Milacron Reports Third Quarter Results; Non-Cash Goodwill Writedown Increases Net Loss

Cash Flow from Operations Turns Positive

CINCINNATI, OHIO, October 31, 2003... Milacron Inc. (NYSE: MZ) today reported a loss in the third quarter of 2003 but said that cost-reduction measures and the implementation of Lean manufacturing strategies helped improve manufacturing margins and generate positive cash flow from operations.

Consolidated Third-Quarter Results
In the third quarter of 2003, Milacron had sales of $170 million down slightly, despite favorable currency translation effects, from $173 million in the third quarter of 2002.  The company reported a net loss in the quarter of $67.7 million, or $2.01 per share, which included, on an after-tax basis, a $52.3 million non-cash charge for goodwill impairment in the company's mold technologies segment, $6.3 million in restructuring costs and $2.0 million in losses from discontinued operations, as well as $1.9 million in tax expense.  This compared to net earnings of $14.5 million, or $.43 per share, in the year-ago quarter, which included, after tax, a one-time gain on divestitures of $29.4 million and a tax benefit of $3.9 million, as well as $1.1 million in restructuring costs and $10.4 million in losses from discontinued operations.  Thus, despite lower sales, Milacron was able to reduce its pre-tax loss from continuing operations before restructuring costs and the goodwill charge to $5.2 million in the most recent quarter, down from $7.3 million in the third quarter last year.

New orders in the third quarter of 2003 were $176 million versus $179 million a year ago. With orders exceeding shipments, the backlog grew to $92 million, up from $85 million at the beginning of the quarter and from $80 million a year ago. Manufacturing margins were 18.3%, up slightly from 18.2% in 2002 and from 16.7% and 15.5% in the first two quarters of 2003, respectively.  The operating loss before interest and taxes was $58.0 million and included restructuring costs of $6.4 million and the goodwill charge of $52.3 million.  Excluding restructuring and goodwill charges, earnings before interest and taxes improved to $0.7 million compared to an operating loss of $0.8 million in the year-ago quarter.  Net cash provided by operating activities was $1.8 million, as the company reduced inventories by almost $9 million in the quarter.

"We made a lot of progress in the quarter," said Ronald D. Brown, chairman, president and chief executive officer.  "We completed our cost-cutting initiatives in North America, and in Europe we saw good improvement in our blowmolding machinery operation in Italy.  By focusing more resources outside our traditional markets of North America and Europe, which were soft in the first two months of the quarter, we took advantage of increasing demand in Asia, especially China.  Overall, with a strong emphasis on working capital management through the implementation of Lean manufacturing strategies, we reduced inventories and generated positive cash flow from operations," Brown said.

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]
Sales of $72 million were down from $74 million in the year-ago quarter.  New orders for the quarter also declined, to $74 million from $79 million in 2002.  Helped by cost-reduction measures taken early in the quarter but penalized by ongoing pricing pressure, pre-tax operating earnings before restructuring costs were $0.9 million, down from $1.5 million a year ago.

Machinery Technologies-Europe [machinery and related parts and services for injection molding and blow molding supplied from Europe]
Despite favorable currency translation effects, sales of $33 million were down from $35 million in the year-ago quarter, while new orders increased to $37 million from $35 million.  The segment cut its pre-tax operating loss before restructuring costs to $0.4 million, down from a loss of $1.5 million a year ago, primarily as a result of improving results in its blowmolding machinery operation in Italy.  Operating results were held back, however, by delays in implementing previously announced cost-cutting measures in injection molding machine operations in Germany.

Mold Technologies [mold bases and related parts and services, as well as maintenance, repair and operating (MRO) supplies for injection molding worldwide]  Sales were $39 million in the third quarter, down from $41 million a year ago, despite favorable currency translation effects.  Excluding restructuring charges, the segment had a slight pre-tax operating profit of $0.1 million compared to $0.4 million last year.

Industrial Fluids [water-based and oil-based coolants, lubricants and cleaners for metalcutting and metalforming operations worldwide]  Sales of $26 million were up from $25 million in the third quarter a year ago, primarily due to favorable currency translation effects.  Pre-tax operating earnings improved to $4.8 million from $3.4 million a year ago.

Goodwill Writedown
In its annual review of intangible assets, the company revised downward estimated future cash flows in its mold technologies segment, which resulted in a non-cash goodwill impairment charge of $52.3 million, with no tax benefit.  The charge is preliminary and may be adjusted in the fourth quarter based on further analysis.

Cash Position and Financial Flexibility
Milacron ended the third quarter with $62 million in cash, down from $67 million at the beginning of the quarter, as positive net cash provided by operations was offset by restructuring charges and losses from discontinued operations. Overall, the company expects cash flow in the fourth quarter to be similar to that of the third quarter.

During the quarter, Milacron's bank group amended the company's revolving credit agreement, relaxing certain financial covenants to address the extended downturn in the plastics industries and to allow the implementation of further cost-cutting initiatives.

Milacron is currently engaged in discussions with a number of potential lenders to replace by year-end both its revolving credit facility and its receivables securitization program, which together have approximately $80 million outstanding.  At the same time, the company is actively pursuing a variety of options to refinance its public debt, which consists of $115 million of 8-3/8% notes due in March 2004 and €115 million of 7-5/8% bonds due in April 2005.

Outlook
With the backlog of unfilled orders currently growing and given the seasonal trend of accelerated machinery deliveries in the final months of the year, fourth-quarter sales are expected to show sequential improvement over the third quarter and approach levels of the fourth quarter a year ago.

"In the fourth quarter we should experience the full benefit of the cost-cutting measures we've recently completed in North America," Brown said.  "Therefore, we expect results from continuing operations in the fourth quarter to improve over those of the third quarter and approach break-even on an operating basis excluding restructuring costs.

"As for the longer term, at this time we have very little visibility into 2004.  On the assumption that there continues to be a moderate improvement in world economies in the first half of the year, this would likely lead to a recovery within our machinery businesses in the second half.  Under this scenario, we believe we can return to sustained profitability in the second half of 2004.

"Regardless of the economy, we will continue to focus our resources on providing our customers with the technology and service they need to improve their overall competitiveness.  We will work hard to implement cost-saving measures in our European operations and we will pursue growth opportunities to serve our customers wherever they are throughout the world," he 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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First incorporated in 1884, Milacron is a leading global supplier of plastics-processing technologies and industrial fluids, with 3,500 employees and 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).