Important Tax Information for Rights Offering Participants

If you participated in our Rights Offering, this is intended to assist you and your tax advisor in the determination of your tax basis of your Milacron stock under two optional methods provided by the Internal Revenue Code and Regulations.

Option 1 provides that your tax basis in your original shares will remain the same and your basis in the newly acquired shares will be your cost of $2.00 per share.

Option 2 provides for an election to allocate a portion of the basis in your original stock to the basis in the newly acquired stock. If you choose to allocate, you must make an affirmative election to be included with the filing of your 2004 federal income tax return. Sample election statement (PDF) This election, once made, is irrevocable.

The calculation is as follows: Assume you received 452 Rights for 1000 shares of common stock that you owned. If you exercised all 452 Rights, received 452 shares pursuant to the November 22, 2004 closing date, and make the election, 12.8% of your total tax basis in the original 1000 shares will be added to the tax basis for the new 452 shares and subtracted from your tax basis in the original 1000 shares. If instead you received 452 shares pursuant to the December 10, 2004 closing date, 13.0% of your tax basis in the original 1000 shares will be added to the tax basis for the new 452 shares and subtracted from your tax basis in the original 1000 shares. Please see the following examples regarding how to allocate basis.

Basis allocation examples

Example a
Acquired pursuant to November 22, 2004:
Sample allocation of tax basis between 1000 shares with a tax basis of $5.00 per share and 452 new shares acquired pursuant to the Rights Offering at $2.00 per share.

Example b Acquired pursuant to December 10, 2004:
Sample allocation of tax basis between 1000 shares with a tax basis of $5.00 per share and 452 new shares acquired pursuant to the Rights Offering at $2.00 per share.