EX-99.1 3 ex99_1.txt PRESS RELEASE MILACRON ------------- Manufacturing Technologies NEWS RELEASE [GRAPHICS OMITTED] Contact: Al Beaupre (513) 487-5918 NOTE: TO ACCESS THE OPEN INVESTOR CONFERENCE CALL LIVE ON 7/29 AT 3:00 P.M. EDT, GO TO WWW.MILACRON.COM OR DIAL (913) 981-5532. FOR THE CONFERENCE CALL REPLAY FROM 6 P.M. ON 7/29 THROUGH MIDNIGHT ON 8/5, GO TO WWW.MILACRON.COM OR DIAL (719) 457-0820, PASSCODE: #509314. MILACRON REPORTS SECOND QUARTER RESULTS NEW COST REDUCTIONS AIM FOR SUSTAINED PROFITABILITY; COMMON AND PREFERRED DIVIDENDS SUSPENDED CINCINNATI, OHIO, July 29, 2003...Confirming its pre-announcement on July 17, Milacron Inc. (NYSE: MZ) today reported a before-tax loss from continuing operations, excluding restructuring charges, of $9.8 million in the second quarter of 2003. The company also outlined additional cost-reduction initiatives designed to achieve sustained profitability. SECOND QUARTER RESULTS Second quarter 2003 sales were $182 million, up 7% versus a year ago, primarily due to favorable currency translation effects. New orders in the quarter rose 12% to $190 million, with about half of the increase coming from currency translation. Milacron's $9.8 million before-tax loss from continuing operations excluding restructuring charges was slightly larger than its loss of $8.3 million in the second quarter of 2002. In the recent quarter, however, the company recorded a $72.2 million tax provision compared to a tax benefit of $2.4 million last year. Included in the tax provision was a $71.2 million non-cash charge to create deferred tax reserves (see below). On an after-tax basis, restructuring charges in the second quarter of 2003 were $6.3 million while losses from discontinued operations were $3.0 million versus $2.0 million and $7.9 million, respectively, in the second quarter of 2002. The net loss for the quarter, therefore, was $91.3 million, or $2.72 per share, compared to a net loss of $31.1 million, or $.93 per share, in the year-ago quarter. "Order rates have stabilized over the past four quarters, albeit at low levels" said Ronald D. Brown, chairman and chief executive officer. "While orders for most of our products have been favorable compared to reported industry trends, competitive pressures continue to constrain our operating margins. We remain committed to returning to profitability and to that end we are taking additional actions to permanently reduce our overhead by approximately $20 million on an annualized basis," he said. -more- RESULTS YEAR TO DATE Year-to-date consolidated sales were $372 million, up from $328 million in 2002, while new orders were $377 million, compared to $339 million a year ago. In both cases, about half of the increases were a result of favorable currency translation effects. For the first six months of 2003, Milacron's pre-tax loss from continuing operations was $26.4 million versus $21.8 million in 2002. The increased loss was almost entirely due to higher restructuring costs in 2003. The company's net loss for the first half of 2003 was $99.6 million (including the $71.2 million non-cash writedown), or $2.97 per share, compared to $231.9 million, or $6.94 per share, last year, which included a writedown of $188 million, or $5.62 per share, due to a mandated accounting change. NEW COST-REDUCTION INITIATIVES Milacron intends to step up its cost-reduction efforts, subject to bank lender approval, with new initiatives designed to generate cost and cash savings in continuing operations of approximately $20 million annually, with some benefits beginning in the fourth quarter of this year. These actions are expected to result in charges to earnings of approximately $10 million in the second half of 2003, with cash costs of about $8 million spread over the next four quarters. The initiatives focus on overhead reductions in each of the company's plastics technologies segments and at the corporate level. Close to 300 positions will be eliminated in North America and in Europe. In another measure to conserve cash, Milacron's board of directors today decided not to pay quarterly dividends on common or preferred stock for the quarter ended June 30, 2003. TAX CHARGE In the second quarter of 2003, Milacron recorded a non-cash valuation reserve of $71.2 million against its U.S. deferred tax assets, under an accounting convention applicable when a company has three years of cumulative tax losses. Previously, Milacron had expected to generate taxable income in the U.S. this year. This expectation changed with the prolonged delay in the plastics industry's recovery and the company's subsequent decision to take additional cost-reduction charges. These deferred tax assets, however, can still be utilized when the company achieves profitability in the U.S. 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] New orders of $84 million in the second quarter were up 11% from a year ago, while sales of $75 million were flat. New orders were helped by strong bookings at the National Plastics Exposition held in Chicago at the end of June. On a pre-tax basis, the segment's operating loss, excluding restructuring charges of $0.9 million, was $1.6 million compared to $0.7 million a year ago, which excluded $0.2 million for restructuring. MACHINERY TECHNOLOGIES-EUROPE [machinery and related parts and services for injection molding and blow molding supplied from Europe] New orders and sales were both $39 million in the quarter, -more- representing over 40% increases from a year ago. About half the gains resulted from favorable currency translation effects. On a pre-tax basis, the segment's operating loss was $1.8 million, excluding $2.4 million in restructuring charges. This compared to a loss of $2.1 million in the second quarter a year ago, which had no restructuring costs. 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 quarter of $43 million were down $2 million from the year-ago quarter despite favorable currency translation effects. On a pre-tax basis, operating earnings were $0.1 million, excluding restructuring charges of $3.0 million, as profits in North America were offset by losses in Europe. This compared to operating earnings of $2.3 million, excluding restructuring charges of $2.5 million, in the second quarter of 2002. INDUSTRIAL FLUIDS [water-based and oil-based coolants, lubricants and cleaners for metalcutting and metalforming operations worldwide] Sales of $26 million were flat with those of the second quarter a year ago when excluding favorable currency translation effects. Pre-tax operating earnings improved to $3.7 million from $3.3 million a year ago. OUTLOOK "We are currently seeing a number of encouraging signs among our customers, including an increase in our replacement parts business as well as quoting activity for new machines," Brown said. "However, it will take a sustained two- or three-quarter recovery in plastic part production and the general economy before we would expect to see significant improvements in the markets for our machinery products. During this difficult time, we remain committed to serving our customers while intensely focused on reducing our cost structure. "Thanks in part to actions taken earlier in the year, we expect modest improvement in our pre-tax operating results in the third quarter and, with additional benefit from the initiatives announced today, we believe we can return to profitability on an operating basis and generate positive cash flow in the fourth quarter," he said. 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 4,000 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). Tables Attached MILACRON INC. AND SUBSIDIARIES
SECOND QUARTER 2003 -------------------------------------------------------------------------------------------------------------------------------- THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ---------------------------------- ----------------------------------- 2003 (a) 2002 (a) 2003 (a) 2002 (a) -------------------------------------------------------------------------------------------------------------------------------- Sales $181,608,000 $ 169,922,000 $ 371,770,000 $ 328,443,000 Loss from continuing operations (b) (88,309,000) (7,890,000) (95,881,000) (14,915,000) Per Share Basic (2.63) (0.24) (2.86) (0.45) Diluted (2.63) (0.24) (2.86) (0.45) Loss from discontinued operations (2,968,000) (23,203,000) (3,717,000) (29,280,000) Per Share Basic (0.09) (0.69) (0.11) (0.87) Diluted (0.09) (0.69) (0.11) (0.87) Cumulative effect of change in accounting method - - - (187,713,000)(c) Per Share Basic - - - (5.62) Diluted - - - (5.62) Net loss (91,277,000) (31,093,000) (99,598,000) (231,908,000) Per Share Basic (2.72) (0.93) (2.97) (6.94) Diluted (2.72) (0.93) (2.97) (6.94) Common shares Weighted average outstanding for basic EPS 33,608,000 33,484,000 33,588,000 33,442,000 Weighted average outstanding for diluted EPS 33,608,000 33,484,000 33,588,000 33,442,000 Outstanding at quarter end 33,816,000 33,718,000 33,816,000 33,718,000 (a) Reflects the presentation of Widia, Werko, Valenite, Grinding Wheels, and Round Tools as discontinued operations. (b) In 2003, includes after-tax restructuring costs of $6.3 million for the second quarter and $11.1 million for the year to date. In 2003, also includes a charge of $71.2 million for the establishment of valuation allowances related to U.S. deferred tax assets. In 2002, includes after-tax restructuring costs of $2.0 million for the second quarter and $5.1 million for the year to date. (c) Represents a charge related to the adoption of a new accounting standard regarding goodwill. --------------------------------------------------------------------------------------- Note: These statements are unaudited and subject to year end adjustments.
CONSOLIDATED EARNINGS Milacron Inc. and Subsidiaries SECOND QUARTER 2003 ------------------------------------------------------------------------------------------------------------------------------------ (IN MILLIONS, EXCEPT PER-SHARE DATA) THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ------------------------------- ------------------------ 2003 (a) 2002 (a) 2003 (a) 2002 (a) ----------------------------------------------------------- SALES $ 181.6 $ 169.9 $ 371.8 $ 328.4 Cost of products sold 149.7 138.5 308.1 271.7 Cost of products sold related to restructuring 3.8 - 3.8 - -------------- -------------- ----------- --------- Manufacturing margins 28.1 31.4 59.9 56.7 Percent of sales 15.5% 18.5% 16.1% 17.3% OTHER COSTS AND EXPENSES Selling and administrative 34.3 31.0 64.5 59.8 Restructuring costs (b) 2.5 2.9 8.5 7.9 Other expense (income) - net 1.6 2.6 2.3 (0.9) -------------- -------------- ----------- --------- Total other costs and expenses 38.4 36.5 75.3 66.8 -------------- -------------- ----------- --------- Percent of sales 21.1% 21.5% 20.3% 20.3% OPERATING LOSS (10.3) (5.1) (15.4) (10.1) Percent of sales -5.7% -3.0% -4.1% -3.1% Interest expense - net of interest income (5.8) (6.1) (11.0) (11.7) -------------- -------------- ----------- --------- LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF CHANGE IN METHOD OF ACCOUNTING (16.1) (11.2) (26.4) (21.8) Provision (benefit) for income taxes (c) 72.2 (3.3) 69.5 (6.9) -------------- -------------- ----------- --------- LOSS FROM CONTINUING OPERATIONS BEFORE CUMULATIVE EFFECT OF CHANGE IN METHOD OF ACCOUNTING (88.3) (7.9) (95.9) (14.9) DISCONTINUED OPERATIONS-NET OF INCOME TAXES Loss from operations (3.0) (7.9) (3.7) (14.0) Loss on anticipated sale of Widia and Werko - (15.3) - (15.3) -------------- -------------- ----------- --------- Total discontinued operations (3.0) (23.2) (3.7) (29.3) CUMULATIVE EFFECT OF CHANGE IN METHOD OF ACCOUNTING (d) - - - (187.7) -------------- -------------- ----------- --------- NET LOSS $ (91.3) $ (31.1) $ (99.6) $ (231.9) ============== ============== =========== ========== LOSS PER COMMON SHARE - BASIC AND DILUTED CONTINUING OPERATIONS $ (2.63) $ (0.24) $ (2.86) $ (0.45) DISCONTINUED OPERATIONS (0.09) (0.69) (0.11) (0.87) CUMULATIVE EFFECT OF ACCOUNTING CHANGE - - - (5.62) -------------- -------------- ----------- --------- NET LOSS $ (2.72) $ (0.93) $ (2.97) $ (6.94) ============== ============== =========== ========== (a) Reflects the presentation of Widia, Werko, Valenite, Grinding Wheels, and Round Tools as discontinued operations. (b) In 2003, includes costs related to initiatives announced in 2002 and 2003 to reduce operating and administrative costs. In 2002, represents costs related to initiatives announced in the second half of 2001 to consolidate manufacturing operations and reduce costs. (c) In 2003, includes a charge of $71.2 million for the establishment of valuation allowances related to U.S. deferred tax assets. (d) Represents a charge related to the adoption of a new accounting standard regarding goodwill. ------------------------------------------------------------------------------------------------------------------------------------ Note: These statements are unaudited and subject to year end adjustments.
CONSOLIDATED BALANCE SHEETS Milacron Inc. and Subsidiaries Second Quarter 2003 ------------------------------------------------------------------------------------------------------- (In millions) June 30, June 30, 2003 (a) 2002 (a) ------------------------------------------------------------------------------------------------------- ASSETS Cash and cash equivalents $ 67.2 $ 75.3 Notes and accounts receivable-net 94.3 87.3 Inventories 145.2 156.8 Other current assets 62.5 65.0 Assets of discontinued operations 14.9 423.3 TOTAL CURRENT ASSETS 384.1 807.7 Property, plant and equipment - net 147.1 154.0 Goodwill 147.6 142.9 Other noncurrent assets 113.6 179.6 TOTAL ASSETS $ 792.4 $ 1,284.2 Liabilities and shareholders' equity Borrowings under lines of credit and long-term debt due within one year $ 160.3 $ 49.8 Trade accounts payable and advance billings and deposits 73.7 74.7 Accrued and other current liabilities 110.2 101.9 Liabilities of discontinued operations 8.4 167.6 TOTAL CURRENT LIABILITIES 352.6 394.0 Long-term accrued liabilities 241.5 155.6 Long-term debt 155.0 513.2 Shareholders' equity 43.3 221.4 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 792.4 $ 1,284.2 (a) Reflects the presentation of Grinding Wheels and Round Tools as discontinued operations in 2002 and 2003. In 2002, assets and liabilities of discontinued operations also includes Widia, Werko, and Valenite. --------------------------------------------------------------------------------------------------------------- Note: These statements are unaudited and subject to year end adjustments.
CONSOLIDATED CASH FLOWS Milacron Inc. and Subsidiaries Second Quarter 2003 ----------------------------------------------------------------------------------------------------------------------------------- (In millions) Three Months Ended Six Months Ended June 30, June 30, ---------------------------------------------------------------- 2003 (a) 2002 (a) 2003 (a) 2002 (a) ------------------------------------------------------------------------------------------ ---------------------------------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS OPERATING ACTIVITIES CASH FLOWS Net loss $ (91.3) $ (31.1) $ (99.6) $ (231.9) Loss from discontinued operations 3.0 7.9 3.7 14.0 Loss on anticipated sale of Widia and Werko - 15.3 - 15.3 Cumulative effect of change in method of accounting - - - 187.7 Depreciation and amortization 5.6 5.6 11.3 11.3 Restructuring costs 6.3 2.9 12.3 7.9 Working capital changes Notes and accounts receivable 0.5 (2.6) 1.9 5.4 Inventories 10.4 9.9 7.6 22.5 Other current assets (0.7) (1.3) 7.9 0.5 Trade accounts payable and other current liabilities (22.7) (2.5) (32.5) (9.8) Deferred income taxes and other - net 71.6 (2.2) 65.1 (3.1) ------------ ------------ ------------ ------------ NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (17.3) 1.9 (22.3) 19.8 INVESTING ACTIVITIES CASH FLOWS Capital expenditures (1.7) (1.4) (3.0) (2.8) Divestitures - - (24.4) - Acquisitions and other - net 2.0 1.8 (4.2) 3.7 ------------ ------------ ------------ ------------ NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 0.3 0.4 (31.6) 0.9 FINANCING ACTIVITIES CASH FLOWS Dividends paid (0.4) (0.4) (0.8) (0.8) Issuance of long-term debt - 11.5 - 11.5 Repayments of long-term debt (0.5) (0.2) (1.0) (0.5) Increase (decrease) in bank borrowings 0.7 (34.0) (1.3) (44.7) Net common share activity - - - 0.4 ------------ ------------ ------------ ------------ NET CASH USED BY FINANCING ACTIVITIES (0.2) (23.1) (3.1) (34.1) EFFECT OF EXCHANGE RATE FLUCTUATIONS ON CASH AND CASH EQUIVALENTS 3.5 2.3 7.0 1.7 CASH FLOWS RELATED TO DISCONTINUED OPERATIONS (1.4) (5.5) (5.1) (3.1) ------------ ------------ ------------ ------------ DECREASE IN CASH AND CASH EQUIVALENTS (15.1) (24.0) (55.1) (14.8) Cash and cash equivalents at beginning of period 82.3 99.3 122.3 90.1 ------------ ------------ ------------ ------------ CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 67.2 $ 75.3 $ 67.2 $ 75.3 ============ ============ ============ ============ (a) Reflects the presentation of Widia, Werko, Valenite, Grinding Wheels, and Round Tools as discontinued operations. --------------------------------------------------------------------------------------------- Note: These statements are unaudited and subject to year end adjustments.
SEGMENT AND SUPPLEMENTAL INFORMATION Milacron Inc. and Subsidiaries SECOND QUARTER 2003 -------------------------------------------------------------------------------------------------------------------------------- (IN MILLIONS) THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, -------------------------------------------------------------------------------------------------------------------------------- 2003 (a) 2002 (a) 2003 (a) 2002 (a) ---------------------------------------------------------------------------- ------------------------------- MACHINERY TECHNOLOGIES NORTH AMERICA Sales $ 74.7 $ 74.9 $ 163.0 $ 143.3 Operating cash flow (b) 0.7 1.8 5.2 5.7 Segment earnings (loss) (1.6) (0.7) 0.5 0.7 Percent of sales -2.1% -0.9% 0.3% 0.5% New orders 83.5 75.5 168.4 153.1 MACHINERY TECHNOLOGIES EUROPE Sales $ 38.9 $ 27.7 $ 73.9 $ 51.5 Operating cash flow (b) (0.8) (1.3) (0.5) (3.4) Segment loss (1.8) (2.1) (2.5) (5.1) Percent of sales -4.6% -7.6% -3.4% -9.9% New orders 38.8 26.4 72.1 53.2 MOLD TECHNOLOGIES Sales $ 43.0 $ 44.8 $ 87.6 $ 90.7 Operating cash flow (b) 1.8 4.1 3.8 8.3 Segment earnings 0.1 2.3 0.4 4.8 Percent of sales 0.2% 5.1% 0.5% 5.3% New orders 42.5 44.3 87.2 90.0 ELMINATIONS Sales $ (1.3) $ (1.6) $ (4.3) $ (3.7) New orders (1.4) (1.5) (2.6) (4.5) TOTAL PLASTICS TECHNOLOGIES Sales $ 155.3 $ 145.8 $ 320.2 $ 281.8 Operating cash flow (b) 1.7 4.6 8.5 10.6 Segment earnings (loss) (3.3) (0.5) (1.6) 0.4 Percent of sales -2.1% -0.3% -0.5% 0.1% New orders 163.4 144.7 325.1 291.8 INDUSTRIAL FLUIDS Sales $ 26.3 $ 24.1 $ 51.6 $ 46.6 Operating cash flow (b) 4.2 3.6 8.2 7.8 Segment earnings 3.7 3.3 7.2 7.1 Percent of sales 14.1% 13.7% 14.0% 15.2% New orders 26.3 24.2 51.6 46.7 TOTAL CONTINUING OPERATIONS Sales $ 181.6 $ 169.9 $ 371.8 $ 328.4 Operating cash flow (b) 1.6 3.4 8.2 9.0 Segment earnings 0.4 2.8 5.6 7.5 Restructuring costs (c) (6.3) (2.9) (12.3) (7.9) Corporate expenses (d) (3.7) (4.0) (7.2) (7.9) Other unallocated expenses (0.7) (1.0) (1.5) (1.8) ------------- ------------- ------------ ------------ Operating loss (10.3) (5.1) (15.4) (10.1) Percent of sales -5.7% -3.0% -4.1% -3.1% New orders 189.7 168.9 376.7 338.5 Ending backlog 85.4 75.7 85.4 75.7 (a) Reflects the presentation of Widia, Werko, Valenite, Grinding Wheels, and Round Tools as discontinued operations. (b) Represents EBITDA (earnings before interest, income taxes, depreciation and amortization) before restructuring costs. (c) In 2003, includes costs related to initiatives announced in 2002 and 2003 to reduce operating and administrative costs. In 2002, represents costs related to initiatives announced in the second half of 2001 to consolidate manufacturing operations and reduce costs. (d) Other unallocated expenses include financing costs related to the sale of accounts receivable. ------------------------------------------------------------------------------------ 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) 2000 2001 2002 2003 ------ ---------------------------------------- ------------------------------------- ------------ Year Qtr 1 Qtr 2 Qtr 3 Qtr 4 Year Qtr 1 Qtr 2 Qtr 3 Qtr 4 Year Qtr 1 Qtr 2 ---------------------------------------------------------------------------------------------------------------------------------- SALES 974.5 201.2 191.7 175.5 186.8 755.2 158.5 169.9 173.3 191.5 693.2 190.2 181.6 Cost of products sold 742.4 157.2 157.5 149.1 159.9 623.7 133.2 138.5 141.7 158.2 571.6 158.4 149.7 Cost of products sold related to restructure - - - 2.5 0.6 3.1 - - - 1.9 1.9 - 3.8 ------ ------- ------ ------- ------- ------- ------ ------- ------- ------- ----- ------ ------ TOTAL COST OF PRODUCTS SOLD 742.4 157.2 157.5 151.6 160.5 626.8 133.2 138.5 141.7 160.1 573.5 158.4 153.5 ------ ------- ------ ------- ------- ------- ------ ------- ------- ------- ----- ------ ------ Manufacturing margins 232.1 44.0 34.2 23.9 26.3 128.4 25.3 31.4 31.6 31.4 119.7 31.8 28.1 OTHER COSTS AND EXPENSES Selling and administrative 134.6 32.9 32.6 32.2 31.9 129.6 28.8 31.0 30.9 30.3 121.0 30.2 34.3 Restructuring costs 1.4 - - 2.8 11.6 14.4 5.0 2.9 1.9 2.2 12.0 6.0 2.5 Other - net (a) 7.0 2.7 2.0 3.4 4.9 13.0 (3.5) 2.6 1.5 (0.6) - 0.7 1.6 ------ ------- ------ ------- ------- ------- ------ ------- ------- ------- ----- ------ ------ Total other costs and expenses 143.0 35.6 34.6 38.4 48.4 157.0 30.3 36.5 34.3 31.9 133.0 36.9 38.4 ------ ------- ------ ------- ------- ------- ------ ------- ------- ------- ----- ------ ------ OPERATING EARNINGS (LOSS) 89.1 8.4 (0.4) (14.5) (22.1) (28.6) (5.0) (5.1) (2.7) (0.5) (13.3) (5.1)(10.3) Interest expense - net of interest income (20.9) (5.0) (5.4) (5.9) (6.2) (22.5) (5.6) (6.1) (6.5) (5.1) (23.3) (5.2) (5.8) EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF CHANGE IN METHOD OF ACCOUNTING 68.2 3.4 (5.8) (20.4) (28.3) (51.1) (10.6) (11.2) (9.2) (5.6) (36.6) (10.3)(16.1) Provision (benefit) from income taxes 19.4 1.5 (6.4) (9.9) (7.6) (22.4) (3.6) (3.3) (4.7) (6.6) (18.2) (2.7) 72.2 ------ ------- ------ ------- ------- ------- ------ ------- ------- ------ ------ ------ ------ EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE CUMULATIVE EFFECT OF CHANGE IN METHOD OF ACCOUNTING 48.8 1.9 0.6 (10.5) (20.7) (28.7) (7.0) (7.9) (4.5) 1.0 (18.4) (7.6) (88.3) DISCONTINUED OPERATIONS-NET OF INCOME TAXES Earnings (loss) from operations 23.5 1.6 0.5 (7.9) (1.2) (7.0) (6.1) (7.9) (10.4) (0.8) (25.2) (0.7) (3.0) Net Gain (loss) on divestitures - - - - - - - (15.3) 29.4 (5.7) 8.4 - - Total discontinued operations 23.5 1.6 0.5 (7.9) (1.2) (7.0) (6.1) (23.2) 19.0 (6.5) (16.8) (0.7) (3.0) Cumulative effect of change in method of accounting - - - - - - (187.7) - - - (187.7) - - ------ ------- ------ ------- ------- ------- ------ ------- ------- ------- ----- ----- ------ NET EARNINGS (LOSS) $ 72.3 $ 3.5 $ 1.1 $(18.4) $(21.9) $(35.7) $(200.8)$(31.1) $ 14.5 $(5.5) $(222.9)$(8.3)$(91.3) ====== ======= ====== ======= ======= ======= ====== ======= ======= ======= ===== ===== ====== EARNINGS (LOSS) PER COMMON SHARE BASIC AND DILUTED (b) CONTINUING OPERATIONS $ 1.38 $ 0.05 $ 0.01 $(0.31) $(0.62) $(0.87) $(0.21)$(0.24) $(0.14) $ 0.03 $(0.56)$(0.23)$(2.63) DISCONTINUED OPERATIONS 0.68 0.05 0.02 (0.24) (0.04) (0.21) (0.18) (0.69) 0.57 (0.20) (0.50) (0.02) (0.09) CUMULATIVE EFFECT OF CHANGE IN METHOD OF ACCOUNTING - - - - - - (5.62) - - - (5.61) - - ------ ------- ------ ------- ------- ------- ------ ------- ------- ------- ----- ------ ------ NET EARNINGS (LOSS) $ 2.06 $ 0.10 $ 0.03 $(0.55) $(0.66) $(1.08) $(6.01)$(0.93) $ 0.43 $(0.17)$(6.67)$(0.25)$(2.72) ====== ======= ====== ======= ======= ======= ====== ======= ======= ======= ===== ====== ====== ----------------------------------------------------------------------------------------------------------------------------------- (a) In the first quarter of 2002, includes royalty income of $ 4.5 million from the licensing of patented technology. (b) 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. (In Millions) 2000 2001 2002 2003 Year Qtr 1 Qtr 2 Qtr 3 Qtr 4 Year Qtr 1 Qtr 2 Qtr 3 Qtr 4 Year Qtr 1 Qtr 2 Machinery technologies North America Sales $550.0 $102.7 $92.9 $75.6 $90.5 $361.7 $68.4 $74.9 $73.7 $96.6 $313.6 $88.3 $74.7 Operating cash flow (a) 81.1 7.5 0.5 (6.3) (1.2) 0.5 3.9 1.8 4.0 8.2 17.9 4.5 0.7 Segment earnings (loss) 67.2 4.0 (3.0) (9.9) (4.6) (13.5) 1.4 (0.7) 1.5 5.8 8.0 2.1 (1.6) New orders 513.0 101.6 79.0 76.2 79.8 336.6 77.6 75.5 79.4 88.0 320.5 84.9 83.5 Machinery technologies Europe Sales 145.2 30.6 33.6 29.2 29.2 122.6 23.8 27.7 34.7 31.2 117.4 35.0 38.9 Operating cash flow (a) 7.1 1.4 1.1 (0.6) (6.2) (4.3) (2.1) (1.3) (0.6) (0.6) (4.6) 0.3 (0.8) Segment earnings (loss) 2.2 0.2 (0.1) (1.7) (7.5) (9.1) (3.0) (2.1) (1.5) (1.5) (8.1) (0.7) (1.8) New orders 143.4 31.0 27.8 28.3 26.8 113.9 26.8 26.4 34.7 34.1 122.0 33.3 38.8 Mold technologies Sales 190.3 45.6 44.0 47.8 47.2 184.6 45.9 44.8 41.1 42.9 174.7 44.6 43.0 Operating cash flow (a) 39.2 8.2 6.7 5.3 4.8 25.0 4.2 4.1 2.6 1.8 12.7 2.0 1.8 Segment earnings 27.2 5.1 3.4 1.9 1.7 12.1 2.5 2.3 0.4 0.1 5.3 0.3 0.1 New orders 190.5 45.7 44.2 46.9 47.5 184.3 45.7 44.3 41.7 42.6 174.3 44.7 42.5 Elminations Sales (11.7) (1.7) (2.0) (1.2) (1.6) (6.5) (2.1) (1.6) (0.9) (3.9) (8.5) (3.0) (1.3) New orders (11.6) (0.7) (2.6) (0.8) (1.5) (5.6) (3.0) (1.5) (1.9) (3.4) (9.8) (1.2) (1.4) Total plastics technologies Sales 873.8 177.2 168.5 151.4 165.3 662.4 136.0 145.8 148.6 166.8 597.2 164.9 155.3 Operating cash flow (a) 127.4 17.1 8.3 (1.6) (2.6) 21.2 6.0 4.6 6.0 9.4 26.0 6.8 1.7 Segment earnings (loss) 96.6 9.3 0.3 (9.7) (10.4) (10.5) 0.9 (0.5) 0.4 4.4 5.2 1.7 (3.3) New orders 835.3 177.6 148.4 150.6 152.6 629.2 147.1 144.7 153.9 161.3 607.0 161.7 163.4 Industrial fluids Sales 100.7 24.0 23.2 24.1 21.5 92.8 22.5 24.1 24.7 24.7 96.0 25.3 26.3 Operating cash flow (a) 21.5 5.2 3.9 6.0 5.5 20.6 4.2 3.6 3.8 4.3 15.9 4.0 4.2 Segment earnings 17.5 4.5 3.1 5.5 5.0 18.1 3.8 3.3 3.4 3.9 14.4 3.5 3.7 New orders 102.0 24.0 23.2 24.1 21.6 92.9 22.5 24.2 24.6 24.7 96.0 25.3 26.3 Total continuing operations Sales $974.5 $201.2 $191.7 $175.5 $186.8 $755.2 $158.5 $169.9 $173.3 $191.5 $693.2 $190.2 $181.6 Operating cash flow (a) 126.0 17.1 8.6 (0.3) (1.4) 24.0 5.6 3.4 5.3 9.2 23.5 6.6 1.6 Segment earnings (loss) 114.1 13.8 3.4 (4.2) (5.4) 7.6 4.7 2.8 3.8 8.3 19.6 5.2 0.4 Restructuring costs (b) (1.4) - - (5.3) (12.2) (17.5) (5.0) (2.9) (1.9) (4.1) (13.9) (6.0) (6.3) Corporate expenses (18.8) (4.3) (4.5) (3.9) (3.7) (16.4) (3.9) (4.0) (3.6) (3.9) (15.4) (3.5) (3.7) Other unallocated expenses (c) (4.8) (1.1) 0.7 (1.1) (0.8) (2.3) (0.8) (1.0) (1.0) (0.8) (3.6) (0.8) (0.7) Operating earnings (loss) 89.1 8.4 (0.4) (14.5) (22.1) (28.6) (5.0) (5.1) (2.7) (0.5) (13.3) (5.1) (10.3) Percent of sales 9.1% 4.2% -0.2% -8.3% -11.8% -3.8% -3.2% -3.0% -1.6% -0.3% -1.9% -2.7% -5.7% New orders 937.3 201.6 171.6 174.7 174.2 722.1 169.6 168.9 178.5 186.0 703.0 187.0 189.7 Ending backlog 100.0 99.7 78.5 79.4 61.2 61.2 74.0 75.7 80.5 76.4 76.4 74.7 85.4 (a) Represents EBITDA (earnings before interest, income taxes, depreciation and amortization) before restructuring costs. (b) In 2003, includes costs related to initiatives announced in 2002 and 2003 to reduce operating and administrative costs. In 2002, represents costs related to initiatives announced in the second half of 2001 to consolidate manufacturing operations and reduce costs. (c) Other unallocated expenses include financing costs related to the sale of accounts receivable and in 2001, a second quarter gain of $2.6 million ($1.6 million after tax, or $ .05 per share) from the sale of surplus land.
ESTIMATES AND PROJECTIONS FOR FINANCIAL MODELING UPDATED: JULY 29, 2003 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 ENDED YEAR ENDED ----------------- ----------------- (IN MILLIONS) SEP. 30, 2003 DEC. 31, 2003 ---------------------------------------------------------------------------------------------- PROJECTED PROFIT & LOSS ITEMS Sales $175 - 185 $730 - 750 Total plastics technologies 150 - 155 625 - 640 Industrial fluids 26 - 29 105 - 110 Segment earnings Total plastics technologies 2 - 5 7 - 11 Industrial fluids 3 - 4 14 - 16 Corporate and unallocated expenses (1) 3 - 4 16 - 17 Interest expense 5 - 6 22 - 24 Restructuring charges 7 - 8 23 - 25 Tax provision (2) 0 - 1 0 - 2 Average diluted shares outstanding 33.7 33.7 PROJECTED CASH FLOW & BALANCE SHEET ITEMS Depreciation 5 - 6 22 - 24 Working capital - increase (decrease) (3) (3) - (6) (5) - (10) Capital expenditures 3 - 4 8 - 10 Cash restructuring 3 - 4 15 - 17 Total debt - net of cash 240 - 250 235 - 245 Debt-to-capital ratio 89 - 91% 89 - 91% Net debt-to-capital ratio 86 - 88% 86 - 88% COMMENTS & EXPLANATIONS Assumes current foreign exchange rates, and no further acquisitions or divestitures. Excludes the effects of discontinued operations. 1 CORPORATE AND UNALLOCATED EXPENSES Includes corporate expenses and financing costs related to the sale of accounts receivable. 2 TAX PROVISION Excludes charge of $71.2 million related to tax valuation reserves. 3 WORKING CAPITAL = inventory + receivables - trade payables - advance billings