EXHIBIT 99.1
MILACRON
Manufacturing Technologies News Release
Note: At 1 p.m. EDT on 7/30, Milacron will hold an open investor conference
call, which can be accessed live at www.milacron.com. The dial-in number for
those interested in asking questions is (913) 981-4900. A replay of the call
will be made available from 4 p.m. on 7/30 through midnight on 8/6 at
www.milacron.com or dial-in at (719) 457-0820 or (888) 203-1112: access code
107530.
MILACRON Q2 SALES AND SEGMENT EARNINGS
IN LINE WITH GUIDANCE;
OUTLOOK POSITIVE AS NEW ORDERS INCREASE
CINCINNATI, OHIO, July 30, 2004...Milacron Inc. (NYSE: MZ) today reported a
net loss of $27.8 million, or $0.64 per share, in the second quarter of 2004
on sales of $192 million. The loss included $14.6 million in refinancing costs
and $1.7 million in restructuring costs, as well as a one-time non-cash
writeoff which added $6.4 million to interest expense. In comparison, in the
second quarter of 2003 the company had sales of $182 million and a net loss of
$91.3 million, or $2.72 per share, which included $6.3 million in after-tax
restructuring costs, a $3.0 million after-tax loss from discontinued
operations and a $70.8 million writedown of deferred tax assets.
Second quarter 2004 sales and segment earnings were within the range of the
guidance issued by Milacron in April. New orders in the second quarter of 2004
were $200 million, up 5% over the second quarter of 2003 and up 7% over the
first quarter of this year, as the backlog of unshipped orders grew by $8
million. The company also reaffirmed its positive outlook for the rest of the
year.
Before interest, taxes, restructuring and refinancing costs, earnings from
continuing operations in the second quarter of 2004 improved significantly to
a $4.8 million profit from a $4.0 million loss in the second quarter of 2003.
(See reconciliation table.)
Cash used by operating activities in the most recent quarter was $3.9 million,
which included a $10.4 million annual interest payment on the company's
Eurobonds, since retired. Milacron continued to reduce its primary working
capital, cutting it to 21.8% of sales, down almost five full percentage points
from 26.5% in the third quarter last year. A major contributor to this gain
was the ongoing implementation of Lean manufacturing techniques, which led to
higher year-over-year inventory turns in each of the company's operations.
-more-
MILACRON INC. - 2090 FLORENCE AVE. - CINCINNATI, OHIO 45206 - 513.487.5000 -
WWW.MILACRON.COM
"The second quarter was significant for Milacron in many respects," said
Ronald D. Brown, chairman, president and chief executive officer.
"Importantly, we completed major refinancing transactions that have provided
us with a much stronger capital structure. Our new orders in the quarter
exceeded $200 million for the first time in over three years. We completed the
sale of our grinding wheel business, the last of our discontinued metalworking
operations, and we concluded the bulk of our company-wide operational
restructuring activities. This means we are now able to devote all our
energies to what we are known for, namely providing our customers around the
world with the best in technology and service."
SEGMENT RESULTS
MACHINERY TECHNOLOGIES-NORTH AMERICA (machinery and related parts and services
for injection molding, blow molding and extrusion supplied from North America
and India) Stronger demand in several key markets - packaging, construction,
automotive, medical and consumer goods - led to new orders of $87 million, up
from $83 million in the second quarter of 2003, while sales rose to $83
million, up 11% over the same period last year. This increased sales volume,
together with cost-savings from restructuring actions and favorable one-time
items of about $1 million, helped improve segment earnings, despite higher
pension costs, to $3.4 million, compared to a segment loss of $1.6 million in
the year-ago quarter.
MACHINERY TECHNOLOGIES-EUROPE (machinery and related parts and services for
injection molding and blow molding supplied from Europe) Demand for Milacron's
European-built machinery was primarily export driven and grew significantly,
reflecting strength in packaging, consumer goods and medical markets. Second
quarter new orders in this segment were $46 million, an 18% jump over the
second quarter of 2003, while sales rose 9% to $42 million. Almost $2.5
million of the increases in new orders and sales were the result of favorable
currency translation. Helped by higher sales volumes and recent cost-cutting
measures, segment earnings improved to $1.3 million compared to a loss of $1.8
million in the year-ago quarter.
MOLD TECHNOLOGIES (mold bases and related parts and services, as well as
maintenance, repair and operating supplies for injection molding worldwide)
Sales in North America were relatively flat with those of the second quarter
of 2003, but, despite higher insurance costs, profitability improved as a
result of earlier restructuring measures. Continued weakness in European
mold-making markets, which have shown double-digit declines year to date in
2004, accounted for an overall drop in segment sales in the second quarter to
$40 million from $43 million a year ago. Also, highly competitive pricing in
Europe precluded passing on increases in raw material costs, especially for
steel. As a consequence, this segment reported an operating loss of $0.1
million in the quarter, compared to operating earnings of $0.1 million in
2003.
INDUSTRIAL FLUIDS (water-based and oil-based coolants, lubricants and cleaners
for metalcutting and metalforming operations worldwide) Sales of $28 million
were up from $26 million in the second quarter a year ago, reflecting strong
auto production and increasing industrial activity in North America, as well
as favorable currency translation of European sales. Segment earnings declined
to $3.4 million from $3.7 million a year ago, primarily as a result of higher
insurance and pension costs.
-more-
MILACRON INC. - 2090 FLORENCE AVE. - CINCINNATI, OHIO 45206 - 513.487.5000 -
WWW.MILACRON.COM
OUTLOOK
"Our outlook for 2004 remains positive, as the manufacturing sector of the
economy continues to rebound," Brown said. "Capacity utilization rates of U.S.
plastics processors reached 83.7% in June. This is the highest level in almost
four years, which bodes well for our machinery businesses. Our backlog is up
14% from year-ago levels, our pipeline of probable new machine orders
continues to grow and pricing is beginning to stabilize despite the somewhat
dampening effect from an overhang of used machines that have recently come
onto the market.
"Sales in our non-machinery businesses - plastics supplies, mold components
and services, as well as industrial fluids - have also begun to pick up in
North America, as many of our customers' end markets have begun to strengthen.
While Western Europe is showing slow growth in 2004, Eastern European markets
are expanding, and Asian markets, particularly China and India, continue to
grow at a rapid pace. Our new business in these areas reflects that growth,
validating our strategy to increase our presence in developing markets. Year
to date, we've had sales in excess of $80 million outside our traditional U.S.
and Western European markets, a double-digit increase over the first half of
last year.
"As demand continues to grow, we are beginning to see some improvement in
pricing for our products, which, on the whole, should offset rising raw
material costs. Higher sales volumes in the second half of the year should
also help us realize the full benefit of our recent restructuring actions and
enable us to return to profitability in the fourth quarter," Brown concluded.
The forward-looking statements above 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 the company's most recent Form 10-Q on file with the
Securities and Exchange Commission.
First incorporated in 1884, Milacron is a leading global supplier of
plastics-processing technologies and industrial fluids, with 3,500 employees
and major manufacturing facilities in North America, Europe and Asia. For
further information, visit www.milacron.com or call the toll-free investor
line: 800-909-MILA (800-909-6452).
CONTACT: AL BEAUPRE (513) 487-5918
Tables Attached
MILACRON INC. - 2090 FLORENCE AVE. - CINCINNATI, OHIO 45206 - 513.487.5000 -
WWW.MILACRON.COM
MILACRON INC. AND SUBSIDIARIES
SECOND QUARTER 2004
- ------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------------------- -----------------------------------
2004 2003 2004 2003
- ------------------------------------------------------------------------------------------------------------------------
SALES $ 191,745,000 $ 181,608,000 $ 380,678,000 $ 371,770,000
LOSS FROM CONTINUING OPERATIONS (27,971,000) (88,309,000) (43,964,000) (95,881,000)
Per Share
Basic (0.64) (2.63) (1.14) (2.86)
Diluted (0.64) (2.63) (1.14) (2.86)
GAIN (LOSS) FROM DISCONTINUED OPERATIONS 126,000 (2,968,000) (477,000) (3,717,000)
Per Share
Basic - (0.09) (0.01) (0.11)
Diluted - (0.09) (0.01) (0.11)
NET LOSS (27,845,000) (91,277,000) (44,441,000) (99,598,000)
Per Share
Basic (0.64) (2.72) (1.15) (2.97)
Diluted (0.64) (2.72) (1.15) (2.97)
COMMON SHARES
Weighted average outstanding for basic EPS 43,429,000 33,608,000 38,671,000 33,588,000
Weighted average outstanding for diluted EPS 43,429,000 33,608,000 38,671,000 33,588,000
Outstanding at quarter end 35,666,000 33,816,000 35,666,000 33,816,000
- -------------------------------------------------------------------------------
Note: These statements are unaudited and subject to year-end adjustments.
CONSOLIDATED EARNINGS
Milacron Inc. and Subsidiaries
SECOND QUARTER 2004
- --------------------------------------------------------------------------------------------------------------------
(IN MILLIONS, EXCEPT PER-SHARE DATA) THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------- -------------------------------
2004 2003 2004 2003
- --------------------------------------------------------------------------------------------------------------------
SALES $ 191.7 $ 181.6 $ 380.6 $ 371.8
Cost of products sold 156.2 149.7 312.3 308.1
Cost of products sold related to restructuring - 3.8 - 3.8
------------ ------------ ------------ ------------
Manufacturing margins 35.5 28.1 68.3 59.9
Percent of sales 18.5% 15.5% 17.9% 16.1%
OTHER COSTS AND EXPENSES
Selling and administrative 30.8 34.3 61.7 64.5
Refinancing costs (a) 14.6 - 21.0 -
Restructuring costs (b) 1.7 2.5 2.8 8.5
Other expense - net (0.1) 1.6 1.3 2.3
------------ ------------ ------------ ------------
Total other costs and expenses 47.0 38.4 86.8 75.3
------------ ------------ ------------ ------------
OPERATING LOSS (11.5) (10.3) (18.5) (15.4)
Interest expense - net of interest income (c) (15.3) (5.8) (23.2) (11.0)
------------ ------------ ------------ ------------
LOSS FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES (26.8) (16.1) (41.7) (26.4)
Provision for income taxes (d) 1.1 72.2 2.2 69.5
------------ ------------ ------------ ------------
LOSS FROM CONTINUING OPERATIONS (27.9) (88.3) (43.9) (95.9)
DISCONTINUED OPERATIONS - NET OF INCOME TAXES (E) 0.1 (3.0) (0.5) (3.7)
------------ ------------ ------------ ------------
NET LOSS $ (27.8) $ (91.3) $ (44.4) $ (99.6)
============ ============ ============ ============
LOSS PER COMMON SHARE - BASIC AND DILUTED
CONTINUING OPERATIONS $ (0.64) $ (2.63) $ (1.14) $ (2.86)
DISCONTINUED OPERATIONS - (0.09) (0.01) (0.11)
------------ ------------ ------------ ------------
NET LOSS $ (0.64) $ (2.72) $ (1.15) $ (2.97)
============ ============ ============ ============
(a) In the first quarter, represents costs incurred in pursuing various
alternatives to the company's March 12 refinancing of $200 million in
debt and other obligations. In the second quarter, represents costs that
resulted from the refinancing and recapitalization of the company.
(b) Represents costs related to initiatives announced in 2002 through 2004 to
reduce operating and administrative costs.
(c) In the second quarter of 2004, includes $6.4 million for the write-off of
a financial asset related to a beneficial conversion feature that allowed
the holders of convertible debt issued on March 12, 2004 to acquire
common shares on April 15, 2004 at $2.00 per share.
(d) In 2003, includes a second quarter charge of $70.8 million for the
establishment of valuation allowances related to U.S. deferred tax
assets.
(e) Reflects the presentation of Grinding Wheels in 2004 and 2003 and Round
Tools in 2003 as discontinued operations.
- -------------------------------------------------------------------------------
Note: These statements are unaudited and subject to year-end adjustments.
CONSOLIDATED BALANCE SHEETS
Milacron Inc. and Subsidiaries
SECOND QUARTER 2004
- -----------------------------------------------------------------------------------------------
(IN MILLIONS) JUNE 30, JUNE 30,
2004 2003
- -----------------------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents $ 42.0 $ 67.2
Notes and accounts receivable-net (a) 124.7 94.3
Inventories 130.0 145.2
Other current assets 51.0 62.5
Assets of discontinued operations (b) - 14.9
----------- -----------
TOTAL CURRENT ASSETS 347.7 384.1
Property, plant and equipment - net 131.4 147.1
Goodwill 83.1 147.6
Other noncurrent assets 116.1 113.6
----------- -----------
TOTAL ASSETS $ 678.3 $ 792.4
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term borrowings and long-term debt due within one year (c) $ 6.7 $ 160.3
Trade accounts payable and advance billings and deposits 87.0 73.7
Accrued and other current liabilities 102.4 110.2
Liabilities of discontinued operations (b) - 8.4
----------- -----------
TOTAL CURRENT LIABILITIES 196.1 352.6
Long-term accrued liabilities 225.1 241.5
Long-term debt 236.2 155.0
Shareholders' equity 20.9 43.3
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 678.3 $ 792.4
=========== ===========
(a) In 2003, excludes receivables for continuing operations of $32.1 million
that were sold under the receivables sale program.
(b) Reflects the presentation of Grinding Wheels and Round Tools as
discontinued operations in 2003.
(c) In 2004, the revolving credit facility was undrawn, excluding outstanding
letters of credit of $21.4 million. In 2003, $42.0 million was drawn,
excluding letters of credit of $11.9 million.
- -------------------------------------------------------------------------------
Note: These statements are unaudited and subject to year-end adjustments.
CONSOLIDATED CASH FLOWS
Milacron Inc. and Subsidiaries
SECOND QUARTER 2004
- ---------------------------------------------------------------------------------------------------------------------------------
(IN MILLIONS) THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------------------------------------------------
2004 2003 2004 2003
- ------------------------------------------------------------------------------------------------ -----------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
OPERATING ACTIVITIES CASH FLOWS
Net Loss $ (27.8) $ (91.3) $ (44.4) $ (99.6)
Loss from discontinued operations 0.7 3.0 1.3 3.7
Adjustment of loss on sale of Grinding Wheels (0.8) - (0.8) -
Depreciation and amortization 5.1 5.6 10.4 11.3
Refinancing costs 14.6 - 21.0 -
Restructuring costs 1.7 6.3 2.8 12.3
Working capital changes
Notes and accounts receivable (a) (1.6) 0.5 (31.6) 1.9
Inventories 0.8 10.4 0.9 7.6
Other current assets 5.1 (0.7) (5.7) 7.9
Other current liabilities (3.1) (22.7) (5.3) (32.5)
Deferred income taxes and other - net 1.4 71.6 5.3 65.1
----------- ----------- ----------- -----------
NET CASH USED BY OPERATING ACTIVITIES (3.9) (17.3) (46.1) (22.3)
INVESTING ACTIVITIES CASH FLOWS
Capital expenditures (1.4) (1.7) (2.9) (3.0)
Divestitures 8.0 - 8.0 (24.4)
Acquisitions and other - net (0.1) 2.0 0.2 (4.2)
----------- ----------- ----------- -----------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 6.5 0.3 5.3 (31.6)
FINANCING ACTIVITIES CASH FLOWS
Issuance of long-term debt 219.8 - 219.8 -
Repayments of long-term debt (145.2) (0.5) (260.6) (1.0)
Increase (decrease) in short-term borrowings (82.1) 0.7 58.3 (1.3)
Debt issuance costs (13.6) - (21.9) -
Dividends paid (0.2) (0.4) (0.2) (0.8)
----------- ----------- ----------- -----------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (21.3) (0.2) (4.6) (3.1)
EFFECT OF EXCHANGE RATE FLUCTUATIONS ON CASH
AND CASH EQUIVALENTS (0.6) 3.5 (1.2) 7.0
CASH FLOWS RELATED TO DISCONTINUED OPERATIONS (0.7) (1.4) (4.2) (5.1)
----------- ----------- ----------- -----------
DECREASE IN CASH AND CASH EQUIVALENTS (20.0) (15.1) (50.8) (55.1)
Cash and cash equivalents at beginning of period 62.0 82.3 92.8 122.3
----------- ----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 42.0 $ 67.2 $ 42.0 $ 67.2
=========== =========== =========== ===========
(a) In the six months ended June 30, 2004, includes $33 million representing
the effect of the repayment of the amounts that were previously sold on
the receivables sale program.
- -------------------------------------------------------------------------------
Note: These statements are unaudited and subject to year-end adjustments.
SEGMENT AND SUPPLEMENTAL INFORMATION
Milacron Inc. and Subsidiaries
SECOND QUARTER 2004
- ---------------------------------------------------------------------------------------------------------------
(IN MILLIONS) THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------------------------------------------------
2004(A) 2003(A) 2004(A) 2003(A)
- -------------------------------------------------------------------------------- ---------------------------
MACHINERY TECHNOLOGIES NORTH AMERICA
Sales $ 83.2 $ 74.7 $ 160.5 $ 163.0
Operating cash flow (b) 5.3 0.7 6.7 5.2
Segment earnings (loss) 3.4 (1.6) 2.8 0.5
Percent of sales 4.1% -2.1% 1.7% 0.3%
New orders 87.2 83.5 166.3 168.4
MACHINERY TECHNOLOGIES EUROPE
Sales $ 42.4 $ 38.9 $ 84.9 $ 73.9
Operating cash flow (b) 2.3 (0.8) 4.5 (0.5)
Segment earnings (loss) 1.3 (1.8) 2.4 (2.5)
Percent of sales 3.1% -4.6% 2.8% -3.4%
New orders 45.7 38.8 85.7 72.1
MOLD TECHNOLOGIES
Sales $ 39.9 $ 43.0 $ 83.2 $ 87.6
Operating cash flow (b) 1.5 1.8 4.5 3.8
Segment earnings (loss) (0.1) 0.1 1.3 0.4
Percent of sales -0.3% 0.2% 1.6% 0.5%
New orders 40.5 42.5 83.5 87.2
ELMINATIONS
Sales $ (1.5) $ (1.3) $ (1.9) $ (4.3)
New orders (1.0) (1.4) (2.3) (2.6)
TOTAL PLASTICS TECHNOLOGIES
Sales $ 164.0 $ 155.3 $ 326.7 $ 320.2
Operating cash flow (b) 9.1 1.7 15.7 8.5
Segment earnings (loss) 4.6 (3.3) 6.5 (1.6)
Percent of sales 2.8% -2.1% 2.0% -0.5%
New orders 172.4 163.4 333.2 325.1
INDUSTRIAL FLUIDS
Sales $ 27.7 $ 26.3 $ 53.9 $ 51.6
Operating cash flow (b) 3.9 4.2 6.9 8.2
Segment earnings 3.4 3.7 5.9 7.2
Percent of sales 12.3% 14.1% 10.9% 14.0%
New orders 27.8 26.3 54.0 51.6
TOTAL CONTINUING OPERATIONS
Sales $ 191.7 $ 181.6 $ 380.6 $ 371.8
Operating cash flow (b) 9.9 1.6 15.7 8.2
Segment earnings 8.0 0.4 12.4 5.6
Refinancing costs (c) (14.6) - (21.0) -
Restructuring costs (d) (1.7) (6.3) (2.8) (12.3)
Corporate expenses (2.9) (3.7) (6.2) (7.2)
Other unallocated expenses (e) (0.3) (0.7) (0.9) (1.5)
------------ ------------ ------------ ------------
Operating loss (11.5) (10.3) (18.5) (15.4)
Percent of sales -6.0% -5.7% -4.9% -4.1%
New orders 200.2 189.7 387.2 376.7
Ending backlog 97.7 85.4 97.7 85.4
(a) Reflects the presentation of Grinding Wheels in 2004 and 2003 and Round
Tools in 2003 as discontinued operations.
(b) Represents EBITDA (earnings before interest, income taxes, depreciation
and amortization) before refinancing costs and restructuring costs.
(c) In the first quarter, represents costs incurred in pursuing various
alternatives to the company's March 12 refinancing of $200 million in
debt and other obligations. In the second quarter, represents costs that
resulted from the refinancing and recapitalization of the company.
(d) Represents costs related to initiatives announced in 2002 through 2004 to
reduce operating and administrative costs.
(e) Other unallocated expenses include financing costs including costs
related to the sale of accounts receivable prior to March 12, 2004.
- -------------------------------------------------------------------------------
Note: These statements are unaudited and subject to year-end adjustments.
RECONCILIATION OF CONSOLIDATED EARNINGS TO INTERNAL REPORTING MEASURES
Milacron Inc. and Subsidiaries
SECOND QUARTER 2004
- ---------------------------------------------------------------------------------------------------------------
(IN MILLIONS, EXCEPT PER-SHARE DATA) THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------------------------------------------
2004 2003 2004 2003
- ---------------------------------------------------------------------------------------------------------------
NET LOSS $ (27.8) $ (91.3) $ (44.4) $ (99.6)
DISCONTINUED OPERATIONS-NET OF INCOME TAXES (a) (0.1) 3.0 0.5 3.7
-------- -------- -------- --------
LOSS FROM CONTINUING OPERATIONS (27.9) (88.3) (43.9) (95.9)
Provision for income taxes (b) (1.1) (72.2) (2.2) (69.5)
-------- -------- -------- --------
LOSS FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES (26.8) (16.1) (41.7) (26.4)
Interest expense - net of interest income (c) 15.3 5.8 23.2 11.0
-------- -------- -------- --------
OPERATING LOSS (11.5) (10.3) (18.5) (15.4)
Refinancing costs (d) 14.6 - 21.0 -
Restructuring costs (e) 1.7 6.3 2.8 12.3
-------- -------- -------- --------
EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE
INTEREST, INCOME TAXES, REFINANCING
COSTS AND RESTRUCTURING COSTS $ 4.8 $ (4.0) $ 5.3 $ (3.1)
======== ======== ======== ========
LOSS PER COMMON SHARE - BASIC AND DILUTED
CONTINUING OPERATIONS $ (0.64) $ (2.63) $ (1.14) $ (2.86)
DISCONTINUED OPERATIONS - (0.09) (0.01) (0.11)
-------- -------- -------- --------
Net loss $ (0.64) $ (2.72) $ (1.15) $ (2.97)
======== ======== ======== ========
(a) Reflects the presentation of Grinding Wheels in 2004 and 2003 and Round
Tools in 2003 as discontinued operations.
(b) In 2003, includes a second quarter charge of $70.8 million for the
establishment of valuation allowances related to U.S. deferred tax
assets.
(c) In the second quarter of 2004, includes $6.4 million for the write-off of
a financial asset related to a beneficial conversion feature that allowed
the holders of convertible debt issued on March 12, 2004 to acquire
common shares on April 15, 2004 at $2.00 per share.
(d) In the first quarter, represents costs incurred in pursuing various
alternatives to the company's March 12 refinancing of $200 million in
debt and other obligations. In the second quarter, represents costs that
resulted from the refinancing and recapitalization of the company.
(e) Represents costs related to initiatives announced in 2002 through 2004 to
reduce operating and administrative costs.
- -------------------------------------------------------------------------------
Note: These statements are unaudited and subject to year-end adjustments.
HISTORICAL INFORMATION
OPERATING RESULTS REFLECTING WIDIA, WERKO, VALENITE, GRINDING WHEELS, AND ROUND TOOLS AS DISCONTINUED OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------------
(IN MILLIONS, EXCEPT PER-SHARE DATA)
2002 2003 2004
---------------------------------------- -------------------------------------- ------------------
Qtr 1 Qtr 2 Qtr 3 Qtr 4 Year Qtr 1 Qtr 2 Qtr 3 Qtr 4 Year Qtr 1 Qtr 2
- ------------------------------------------------------------------------- -------------------------------------- ------------------
SALES $158.5 $169.9 $173.3 $191.5 $693.2 $190.2 $181.6 $170.2 $197.7 $739.7 $188.9 $191.7
Cost of products sold 133.2 138.5 141.7 158.2 571.6 158.4 149.7 139.0 158.2 605.3 156.1 156.2
Cost of products sold related to
restructuring - - - 1.9 1.9 - 3.8 - (0.5) 3.3 - -
-------- ------- ------ ------- -------- ------ ------- ------- ------- -------- ------- -------
TOTAL COST OF PRODUCTS SOLD 133.2 138.5 141.7 160.1 573.5 158.4 153.5 139.0 157.7 608.6 156.1 156.2
-------- ------- ------ ------- -------- ------ ------- ------- ------- -------- ------- -------
Manufacturing margins 25.3 31.4 31.6 31.4 119.7 31.8 28.1 31.2 40.0 131.1 32.8 35.5
OTHER COSTS AND EXPENSES
Selling and administrative 28.8 31.0 30.9 30.3 121.0 30.2 34.3 30.7 33.8 129.0 30.9 30.8
Goodwill impairment charge - - - - - - - 52.3 13.3 65.6 - -
Refinancing costs - - - - - - - 1.0 0.8 1.8 6.4 14.6
Restructuring costs 5.0 2.9 1.9 2.2 12.0 6.0 2.5 6.4 8.9 23.8 1.1 1.7
Other - net (3.5) 2.6 1.5 (0.6) - 0.7 1.6 (1.2) (1.4) (0.3) 1.4 (0.1)
-------- ------- ------ ------- -------- ------ ------- ------- ------- -------- ------- -------
Total other costs and expenses 30.3 36.5 34.3 31.9 133.0 36.9 38.4 89.2 55.4 219.9 39.8 47.0
-------- ------- ------ ------- -------- ------ ------- ------- ------- -------- ------- -------
OPERATING LOSS (5.0) (5.1) (2.7) (0.5) (13.3) (5.1) (10.3) (58.0) (15.4) (88.8) (7.0) (11.5)
Interest expense - net of
interest income (5.6) (6.1) (6.5) (5.1) (23.3) (5.2) (5.8) (5.9) (6.1) (23.0) (7.9) (15.3)
-------- ------- ------ ------- -------- ------ ------- ------- ------- -------- ------- -------
LOSS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF CHANGE
IN METHOD OF ACCOUNTING (10.6) (11.2) (9.2) (5.6) (36.6) (10.3) (16.1) (63.9) (21.5) (111.8) (14.9) (26.8)
Provision (benefit) from income
taxes (3.6) (3.3) (4.7) (6.6) (18.2) (2.7) 72.2 1.8 1.4 72.7 1.1 1.1
-------- ------- ------ ------- -------- ------ ------- ------- ------- -------- ------- -------
EARNINGS (LOSS) FROM CONTINUING
OPERATIONS BEFORE CUMULATIVE
EFFECT OF CHANGE IN METHOD OF
ACCOUNTING (7.0) (7.9) (4.5) 1.0 (18.4) (7.6) (88.3) (65.7) (22.9) (184.5) (16.0) (27.9)
DISCONTINUED OPERATIONS-NET OF
INCOME TAXES
Loss from operations (6.1) (7.9) (10.4) (0.8) (25.2) (0.7) (3.0) (2.0) (0.7) (6.4) (0.6) (0.7)
Net gain (loss) on divestitures - (15.3) 29.4 (5.7) 8.4 - - - (0.8) (0.8) - 0.8
-------- ------- ------ ------- -------- ------ ------- ------- ------- -------- ------- -------
Total discontinued operations (6.1) (23.2) 19.0 (6.5) (16.8) (0.7) (3.0) (2.0) (1.5) (7.2) (0.6) 0.1
CUMULATIVE EFFECT OF CHANGE IN
METHOD OF ACCOUNTING (187.7) - - - (187.7) - - - - - - -
-------- ------- ------ ------- -------- ------ ------- ------- ------- -------- ------- -------
NET EARNINGS (LOSS) $(200.8) $(31.1) $14.5 $(5.5) $(222.9) $(8.3) $(91.3) $(67.7) $(24.4) $(191.7) $(16.6) $(27.8)
======== ======= ====== ======= ======== ====== ======= ======= ======= ======== ======= =======
EARNINGS (LOSS) PER COMMON SHARE
BASIC AND DILUTED (a)
CONTINUING OPERATIONS $(0.21) $(0.24) $(0.14) $ 0.03 $ (0.56) $(0.23) $(2.63) $(1.95) $(0.68) $ (5.49) $(0.47) $(0.64)
DISCONTINUED OPERATIONS (0.18) (0.69) 0.57 (0.20) (0.50) (0.02) (0.09) (0.06) (0.04) (0.21) (0.02) -
CUMULATIVE EFFECT OF CHANGE
IN METHOD OF ACCOUNTING (5.62) - - - (5.61) - - - - - - -
-------- ------- ------ ------- -------- ------ ------- ------- ------- -------- ------- -------
NET EARNINGS (LOSS) $(6.01) $(0.93) $ 0.43 $(0.17)$ (6.67) $(0.25) $(2.72) $(2.01) $(0.72) $ (5.70) $(0.49) $(0.64)
======== ======= ====== ======= ======== ====== ======= ======= ======= ======== ======= =======
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(a) For all periods presented, basic and diluted earnings per share are identical.
HISTORICAL SEGMENT AND SUPPLEMENTAL INFORMATION
REFLECTS THE PRESENTATION OF WIDIA, WERKO, VALENITE, GRINDING WHEELS, AND ROUND TOOLS AS DISCONTINUED OPERATIONS.
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(IN MILLIONS)
2002 2003 2004
---------------------------------------- -------------------------------------- ------------------
Qtr 1 Qtr 2 Qtr 3 Qtr 4 Year Qtr 1 Qtr 2 Qtr 3 Qtr 4 Year Qtr 1 Qtr 2
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MACHINERY TECHNOLOGIES NORTH
AMERICA
Sales $68.4 $74.9 $73.7 $96.6 $313.6 $88.3 $74.7 $71.6 $86.6 $321.2 $77.3 $83.2
Operating cash flow (a) 3.9 1.8 4.0 8.2 17.9 4.5 0.7 2.8 7.4 15.4 1.4 5.3
Segment earnings (loss) 1.4 (0.7) 1.5 5.8 8.0 2.1 (1.6) 0.9 5.3 6.7 (0.6) 3.4
New orders 77.6 75.5 79.4 88.0 320.5 84.9 83.5 74.4 82.0 324.8 79.1 87.2
MACHINERY TECHNOLOGIES EUROPE
Sales $23.8 $27.7 $34.7 $31.2 $117.4 $35.0 $38.9 $33.4 $43.7 $151.0 $42.5 $42.4
Operating cash flow (a) (2.1) (1.3) (0.6) (0.6) (4.6) 0.3 (0.8) 0.6 2.4 2.5 2.2 2.3
Segment earnings (loss) (3.0) (2.1) (1.5) (1.5) (8.1) (0.7) (1.8) (0.4) 1.5 (1.4) 1.1 1.3
New orders 26.8 26.4 34.7 34.1 122.0 33.3 38.8 36.9 44.5 153.5 40.0 45.7
MOLD TECHNOLOGIES
Sales $45.9 $44.8 $41.1 $42.9 $174.7 $44.6 $43.0 $39.1 $42.0 $168.7 $43.3 $39.9
Operating cash flow (a) 4.2 4.1 2.6 1.8 12.7 2.0 1.8 1.8 2.9 8.5 3.0 1.5
Segment earnings 2.5 2.3 0.4 0.1 5.3 0.3 0.1 0.1 1.3 1.8 1.4 (0.1)
New orders 45.7 44.3 41.7 42.6 174.3 44.7 42.5 39.4 42.1 168.7 43.0 40.5
ELMINATIONS
Sales $(2.1) $(1.6) $(0.9) $(3.9) $(8.5) $(3.0) $(1.3) $(0.3) $(0.8) $(5.4) $(0.4) $(1.5)
New orders (3.0) (1.5) (1.9) (3.4) (9.8) (1.2) (1.4) (0.7) (1.0) (4.3) (1.3) (1.0)
TOTAL PLASTICS TECHNOLOGIES
Sales $136.0 $145.8 $148.6 $166.8 $597.2 $164.9 $155.3 $143.8 $171.5 $635.5 $162.7 $164.0
Operating cash flow (a) 6.0 4.6 6.0 9.4 26.0 6.8 1.7 5.2 12.7 26.4 6.6 9.1
Segment earnings (loss) 0.9 (0.5) 0.4 4.4 5.2 1.7 (3.3) 0.6 8.1 7.1 1.9 4.6
New orders 147.1 144.7 153.9 161.3 607.0 161.7 163.4 150.0 167.6 642.7 160.8 172.4
INDUSTRIAL FLUIDS
Sales $22.5 $24.1 $24.7 $24.7 $96.0 $25.3 $26.3 $26.4 $26.2 $104.2 $26.2 $27.7
Operating cash flow (a) 4.2 3.6 3.8 4.3 15.9 4.0 4.2 5.2 4.3 17.7 3.0 3.9
Segment earnings 3.8 3.3 3.4 3.9 14.4 3.5 3.7 4.8 3.7 15.7 2.5 3.4
New orders 22.5 24.2 24.6 24.7 96.0 25.3 26.3 26.4 26.3 104.3 26.2 27.8
TOTAL CONTINUING OPERATIONS
Sales $158.5 $169.9 $173.3 $191.5 $693.2 $190.2 $181.6 $170.2 $197.7 $739.7 $188.9 $191.7
Operating cash flow (a) 5.6 3.4 5.3 9.2 23.5 6.6 1.6 5.8 11.6 25.6 5.8 9.9
Segment earnings (loss) 4.7 2.8 3.8 8.3 19.6 5.2 0.4 5.4 11.8 22.8 4.4 8.0
Goodwill impairment
charges (b) - - - - - - - (52.3) (13.3) (65.6) - -
Refinancing costs (c) - - - - - - - (1.0) (0.8) (1.8) (6.4) (14.6)
Restructuring costs (d) (5.0) (2.9) (1.9) (4.1) (13.9) (6.0) (6.3) (6.4) (8.4) (27.1) (1.1) (1.7)
Corporate expenses (3.9) (4.0) (3.6) (3.9) (15.4) (3.5) (3.7) (3.1) (4.0) (14.3) (3.3) (2.9)
Other unallocated expenses (e)(0.8) (1.0) (1.0) (0.8) (3.6) (0.8) (0.7) (0.6) (0.7) (2.8) (0.6) (0.3)
-------- ------ ------ ------- ------- ------ ------- ------ ------ ------ ------ ------
Operating earnings (loss) (5.0) (5.1) (2.7) (0.5) (13.3) (5.1) (10.3) (58.0) (15.4) (88.8) (7.0) (11.5)
Percent of sales -3.2% -3.0% -1.6% -0.3% -1.9% -2.7% -5.7% -34.1% -7.8% -12.0% -3.7% -6.0%
New orders 169.6 168.9 178.5 186.0 703.0 187.0 189.7 176.4 193.9 747.0 187.0 200.2
Ending backlog 74.0 75.7 80.5 76.4 76.4 74.7 85.4 91.7 92.0 92.0 89.5 97.7
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(a) Represents EBITDA (earnings before interest, income taxes, depreciation
and amortization) before refinancing costs and restructuring costs.
(b) Represents charges to adjust the carrying value of goodwill in the mold
technologies segment.
(c) In 2003 and the first quarter of 2004, represents costs incurred in
pursuing various alternatives to the company's March 12 refinancing of
$200 million in debt and other obligations. In the second quarter of
2004, represents costs that resulted from the refinancing and
recapitalization of the company.
(d) Represents costs related to initiatives announced in 2002 through 2004 to
reduce operating and administrative costs. In 2002, also includes costs
related to initiatives announced in the second half of 2001 to
consolidate manufacturing operations and reduce costs.
(e) Other unallocated expenses include financing costs including costs
related to the sale of accounts receivable prior to March 12, 2004.
ESTIMATES AND PROJECTIONS FOR FINANCIAL MODELING UPDATED: JULY 30, 2004
Note: The amounts below are approximate working estimates, around which an
even wider range of numbers could be used for financial modeling purposes.
These estimates, by their nature, involve a great number of risks and
uncertainties. Actual results may differ as these risks and uncertainties
could significantly impact the company's markets, products, and operations.
For further information please refer to the Cautionary Statement included in
Item 2 of the company's most recent Form 10-Q on file with the Securities and
Exchange Commission.
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QUARTER ENDED YEAR ENDED
--------------------- ---------------------
(IN MILLIONS) SEP. 30, 2004 DEC. 31, 2004
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PROJECTED PROFIT & loss items
Sales $188 - 200 $780 - 800
Total plastics technologies 160 - 170 670 - 685
Industrial fluids 28 - 30 110 - 115
Segment earnings
Total plastics technologies 6 - 7 26 - 29
Industrial fluids 3 - 4 13 - 15
Corporate and unallocated expenses (1) 3 - 4 13 - 14
Interest expense - net 7 - 8 37 - 39
Provision for income taxes 1 - 2 4 - 5
Refinancing costs 0 - 1 21 - 22
Restructuring charges 1 - 2 3 - 4
----- -----
Earnings (loss) after tax from
continuing operations (8) - (1) (45) - (34)
PROJECTED CASH FLOW & balance sheet items
Depreciation 5 - 6 20 - 22
Working capital - increase (decrease) (2) (1) - (4) 0 - (10)
Cash pension contribution 3 4
Capital expenditures 4 - 6 12 - 15
Cash interest 1 - 2 34 - 37
Cash taxes < 1 < 3
Cash refinancing 4 - 6 35 - 37
Cash restructuring 2 - 3 8 - 9
1 Corporate and unallocated expenses Includes corporate expenses and ongoing financing costs.
2 Working capital = inventory + receivables - trade payables - advance billings
COMMENTS & explanations
Assumes current foreign exchange rates, and no further acquisitions,
divestitures or restructuring initiatives. Excludes the effects of
discontinued operations and any potential goodwill impairment charges.
For modeling purposes, weighted average number of outstanding shares for
diluted earnings per share is 33.9 million in quarter 1, 43.4 million in
quarter 2, 34.7 million in quarter 3, 86.2 million in quarter 4, and 40.6
million for the year (subject to change based on the outcome of the rights
offering).
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