MZ Milacron

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2008

or

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

For the transition period from to                      to                     

Commission file number 1-8485

MILACRON INC.

Delaware		No. 31-1062125
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2090 Florence Avenue, Cincinnati, Ohio		45206
(Address of principal executive offices)		(Zip Code)

(513) 487-5000

including area code)

     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 þ No o

      Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer: o		Accelerated filer: o		Non-accelerated filer: o		Smaller reporting company: þ
				(Do not check if a smaller reporting company)

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

     Number of shares of Common Stock, $.01 par value, outstanding as of April 30, 2008: 5,505,723

 

 

Milacron Inc. and Subsidiaries
Index

				Page
PART I Financial Information
Item 1.		Financial Statements			3
		Consolidated Condensed Statements of Operations			3
		Consolidated Condensed Balance Sheets			4
		Consolidated Condensed Statements of Comprehensive Income (Loss) and Shareholders’ Equity (Deficit)			5
		Consolidated Condensed Statements of Cash Flows			6
		Notes to Consolidated Condensed Financial Statements			7
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			32
Item 3.		Quantitative and Qualitative Disclosures About Market Risk			41
Item 4.		Controls and Procedures			41
PART II Other Information
Item 1.		Legal Proceedings			42
Item 1A.		Risk Factors			42
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds			42
Item 6.		Exhibits			44
		Signatures			45
EX-11
EX-31.1
EX-31.2
EX-32

PART I Financial Information

Item 1. Financial Statements

Consolidated Condensed Statements of Operations
Milacron Inc. and Subsidiaries
(Unaudited)

		Three Months Ended
		March 31,
(In millions, except share and per-share amounts)		2008				2007
Sales		$	202.8			$	190.3
Cost of products sold			164.2				154.8
Manufacturing margins			38.6				35.5
Other costs and expenses
Selling and administrative			36.0				35.3
Restructuring costs			.6				2.4
Other (income) expense — net			.5				(.2	)
Total other costs and expenses			37.1				37.5
Operating earnings (loss)			1.5				(2.0	)
Interest
Income			.2				.2
Expense			(8.2	)			(7.9	)
Interest — net			(8.0	)			(7.7	)
Loss from continuing operations before income taxes			(6.5	)			(9.7	)
Provision for income taxes			.4				1.0
Loss from continuing operations			(6.9	)			(10.7	)
Discontinued operations net of income taxes			—				(.1	)
Net loss		$	(6.9	)		$	(10.8	)
Loss applicable to common shareholders		$	(9.2	)		$	(13.1	)
Loss per common share — basic and diluted
Continuing operations		$	(1.76	)		$	(2.66	)
Discontinued operations			—				(.02	)
Net loss		$	(1.76	)		$	(2.68	)
Dividends per common share		$	—			$	—
Weighted-average common shares outstanding assuming dilution (in thousands)			5,227				4,897

See notes to consolidated condensed financial statements.

Consolidated Condensed Balance Sheets
Milacron Inc. and Subsidiaries
(Unaudited)

		Mar. 31,				Dec. 31,
(In millions, except par value)		2008				2007
Assets
Current assets
Cash and cash equivalents		$	36.8			$	40.8
Notes and accounts receivable, less allowances of $8.4 in 2008 and $7.8 in 2007			133.4				114.6
Inventories
Raw materials			10.2				8.2
Work-in-process and finished parts			97.9				96.0
Finished products			85.3				75.5
Total inventories			193.4				179.7
Other current assets			34.0				34.9
Total current assets			397.6				370.0
Property, plant and equipment — net			109.9				106.4
Goodwill			93.5				90.5
Other noncurrent assets			39.5				36.0
Total assets		$	640.5			$	602.9
Liabilities and Shareholders’ Deficit
Current liabilities
Short-term borrowings		$	28.4			$	26.9
Long-term debt and capital lease obligations due within one year			2.2				2.1
Trade accounts payable			90.4				92.1
Advance billings and deposits			31.1				29.4
Accrued and other current liabilities			87.8				76.6
Total current liabilities			239.9				227.1
Long-term accrued liabilities			196.6				193.3
Long-term debt			246.8				231.9
Total liabilities			683.3				652.3
Commitments and contingencies			—				—
Shareholders’ deficit
4% Cumulative Preferred Stock			6.0				6.0
6% Series B Convertible Preferred Stock, $.01 par value (outstanding: .5 in both 2008 and 2007)			119.9				119.2
Common shares, $.01 par value (outstanding: 5.5 in both 2008 and 2007)			.1				.1
Capital in excess of par value			356.3				355.9
Contingent warrants			.2				.2
Accumulated deficit			(487.5	)			(478.3	)
Accumulated other comprehensive loss			(37.8	)			(52.5	)
Total shareholders’ deficit			(42.8	)			(49.4	)
Total liabilities and shareholders’ deficit		$	640.5			$	602.9

See notes to consolidated condensed financial statements.

Consolidated Condensed Statements of Comprehensive Income (Loss) and
Shareholders’ Equity (Deficit)
Milacron Inc. and Subsidiaries
(Unaudited)

		Three Months Ended
		March 31,
(In millions)		2008				2007
4% Cumulative Preferred Stock
Balance at beginning and end of period		$	6.0			$	6.0
6% Series B Convertible Preferred Stock
Balance at beginning of period			119.2				116.1
Beneficial conversion feature			.7				.7
Balance at end of period			119.9				116.8
Common shares and capital in excess of par value
Balance at beginning of period			356.0				351.6
Restricted stock expense			.2				.5
Issuance of previously unissued shares			.2				.7
Balance at end of period			356.4				352.8
Contingent warrants
Balance at beginning and end of period			.2				.5
Accumulated deficit
Balance at beginning of period			(478.3	)			(381.9	)
Net loss for the period			(6.9	)			(10.8	)
Beneficial conversion feature related to Series B Preferred Stock			(.7	)			(.7	)
Dividends declared or accrued
4% Cumulative Preferred Stock			(.1	)			(.1	)
6% Series B Convertible Preferred Stock			(1.5	)			(1.5	)
Balance at end of period			(487.5	)			(395.0	)
Accumulated other comprehensive loss
Balance at beginning of period			(52.5	)			(113.6	)
Foreign currency translation adjustments			13.0				1.7
Postretirement benefit plan adjustments
Amortization of unrecognized prior service cost			(.7	)			(.4	)
Amortization of net unrecognized losses			2.1				2.6
Actuarial loss arising in the period not included in net periodic postretirement benefit costs			—				(.2	)
Foreign currency exchange contract adjustments			.3				—
Balance at end of period			(37.8	)			(109.9	)
Total shareholders’ deficit		$	(42.8	)		$	(28.8	)
Net loss for the period		$	(6.9	)		$	(10.8	)
Change in accumulated other comprehensive loss			14.7				3.7
Total comprehensive income (loss)		$	7.8			$	(7.1	)

See notes to consolidated condensed financial statements.

Consolidated Condensed Statements of Cash Flows
Milacron Inc. and Subsidiaries
(Unaudited)

		Three Months Ended
		March 31,
(In millions)		2008				2007
Increase (decrease) in cash and cash equivalents
Operating activities cash flows
Net loss		$	(6.9	)		$	(10.8	)
Loss on divestiture of discontinued operations			—				.1
Operating activities providing (using) cash
Depreciation and amortization			3.6				4.0
Restructuring costs			.2				.3
Deferred income taxes			(.2	)			—
Working capital changes
Notes and accounts receivable			(14.4	)			4.9
Inventories			(7.0	)			(.3	)
Other current assets			2.7				(.7	)
Trade accounts payable			(4.9	)			(8.1	)
Other current liabilities			6.7				(1.1	)
Decrease (increase) in other noncurrent assets			.4				1.3
Increase in long-term accrued liabilities			.3				3.0
Other — net			.4				.7
Net cash used by operating activities			(19.1	)			(6.7	)
Investing activities cash flows
Capital expenditures			(2.6	)			(1.6	)
Net disposals of property, plant and equipment			—				.1
Net cash used by investing activities			(2.6	)			(1.5	)
Financing activities cash flows
Issuance (repayments) of long-term debt			14.5				(.2	)
Increase in short-term borrowings			1.2				4.3
Dividends paid			(.1	)			(.1	)
Net cash provided by financing activities			15.6				4.0
Effect of exchange rate fluctuations on cash and cash equivalents			2.1				.2
Decrease in cash and cash equivalents			(4.0	)			(4.0	)
Cash and cash equivalents at beginning of period			40.8				38.5
Cash and cash equivalents at end of period		$	36.8			$	34.5

See notes to consolidated condensed financial statements.

Notes to Consolidated Condensed Financial Statements
(Unaudited)

Basis of Presentation

     In the opinion of management, the accompanying unaudited Consolidated Condensed Financial Statements contain all adjustments, which consist only of normal recurring adjustments except for the matters discussed in the note captioned “Restructuring Costs,” necessary to present fairly the company’s financial position, results of operations and cash flows.

     The Consolidated Condensed Balance Sheet at December 31, 2007 has been derived from the audited Consolidated Financial Statements at that date, but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.

     Except as discussed in the note captioned “Changes in Methods of Accounting,” the accounting policies followed by the company are set forth in the “Summary of Significant Accounting Policies” note to the Consolidated Financial Statements included in the company’s Annual Report on Form 10-K for the year ended December 31, 2007.

Changes in Methods of Accounting

     In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements,” (SFAS 157). SFAS 157 is effective for fiscal years and interim periods that begin after November 15, 2007 on a prospective basis. SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosure about fair value. Relative to SFAS 157, the FASB has issued FASB Staff Positions (FSP) 157-1 and 157-2. FSP 157-1 amends SFAS 157 to exclude SFAS 13 and its related interpretive accounting pronouncements that address leasing transactions, and FSP 157-2 delays the effective date of SFAS 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis. Effective January 1, 2008, the company adopted SFAS 157, with the exception of the application of the statement to non-recurring nonfinancial assets and nonfinancial liabilities. We have evaluated the impact of the provisions applicable to our financial assets and liabilities and have determined that there was not a material impact on our consolidated financial statements.

     In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” (SFAS 159). SFAS 159 is elective for fiscal years that begin after November 15, 2007 on a prospective basis. SFAS 159 allows companies to measure certain financial assets and financial liabilities at fair market value and to report changes in the fair market value in earnings. Effective January 1, 2008, the company adopted SFAS 159, however, the company has not elected fair value reporting for any of its financial assets and financial liabilities.

Recently Issued Pronouncements

     In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities,” (SFAS 161). SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008 and encourages comparative disclosures. The effects of adopting this standard are not expected to have a material effect on the company’s financial statements. SFAS 161 requires that entities provide enhanced disclosures about how and why an entity uses derivative instruments and how derivative instruments and related hedged items are accounted for under SFAS 133 and its related interpretations and how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows.

Restructuring Costs

     The paragraphs that follow discuss certain of the restructuring actions that have been undertaken in recent years. These actions, as well as certain other initiatives, are discussed more fully in the notes to the Consolidated Financial Statements included in the company’s Annual Report on Form 10-K for the year ended December 31, 2007.

     In the fourth quarter of 2005, the company announced that it planned to reduce its cost structure by consolidating certain operations in both North America and Europe. One such action, the reorganization of the European sales offices of the machinery technologies — Europe segment, was initiated in the fourth quarter of 2005 and was continued through 2007. Expense related to these actions totaled $4.0 million, including $.5 million in the first quarter of 2007. Another action was the overall reorganization of European operations of the mold technologies segment, including product line

Notes to Consolidated Condensed Financial Statements
(Unaudited)

rationalization and the streamlining of sales, marketing and administrative functions. Expense related to these actions totaled $2.9 million, including $.4 million in the first quarter of 2007. In total, the cash costs related to the sales office and mold base and components reorganizations were approximately $5.3 million and as of the first quarter of 2008 cash payments were substantially complete. Cash payments were $.2 million in the first quarter of 2008.

     In the first quarter of 2006, the company initiated a plan to reduce the cost structure of its injection molding machine manufacturing facility in Malterdingen, Germany. The business has been restructured based on a rationalized global product portfolio, thereby eliminating complexity and reducing the overall cost structure. The cost of the restructuring was $7.6 million, all of which relates to severance and other termination benefits. Of this amount, $1.1 million was charged to expense in 2007 of which $1.0 million was recorded in the first quarter. The cash cost, all of which relates to termination benefits, was also $7.6 million of which $2.4 million was spent in 2007 including $1.9 million in the first quarter.

     In the third quarter of 2006, the company initiated a reorganization of the mold technologies segment’s operations in North America. In one action, the company announced its intention to eliminate most of the manufacturing activities at the segment’s facility in Charlevoix, Michigan and outsource a majority of the mold components the facility produces. The cost of this action was approximately $1.8 million of which $.3 million was expensed in 2007 including $.1 million in the first quarter. After deducting expected proceeds from sales of assets made surplus by the reorganization, the cash cost is expected to be approximately $.6 million. In another action, the company initiated the restructuring of the administrative workflow and workforce at the segment’s North American headquarters in Madison Heights, Michigan. The cost of this action was primarily recorded in 2006 and included $.2 million of expense in the first quarter of 2007. In the first quarter of 2008, the company initiated a third action to reduce its cost structure by outsourcing certain operations also at the segment’s North American headquarters in Madison Heights, Michigan. Expense related to this action is expected to be $.1 million all of which was recorded in the first quarter of 2008. Cash costs are also expected to be $.1 million with the majority being spent in the first quarter of 2008.

     In the first quarter of 2007, the operating assets of two sales branches of the company’s MRO (maintenance, repair and operating supplies) business were sold which resulted in expense of $.2 million. This business is included in the mold technologies segment. The cash proceeds were $.5 million in 2007 including $.3 million in the first quarter of 2007 and the cash costs related to the sales were $.2 million.

     In the first quarter of 2008, the company initiated a reorganization of the mold technologies segment’s operations in Europe to better align the cost structure with business requirements. The total cost of the restructuring is expected to be approximately $.9 million, all of which relates to severance and other termination benefits. Of this amount, $.2 million was charged in the first quarter of 2008. Cash costs are also expected to be $.9 million with $.1 million being spent in the first quarter of 2008.

     In the first quarter of 2008, the company initiated a reorganization of the injection molding machinery business in North America. The total cost of the restructuring is expected to be approximately $.8 million with the majority of the expense related to severance and other termination benefits. Of this amount, $.3 million was expensed in the first quarter of 2008. Cash costs are expected to be $.9 million, all of which is expected to be spent in the second quarter of 2008.

     Additional restructuring actions are expected to be implemented later in 2008, including actions that have been initiated since March 31, 2008. Actions taken in recent years have favorably affected the manufacturing margin trends and segment operating profits. Actions taken in 2007 and that are expected to be taken in 2008 are expected to continue to favorably affect manufacturing margins and segment operating profits. In total, the actions initiated in 2005 through 2008 are expected to result in restructuring charges of approximately $32 million and cash costs of approximately $15 million spread from 2006 to 2008. Restructuring expense for the remainder of 2008 is expected to be approximately $1.7 million while cash costs are expected to be $1.5 million.

Notes to Consolidated Condensed Financial Statements
(Unaudited)

     The table that follows summarizes the first quarter of 2008 and 2007 costs of the various restructuring actions that are described above.

Restructuring Costs

		Three Months Ended
		March 31,
(In millions)		2008				2007
Consolidation of European injection molding sales offices		$	—			$	.5
Consolidation of European mold component operations			—				.4
Reorganization of Germany injection molding machine facility			—				1.0
Reorganization of North America mold components operations			.1				.3
Sale of MRO sales offices			—				.2
Reorganization of European mold component operations			.2				—
Reorganization of U.S. plastics machinery operations			.3				—
Total restructuring costs		$	.6			$	2.4

     The following table presents the components of the restructuring costs that are included in the Consolidated Condensed Statements of Operations for the first quarters of 2008 and 2007.

Restructuring Costs

		Three Months Ended
		March 31,
(In millions)		2008				2007
Accruals for termination benefits and facility exit costs		$	.2			$	1.6
Costs charged to expense as incurred
Severance and facility exit costs			.1				.7
Inventory and machinery relocation			—				.1
Other			.3				—
Total restructuring costs		$	.6			$	2.4

     As presented in the above table, the costs under the line captioned “Costs charged to expense as incurred” do not meet the conditions for accrual under U.S. generally accepted accounting principles and are therefore expensed when the related contractual liabilities are incurred. Accordingly, no reserves related to these costs have been established.

Notes to Consolidated Condensed Financial Statements
(Unaudited)

The status of the reserves for the initiatives discussed above and certain other actions is summarized in the following tables.

Restructuring Reserves

		Three Months Ended
		March 31, 2008
		Beginning				Addi-				Usage and				Ending
(In millions)		Balance				tions				Other				Balance
Restructuring costs
Termination benefits		$	1.6			$	.4			$	(.4	)		$	1.6
Facility exit costs			.3				—				(.2	)			.1
Total reserves		$	1.9			$	.4			$	(.6	)		$	1.7

		Three Months Ended
		March 31, 2007
		Beginning				Addi-				Usage and				Ending
(In millions)		Balance				tions				Other				Balance
Restructuring costs
Termination benefits		$	3.1			$	1.4			$	(2.8	)		$	1.7
Facility exit costs			.8				.2				(.7	)			.3
Total reserves		$	3.9			$	1.6			$	(3.5	)		$	2.0

     Approximately $.6 million of the $1.7 million of reserves related to restructuring actions is expected to be utilized in the second quarter of 2008. An additional $.6 million is expected to be used in the second half of the year. A large majority of the remaining $.5 million represents supplemental retirement benefits for certain employees in Belgium that will be paid at a rate of approximately $.1 million per year for the next several years.

Notes to Consolidated Condensed Financial Statements
(Unaudited)

Retirement Benefit Plans

     The tables that follow present the components of expense for all defined benefit pension plans and for postretirement health care costs for the first quarters of 2008 and 2007. Pension expense for the defined benefit pension plan for certain U.S. employees and retirees (the U.S. Plan) in the first quarters of 2008 and 2007 was $.6 million and $2.8 million respectively. The expense improvement for the U.S. Plan is primarily due to freezing benefits as of December 31, 2007 offset in part by a lower long-term expected rate of return on plan assets. Employees whose benefits were frozen are now eligible for benefits under the U.S. defined contribution retirement plan and costs for this plan increased $.8 million in the first quarter of 2008 compared to the same period last year.

Pension Expense

		Three Months Ended
		March 31,
(In millions)		2008				2007
Service cost (benefits earned during the period)		$	.2			$	1.2
Interest cost on projected benefit obligation			8.0				8.5
Expected return on plan assets			(8.5	)			(8.7	)
Amortization of unrecognized prior service cost			—				.1
Amortization of net unrecognized losses			2.0				2.7
Total pension expense		$	1.7			$	3.8

Postretirement Health Care Income

		Three Months Ended
		March 31,
(In millions)		2008				2007
Interest cost on accumulated postretirement benefit obligation		$	.1			$	.1
Amortization of unrecognized gains			(.1	)			(.1	)
Amortization of effect of plan amendment			(.7	)			(.5	)
Total postretirement health care income		$	(.7	)		$	(.5	)

     Required contributions to the funded defined benefit pension plan for certain U.S. employees and retirees in 2008 and beyond are based upon the provisions of the Pension Protection Act of 2006, which became effective on January 1, 2008. A $5 million contribution was made in April 2008 and full year contributions are estimated to be approximately $33 million with approximately $20 million being due in September.

Income Taxes

     At December 31, 2007, the company had non-U.S. net operating loss carryforwards — principally in The Netherlands, Germany, Italy and Belgium — totaling $197 million, of which $76 million have a limited carryforward period and may expire between 2008 and 2023. The remaining $121 million have no expiration dates. Deferred tax assets related to the non-U.S. loss carryforwards totaled $50 million at December 31, 2007 and valuation allowances totaling $37 million had been provided with respect to these assets as of that date. The company believes that it is more likely than not that portions of the net operating loss carryforwards in these jurisdictions will be utilized. However, there is currently insufficient positive evidence in some non-U.S. jurisdictions — primarily Germany, Italy and Belgium — to conclude that no valuation allowances are required.

     At December 31, 2007, the company had a U.S. federal net operating loss carryforward of $174 million, which will expire between 2023 and 2028. Deferred tax assets related to this loss carryforward, as well as to federal tax credit carryforwards ($16 million) and additional state and local loss carryforwards ($7 million), totaled $84 million. Of the

Notes to Consolidated Condensed Financial Statements
(Unaudited)

federal tax credit carryforwards, $5 million expire between 2008 and 2019 and $11 million have no expiration dates. Approximately 74% of the state and local loss carryforwards will expire by 2012 and the remainder will expire by 2028. At December 31, 2007, additional deferred tax assets totaling approximately $72 million had also been provided for book deductions not currently deductible for tax purposes including the writedown of goodwill, postretirement health care benefit costs and accrued pension liabilities. The deductions for financial reporting purposes are expected to be realized for income tax purposes in future periods, at which time they will have the effect of decreasing taxable income or increasing the net operating loss carryforward. The latter will have the effect of extending the ultimate expiration of the net operating loss carryforward beyond 2028.

     The sale of 287,500 shares of the company’s Series B Preferred Stock on October 2, 2007, combined with the sale of Series B shares in the prior three year period, resulted in an “ownership change” for U.S. federal income tax purposes. The change in ownership has the effect of limiting the company’s utilization of pre-change net operating loss and tax credit carryforwards in future periods. The amount of the annual limitation is expected to be approximately $5.7 million. The allowable limitation will be cumulative for years in which it is not fully utilized. At December 31, 2007 the limitation amounts to approximately $1.4 million of available pre-change net operating losses with no limitations on utilization.

     As of December 31, 2007, U.S. deferred tax assets net of deferred tax liabilities totaled $156 million and U.S. valuation allowances totaled $156 million. U.S. deferred tax assets and valuation allowances were both increased by an additional $2.6 million in the first quarter of 2008 as a result of losses without current tax benefits. Due to the lack of positive evidence as required by Statement of Financial Accounting Standards No. 109, the company was unable to record tax benefits with respect to its losses in the U.S. and certain other jurisdictions in the first quarter of 2008. However, results for the quarter include tax expense related to operations in profitable non-U.S. jurisdictions. This resulted in a first quarter provision for income taxes of $.4 million in 2008. For the first quarter of 2007, the provision for income taxes was $1.0 million.

     Pursuant to Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainties in Income Taxes”, the gross amount of unrecognized tax benefits of $20.2 million at December 31, 2007 increased by $2.1 million during the first quarter to $22.3 million (see table below). The tax benefits, if recognized, would have a favorable impact on our tax provision of $.9 million.

Reconciliation of Unrecognized Tax Benefits

(In millions)		2008
Balance as of December 31, 2007		$	20.2
Increases related to prior year tax positions			2.0
Decreases related to prior year tax positions			—
Increases related to current year tax positions			.1
Decreases related to current year tax positions			—
Decreases related to lapsing of statute of limitations			—
Balance as of March 31, 2008		$	22.3

     The company’s tax returns are open under the respective statutes of limitations in most of the jurisdictions in which the company has major operations for periods generally beginning with the 2003 tax year. Resolution of controversies related to uncertain tax benefits is contingent on reaching satisfactory settlement agreements with the relevant taxing authorities. We expect resolution of certain issues during 2008 related to positions in a non-U.S. jurisdiction amounting to $3.3 million. However, we do not expect that change to have a significant impact on our financial position or results of operation.

Notes to Consolidated Condensed Financial Statements
(Unaudited)

     Consistent with past practice, interest and penalties are classified as income tax expense as accrued. However, the amounts are immaterial in the periods presented primarily due to net operating loss carryforwards reflected as deferred tax assets.

Receivables and Guarantees

     In March 2008, certain of the company’s European subsidiaries entered into a five-year, asset-based revolving credit program made available by Lloyds TSB Bank plc and its affiliates, (see Short-Term Borrowings), that included an accounts receivable factoring facility. Under this facility the company’s principal operating subsidiary in Germany sold without recourse $6.3 million of customer receivables as of March 31, 2008. In consideration for the sale, the company is holding a demand note receivable from Lloyds upon which the company did not draw funding as of March 31, 2008. This facility replaces the subsidiary’s previous factoring agreement which allowed the sale of up to € 10.0 million ($15.8 million) of accounts receivable without recourse and which was terminated concurrent with entering into the new facility. At December 31, 2007, the gross amounts of accounts receivable that had been sold under the previous arrangement was $10.6 million.

     The company also periodically sells with recourse notes receivable arising from customer purchases of plastics processing machinery and, in a limited number of cases, guarantees the repayment of all or a portion of notes payable by its customers to third party lenders. At March 31, 2008 and December 31, 2007, the company’s maximum exposure under these arrangements totaled $4.9 million and $4.7 million, respectively. In the event a customer were to fail to repay a note, the company would generally regain title to the machinery for later resale as used equipment. Costs related to sales of notes receivable and guarantees have not been material in the past.

Notes to Consolidated Condensed Financial Statements
(Unaudited)

Goodwill and Other Intangible Assets

     The carrying value of goodwill totaled $93.5 million at March 31, 2008 and $90.5 million at December 31, 2007. The company’s other intangible assets, which are included in other noncurrent assets in the Consolidated Condensed Balance Sheets, are not significant.

Other Assets

     The components of other current assets and other noncurrent assets are shown in the tables that follow.

Other Current Assets

		Mar. 31,				Dec. 31,
(In millions)		2008				2007
Deferred income taxes net of valuation allowances		$	13.0			$	12.8
Recoverable from excess liability carriers			.3				1.0
Prepaid expenses and other			20.7				21.1
		$	34.0			$	34.9

Other Noncurrent Assets

		Mar. 31,				Dec. 31,
(In millions)		2008				2007
Deferred income taxes net of valuation allowances		$	19.3			$	17.4
Intangible assets other than goodwill			1.3				1.2
Other			18.9				17.4
		$	39.5			$	36.0

Liabilities

     The components of accrued and other current liabilities are shown in the following table.

Accrued and Other Current Liabilities

		Mar. 31,				Dec. 31,
(In millions)		2008				2007
Accrued salaries, wages and other compensation		$	23.1			$	21.0
Taxes payable other than income tax			7.2				5.2
Accrued and deferred income taxes			12.6				12.8
Accrued insurance and self-insurance reserves			7.0				7.2
Accrued interest			9.8				3.4
Other accrued expenses			28.1				27.0
		$	87.8			$	76.6

Notes to Consolidated Condensed Financial Statements
(Unaudited)

     The following table summarizes changes in the company’s warranty reserves. These reserves are included in accrued and other current liabilities in the Consolidated Condensed Balance Sheets.

Warranty Reserves

		Three Months Ended
		March 31,
(In millions)		2008				2007
Balance at beginning of period		$	5.9			$	5.6
Accruals			1.0				.9
Payments			(.9	)			(.8	)
Warranty expirations			.2				(.2	)
Foreign currency translation adjustments			.2				—
Balance at end of period		$	6.4			$	5.5

     The components of long-term accrued liabilities are shown in the following table.

Long-Term Accrued Liabilities

		Mar. 31,				Dec. 31,
(In millions)		2008				2007
Accrued pensions and other compensation		$	148.6			$	147.0
Accrued postretirement health care benefits			2.0				2.1
Self-insurance reserves (a)			14.8				14.9
Accrued and deferred income taxes			6.7				6.3
Reserves related to prior years’ divestitures of discontinued operations			3.2				3.2
Accrued dividends on 6% Series B Convertible Preferred Stock			13.5				12.0
Other			7.8				7.8
		$	196.6			$	193.3

Notes to Consolidated Condensed Financial Statements
(Unaudited)

Short-Term Borrowings

     The components of short-term borrowings are shown in the table that follows.

Short-Term Borrowings

		Mar. 31,				Dec. 31,
(In millions)		2008				2007
North American asset based credit facility due 2011		$	16.8			$	24.4
European asset based credit program due 2013			8.9				—
Borrowings under other lines of credit			2.7				2.5
		$	28.4			$	26.9

     On December 19, 2006, certain of the company’s North American affiliates entered into a five year asset based revolving credit facility for which General Electric Capital Corporation acts as administrative agent, collateral agent and a lender (the North American facility). The facility provides up to $105 million of borrowing availability and no performance covenants as long as the company complies with certain minimum availability thresholds that are described below. See the “Short-Term Borrowings” note to the Consolidated Financial Statements included in the company’s Annual Report on Form 10-K for the year ended December 31, 2007 for the facility’s security, operation and covenant details.

     At March 31, 2008, $24 million of the North America facility was utilized, including borrowings of $17 million and letters of credit of $7 million. Under the terms of the facility, the company’s additional borrowing capacity based on the assets included in the borrowing base at March 31, 2008 was approximately $50 million after taking into account then-outstanding letters of credit and the minimum availability and existing reserve requirements. The effective interest rate for borrowings under the facility at March 31, 2008 was 4.9%.

     On March 12, 2008, certain European subsidiaries of the company entered into a five-year, asset-based revolving credit program (the European facility) pursuant to which up to € 27 million ($43 million) in aggregate financing is made available to such subsidiaries by Lloyds TSB Bank plc and its affiliates. The new credit program consists of two parts: asset-based revolving loan facilities provided to certain subsidiaries of the company organized in Germany, Holland and Belgium and an accounts receivable factoring facility involving the company’s principal German operating subsidiary. Based upon current asset levels, total borrowing and factoring capacity under the new program is expected to exceed € 20 million when fully operational. Proceeds of the credit program may be used solely for working capital purposes of the borrowers and their affiliates. We anticipate that the incremental working capital capacity provided by the new credit program will help us meet U.S. pension funding obligations in 2008.

     The obligations of each borrower under the asset-based loan component of the credit program are guaranteed by each other borrower and by certain other subsidiaries of the company organized in Germany and Holland. Borrowings under the asset-based loan portion of the new credit program are secured by the accounts receivable (other than accounts receivable of the German borrower, which are sold pursuant to the factoring component of the new credit program) and certain bank accounts and inventory of the borrowers, by a mortgage on certain real property in Germany and by pledges of shares in each of the borrowers by their respective parent entities.

     Under the accounts receivable factoring portion of the new credit program, the company’s principal German operating subsidiary sells all of its eligible accounts receivable, together with related security and ancillary rights, to Lloyds TSB Commercial Finance Limited. Accounts receivable are sold pursuant to this factoring facility at a customary discount rate. The German subsidiary is required to repurchase a sold receivable in the event that a warranty related to such receivable (which warranties consist primarily of assurances that sold receivables are not subject to defenses of the trade debtors) is breached.

     The new credit program contains customary covenants, including but not limited to an obligation to maintain a fixed charge coverage ratio at a specified level and covenants relating to debt turn and dilution rates with respect to the

Notes to Consolidated Condensed Financial Statements
(Unaudited)

accounts receivable. The German borrower must maintain a minimum tangible net worth of € 20 million. The borrowers are permitted to transfer up to $25 million of the funds initially made available under the credit program to their U.S. affiliates, provided that no termination event has occurred. Any further transfer of any funds to U.S. affiliates, regardless of source, is permitted only if, pro forma for such transfer, a headroom of € 7 million (including the permanent headroom block) would be maintained under the European facility based on six-month projections for cash flow of Milacron B.V. and its subsidiaries.

     At March 31, 2008, $24 million of the European facility was utilized. Borrowings under the European facility were primarily used to repatriate $20 million to the U.S. Under the terms of the European facility, the company’s additional borrowing and factoring capacity based on the assets included in the borrowing base at March 31, 2008 was less than $1 million after taking into account then-outstanding letters of credit and the minimum availability and existing reserve requirements. The company expects availability under the European facility to increase as the facility becomes fully operational. The effective interest rate for borrowings under the facility at March 31, 2008 was 6.3%.

     At March 31, 2008, the company had other lines of credit with various banks totaling approximately $19 million. These credit facilities support the discounting of receivables, letters of credit, guarantees and leases in addition to providing borrowings under varying terms. Approximately $8 million was available to the company under these lines under certain circumstances.

Long-Term Debt

     The components of long-term debt are shown in the following table.

Long-Term Debt

		Mar. 31,				Dec. 31,
(In millions)		2008				2007
11 1 / 2 % Senior Secured Notes due 2011		$	222.1			$	221.9
European asset based credit program due 2013			14.5				—
Capital lease obligations			11.3				11.2
Other			1.1				.9
			249.0				234.0
Less current maturities			(2.2	)			(2.1	)
		$	246.8			$	231.9

     See the “Long-Term Debt” note to the Consolidated Financial Statements included in the company’s Annual Report on Form 10-K for the year ended December 31, 2007 for detail information related to guarantees, security interests, and covenants on the 11 ¹ / 2 % Senior Secured Notes due 2011.

     Based on recent trade prices, the fair value of the 11 ¹ / 2 % Senior Secured Notes due 2011 was approximately $165 million. The carrying value of the company’s other long-term debt approximates fair value.

     Certain of the company’s long-term debt obligations contain various restrictions and financial covenants, including those described above. The 11 ¹ / 2 % Senior Secured Notes due 2011, the North American asset based credit facility and the European facility are secured as described above. Except for obligations under capital leases and as discussed above, no significant indebtedness is secured.

     The European asset based credit facility is five-year program and is more fully described in Short-term Borrowings. The long-term debt portion of the facility is secured by a mortgage on real property in Germany and is due beyond one year from now.

Shareholders’ Equity

     At March 31, 2008 and December 31, 2007, the company had outstanding 500,000 shares of Series B Preferred Stock having a par value of $.01 per share and a liquidation preference of $200 per share. The Series B Preferred Stock

Notes to Consolidated Condensed Financial Statements
(Unaudited)

has a cash dividend rate of 6% per year. Dividends may also be paid in additional shares of Series B Preferred Stock at a rate of 8% per year if the company is prohibited by the terms of its certificate of incorporation or its financing agreements from paying dividends in cash. The company is currently precluded from paying cash dividends under the indenture governing its 11 ¹ / 2 % Senior Secured Notes due 2011 although the company is permitted to pay pay-in-kind dividends (see Long-Term Debt). In 2006, 2007, and the first quarter of 2008, no dividends were declared with respect to the Series B Preferred Stock and consequently, dividends were accrued at the contractual (face) rate of 6% per annum. At March 31, 2008 and December 31, 2007, accrued and unpaid dividends totaled $13.5 million and $12.0 million, respectively. Accrued and unpaid dividends on the Series B Preferred Stock must be paid prior to any dividend or distribution with respect to common stock and at the time of the redemption of any Series B Preferred Stock.

     The 500,000 shares of Series B Preferred Stock are convertible into 5.7 million common shares of the company. As discussed further below, this amount has the potential to increase significantly in the future. To the extent not previously converted to common shares at the option of the holders or to the extent not redeemed, the Series B Preferred Stock must be converted to common shares on June 10, 2011. In the event of the liquidation of the company, the Series B Preferred Stock ranks junior to the company’s 4% Cumulative Preferred Stock. Portions of the Series B Preferred Stock may be redeemed at the company’s option beginning in 2008 at an initial redemption price of $224 per share that decreases to $216 per share by 2010.

     Except as otherwise required by law or by the company’s certificate of incorporation or expressly provided for in the certification of designation governing the Series B Preferred Stock, the holders of record of shares of the Series B Preferred Stock have full voting rights and powers, and are entitled to vote on all matters put to a vote or consent of the company’s shareholders, voting together with the holders of the company’s common stock and its 4% Cumulative Preferred Stock as a single class, with each holder of shares of Series B Preferred Stock having the number of votes equal to the number of shares of common stock into which such shares of Series B Preferred Stock could be converted as of the record date for the vote or consent which is being taken. As of March 31, 2008, the outstanding Series B Preferred Stock represented approximately 50.3% of the voting power of the company’s outstanding equity securities, and 51.0% of the company’s fully diluted common stock on an as-converted basis. In addition, holders of Series B Preferred Stock have special voting and approval rights, including the right, voting separately as a class, to elect the number of directors to the company’s board proportionate to the percentage of the company’s fully diluted common stock represented by the Series B Preferred Stock on an as-converted basis, rounded up to the nearest whole number (up to a maximum equal to two-thirds of the total number of directors, less one). As of March 31, 2008, such rights entitled the holders of the Series B Preferred Stock to elect, and the holders of the Series B Preferred had elected, 7 of the 13 members of the board of directors.

     On October 2, 2007, Ohio Plastics, LLC, an affiliate of Bayside Capital Inc., purchased Glencore Finance AG’s 287,500 shares of Series B Preferred Stock which represents 57.5% of the Series B Preferred Stock, 28.9% of the voting power of the company’s outstanding equity securities and 29.3% of the company’s fully diluted common stock on an as-converted basis, in each case as of March 12, 2008.

     Neither the Series B Preferred Stock nor the common shares into which the Series B Preferred Stock can be converted are currently registered for active trading in financial markets. However, any holder of the Series B Preferred Stock can demand registration of all or a portion of its shares or the underlying common stock. Once notice is given, the company is required to promptly prepare and file a registration statement with the SEC. In the event of a demand for registration, the company has the right, but not the obligation, to select and use an underwriter and must pay all expenses incurred in the registration process other than underwriting or brokerage fees and commissions. If the company unilaterally elects to register and sell additional common shares, it must notify the holders of the Series B Preferred Stock. In such circumstances, the holders of the Series B Preferred Stock have the right to include their shares or any common shares into which their Series B Preferred Stock was previously converted in the same registration.

     The Series B Preferred Stock is currently convertible into 5.7 million common shares. However, this amount has the potential to increase significantly if the company elects to declare pay-in-kind dividends in the future. The payment of accrued dividends in common shares on the mandatory conversion date of June 10, 2011 would also have the effect of increasing the aggregate percentage ownership interest of the holders of the Series B Preferred Stock.

Notes to Consolidated Condensed Financial Statements
(Unaudited)

     The Series B Preferred Stock includes a beneficial conversion feature because it allows the holders to acquire common shares of the company at an effective conversion price that is less than their fair value on March 12, 2004. The beneficial conversion feature was initially valued at $15.9 million in 2004. However, the reset of the conversion price had the effect of lowering the historical effective conversion price. This change resulted in an increase in the value of the beneficial conversion feature from $15.9 million to $33.1 million. The original value of the beneficial conversion feature was included in the carrying value of the Series B Preferred Stock in 2004 and applied as a direct increase in accumulated deficit. Based on the provisions of Emerging Issues Task Force Issue 00-27, the $17.2 million increase is being recorded ratably in a similar manner between 2006 and the mandatory conversion date of the Series B Preferred Stock in the second quarter of 2011. In the first quarters of 2008 and 2007, $.7 million of the increase was recorded. The changes in the recorded value of the beneficial conversion feature in 2008 and 2007 were added to the net loss amounts for those years in calculating the applicable loss per common share amounts.

     In 2004, the company issued to holders of the Series B Preferred Stock contingent warrants to purchase an aggregate of 100,000 shares of its common stock for $.10 per share. The contingent warrants are exercisable because a 2005 consolidated cash flow covenant specified in the Contingent Warrant Agreement was not achieved. On October 23, 2007, Glencore Finance AG exercised warrants for 57,500 common shares. The remaining contingent warrants will be exercisable until March 15, 2011. The contingent warrants were originally valued at $.5 million based on an independent appraisal of their value that was completed in 2004. Of this amount, $.3 million was included in the carrying value of the common shares issued to Glencore Finance AG in 2007. The remaining $.2 million carrying value will be included in the value of the shares issued in connection with exercises of additional contingent warrants. In April 2008, additional contingent warrants were exercised.

     In addition to the Series B Preferred Stock, at March 31, 2008 and December 31, 2007, the company had outstanding 6,000 shares (after giving effect to the reverse stock split) of 4% Cumulative Preferred Stock (the 4% Preferred Stock) having a par value of $100 per share. Except as otherwise required by law or the company’s certificate of incorporation, the holders of the 4% Preferred Stock vote together with the holders of shares of the common stock and the holders of Series B Preferred Stock as a single class, and separately with holders of shares of 4% Preferred Stock having 24 votes per share. Holders of the 4% Preferred Stock are entitled to receive quarterly dividends in cash out of the net assets legally available for the payment of dividends at a rate of $40 per year. Dividends are cumulative, and they must be paid prior to the purchase or redemption of any 4% Preferred Stock, any Series B Preferred Stock or any common stock. Dividends must also be paid prior to any distribution in respect of the common stock or the Series B Preferred Stock. In addition, dividends or distributions on common stock may not be made unless “consolidated net current assets,” and “consolidated net tangible assets,” in both cases as defined in the company’s certificate of incorporation, exceed certain amounts per share of 4% Preferred Stock. In the event of any liquidation, dissolution or winding up of the company, the holders of the 4% Preferred Stock are entitled to receive out of the assets available for distribution to shareholders an amount equal to $1,050 per share if the action is voluntary and $1,000 per share if it is not voluntary, in each case in addition to an amount equal to all accrued dividends in arrears at the date of the distribution, before any distributions of assets shall be made to the holders of Series B Preferred Stock or common stock. The holders of the Series B Preferred Stock and the common stock would be entitled to share in any assets then remaining to the exclusion of the holders of 4% Preferred Stock.

     The 4% Preferred Stock may be redeemed, under certain conditions, at the company’s election, by resolution of the board of directors, for a redemption price of $1,050 per share plus all accrued and unpaid dividends to the date of redemption. At meetings of shareholders of the company, each shareholder of 4% Preferred Stock is entitled to 24 votes for each share of 4% Preferred Stock held except that in the event that a default in dividends on the 4% Preferred Stock is deemed to have occurred, the holders of the 4% Preferred Stock, voting separately as a class, have the right at each shareholders’ meeting thereafter (at which 35% of the 4% Preferred Stock is represented) to elect one-third of the members of the board of directors to be elected at that meeting. A default in preferred dividends would be deemed to have occurred if at any time dividends accrued or in arrears on the 4% Preferred Stock amounts to $40 per share or more.

     In the first quarter of 2008, a total of 64,722 previously unissued common shares were issued in connection with incentive compensation and employee benefit programs. A total of 58,777 restricted shares were cancelled during the

Notes to Consolidated Condensed Financial Statements
(Unaudited)

quarter, all of which were added to the treasury share balance. The treasury share balance at March 31, 2008 was 76,028 shares.

     After giving effect to the reverse stock split, a total of 346,231 previously unissued common shares were issued in connection with incentive compensation and employee benefit programs during the first quarter of 2007. A total of 3,650 restricted shares were cancelled during the quarter, of which 900 were added to the treasury share balance. After giving effect to the reissuance of 70 treasury shares during the quarter, the treasury share balance at March 31, 2007 was 3,706 shares.

     The company has authorized 10 million serial preference shares with $.01 par value. In 1999, 300,000 serial preference shares were designated as Series A Participating Cumulative Preferred Shares in connection with the stockholder rights plan discussed below. No serial preference shares had been issued as of March 31, 2008. On June 9, 2004, 900,000 serial preference shares were designated as 6.0% Series B Convertible Preferred Stock. As discussed above, 500,000 shares of Series B Preferred Stock were issued on June 10, 2004. As of March 31, 2008, no other serial preference shares have been designated or issued by the company.

     The company has a stockholder rights plan which provides for the issuance of one nonvoting preferred stock right for each common share issued as of February 5, 1999 or issued subsequent thereto. Each right, if activated, will entitle the holder to purchase 1/1000 of a share of Series A Participating Cumulative Preferred Stock at an initial exercise price of $70.00. Each 1/1000 of a preferred share will be entitled to participate in dividends and vote on an equivalent basis with one whole common share. Initially, the rights are not exercisable. The rights will become exercisable if any person or group acquires, or makes a tender offer for, more than 15% of the company’s outstanding common shares. In the event that any party should acquire or obtain the right to acquire more than 15% of the company’s common shares, holders of rights other than the potential acquirer will be able to purchase the preferred shares at a substantial discount. In addition, if a merger occurs with any potential acquirer owning more than 15% of the common shares outstanding, holders of rights other than the potential acquirer will be able to purchase the acquirer’s common stock at a substantial discount. On March 11, 2004, the company amended its stockholder rights plan to exempt the acquisition by Glencore Finance AG and Mizuho International plc of securities issued by the company in connection with the financing arrangements entered into on March 12, 2004 from triggering the rights under the plan. On June 9, 2004, the company further amended its stockholder rights plan to reflect the decrease in par value of the Series A Participating Cumulative Preferred Stock from $1.00 per share to $.01 per share as approved by the company’s shareholders. On October 1, 2007, the company further amended its stockholder rights plan to exempt the voting agreement between the company and Glencore Finance AG dated October 1, 2007 from triggering the rights under the plan. On October 2, 2007, the company further amended its stockholder rights plan to exempt the securities purchase agreement between Glencore Finance AG and Ohio Plastics, LLC dated October 2, 2007, from triggering the rights under the plan. The rights plan expires in February 2009.

Notes to Consolidated Condensed Financial Statements
(Unaudited)

Comprehensive Income (Loss)

     Total comprehensive income or loss represents the net change in shareholders’ equity during a period from sources other than transactions with shareholders and, as such, includes net earnings or loss for the period. The components of total comprehensive loss are as follows:

Comprehensive Income (Loss)

		Three Months Ended
		March 31,
(In millions)		2008				2007
Net loss		$	(6.9	)		$	(10.8	)
Postretirement benefit plan adjustments
Amortization of unrecognized prior service cost			(.7	)			(.4	)
Amortization of net unrecognized losses			2.1				2.6
Actuarial loss arising in the period not included in net periodic postretirement benefit costs			—				(.2	)
Foreign currency translation adjustments			13.0				1.7
Change in fair value of foreign currency exchange contracts			.3				—
Total comprehensive income (loss)		$	7.8			$	(7.1	)

     The components of accumulated other comprehensive loss are shown in the following table.

Accumulated Other Comprehensive Loss

		Mar. 31,				Dec. 31,
(In millions)		2008				2007
Foreign currency translation adjustments		$	19.6			$	6.6
Defined postretirement benefit plans
Net unamortized prior service costs			13.4				14.1
Unamortized net loss (a)			(71.1	)			(73.2	)
Foreign currency exchange contract adjustments			.3				—
		$	(37.8	)		$	(52.5	)

Contingencies

     The company is involved in remedial investigations and actions at various locations, including former plant facilities, and offsite disposal sites where the company and other companies have been designated as potentially responsible parties. The company accrues remediation costs, on an undiscounted basis, when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. Accruals for estimated losses from environmental remediation obligations are generally recognized no later than the completion of a remediation feasibility study. The accruals are adjusted as further information becomes available or circumstances change. Environmental costs have not been material in the past.

     Various lawsuits arising during the normal course of business are pending against the company and its consolidated subsidiaries. In several such lawsuits, some of which seek substantial dollar amounts, multiple plaintiffs allege personal injury involving products supplied by the company. The company is vigorously defending these claims and, based on current information, believes it has recorded appropriate reserves in addition to its excess carrier insurance coverage and indemnity claims against third parties. The projected availability under the company’s asset based credit facility is

Notes to Consolidated Condensed Financial Statements
(Unaudited)

currently expected to be adequate to cover the company’s cash needs under these claims, assuming satisfaction or waiver of the conditions to borrowing thereunder (see Short-Term Borrowings for further information regarding those conditions to borrowing as well as the company’s dependence on its asset based credit facility for liquidity). It is possible that the company’s ultimate liability could substantially exceed its current reserves, but the amount of any such excess cannot reasonably be determined at this time. Were the company to have significant adverse judgments or determine as the cases progress that significant additional reserves should be recorded, the company’s future operating results and financial condition, particularly its liquidity, could be adversely affected.

Stock-Based Compensation

     At March 31, 2008, there was a total of $1.3 million of unrecognized compensation cost related to restricted stock and deferred shares. This amount is expected to be recognized over a weighted-average period of 1.6 years, including approximately $.7 million in the last three quarters of 2008.

     The total cost charged to expense for share-based compensation was $.2 million in the first quarter of 2008 and $.5 million in the first quarter of 2007. These amounts relate almost exclusively to restricted stock and deferred shares. No tax benefits were recognized in the Consolidated Condensed Statements of Operations for these periods because any change in the related deferred tax assets was fully offset by changes in valuation allowances (see Income Taxes). The weighted-average grant date fair value for all restricted stock and deferred shares in the first quarter of 2008 was $3.11 per share. The fair value of the shares that vested in each of the first quarters of 2008 and 2007 was $.1 million.

Notes to Consolidated Condensed Financial Statements
(Unaudited)

Organization

     The company has four business segments: machinery technologies — North America, machinery technologies — Europe, mold technologies and industrial fluids. Descriptions of the products and services of these business segments are included in the “Organization” note to the Consolidated Financial Statements included in the company’s Annual Report on Form 10-K for the year ended December 31, 2007. Operating results by segment for the first quarters of 2008 and 2007 are presented in the following tables.

Total Sales by Segment

		Three Months Ended
		March 31,
(In millions)		2008				2007
Plastics technologies
Machinery technologies — North America		$	92.4			$	91.1
Machinery technologies — Europe			44.0				34.4
Mold technologies			38.0				37.9
Eliminations (a)			(3.1	)			(2.8	)
Total plastics technologies			171.3				160.6
Industrial fluids			31.5				29.7
Total sales		$	202.8			$	190.3

Customer Sales by Segment

		Three Months Ended
		March 31,
(In millions)		2008				2007
Plastics technologies
Machinery technologies — North America		$	91.5			$	90.3
Machinery technologies — Europe			41.8				32.4
Mold technologies			38.0				37.9
Total plastics technologies			171.3				160.6
Industrial fluids			31.5				29.7
Total sales		$	202.8			$	190.3

Notes to Consolidated Condensed Financial Statements
(Unaudited)

Operating Information by Segment

		Three Months Ended
		March 31,
(In millions)		2008				2007
Operating profit (loss)
Plastics technologies
Machinery technologies — North America		$	2.8			$	1.8
Machinery technologies — Europe			(.4	)			(1.2	)
Mold technologies			.5				.3
Total plastics technologies			2.9				.9
Industrial fluids			2.9				3.3
Restructuring costs (a)			(.6	)			(2.4	)
Corporate expenses			(3.5	)			(3.7	)
Other unallocated expenses (b)			(.2	)			(.1	)
Operating earnings (loss)			1.5				(2.0	)
Interest expense-net			(8.0	)			(7.7	)
Loss before income taxes		$	(6.5	)		$	(9.7	)

     Consistent with the company’s internal reporting methods, segment operating profit or loss excludes restructuring costs and certain unallocated corporate and financing expenses.

Earnings Per Common Share

     Basic earnings per common share data are based on the weighted-average number of common shares outstanding during the respective periods. The common shares into which the Series B Preferred Stock and contingent warrants are convertible and potentially dilutive restricted shares are excluded from weighted-average common shares assuming dilution because their inclusion would result in a smaller loss per common share.

Subsequent Event

     On April 14, 2008, Ronald D. Brown informed the board of directors (the Board) of Milacron Inc. that he intends to retire by the end of the year from his positions as Chairman, President and Chief Executive Officer of the company. The Board requested Mr. Brown to continue to serve in his current capacities until a successor has been named and to remain as an employee for a period of time thereafter to assist his successor.

     The company entered into a Retirement & Transition Agreement with Mr. Brown in order to provide Mr. Brown with certain retirement benefits in connection with his retirement from his positions as President and Chief Executive Officer of Milacron and to ensure that Mr. Brown’s responsibilities in those capacities are successfully transitioned to his successor. Terms of the agreement were provided in the company’s Form 8-K filed on April 18, 2008.

Notes to Consolidated Condensed Financial Statements
(Unaudited)

     The table that follows presents the calculation of loss applicable to common shareholders.

Loss Applicable to Common Shareholders

		Three Months Ended
		March 31,
(In millions)		2008				2007
Net loss		$	(6.9	)		$	(10.8	)
Dividends on preferred shares			(1.6	)			(1.6	)
Beneficial conversion feature related to Series B Preferred Stock (a)			(.7	)			(.7	)
Loss applicable to common shareholders		$	(9.2	)		$	(13.1	)

Condensed Consolidating Financial Information

     The 11 ¹ / 2 % Senior Secured Notes due 2011 are, jointly, severally, fully and unconditionally guaranteed by the company’s U.S. and Canadian restricted subsidiaries and by Milacron Capital Holdings B.V., each of which subsidiary guarantor is 100% owned, directly or indirectly, by Milacron Inc.

     Following are unaudited condensed consolidating financial statements of the company, including the guarantors. This information is provided pursuant to Rule 3-10 of Regulation S-X in lieu of separate financial statements of each subsidiary guaranteeing the Senior Secured Notes. The following condensed consolidating financial statements present the balance sheet, statement of operations and cash flows of (i) Milacron Inc. (in each case, reflecting investments in its consolidated subsidiaries under the equity method of accounting), (ii) the guarantor subsidiaries of Milacron Inc., (iii) the nonguarantor subsidiaries of Milacron Inc., and (iv) the eliminations necessary to arrive at the information for the company on a consolidated basis. The condensed consolidating financial statements should be read in conjunction with the accompanying unaudited consolidated condensed financial statements of the company.

Notes to Consolidated Condensed Financial Statements
(Unaudited)

Consolidating Statement of Operations

		Three Months Ended March 31, 2008
						Guarantor				Nonguarantor				Eliminations &
(in millions)		Parent				Subsidiaries				Subsidiaries				Other				Milacron Inc.
Sales		$	—			$	119.1			$	89.4			$	(5.7	)		$	202.8
Cost of products sold			.3				101.0				68.6				(5.7	)			164.2
Manufacturing margins			(.3	)			18.1				20.8				—				38.6
Other costs and expenses
Selling and administrative			5.4				12.4				18.2				—				36.0
Restructuring costs			.2				.2				.2				—				.6
Other expense — net			—				(.3	)			.8				—				.5
Total other costs and expenses			5.6				12.3				19.2				—				37.1
Operating earnings (loss)			(5.9	)			5.8				1.6				—				1.5
Other non-operating expense (income)
Intercompany management fees			(2.9	)			2.9				—				—				—
Intercompany interest			(12.2	)			12.7				(.5	)			—				—
Equity in (earnings) losses of subsidiaries			8.2				(5.5	)			—				(2.7	)			—
Other intercompany transactions			—				—				—				—				—
Total other non-operating expense (income)			(6.9	)			10.1				(.5	)			(2.7	)			—
Earnings (loss) before interest and income taxes			1.0				(4.3	)			2.1				2.7				1.5
Interest expense — net			(7.9	)			—				(.1	)			—				(8.0	)
Earnings (loss) before income taxes			(6.9	)			(4.3	)			2.0				2.7				(6.5	)
Provision (benefit) for income taxes			—				(.4	)			.8				—				.4
Net earnings (loss)		$	(6.9	)		$	(3.9	)		$	1.2			$	2.7			$	(6.9	)

Notes to Consolidated Condensed Financial Statements
(Unaudited)

Consolidating Statement of Operations

		Three Months Ended March 31, 2007
						Guarantor				Nonguarantor				Eliminations &
(in millions)		Parent				Subsidiaries				Subsidiaries				Other				Milacron Inc.
Sales		$	—			$	120.6			$	75.3			$	(5.6	)		$	190.3
Cost of products sold			.6				101.7				58.1				(5.6	)			154.8
Manufacturing margins			(.6	)			18.9				17.2				—				35.5
Other costs and expenses
Selling and administrative			6.2				13.5				15.6				—				35.3
Restructuring costs			.3				.3				1.8				—				2.4
Other expense — net			—				(.4	)			.2				—				(.2	)
Total other costs and expenses			6.5				13.4				17.6				—				37.5
Operating earnings (loss)			(7.1	)			5.5				(.4	)			—				(2.0	)
Other non-operating expense (income)
Intercompany management fees			(3.2	)			3.2				—				—				—
Intercompany interest			(14.1	)			10.1				4.0				—				—
Equity in (earnings) losses of subsidiaries			13.0				(.9	)			—				(12.1	)			—
Other intercompany transactions			—				.4				(.4	)			—				—
Total other non-operating expense (income)			(4.3	)			12.8				3.6				(12.1	)			—
Earnings (loss) from continuing operations before interest and income taxes			(2.8	)			(7.3	)			(4.0	)			12.1				(2.0	)
Interest expense — net			(7.9	)			.2				—				—				(7.7	)
Earnings (loss) from continuing operations before income taxes			(10.7	)			(7.1	)			(4.0	)			12.1				(9.7	)
Provision for income taxes			—				.2				.8				—				1.0
Earnings (loss) from continuing operations			(10.7	)			(7.3	)			(4.8	)			12.1				(10.7	)
Net loss on divestitures			(.1	)			—				—				—				(.1	)
Discontinued operations net of income taxes			(.1	)			—				—				—				(.1	)
Net earnings (loss)		$	(10.8	)		$	(7.3	)		$	(4.8	)		$	12.1			$	(10.8	)