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Milltronics Distributor News Page 3 of 6

SPECIALS ReconditionedNew Customer Dealer

VMD30 Trade 1/97 Nice Mill $104,980 $49,980 $44,9803990 70" travel, workable enclosureVK2 Trade 8/97 Like new, R8, LCD, 2 axes $26,280 $15,980 $12,9804584 Was Andersen WindowsML17/40 Return 1/02 Like new, 8 Position turret $47,980 $34,980 $30,9807083RW12 Trade 10/01 10 ATC, Pkg A, B Generation 1 $39,980 $29,980 $25,9807007VM17 Trade 12/97 Nice, 45" travel, fiberglass $58,980 $37,980 $32,9804782 enclosureGL6 Return 8/01 Nice condition, conveyor, $48,880 $29,980 $26,9806984 parts catcherSL10/5 Trade 5/02 5" chuck, 5C collet, Pkg 1, 2, $52,880 $42,980 $36,9807132 6000 rpm, parts catcher, conveyor

Add Barfeeder for $8000

SPECIAL FOR MARCH ALL MACHINES COME WITH A FULL SIX MONTH PARTSWARRANTY FOR NORMAL USAGE, AND WE CAN ARRANGE FOR LEASING.

FROM OUR SHOP ReconditionedWe need to replace many shop machines to get the accelerated tax credit.

New Customer DealerRW30 8/02 Huge #50 spindle, $149,980 $94,980 $88,9806202 Very Nice!VM30 3/01 24 arm ATC, 30 hp, 15,000 rpm $107,380 $74,980 $69,9806721 and much moreVM30 3/01 24 arm ATC, 30 hp, $108,880 $79,980 $73,9806697 700 psi coolant thruMC32 11/96 Big #50 spindle, 20 carousel, $149,980 $69,980 $64,980

3910 LCD, like an RW30VM17 5/02 15 hp 2 speed, small column, $69,980 $44,980 $39,9807209 Gen. 1 16 arm ATC, metal enclosureML18/40 6/02 8 Position, " turret, new style, $52,780 $46,980 $39,9807270 2 speed

SPECIAL FOR MARCH ALL MACHINES COME WITH A FULL SIX MONTH PARTSWARRANTY FOR NORMAL USAGE, AND WE CAN ARRANGE FOR LEASING.


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FORECAST We see sales as flat, but in general up from last year.Margins, however, are poor; so while the volume is OK, the profitsare low. We feel strongly that we are growing in market share andare doing the right things to be postured for rapid growth. The ML18and ML22's are doing incredibly well and the new VM15XT, VM16,and VM17 have been big hits. In fact, we are sold out already forMarch and are reviewing what's needed to increase output. Thenew Centurion 7 is on many products now and has come togetherwithout a hitch.

STAFFINGLow margins and regular discounting have forced us to

decrease our salary base. We reluctantly moved more staff to theunemployment rolls to further our move toward "leanmanufacturing." Brian Morris, our Chicago-based sales managerwas unfortunately among these. As margins decrease anddiscounts increase, we must reduce staff and costs in order toremain profitable. While Milltronics remains a healthy companyfinancially, the cost on personnel layoffs, pay cuts and overheadreductions are significant. Please do not look to us for financial

assistance on sales where your margin is not less than 15%.

START-UPS & VOLTAGESWe perform a number of start-ups ourselves. Our technicians

take considerable time to check all voltages, connections, andalignments, and train operators. We know how vital these efforts areand how much they can prevent future troubles. We have noticed a

lot of shortcuts in start-ups lately and have heard an increasingnumber of complaints concerning start-ups. Please allow the timeand resources necessary for a new installation, as I cannot stressenough how important this time is. Also, it is vital to measurevoltages, especially incoming voltages, to be sure they are not over240 volts. We have seen more high voltage lines that haveincreased Yaskawa problems. Please take time to complete start-upsheets and adequately train operators. Warranties are not activateduntil start-up sheets are returned to us.


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We will soon introduce two new divisions of Milltronics to themarket. These are entirely new efforts which have nothing to do withthe Milltronics product line, but efforts that you certainly should beaware of. These two companies will be divisions of Milltronics and

operate on different price lists, terms and in some cases differentdistribution and distributor contracts.

PARTNER MACHINESOne new division of Milltronics will be PARTNER MACHINES

which will market manual machine tools including a few models ofknee mills and lathes as well as a new mill called VK1 (two axes),VK2, and the ML14. Our current distribution system has been veryineffective at marketing these models that are often seen as too

much trouble for the return or get lost in the big picture. The PartnerMachine product line will have different pricing, lower costaccessories, and will have a more open distribution in someterritories. Many of our current distributors already have establishedmanual lines or market competitive products such as Acu-Rite.Many have never even sold a single VK2 or ML14, so we arereviewing how best to move into this market.

All Partner Machine products are available to all currentMilltronics distributors and will be offered to you at a preferred price.This new marketing company will not sell any machining centers,any three axes machines, or any lathes from ML15 and larger

nothing changes in this area. We will release price sheets andadditional information very soon for your review.

INTERNATIONAL MACHINE TOOLSThe other marketing division is called International Machine

Tools. This distribution arm will market the ML18 and ML22, RH20and RH30, and all VM's with either a Fanuc 0iMB or Siemens 810control. This effort was precipitated by our need to create

opportunities for international growth. Interestingly enough, not oneUS made milling machine offers Fanuc, so we will be alone. Theseproducts are well on their way to completion with many months ofengineering efforts. We will market these products at a much higherprice than Milltronics machines and do not expect any of theseofferings to take sales from our current Milltronics product line. Onthe other hand, we hope to build additional US machines and helpour overall volume so that all prices can remain low. We also expect

NEWPROJECTS


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1400 Mill LaneWaconia, MN 55387

PHONE:(952) 442-1410

FAX:(952) 442-6457

E-MAIL:[email protected]

See more at

www.milltronics.net

All humans

have a

battery.

It's called

ENTHUSIASM.

Without it,

things are

pretty dead.

to compete with several imported machine lines offering Fanuccontrols. Again, I want to stress that I do not feel this will have anyimpact on the current product line and may even enhance it. We donot plan to use current Milltronics distributors to market the Fanuc or

Siemens International product line. We are hopeful that you willunderstand our need to develop this market.

I invite your input regarding the Partner and Internationalproduct lines. Pricing, terms, discounts and even the internet siteswill be distinctly different.

These are hard times, but times that offer tremendousopportunities. We have focused on product improvement,expanding market share, international marketing, the neCenturion 7 control, cost efficiency, and many, many othe

efforts. We will not only survive, but we will thrive as the marketmakes a slow return. We are determined to protect youmargins and look to ourselves for reductions in cost andevelopment of greater profits for us all. But to expand marketshare, we require your aggressive efforts. Companies like Acra,

Acer, Chevalier, Fryer, ProtoTrak and Willis continue to beviable competitors and develop products that overlap with ours.We exceed all these products technically, but only a strongsales presentation offers your customer that knowledge.

We also are competing daily with Haas and Hurco, and to

a lesser extent with Okuma, Mazak, Fadal, Daewoo, Supermaxand other machining center producers. This has driven us toevolve our machining centers and control with totally nemachines and technologies. Only better quality and reliabilitywill assure the opportunities for us to grow in this market area.The new VM's have had tremendous acceptance and ou

projected growth in this area is exceeding our expectations.The International Machine Tools company will offer us neopportunities to expand in new market areas.

What company has aggressively redesigned its

machining centers to offer better quality and performance vs.the companies that have spent considerable time in trying tocheapen their product? Certainly Fadal, Okuma and Haas havenot evolved machines or controls much in the past two years.

I believe future success will only be available to thosewho provide increased value and performance. Your inputs arevery valued in the ongoing evolution of performance, reliabilityand value.

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