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SECURITIES AND EXCHANGE COMMISSION

FORM 10-K

Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

MILACRON INC.

Securities Registered Pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

	Yes x               No o

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o               

     The aggregate market value of voting stock held by non-affiliates of the registrant is $335,858,798 at February 28, 2002*

     *Voting stock held by officers, directors and principal holders is not included in the computation. The company, however, has not made a determination that such individuals are “affiliates” within the meaning of Rule 405 under the Securities Act of 1933.

     Number of shares of Common Stock, $1.00 par value, outstanding as of February 28, 2002: 33,630,217

Documents Incorporated by Reference:
PART III — Proxy statement, dated March 29, 2002

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Milacron Inc.

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PART I

Item 1.      Business

General

     Starting out in the 1860s as a screw and tap maker in a small shop in downtown Cincinnati, the company was first incorporated in 1884. As a successor to that business, Milacron was most recently incorporated in Delaware in 1983. Known throughout most of our history as a leading maker of machine tools serving metalworking industries, in 1998 we divested this business in order to focus exclusively on our two more rapidly growing businesses.

     Milacron’s plastics technologies group, which accounted for 52% of consolidated sales in 2001, sells equipment and turnkey systems for the three most common methods of processing plastic: injection molding, extrusion and blow molding, as well as related mold tooling, components and MRO (maintenance, repair and operating) supplies to these same customers. Major global markets for plastics technologies include the following industries: packaging, building and construction, components, automotive, consumer goods, medical, electrical and electronics, housewares and appliances.

     Milacron’s metalworking technologies group, at 48% of consolidated sales, sells carbide inserts and related tool holders, carbide and high-speed steel round tools, coolants, lubricants, cleaning fluids and grinding wheels to many large manufacturing industries worldwide. These include: automotive, machinery, components, aerospace, consumer goods, oil and gas drilling and mining, construction, off-road equipment, housewares and appliances.

     Milacron pursues an active acquisition and divestiture strategy to expand our core businesses on a global basis and to improve profitability. Since 1993, we have made fourteen acquisitions in plastics technologies and eight in metalworking technologies while divesting six businesses.

     During the eight year period from 1993 through 2000, with the help of several acquisitions, plastics technologies sales grew at a compounded annual rate of 14%, while metalworking technologies sales, starting from a lower base, grew 27%. In both segments, operating earnings before nonrecurring items (primarily gains and losses on divestitures and restructuring charges) rose 18% compounded annually. Reported growth in the latter part of the eight year period was slower for several reasons including softness in many key industrial markets worldwide and the effects of currency translation.

     On a consolidated basis in the eight year period from 1993 through 2000, Milacron’s sales from continuing operations grew from $674 million to $1,584 million, or 18% compounded annually. Competing effectively in international markets, our sales to customers outside the U.S. rose from $155 million in 1992 to $613 million, representing 39% of total sales, in 2000. From 1992 through 2000, excluding nonrecurring items, Milacron’s earnings improved 34% compounded annually and earnings per share increased 31%. Including nonrecurring items, earnings from continuing operations grew 16% compounded annually and 13% on a per-share basis.

     In 2001, Milacron endured the deepest and longest recession in the North American manufacturing sector in over 50 years. Demand for consumable and durable products for both plastics processing and metalworking was down 15% to 20%, while markets for plastics processing machinery fell 50% to 60%. As a result, our consolidated 2001 sales decreased to $1,263 million. Excluding the effects of acquisitions, divestitures and currency translation, sales declined 19% from 2000. Despite aggressive cost reduction actions, we recorded a net loss of $35.7 million, or $1.08 per share, of which $19.1 million, or $.57 per share, represented restructuring charges.

Strategic Acquisitions and Divestitures

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     To further expand our presence in all phases of plastics processing, in 2001 we bought two European plastics injection mold base and tooling manufacturers, EOC Normalien and Reform Flachstahl, both located in Germany. These companies will help improve our competitive position as a growing supplier of mold bases and related tooling for plastics injection molding in Europe. The consolidation of their operations with our existing mold components business is included in the 2001 restructuring actions that are discussed below. Also in 2001, we purchased Progress Precision of Mississauga, Ontario, Canada, a provider of barrels and screws and related value-added services for plastics extrusion, injection and blow molding, thereby enhancing our presence in these markets in the northeast United States and Canada. In mid-2001, we scaled back our acquisition program in response to weakening business conditions.

     Milacron is committed to growing sales and profitability in each of our businesses and we seek to divest any operation or product line that is not critical to our core businesses or not likely to meet our growth targets. Since 1994, we have sold six such businesses:

Cost Cutting and Efficiency Initiatives

     The 2000 efficiency improvement program, carried out in both segments in North America and in Europe, entailed closing four small manufacturing facilities and five administrative offices, and the elimination of more than 300 administrative and manufacturing positions worldwide. Initiated in 1999 and substantially completed in 2000, the plan cost approximately $18 million and yielded $19 million in savings in 2000. The annualized savings from the plan exceeded $20 million and were realized in 2001.

     The consolidation of European blow molding operations consisted of closing plants in Florence, Milan, and Berlin and the transfer of their manufacturing and assembly operations to an existing plant located in the Czech Republic and to a new facility near Milan upon its completion in the first half of 2001. The consolidation, which cost approximately $6 million, is generating annual savings of approximately $3 million.

     All told, the 2000 efficiency improvement program, the consolidation of European blow molding operations and other cost-cutting efforts in 2000 led to the elimination of more than 400 positions and annualized savings of around $25 million.

     In the first half of 2001, in response to a major falloff in demand, Milacron eliminated 750 positions in North America. In the second half of 2001, we took $19.1 million, or $.57 per share, in after-tax restructuring charges associated with more than a dozen plant closures and the elimination of approximately 480 additional positions. Cash costs

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Research and Development, New Product
Development and Capital Expenditures

     Because of depressed economic conditions, we reduced our investment in capital spending from $47 million in 2000 to $32 million in 2001. For 2002, we are currently estimating $30 million for capital additions.

Patents

Employees

Backlog

Segment Information

Plastics Technologies Business

      Plastics Technologies Markets. The markets for plastics machinery and supplies have grown steadily over the past five decades, as plastics continue to replace traditional materials such as metal, wood, glass and paper in manufactured products. Plastics are increasingly the material of choice for packaging, cars, buildings and infrastructure, consumer goods, electronics, medical devices, housewares and appliances.

     Advancements in the development of materials and in the capabilities of the processing equipment continue to make plastic products more functional and less expensive, thus spurring secular growth. Thanks to superior strength-to-weight ratios, plastics are increasingly used in transportation-related industries. And consumer demand for safer, more convenient products has also driven the general demand for plastic products.

     The plastics technologies areas where Milacron competes comprise a $15 billion global market. About two-thirds of the market consists of capital equipment, which is subject to general economic cycles and capital spending patterns. Demand is often shaped by other, more specific factors as well, such as fluctuations in resin pricing and availability, oil, gas and electricity prices, the impact of interest rates on new housing starts and auto sales, the introduction of new model cars and consumer spending. Changes in currency exchange rates may also affect our customers’ businesses and, in turn, the demand for processing equipment.

     While concerns about energy conservation and the environment could theoretically deter the growth of the plastics industry, in practice this does not appear to have happened. Factually, it has been known for many decades that the use of plastics actually conserves energy and is environmentally friendly when compared to making the same products out of metal, wood, glass or paper. To further address environmental issues, many polymer suppliers, machinery makers and processors are actively developing and improving methods of recycling. Through membership in the trade association, Society of Plastics Industry, Milacron continues to work with other leading companies to position plastics as a part of the solution to the challenges of energy and environmental conservation.

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     Plastics Technologies Products. We believe Milacron is the broadest-line producer of machinery, mold bases, related tooling and supplies for plastics processing in the world. With 2001 sales of $662 million, our plastics technologies segment is organized around five major businesses:

     We offer full lines of equipment and systems for the three major methods of processing plastic: injection molding, extrusion and blow molding. Milacron is also a leading maker and supplier of durable goods such as mold bases and related tooling, components and supplies for the injection moldmaking industry, and we make complete molds for blow molding. We sell specialty auxiliary equipment for all types of plastics processing and we rebuild and retrofit older equipment manufactured by Milacron or others. We also have a growing presence as a provider of services and supplier of aftermarket MRO items for plastics processing.

     In each of our businesses, Milacron has a global leadership position with certain product lines. We are a world leader, for example, in all-electric injection molding systems, which we believe will become the industry standard within the next several years. Compared to traditional hydraulic powered machines, all-electric systems are faster, quieter, cleaner, more accurate and consume less than half the energy. In blow molding, we believe we are the number-one maker of systems to produce HDPE (high density polyethylene) containers. Our twin-screw extruders are the system of choice in North America to produce a wide variety of PVC products used in construction and remodeling. And our D-M-E pre-engineered mold bases are the best-selling products in their categories in North America and very popular in Europe as well.

     Plastics Technologies Geographic Sales. About 69% of our plastics technologies sales in 2001 went to customers in North America. European sales made up about 23% of the group’s total, with the remainder coming from Asia and the rest of the world. Prior to 2001, a trend toward an increasingly high percentage of sales in North America was exacerbated by weak or depressed overseas markets, the strong dollar and the resulting currency translation effects, the divestiture of our European extrusion systems business at the end of 1999 and increased sales associated with recent acquisitions of companies based in North America. From a transactional point of view, fluctuating currency exchange rates and the introduction of the euro have not caused any material changes in Milacron’s competitive position in the industry or in the operation of this group’s businesses.

     Plastics Technologies Distribution. We distribute our plastics machinery and systems through a combination of a direct sales force and independent agents, who are spread geographically throughout our key markets. We sell our mold bases, supplies and components through a direct distribution network in North America and Europe and through a large network of joint venture sales and service offices in Asia. We market our MRO supplies in traditional printed catalogs as well as through electronic catalogs and over the Internet.

     Our plastics technologies group maintains sales, marketing and customer service facilities in major cities across North America and Europe. In Asia, we have offices in India, Singapore, China and Malaysia and we also sell through a large network of joint venture sales and service offices in all major countries. A great number of D-M-E’s products are sold through catalogs and telemarketing. We are rapidly developing full e-business capabilities for Internet sales and distribution.

     Our service and parts organization, ServTek, provides a steady revenue stream and continues to grow worldwide. Through ServTek, we supplement our own service technicians with a network of independent providers for 24-hour response across North and South America and in a number of European countries.

     Plastics Technologies Customers. Our plastics technologies customers are involved in making a wide range of everyday products: from food and beverage containers to refrigerator liners; from electronic and medical components to digital cameras, cell phones, toothbrushes and razors; from milk bottles to outdoor furniture and toys. Discrete end-markets in order of 2001 sales were packaging, industrial components, construction, automotive and transport, custom molders, consumer goods and toys.

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     Plastics Technologies Production Facilities. For the plastics technologies segment, Milacron maintains the following principal production facilities:

(1)	Closing in Quarter 1, 2002

*	Leased

     Plastics Technologies Competition. The markets for plastics technologies are global and highly competitive and include North American, European and Asian companies. We believe Milacron has the number-one share of the North American market and the number-two share worldwide. Our competitors vary in size: some are larger than us, most are smaller, and only a few compete in more than one product category. Principal competitive factors in the plastics technologies industry are: product features, technology, performance, reliability, quality, delivery, price and customer service.

Metalworking Technologies Business

       Metalworking Technologies Markets. Key markets for our tools and related supplies include the whole spectrum of metalworking industries, from auto, aircraft and machinery makers and job shops, to manufacturers of electronic and consumer goods and the construction and energy extraction businesses.

     During the past several decades, overall demand for metalworking products has grown at a rate approximating the growth of industrial production in both developing and mature economies around the world. Higher growth areas within the metalworking industries include the machining of special alloys and lightweight metals such as aluminum as well as components to build equipment to process silicon wafers, circuit boards and other materials used in the electronic and computer-related industries.

     Milacron’s metalworking technologies business participates in a $14 to $15 billion world market and consists almost entirely of consumables, durables and services. As such, demand for our products is generally directly proportional to levels of industrial production, although we specifically target higher-growth areas with each of our product lines. Factors affecting our customers’ production rates, and ultimately demand for our own products, include auto sales, consumer spending and confidence, interest rates, energy prices and currency exchange rates.

     Metalworking Technologies Products. We believe Milacron is the world’s broadest-line maker of tools and supplies for the metalworking industries. The group, whose sales in 2001 were $600 million, is organized around four basic businesses:

     The lines listed above represent over 150,000 different products. Milacron has established a leadership position in many new product technologies including synthetic lubri-

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     Metalworking Technologies Geographic Sales. About 53% of our metalworking technologies sales were to customers in North America in 2001, while another 34% were sold in Europe. The remaining sales were to Asia, primarily India, where we have the leading share of the carbide insert market. Over the past several years, the group has achieved substantial growth in European markets in local currencies but adverse currency translation effects – the result of a strong U.S. dollar – have reduced reported sales considerably. From a transactional point of view, fluctuating exchange rates and the introduction of the euro have not caused any material changes in Milacron’s competitive position in the industry or in the operation of this group’s businesses.

     Metalworking Technologies Distribution. Our metalworking technologies business sells products under multiple brands through parallel market channels, using direct sales, industrial distributors, agents and manufacturers’ representatives, and in traditional printed catalogs as well as through electronic catalogs and over the Internet. We manufacture most of what we sell, and most of what we make is sold under company-owned brands. In addition, our products are sold under the brand names of other companies through their own market channels, and we also use Milacron brand names to sell products that are made by other companies.

     Metalworking Technologies Customers. Our metalworking tools, abrasives and fluids are involved in making all kinds of products: from automotive power train parts to aluminum soft drink cans, from air conditioners and hair dryers to jet engines and bicycles, not to mention a variety of industrial components such as gaskets, seals, pumps and valves.

     Discrete end-markets for our metalworking technologies group in order of importance based on 2001 sales were: automotive and transportation, job shops, industrial machinery, industrial components, aerospace, consumer goods and toys, oil and primary metals and off-road equipment. The largest customer category, automotive and transportation, accounted for 34% of the group’s sales in 2001.

     Metalworking Technologies Production Facilities. For our metalworking technologies segment, Milacron maintains the following principal production facilities:

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(1)	Five of these plants will be consolidated into a new leased facility during 2002

*	Leased

     Metalworking Technologies Competition. While we have many competitors in metalcutting tools, we believe Milacron has the number-three share of the North American market and ranks third overall globally. Our competitors in metalworking fluids are large petrochemical companies and smaller companies specializing in similar fluids. There are a few large competitors in the North American grinding wheel market, one of which is significantly larger than Milacron. Principal competitive factors in these markets include market coverage, technology, performance, delivery, price and customer service.

Executive Officers of the Registrant

The following information is included in accordance with the provisions for Part III, Item 10:

   Parenthetical figure below name of individual indicates age at most recent birthday prior to December 31, 2001.

   There are no family relationships among the executive officers of the Registrant.

   Officers of the company are elected each year by the Board of Directors.

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Item 2.   Properties

     The remaining information required by Item 2 is included in Part I on pages 7 through 9 of this Form 10-K.

Item 3.   Legal Proceedings

     The following table shows the price range of the common shares for 2000 and 2001, as reported by the New York Stock Exchange. Cash dividends of $.12 per common share were paid in each quarter of 2000 and the first three quarters of 2001. Cash dividends of $.01 per common share were paid in the fourth quarter of 2001. Our revolving credit facility (discussed on page 41 of this Form 10-K) currently limits the payment of cash dividends to $.01 per share beginning in the fourth quarter of 2001.

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Item 6.   Selected Financial Data

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Results of Operations

Acquisitions

     In August, 1999, we acquired Producto Chemical, Inc. (Producto), which manufactures process cleaners, washers, corrosion inhibitors and specialty products for metalworking. Producto had annual sales approaching $5 million as of the acquisition date.

     In September, 1999, we acquired Oak International, Inc. (Oak), a supplier of lubricants and process cleaners used in metalforming and metalworking. Oak has three manufacturing plants, including two in the U.S. and one in the U.K., and had annual sales approaching $12 million as of the acquisition date.

     In September, 1999, we acquired the Micro Carbide product line, which includes solid carbide reamers, step drills and miniature tools. These products are now being manufactured by our Data Flute facility.

     In May, 2000, we acquired Akron Extruders, Inc., a single-screw plastics extrusion manufacturer which had annual sales of approximately $5 million as of the acquisition date. The manufacture of Akron Extruders’ lines of single-screw extruders and replacement barrels and screws has been moved to our principal U.S. plastics machinery facility near Cincinnati, Ohio.

     In October, 2000, we acquired Ontario Heater and Supply Company and Rite-Tek Canada (Rite-Tek), two Canadian companies that specialize in the distribution of maintenance, repair and operating supplies for the plastics processing industry. Rite-Tek also manufactures heater bands used in plastics processing. The combined sales of the two companies were approximately $5 million per year as of the date of the acquisitions.

     In April, 2001, we acquired Progress Precision, a Canadian manufacturer of barrels and screws and provider of related services for plastics extrusion, injection molding and blow molding. Progress Precision has annual sales of approximately $2 million.

     Also in April, 2001, we acquired Reform Flachstahl (Reform), a manufacturer of mold bases and plates for plastics injection molding headquartered in Germany. With annual sales of approximately $16 million, Reform also provides components, cooling products and tools for molds and mold making.

     In May, 2001, we completed the acquisition of EOC Normalien (EOC), a German manufacturer of mold bases, components and die sets for plastics injection molding. EOC has annual sales of approximately $35 million.

     With the exception of Producto, Oak and the Micro Carbide product line, all of the acquisitions that took place in 1999 through 2001 are included in the plastics technologies segment. All of the acquisitions were financed through available cash and bank borrowings and have been accounted for under the purchase method of accounting.

Divestitures of Businesses

     In September, 2000, we completed the sale of our German-based industrial magnets business, Widia Magnet Engineering, for approximately $14 million and recorded a pretax gain of $1.5 million ($.8 million after tax). For the first nine months of 2000, Widia Magnet Engineering, which manufactures and sells both soft and permanent magnets, had new orders and sales of $25 million and $26 million, respectively. The business was included in the acquisition of Widia GmbH in 1995 and was sold to redeploy assets to other businesses.

Presence Outside the U.S.

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     Between December 31, 2000 and December 31, 2001, the euro weakened slightly against the dollar which resulted in a $1 million reduction in consolidated shareholders’ equity due to unfavorable foreign currency translation adjustments.

     If the euro should weaken further against the U.S. dollar in future periods, we will once again experience a negative effect in translating our European new orders, sales and earnings when compared to historical results.

Significant Accounting Policies and Judgments

       The consolidated financial statements discussed herein have been prepared in accordance with generally accepted accounting principles in the United States, which require management to make estimates and assumptions that affect the amounts that are included therein. The following is a summary of certain accounting policies, estimates and judgmental matters that management believes are significant to Milacron’s reported financial position and results of operations. Additional accounting policies are described in the note captioned “Summary of Significant Accounting Policies” on pages 30 through 32 of this Form 10-K, which should be read in connection with the discussion that follows. Management regularly reviews its estimates and judgments and the assumptions regarding future events and economic conditions that serve as their basis. While management believes the estimates used in the preparation of the consolidated financial statements to be reasonable in the circumstances, the recorded amounts could vary under different conditions or assumptions.

Deferred Tax Assets and Valuation Allowances

     At December 31, 2001, Milacron had a U.S. net operating loss carryforward of $23.8 million, which expires in 2021, and related federal, state and local deferred tax assets of $11.9 million. No valuation allowances have been provided with respect to these assets because management believes the net operating loss carryforwards will be fully utilized prior to their expiration. This judgment is based on the expectation of increased U.S. industrial production and capital spending in the latter part of 2002 and on the significant reductions in Milacron’s cost structure that have been achieved in recent years and that will be achieved through the restructuring programs that began in 2001 (see Restructuring Costs).

     At December 31, 2001, Milacron had non-U.S. operating loss carryforwards — principally in Germany — totaling $169.7 million and related deferred tax assets of $56.6 million. Valuation allowances totaling $18.6 million have been provided with respect to these assets. Management believes that it is more likely than not that portions of the net operating loss carryforwards in Germany and other jurisdictions will be utilized. However, the magnitude of the carryforwards in those countries makes it impossible to conclude at this time that no valuation allowances are required.

Accounts Receivable and Inventory Reserves

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     Allowances for doubtful accounts are generally established using specific percentages of the gross receivables amounts based on their age as of a particular balance sheet date. The amounts calculated through this process are then adjusted for known credit risks and collection problems. Write-offs of accounts receivable have averaged $3.1 million during the last three years. While management believes that the company’s reserves for doubtful accounts are reasonable in the circumstances, adverse changes in general economic conditions or in the financial condition of Milacron’s major customers could result in the need for additional reserves in the future.

     Reserves for inventory obsolescence are generally calculated by applying specific percentages to inventory carrying values based on the level of usage and sales in recent years. These calculations are then adjusted based on current economic trends, expected product line changes, changes in customer requirements and other factors. In 2001, Milacron recorded new inventory obsolescence reserves totaling $12.9 million and utilized $5.0 million of such reserves in connection with the disposal of obsolete inventory. Management believes that Milacron’s reserves are appropriate in light of its historical results and its assumptions regarding the future. However, adverse economic changes or changes in customer requirements could necessitate the recording of additional reserves through charges to earnings in the future.

Impairment of Property, Plant and Equipment and Goodwill

     In 2001, Milacron reviewed the aggregate carrying values of selected groups of its long-lived assets under the provisions of Statement of Financial Accounting Standards No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of.” The assets included in these reviews consisted principally of property, plant and equipment and, where applicable, goodwill. Based on these reviews, it was determined that the maximum period of time to recover the carrying values of the tested groups of assets through undiscounted cash flows is approximately 14 years and that the weighted-average recovery period is approximately 28% of the remaining average lives of the assets. Based on the results of the reviews, no impairment charges were recorded in 2001.

     The 2001 review for goodwill impairment was conducted as of September 30, 2001, using recorded balances and cash flow projections as of that date. This review did not reveal any instances in which an impairment charge was required based on the methodology described above. The maximum period of time to recover the carrying value of recorded goodwill through undiscounted cash flows was determined to be approximately 12 years and the weighted-average recovery period was approximately 18% of the average remaining amortization period. However, effective January 1, 2002, Milacron will adopt Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.” This recently issued standard requires that goodwill be tested for impairment annually using probability-weighted cash flows discounted at market interest rates. As described more fully in the notes to the consolidated financial statements and in the section of this Management’s Discussion and Analysis captioned “Future Change in Method of Accounting,” the change from the undiscounted cash flow methodology described above to the use of discounted future cash flows will result in a significant non-cash charge for goodwill impairment that will be recorded as the cumulative effect of a change in method of accounting. It is expected that this charge will be recorded when the actual amount is determined around the middle of 2002, retroactive to January 1, 2002.

Insurance Reserves

     MAL’s reserves are established based on known claims and management’s best estimates of the ultimate exposures thereunder and on estimates of the cost of

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Pensions

     The most significant factor in determining the amount of income recorded for the funded U.S. plan is the expected long-term rate of return on plan assets. In 2001 and in several preceding years, Milacron has used an expected long-term rate of return of 9 1/2% and expects to use this rate again in 2002. Despite the loss incurred in 2001, over the last ten years the assets of the funded U.S. plan have earned in excess of 9 1/2% and management therefore believes that this rate continues to be appropriate.

     In determining the amount of pension income to be recognized, the expected long-term rate of return that is discussed above is applied to a calculated value of plan assets which recognizes changes in fair value over a three year period. This practice has the effect of reducing year-to-year volatility in recorded pension income. However, recognition of the remainder of the 2001 loss will have the effect of reducing the return on plan assets component of Milacron’s pension income in 2002 and 2003, in both cases in relation to 2001. Moreover, additional asset-related losses in 2002 and beyond would possibly require management to reduce the expected long-term rate of return from the current 9 1/2% to a lower amount, a change that would also reduce the amount of income in the future. Conversely, asset returns in excess of 9 1/2% in future years could conceivably result in the use of a higher rate which would have the effect of increasing pension income.

2001 Compared to 2000

New Orders and Backlog

     Orders for plastics technologies products totaled $629 million for 2001, a decrease of $206 million, or 25%, in relation to 2000. In North America, orders for injection molding machines and extrusion systems decreased by approximately 40% due to low levels of industrial production and significantly reduced capital spending. Orders for injection molding machines also decreased in Europe but to a lesser degree. European orders for Uniloy blow molding systems approximated the level achieved in 2000 but remained at depressed levels, while in North America, orders for Uniloy systems decreased by more than 25%. Orders for D-M-E mold bases and components increased in Europe due to the acquisitions of EOC and Reform (see Acquisitions). However, orders for D-M-E products in North America decreased by more than 20% due to low levels of industrial production and capacity utilization in the plastics processing industry.

     In the metalworking technologies segment, orders for 2001 totaled $594 million compared to $717 million in 2000. This represents a decrease of $123 million, or 17%, that was due in part to the sale of the industrial magnets business, which had contributed $25 million of orders in 2000, and to the strength of the U.S. dollar in relation to the euro and other currencies. Excluding the divestiture and currency effects, orders decreased by 12% in relation to 2000. All of the segment’s businesses experienced reduced order levels in North America due to low production levels in the metalworking industry. The most significant decreases occurred in the Valenite metalcutting tools business due in part to lower levels of automotive production and in the round metalcutting tools business due to lower demand from the aerospace industry. In Europe, orders for Widia metalcutting tools increased both in local currencies and as measured in U.S. dollars despite adverse currency effects.

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     Consolidated U.S. export orders totaled $101 million in 2001 compared to $124 million in 2000. The decrease resulted principally from lower export orders for Valenite products and Uniloy blow molding machinery.

     Milacron’s backlog of unfilled orders totaled $130 million at December 31, 2001, compared to $181 million at December 31, 2000. The decrease is due primarily to lower order levels for all types of plastics machinery in North America.

Sales

     Sales of the plastics technologies segment were $662 million in 2001 compared to $874 million in 2000, a decrease of $212 million, or 24%. The most significant decreases occurred in the segment’s North American injection molding machine and extrusion systems businesses, where sales decreased by more than 40%. Sales of Uniloy blow molding systems also decreased in North America but to a somewhat lesser degree, as did shipments of injection molding machines in Europe. As was the case for new orders, European sales of blow molding equipment held steady in relation to 2000 but remained at low levels due to the restructuring and reorganization of Uniloy’s Italian operations (see Margins, Costs and Expenses). In the aggregate, worldwide sales of plastics processing machinery in 2001 decreased by 50% to 60% in relation to 2000 due to lower production levels and reduced capital spending. Order levels and shipments of Milacron’s machinery products can be expected to remain at low levels until the overall economy begins to recover, possibly later in 2002. We expect that increases in demand for our capital goods, however, will probably trail the general improvement in business conditions by a quarter or two. In the segment’s non-machinery businesses, sales of D-M-E products decreased in North America due to low levels of capacity utilization and industrial production. Shipments of D-M-E products increased in Europe due to the contributions of EOC and Reform while worldwide sales of MRO (maintenance, repair and operating) supplies approximated the level achieved in 2000.

     Sales of the metalworking technologies segment were $600 million in 2001, a decrease of $110 million in relation to $710 million in 2000. The absence of the industrial magnets business and adverse currency effects accounted for more than one third of the decrease. Excluding these factors, sales decreased by 10% in relation to 2000. In North America, sales of the segment’s metalcutting products — carbide inserts and tool holders, round tools and grinding wheels — all decreased in relation to 2000 due to significantly lower levels of industrial production. The largest decrease occurred in the Valenite metalcutting tools business due in part to reduced automotive production. U.S. dollar shipments of Widia products in Europe increased by almost 7% despite $6 million of adverse currency effects that resulted from the comparative weakness of the euro. Shipments of metalworking fluids decreased in North America but held steady in relation to 2000 in Europe.

     Consolidated U.S. export sales were $109 million in 2001 compared to $133 million in 2000. Reduced export shipments of injection molding machines, Uniloy blow molding systems and Valenite products were the principal reason for the $24 million decrease.

     Sales of both segments to non-U.S. markets, including exports, totaled $583 million in 2001, compared to $613 million in 2000. The decrease was caused principally by adverse currency effects, the sale of the industrial magnets business and reduced export shipments. For 2001 and 2000, products manufactured outside the U.S. approximated 42% and 36% of sales, respectively, while products sold outside the U.S. approximated 46% and 39% of sales, respectively.

Margins, Costs and Expenses

     In response to the general economic slowdown, we have continued to reduce production to meet lower levels of

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     As discussed more fully in the section of this Management’s Discussion and Analysis captioned “Restructuring Costs,” during 2001 the company completed an eighteen month long reorganization and restructuring of Uniloy Europe at a total cost of $5.5 million. Due to the complexities of closing two manufacturing plants, including the relocation of employees, inventory and productive assets, we recorded an additional nonrecurring, non-cash charge of $4.6 million related to the writedown of certain assets in the fourth quarter of 2001.

     For 2001, total selling and administrative expense decreased in amount in relation to 2000 due to a decrease in variable selling expenses that resulted from lower sales volume and from the aggressive cost reduction measures implemented in recent years. As a percentage of sales, however, selling expense increased from 14.2% to 17.0% due in part to increased expense for bad debts. Administrative expense decreased by almost 15% due principally to the benefits derived from the aforementioned cost reduction programs.

     Other expense-net totaled $10.8 million in 2001 compared to $5.8 million in 2000. The amount for 2001 includes a pretax gain of $2.6 million ($1.6 million after tax) on the sale of surplus real estate, while the amount for 2000 includes $8.3 million of revenue from the licensing of patented plastics processing technology.

     For 2001, net interest expense increased modestly as the beneficial effects of lower short-term interest rates were offset by higher average debt levels.

Restructuring Costs

     In September, 1999, we announced a formal plan to consolidate Uniloy’s European blow molding operations in a new manufacturing facility located near Milan, Italy at a cost of $5.5 million including a reserve for employee termination benefits and facility exit costs that was established in the allocation of the Uniloy acquisition cost. The remainder of the cost of the consolidation was charged to expense as incurred, including $.5 million in 2000.

     In December, 1999, we initiated a second plan to improve operating efficiency and reduce costs at additional businesses. The cost of implementing the plan was originally expected to be $20.8 million, of which $16.0 million was charged to earnings in the fourth quarter of 1999. However, lower than anticipated costs for employee, inventory and equipment relocation and for severance and other termination benefits reduced the actual cost to $18.2 million. The remainder of the total cost of the plan of $2.2 million was charged to expense as incurred in 2000.

     As discussed more fully in the notes to the consolidated financial statements, in the third and fourth quarters of 2001, Milacron’s management formally approved plans to consolidate additional operations and further reduce the company’s cost structure. Implementation of these plans is expected to result in pretax charges to earnings of approximately $33.2 million. Of the total expected cost of the plans, $27.0 million was recorded in 2001, including reserves totaling $18.2 million for employee termination benefits and facility exit costs. The amount for 2001 also includes $.5 million for supplemental early retirement benefits that will be funded through the company’s principal U.S. pension plan and $3.6 million for product line discontinuation and certain other inventory write downs in both segments. The remaining $10.9 million of the expected total cost of the plans is being charged to expense as incurred, including $4.7 million in 2001 and $6.2 million in 2002.

     As approved by management, the 2001 plans involve the closure of twelve manufacturing facilities in North America, including five smaller South Carolina facilities that will be consolidated in a new leased facility. The plans also entail the elimination of several warehousing, sales and administrative locations worldwide. The consolidation and overhead reductions will result in the elimination of approximately 1,000 manufacturing and administrative positions, principally in the U.S. and Europe. The net cash cost of implementing the plans is expected to be approximately $25.5 million, of which $9.4 million was spent in 2001. Substantially all of the remainder is expected to be spent in the first half of 2002.

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     Completion of the plans is expected to result in annual cost savings of more than $40 million which began to phase-in during the fourth quarter of 2001 and which are expected to be fully realized in 2003.

     During 2001, the company’s management also approved a plan to integrate the operations of EOC and Reform with D-M-E’s existing European mold base and components business at a total cost of approximately $6.6 million. Of this amount, $2.1 million relates to reserves for employee termination benefits and facility exit costs that are being recorded in the allocation of the EOC and Reform acquisition costs. The remaining $4.5 million is being charged to expense, including $3.4 million in 2001. The plan involves the consolidation of the manufacturing operations of five existing facilities located in Germany and Belgium into three facilities, the reorganization of warehousing and distribution activities in Europe, and the elimination of approximately 160 manufacturing and administrative positions. Of the total cost of the plan, $3.2 million relates to the newly-acquired EOC and Reform businesses, including the $2.1 million of reserves that are discussed above. An additional $1.1 million related to EOC and Reform is being charged to expense as incurred, including $.6 million in 2001. As it relates to D-M-E, the total cost of the plan is expected to be $3.4 million, including reserves of $2.5 million for termination benefits and facility exit costs that were charged to expense in 2001. Additional costs related to D-M-E totaling $.9 million are being expensed as incurred, including $.3 million in 2001 and $.6 million in 2002.

     The total cash cost of the consolidation plan is expected to be approximately $6.5 million, of which $1.0 million was spent in 2001.

     In total, Milacron recorded restructuring charges of $30.4 million in 2001, including $3.4 million for the EOC and Reform integration and $27.0 million for the other actions that are discussed above. An additional $7.3 million will be expensed in 2002. The total cash cost of the restructuring actions in 2001 was $10.4 million. Additional spending in 2002 will total approximately $20 million.

Earnings (Loss) Before Income Taxes and Minority Shareholders’ Interests

Income Taxes

     Milacron entered both 2001 and 2000 with significant net operating loss carryforwards in certain jurisdictions, along with valuation allowances against the carryforwards and other deferred tax assets. Valuation allowances are evaluated periodically and revised based on a “more likely than not” assessment of whether the related deferred tax assets will be realized. Increases or decreases in these valuation allowances serve to unfavorably or favorably affect our effective tax rate. Milacron’s effective tax rate for 2000 was less than the federal statutory rate due principally to such adjustments of valuation allowances and to favorable rulings from various taxing authorities.

Net Earnings (Loss)

Future Change in Method of Accounting

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     During 2002, Milacron will complete the transitional reviews of the recorded balances of goodwill and certain other intangible assets as of January 1, 2002 that are required by SFAS No. 142. Based on our preliminary evaluations, these reviews are expected to result in a non-cash pretax goodwill impairment charge of between $180 million and $210 million ($140 million and $165 million after tax). This charge will be recorded as the cumulative effect of a change in method of accounting when the actual amount is determined around the middle of 2002, retroactive to January 1, 2002.

2000 Compared to 1999

New Orders and Backlog

     In the plastics technologies segment, new orders totaled $835 million, a decrease of $62 million in relation to 1999 that was due principally to the absence of the European extrusion systems business and unfavorable foreign currency effects that reduced orders by $25 million. Excluding the divestiture and the contribution of the acquisitions made in 1999 and 2000, the segment’s orders decreased by 1%. Excluding the aforementioned adverse currency effects in addition to acquisitions and divestitures, orders increased by more than 2%. Orders for injection molding machines increased in both North America and Europe. Orders for U.S.-built extrusion systems decreased modestly but remained at good levels. Orders for Uniloy blow molding systems also decreased due in part to the ongoing consolidation of the dairy industry in North America.

     Orders for metalworking technologies products totaled $717 million in 2000, representing only a modest decrease in relation to 1999 despite unfavorable currency effects of $35 million. Excluding the effects of currency, the sale of the industrial magnets business and the segment’s 1999 acquisitions, orders for the year increased by 5%. Orders for metalworking fluids increased worldwide but especially in North America due to the expanded product offerings that resulted from the 1999 acquisitions. Orders for Valenite metalcutting tools increased in North America, as did orders for Widia products in Europe as measured in local currencies. Orders for round tools decreased slightly due in part to currency effects.

     U.S. export orders totaled $124 million in 2000 compared to $149 million in 1999. The decrease resulted principally from lower export orders for injection molding machines and Uniloy products.

     The company’s backlog of unfilled orders was $181 million at December 31, 2000, compared to $243 million at December 31, 1999. The decrease is due principally to continuing low order levels for Uniloy blow molding systems and lower fourth quarter, 2000, demand for injection molding machines and U.S.-built extrusion systems.

Sales

     Sales of the plastics technologies segment were $874 million in 2000 compared to $904 million in 1999. The absence of the European extrusion systems business more than accounted for the decrease. Excluding the effects of the divestiture and the contribution of the segment’s recent acquisitions, sales increased by 3%. Unfavorable foreign currency exchange rate effects reduced sales by $32 million in relation to 1999. Adjusting for currency effects and for acquisitions and the divestiture, sales for the year increased by more than 6%. Sales of injection molding machines increased in both North America and Europe, the latter despite adverse currency effects. Sales of U.S.-built extrusion systems also increased for the year despite a modest decrease in the fourth quarter, but sales of Uniloy blow molding systems decreased worldwide due to the dairy industry consolidation in North America and lower shipments to European and Asian markets.

     Sales of metalworking technologies products were $710 million in 2000, representing only a modest decrease of $11 million in relation to $721 million in 1999 despite unfavorable currency effects of $43 million and the sale of

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     Consolidated export sales were $133 million in 2000, compared to $148 million in 1999. The decrease resulted principally from lower export shipments of Uniloy products and, to a lesser degree, injection molding machines.

     Sales of both segments to non-U.S. markets totaled $613 million in 2000, a decrease of $102 million that was due principally to currency effects and the aforementioned divestitures. In 2000 and 1999, products manufactured outside the U.S. approximated 36% and 40% of sales, respectively, while products sold outside the U.S. approximated 39% of sales in 2000 and 44% in 1999.

Margins, Costs and Expenses

     Total selling and administrative expense decreased in amount and as a percentage of sales in 2000 due in part to our aggressive cost reduction efforts that began in 1999 and continued in 2000. Selling expense decreased by $8.2 million from 14.4% of sales to 14.2% of sales. Administrative expenses for the year decreased by $1.8 million.

     Other expense-net decreased from $10.0 million in 1999 to $5.8 million in 2000 due to increased royalty income from the licensing of patented plastics processing technology and higher gains on the disposal of surplus property and equipment. These benefits were partially offset by higher goodwill amortization expense and increased costs related to the sale of receivables.

     Interest expense-net increased in 2000 due primarily to higher short-term interest rates despite lower average debt levels.

Restructuring Costs

     In September, 1999, we announced a formal plan to consolidate Uniloy’s European blow molding operations in a new manufacturing facility located near Milan, Italy. At the time Uniloy was acquired in September, 1998, we recognized the need for improved efficiency within Uniloy’s European operations and immediately thereafter began to evaluate various options for the purpose of identifying the optimal long-term solution. Through that process, it was determined that certain of the manufacturing and assembly operations at the plants located in Florence and Milan, Italy and Berlin, Germany would be consolidated into a more modern plant near Milan and that other operations would be transferred to another plant located in the Czech Republic. In the second quarter of 1999, we began to develop a detailed plan for the consolidation, which was formally approved by management in August, 1999.

     The total cost of the plan, which was initiated in the fourth quarter of 1999 and which was completed in 2001, was originally expected to be approximately $6.7 million. However, foreign currency exchange rate fluctuations since the acquisition date and lower than expected costs to relocate inventory and equipment had the effect of reducing the total cost as measured in U.S. dollars to approximately $5.5 million, including $.7 million that was charged to expense as incurred. Of the latter amount, $.5 million was expensed in 2000. The remainder of the total cost of the consolidation was included in a reserve for employee termination benefits and facility exit costs that was established in the allocation of the Uniloy acquisition cost. The original amount of the reserve was $5.7 million but foreign currency exchange rate fluctuations had the effect of reducing it by $.9 million, including $.2 million in 2000. Charges against the reserve in 2000 were $2.5 million.

     The total cash cost of the consolidation is ultimately expected to be approximately $3 million, which is net of the expected proceeds from the sale of two facilities in Italy, one of which was sold in 2000. The consolidation reduced revenues in 2000 but did not adversely affect revenues by the second half of 2001. Completion of the consolidation has resulted in annual pretax cost savings of approximately $3 million, which began to phase-in during the second quarter of 2000.

     In December, 1999, we initiated a second plan to improve operating efficiency and reduce costs at additional businesses. The actions included in the plan involved both segments’ operations in North America and Europe. The

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     The total cash cost of the plan, including capital expenditures of $3.6 million, was approximately $15.3 million, most of which was expended in 2000. Completion of the plan has resulted in annual pretax cost savings of more than $20 million, which phased-in during 2000 and which were fully realized in 2001.

Earnings From Continuing Operations Before Income Taxes and Minority Shareholders’ Interests

Income Taxes

     Milacron entered both 2000 and 1999 with sizable net operating loss carryforwards in certain non-U.S. jurisdictions, along with valuation allowances against the carryforwards and other deferred tax assets. We review valuation allowances periodically based on the relative amount of positive and negative evidence available at the time. This is done for the purpose of reaching conclusions regarding the future realization of deferred tax assets. Valuation allowances are then adjusted accordingly. The resulting decreases or increases in valuation allowances serve to favorably or unfavorably affect our effective tax rate.

     Our effective tax rate for 2000 was 25% compared to 27% in 1999. The rate for 2000 is lower than the U.S. federal statutory rate due principally to the reversal of valuation allowances in certain jurisdictions and the adjustment of income tax reserves to more accurately reflect actual expected liabilities as a result of favorable rulings and resolutions from various taxing authorities. These benefits were partially offset by the downward adjustment of the carrying value of our net deferred tax assets in Germany to a lower rate as a result of a tax law change in that country. Adjustments of valuation allowances did not have a material effect on the effective tax rate for 1999. However, the effective rate was lower than the U.S. federal statutory rate primarily as a result of tax reserve adjustments.

Net Earnings

Market Risk

Foreign Currency Exchange Rate Risk

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Interest Rate Risk

Liquidity and Sources of Capital

     In 2001, operating activities provided $13 million of cash compared to $96 million of cash provided in 2000. The amount for 2001 includes the negative effects of a $25 million reduction in the amount of accounts receivable sold under our receivables purchase agreement whereas sales of additional receivables provided $10 million of cash in 2000. In 2001, cash flow from operations benefited from reductions in accounts receivable that resulted from lower sales volume and significant reductions in inventories that were achieved through our working capital reduction plan. These effects were partially offset by reductions in trade payables and other current liabilities that were related to lower production volumes.

     In 2001, investing activities resulted in a $54 million use of cash, including $29 million for acquisitions and $32 million for capital expenditures. Investing activities used $33 million of cash in 2000, including $47 million for capital additions and $7 million for acquisitions. Together, the proceeds from the sale of the industrial magnets business and the disposal of surplus property, plant and equipment provided $21 million of cash in 2000.

     During 2001, financing activities provided $111 million of cash compared to $101 million of cash used in 2000. In 2001, net additional borrowings provided $128 million of cash which was partially offset by net common share repurchases of $8 million. The amount for 2000 includes $48 million for common shares repurchases and $151 million for repayments of debt, including $100 million for the repayment of 7 7/8% Notes due May 15, 2000 using the proceeds from a €115 million ($110 million) Eurobond debt offering that was completed on April 6, 2000. Dividends of $13 million and $17 million were paid in 2001 and 2000, respectively.

     In the first quarter of 2000, Milacron’s Board of Directors authorized the repurchase of up to four million common shares on the open market. During 2000, we repurchased 3.3 million shares under this authorization. An additional .2 million shares were repurchased during 2001 bringing the total to 3.5 million. No additional repurchases are planned at this time.

     As of December 31, 2001, Milacron’s current ratio was 1.9, compared to 1.6 at December 31, 2000.

     Total shareholders’ equity was $435 million at December 31, 2001, a decrease of $49 million from December 31, 2000. The decrease resulted principally from the net loss incurred during the year. The ratio of total debt to total capital (debt plus equity) was 58% at December 31, 2001 compared to 50% at December 31, 2000.

     The company’s debt and lease obligations for 2002 and beyond are shown in the table that follows.

     Note: For 2002, the above table excludes $28.8 million of borrowings under the revolving credit facility and $16.5 million of borrowings under other lines of credit that the company may, but is not currently obligated to, repay in

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     Our ability to satisfy our 2002 obligations and our other liquidity needs is a function of a number of factors, the most important of which include: our available cash and cash equivalents, our continued ability to borrow under our revolving credit facility and other lines of credit, our ability to continue to utilize our receivables purchase agreement, the cash cost of our restructuring program and our cash flow from operating activities.

     We began 2002 with cash and cash equivalents of approximately $110 million.

     At December 31, 2001, Milacron had lines of credit with various U.S. and non-U.S. banks totaling approximately $476 million, including a $335 million committed revolving credit facility. At December 31, 2001, $333 million was drawn against the facility, including outstanding letters of credit of $7 million. The facility matures in June, 2005. The facility limits the payment of cash dividends and imposes certain restrictions on, among other things, share repurchases, capital expenditures and cash acquisitions. The facility also includes a number of financial covenants. At December 31, 2001, Milacron was in compliance with these covenants.

     Effective March 14, 2002, the revolving credit facility was amended to, among other things, adjust certain financial covenants including suspension of the leverage test (ratio of net debt to EBITDA, in both cases as defined below) for the first two quarters of 2002. Under the terms of the amended agreement, the maximum borrowing under the facility reduces from $335 million to $325 million at June 15, 2002 and $310 million at December 31, 2002. The amended agreement includes a number of financial and other covenants, including those which require Milacron to achieve specified minimum levels of quarterly EBITDA (earnings before interest, taxes, depreciation and amortization) and maintain certain ratios of net debt (debt less cash and cash equivalents) to EBITDA and limit the incurrence of new debt. If the amended facility had been in effect as of January 1, 2002, in addition to the $110 million of cash and cash equivalents, the company would have been able to borrow approximately $2 million in additional funds under the facility and up to $68 million from other lines of credit. The facility also allows for over $40 million of additional indebtedness from other sources.

     For 2002, the company’s significant cost cutting actions coupled with an expected modest, gradual improvement in business conditions cause the company to believe that operating earnings will increase, which should allow us to continue to meet the covenants. However, if unforeseen market conditions develop or the company is otherwise unable to meet the covenants, it is possible that it would not be in compliance. In that event, we would attempt to renegotiate the covenants with the bank group to assure compliance. However, our lenders’ actions are not controllable by us and if the renegotiations were not successful, the company could be placed in default under the agreement, which would allow the lenders to declare the outstanding borrowings currently due and collectible. In addition, due to cross-default provisions in Milacron’s other agreements, over 90% of our other debt could become payable in full and our receivables purchase program (as discussed below) could be terminated if we were in default under the credit facility. Were these events to occur, we would experience a material adverse impact on our reported liquidity, financial position and results of operations.

     In addition to the revolving credit facility, as of December 31, 2001, we had a number of other credit lines totaling $141 million, of which $73 million was used and $68 million was unused. During the first half of 2002, we expect to repay approximately $17 million of borrowings that were outstanding at December 31, 2001. Under the terms of the revolving credit facility as amended, increases in debt are primarily limited to current lines of credit and certain other indebtedness from other sources. Subsequent to June 30, 2002, the company’s borrowing capacity is also limited by a leverage test based on future levels of EBITDA. The company expects to be in compliance with this covenant when it becomes effective, and based on current expectations, this test would not limit access to the additional borrowings described above.

     Another important source of liquidity is our accounts receivable purchase program. Although the agreement could be terminated upon the occurrence of certain events, some of which may be beyond our control, we expect to continue to be able to use the program for the foreseeable future. At December 31, 2001, only $60 million of the $75 million facility was utilized due to the low level of accounts receivable that resulted from lower sales volume. As the amount of eligible accounts receivable increases due to improved business conditions, we expect to utilize the remaining availability under the facility.

     Milacron expects to generate positive cash flow from operating activities in 2002 despite the use of approximately $20 million of cash to complete the restructuring program that was initiated in the third quarter of 2001. We also expect to use $30 million of cash for capital expenditures.

     Assuming there is no further significant deterioration in the markets we serve, we believe that Milacron’s current cash position, cash flow from operations, available credit lines and capacity to sell receivables will be sufficient to

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Cautionary Statement

•	global and regional economic conditions, consumer spending and industrial production, particularly in segments related to the level of automotive production and spending in the construction industry;
•	fluctuations in currency exchange rates of U.S. and foreign countries, including countries in Europe and Asia where Milacron has several principal manufacturing facilities and where many of our competitors and suppliers are based;
•	Milacron’s continued ability to borrow under its lines of credit and sell accounts receivable under its receivables purchase agreement;
•	fluctuations in interest rates which affect the cost of borrowing under Milacron’s lines of credit and financing costs related to the sale of domestic accounts receivable;
•	production and pricing levels of important raw materials, including plastic resins, which are a key material used by purchasers of Milacron’s plastics technologies products, steel, oil, cobalt, tungsten, tantalum carbide and industrial grains used in the production of metalworking products;
•	lower than anticipated levels of plant utilization resulting in production inefficiencies and higher costs, whether related to the delay of new product introductions, improved production processes or equipment, or labor relations issues;
•	customer acceptance of new products introduced during 2001 and additional new products that will be introduced in 2002;
•	any major disruption in production at key customer or supplier facilities or at Milacron’s facilities;
•	disruptions in global or regional commerce due to social, civil or political unrest in the non-U.S. countries in which Milacron operates;
•	alterations in trade conditions in and between the U.S. and non-U.S. countries where Milacron does business, including export duties, import controls, quotas and other trade barriers;
•	disruptions in global and regional commerce due to acts of terrorism, continued threats of terrorism and military, political and economic responses (including heightened security measures) to terrorism;
•	changes in tax, environmental and other laws and regulations in the U.S. and non-U.S. countries where Milacron does business;
•	unanticipated litigation, claims or assessments, including but not limited to claims or problems related to product liability, warranty or environmental issues.

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Responsibility for Financial Reporting

Financial Statements

Internal Control System

     The company assessed its internal control system as of December 31, 2001 in relation to criteria for effective internal control over the preparation of its published annual and quarterly financial statements described in “Internal Control — Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, the company believes that, as of December 31, 2001, its system of internal control over the preparation of its published annual and quarterly financial statements and over the safeguarding of assets against unauthorized acquisition, use or disposition met those criteria.

March 14, 2002

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Consolidated Statements of Earnings

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Consolidated Balance Sheets