Milacron Reports First Quarter Loss of $.29 Per Share Before Restructuring Charges; in Line with Expectations

Cash Flow Continues Strong in Quarter

CINCINNATI, OHIO, April 23, 2002...Milacron Inc. (NYSE: MZ) today reported a net loss in the first quarter of 2002 of $.39 per share, including $.10 per share in restructuring charges, in line with guidance issued by the company and with analysts’ current consensus estimates. Despite the loss and cash outlays for restructuring activities, the company reported strong, positive cash generation in the quarter, achieved in great part through improved inventory turns.

Sales in the first quarter of 2002 of $275 million were down 19% from $339 million in the first quarter of 2001, while new orders were $286 million, off 17%. Milacron’s net loss in the quarter of $13.1 million, or $.39 per share, included $3.5 million, or $.10 per share, in restructuring charges and, in accordance with newly adopted accounting rules, did not include amortization of goodwill. Earnings continued to be hurt by weak market demand and related underutilization of assets. In the first quarter 2001, Milacron had net earnings of $3.5 million, or $.10 per share, which included after-tax expense of $2.3 million, or $.07 per share, for the amortization of goodwill.

On a pre-tax basis excluding restructuring charges, Milacron lost $14.9 million in the first quarter of 2002, a considerable improvement over the $26.4 million loss in the fourth quarter of 2001 and evidence that the company’s restructuring measures, initiated in the second half of 2001, are beginning to generate significant savings. This improvement was not so evident on an after-tax basis, however, because Milacron benefited from favorable one-time tax adjustments in the fourth quarter of 2001, while 2002 earnings are subject to a more normalized tax rate.

During the first quarter of 2002, Milacron slashed inventory by $20 million. This helped generate a positive net cash flow from operations of $13 million, which was used to pay down debt, and allowed the company to maintain its strong cash position of $108 million.

“We continued to suffer from severely depressed conditions in North America during the quarter as well as some softness overseas,” said Ronald D. Brown, chairman, president and chief executive officer. “As in the three prior quarters, employees in both of our operating groups faced the adversity head on and, without compromising our high levels of customer service, did an outstanding job of managing working capital and generating strong cash flow.

“We’re pleased with the results we’re getting from the implementation of Six Sigma and Lean techniques throughout the company. At the same time, we continue to emphasize development of new, innovative products and services. We are determined to emerge from this downturn stronger and better positioned than ever to take advantage of the eventual recovery,” Brown said.

Segment Results
Plastics Technologies
Sales in the first quarter of 2002 were $136 million, down 23% from $177 million a year ago, while new orders were $147 million, off 17%. Sales and order declines for the group’s machinery products reflected continued low levels of capital spending, particularly in North America. Sales of mold technologies and MRO (maintenance, repair and operating) supplies – primarily durable and consumable products – were off about 15% from the year-ago quarter excluding the sales of recent acquisitions. During the quarter, the group posted operating earnings of $1.1 million, including $4.5 million in royalty income related to licensing of patented technology. Operating earnings in the year-ago quarter were $9.4 million, which included goodwill amortization expense of $2.6 million.

Metalworking Technologies
Sales in the quarter were $139 million, off 14% from $162 million in the year-ago quarter, and new orders, also $139 million, declined 17%. Softer demand from the automotive and electronics industries, as well as from makers of industrial machinery, hurt sales volumes, margins and absorption. As a result, the group posted an operating loss of $1.8 million in the quarter, compared to operating earnings in the year-ago period of $11.2 million, which included $0.5 million in goodwill amortization expense.

Restructuring and Cost Cutting
Milacron is in the midst of a major restructuring program that specifies the closing of 14 small manufacturing plants and the elimination of about 1,100 jobs. Having begun this restructuring in the third quarter of 2001, the company expects to complete the bulk of the actions by mid year 2002. Charges for the entire program are projected to total approximately $38 million pre-tax, including about $8 million in 2002. Total cash costs of the program are estimated at about $30 million, including approximately $20 million in 2002. All told, the plan is now expected to generate cost savings of more than $40 million annually. First-quarter restructuring activities included the elimination of more than 300 positions and cash costs of $10 million. Cost savings from restructuring totaled about $9 million in the quarter.

Outlook
“For the first time in seven quarters, our new orders did not decline from the prior quarter,” Brown said. “We believe this is a sign that the manufacturing recession has bottomed out. Currently, however, operating rates among our North American customers remain very low and are soft in some overseas markets as well.

“Looking ahead, we expect our non-machinery businesses – primarily durable and consumable products for plastics processing and metalworking, which make up about 70% of our current sales – to move up with industrial production. On the other hand, as we have previously cautioned, we believe it will take two or three quarters of solid improvement in the manufacturing sector before customers begin to increase capital spending budgets, and therefore we don’t expect to see significant pickup in demand for our plastics machinery until late 2002 or 2003.

“We can’t predict or control the economy but we will continue to proactively reduce costs and improve our products, services and internal efficiency. Despite good progress in these areas, however, at this time we believe it’s prudent to plan on a slower, more gradual recovery than originally envisioned. Given this scenario, we expect to report a loss in the second quarter, to reach breakeven in the third quarter and to return to profitability in the fourth quarter of the year. Longer term, for 2003 and beyond, we believe Milacron will be well positioned to take advantage of healthier economic conditions,” Brown said.

Financial Statements (MS Excel file)
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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.

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Milacron Inc. (NYSE: MZ) is a world leader in plastics processing and metalworking technologies with major manufacturing facilities in North America, Europe and Asia and 9,500 employees worldwide. Plastics technologies include injection molding machines, blow molding equipment, extrusion systems and wear items, mold bases, mold-making equipment and mold components, as well as aftermarket and MRO (maintenance, repair and operating) parts and services. Metalworking technologies include carbide metalcutting inserts, tool holders, carbide and high-speed steel round tools, metalworking fluids, grinding wheels, and carbide die and wear parts. For further information, visit the company’s web site, www.milacron.com, or call the toll-free investor hot line: 800-909-MILA (800-909-6452).

Note: To access the open investor conference call live on 4/23 at 2:00 p.m. EDT, go to www.milacron.com or dial (913) 981-5522. For the conference call replay from 4/23 to 4/30, go to www.milacron.com or dial (719) 457-0820, passcode: #168527.