Exhibit 99.1
Milacron's Q4 Results Improve on Higher Sales; Outlook for 2005 Remains Positive
CINCINNATI--(BUSINESS WIRE)--Feb. 14, 2005--Milacron Inc.:
-- Note: At 1 p.m. ET on 2/14, 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. ET
on Monday, February 14, through midnight Monday, February 21, on
Milacron's website or by phone: (719) 457-0820 or toll-free (888)
203-1112, access code: 584534.
Milacron Inc. (NYSE: MZ) today reported a net loss in the fourth quarter of
2004 of $1.2 million, or $0.07 per share, on sales of $213 million. This
compares to a net loss of $24.2 million, or $0.66 per share, on sales of $198
million, in the fourth quarter of 2003.
In the fourth quarter of 2004, restructuring charges of $8.5 million were
greater than anticipated, as the company wrote down plant and equipment idled as
a result of recent restructuring actions. The 2003 fourth quarter included
restructuring charges of $8.1 million with no tax benefit and a goodwill
impairment charge of $13.3 million.
The results in the most recent quarter came in at the high end of the
guidance last issued by Milacron on November 3, 2004, as sales, segment earnings
and income tax benefits exceeded the estimated ranges.
Operating earnings before interest, taxes, restructuring, goodwill
impairment and refinancing charges were $9.9 million in the fourth quarter of
2004, compared to $7.9 million in the year-ago quarter (see reconciliation
table), as cost-reduction benefits more than offset higher material costs.
Manufacturing margins continued to improve, reaching 21.7%, up from 20.6%
in the year-ago quarter.
The $213 million in sales represented an 8% gain over the fourth quarter a
year ago, reflecting a continued pickup in demand for injection molding machines
in North America as well as favorable currency translation effects - primarily
the stronger euro and the weaker dollar. Currency translation had little impact
on earnings. New orders in the fourth quarter of 2004 were $197 million, $3
million higher than a year ago, as continued strong demand in Asia and
recovering North American markets - as well as favorable currency effects -
offset weakening demand in Western Europe.
"Our quarterly sales exceeded $200 million for the first time in almost
four years," said Ronald D. Brown, chairman, president and chief executive
officer. "As the North American market for plastics processing equipment
continues to recover, the benefits of the cost reductions we've implemented over
the past several years should become more evident with sales volume increases,"
he said.
Year 2004
Milacron's net loss for the year was $51.1 million, or $1.32 per share, and
included $21.4 million in refinancing costs and $13.6 million in restructuring
charges. 2004 results were aided by a fourth-quarter non-cash income tax benefit
of $4.8 million, resulting from a year-end adjustment of valuation allowances
for deferred taxes. In 2003, the company had a net loss of $190.9 million, or
$5.21 per share, which included a $70.8 million non-cash writedown of deferred
tax assets and a $65.6 million non-cash goodwill impairment charge, as well as
$28.9 million in restructuring and refinancing charges and $7.2 million in
losses from discontinued operations.
In 2004, earnings from continuing operations before interest, taxes,
restructuring, refinancing and goodwill impairment charges were $19.8 million,
up from $7.1 million in 2003 (see reconciliation table), as savings from
restructuring and other cost-reduction measures more than compensated for
increased costs of materials, pension, insurance and compliance with the
Sarbanes-Oxley Act.
Sales in 2004 reached $774 million, up from $740 million in 2003, while new
orders rose to $766 million from $747 million, reflecting 5% and 3% increases,
respectively, as solid growth in North America and Asia, and favorable currency
translation effects, offset weakness in Western Europe.
"In 2004, Milacron successfully met the challenge of refinancing our
capital structure while taking advantage of a partial recovery in capital goods
markets in North America and strong growth outside our traditional markets,
particularly in China, India and Eastern Europe," Brown said. "We continued to
find ways to reduce costs and improve efficiency while never losing focus on the
number-one priority: delivering advanced technology and superior service to our
customers."
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) Driven by higher demand for our injection molding machines,
new orders and sales in the fourth quarter of 2004 were up about 11% versus the
fourth quarter of 2003. New orders were $91 million, up from $82 million a year
ago, while sales increased to $97 million from $87 million. Cost-reduction
benefits, sales volume increases and better pricing more than offset higher
material costs, as segment operating earnings (earnings before interest, taxes
and restructuring charges) in the quarter rose to $9.1 million, or 9.4% of
sales, compared to $6.1 million, or 7.1% of sales, in the year-ago quarter.
For the year 2004, new orders in this segment were $337 million, up from
$325 million in 2003, and sales rose to $334 million, from $321 million. Cost
reduction benefits were the primary factor leading to a near doubling of
operating earnings to $16.0 million, or 4.8% of sales, from $8.1 million, or
2.5% of sales, in 2003.
Machinery Technologies-Europe (machinery and related parts and services for
injection molding and blow molding supplied from Europe) As demand softened
considerably in November and December, fourth quarter new orders declined to $33
million from $45 million in the same quarter of 2003. Sales of $45 million were
comparable to the year-ago quarter in dollars but down in local currencies.
Lower sales volumes and rising material costs led to a modest loss of $0.3
million compared to operating earnings of $1.5 million in the fourth quarter of
2003.
For the year 2004, this segment's new orders were $155 million compared to
$154 million in 2003, while sales rose to $167 million from $151 million. In
local currencies, new orders declined while sales were about even with those of
2003. As a result of our focus on cost reduction over the past year, operating
earnings improved to $1.8 million, up from an operating loss of $1.4 million a
year ago.
Mold Technologies (mold bases and related parts and services, as well as
maintenance, repair and operating (MRO) supplies for injection molding
worldwide) Sales in the fourth quarter of 2004 were $44 million, versus $42
million in 2003. Our emphasis on cost reductions in Europe caused operating
earnings to improve to $2.1 million from $1.3 million in the year-ago quarter.
Despite favorable currency translation effects, sales for the year of $167
million were down from $169 million in 2003. Operating earnings, however,
improved to $4.5 million from $1.8 million a year ago, as significant benefits
from our restructuring actions in Europe outweighed the effects of lower sales
volumes there.
Industrial Fluids (water-based and oil-based coolants, lubricants and
cleaners for metalcutting and metalforming operations worldwide) Fourth quarter
sales rose to $29 million from $26 million a year ago, aided in part by
favorable currency translation effects. Operating earnings, however, declined to
$2.4 million from $3.7 million due to increases in material costs, as well as
higher pension and insurance expenses.
Industrial fluid sales for the year 2004 were $109 million, up from $104
million in 2003, as favorable currency translation accounted for virtually all
of the increase. The segment's operating earnings fell to $11.1 million from
$15.7 million, due to the aforementioned cost increases.
Outlook
"The outlook for 2005 is positive," said Ronald D. Brown, chairman,
president and chief executive officer. "Energy and material costs, including
resin prices, have begun to stabilize, which should be beneficial to plastics
processors and help facilitate the ongoing recovery in our North American
machinery business. Accordingly, we believe continued growth in North America -
as well as in Eastern Europe and Asia - will more than offset softness in
Western European markets in 2005. In this scenario, we are projecting an overall
volume growth of 5% to 7%, excluding currency translation effects.
"In addition, we've been able to offset some of the higher material costs
we saw in the second half of 2004 with aggressive cost reductions and selective
price increases, depending on market conditions. This should have a favorable
impact on margins going forward.
"While the first quarter is on track to show improvement over the first
quarter a year ago, we still anticipate incurring a small loss, as this is
typically our weakest quarter and this year it will include additional costs to
comply with Sarbanes-Oxley. Looking further ahead, we believe our combination of
sales growth initiatives and cost reduction measures will enable us to return to
profitability in the second half of 2005," Brown said.
Revolving Credit Facility Amended
Milacron said it had reached an agreement with its bank group to amend a
number of covenants and terms of its revolving credit facility, including a
reduction of the minimum levels of EBITDA (earnings before interest, taxes,
depreciation and amortization) required by the facility in 2005. The amendment
will be filed in its entirety with the Securities and Exchange Commission later
this week.
Conversion Price for Series B Preferred Stock Reset
As previously forecast in its November guidance, in 2004 Milacron generated
less than $50 million in adjusted EBITDA (earnings before interest, taxes,
depreciation and amortization), a threshold in the terms of the transaction that
created the company's Series B Convertible Preferred Stock. As a result, the
conversion price of that stock into Milacron common stock will be automatically
lowered to $1.75 per share from $2.00 per share, effective June 30, 2005.
Change in Method of Accounting
In the fourth quarter of 2004, Milacron changed its valuation method for
certain inventories in its North American machinery technologies segment. Those
operations previously using the "last in, first out" (LIFO) method were changed
to the "first in, first out" (FIFO) method, retroactive to the beginning of the
year. The FIFO method is considered preferable because it results in a balance
sheet presentation more reflective of current costs and, as a result of the
change, all Milacron operations now use FIFO.
This change in method of accounting had no impact on 2004 earnings, but
prior periods have been restated for consistency. The primary effects of this
change on the previous four years are: a slight increase in the cumulative
operating earnings of the Plastics Technologies - North America segment,
resulting in a slight decease in the company's cumulative net losses, and a
$10.3 million increase in shareholders' equity as of year-end 2003.
Restatement of Earnings Per Share (EPS)
The execution of the rights offering in the fourth quarter of 2004
permitted certain shareholders to purchase common shares at less than market
value. In such situations, accounting rules require restatement of the number of
outstanding shares used in the calculation of EPS in prior periods. Accordingly,
EPS amounts for prior quarters have been restated. The effect is to increase the
outstanding shares by about 9%.
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).
Milacron Inc. and Subsidiaries
Fourth Quarter 2004
- ----------------------------------------------------------------------
Three Months Ended Year Ended
December 31, December 31,
-------------------- -----------------------
2004 2003 2004 2003
- ----------------------------------------------------------------------
Sales $213,083,000 $197,735,000 $774,243,000 $739,711,000
Loss from
continuing
operations (a) (1,277,000) (22,746,000) (50,728,000) (183,678,000)
Per Share (b)
Basic (0.07) (0.62) (1.31) (5.02)
Diluted (0.07) (0.62) (1.31) (5.02)
Earnings (loss)
from
discontinued
operations 127,000 (1,499,000) (351,000) (7,173,000)
Per Share (b)
Basic 0.00 (0.04) (0.01) (0.19)
Diluted 0.00 (0.04) (0.01) (0.19)
Net loss (a) (1,150,000) (24,245,000) (51,079,000) (190,851,000)
Per Share (b)
Basic (0.07) (0.66) (1.32) (5.21)
Diluted (0.07) (0.66) (1.32) (5.21)
Common shares
Weighted
average
outstanding
for basic
EPS (b) 40,195,000 36,793,000 40,955,000 36,660,000
Weighted
average
outstanding
for diluted
EPS (b) 40,195,000 36,793,000 40,955,000 36,660,000
Outstanding
at quarter
end 48,559,000 34,824,000 48,559,000 34,824,000
(a) 2003 amounts have been restated due to a change to a preferable
method of valuing certain inventories.
(b) Shares used to compute loss per common share for 2003 have been
restated to reflect the effect of the rights offering completed
in 2004.
- --------------------------------------------
Note: These statements are unaudited.
Consolidated Earnings
Milacron Inc. and Subsidiaries
Fourth Quarter 2004
- ----------------------------------------------------------------------
(In millions, except per-share data) Three Months Ended Year Ended
December 31, December 31,
---------------------------------
2004 2003(a) 2004 2003(a)
- ----------------------------------------------------------------------
Sales $213.1 $197.7 $774.2 $739.7
Cost of products sold (a) 167.0 157.4 623.9 603.8
Cost of products sold related to
restructuring (0.2) (0.5) 1.5 3.3
------- ------- ------ -------
Manufacturing margins 46.3 40.8 148.8 132.6
Percent of sales 21.7% 20.6% 19.2% 17.9%
Other costs and expenses
Selling and administrative 34.6 33.8 127.1 129.0
Goodwill impairment charge (b) - 13.3 - 65.6
Refinancing costs (c) - 0.8 21.4 1.8
Restructuring costs (d) 8.7 8.9 12.1 23.8
Other expense - net 1.6 (1.4) 3.4 (0.2)
------- ------- ------ -------
Total other costs and expenses 44.9 55.4 164.0 220.0
------- ------- ------ -------
Operating earnings (loss) 1.4 (14.6) (15.2) (87.4)
Interest expense - net (e) (7.5) (6.1) (37.3) (23.0)
------- ------- ------ -------
Loss from continuing operations
before income taxes (6.1) (20.7) (52.5) (110.4)
Provision (benefit) for income taxes
(f) (4.8) 2.0 (1.8) 73.3
------- ------- ------ -------
Loss from continuing operations (1.3) (22.7) (50.7) (183.7)
Discontinued operations - net of
income taxes (g) 0.1 (1.5) (0.4) (7.2)
------- ------- ------ -------
Net loss $(1.2) $(24.2) $(51.1)$(190.9)
======= ======= ====== =======
Loss per common share - basic and
diluted (h)
Continuing operations $(0.07) $(0.62) $(1.31) $(5.02)
Discontinued operations - (0.04) (0.01) (0.19)
------- ------- ------ -------
Net loss $(0.07) $(0.66) $(1.32) $(5.21)
======= ======= ====== =======
(a) In the fourth quarter of 2004, the company elected to change its
method of accounting for certain inventories from the LIFO method
to the FIFO method, retroactive to the beginning of the year.
Financial results for 2003 have been restated to conform to the
2004 presentation.
(b) Represents a charge to adjust the carrying value of goodwill in
the mold technologies segment.
(c) In 2004 and 2003, includes costs incurred in pursuing various
alternatives to the company's March 12 refinancing of $200 million
of debt and other obligations. In 2004, also includes 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) In the year ended December 31, 2004, includes a charge of $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.
(f) In the year ended December 31, 2003, includes a charge of $70.8
million for the establishment of valuation allowances related to
U.S. deferred tax assets.
(g) Reflects the presentation of Grinding Wheels in 2004 and 2003 and
Round Tools in 2003 as discontinued operations.
(h) The numbers of shares used to compute loss per common share data
for 2003 have been restated to reflect the effect of the 2004
rights offering which allowed shareholders to purchase additional
shares at a discounted price of $2.00 per share.
- ------------------------------------------------------
Note: These statements are unaudited.
Consolidated Balance Sheets
Milacron Inc. and Subsidiaries
Fourth Quarter 2004
- ----------------------------------------------------------------------
(In millions) December 31, December 31,
2004 2003(a)
- ----------------------------------------------------------------------
Assets
Cash and cash equivalents $ 69.2 $ 92.8
Notes and accounts receivable-net (b) 134.4 93.8
Inventories (a) 154.0 149.5
Other current assets 47.7 45.2
Assets of discontinued operations (c) - 7.2
--------- ----------
Total current assets 405.3 388.5
Property, plant and equipment - net 127.9 140.8
Goodwill 86.6 83.8
Other noncurrent assets 106.6 115.6
--------- ----------
Total assets $726.4 $728.7
========= ==========
Liabilities and shareholders' equity
Short-term borrowings and long-term
debt due within one year (d) $ 17.2 $ 159.9
Trade accounts payable and advance
billings and deposits 99.0 83.1
Accrued and other current liabilities 93.8 116.1
Liabilities of discontinued operations (c) - 1.8
--------- ----------
Total current liabilities 210.0 360.9
Long-term accrued liabilities 222.0 227.9
Long-term debt 235.9 163.5
Shareholders' equity 58.5 (23.6)
--------- ----------
Total liabilities and shareholders'
equity $ 726.4 $ 728.7
========= ==========
(a) Restated due to a change in the method of valuing certain
inventories from the LIFO method to the FIFO method.
(b) In 2003, excludes receivables for continuing operations of $33
million that were sold under the receivables sale program.
(c) Reflects the presentation of Grinding Wheels as a discontinued
operation in 2003.
(d) In 2004, $11.0 million was drawn against the revolving credit
facility, excluding outstanding letters of credit of $10.5
million. In 2003, $42.0 million was drawn, excluding letters of
credit of $11.9 million.
- ----------------------------------------------------
Note: These statements are unaudited.
Consolidated Cash Flows
Milacron Inc. and Subsidiaries
Fourth Quarter 2004
- ----------------------------------------------------------------------
(In millions) Three Months Ended Year Ended
December 31, December 31,
---------------------------------
2004 2003(a) 2004 2003(a)
- ----------------------------------------------------------------------
Increase (decrease) in cash and
cash equivalents
Operating activities cash flows
Net Loss $(1.2) $(24.2) $(51.1) $(190.9)
Loss (earnings) from discontinued
operations (0.1) 1.5 0.4 7.2
Depreciation and amortization 5.1 5.4 20.5 21.7
Goodwill impairment charges - 13.3 - 65.6
Refinancing costs - 0.8 21.4 1.8
Restructuring costs 8.5 8.4 13.6 27.1
Working capital changes
Notes and accounts receivable(b) (3.3) 12.9 (35.9) 6.6
Inventories (2.7) 6.6 (1.5) 22.3
Other current assets 7.3 5.0 (0.2) 13.9
Trade accounts payable 8.7 (0.4) 11.9 (6.1)
Other current liabilities (19.4) (1.2) (31.1) (30.7)
Deferred income taxes and other -
net 6.0 2.4 9.9 71.5
------ ----- ------ ------
Net cash provided (used) by
operating activities 8.9 30.5 (42.1) 10.0
Investing activities cash flows
Capital expenditures (4.5) (2.4) (8.8) (6.5)
Divestitures - - 8.0 (20.3)
Acquisitions and other - net 0.2 0.1 0.6 (4.0)
------ ----- ------ ------
Net cash used by investing
activities (4.3) (2.3) (0.2) (30.8)
Financing activities cash flows
Issuance of long-term debt - - 219.8 -
Repayments of long-term debt (0.5) (0.5) (261.5) (2.2)
Increase (decrease) in short-term
borrowings 1.0 0.2 68.4 (2.6)
Debt issuance costs (2.7) - (27.6) -
Issuance of common shares 25.4 - 25.4 -
Dividends paid (1.6) - (3.2) (0.8)
------ ----- ------ ------
Net cash provided (used) by
financing activities 21.6 (0.3) 21.3 (5.6)
Effect of exchange rate
fluctuations on cash and cash
equivalents 2.5 2.6 1.6 8.8
Cash flows related to discontinued
operations - (0.5) (4.2) (11.9)
------ ----- ------ ------
Decrease in cash and cash
equivalents 28.7 30.0 (23.6) (29.5)
Cash and cash equivalents at
beginning of period 40.5 62.8 92.8 122.3
------ ----- ------ ------
Cash and cash equivalents at end
of period $69.2 $92.8 $69.2 $92.8
====== ===== ====== ======
(a) In the fourth quarter of 2004, the company elected to change its
method of accounting for certain inventories from the LIFO method
to the FIFO method, retroactive to the beginning of the year.
Financial results for 2003 have been restated to conform to the
2004 presentation.
(b) In the year ended December 31, 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.
Segment and Supplemental Information
Milacron Inc. and Subsidiaries
Fourth Quarter 2004
- ----------------------------------------------------------------------
(In millions) Three Months Ended Year Ended
December 31, December 31,
----------------------------------------
2004 2003(a)(b) 2004 2003(a)(b)
- ----------------------------------------------------------------------
Machinery technologies North
America
Sales $96.7 $86.6 $334.4 $321.2
Operating cash flow (c) 10.7 8.2 23.3 16.8
Segment earnings (b) 9.1 6.1 16.0 8.1
Percent of sales 9.4% 7.0% 4.8% 2.5%
New orders 90.5 82.0 337.1 324.8
Machinery technologies Europe
Sales $44.6 $43.7 $167.0 $151.0
Operating cash flow (c) 0.7 2.4 6.0 2.5
Segment earnings (loss) (0.3) 1.5 1.8 (1.4)
Percent of sales -0.7% 3.4% 1.1% -0.9%
New orders 33.0 44.5 155.0 153.5
Mold technologies
Sales $44.3 $42.0 $167.1 $168.7
Operating cash flow (c) 4.2 2.9 11.4 8.5
Segment earnings 2.1 1.3 4.5 1.8
Percent of sales 4.7% 3.1% 2.7% 1.1%
New orders 44.8 42.1 167.8 168.7
Eliminations
Sales $(1.0) $(0.8) $(3.3) $(5.4)
New orders (0.1) (1.0) (2.6) (4.3)
Total plastics
technologies
Sales $184.6 $171.5 $665.2 $635.5
Operating cash flow (c) 15.6 13.5 40.7 27.8
Segment earnings (b) 10.9 8.9 22.3 8.5
Percent of sales 5.9% 5.2% 3.4% 1.3%
New orders 168.2 167.6 657.3 642.7
Industrial fluids
Sales $28.5 $26.2 $109.0 $104.2
Operating cash flow (c) 2.8 4.3 13.0 17.7
Segment earnings (b) 2.4 3.7 11.1 15.7
Percent of sales 8.4% 14.1% 10.2% 15.1%
New orders 28.5 26.3 109.1 104.3
Total continuing operations
Sales $213.1 $197.7 $774.2 $739.7
Operating cash flow (c) 15.0 13.3 40.3 28.8
Segment earnings (b) 13.3 12.6 33.4 24.2
Goodwill impairment
charge (d) - (13.3) - (65.6)
Refinancing costs (e) - (0.8) (21.4) (1.8)
Restructuring costs (f) (8.5) (8.4) (13.6) (27.1)
Corporate expenses (3.1) (4.0) (11.9) (14.3)
Other unallocated
expenses (g) (0.3) (0.7) (1.7) (2.8)
------- ------ -------- ---------
Operating earnings (loss) 1.4 (14.6) (15.2) (87.4)
Percent of sales 0.7% -7.4% -2.0% -11.8%
New orders 196.7 193.9 766.4 747.0
Ending backlog 87.3 92.0 87.3 92.0
(a) Reflects the presentation of Grinding Wheels in 2004 and 2003 and
Round Tools in 2003 as discontinued operations.
(b) In the fourth quarter of 2004, the company elected to change its
method of accounting for certain inventories from the LIFO method
to the FIFO method, retroactive to the beginning of the year.
Financial results for 2003 have been restated to conform to the
2004 presentation.
(c) Represents EBITDA (earnings before interest, income taxes,
depreciation and amortization) before refinancing costs and
restructuring costs.
(d) Represents a charge to adjust the carrying value of goodwill in
the mold technologies segment.
(e) In 2004 and 2003, includes costs incurred in pursuing various
alternatives to the company's March 12 refinancing of $200 million
of debt and other obligations. In 2004, also includes costs that
resulted from the refinancing and recapitalization of the company.
(f) Represents costs related to initiatives announced in 2002 through
2004 to reduce operating and administrative costs.
(g) 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.
Reconciliation of Earnings to Operating Cash Flows
Milacron Inc. and Subsidiaries
Fourth Quarter 2004
- ----------------------------------------------------------------------
(In millions) Three Months Ended Year Ended
December 31, December 31,
--------------------------------
2004 2003(a) 2004 2003(a)
- ----------------------------------------------------------------------
Machinery technologies North
America
Segment earnings $9.1 $6.1 $16.0 $8.1
Depreciation and amortization 1.6 2.1 7.3 8.7
------- ------ ------- ------
Operating cash flow 10.7 8.2 23.3 16.8
Machinery technologies Europe
Segment earnings (loss) $(0.3) $1.5 $1.8 $(1.4)
Depreciation and amortization 1.0 0.9 4.2 3.9
------- ------ ------- ------
Operating cash flow 0.7 2.4 6.0 2.5
Mold technologies
Segment earnings $2.1 $1.3 $4.5 $1.8
Depreciation and amortization 2.1 1.6 6.9 6.7
------- ------ ------- ------
Operating cash flow 4.2 2.9 11.4 8.5
Total plastics technologies
Segment earnings $10.9 $8.9 $22.3 $8.5
Depreciation and amortization 4.7 4.6 18.4 19.3
------- ------ ------- ------
Operating cash flow 15.6 13.5 40.7 27.8
Industrial fluids
Segment earnings $2.4 $3.7 $11.1 $15.7
Depreciation and amortization 0.4 0.6 1.9 2.0
------- ------ ------- ------
Operating cash flow 2.8 4.3 13.0 17.7
Total continuing operations
Net Loss $(1.2) $(24.2) $(51.1) $(190.9)
Loss (earnings) from discontinued
operations (b) (0.1) 1.5 0.4 7.2
Provision (benefit) for income
taxes (c) (4.8) 2.0 (1.8) 73.3
Interest expense - net (d) 7.5 6.1 37.3 23.0
Goodwill impairment charge (e) - 13.3 - 65.6
Refinancing costs (f) - 0.8 21.4 1.8
Restructuring costs (g) 8.5 8.4 13.6 27.1
Depreciation and amortization 5.1 5.4 20.5 21.7
------- ------ ------- ------
Operating cash flow $15.0 $13.3 $40.3 $28.8
======= ====== ======= ======
(a) In the fourth quarter of 2004, the company elected to change its
method of accounting for certain inventories from the LIFO method
to the FIFO method, retroactive to the beginning of the year.
Financial results for 2003 have been restated to conform to the
2004 presentation.
(b) Reflects the presentation of Grinding Wheel in 2004 and 2003 and
Round Tools in 2003 as discontinued operations.
(c) In the year ended December 31, 2003, includes a charge of $70.8
million for the establishment of valuation allowances related to
U.S. deferred tax assets.
(d) In the year ended December 31, 2004, includes a charge of $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.
(e) Represents a charge to adjust the carrying value of goodwill in
the mold technologies segment.
(f) In 2004 and 2003, includes costs incurred in pursuing various
alternatives to the company's March 12 refinancing of $200 million
of debt and other obligations. In 2004, also includes costs that
resulted from the refinancing and recapitalization of the company.
(g) Represents costs related to initiatives announced in 2002 through
2004 to reduce operating and administrative costs.
- ------------------------------------------------------
Note: These statements are unaudited.
Reconciliation of Consolidated Earnings to Internal Reporting Measures
Milacron Inc. and Subsidiaries
Fourth Quarter 2004
- ----------------------------------------------------------------------
(In millions, except per-share Three Months Ended Year Ended
data) December 31, December 31,
-------------------------------------
2004 2003(a) 2004 2003(a)
- --------------------------------------------------- ----------------
Net loss $ (1.2) $ (24.2) $ (51.1) $ (190.9)
Discontinued operations-net of
income taxes (b) (0.1) 1.5 0.4 7.2
------- -------- -------- ---------
Loss from continuing operations (1.3) (22.7) (50.7) (183.7)
Benefit (provision) for income
taxes (c) 4.8 (2.0) 1.8 (73.3)
-------- -------- -------- ---------
Loss from continuing operations
before income taxes (6.1) (20.7) (52.5) (110.4)
Interest expense - net (d) 7.5 6.1 37.3 23.0
------- -------- -------- ---------
Operating earnings (loss) 1.4 (14.6) (15.2) (87.4)
Goodwill impairment charge (e) - 13.3 - 65.6
Refinancing costs (f) - 0.8 21.4 1.8
Restructuring costs (g) 8.5 8.4 13.6 27.1
------- -------- -------- ---------
Earnings from continuing
operations before interest,
income taxes, refinancing costs
and restructuring costs $ 9.9 $ 7.9 $ 19.8 $ 7.1
======= ======== ======== =========
Loss per common share - basic and
diluted (h)
Continuing operations $(0.07) $ (0.62) $ (1.31) $ (5.02)
Discontinued operations - (0.04) (0.01) (0.19)
------- -------- -------- ---------
Net loss $(0.07) $ (0.66) $ (1.32) $ (5.21)
======= ======== ======== =========
(a) In the fourth quarter of 2004, the company elected to change its
method of accounting for certain inventories from the LIFO method
to the FIFO method, retroactive to the beginning of the year.
Financial results for 2003 have been restated to conform to the
2004 presentation.
(b) Reflects the presentation of Grinding Wheels in 2004 and 2003 and
Round Tools in 2003 as discontinued operations.
(c) In the year ended December 31, 2003, includes a charge of $70.8
million for the establishment of valuation allowances related to
U.S. deferred tax assets.
(d) In the year ended December 31, 2004, includes a charge of $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.
(e) Represents a charge to adjust the carrying value of goodwill in
the mold technologies segment.
(f) In 2004 and 2003, includes costs incurred in pursuing various
alternatives to the company's March 12 refinancing of $200 million
of debt and other obligations. In 2004, also includes costs that
resulted from the refinancing and recapitalization of the company.
(g) Represents costs related to initiatives announced in 2002 through
2004 to reduce operating and administrative costs.
(h) The numbers of shares used to compute loss per common share data
for 2003 have been restated to reflect the effect of the 2004
rights offering which allowed shareholders to purchase additional
shares at a discounted price of $2.00 per share.
- --------------------------------------------
Note: These statements are unaudited.
Historical Information
- ----------------------------------------------------------------------
(In millions, except per-share data)
2003(a)
-----------------------------------------
Qtr 1 Qtr 2 Qtr 3 Qtr 4 Year
- ----------------------------------------------------------------------
Sales $190.2 $181.6 $170.2 $197.7 $ 739.7
Cost of products sold 158.2 149.6 138.6 157.4 603.8
Cost of products sold
related to restructuring - 3.8 - (0.5) 3.3
-------- ------- ------- ------- --------
Total cost of products
sold 158.2 153.4 138.6 156.9 607.1
-------- ------- ------- ------- --------
Manufacturing margins 32.0 28.2 31.6 40.8 132.6
Other costs and expenses
Selling and administrative 30.2 34.3 30.7 33.8 129.0
Goodwill impairment charge - - 52.3 13.3 65.6
Refinancing costs - - 1.0 0.8 1.8
Restructuring costs 6.0 2.5 6.4 8.9 23.8
Other - net 0.7 1.6 (1.2) (1.4) (0.2)
-------- ------- ------- ------- --------
Total other costs and
expenses 36.9 38.4 89.2 55.4 220.0
-------- ------- ------- ------- --------
Operating earnings (loss) (4.9) (10.2) (57.6) (14.6) (87.4)
Interest expense - net (5.2) (5.8) (5.9) (6.1) (23.0)
-------- ------- ------- ------- --------
Loss from continuing
operations before income
taxes (10.1) (16.0) (63.5) (20.7) (110.4)
Provision (benefit) from
income taxes (2.5) 72.1 1.8 2.0 73.3
-------- ------- ------- ------- --------
Loss from continuing
operations (7.6) (88.1) (65.3) (22.7) (183.7)
Discontinued operations-net
of income taxes (b)
Loss from operations (0.7) (3.0) (2.0) (0.7) (6.4)
Net gain (loss) on
divestitures - - - (0.8) (0.8)
-------- ------- ------- ------- --------
Total discontinued
operations (0.7) (3.0) (2.0) (1.5) (7.2)
-------- ------- ------- ------- --------
Net loss $ (8.3) $(91.1) $(67.3) $(24.2) $(190.9)
======== ======= ======= ======= ========
Earnings (loss) per common
share
Basic and diluted (c)
Continuing operations $(0.21) $(2.41) $(1.78) $(0.62) $ (5.02)
Discontinued operations (0.02) (0.08) (0.05) (0.04) (0.19)
-------- ------- ------- ------- --------
Net earnings (loss) $(0.23) $(2.49) $(1.83) $(0.66) $ (5.21)
======== ======= ======= ======= ========
2004
--------------------------------------
Qtr 1 Qtr 2 Qtr 3 Qtr 4 Year
- ----------------------------------------------------------------------
Sales $188.9 $191.7 $180.5 $213.1 $774.2
Cost of products sold 156.1 156.2 144.6 167.0 623.9
Cost of products sold related
to restructuring - - 1.7 (0.2) 1.5
------- ------- ------- ------- --------
Total cost of products sold 156.1 156.2 146.3 166.8 625.4
------- ------- ------- ------- -------
Manufacturing margins 32.8 35.5 34.2 46.3 148.8
Other costs and expenses
Selling and administrative 30.9 30.8 30.8 34.6 127.1
Goodwill impairment charge - - - - -
Refinancing costs 6.4 14.6 0.4 - 21.4
Restructuring costs 1.1 1.7 0.6 8.7 12.1
Other - net 1.4 (0.1) 0.5 1.6 3.4
------- ------- ------- ------- --------
Total other costs and
expenses 39.8 47.0 32.3 44.9 164.0
------- ------- ------- ------- --------
Operating earnings (loss) (7.0) (11.5) 1.9 1.4 (15.2)
Interest expense - net (7.9) (15.3) (6.6) (7.5) (37.3)
------- ------- ------- ------- --------
Loss from continuing
operations before income
taxes (14.9) (26.8) (4.7) (6.1) (52.5)
Provision (benefit) from
income taxes 1.1 1.1 0.8 (4.8) (1.8)
------- ------- ------- ------- --------
Loss from continuing
operations (16.0) (27.9) (5.5) (1.3) (50.7)
Discontinued operations-net
of income taxes (b)
Loss from operations (0.6) (0.7) - - (1.3)
Net gain (loss) on
divestitures - 0.8 - 0.1 0.9
------- ------- ------- ------- --------
Total discontinued
operations (0.6) 0.1 - 0.1 (0.4)
------- ------- ------- ------- --------
Net loss $(16.6) $(27.8) $(5.5) $(1.2) $ (51.1)
======= ======= ======= ======= ========
Earnings (loss) per common
share
Basic and diluted (c)
Continuing operations $(0.43) $(0.61) $(0.18) $(0.07) $ (1.31)
Discontinued operations (0.02) 0.01 - - (0.01)
------- ------- ------- ------- --------
Net earnings (loss) $(0.45) $(0.60) $(0.18) $(0.07) $(1.32)
======= ======= ======= ======= ========
(a) In the fourth quarter of 2004, the company elected to change its
method of accounting for certain inventories from the LIFO method
to the FIFO method, retroactive to the beginning of the year.
Financial results for 2003 have been restated to conform to the
2004 presentation. The effect is to increase net earnings by $.8
million in 2003.
(b) Reflects the presentation of Grinding Wheels in 2004 and 2003 and
Round Tools in 2003 as discontinued operations.
(c) The numbers of shares used to compute loss per common share data
for 2003 have been restated to reflect the effect of the 2004
rights offering which allowed shareholders to purchase additional
shares at a discounted price of $2.00 per share. The effect is to
increase the number of outstanding shares by approximately 9%.
Historical Segment and Supplemental Information
- ----------------------------------------------------------------------
(In Millions)
2003 (a)
---------------------------------------
Qtr 1 Qtr 2 Qtr 3 Qtr 4 Year
- ----------------------------------------------------------------------
Machinery technologies North
America
Sales $88.3 $74.7 $71.6 $86.6 $321.2
Operating cash flow (b) 4.6 0.8 3.2 8.2 16.8
Segment earnings (loss) (a) 2.1 (1.4) 1.3 6.1 8.1
New orders 84.9 83.5 74.4 82.0 324.8
Machinery technologies Europe
Sales $35.0 $38.9 $33.4 $43.7 $151.0
Operating cash flow (b) 0.3 (0.8) 0.6 2.4 2.5
Segment earnings (loss) (0.7) (1.8) (0.4) 1.5 (1.4)
New orders 33.3 38.8 36.9 44.5 153.5
Mold technologies
Sales $44.6 $43.0 $39.1 $42.0 $168.7
Operating cash flow (b) 2.0 1.8 1.8 2.9 8.5
Segment earnings (loss) 0.3 0.1 0.1 1.3 1.8
New orders 44.7 42.5 39.4 42.1 168.7
Eliminations
Sales $(3.0) $(1.3) $(0.3) $(0.8) $(5.4)
New orders (1.2) (1.4) (0.7) (1.0) (4.3)
Total plastics
technologies
Sales $164.9 $155.3 $143.8 $171.5 $635.5
Operating cash flow (b) 6.9 1.8 5.6 13.5 27.8
Segment earnings (loss) (a) 1.7 (3.1) 1.0 8.9 8.5
New orders 161.7 163.4 150.0 167.6 642.7
Industrial fluids
Sales $25.3 $26.3 $26.4 $26.2 $104.2
Operating cash flow (b) 4.0 4.2 5.2 4.3 17.7
Segment earnings 3.5 3.7 4.8 3.7 15.7
New orders 25.3 26.3 26.4 26.3 104.3
Total continuing operations (c)
Sales $190.2 $181.6 $170.2 $197.7 $739.7
Operating cash flow (b) 6.7 1.7 7.2 13.3 28.8
Segment earnings (loss) (a) 5.2 0.6 5.8 12.6 24.2
Goodwill impairment
charges (d) - - (52.3) (13.3) (65.6)
Refinancing costs (e) - - (1.0) (0.8) (1.8)
Restructuring costs (f) (6.0) (6.3) (6.4) (8.4) (27.1)
Corporate expenses (3.5) (3.7) (3.1) (4.0) (14.3)
Other unallocated
expenses (g) (0.8) (0.7) (0.6) (0.7) (2.8)
------- ------- ------- ------- -------
Operating earnings (loss) (5.1) (10.1) (57.6) (14.6) (87.4)
Percent of sales -2.7% -5.7% -34.1% -7.8% -11.8%
New orders 187.0 189.7 176.4 193.9 747.0
Ending backlog 74.7 85.4 91.7 92.0 92.0
(In Millions)
2004
---------------------------------------
Qtr 1 Qtr 2 Qtr 3 Qtr 4 Year
- ----------------------------------------------------------------------
Machinery technologies North
America
Sales $77.3 $83.2 $77.2 $96.7 $334.4
Operating cash flow (b) 1.4 5.3 5.9 10.7 23.3
Segment earnings (loss) (a) (0.6) 3.4 4.1 9.1 16.0
New orders 79.1 87.2 80.3 90.5 337.1
Machinery technologies Europe
Sales $42.5 $42.4 $37.5 $44.6 $167.0
Operating cash flow (b) 2.2 2.3 0.8 0.7 6.0
Segment earnings (loss) 1.1 1.3 (0.3) (0.3) 1.8
New orders 40.0 45.7 36.3 33.0 155.0
Mold technologies
Sales $43.3 $39.9 $39.6 $44.3 $167.1
Operating cash flow (b) 3.0 1.5 2.7 4.2 11.4
Segment earnings (loss) 1.4 (0.1) 1.1 2.1 4.5
New orders 43.0 40.5 39.5 44.8 167.8
Eliminations
Sales $(0.4) $(1.5) $(0.4) $(1.0) $(3.3)
New orders (1.3) (1.0) (0.2) (0.1) (2.6)
Total plastics
technologies
Sales $162.7 $164.0 $153.9 $184.6 $665.2
Operating cash flow (b) 6.6 9.1 9.4 15.6 40.7
Segment earnings (loss) (a) 1.9 4.6 4.9 10.9 22.3
New orders 160.8 172.4 155.9 168.2 657.3
Industrial fluids
Sales $26.2 $27.7 $26.6 $28.5 $109.0
Operating cash flow (b) 3.0 3.9 3.3 2.8 13.0
Segment earnings 2.5 3.4 2.8 2.4 11.1
New orders 26.2 27.8 26.6 28.5 109.1
Total continuing operations (c)
Sales $188.9 $191.7 $180.5 $213.1 $774.2
Operating cash flow (b) 5.8 9.9 9.6 15.0 40.3
Segment earnings (loss) (a) 4.4 8.0 7.7 13.3 33.4
Goodwill impairment
charges (d) - - - - -
Refinancing costs (e) (6.4) (14.6) (0.4) - (21.4)
Restructuring costs (f) (1.1) (1.7) (2.3) (8.5) (13.6)
Corporate expenses (3.3) (2.9) (2.6) (3.1) (11.9)
Other unallocated
expenses (g) (0.6) (0.3) (0.5) (0.3) (1.7)
------- ------- ------- ------- -------
Operating earnings (loss) (7.0) (11.5) 1.9 1.4 (15.2)
Percent of sales -3.7% -6.0% 1.1% 0.7% -2.0%
New orders 187.0 200.2 182.5 196.7 766.4
Ending backlog 89.5 97.7 100.1 87.3 87.3
(a) In the fourth quarter of 2004, the company elected to change its
method of accounting for certain inventories from the LIFO method
to the FIFO method, retroactive to the beginning of the year.
Financial results for 2003 have been restated to conform to the
2004 presentation.
(b) Represents EBITDA (earnings before interest, income taxes,
depreciation and amortization) before refinancing costs and
restructuring costs.
(c) Reflects the presentation of Grinding Wheels in 2004 and 2003 and
Round Tools in 2003 as discontinued operations.
(d) Represents charges to adjust the carrying value of goodwill in the
mold technologies segment.
(e) 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 and third quarters of 2004, represents costs that resulted
from the refinancing and recapitalization of the company.
(f) Represents costs related to initiatives announced in 2002 through
2004 to reduce operating and administrative costs.
(g) 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: February 14, 2005
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.
- ----------------------------------------------------------------------
Quarter Year
Ended Ended
------------ ------------
(In millions) Mar. 31, Dec. 31,
2005 2005
- ----------------------------------------------------------------------
Projected profit & loss items
Sales (1) $186 - 198 $825 - 855
Total plastics technologies 160 - 170 710 - 730
Industrial fluids 26 - 28 115 - 125
Segment earnings
Total plastics technologies 0 - 2 25 - 32
Industrial fluids 2 - 3 13 - 16
Corporate expenses 3 - 4 12 - 13
Interest expense - net 7 - 8 31 - 32
Provision for income taxes less than 1 4 - 5
Restructuring charges less than 1 1
------------ ------------
Earnings (loss) after tax from
continuing operations (2) (11) - (5) (13) - 0
Average shares outstanding - basic (3) 47 - 48 47 - 48
Average shares outstanding - diluted (3) 93 - 94 91 - 92
Projected cash flow & balance sheet items
Depreciation 4 - 5 20 - 21
Working capital - increase (decrease) (4) 1 - 3 0 - 5
Cash pension contribution less than 1 2 - 3
Capital expenditures 5 - 6 14 - 16
Cash interest 0 - 1 28 - 30
Cash dividends 1 - 2 5 - 6
Cash taxes less than 1 2 - 3
Cash restructuring 1 - 2 3 - 4
1 Sales Includes increased sales due to the strengthening of the Euro
in 2004 of approximately $5 million and $22 million in quarter
ended Mar. 31, 2005, and year ended Dec. 31, 2005, respectively.
2 Earnings (loss) after tax from continuing operations Includes $2.8
million and $11.3 million of expenses related to the U.S. defined
benefit pension plan in quarter ended Mar. 31, 2005 and year ended
Dec. 31, 2005, respectively (versus $1.6 million and $6.4 million
in quarter ended Mar. 31, 2004 and year ended Dec. 31 2004,
respectively).
3 Average shares outstanding Assumes the repurchase of Series B
preferred shares prior to Mar. 7, 2005 with net proceeds of the
2004 rights offering.
4 Working capital = inventory + receivables - trade payables -
advance billings
Comments & explanations
Assumes 2004 year-end foreign exchange rates (e.g., USD/EUR = 1.3385), and
no further acquisitions, divestitures or restructuring initiatives.
CONTACT: Milacron Inc.
Al Beaupre, 513-487-5918