-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QI3e6e3x+AdiXlePepp60ojj3cIsex4wtSXpYbc4Xbx9vWVOl6fv4P2WzQ8M7Kt4 j3jC/ww3uM6t/sd9VO3Hgw== 0001157523-04-010254.txt : 20041103 0001157523-04-010254.hdr.sgml : 20041103 20041103101013 ACCESSION NUMBER: 0001157523-04-010254 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20041103 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041103 DATE AS OF CHANGE: 20041103 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MILACRON INC CENTRAL INDEX KEY: 0000716823 STANDARD INDUSTRIAL CLASSIFICATION: SPECIAL INDUSTRY MACHINERY, NEC [3559] IRS NUMBER: 311062125 STATE OF INCORPORATION: DE FISCAL YEAR END: 1228 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08485 FILM NUMBER: 041115027 BUSINESS ADDRESS: STREET 1: 2090 FLORENCE AVENUE STREET 2: PO BOX 63716 CITY: CINCINNATI STATE: OH ZIP: 45206 BUSINESS PHONE: 5134875000 MAIL ADDRESS: STREET 1: 2090 FLORENCE AVENUE STREET 2: P.O. BOX 63716 CITY: CINCINNATI STATE: OH ZIP: 45206 FORMER COMPANY: FORMER CONFORMED NAME: CINCINNATI MILACRON INC /DE/ DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: CINCINNATI MILACRON HOLDINGS INC DATE OF NAME CHANGE: 19830503 FORMER COMPANY: FORMER CONFORMED NAME: CINCINNATI MILLING MACHINE CO DATE OF NAME CHANGE: 19600201 8-K 1 a4756456.txt MILACRON 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): November 3, 2004 MILACRON INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 1-8485 31-1062125 - ----------------------------- ------------------------------ ------------------ (State or other (Commission File Number) (IRS Employer jurisdiction of Identification No.) incorporation) 2090 Florence Avenue, Cincinnati, Ohio 45206 - ----------------------------------------------------------------- -------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (513) 487-5000 ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION. On November 3, 2004, Milacron Inc. (the "Company") issued an earnings release announcing its results for the third quarter of 2004, which is furnished as Exhibit 99.1 hereto. The Company's earnings release presents the Company's earnings from continuing operations in the third quarters of 2003 and 2004 excluding interest, taxes, goodwill impairment, restructuring and refinancing costs. The Company's management believes that describing the Company's results using this non-GAAP financial measure is useful to investors because this non-GAAP financial measure provides investors with a basis for comparing the Company's results for its most recently completed financial period to its results in prior periods. In addition, the measure for earnings from continuing operations excluding interest, taxes, goodwill impairment, restructuring and refinancing costs is the basis on which management reports to the Company's board of directors and represents a measure which management believes is used by analysts and investors following the Company. This information shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference to such filing. ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits: Exhibit No. Description - ---------------------- ----------------------------------------------------- 99.1 Earnings release issued by Milacron Inc. on November 3, 2004. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Milacron Inc. Date: November 3, 2004 By: /s/ Robert P. Lienesch ----------------------------------- Robert P. Lienesch Senior Vice President - Finance, Controller and Chief Financial Officer EXHIBIT INDEX Exhibit No. Description - ---------------------- ----------------------------------------------------- 99.1 Earnings release issued by Milacron Inc. on November 3, 2004. EX-99.1 2 a4756456ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Milacron Narrows Net Loss on Higher Sales; Outlook Remains Positive CINCINNATI--(BUSINESS WIRE)--Nov. 3, 2004--Milacron Inc. (NYSE:MZ) -- Note: At 11 a.m. EST on 11/3, 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) 981-5591. A replay of the call will be made available from 2 p.m. on 11/3 through midnight on 11/10 at www.milacron.com or dial-in at (719) 457-0820 or (888) 203-1112: access code 964374. Milacron Inc. (NYSE:MZ) today reported a net loss of $5.5 million, or $0.20 per share, in the third quarter of 2004 on sales of $181 million. The loss included, on an after-tax basis, $2.3 million in restructuring costs and $0.4 million in refinancing costs. In comparison, in the third quarter of 2003 the company had a net loss of $67.7 million, or $2.01 per share, on sales of $170 million. The year-ago loss included, on an after-tax basis: a goodwill impairment charge of $52.3 million, $6.3 million in restructuring costs and $1.0 million in refinancing costs, as well as $2.0 million in losses from discontinued operations. New orders in the third quarter of 2004 were $183 million, compared to $176 million in the same quarter a year ago. Orders for plastics machinery in North America accounted for most of the increase, as favorable currency translation effects offset softness in Europe. Excluding interest, taxes, goodwill impairment, restructuring and refinancing costs, in the third quarter of 2004 earnings from continuing operations improved to $4.6 million, up from $1.7 million in the third quarter of 2003, while operating cash flow grew to $9.5 million from $6.7 million (see reconciliation tables). Despite $1.7 million of restructuring costs, manufacturing margins in the quarter were 18.9%, up from 18.3% in the same quarter last year. "Our operational efficiencies continued to improve and consequently, even though our markets did not experience as much growth as we were anticipating, Milacron's third quarter results showed good progress on a year-over-year basis," said Ronald D. Brown, chairman, president and chief executive officer. "Increases in oil and resin prices had a clear negative impact on the economy, as well as on our customers' operating costs, delaying their plans to purchase new equipment. We remain committed to finding better ways to help our customers improve their competitiveness while improving our own performance in this challenging environment." 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) Steady demand for injection molding products in several key markets - packaging, construction, automotive, medical and consumer goods - led to new orders of $80 million, up from $74 million in the third quarter of 2003. Sales rose to $77 million, from $72 million in the same period last year. This increased sales volume, together with cost-savings from recent restructuring actions, helped improve segment earnings to $4.1 million, from $0.9 million in the year-ago quarter, despite higher pension costs. 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, reflecting strength in packaging, consumer goods and medical markets. Despite favorable currency translation effects, third quarter new orders in this segment were $36 million versus $37 million a year ago. Sales, however, rose to $38 million from $33 million last year, with about two-thirds of the increase attributable to favorable currency translation effects. The segment loss of $0.3 million was essentially comparable to a loss of $0.4 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) New orders and sales of $40 million were essentially flat with year-ago results when excluding currency effects. Held back by highly competitive pricing in Europe and increasing raw material costs worldwide, this segment's operating earnings nevertheless improved to $1.1 million versus $0.1 million in the third quarter of 2003, reflecting improved profitability in North America and cost reductions in Europe. Industrial Fluids (water-based and oil-based coolants, lubricants and cleaners for metalcutting and metalforming operations worldwide) Sales of $27 million were essentially flat with those of the third quarter a year ago when excluding currency effects. Segment earnings declined to $2.8 million from $4.8 million a year ago, primarily as a result of rising raw material costs. To offset these higher costs, price increases are being phased in between now and year-end. Outlook "Our outlook for the fourth quarter and 2005 remains positive," Brown said. "The recovery in the plastics industry is behind where most experts had predicted it would be at this time, which we attribute to rising resin prices. However, we are encouraged by recent order trends, particularly in North America, and for 2005 we are projecting 5% to 7% overall growth in sales. "We are also encouraged by our experience at 'K 2004,' the largest plastics trade show in the world, held in Dusseldorf, Germany last week. At the show, we introduced a number of new, technologically advanced products, which were very well received. "Outside of North America and Western Europe, growth continues strong, particularly in Eastern Europe and Asia, and we are rapidly expanding our presence in these markets. "All things considered, we believe that our cost-reduction initiatives and continued improvements in operating efficiency, as well as increased sales volumes, should enable us to approach breakeven in the fourth quarter and return to profitability in 2005," 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 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 Third Quarter 2004 - ---------------------------------------------------------------------- Three Months Ended Nine Months Ended September 30, September 30, ------------------------------------------------------- 2004 2003 2004 2003 - ---------------------------------------------------------------------- Sales $180,484,000 $170,206,000 $561,166,000 $541,976,000 Loss from continuing operations (5,487,000) (65,701,000) (49,451,000)(161,582,000) Per Share (a) Basic (0.20) (1.95) (1.37) (4.81) Diluted (0.20) (1.95) (1.37) (4.81) Loss from discontinued operations - (1,958,000) (477,000) (5,675,000) Per Share (a) Basic - (0.06) (0.01) (0.17) Diluted - (0.06) (0.01) (0.17) Net loss (5,487,000) (67,659,000) (49,928,000)(167,257,000) Per Share (a) Basic (0.20) (2.01) (1.38) (4.98) Diluted (0.20) (2.01) (1.38) (4.98) Common shares Weighted average outstanding for basic EPS 34,723,000 33,684,000 37,333,000 33,620,000 Weighted average outstanding for diluted EPS 34,723,000 33,684,000 37,333,000 33,620,000 Outstanding at quarter end 35,812,000 33,874,000 35,812,000 33,874,000 (a) Per share amounts include the effects of dividends on preferred stock. - --------------------------------------------- Note: These statements are unaudited and subject to year- end adjustments. Consolidated Earnings Milacron Inc. and Subsidiaries Third Quarter 2004 - ---------------------------------------------------------------------- (In millions, Three Months Ended Nine Months Ended except per-share data) September 30, September 30, ------------------------------------- 2004 2003 2004 2003 - ---------------------------------------------------------------------- Sales $180.5 $170.2 $561.2 $542.0 Cost of products sold 144.6 139.0 457.0 447.1 Cost of products sold related to restructuring 1.7 - 1.7 3.8 ------------------------------------- Manufacturing margins 34.2 31.2 102.5 91.1 Percent of sales 18.9% 18.3% 18.3% 16.8% Other costs and expenses Selling and administrative 30.8 30.7 92.6 95.3 Goodwill impairment charge (a) - 52.3 - 52.3 Refinancing costs (b) 0.4 1.0 21.4 1.0 Restructuring costs (c) 0.6 6.4 3.4 14.8 Other expense - net 0.5 (1.2) 1.7 1.0 ------------------------------------- Total other costs and expenses 32.3 89.2 119.1 164.4 ------------------------------------- Operating earnings (loss) 1.9 (58.0) (16.6) (73.3) Interest expense - net of interest income (d) (6.6) (5.9) (29.8) (16.9) ------------------------------------- Loss from continuing operations before income taxes (4.7) (63.9) (46.4) (90.2) Provision for income taxes (e) 0.8 1.8 3.0 71.4 ------------------------------------- Loss from continuing operations (5.5) (65.7) (49.4) (161.6) Discontinued operations - net of income taxes (f) - (2.0) (0.5) (5.7) ------------------------------------- Net loss $ (5.5) $(67.7) $(49.9)$(167.3) ===================================== Loss per common share - basic and diluted (g) Continuing operations $(0.20) $(1.95) $(1.37) $(4.81) Discontinued operations - (0.06) (0.01) (0.17) ------------------------------------- Net loss $(0.20) $(2.01) $(1.38) $(4.98) ===================================== (a) Represents a charge to adjust the carrying value of goodwill in the mold technologies segment. (b) In the first quarter of 2004 and the third quarter of 2003, 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. (c) Represents costs related to initiatives announced in 2002 through 2004 to reduce operating and administrative costs. (d) 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. (e) In the nine months ended September 30, 2003, includes a second quarter charge of $70.8 million for the establishment of valuation allowances related to U.S. deferred tax assets. (f) Reflects the presentation of Grinding Wheels in 2004 and 2003 and Round Tools in 2003 as discontinued operations. (g) Per share amounts include the effects of dividends on preferred stock. - ----------------------------------------------------- Note: These statements are unaudited and subject to year-end adjustments. Consolidated Balance Sheets Milacron Inc. and Subsidiaries Third Quarter 2004 - ---------------------------------------------------------------------- (In millions) September 30, September 30, 2004 2003 - ---------------------------------------------------------------------- Assets Cash and cash equivalents $40.5 $62.8 Notes and accounts receivable-net (a) 126.5 102.7 Inventories 128.8 136.4 Other current assets 52.5 62.5 Assets of discontinued operations (b) - 9.0 ---------------------------- Total current assets 348.3 373.4 Property, plant and equipment - net 129.0 143.0 Goodwill 83.8 95.1 Other noncurrent assets 112.5 110.5 ---------------------------- Total assets $673.6 $722.0 ---------------------------- Liabilities and shareholders' equity Short-term borrowings and long-term debt due within one year (c) $15.8 $158.7 Trade accounts payable and advance billings and deposits 88.0 78.4 Accrued and other current liabilities 96.2 110.9 Liabilities of discontinued operations (b) - 2.3 ---------------------------- Total current liabilities 200.0 350.3 Long-term accrued liabilities 220.9 243.6 Long-term debt 235.8 153.8 Shareholders' equity 16.9 (25.7) ---------------------------- Total liabilities and shareholders' equity $673.6 $722.0 ---------------------------- (a) In 2003, excludes receivables for continuing operations of $24.6 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, $9.3 million was drawn against the revolving credit facility, excluding outstanding letters of credit of $13.1 million. In 2003, $42.0 million was drawn against the revolving credit facility, 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 Third Quarter 2004 - ---------------------------------------------------------------------- (In millions) Three Months Nine Months Ended Ended September 30, September 30, ---------------------------- 2004 2003 2004 2003 - ---------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents Operating activities cash flows Net Loss $(5.5)$(67.7)$(49.9)$(167.3) Loss from discontinued operations - 2.0 0.5 5.7 Depreciation and amortization 4.9 5.0 15.3 16.3 Goodwill impairment charges - 52.3 - 52.3 Refinancing costs 0.4 - 21.4 - Restructuring costs 2.3 6.4 5.1 18.6 Working capital changes Notes and accounts receivable (a) (1.0) (8.2) (32.6) (6.3) Inventories 2.0 8.7 2.9 16.3 Other current assets (1.8) 1.0 (7.5) 8.9 Trade accounts payable (0.2) 7.4 3.2 (5.7) Other current liabilities (4.6) (10.1) (13.3) (29.5) Deferred income taxes and other - net (1.4) 5.0 3.9 70.2 ---------------------------- Net cash provided (used) by operating activities (4.9) 1.8 (51.0) (20.5) Investing activities cash flows Capital expenditures (1.4) (1.1) (4.3) (4.1) Divestitures - 4.1 8.0 (20.3) Acquisitions and other - net 0.2 0.1 0.4 (4.1) ---------------------------- Net cash provided (used) by investing activities (1.2) 3.1 4.1 (28.5) Financing activities cash flows Issuance of long-term debt - - 219.8 - Repayments of long-term debt (0.4) (0.7)(261.0) (1.7) Increase (decrease) in short-term borrowings 9.1 (1.5) 67.4 (2.8) Debt issuance costs (3.0) - (24.9) - Dividends paid (1.4) - (1.6) (0.8) ---------------------------- Net cash provided (used) by financing activities 4.3 (2.2) (0.3) (5.3) Effect of exchange rate fluctuations on cash and cash equivalents 0.3 (0.8) (0.9) 6.2 Cash flows related to discontinued operations - (6.3) (4.2) (11.4) ---------------------------- Decrease in cash and cash equivalents (1.5) (4.4) (52.3) (59.5) Cash and cash equivalents at beginning of period 42.0 67.2 92.8 122.3 ---------------------------- Cash and cash equivalents at end of period $40.5 $62.8 $40.5 $62.8 ============================ (a) In the nine months ended September 30, 2004, includes $33 million representing the effect of the repayment of the amounts that were previously sold under the receivables sale program. - ------------------------------------------------------- Note: These statements are unaudited and subject to year-end adjustments. Segment and Supplemental Information Milacron Inc. and Subsidiaries Third Quarter 2004 - ---------------------------------------------------------------------- (In millions) Three Months Nine Months Ended Ended September 30, September 30, ------------------------------- 2004 2003 (a)2004 (a)2003 (a) - ---------------------------------------------------------------------- Machinery technologies North America Sales $77.2 $71.6 $237.7 $234.6 Operating cash flow (b) 5.9 2.8 12.6 8.0 Segment earnings 4.1 0.9 6.9 1.4 Percent of sales 5.3% 1.3% 2.9% 0.6% New orders 80.3 74.4 246.6 242.8 Machinery technologies Europe Sales $37.5 $33.4 $122.4 $107.3 Operating cash flow (b) 0.8 0.6 5.3 0.1 Segment earnings (0.3) (0.4) 2.1 (2.9) Percent of sales -0.8% -1.2% 1.7% -2.7% New orders 36.3 36.9 122.0 109.0 Mold technologies Sales $39.6 $39.1 $122.8 $126.7 Operating cash flow (b) 2.7 1.8 7.2 5.6 Segment earnings (loss) 1.1 0.1 2.4 0.5 Percent of sales 2.8% 0.3% 2.0% 0.4% New orders 39.5 39.4 123.0 126.6 Eliminations Sales $(0.4) $(0.3) $(2.3) $(4.6) New orders (0.2) (0.7) (2.5) (3.3) Total plastics technologies Sales $153.9 $143.8 $480.6 $464.0 Operating cash flow (b) 9.4 5.2 25.1 13.7 Segment earnings (loss) 4.9 0.6 11.4 (1.0) Percent of sales 3.2% 0.4% 2.4% -0.2% New orders 155.9 150.0 489.1 475.1 Industrial fluids Sales $26.6 $26.4 $80.6 $78.0 Operating cash flow (b) 3.3 5.2 10.2 13.4 Segment earnings 2.8 4.8 8.7 12.0 Percent of sales 10.5% 18.2% 10.8% 15.4% New orders 26.6 26.4 80.6 78.0 Total continuing operations Sales $180.5 $170.2 $561.2 $542.0 Operating cash flow (b) 9.5 6.7 25.2 14.9 Segment earnings 7.7 5.4 20.1 11.0 Goodwill impairment charge (c) - (52.3) - (52.3) Refinancing costs (d) (0.4) (1.0) (21.4) (1.0) Restructuring costs (e) (2.3) (6.4) (5.1) (18.6) Corporate expenses (2.6) (3.1) (8.8) (10.3) Other unallocated expenses (f) (0.5) (0.6) (1.4) (2.1) ------------------------------- Operating loss 1.9 (58.0) (16.6) (73.3) Percent of sales 1.1% -34.1% -3.0% -13.5% New orders 182.5 176.4 569.7 553.1 Ending backlog 100.1 91.7 100.1 91.7 (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) Represents a charge to adjust the carrying value of goodwill in the mold technologies segment. (d) In the first quarter of 2004 and the third quarter of 2003, 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. (e) Represents costs related to initiatives announced in 2002 through 2004 to reduce operating and administrative costs. (f) 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 Earnings to Operating Cash Flows Milacron Inc. and Subsidiaries Third Quarter 2004 - ---------------------------------------------------------------------- (In millions) Three Months Nine Months Ended Ended September 30, September 30, ---------------------------- 2004 2003 2004 2003 - ---------------------------------------------------------------------- Machinery technologies North America Segment earnings $4.1 $0.9 $6.9 $1.4 Depreciation and amortization 1.8 1.9 5.7 6.6 ---------------------------- Operating cash flow 5.9 2.8 12.6 8.0 Machinery technologies Europe Segment earnings (loss) $(0.3) $(0.4) $2.1 $(2.9) Depreciation and amortization 1.1 1.0 3.2 3.0 ---------------------------- Operating cash flow 0.8 0.6 5.3 0.1 Mold technologies Segment earnings $1.1 $0.1 $2.4 $0.5 Depreciation and amortization 1.6 1.7 4.8 5.1 ---------------------------- Operating cash flow 2.7 1.8 7.2 5.6 Total plastics technologies Segment earnings (loss) $4.9 $0.6 $11.4 $(1.0) Depreciation and amortization 4.5 4.6 13.7 14.7 ---------------------------- Operating cash flow 9.4 5.2 25.1 13.7 Industrial fluids Segment earnings $2.8 $4.8 $8.7 $12.0 Depreciation and amortization 0.5 0.4 1.5 1.4 ---------------------------- Operating cash flow 3.3 5.2 10.2 13.4 Total continuing operations Net Loss $(5.5)$(67.7)$(49.9)$(167.3) Loss from discontinued operations (a) - 2.0 0.5 5.7 Provision for income taxes (b) 0.8 1.8 3.0 71.4 Interest expense - net (c) 6.6 5.9 29.8 16.9 Goodwill impairment charge (d) - 52.3 - 52.3 Refinancing costs (e) 0.4 1.0 21.4 1.0 Restructuring costs (f) 2.3 6.4 5.1 18.6 Depreciation and amortization 4.9 5.0 15.3 16.3 ---------------------------- Operating cash flow (g) $9.5 $6.7 $25.2 $14.9 ============================ (a) Reflects the presentation of Grinding Wheels in 2004 and 2003 and Round Tools in 2003 as discontinued operations. (b) In the nine months ended September 30, 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) Represents a charge to adjust the carrying value of goodwill in the mold technologies segment. (e) In the first quarter of 2004 and the third quarter of 2003, 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) Represents EBITDA (earnings before interest, income taxes, depreciation and amortization) before refinancing costs and restructuring costs. - ------------------------------------------------------- Note: These statements are unaudited and subject to year-end adjustments. Reconciliation of Consolidated Earnings to Internal Reporting Measures Milacron Inc. and Subsidiaries Third Quarter 2004 - ---------------------------------------------------------------------- (In millions, except per-share data) Three Months Nine Months Ended Ended September 30, September 30, --------------------------------- 2004 2003(a) 2004(a) 2003(a) - ---------------------------------------------------------------------- Net loss $(5.5) $(67.7) $(49.9) $(167.3) Discontinued operations-net of income taxes - 2.0 0.5 5.7 --------------------------------- Loss from continuing operations (5.5) (65.7) (49.4) (161.6) Provision for income taxes (b) (0.8) (1.8) (3.0) (71.4) --------------------------------- Loss from continuing operations before income taxes (4.7) (63.9) (46.4) (90.2) Interest expense - net of interest income (c) 6.6 5.9 29.8 16.9 --------------------------------- Operating loss 1.9 (58.0) (16.6) (73.3) Goodwill impairment charge (d) - 52.3 - 52.3 Refinancing costs (e) 0.4 1.0 21.4 1.0 Restructuring costs (f) 2.3 6.4 5.1 18.6 --------------------------------- Earnings (loss) from continuing operations before interest, income taxes, refinancing costs and restructuring costs $4.6 $1.7 $9.9 $(1.4) ================================= Loss per common share - basic and diluted Continuing operations $(0.20) $(1.95) $(1.37) $(4.81) Discontinued operations - (0.06) (0.01) (0.17) --------------------------------- Net loss $(0.20) $(2.01) $(1.38) $(4.98) ================================= (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) Represents a charge to adjust the carrying value of goodwill in the mold technologies segment. (e) In the first quarter of 2004 and the third quarter of 2003, 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. - ------------------------------------------------------ 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 ------------------------------------- Qtr 1 Qtr 2 Qtr 3 Qtr 4 Year - ---------------------------------------------------------------------- Sales $158.5 $169.9 $173.3 $191.5 $693.2 Cost of products sold 133.2 138.5 141.7 158.2 571.6 Cost of products sold related to restructuring - - - 1.9 1.9 ------------------------------------- Total cost of products sold 133.2 138.5 141.7 160.1 573.5 ------------------------------------- Manufacturing margins 25.3 31.4 31.6 31.4 119.7 Other costs and expenses Selling and administrative 28.8 31.0 30.9 30.3 121.0 Goodwill impairment charge - - - - - Refinancing costs - - - - - Restructuring costs 5.0 2.9 1.9 2.2 12.0 Other - net (3.5) 2.6 1.5 (0.6) - ------------------------------------- Total other costs and expenses 30.3 36.5 34.3 31.9 133.0 ------------------------------------- Operating loss (5.0) (5.1) (2.7) (0.5) (13.3) Interest expense - net of interest income (5.6) (6.1) (6.5) (5.1) (23.3) ------------------------------------- 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) Provision (benefit) from income taxes (3.6) (3.3) (4.7) (6.6) (18.2) ------------------------------------- Earnings (loss) from continuing operations before cumulative effect of change in method of accounting (7.0) (7.9) (4.5) 1.0 (18.4) Discontinued operations-net of income taxes Loss from operations (6.1) (7.9) (10.4) (0.8) (25.2) Net gain (loss) on divestitures - (15.3) 29.4 (5.7) 8.4 ------------------------------------- Total discontinued operations (6.1) (23.2) 19.0 (6.5) (16.8) 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) ===================================== Earnings (loss) per common share Basic and diluted (a) Continuing operations $(0.21)$(0.24)$(0.14) $0.03 $(0.56) Discontinued operations (0.18) (0.69) 0.57 (0.20) (0.50) 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) ===================================== - ---------------------------------------------------------------------- Historical Information Operating results reflecting Widia, Werko, Valenite, Grinding Wheels, and Round Tools as discontinued operations - ---------------------------------------------------------------------- (In millions, except per-share data) 2003 ------------------------------------ Qtr 1 Qtr 2 Qtr 3 Qtr 4 Year - ---------------------------------------------------------------------- Sales $190.2 $181.6 $170.2 $197.7 $739.7 Cost of products sold 158.4 149.7 139.0 158.2 605.3 Cost of products sold related to restructuring - 3.8 - (0.5) 3.3 ------------------------------------ Total cost of products sold 158.4 153.5 139.0 157.7 608.6 ------------------------------------ Manufacturing margins 31.8 28.1 31.2 40.0 131.1 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) (0.3) ------------------------------------ Total other costs and expenses 36.9 38.4 89.2 55.4 219.9 ------------------------------------ Operating loss (5.1) (10.3) (58.0) (15.4) (88.8) Interest expense - net of interest income (5.2) (5.8) (5.9) (6.1) (23.0) ------------------------------------ Loss from continuing operations before income taxes and cumulative effect of change in method of accounting (10.3) (16.1) (63.9) (21.5) (111.8) Provision (benefit) from income taxes (2.7) 72.2 1.8 1.4 72.7 ------------------------------------ Earnings (loss) from continuing operations before cumulative effect of change in method of accounting (7.6) (88.3) (65.7) (22.9) (184.5) Discontinued operations-net of income taxes 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) Cumulative effect of change in method of accounting - - - - - ------------------------------------ Net earnings (loss) $(8.3)$(91.3)$(67.7)$(24.4)$(191.7) ==================================== Earnings (loss) per common share Basic and diluted (a) Continuing operations $(0.23)$(2.63)$(1.95)$(0.68) $(5.49) Discontinued operations (0.02) (0.09) (0.06) (0.04) (0.21) Cumulative effect of change in method of accounting - - - - - ------------------------------------ Net earnings (loss) $(0.25)$(2.72)$(2.01)$(0.72) $(5.70) ==================================== - ---------------------------------------------------------------------- Historical Information Operating results reflecting Widia, Werko, Valenite, Grinding Wheels, and Round Tools as discontinued operations - ---------------------------------------------------------------------- (In millions, except per-share data) 2004 --------------------- Qtr 1 Qtr 2 Qtr 3 - ---------------------------------------------------------------------- Sales $188.9 $191.7 $180.5 Cost of products sold 156.1 156.2 144.6 Cost of products sold related to restructuring - - 1.7 --------------------- Total cost of products sold 156.1 156.2 146.3 --------------------- Manufacturing margins 32.8 35.5 34.2 Other costs and expenses Selling and administrative 30.9 30.8 30.8 Goodwill impairment charge - - - Refinancing costs 6.4 14.6 0.4 Restructuring costs 1.1 1.7 0.6 Other - net 1.4 (0.1) 0.5 --------------------- Total other costs and expenses 39.8 47.0 32.3 --------------------- Operating loss (7.0) (11.5) 1.9 Interest expense - net of interest income (7.9) (15.3) (6.6) --------------------- Loss from continuing operations before income taxes and cumulative effect of change in method of accounting (14.9) (26.8) (4.7) Provision (benefit) from income taxes 1.1 1.1 0.8 --------------------- Earnings (loss) from continuing operations before cumulative effect of change in method of accounting (16.0) (27.9) (5.5) Discontinued operations-net of income taxes Loss from operations (0.6) (0.7) - Net gain (loss) on divestitures - 0.8 - --------------------- Total discontinued operations (0.6) 0.1 - Cumulative effect of change in method of accounting - - - --------------------- Net earnings (loss) $(16.6)$(27.8) $(5.5) ===================== Earnings (loss) per common share Basic and diluted (a) Continuing operations $(0.47)$(0.64)$(0.20) Discontinued operations (0.02) - - Cumulative effect of change in method of accounting - - - --------------------- Net earnings (loss) $(0.49)$(0.64)$(0.20) ===================== - ---------------------------------------------------------------------- (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. - ---------------------------------------------------------------------- (In Millions) 2002 ----------------------------------- Qtr 1 Qtr 2 Qtr 3 Qtr 4 Year - ---------------------------------------------------------------------- Machinery technologies North America Sales $68.4 $74.9 $73.7 $96.6 $313.6 Operating cash flow (a) 3.9 1.8 4.0 8.2 17.9 Segment earnings (loss) 1.4 (0.7) 1.5 5.8 8.0 New orders 77.6 75.5 79.4 88.0 320.5 Machinery technologies Europe Sales $23.8 $27.7 $34.7 $31.2 $117.4 Operating cash flow (a) (2.1) (1.3) (0.6) (0.6) (4.6) Segment earnings (loss) (3.0) (2.1) (1.5) (1.5) (8.1) New orders 26.8 26.4 34.7 34.1 122.0 Mold technologies Sales $45.9 $44.8 $41.1 $42.9 $174.7 Operating cash flow (a) 4.2 4.1 2.6 1.8 12.7 Segment earnings 2.5 2.3 0.4 0.1 5.3 New orders 45.7 44.3 41.7 42.6 174.3 Eliminations Sales $(2.1) $(1.6) $(0.9) $(3.9) $(8.5) New orders (3.0) (1.5) (1.9) (3.4) (9.8) Total plastics technologies Sales $136.0 $145.8 $148.6 $166.8 $597.2 Operating cash flow (a) 6.0 4.6 6.0 9.4 26.0 Segment earnings (loss) 0.9 (0.5) 0.4 4.4 5.2 New orders 147.1 144.7 153.9 161.3 607.0 Industrial fluids Sales $22.5 $24.1 $24.7 $24.7 $96.0 Operating cash flow (a) 4.2 3.6 3.8 4.3 15.9 Segment earnings 3.8 3.3 3.4 3.9 14.4 New orders 22.5 24.2 24.6 24.7 96.0 Total continuing operations Sales $158.5 $169.9 $173.3 $191.5 $693.2 Operating cash flow (a) 5.6 3.4 5.3 9.2 23.5 Segment earnings (loss) 4.7 2.8 3.8 8.3 19.6 Goodwill impairment charges (b) - - - - - Refinancing costs (c) - - - - - Restructuring costs (d) (5.0) (2.9) (1.9) (4.1) (13.9) Corporate expenses (3.9) (4.0) (3.6) (3.9) (15.4) Other unallocated expenses (e) (0.8) (1.0) (1.0) (0.8) (3.6) ----------------------------------- Operating earnings (loss) (5.0) (5.1) (2.7) (0.5) (13.3) Percent of sales -3.2% -3.0% -1.6% -0.3% -1.9% New orders 169.6 168.9 178.5 186.0 703.0 Ending backlog 74.0 75.7 80.5 76.4 76.4 - ---------------------------------------------------------------------- Historical Segment and Supplemental Information Reflects the presentation of Widia, Werko, Valenite, Grinding Wheels, and Round Tools as discontinued operations. - ---------------------------------------------------------------------- (In Millions) 2003 2004 -------------------------------------------------------- Qtr 1 Qtr 2 Qtr 3 Qtr 4 Year Qtr 1 Qtr 2 Qtr 3 - ---------------------------------------------------------------------- Machinery technologies North America Sales $88.3 $74.7 $71.6 $86.6 $321.2 $77.3 $83.2 $77.2 Operating cash flow (a) 4.5 0.7 2.8 7.4 15.4 1.4 5.3 5.9 Segment earnings (loss) 2.1 (1.6) 0.9 5.3 6.7 (0.6) 3.4 4.1 New orders 84.9 83.5 74.4 82.0 324.8 79.1 87.2 80.3 Machinery technologies Europe Sales $35.0 $38.9 $33.4 $43.7 $151.0 $42.5 $42.4 $37.5 Operating cash flow (a) 0.3 (0.8) 0.6 2.4 2.5 2.2 2.3 0.8 Segment earnings (loss) (0.7) (1.8) (0.4) 1.5 (1.4) 1.1 1.3 (0.3) New orders 33.3 38.8 36.9 44.5 153.5 40.0 45.7 36.3 Mold technologies Sales $44.6 $43.0 $39.1 $42.0 $168.7 $43.3 $39.9 $39.6 Operating cash flow (a) 2.0 1.8 1.8 2.9 8.5 3.0 1.5 2.7 Segment earnings 0.3 0.1 0.1 1.3 1.8 1.4 (0.1) 1.1 New orders 44.7 42.5 39.4 42.1 168.7 43.0 40.5 39.5 Eliminations Sales $(3.0) $(1.3) $(0.3) $(0.8) $(5.4) $(0.4) $(1.5) $(0.4) New orders (1.2) (1.4) (0.7) (1.0) (4.3) (1.3) (1.0) (0.2) Total plastics technologies Sales $164.9 $155.3 $143.8 $171.5 $635.5 $162.7 $164.0 $153.9 Operating cash flow (a) 6.8 1.7 5.2 12.7 26.4 6.6 9.1 9.4 Segment earnings (loss) 1.7 (3.3) 0.6 8.1 7.1 1.9 4.6 4.9 New orders 161.7 163.4 150.0 167.6 642.7 160.8 172.4 155.9 Industrial fluids Sales $25.3 $26.3 $26.4 $26.2 $104.2 $26.2 $27.7 $26.6 Operating cash flow (a) 4.0 4.2 5.2 4.3 17.7 3.0 3.9 3.3 Segment earnings 3.5 3.7 4.8 3.7 15.7 2.5 3.4 2.8 New orders 25.3 26.3 26.4 26.3 104.3 26.2 27.8 26.6 Total continuing operations Sales $190.2 $181.6 $170.2 $197.7 $739.7 $188.9 $191.7 $180.5 Operating cash flow (a) 6.6 1.6 6.8 12.4 27.4 5.8 9.9 9.5 Segment earnings (loss) 5.2 0.4 5.4 11.8 22.8 4.4 8.0 7.7 Goodwill impairment charges (b) - - (52.3) (13.3) (65.6) - - - Refinancing costs (c) - - (1.0) (0.8) (1.8) (6.4) (14.6) (0.4) Restructuring costs (d) (6.0) (6.3) (6.4) (8.4) (27.1) (1.1) (1.7) (2.3) Corporate expenses (3.5) (3.7) (3.1) (4.0) (14.3) (3.3) (2.9) (2.6) Other unallocated expenses (e) (0.8) (0.7) (0.6) (0.7) (2.8) (0.6) (0.3) (0.5) -------------------------------------------------------- Operating earnings (loss) (5.1) (10.3) (58.0) (15.4) (88.8) (7.0) (11.5) 1.9 Percent of sales -2.7% -5.7% -34.1% -7.8% -12.0% -3.7% -6.0% 1.1% New orders 187.0 189.7 176.4 193.9 747.0 187.0 200.2 182.5 Ending backlog 74.7 85.4 91.7 92.0 92.0 89.5 97.7 100.1 - ----------------------------------- (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 the first quarter of 2004 and the third quarter of 2003, 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. (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: November 3, 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. Quarter Ended Year Ended (In millions) Dec. 31, 2004 Dec. 31, 2004 - ---------------------------------------------------------------------- Projected profit & loss items Sales 195 - 205 $757 - 768 Total plastics technologies 170 - 180 650 - 660 Industrial fluids 25 - 27 106 - 108 Segment earnings Total plastics technologies 8 - 10 19 - 21 Industrial fluids 2 - 3 11 - 12 Corporate and unallocated expenses (1) 3 - 4 13 - 14 Interest expense - net 7 - 8 37 - 38 Provision for income taxes 0 - 1 3 - 4 Refinancing costs - 21 Restructuring charges 2 7 ---------- ------------- Earnings (loss) after tax from continuing operations (5)- 1 (54) - (48) Average diluted shares outstanding(2) 40.2 38.0 Projected cash flow & balance sheet items Depreciation 5 20 Working capital - increase (decrease) (3) (7)- (10) (9) - (11) Cash pension contribution (less than) 1 4 Capital expenditures 6 - 7 9 - 11 Cash interest 12 - 13 33 - 35 Cash dividends 1 - 2 3 - 4 Cash taxes - (less than) 2 Cash refinancing 3 - 4 39 - 40 Cash restructuring 1 - 2 8 - 9 1 Corporate and unallocated expenses Includes corporate expenses and ongoing financing costs. 2 Average diluted shares outstanding Subject to change based on the outcome of the rights offering. For purposes of computing per-share amounts, earnings should be reduced for preferred stock dividend requirements. 3 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. CONTACT: Milacron Inc. Al Beaupre, 513-487-5918 -----END PRIVACY-ENHANCED MESSAGE-----