Milacron Reports Second Quarter Results

New Cost Reductions Aim for Sustained Profitability; Common and Preferred Dividends Suspended

CINCINNATI , OHIO , July 29, 2003...Confirming its pre-announcement on July 17, Milacron Inc. (NYSE: MZ) today reported a before-tax loss from continuing operations, excluding restructuring charges, of $9.8 million in the second quarter of 2003. The company also outlined additional cost-reduction initiatives designed to achieve sustained profitability.

Second Quarter Results
Second quarter 2003 sales were $182 million, up 7% versus a year ago, primarily due to favorable currency translation effects. New orders in the quarter rose 12% to $190 million, with about half of the increase coming from currency translation.

Milacron’s $9.8 million before-tax loss from continuing operations excluding restructuring charges was slightly larger than its loss of $8.3 million in the second quarter of 2002. In the recent quarter, however, the company recorded a $72.2 million tax provision compared to a tax benefit of $2.4 million last year. Included in the tax provision was a $71.2 million non-cash charge to create deferred tax reserves (see below). On an after-tax basis, restructuring charges in the second quarter of 2003 were $6.3 million while losses from discontinued operations were $3.0 million versus $2.0 million and $7.9 million, respectively, in the second quarter of 2002. The net loss for the quarter, therefore, was $91.3 million, or $2.72 per share, compared to a net loss of $31.1 million, or $.93 per share, in the year-ago quarter.

“Order rates have stabilized over the past four quarters, albeit at low levels” said Ronald D. Brown, chairman and chief executive officer. “While orders for most of our products have been favorable compared to reported industry trends, competitive pressures continue to constrain our operating margins. We remain committed to returning to profitability and to that end we are taking additional actions to permanently reduce our overhead by approximately $20 million on an annualized basis,” he said.

Results Year To Date
Year-to-date consolidated sales were $372 million, up from $328 million in 2002, while new orders were $377 million, compared to $339 million a year ago. In both cases, about half of the increases were a result of favorable currency translation effects. For the first six months of 2003, Milacron’s pre-tax loss from continuing operations was $26.4 million versus $21.8 million in 2002. The increased loss was almost entirely due to higher restructuring costs in 2003. The company’s net loss for the first half of 2003 was $99.6 million (including the $71.2 million non-cash writedown), or $2.97 per share, compared to $231.9 million, or $6.94 per share, last year, which included a writedown of $188 million, or $5.62 per share, due to a mandated accounting change.

New Cost-Reduction Initiatives
Milacron intends to step up its cost-reduction efforts, subject to bank lender approval, with new initiatives designed to generate cost and cash savings in continuing operations of approximately $20 million annually, with some benefits beginning in the fourth quarter of this year. These actions are expected to result in charges to earnings of approximately $10 million in the second half of 2003, with cash costs of about $8 million spread over the next four quarters. The initiatives focus on overhead reductions in each of the company’s plastics technologies segments and at the corporate level. Close to 300 positions will be eliminated in North America and in Europe.

In another measure to conserve cash, Milacron’s board of directors today decided not to pay quarterly dividends on common or preferred stock for the quarter ended June 30, 2003.

Tax Charge
In the second quarter of 2003, Milacron recorded a non-cash valuation reserve of $71.2 million against its U.S. deferred tax assets, under an accounting convention applicable when a company has three years of cumulative tax losses. Previously, Milacron had expected to generate taxable income in the U.S. this year. This expectation changed with the prolonged delay in the plastics industry’s recovery and the company’s subsequent decision to take additional cost-reduction charges. These deferred tax assets, however, can still be utilized when the company achieves profitability in the U.S.

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]
New orders of $84 million in the second quarter were up 11% from a year ago, while sales of $75 million were flat. New orders were helped by strong bookings at the National Plastics Exposition held in Chicago at the end of June. On a pre-tax basis, the segment’s operating loss, excluding restructuring charges of $0.9 million, was $1.6 million compared to $0.7 million a year ago, which excluded $0.2 million for restructuring.

Machinery Technologies-Europe [machinery and related parts and services for injection molding and blow molding supplied from Europe]
New orders and sales were both $39 million in the quarter, representing over 40% increases from a year ago. About half the gains resulted from favorable currency translation effects. On a pre-tax basis, the segment’s operating loss was $1.8 million, excluding $2.4 million in restructuring charges. This compared to a loss of $2.1 million in the second quarter a year ago, which had no restructuring costs.

Mold Technologies [mold bases and related parts and services, as well as maintenance, repair and operating (MRO) supplies for injection molding worldwide]
Sales in the quarter of $43 million were down $2 million from the year-ago quarter despite favorable currency translation effects. On a pre-tax basis, operating earnings were $0.1 million, excluding restructuring charges of $3.0 million, as profits in North America were offset by losses in Europe. This compared to operating earnings of $2.3 million, excluding restructuring charges of $2.5 million, in the second quarter of 2002.

Industrial Fluids [water-based and oil-based coolants, lubricants and cleaners for metalcutting and metalforming operations worldwide] Sales of $26 million were flat with those of the second quarter a year ago when excluding favorable currency translation effects. Pre-tax operating earnings improved to $3.7 million from $3.3 million a year ago.

Outlook
“We are currently seeing a number of encouraging signs among our customers, including an increase in our replacement parts business as well as quoting activity for new machines,” Brown said. “However, it will take a sustained two- or three-quarter recovery in plastic part production and the general economy before we would expect to see significant improvements in the markets for our machinery products. During this difficult time, we remain committed to serving our customers while intensely focused on reducing our cost structure.

“Thanks in part to actions taken earlier in the year, we expect modest improvement in our pre-tax operating results in the third quarter and, with additional benefit from the initiatives announced today, we believe we can return to profitability on an operating basis and generate positive cash flow in the fourth quarter,” he said.

Financial Statements (MS Excel file)
Click Here for free MS Excel viewer for financial statements.

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 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).