Saturday, September 16, 2000

Cincinnati Machine to offer deal


Early retirements presented to 60 employees

By Mike Boyer
The Cincinnati Enquirer

        Cincinnati Machine, the Oakley-based unit of Unova Inc., expects to offer a voluntary early-retirement program to about 60 employees this year as the machine tool maker seeks to trim costs in the face of slower sales.

        Kyle Seymour, Cincinnati Machine president, on Friday said the company would make “a modest adjustment through a voluntary early retirement program” in the fourth quarter.

        He estimated the program would be offered to “5 percent or less” of the company's 1,200 employees in Greater Cincinnati as the company attempts to improve profit margins in its industrial automation systems business.

        Mr. Seymour disclosed the early retirement offer as Unova said it expects to post losses in both the third and fourth quarters. The news sent shares of the Woodland Hills, Calif.-based company down 33 percent Friday to $4.94, off $2.31. The stock is off more than 65 percent in the past year.

        Unova said most of the problems were in its auto mated data systems business, which makes hand-held computers for warehouse and delivery people. The company's Intermec unit has seen a slowdown in orders because of a shift in sales strategies.

        Unova, which this summer retained investment bankers to look at ways to boost shareholder value, said it will probably see losses in the third and fourth quarters comparable to its second-quarter pretax loss from operations of $22.4 million.

        After taxes, the second-quarter loss from operations would have been in the low-20-cent range, a Unova spokesman told Bloomberg Business News. The company had been expected to lose 3 cents a share in the third quarter and earn 27 cents a share in the fourth quarter, according to the average of four estimates polled by First Call/Thomson Financial.

        Cincinnati Machine is part of Unova's Industrial Automation Systems business, which accounted for $1.2 billion of Unova's $2.1 billion in revenues last year.

        Unova pointed to several areas that will keep profit margins in the industrial automation business flat the remainder of this year rather than increasing as previously ex pected:

        • An order slowdown at Cincinnati Machine.

        • Delays in orders by some customers in the automotive and diesel engine industries.

        • Higher installation costs as customers switch from dedicated to flexible machining systems.

        Mr. Seymour said Cincinnati Machine, acquired by Unova from Milacron Inc. in 1998, continues to see weaker machine tool orders than expected.

        Going into the recent International Manufacturing Technology Show in Chicago, Cincinnati Machine expected to see an upturn in orders.

        “The buying at the show was slower than everybody expected,” he said.

        While Cincinnati Machine still anticipates a rebound in the machine tool market, Mr. Seymour said it will take longer than previously thought.

        In June, Unova retained Credit Suisse First Boston to explore options, ranging from a stock buyback to a sale or divestiture of assets to boost its stock price.

        No moves along those lines have been announced, but Unova said late Thursday that it is in talks with its lenders to amend its loan agreements because of the projected third- and fourth-quarter losses.

        Unova also announced that Larry Brady, president and chief operating officer, was named chief executive, succeeding chairman Alton Brann, who retains that post.

       



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