============================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
FORM 10-Q
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
For the quarter ended March 31, 1999
[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.
For the transition period from __________ to __________
Commission file number 1-8485
MILACRON INC.
(Exact name of registrant as specified in its charter)
Delaware 31-1062125
<State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4701 Marburg Avenue
Cincinnati, Ohio 45209
(Address of principal executive offices)
(513)841-8100
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [x] No [ ]
Number of shares of Common Stock, $1.00 par value,
outstanding as of May 10, 1999: 37,021,050
============================================================
Milacron Inc. and Subsidiaries
Index
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Statement of Earnings 3
Consolidated Condensed Balance Sheet 4
Consolidated Condensed Statement of Cash Flows 5
Notes to Consolidated Condensed Financial
Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 13
Item 3. Quantitative and Qualitative Disclosure about
Market Risk 21
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 22
Item 6. (a) Exhibits 22
(b) Reports on Form 8-K 22
Signatures 23
Index to Exhibits 24
PART I. Financial Information
Milacron Inc. and Subsidiaries
Consolidated Condensed Statement of Earnings
(Unaudited)
<TABLE>
<CAPTION>
(In millions, except share
and per-share amounts)
Quarter Ended March 31,
----------------------
1999 1998
--------- --------
<S> <C> <C>
Sales $ 392.0 $ 356.5
Cost of products sold 288.4 259.9
------- -------
Manufacturing margins 103.6 96.6
------- -------
Other costs and expenses
Selling and administrative 70.4 64.1
Other - net 2.5 4.2
------- -------
Total other costs and expenses 72.9 68.3
------- -------
Operating earnings 30.7 28.3
Interest
Income .4 .4
Expense (9.6) (7.8)
------- -------
Interest - net (9.2) (7.4)
------- -------
Earnings before income taxes and minority
shareholders' interests 21.5 20.9
Provision for income taxes 6.3 5.8
------- -------
Earnings from continuing operations before
minority shareholders' interests 15.2 15.1
Minority shareholders' interests in
earnings of subsidiaries .1 .1
------- -------
Earnings from continuing operations 15.1 15.0
Discontinued operations net of income taxes - 2.6
------- -------
Net earnings $ 15.1 $ 17.6
======= =======
Earnings per common share
Basic
Continuing operations $ .40 $ .38
Discontinued operations - .07
------- -------
Net earnings $ .40 $ .45
======= =======
Diluted
Continuing operations $ .40 $ .37
Discontinued operations - .07
------- -------
Net earnings $ .40 $ .44
======= =======
Dividends per common share $ .12 $ .12
Weighted average common shares outstanding
assuming dilution (in thousands) 37,500 39,708
</TABLE>
See notes to consolidated condensed financial statements.
Milacron Inc. and Subsidiaries
Consolidated Condensed Balance Sheet
(Unaudited)
<TABLE>
<CAPTION>
(In millions)
March 31, Dec. 31,
1999 1998
-------- --------
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 37.6 $ 48.9
Notes and accounts receivable,
less allowances of $12.6 in 1999
and $12.1 in 1998 222.5 226.1
Receivable from sale of discontinued
machine tools segment 6.9 10.8
Inventories
Raw materials 43.3 45.6
Work-in-process and finished parts 200.2 204.6
Finished products 161.3 150.8
-------- --------
Total inventories 404.8 401.0
Other current assets 45.8 43.7
-------- --------
Total current assets 717.6 730.5
Property, plant and equipment 596.5 605.2
Less accumulated depreciation (250.5) (254.3)
-------- --------
Property, plant and equipment - net 346.0 350.9
Goodwill 389.7 397.6
Other noncurrent assets 72.8 78.1
-------- --------
Total assets $1,526.1 $1,557.1
======== ========
Liabilities and shareholders' equity
Current liabilities
Amounts payable to banks and current
portion of long-term debt $ 211.3 $ 185.2
Trade accounts payable 136.7 155.2
Advance billings and deposits 32.5 31.7
Accrued and other current liabilities 165.4 178.8
-------- --------
Total current liabilities 545.9 550.9
Long-term accrued liabilities 189.2 193.9
Long-term debt 329.9 335.7
-------- --------
Total liabilities 1,065.0 1,080.5
-------- --------
Commitments and contingencies - -
Shareholders' equity
Preferred shares 6.0 6.0
Common shares (outstanding: 37.0 in 1999 and
37.8 in 1998) 365.4 379.0
Reinvested earnings 116.5 106.0
Accumulated other comprehensive
income (loss) (26.8) (14.4)
-------- --------
Total shareholders' equity 461.1 476.6
-------- --------
Total liabilities and shareholders' equity $1,526.1 $1,557.1
======== ========
</TABLE>
See notes to consolidated condensed financial statements.
Milacron Inc. and Subsidiaries
Consolidated Condensed Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
(In millions)
Quarter Ended March 31,
----------------------
1999 1998
-------- --------
<S> <C> <C>
Increase (decrease) in cash
and cash equivalents
Operating activities cash flows
Net earnings $ 15.1 $ 17.6
Operating activities providing
(using) cash
Depreciation and amortization 14.7 14.4
Deferred income taxes .7 (3.2)
Working capital changes
Notes and accounts receivable (7.4) 21.4
Inventories (15.5) (19.1)
Other current assets (1.5) (4.7)
Trade accounts payable (14.6) (.7)
Accrued and other current liabilities 9.0 10.8
Decrease (increase) in other
noncurrent assets 4.1 (2.7)
Decrease in long-term accrued liabilities (.7) (5.3)
Other - net (2.2) (.8)
-------- --------
Net cash provided by
operating activities 1.7 27.7
-------- --------
Investing activities cash flows
Capital expenditures (15.2) (12.0)
Net disposals of property, plant
and equipment .4 1.1
Acquisitions (10.5) (12.5)
Divestitures 3.2 -
-------- --------
Net cash used by
investing activities (22.1) (23.4)
-------- --------
Financing activities cash flows
Dividends paid (4.6) (4.8)
Issuance of long-term debt - 1.5
Repayments of long-term debt (1.5) (.5)
Increase in amounts payable to banks 32.9 21.5
Issuance of common shares - 4.2
Purchase of treasury and other
common shares (17.7) (8.9)
-------- --------
Net cash provided by
financing activities 9.1 13.0
-------- --------
Increase (decrease) in cash
and cash equivalents (11.3) 17.3
Cash and cash equivalents at
beginning of period 48.9 25.7
-------- --------
Cash and cash equivalents at
end of period $ 37.6 $ 43.0
======== ========
</TABLE>
See notes to consolidated condensed financial statements.
Milacron Inc. and Subsidiaries
Notes to Consolidated Condensed Financial Statements
(Unaudited)
Basis of Presentation
- ---------------------
In the opinion of management, the accompanying unaudited
consolidated condensed financial statements contain all
adjustments, all of which are normal and recurring,
necessary to present fairly the company's financial
position, results of operations and cash flows.
The Consolidated Condensed Balance Sheet at December 31,
1998, has been derived from the audited consolidated
financial statements at that date but does not include all
of the information and footnotes required by generally
accepted accounting principles for complete financial
statements.
The accounting policies followed by the company are set
forth in the "Summary of Significant Accounting Policies"
note to the consolidated financial statements included in
the company's Annual Report on Form 10-K for the year ended
December 31, 1998.
Discontinued Operations
- -----------------------
On October 2, 1998, the company completed the sale of its
machine tools segment (MTG). The proceeds from the sale,
including post-closing adjustments, were approximately $187
million, of which $180 million was received on the closing
date and used to repay bank borrowings incurred for the
acquisition of Uniloy (see Acquisitions). MTG was largely
involved in the manufacture and sale of aerospace systems
and stand-alone machinery for general metalworking. The
Consolidated Condensed Statement of Earnings for the first
quarter of 1998 has been restated to present the operating
results of MTG as a discontinued operation. MTG's sales in
the first quarter of 1998 were $120.9 million.
Acquisitions
- ------------
In February, 1998, the company acquired Wear Technology,
which has annual sales of approximately $10 million and
serves the aftermarket for new and rebuilt twin screws for
extrusion systems, and Northern Supply, a regional catalog
distribution company offering supplies to plastics
processors for injection molding, blow molding and extrusion
with annual sales of approximately $5 million.
In May, 1998, the company acquired Autojectors, Inc., a
leading U.S. producer of vertical insert injection molding
machinery widely used to make medical, electrical and
automotive components. Autojectors has annual sales of
approximately $20 million.
In September, 1998, the company acquired Master Unit Die
Products, Inc., a leading North American manufacturer of
quick-change mold bases for the plastics industry. Master
Unit Die Products has annual sales in excess of $10 million.
Also, in September, 1998, the company acquired the assets of
the plastics machinery division of Johnson Controls, Inc.
(Uniloy) for approximately $199 million, subject to
additional post-closing adjustments. Uniloy, which is known
for its Uniloy brand of equipment, as well as various other
brands, had annual sales of more than $190 million for the
fiscal year ended September 30, 1998, and is one of the
world's leading providers of blow molding machines, as well
as structural foam systems, aftermarket parts, services and
molds for blowmolding.
On December 30, 1998, the company acquired Werkzeugfabrik
GmbH Konigsee (Werko), a manufacturer of high-speed steel
drills. Located in eastern Germany, Werko has annual sales
of approximately $25 million.
All of the acquisitions are being accounted for under the
purchase method and were financed through the use of
available cash and bank borrowings. The aggregate cost of
the acquisitions, including professional fees and other
related costs, is expected to total approximately $242.2
million. The allocation of the aggregate cost of the
acquisitions to the assets acquired and liabilities assumed
is presented in the table that follows.
<TABLE>
<CAPTION>
(In millions)
1998
--------
<S> <C>
Cash and cash equivalents $ 2.1
Accounts receivable 34.8
Inventories 71.9
Other current assets 3.9
Property, plant and equipment 30.1
Goodwill 175.7
Other noncurrent assets 10.6
------
Total assets 329.1
Current portion of long-term debt 7.0
Other current liabilities 67.3
Long-term accrued liabilities 1.7
Long-term debt 10.9
------
Total liabilities 86.9
------
Total acquisition cost $242.2
======
</TABLE>
SEVERANCE EXPENSE
- -----------------
In the first quarter of 1998, the company recorded severance
expense of $2.0 million ($1.4 million after tax) related to
a workforce reduction plan involving approximately 60
employees at Widia, the company's European cutting tool
company. As a result of the workforce reduction and other
actions at Widia, the company expects to achieve annual
pretax cost savings of approximately $5.0 million, which
began to phase in during the fourth quarter of 1998.
INCOME TAXES
- ------------
In both 1999 and 1998, the provision for income taxes
consists of U.S. federal and state and local income taxes as
well as non-U.S. income taxes. The provision also includes
the effects of adjustments of deferred tax assets and
related valuation allowances in certain non-U.S.
jurisdictions.
At December 31, 1998, certain of the company's non-U.S.
subsidiaries reported net operating loss carryforwards
aggregating approximately $120 million, substantially all of
which have no expiration dates. This amount included $39
million related to Werko (see Acquisitions), which was
acquired on December 30, 1998. The deferred tax assets
related to certain of these loss carryforwards were
partially reserved through valuation allowances which
totaled approximately $28 million.
During the first quarter of 1999, the company reevaluated
Werko's preacquisition profits and losses. As a result of
the reevaluation, the company's calculation of Werko's net
operating loss carryforwards has been increased to
approximately $66 million and the related valuation
allowances have been increased by $6 million. The
additional deferred tax assets and valuation allowances will
be recorded in 1999 in connection with the allocation of the
Werko acquisition costs.
Effective January 1, 1999, the German federal income tax
rate on undistributed earnings was reduced from 45% to 40%.
As a result, the net carrying value of the company's net
deferred assets in Germany, including valuation allowances,
was reduced by approximately $1.8 million. This increase in
the first quarter tax provision was substantially offset by
adjustments of certain other non-U.S. accrued and deferred
tax balances.
The company reviews the valuation of all deferred tax assets
on an ongoing basis and concluded in 1998 that it was more
likely than not that a portion of these assets would be
realized in the future. Accordingly, certain non-U.S.
valuation allowances were reversed which caused the
effective tax rate for 1998 to be less than the U.S.
statutory rate. Similarly, the 1999 effective tax rate also
provides for the reversal of non-U.S. valuation allowances
due to the expectation of additional net operating loss
carryforward utilization. The 1999 rate also includes the
effect of tax reserve adjustments to more accurately reflect
actual expected liabilities. These benefits are offset to
some degree by a provision for the write down to the
company's net deferred tax assets in Germany from the
"without distribution" rate to the lower "with distribution"
rate of 30%.
RECEIVABLES
- -----------
In accordance with the company's receivables purchase
agreement with an independent party, the company sells on an
ongoing basis undivided percentage ownership interests of up
to $75 million in designated pools of accounts receivable.
At March 31, 1999, December 31, 1998, March 31, 1998 and
December 27, 1997, the undivided interests in the company's
gross accounts receivable that had been sold to the
purchaser aggregated $71.2 million, $63.1 million, $75.0
million and $75.0 million, respectively. Increases and
decreases in the amount sold are reported as operating cash
flows in the Consolidated Condensed Statement of Cash Flows.
Costs related to the sales are included in other costs and
expenses-net in the Consolidated Condensed Statement of
Earnings.
LIABILITIES
- -----------
The components of accrued and other current liabilities and
long-term accrued liabilities are shown in the following
tables.
<TABLE>
<CAPTION>
(In millions)
Mar. 31, Dec. 31,
1999 1998
-------- --------
<S> <C> <C>
Accrued and other current liabilities
Accrued salaries, wages
and other compensation $ 57.5 $ 49.1
Accrued and deferred income taxes 15.6 (.5)
Other accrued expenses 92.3 130.2
-------- --------
$ 165.4 $ 178.8
======== ========
Long-term accrued liabilities
Accrued pension and other
compensation $ 67.8 $ 74.9
Accrued postretirement health
care benefits 40.3 40.6
Accrued and deferred income taxes 27.3 26.6
Minority shareholders' interests 20.0 19.9
Other 33.8 31.9
-------- --------
$ 189.2 $ 193.9
======== ========
</TABLE>
Long-term Debt
The components of long-term debt are shown in the following table.
<TABLE>
<CAPTION>
(In millions)
Mar. 31, Dec. 31,
1999 1998
------- --------
<S> <C> <C>
Long-term debt
7-7/8% Notes due 2000 $ 100.0 $ 100.0
8-3/8% Notes due 2004 115.0 115.0
Revolving credit facility 82.8 84.8
Other 36.6 43.7
-------- --------
Total long-term debt 334.4 343.5
Less current maturities (4.5) (7.8)
-------- --------
$ 329.9 $ 335.7
======== ========
</TABLE>
Outstanding borrowings under the company's revolving credit
facility of DM 149 million ($82.8 million) at March 31,
1999, and $10.0 million and DM 125 million ($74.8 million)
at December 31, 1998 are included in long-term debt based on
the expectation that these borrowings will remain
outstanding for more than one year. These borrowings are at
variable interest rates, which had a weighted average of
4.6% per year at March 31, 1999 and 4.8% per year at
December 31, 1998.
LINES OF CREDIT
- ---------------
At March 31, 1999, the company had lines of credit with
various U.S. and non-U.S. banks of approximately $629
million, including a $375 million committed revolving credit
facility. These credit facilities support letters of credit
and leases in addition to providing borrowings under varying
terms. Under the provisions of the revolving credit
facility, the company's additional borrowing capacity
totaled approximately $224 million at March 31, 1999.
SHAREHOLDERS' EQUITY
- --------------------
On October 2, 1998, the company announced its intention to
repurchase up to two million of its outstanding common
shares on the open market, of which 1,239,700 were
repurchased during the fourth quarter of 1998. The
remaining 760,300 shares were repurchased in the first
quarter of 1999 at a cost of $13.1 million. In the first
quarter of 1998, the company repurchased a total of 339,900
treasury shares on the open market at a cost of $8.2 million
to partially meet current and future needs of management
incentive, employee benefit and dividend reinvestment
programs. Additional shares totaling 88,309 and 23,664 were
purchased in the first quarter of 1999 and 1998,
respectively, in connection with current exercises of stock
options and restricted share grants in lieu of the use of
authorized but unissued shares or treasury shares.
COMPREHENSIVE INCOME
- --------------------
Total comprehensive income represents the net change in
shareholders' equity during a period from sources other than
transactions with shareholders and, as such, includes net
earnings. For the company, the only other component of total
comprehensive income is the change in the cumulative foreign
currency translation adjustments recorded in shareholders'
equity. Total comprehensive income and changes in total
shareholders' equity are as follows:
<TABLE>
<CAPTION>
(In millions)
Quarter Ended March 31,
----------------------------------------
1999 1998
------------------ -----------------
Total Total Total Total
Compre- Share- Compre- Share-
hensive holders' hensive holders'
Income Equity Income Equity
------- -------- ------- --------
<S> <C> <C> <C> <C>
Balance at beginning of period $ 476.6 $ 471.9
Net common share transactions (13.6) (4.7)
Net earnings $ 15.1 15.1 $ 17.6 17.6
Foreign currency translation
adjustments (12.4) (12.4) (2.3) (2.3)
------- -------
Total comprehensive income $ 2.7 $ 15.3
======= =======
Cash dividends (4.6) (4.8)
-------- --------
Balance at end of period $ 461.1 $ 477.7
======== ========
</TABLE>
CONTINGENCIES
- -------------
The company is involved in remedial investigations and
actions at various locations, including former plant
facilities, and EPA Superfund sites where the company and
other companies have been designated as potentially
responsible parties. The company accrues remediation costs,
on an undiscounted basis, when it is probable that a
liability has been incurred and the amount of the liability
can be reasonably estimated. Accruals for estimated losses
from environmental remediation obligations are generally
recognized no later than the completion of a remediation
feasibility study. The accruals are adjusted as further
information becomes available or circumstances change.
Environmental costs have not been material in the past.
Various lawsuits arising during the normal course of
business are pending against the company and its
consolidated subsidiaries.
In the opinion of management, the ultimate liability, if
any, resulting from these matters will have no significant
effect on the company's consolidated financial position or
results of operations.
ORGANIZATION
- ------------
The company has two business segments: plastics
technologies and cutting process technologies. Financial
information for each of these segments for the quarters
ended March 31, 1999 and 1998 is presented below.
<TABLE>
<CAPTION>
(In millions)
Quarter Ended March 31,
----------------------
1999 1998
-------- --------
<S> <C> <C>
Sales
Plastics technologies $ 217.2 $ 180.3
Cutting process technologies 174.8 176.2
-------- --------
$ 392.0 $ 356.5
======== ========
Operating earnings
Plastics technologies $ 20.1 $ 16.2
Cutting process technologies 16.1 18.6
Corporate expenses (4.2) (5.1)
Other unallocated expenses (a) (1.3) (1.4)
-------- --------
Operating earnings 30.7 28.3
Interest expense-net (9.2) (7.4)
-------- --------
Earnings from continuing operations
before income taxes and minority
shareholders' interest $ 21.5 $ 20.9
======== ========
New orders
Plastics technologies $ 206.5 $ 180.3
Cutting process technologies 181.5 182.7
-------- --------
$ 388.0 $ 363.0
======== ========
</TABLE>
(a) Includes financing costs related to the sale of
accounts receivable.
EARNINGS PER COMMON SHARE
- -------------------------
Basic earnings per common share data are based on the
weighted-average number of common shares outstanding during
the respective periods. Diluted earnings per common share
data are based on the weighted-average number of common
shares outstanding adjusted to include the effects of
potentially dilutive stock options and certain restricted
shares.
RECENTLY ISSUED PRONOUNCEMENTS
- ------------------------------
During the second quarter of 1998, the Financial Accounting
Standards Board issued Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities." This standard is effective for the
company beginning in 2000. It establishes comprehensive
accounting and reporting requirements for the recognition
and measurement of derivative financial instruments and
hedging activities including a requirement that derivatives
be measured at fair value and recognized in the statement of
financial position. The company enters into forward
contracts, which are a form of derivative instrument, to
minimize the effect of foreign currency exchange rate
fluctuations. The company is evaluating the effect of this
standard on the company's financial position and results of
operations. However, management currently believes that the
effect will not be material.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Unaudited)
RESULTS OF OPERATIONS
- ---------------------
Milacron operates in two business segments: plastics
technologies and cutting process technologies.
DISCONTINUED OPERATIONS
On October 2, 1998, we completed the sale of our machine
tools group (MTG) for proceeds of $187 million, including
post-closing adjustments. All comparisons of "results of
operations" in this Management's Discussion and Analysis
have been restated to exclude the historical operations
of MTG.
RECLASSIFICATION OF FINANCIAL STATEMENT
Beginning in the fourth quarter of 1998, expense for
minority shareholders' interests in the earnings of
subsidiaries, which was previously included as a
component of operating earnings in the Consolidated
Condensed Statement of Earnings, is presented as a
separate component of earnings from continuing operations
after income taxes. Also beginning in the fourth quarter
of 1998, amortization expense related to deferred debt
issuance costs has been reclassified from other costs and
expenses-net to interest expense. Amounts for the first
quarter of 1998 have been reclassified to conform to
these presentations.
ACQUISITIONS
In February, 1998, Milacron acquired Wear Technology and
Northern Supply. Wear Technology is a McPherson, Kansas
company with annual sales of approximately $10 million
which primarily serves the aftermarket for new and
rebuilt twin screws for extrusion systems. Northern
Supply, with annual sales of approximately $5 million,
offers supplies to plastics processors for injection
molding, blow molding and extrusion through distribution
centers in Minneapolis, Minnesota and Charlotte, North
Carolina.
In May, 1998, we acquired Autojectors, Inc., a leading
U.S. producer of vertical insert injection molding
machinery widely used to make medical, electrical and
automotive components. With annual sales of approximately
$20 million, Autojectors operates through two
manufacturing facilities near Fort Wayne, Indiana.
Effective September 30, 1998, we acquired Master Unit Die
Products, Inc., a leading North American manufacturer of
quick-change mold bases for the plastics industry. Master
Unit Die Products has annual sales in excess of $10
million.
Also on September 30, 1998, we acquired the assets of
Uniloy, the plastics machinery division of Johnson
Controls, Inc., for approximately $199 million, subject
to additional post-closing adjustments. Uniloy, which is
known for its Uniloy brand of equipment, as well as
various other brands, had sales of more than $190 million
for the fiscal year ending on September 30, 1998, and is
one of the world's leading providers of blow molding
machines, as well as structural foam systems, aftermarket
parts, services and molds for blowmolding.
On December 30, 1998, we acquired Werkzeugfabrik GmbH
Konigsee (Werko), a manufacturer of high-speed steel
drills. Located in eastern Germany, Werko has annual
sales of approximately $25 million.
With the exception of Werko, all of the businesses
purchased in 1998 are included in the plastics
technologies segment from the respective dates of
acquisition. Werko is included in the cutting process
technologies segment beginning in 1999. In the
aggregate, these acquisitions had the effect of
increasing first quarter 1999 new orders and sales by $57
million and $58 million, respectively, in relation to
1998.
All of the acquisitions were financed through available
cash and bank borrowings and have been accounted for
under the purchase method of accounting.
PRESENCE OUTSIDE THE U.S.
In recent years, Milacron's growth outside the U.S. has
allowed it to become more globally balanced. In 1998,
markets outside the U.S. represented the following
percentages of our consolidated sales: Europe 29%; Asia
7%; Canada and Mexico 6%; and the rest of the world 2%.
As a result of this geographic mix, foreign currency
exchange rate fluctuations affect the translation of our
sales and earnings, as well as consolidated shareholders'
equity. During the first quarter of 1999, the weighted-
average exchange rates of most major European currencies
in relation to the U.S. dollar were slightly stronger
than in the comparable period of 1998. As a result,
Milacron experienced favorable translation effects on new
orders and sales of $2 million and $3 million,
respectively. The effect on earnings was not
significant. However, between December 31, 1998 and
March 31, 1999, the new European currency, the euro, and
the sovereign currencies of the eleven participating
countries weakened against the dollar by approximately
7%. This resulted in a $12 million reduction in
consolidated shareholders' equity due to unfavorable
foreign currency translation adjustments.
If the major European and other world currencies should
weaken further against the U.S. dollar in future periods,
we will experience a negative effect in translating our
non-U.S. new orders, sales and, possibly, net earnings
when compared to historical results.
NEW ORDERS AND BACKLOG
New orders in the first quarter of 1999 were $388
million, which represents a $25 million, or 7%, increase
from $363 million in the comparable period of 1998.
Excluding the effects of the 1998 acquisitions, new
orders decreased by $32 million, or 9%. In the plastics
technologies segment, new orders increased by $27
million, or 15%, which was more than accounted for by the
addition of Uniloy and the other 1998 acquisitions.
Orders for extrusion systems increased in both the U.S.
and Europe but orders for injection molding machines
decreased worldwide due to softness in many capital goods
markets. However, assuming the consumer economy remains
strong, we expect the order rate for injection molding to
improve later in the year, especially in the U.S.
Orders for cutting process technologies products were
$182 million, which represents a modest decrease from
$183 million in the first quarter of 1998. Excluding the
effects of the Werko acquisition and currency effects,
new orders decreased by $9 million, or 5%. The decrease
was due primarily to lower North American orders for
round metalcutting tools, grinding wheels and
metalcutting fluids that resulted from soft economic
conditions in many of the industrial markets served by
these products. Orders for Valenite and Widia products
approximated the 1998 levels.
U.S. export orders were $35 million in the first quarter
of 1999, of which Uniloy accounted for approximately $6
million. In the first quarter of 1998, export orders
totaled $31 million.
Milacron's backlog of unfilled orders totaled $261
million at March 31, 1999, compared to $247 million at
December 31, 1998, and $200 million at March 31, 1998.
The increase in relation to year-end 1998 related
principally to an increase at Uniloy which was offset to
some degree by a lower backlog for injection molding
machines.
SALES
Sales in the first quarter of 1999 were $392 million,
which represented a $35 million, or 10%, increase from
$357 million in 1998. Excluding the effect of the 1998
acquisitions, consolidated sales decreased by
approximately 6%. Sales of plastics technologies products
increased by $37 million, or 21%. The segment's sales
include an incremental $53 million related to the 1998
acquisitions. Shipments of injection molding machines
decreased, especially in the U.S., due to the
aforementioned reduction in orders, but sales of U.S.-
built extrusion systems increased significantly.
Sales of cutting process technologies products decreased
modestly to $175 million despite the effect of the Werko
acquisition. North American shipments of round
metalcutting tools decreased due to customers reducing
their inventory levels, delays in large programs and
overall softness in many industrial markets. Sales of
Valenite and Widia metalcutting products approximated the
levels achieved in 1998.
Export sales were $39 million in the first quarter of
1999 compared to $27 million in 1998. The 1999 amount
includes $11 million for Uniloy.
Sales of both segments to non-U.S. markets, including
exports, totaled $168 million in the first quarter of
1999, an increase of $12 million in relation to 1998. In
1999 and 1998, products manufactured outside the U.S.
approximated 38% and 41% of sales, respectively, while
products sold outside the U.S. approximated 43 % and 44 %
of sales, respectively.
MARGINS, COSTS AND EXPENSES AND OPERATING EARNINGS
Our consolidated manufacturing margin in the first
quarter of 1999 was 26.4% compared to 27.1% in 1998. In
the plastics technologies segment, the overall margin
approximated the results achieved in 1998, while the
margin of the cutting process technologies segment
decreased modestly. The decline resulted principally
from lower margins for round metalcutting tools worldwide
and metalworking fluids in Europe.
In the first quarter of 1999, the plastics technologies
segment had operating earnings of $20.1 million, or 9.3%
of sales, compared to $16.2 million, or 9.0% of sales, in
1998. The acquisition of Uniloy contributed to the
improvement. However, even without Uniloy, the segment's
operating profit and return on sales would have shown
improvement in 1999 in relation to 1998 due to higher
earnings for U.S.-built extrusion systems and the non-
U.S. injection molding machine business.
The cutting process technologies segment had operating
earnings of $16.1 million, or 9.2% of sales, in the first
quarter of 1999, which represented a decrease of $2.5
million from $18.6 million, or 10.6% of sales, in 1998.
The decrease resulted principally from softness in many
of the segment's markets worldwide, especially those
served by round metalcutting tools. The exception was
the automotive sector, where demand remained strong.
Total selling and administrative expense increased in
amount in relation to 1998 due principally to the effect
of the 1998 acquisitions. As a percentage of sales, these
expenses remained constant at approximately 18%.
Other expense-net, decreased to $2.5 million in the first
quarter of 1999 from $4.2 million in 1998. The 1999
amount includes higher expense for goodwill amortization
due principally to the Uniloy acquisition which occurred
in the third quarter of 1998. The 1998 amount included
severance expenses totaling approximately $2.0 million
relating to approximately 60 employees at Widia, the
company's European cutting tool business. As a result of
these and other actions at Widia, we expect to achieve
annualized pretax savings of approximately $5.0 million,
which began to phase in during the fourth quarter of
1998.
Interest expense-net, including amortization of debt
issuance costs, increased in the first quarter of 1999
due primarily to higher average debt levels associated
with the 1998 acquisitions and the repurchase of common
shares.
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME
TAXES AND MINORITY SHAREHOLDERS' INTERESTS
Earnings before income taxes and minority shareholders'
interests were $21.5 million in the first quarter of 1999
compared to $20.9 million in 1998. The increase results
principally from the effects of the 1998 acquisitions,
which were partially offset by lower operating earnings
for round cutting tools and injection molding machines
and by higher interest expense. As a percentage of
sales, pretax earnings decreased modestly from 5.9% to
5.5%.
INCOME TAXES
The 1999 and 1998 provisions for income taxes include
U.S. federal and state and local income taxes as well as
non-U.S. income taxes in jurisdictions outside the U.S.
As discussed more fully in the notes to the consolidated
condensed financial statements, Milacron entered both
1999 and 1998 with sizeable net operating loss (NOL)
carryforwards in certain jurisdictions, along with
valuation allowances against the NOL carryforwards and
other deferred tax assets. Valuation allowances are
evaluated periodically and revised based on a "more
likely than not" assessment of whether the related
deferred tax assets will be realized. Increases or
decreases in these valuation allowances serve to
unfavorably or favorably affect our effective tax rate.
As a result of planned reductions in valuation allowances
and certain other factors described below, Milacron's
expected effective tax rate for 1999 is less than the
U.S. statutory rate, as was also the case in 1998.
In addition to the effects of reductions in valuation
allowances, the 1999 effective tax rate includes
adjustments of income tax reserves to more accurately
reflect actual expected liabilities. These benefits are
partially offset by the downward adjustment of the
carrying value of net deferred tax assets in Germany to
the lower "with distribution" rate. This change is being
made as a result of recent changes in Milacron's capital
structure in Europe.
The effective tax rates for 1999 and 2000 are expected to
be approximately 28-30%. However, the actual rates for
both years will ultimately be contingent on the mix of
earnings among tax jurisdictions and other factors that
cannot be predicted with certainty at this time.
EARNINGS FROM CONTINUING OPERATIONS
Earnings from continuing operations, net of minority
shareholders' interests, were $15.1 million, or $.40 per
share (diluted), in the first quarter of 1999 compared
with $15.0 million, or $.37 per share (diluted), in 1998.
The modest increase in earnings resulted from higher
pretax earnings offset by a slightly higher effective tax
rate. The 8% increase in earnings per share reflects
fewer common shares outstanding in 1999 as a result of
the two million share repurchase program that began in
the fourth quarter of 1998. The repurchase program was
completed in 1999.
DISCONTINUED OPERATIONS
In 1998, discontinued operations reflects the operating
results of the company's machine tools segment, which was
sold on October 2, 1998.
NET EARNINGS
For the first quarter of 1999, net earnings were $15.1
million, or $.40 per share (diluted), compared to $17.6
million, or $.44 per share (diluted), for 1998. The most
significant item affecting the net earnings comparison
between years was the $2.6 million of earnings of the
discontinued machine tools segment in 1998.
YEAR 2000
- ---------
The term "Year 2000 problem" (Y2K) refers to processing
difficulties that may occur in information technology
(I.T.) systems and other equipment with embedded
microprocessors that were designed without considering
the distinction between dates in the 1900s and the 2000s.
If not corrected, these systems could fail or
miscalculate data when processing information that
includes a date on or after January 1, 2000.
Each of Milacron's business units, as well as our
corporate headquarters, is responsible for developing and
executing comprehensive plans to minimize and, to the
extent possible, eliminate any major business
interruptions that could be caused by the Y2K issue. We
have established an executive level Y2K Compliance
Committee, which is monitoring our progress toward Y2K
preparedness. This monitoring process includes testing by
our internal auditors and considering reports from
limited reviews conducted by outside consultants to
identify issues requiring attention by the Compliance
Committee.
Milacron's Y2K effort focuses primarily on three
important elements: 1) I.T. systems; 2) non-I.T.
equipment that includes embedded microprocessors; and 3)
supplier preparedness.
Most of our efforts to date have focused on our most
critical I.T. business systems (e.g., financial;
enterprise resource planning, or "ERP"). Each of our ten
major manufacturing locations operates a unique
information technology system which has been selected to
best serve that business's needs. Four of these
businesses operate systems that are licensed from
independent third-party software providers and require
third party updates to be Y2K compliant. Milacron is
cooperating with and relying on these third parties to
replace or upgrade its software with Y2K compliant
software on a timely basis. We are installing and testing
the new software to provide assurance that the updated
systems will properly process date-sensitive information.
These systems have already been updated, except for one
that is scheduled to be updated in the second quarter of
1999. Five other businesses are using the Y2K
compliance process as an opportunity to modernize their
systems by installing new ERP systems licensed from
independent software providers. All of the ERP system
installations were completed by January 11, 1999. Another
business unit operates its own proprietary business
systems, which are being reprogrammed to be Y2K
compliant; over 95% of the applications have already
been remediated with the balance expected to be remediated
in the first half of 1999.
In addition, Milacron is in the process of completing
inventories, assessments and testing of non-I.T. systems
(e.g., production equipment) which may contain embedded
chips that could malfunction with the approach of the
year 2000. Wherever critical systems are identified as
not being compliant, Milacron plans to remediate or
replace these non-compliant systems. The remediation
phase of this effort is expected to be substantially
completed by June 30, 1999.
All business units are in the process of contacting key
vendors and service providers to obtain information about
their plans and progress on Y2K issues and to obtain
their assurances that they expect to be able to provide
an uninterrupted flow of product or service approaching
and into the year 2000. We are following up on
significant concerns that are identified as a result of
these communications and, in some cases, may be arranging
alternative sources of that product or service.
In 1998, we focused on preventing significant Y2K
failures, rather than preparing formal, written
contingency plans. In the first quarter of 1999, many of
our business units began working on contingency plans.
These plans are expected to be substantially completed by
the end of the third quarter of 1999.
Many of the machinery products we sell rely on computer
controls and embedded microprocessors to achieve optimum
performance. We are making information available publicly
to our customers on the Y2K status of these products.
Substantially all of them are Y2K compliant.
Milacron has estimated the cost of major system
implementation and remediation efforts. However, other
costs are being absorbed in departmental operating
budgets. Based on currently available information, we
estimate that the incremental cost of these major
implementation and remediation projects will be
approximately $14 million over 1997, 1998 and 1999, of
which over 76% has been expended through March 31, 1999.
These costs are not expected to have a material effect on
Milacron's financial position, results of operations, or
cash flows.
Milacron recognizes that the Y2K issue could result in
the interruption or failure of certain normal business
operations which could materially and adversely affect
our results of operations, liquidity and financial
condition. We believe that the reasonable worst-case
scenario is that Milacron could encounter production and
shipment delays caused in large part by vendors, service
providers and other third parties. Due to the general
uncertainty inherent in the Y2K problem, resulting in
part from the uncertainty of the Y2K preparedness of
third parties, we are unable to determine at this time
whether the consequences of the Y2K issue will have a
material impact on Milacron's results of operations,
liquidity or financial condition. However, as a result of
our past and future Y2K activities, we believe that the
risk of significant interruption of normal operations
should be reduced.
MARKET RISK
- -----------
FOREIGN CURRENCY EXCHANGE RATE RISK
Milacron uses foreign currency forward exchange contracts
to hedge its exposure to adverse changes in foreign
currency exchange rates related to firm commitments
arising from international transactions. The company does
not hold or issue derivative instruments for trading
purposes. At March 31, 1999, Milacron had outstanding
forward contracts totaling $14.9 million compared to
$19.1 million at December 31, 1998, and $30.8 million at
March 31, 1998. The potential loss from a hypothetical
10% adverse change in foreign currency rates on
Milacron's foreign exchange contracts at March 31, 1999
or March 31, 1998, would not materially affect Milacron's
consolidated financial position, results of operations,
or cash flows.
INTEREST RATE RISK
At March 31, 1999, Milacron had fixed interest rate debt
of $222 million, including $100 million of 7 7/8% Notes
due May 15, 2000, and $115 million of 8 3/8% Notes due
March 15, 2004. We also had floating rate debt totaling
$319 million, with interest fluctuating based primarily
on changes in LIBOR. At December 31, 1998 and March 31,
1998, fixed rate debt totaled $228 million and $218
million, respectively, and floating rate debt totaled
$293 million and $174 million, respectively. We also sell
up to $75 million of accounts receivable under our
receivables purchase agreement, which results in
financing fees that fluctuate based on changes in
commercial paper rates. As a result, annual interest
expense and financing fees fluctuate based on
fluctuations in short-term borrowing rates. The effect of
these fluctuations was not significant in the first
quarter of 1999 or 1998.
LIQUIDITY AND SOURCES OF CAPITAL
- --------------------------------
At March 31, 1999, Milacron had cash and cash equivalents
of $38 million, representing a decrease of $11 million
during the first quarter of the year.
Operating activities provided $2 million of cash in the
first quarter of 1999, compared with $28 million provided
in 1998. The decrease in cash provided resulted primarily
from higher working capital requirements. These
requirements were related to higher receivables levels,
as well as higher inventory levels to support new product
introductions and anticipated sales growth that did not
materialize when expected.
In 1999, investing activities resulted in a $22 million
use of cash due to capital expenditures of $15 million
and post-closing adjustments related to the 1998
acquisitions totaling $10 million. In 1998, investing
activities used $23 million of cash, including capital
expenditures of $12 million and the cost of two
acquisitions totaling $13 million.
Financing activities provided $9 million of cash in the
first quarter of 1999, compared to $13 million in 1998.
The 1999 amount includes a $31 million net increase in
debt to finance acquisitions and to repurchase common
shares (as described below). In 1998, incremental
borrowings totaled $23 million while net repurchases of
common shares used $5 million of cash.
In the fourth quarter of 1998, we announced a two million
common share repurchase program, of which 1.2 million
shares were repurchased through December 31, 1998. The
remainder of shares were repurchased in the first quarter
of 1999. Including shares repurchased to meet the current
needs of management incentive plans, Milacron used $18
million of cash for share repurchases in the first
quarter of 1999.
As of March 31, 1999 and December 31, 1998, Milacron's
current ratio was 1.3, compared to 1.7 at March 31, 1998.
The decrease in the current ratio was principally the
result of higher bank borrowings to finance the 1998
acquisitions and the share repurchase program.
As of March 31, 1999, Milacron had lines of credit with
various U.S. and non-U.S. banks of approximately $629
million, including a $375 million committed revolving
credit facility. Under the provisions of the facility,
our additional borrowing capacity totaled approximately
$224 million at March 31, 1999.
Total debt was $541 million at March 31, 1999,
representing an increase of $20 million from December 31,
1998. Total shareholders' equity was $461 million at
March 31, 1999, a decrease of $16 million from December
31, 1998. The decrease resulted from $13 million of
unfavorable foreign currency translation effects and the
share repurchase program, which more than offset earnings
net of dividends paid. The ratio of total debt to total
capital (debt plus equity) was 54% at March 31, 1999,
compared with 52% at December 31, 1998.
We recently reduced the 1999 capital expenditures budget
from an original amount of $80 million to a revised
budget of $63 million. We made this reduction partly as
a result of reduced capacity expansion needs in some
businesses.
We believe that Milacron's cash flow from operations and
currently available credit lines are sufficient to meet
our operating and capital requirements in 1999.
OUTLOOK
Industrial sectors remain soft in both North America and
Europe. In the plastics technologies segment, we expect
demand to improve during the rest of 1999 assuming the
consumer economy remains strong. In the cutting process
technologies segment, we believe industrial production is
likely to remain slow in the second quarter and then pick
up in the second half of the year. Under these
conditions, we believe we can continue to grow Milacron's
sales and earnings in 1999 and achieve our average annual
targets of a 7% to 8% increase in sales and a 12% to 15%
improvement in earnings per share.
CAUTIONARY STATEMENT
- -------------------
Milacron wishes to caution readers about all of the
forward-looking statements in the "Outlook" section above
and elsewhere. These include all statements that speak
about the future or are based on our interpretation of
factors that might affect our businesses. Milacron
believes the following important factors, among others,
could affect its actual results in 1999 and beyond and
cause them to differ materially from those expressed in
any of our forward-looking statements:
* global and regional economic
conditions, consumer spending and
industrial production, particularly in
segments related to the level of
automotive production and spending in
the construction industry;
* fluctuations in currency exchange
rates of U.S. and foreign countries,
including countries in Europe and Asia
where Milacron has several principal
manufacturing facilities and where many
of our competitors and suppliers are
based;
* fluctuations in domestic and non-
U.S. interest rates which affect the
cost of borrowing under Milacron's lines
of credit and financing fees related to
the sale of domestic accounts
receivable;
* production and pricing levels of
important raw materials, including
plastic resins, which are a key material
used by purchasers of Milacron's
plastics technologies products, and
steel, cobalt, tungsten and industrial
grains used in the production of
metalworking products;
* lower than anticipated levels of
plant utilization resulting in
production inefficiencies and higher
costs, whether related to the delay of
new product introductions, improved
production processes or equipment, or
labor relation issues;
* any major disruption in production
at key customer or supplier facilities;
* alterations in trade conditions in
and between the U.S. and non-U.S.
countries where Milacron does business,
including export duties, import
controls, quotas and other trade
barriers;
* changes in tax, environmental and
other laws and regulations in the U.S.
and non-U.S. countries where Milacron
does business;
* unanticipated litigation, claims or
assessments, including but not limited
to claims or problems related to product
liability, warranty, or environmental
issues;
* the failure of key vendors,
software providers, public utilities,
financial institutions or other critical
suppliers to provide products or
services that are Y2K compliant.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT
MARKET RISK
The information required by Item 3 is included in Item 2 on
page 19 of this Form 10-Q.
PART II. OTHER INFORMATION
MILACRON INC. AND SUBSIDIARIES
ITEM 1. LEGAL PROCEEDINGS
- --------------------------
In the opinion of management and counsel, there are no
material pending legal proceedings to which the company or
any of its subsidiaries is a party or of which any of its
property is the subject.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(a) Exhibits
Exhibit (3) - Certificate of Incorporation and Bylaws
Exhibit (4) - Instruments Defining the Rights of Security
Holders, Including Indentures
Exhibit (10) - Material Contracts
Exhibit (11) - Statement Regarding Computation of Per Share
Earnings - filed as a part of Part I
Exhibit (27) - Financial Data Schedule - filed as
part of Part I
(b) Reports on Form 8-K
-A current report on Form 8-K, Item 5, dated February 5, 1999
was filed regarding the approval by the Board of Directors of
a stockholders rights plan.
MILACRON INC. AND SUBSIDIARIES
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: May 13, 1999 By:/s/Jerome L. Fedders
------------------- ----------------------------------------
Jerome L. Fedders
Controller
Date: May 13, 1999 By:/s/Ronald D. Brown
------------------ ----------------------------------------
Ronald D. Brown
Senior Vice President - Finance and
Administration and Chief Financial
Officer
MILACRON INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
EXHIBIT NO. PAGE NO.
2 Plan of Acquisition, Reorganization,
Arrangement, Liquidation, or
Succession - not applicable
3 Certificate of Incorporation and By-Laws
3.1 Restated Certificate of Incorporation filed
with the Secretary of State of the State of
Delaware on November 17, 1998
- Incorporated herein by reference to the company's
Registration Statement on Form S-8
(Registration No. 333-70733)
3.4 By-laws, as amended
- Incorporated herein by reference to the company's
Registration Statement on Form S-8
(Registration No. 333-7733)
4 Instruments Defining the Rights of Security Holders, Including
Indentures:
4.1 8-3/8% Notes due 2004
-Incorporated herein by reference to the company's
Amendment No. 3 to Form S-4 Registration Statement
dated July 7, 1994 (File No. 33-53009)
4.2 7-7/8% Notes due 2000
- Incorporated by reference to the company's Registration
Statement on Form S-4 dated July 21, 1995
(File No. 33-60081)
4.3 Milacron Inc. hereby agrees to furnish to the Securities
and Exchange Commission, upon its request, the instruments
with respect to long-term debt for securities authorized
thereunder which do not exceed 10% of the registrant's
total consolidated assets
10 Material Contracts:
10.1 Milacron 1987 Long-Term Incentive Plan
-Incorporated herein by reference to the company's Proxy
Statement dated March 27, 1987.
10.2 Milacron 1991 Long-Term Incentive Plan
-Incorporated herein by reference to the company's
Proxy Statement dated March 22, 1991.
10.3 Milacron 1994 Long-Term Incentive Plan
-Incorporated herein by reference to the company's
Proxy Statement dated March 24, 1994.
10.4 Milacron 1997 Long-Term Incentive Plan, as amended
-Incorporated herein by reference to the company's
Form 10-K for the fiscal year ended December 31, 1998.
10.5 Milacron 1996 Short-Term Management Incentive Plan
-Incorporated herein by reference to the company's
Form 10-K for the fiscal year ended December 28, 1996.
10.6 Milacron Inc. Supplemental Pension Plan, as amended
-Incorporated herein by reference to the company's
Form 10-K for the fiscal year ended December 31, 1998.
10.7 Milacron Inc. Supplemental Retirement Plan, as amended
-Incorporated herein by reference to the company's
Form 10-K for the fiscal year ended December 31, 1998.
10.8 Milacron Inc. Plan for the Deferral of Directors'
Compensation, as amended
-Incorporated herein by reference to the company's
Form 10-K for the fiscal year ended December 31, 1998.
10.9 Milacron Inc. Retirement Plan for Non-Employee Directors,
as amended
-Incorporated herein by reference to the company's
Form 10-K for the fiscal year ended December 31, 1998.
10.10 Milacron Supplemental Executive Retirement Plan,
as amended
-Incorporated herein by reference to the company's
Form 10-K for the fiscal year ended December 31, 1998.
10.11 Amended and Restated Revolving Credit Agreement dated
as of November 30, 1998 among Milacron Inc., Cincinnati
Milacron Kunststoffmaschinen Europe GmbH, the lenders
listed therein and Bankers Trust Company, as agent.
-Incorporated herein by reference to the company's
Form 10-K for the fiscal year ended December 31, 1998.
10.12 Milacron Compensation Deferral Plan, as amended
-Incorporated herein by reference to the company's
Form 10-K for the fiscal year ended December 31, 1998.
10.13 Rights Agreement dated as of February 5, 1999, between
Milacron, Inc. and Chase Mellon Shareholder Services,
L.L.C., as Rights Agent.
-Incorporated herein by reference to the company's
Registration Statement on Form 8-A (File No. 001-08485).
10.14 Purchase and Sale Agreement between UNOVA, Inc., UNOVA
Industrial Automation Systems, Inc., UNOVA U.K. Limited
and Cincinnati Milacron, Inc. dated August 20, 1998.
-Incorporated herein by reference to the company's
Form 8-K dated December 30, 1995.
10.15 Purchase and Sale Agreement between Johnson Controls,
Inc., Hoover Universal, Inc. and Cincinnati Milacron Inc.,
dated August 3, 1998.
-Incorporated herein by reference to the company's
Form 8-K dated September 30, 1998.
11 Statement Regarding Computation of Per-Share Earnings 27
15 Letter Regarding Unaudited Interim Financial Information
- Not Applicable
18 Letter Regarding Change in Accounting Principles - Not Applicable
19 Report Furnished to Security Holders- Not Applicable
22 Published Report Regarding Matters Submitted to Vote of
Security Holders - Not Applicable
23 Consent of Experts and Counsel - Not Applicable
24 Power of Attorney - Not Applicable
27 Financial Data Schedule 28
99 Additional Exhibits - Not Applicable
MILACRON INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
(In thousands, except
per-share amounts)
Quarter Ended March 31,
----------------------
1999 1998
-------- --------
<S> <C> <C>
Net earnings $ 15,075 $ 17,628
Less preferred dividends (60) (60)
-------- --------
Net earnings available
to common shareholders $ 15,015 $ 17,568
======== ========
Basic Earnings Per Share:
Weighted-average common
shares outstanding 37,299 39,157
======== ========
Per share amount $ .40 $ .45
======== ========
Diluted Earnings Per Share:
Weighted-average common
shares outstanding 37,299 39,157
Dilutive effect of stock options
and restricted shares based on
the treasury stock method 201 551
-------- --------
Total 37,500 39,708
======== ========
Per share amount $ .40 $ .44
======== ========
</TABLE>
Note: This computation is required by Regulation S-K, Item 601,
and is filed as an exhibit under Item 6 of Form 10-Q.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 37,600
<SECURITIES> 0
<RECEIVABLES> 242,000
<ALLOWANCES> 12,600
<INVENTORY> 404,800
<CURRENT-ASSETS> 717,600
<PP&E> 596,500
<DEPRECIATION> 250,500
<TOTAL-ASSETS> 1,526,100
<CURRENT-LIABILITIES> 545,900
<BONDS> 0
0
6,000
<COMMON> 365,400
<OTHER-SE> 89,700
<TOTAL-LIABILITY-AND-EQUITY> 1,526,100
<SALES> 392,000
<TOTAL-REVENUES> 392,000
<CGS> 288,400
<TOTAL-COSTS> 288,400
<OTHER-EXPENSES> 73,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,200
<INCOME-PRETAX> 21,400
<INCOME-TAX> 6,300
<INCOME-CONTINUING> 15,100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,100
<EPS-PRIMARY> .40
<EPS-DILUTED> .40
</TABLE>
