations,
markets, products and expected results. For further information
please refer to the Cautionary Statement included in Item 2 of
Cincinnati Milacron's most recent Form 10-Q on file with the
Securities and Exchange Commission.
____________________
Milacron, after the machine tool divestiture, emerges as a world
leader in plastics processing technologies and industrial consumable
products for metalworking, with estimated 1998 sales from continuing
operations of $1.6 billion, major manufacturing facilities in North
America, Europe and Asia, and 11,500 employees worldwide. The
company's plastics technologies include: injection molding machines,
blow-molding systems, extrusion systems and components, mold bases,
mold-making equipment and mold components; the company's industrial
products include: metalcutting inserts, insert holders and round
tools, metalworking fluids, chemical and tool management services,
precision grinding wheels, carbide wear parts and industrial magnets.
Additional releases, fact sheets and other information are available
on request.
-end-
"The New Milacron Inc." - Investor Profile
A New Name for a Reborn Company
On August 21, 1998, Cincinnati Milacron Inc. (NYSE: CMZ) announced it
would sell its legacy machine tool business to UNOVA, Inc. (NYSE: UNA),
shorten its name to Milacron Inc. and focus on its two remaining larger
businesses: plastics technologies and industrial products. Since 1989,
Milacron has transformed itself through eleven major acquisitions all
within these two segments - as well as eight key divestitures.
Milacron Inc.
Recent Price $22 (8/20/98) 1997 Sales* $1.4 billion
Shares Outstanding 39.1 million 1997 EPS* (diluted) $1.72
Market Value $860 million Shareholders'
Equity** $473 million
Book Value/Share** $11.86 Debt-to-Capital
Ratio** 48%
P/E(12-mo.trailing) 10 Annual Dividend $.48 per share
* From continuing operations, i.e. adjusted for the sale of
machine tools
** Pro forma as of 6/30 - includes sale of machine tools and
acquisition of Uniloy
The New Enterprise
- Estimated 1998 revenues of $1.6 billion; estimated 1999 revenues
of $1.8 billion
- Long-term sales growth target of 7% to 8% annually - excluding
acquisitions
- Segment operating margins (EBIT/sales) in excess of 10%
- Long-term EPS growth target of 12% to 15% annually
- Increasing, more consistent cash flow and earnings
Balanced Revenues
- By segment: current running mix: 55% plastics technologies and
45% industrial products
- Geographically: current running mix: 55% U.S. and 45% rest of
the world
- By product type: 40% capital goods; 25% durable goods; 25%
consumables; 10% components
Strong Market Positions
With major manufacturing facilities in North America, Europe and India,
and 11,500 employees worldwide, the new Milacron has:
- World's broadest line of machines, systems and supplies for
plastics-processing
- #1 share of North American market for plastics machinery and
mold components
and #2 worldwide share in each of these businesses
- World's broadest line of industrial consumable products for
metalworking
- #2 share of North American market for cutting tools and #3
worldwide
A Proven Track Record of Growth
- 1992-1997 compound annual growth: 29% sales, 47% pre-tax
earnings; 59% net earnings and 48% EPS
Milacron Inc. - From continuing operations, before one-time items
In $ millions except EPS 1992 1993 1994 1995 1996 1997
Sales 410 674 859 1240 1358 1439
E.B.I.T. 29 38 57 90 106 113
Pre-Tax Earnings 13 25 42 65 76 86
Net Earnings 7 17 31 49 54 69
Earnings per Share .24 .52 .92 1.43 1.41 1.72
"The New Milacron Inc." - Fact Sheet
- World's broadest-line producer of machines, systems and supplies
for plastics processing.
- The largest maker of plastics machinery in North America and
second-largest worldwide.
- World's broadest-line producer of industrial consumable products
for metalworking.
- The second-largest cutting tool maker in North America and the
third largest worldwide.
Employees 11,500 people worldwide: 6,000 in U.S.; 3,500 in Europe;
2,000 in rest of the world.
Sales* 1997: $1.4 billion 1998E: $1.6 billion 1999E: $1.8 billion
1997 Sales* by Segment 1997 Sales* by Industry
51% Plastics Technologies 21% Automotive
49 Industrial Products 19 Custom Molders/Job Shops
10 Electrical
1997 Sales* by Geography 8 Construction
53% United States 8 Industrial Components
30 Europe 7 Consumer Goods/Toys
9 Asia 7 Machinery/Off-Road
6 Canada & Mexico 4 Housewares/Appliances
2 Rest of World 3 Medical
13 Other
*From continuing operations, i.e. adjusted for the sale of machine tools
Major Products Lines
Plastics Technologies Segment Industrial Products Segment
Injection Molding Machines Metalcutting Tools
(hydraulic, toggle, all-electric, (carbide inserts, steel
multi-material,vertical-insert) holders,drills, end mills,
taps, reamers)
Blow Molding Systems Metalworking Fluids
Extrusion Systems Grinding Wheels
Mold Bases Carbide Wear Parts
Moldmaking parts and equipment Industrial Magnets
Major Manufacturing Facilities
United States
Batavia/Mt. Orab, OH Plastics machinery and part making
Chisholm, MN High-speed steel drills
Cincinnati, OH Metalworking fluids and grinding
wheels
Cleveland
(Valley View), OH Weldon end mills
Gainesville, TX Carbide inserts
McPherson, KS Weartech extruder screws and
barrels
Madison Heights, MI D-M-E mold bases and moldmaking
components
Madison Heights, MI Valenite carbide inserts and steel
holders
Manchester, MI Uniloy blow-molding equipment
Millersburg, PA End mills and taps
Pittsfield, MA Carbide round tools
South Carolina
(5 locations) Carbide inserts
Europe
Essen/Sinsheim, Germany Widia carbide inserts, steel
holders, magnets
Malterdingen, Germany Ferromatik injection molding
machines
Mechelen, Belgium D-M-E mold bases and moldmaking
components
Vienna, Austria Plastics extrusion systems
Vlaardingen,
The Netherlands Metalworking fluids
Fact Sheet
Cincinnati Milacron Machine Tool Group
- A world leader in aerospace profiling and routing machines and
composites-processing systems
- A world leader in vertical machining centers (made in the UK)
- A leading U.S. maker of horizontal machining centers and
centerless grinding machines
- A leading U.S. maker of pre-engineered flexible manufacturing
cells and systems
Employees 2,400 total worldwide
1,725 in U.S. (1,375 in Cincinnati, Ohio)
600 in Birmingham, UK
75 in rest of world
1997 Sales $458 million
Production Facilities
Cincinnati, Ohio 4 manufacturing plants plus offices =1.25 million sq. ft.
Birmingham, England 1 manufacturing plant plus offices = 200,000 sq. ft.
Product Lines
Standard Machines Advanced Systems
Vertical machining centers Five-axis profilers
(Sabre, Arrow, Lancer)
Turning centers High-speed routing machines
(Avenger, Falcon, Cinturn)
Production Systems Die- and mold making machines
Horizontal machining centers Composites-processing systems
(Maxim, Magnum)
Grinding machines (Viking)
Mill/turn centers (Nighthawk)
Milacron's Machine Tool Markets
Milacron's machine tool group competes in approximately one-
third of the worldwide market for machine tools, which is estimated
at $35 to 40 billion
annually.
1997 Sales by Industry Sales by Geography (1997 data)
Aerospace 26% United States 70
Job Shops 22 Europe 17
Components 17 Asia 9
Automotive 14 Canada & Mexico 3
Fluid Power 8 Rest of World 1
Machinery 3
Tool and Die 2
Electrical 1
Off-road/
Agricultural 1
Other 12
"The New Milacron Inc."
Recent Acquisition & Divestiture History
Sales
Acquisition Date Segment at Date Price Rationale/Strategic Benefits
Uniloy 9/98 Plastics Technologies $190M $210 M leader in blow molding equipment
Autojectors 5/98 Plastics Technologies 20 M ND leader in vertical insert molding systems
Wear Technologies 2/98 Plastics Technologies ~10 M ND strong aftermarket for extruder barrels & screws
Northern Supply 2/98 Plastics Technologies 5+ M ND distribution: aftermarket spare parts catalogue
Minnesota
Twist Drill 9/97 Industrial Products 10+ M ND entry into high-speed steel round tool market
Data Flute CNC 6/97 Industrial Products 10+ M ND expansion of carbide round tool lines
D-M-E 1/96 Plastics Technologies 175 M 246 M entry into mold base and mold components
Talbot Holdings 7/95 Industrial Products 40 M 38 M entry into steel and carbide round tool business
Widia 2/95 Industrial Products 250 M 96 M leading cutting insert maker in Europe and India
Ferromatik 11/93 Plastics Technologies 80 M 50 M multi-material injection molding technology
Valenite 2/93 Industrial Products 260 M 77 M entry into insert cutting tool market
Gain
Divestiture Date Segment Sales Price (Loss) Rationale
Machine Tools 9/98 Machine Tools $485 M $178 M $(32) M redeploy resources into faster-growing segments
Electronic
Systems 12/95 Machine Tools 30 M 104 M 52 M redeploy resources into faster-growing segments
American
Mine Tool 1/95 Industrial Products 30 M 15 M 4 M not core to metalworking or plastics processing
Sano Blown
Film Equip 2/94 Plastics Technologies ND 9 M (23) M not core to high-tech plastics processing systems
LK Tool
Meas. Equip. 9/91 Industrial Products 30 M ND (15) M not core to metalworking or plastics processing
Industrial Robots 9/90 Industrial Products 31 M ND (2) M not core to metalworking or plastics processing
ILM Laser
Machines 12/89 Industrial Products 3 M ND (5) M not core to metalworking or plastics processing
Semiconductor
Materials 1/89 Industrial Products ND 29 M 1 M not core to metalworking or plastics processing
ND = not disclosed
Milacron Inc.
Historical Data
Preliminary
($ in millions, except EPS amounts)
1992 1993 1994 1995 1996 1997
Plastics technologies $301.4 $357.2 $503.8 $ 570.1 $ 662.4 $ 735.7
Industrial products 108.1 317.2 354.8 670.2 695.5 703.0
Total sales 409.5 674.4 858.6 1,240.3 1,357.9 1,438.7
Plastics technologies 25.7 29.2 45.9 54.3 59.2 59.7
Industrial products 18.7 29.0 36.3 62.1 73.7 81.2
Total operating profit 44.4 58.2 82.2 116.4 132.9 140.9
Unallocated expenses (15.5) (20.0) (24.8) (26.2) (26.7) (28.3)
Earnings before interest and taxes 28.0 38.2 57.4 90.2 106.2 112.6
Interest-net (16.2) (13.4) (15.3) (24.8) (29.8) (26.5)
Earnings before income taxes 12.7 24.8 42.1 65.4 76.4 86.1
Provision for income taxes 5.8 8.1 10.9 16.2 22.6 17.0
Tax rate 46% 33% 26% 25% 30% 20%
Earnings from continuing
operations before nonrecurring
items 6.9 16.7 31.2 49.2 53.8 69.1
EPS 0.24 0.52 0.92 1.43 1.41 1.72
Nonrecurring items after tax ______ (22.8)(b) _____ 3.8(f)______ ________
Earnings(loss) from continuing
operations 6.9 (6.1) 31.2 45.4 53.8 69.1
EPS 0.24 (0.20) 0.92 1.32 1.41 1.72
Extraordinary items 5.4(a) (4.4)(c)
EPS 0.20 (0.14)
Cumulative effect of changes (52.1)(d)
EPS (1.66)
Discontinued machine tool
operations 9.2 (39.3)(e) 6.5 60.2(g) 12.5 11.5
EPS 0.33 (1.26) 0.19 1.75 0.33 0.29
Net earnings(loss) $21.5 $(101.9) $37.7 $105.6 $ 66.3 $ 80.6
EPS $0.77 $ (3.26) $11.1 $.307 $ 1.74 $ 2.01
Total depreciation and
amortization $10.3 $16.7 $21.4 $36.2 $ 45.9 $47.5
Earnings before interest,
taxes, depreciation and
amortization (EBITDA) $39.2 $54.9 $78.8 $126.4 $152.1 $160.1
(a) Represents an extraordinary tax benefit from the partial utilization of the
company's U.S. net operating loss carryforward.
(b) Represents nonrecurring charges totaling $22.8 million (with no current tax
effect) for the disposition of a subsidiary.
(c) Represents an extraordinary loss ($5.2 million before tax) from the early
extinguishment of debt.
(d) Represents the cumulative effect of the adoption of Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions" and Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes."
(e) Includes a charge of $47.1 million (with no current tax effect) for the
consolidation of U.S. machine tool manufacturing operations.
(f) Represents an after tax gain of $4.0 million (45.0 million before tax) on
the sale of the company's American Mine Tool Business and an after tax charge of
$7.8 million ($9.8 million before tax) for the integration of certain Widia and
Valenite operations.
(Note: EPS amounts represent diluted earnings per share.)